UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2009
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ______________ to ______________
   USCORP
(Exact name of registrant as specified in its charter)
   
Nevada
000-19061
87-0403330
(State or Other Jurisdiction
(Commission
(I.R.S. Employer
of Incorporation)
File Number)
Identification No.)

4535 W. Sahara Avenue, Suite 200, Las Vegas, NV 89102
(Address of Principal Executive Office) (Zip Code)

(702) 933-4034
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           x Yes    ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 
Large accelerated filer
¨
    
Accelerated filer
¨
 
Non-accelerated filer
¨
    
Smaller reporting company
x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    ¨ Yes   x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of December 31, 2009.
78,192,052 shares of Common Class A Stock and 5,000,000 shares of Common Class B Stock issued and outstanding.

 
 
 
 
USCORP
TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
  
   
     
Item 1. Financial Statements
    
     
Consolidated Balance Sheet as of December 31, 2009 and December 31, 2008 (unaudited)
  
  3
     
Consolidated Statements of Operations for the Three Months and Quarter Ended December 31, 2009 and December 31, 2008 and from Inception, May 1989 through December 31, 2009 (unaudited)
  
  4
     
Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2009 and December 31, 2008 and from Inception, May 1989 through December 31, 2009 (unaudited)
  
  5
     
Consolidated Statements of Changes in Shareholders’ Equity from Inception, May 1989 through December 31, 2009
  
  6
     
Notes to Consolidated Financial Statements (unaudited)
  
  11
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
  18
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
  19
     
Item 4T. Controls and Procedures
  
  20
     
PART II — OTHER INFORMATION
     
Item 1.   Legal Proceedings
  
  20
       
Item 1A. Risk Factors
  
  20
     
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds
  
  20
     
Item 3.   Defaults Upon Senior Securities
  
  21
     
Item 4.   Submission of Matters to a Vote of Security Holders
  
  21
     
Item 5.   Other Information
  
  21

 
2
 
 
PART I.  FINANCIAL INFORMATION
USCorp
(an Exploration Stage Company)
Balance Sheet
    As of December 31, 2009 and September 30, 2009

   
31-Dec-09
    
30-Sep-09
  
ASSETS
            
             
Current assets:
            
Cash
   $ 30,936     $ 18,527  
Total current assets
   $ 30,936     $ 18,527  
                 
Other assets:
                
Equipment- net
     753       1,030  
                 
Total assets
   $ 31,689     $ 19,557  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
Current liabilities:
                
Accounts payable & accrued expenses
   $ 8,953     $ 8,953  
Gold bullion loan
     2,136,539       1,786,025  
Convertible debenture payable
     267,890       249,955  
Subscriptions payable
     104,951       93,481  
Total current liabilities
   $ 2,518,333     $ 2,138,414  
                 
Convertible debenture payable
     393,312       390,661  
Due to officer
     25,005       16,349  
                 
Shareholders' equity:
                
Series A preferred stock, one share convertible to eight shares of common; par value $0.001, 10,000,000 shares authorized, 6,562,500 shares issued and outstanding at September 30, 2009 and December 31, 2009
     8,327       8,327  
Series B preferred stock, one share convertible to two shares of common; 10% cumulative stated dividend, stated value $0.50, 50,000,000 shares authorized, 141,687 outstanding at September 30, 2009 and December 31, 2009, stated value; $0.50
     63,498       63,498  
Common stock B- $.001 par value, authorized 250,000,000 shares, issued and outstanding, 5,000,000 shares at September 30, 2009 and December 31, 2009
     5,000       5,000  
Common stock A- $.01 par value, authorized 550,000,000 shares authorized, issued and outstanding, 74,319,460 shares at September 30, 2009 and 78,192,052 at December 31, 2009
   $ 781,921     $ 743,195  
Additional paid in capital
     12,257,528       12,183,315  
Accumulated deficit - exploration stage
     (16,021,235 )     (15,529,202 )
Total shareholders' deficit
     (2,981,786 )     (2,602,692 )
                 
Total Liabilities & Shareholders' Deficit
   $ 31,689     $ 19,557  
 
See the notes to the financial statements.

 
3
 
 
USCorp
(an Exploration Stage Company)
Statements of Operations
For the Quarters Ended December 31, 2009 and December 31, 2008
and from Inception, May 1989 through December 31, 2009

               
Inception
  
   
31-Dec-09
    
31-Dec-08
    
to Date
  
General and administrative expenses:
                  
Consulting
   $ 64,109     $ 84,723     $ 6,823,612  
Administration
     49,941       247,662       5,450,401  
License expense
     0       100       247,559  
Professional fees
     6,883       18,810       683,606  
 Total general & administrative expenses
     120,933       351,295       13,205,178  
                         
Net loss from operations
   $ (120,933 )   $ (351,295 )   $ (13,205,178 )
                         
Other income (expenses):
                        
Interest income
     0       509       7,908  
Interest expense
     (35,006 )     (70,948 )     (966,975 )
Gain (loss) on unhedged derivative
     (336,094 )     14,747       (1,256,990 )
Loss on mining claim
     0       0       (600,000 )
                         
Net loss before provision for income taxes
   $ (492,033 )   $ (406,987 )   $ (16,021,235 )
                         
Provision for income taxes
     0       0       0  
                         
Net loss
   $ (492,033 )   $ (406,987 )   $ (16,021,235 )
                         
Basic & fully diluted net loss per common share
   $ (0.01 )   $ (0.01 )        
                         
Weighted average of common shares outstanding:
                        
  Basic & fully diluted
     76,043,451       61,859,459          

See the notes to the financial statements.

 
4
 

USCorp
(an Exploration Stage Company)
Statements of Cash Flows
For the Quarters Ended December 31, 2009 and December 31, 2008
and from Inception, May 1989 through December 31, 2009

               
Inception
  
   
31-Dec-09
    
31-Dec-08
    
to Date
  
Operating Activities:
                  
  Net loss
   $ (492,033 )   $ (406,987 )   $ (16,021,235 )
  Adjustments to reconcile net income items
                        
    not requiring the use of cash:
                        
Loss on sale of mining claim
     0       0       600,000  
Consulting fees
     7,159       28,271       2,154,719  
Depreciation expense
     277       848       16,802  
Legal settlement expense
     0       0       12,000  
Interest expense
     35,006       70,948       966,975  
Shares issued for mining claim
     0       0       2,449,465  
Loss on unhedged underlying derivative
     336,094       (14,747 )     1,256,990  
Changes in other operating assets and liabilities :
                        
Accounts payable and accrued expenses
     0       0       2,391,141  
Net cash used by operations
   $ (113,497 )   $ (321,667 )   $ (6,173,143 )
                         
Investing activities:
                        
Purchase of office equipment
   $ 0     $ 0     $ (17,555 )
Net cash used by investing activities
     0       0       (17,555 )
                         
Financing activities:
                        
Issuance of common stock
   $ 105,780     $ 85,000     $ 2,848,021  
Issuance of preferred stock
     0       0       78,559  
Issuance of gold bullion note
     0       0       648,282  
Subscriptions received
     11,470       35,652       674,274  
Issuance of convertible notes
     0       200,000       1,600,000  
Advances received (paid) shareholder
     8,656       0       372,499  
Net cash provided by financing activities
     125,906       320,652       6,221,635  
                         
Net increase (decrease) in cash during the period
   $ 12,409     $ (1,015 )   $ 30,936  
                         
Cash balance at beginning of the fiscal year
     18,527       478,843       0  
                         
Cash balance at December 31st
   $ 30,936     $ 477,828     $ 30,936  
                         
Supplemental disclosures of cash flow information:
                        
     Interest paid during the period
   $ 0     $ 0     $ 0  
     Income taxes paid during the period
   $ 0     $ 0     $ 0  

See the notes to the financial statements.

 
5
 
 
USCorp
(an Exploration Stage Company)
Statement of Changes in Shareholders’ Equity
From Inception in May 1989
 
   
Common
    
Common
    
Paid in
    
Accumulated
          
Stock
  
   
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
    
Price *
  
                                     
Inception
     0     $ 0     $ 0     $ 0     $ 0        
                                               
Issuance of common stock
     84,688       847       1,185,153               1,186,000     $ 0.07  
                                                 
Net income fiscal 1990
                             520,000       520,000          
                                                 
Balance at September 30, 1990-unaudited
     84,688     $ 847     $ 1,185,153     $ 520,000     $ 1,706,000          
                                                 
Net income fiscal 1991
                             1,108,000       1,108,000          
                                                 
Balance at September 30, 1991-unaudited
     84,688     $ 847     $ 1,185,153     $ 1,628,000     $ 2,814,000          
                                                 
Issuance of common stock
     472       5       32,411               32,416     $ 0.22  
                                                 
Net income fiscal 1992
                             466,000       466,000          
                                                 
Balance at September 30, 1992-unaudited
     85,160     $ 852     $ 1,217,564     $ 2,094,000     $ 3,312,416          
                                                 
Net loss fiscal 1993
                             (3,116,767 )     (3,116,767 )        
                                                 
Balance at September 30, 1993-unaudited
     85,160     $ 852     $ 1,217,564     $ (1,022,767 )   $ 195,649          
                                                 
Net loss fiscal 1994
                             (63,388 )     (63,388 )        
                                                 
Balance at September 30, 1994-unaudited
     85,160     $ 852     $ 1,217,564     $ (1,086,155 )   $ 132,261          
                                                 
Net income fiscal 1995
                             (132,261 )     (132,261 )        
                                                 
Balance at September 30, 1995-unaudited
     85,160     $ 852     $ 1,217,564     $ (1,218,416 )   $ 0          
                                                 
Net loss fiscal 1996
                             0       0          
                                                 
Balance at September 30, 1996-unaudited
     85,160     $ 852     $ 1,217,564     $ (1,218,416 )   $ 0          

 
6
 
 
USCorp
(an Exploration Stage Company)
Statement of Changes in Shareholders’ Equity
From Inception in May 1989
(Continued)

   
Common
    
Common
    
Paid in
    
Accumulated
          
Stock
  
   
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
    
Price *
  
                                     
Stock issued for mining claim
     150,000       1,500       598,500             600,000     $ 0.20  
                                               
Issuance of common stock
     50,000       500       59,874             60,374     $ 0.06  
                                               
Stock issued for services
     14,878       149       29,608             29,757     $ 0.10  
                                               
Net loss fiscal 1997
                             (90,131 )     (90,131 )        
                                                 
Balance at September 30, 1997-unaudited
     300,038     $ 3,001     $ 1,905,546     $ (1,308,547 )   $ 600,000          
                                                 
Capital contributed by shareholder
                     58,668               58,668          
                                                 
Net loss fiscal 1998
                             (58,668 )     (58,668 )        
                                                 
Balance at September 30, 1998-unaudited
     300,038     $ 3,001     $ 1,964,214     $ (1,367,215 )   $ 600,000          
                                                 
Capital contributed by shareholder
                     28,654               28,654          
                                                 
Net income fiscal 1999
                             (26,705 )     (26,705 )        
                                                 
Balance at September 30, 1999-unaudited
     300,038     $ 3,001     $ 1,992,868     $ (1,393,920 )   $ 601,949          
                                                 
Capital contributed by shareholder
                     22,750               22,750          
                                                 
Net loss fiscal 2000
                             (624,699 )     (624,699 )        
                                                 
Balance at September 30, 2000-unaudited
     300,038     $ 3,001     $ 2,015,618     $ (2,018,619 )   $ 0          

 
7
 

USCorp
(an Exploration Stage Company)
Statement of Changes in Shareholders’ Equity
From Inception in May 1989
(Continued)

   
Common
    
Common
    
Paid in
    
Accumulated
          
Stock
  
   
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
    
Price *
  
                                     
Issuance of common stock
     103,535       1,035       611,943             612,978     $ 0.15  
                                               
Issued stock for compensation
     50,000       500       19,571             20,071     $ 0.04  
                                               
Capital contributed by shareholder
                     21,719             21,719          
                                               
Net loss fiscal 2001
                             (654,768 )     (654,768 )        
                                                 
Balance at September 30, 2001-unaudited
     453,573     $ 4,536     $ 2,668,851     $ (2,673,387 )   $ 0          
                                                 
Issued stock to purchase mining claim
     24,200,000       242,000       2,207,466               2,449,466     $ 0.10  
                                                 
Issued shares to employees
     267,500       2,675       (2,675 )             0          
                                                 
Capital contributed by shareholders
                     143,480               143,480          
                                                 
Net loss for the fiscal year
                             (2,591,671 )     (2,591,671 )        
                                                 
Balance at September 30, 2002-unaudited
     24,921,073     $ 249,211     $ 5,017,122     $ (5,265,058 )   $ 1,275          
                                                 
Issued stock for services
     872,000       8,720       264,064               272,784     $ 0.31  
                                                 
Beneficial conversion feature
                     3,767               3,767          
                                                 
Capital contributed by shareholders
                     81,472               81,472          
                                                 
Net loss for the fiscal year
                             (865,287 )     (865,287 )        
                                                 
Balance at September 30, 2003
     25,793,073     $ 257,931     $ 5,366,425     $ (6,130,345 )   $ (505,989 )        

 
8
 
 
USCorp
(an Exploration Stage Company)
Statement of Changes in Shareholders’ Equity
From Inception in May 1989
(Continued)

   
Common
    
Common
    
Paid in
    
Accumulated
          
Stock
  
    
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
    
Price *
  
                                     
Issuance of common stock
     550,000       5,500       206,500             212,000     $ 0.39  
                                               
Issued stock to pay bills
     1,069,945       10,699       460,077             470,776     $ 0.44  
                                               
Issued stock for services
     2,118,444       21,184       652,714             673,898     $ 0.32  
                                               
Net loss for the fiscal year
                             (964,108 )     (964,108 )        
                                                 
Balance at September 30, 2004
     29,531,462     $ 295,314     $ 6,685,716     $ (7,094,453 )   $ (113,423 )        
                                                 
Issuance of common stock
     150,000       1,500       46,500               48,000     $ 0.32  
                                                 
Issued stock for services
     2,840,000       28,400       331,600               360,000     $ 0.13  
                                                 
Issued stock to pay debt
     400,000       4,000       50,000               54,000     $ 0.14  
                                                 
Issuance of warrants
                     1,817               1,817          
                                                 
Net loss for the fiscal year
                             (628,337 )     (628,337 )        
                                                 
Balance at September 30, 2005
     32,921,462     $ 329,214     $ 7,115,633     $ (7,722,790 )   $ (277,943 )        
                                                 
Issued stock for services
     885,000       8,850       70,800               79,650     $ 0.09  
                                                 
Net loss for the period
                             (837,551 )     (837,551 )        
                                                 
Balance at September 30, 2006
     33,806,462     $ 338,064     $ 7,186,433     $ (8,560,341 )   $ (1,035,844 )        
                                                 
Issued stock for services
     50,000       500       4,500               5,000     $ 0.10  
                                                 
Issuance of convertible debt
                     648,098               648,098          
                                                 
Net loss for the fiscal year
                             (3,176,745 )     (3,176,745 )        
                                                 
Balance at September 30, 2007
     33,856,462       338,564       7,839,031       (11,737,086 )     (3,559,491 )        

 
9
 
 
USCorp
(an Exploration Stage Company)
Statement of Changes in Shareholders’ Equity
From Inception in May 1989
(Continued)

   
Common
    
Common
    
Paid in
    
Accumulated
          
Stock
  
    
Shares
    
Par Value
    
Capital
    
Deficit
    
Total
    
Price *
  
                                     
Issuance of common stock
     10,011,879       100,119       638,559             738,678     $ 0.07  
                                               
Issued stock for services
     9,517,664       95,177       2,447,473             2,542,650     $ 0.27  
                                               
Conversion of debentures
     7,200,000       72,000       828,000             900,000     $ 0.13  
                                               
Conversion of preferred stock
     26,626       266       6,401             6,667     $ 0.25  
                                               
Issuance of convertible debt
                     56,000             56,000          
                                               
Net loss for the fiscal period- as restated
                             (2,498,879 )     (2,498,879 )        
                                                 
Balance at September 30, 2008
     60,612,631       606,126       11,815,464       (14,235,965 )     (1,814,375 )        
                                                 
Issuance of common stock
     12,261,765       122,618       304,845               427,463     $ 0.03  
                                                 
Issued stock for services
     845,064       8,451       53,939               62,390     $ 0.07  
                                                 
Issued stock to settle lawsuit
     200,000       2,000       10,000               12,000     $ 0.06  
                                                 
Conversion of Preferred A
     400,000       4,000       (3,933 )             67          
                                                 
Issuance of convertible debt
                     3,000               3,000          
                                                 
Net loss for the year
                             (1,293,237 )     (1,293,237 )        
                                                 
Balance at September 30, 2009
     74,319,460       743,195       12,183,315       (15,529,202 )     (2,602,692 )        
                                                 
Issuance of common stock
     3,633,956       36,340       69,440               105,780     $ 0.03  
                                                 
Issued stock for services
     238,636       2,386       4,773               7,159     $ 0.03  
                                                 
Net loss for the period
                             (492,033 )     (492,033 )        
                                                 
Balance at December 31, 2009
     78,192,052     $ 781,921     $ 12,257,528     $ (16,021,235 )   $ (2,981,786 )        
 
*- Prices adjusted for stock splits.

Please see the notes to the financial statements.

 
10
 

     USCorp
(an Exploration Stage Company)
Notes to the Consolidated Financial Statements
For the Quarters Ended December 31, 2009 and December 31, 2008

1.
Organization of the Company and Significant Accounting Principles

USCorp (the “Company”) is a publicly held corporation formed in May 1989 in the state of Nevada. In April 2002 the Company acquired US Metals, Inc. (“USMetals”), a Nevada corporation, by issuing 24,200,000 shares of common stock. US Metals became a wholly owned subsidiary of the Company.

The Company owns the mineral rights to 177 Lode and Placer Mining Claims in the Eureka Mining District of Yavapai County, Arizona, called the Twin Peaks Project; and owns the mineral rights to 235 Lode and Placer Claims on five properties in the Mesquite Mining District of Imperial County, California, which the Company collectively refers to as the Picacho Salton Project.

The Company has no revenues to date and has defined itself as an “exploration stage” company.

Exploration Stage Company- the Company has no operations or revenues since its inception and therefore qualifies for treatment as an Exploration Stage company as per Statement of Financial Accounting Standards (SFAS) No. 7.  As per SFAS No.7, financial transactions are accounted for as per generally accepted accounted principles.  Costs incurred during the development stage are accumulated in “accumulated deficit- exploration stage” and are reported in the Stockholders’ Equity section of the balance sheet.

Consolidation- the accompanying consolidated financial statements include the accounts of the company and its wholly owned subsidiary.  All significant inter-company balances have been eliminated.

Use of Estimates- The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make reasonable estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses at the date of the financial statements and for the period they include.  Actual results may differ from these estimates.

Cash and interest bearing deposits- For the purpose of calculating changes in cash flows, cash includes all cash balances and highly liquid short-term investments with an original maturity of three months or less.

Long Lived Assets- The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

Property and Equipment- Property and equipment are stated at cost. Depreciation expense is computed using the straight-line method over the estimated useful life of the asset, which is estimated at three years.

Income taxes- The Company accounts for income taxes in accordance with the Statement of Accounting Standards No. 109  (SFAS No. 109), "Accounting for Income Taxes".  SFAS No. 109 requires an asset and liability approach to financial accounting and reporting for income taxes.  Deferred income tax assets and liabilities are computed annually for differences between financial statement and income tax bases of assets and liabilities that will result in taxable income or deductible expenses in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets and liabilities to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period adjusted for the change during the period in deferred tax assets and liabilities.

 
11
 

Mineral Properties- Costs incurred to acquire mineral interest in properties, to drill and equip exploratory sites within the claims groups, to conduct exploration and assay work are expensed as incurred.

Revenue Recognition- Mineral sales will result from undivided interests held by the Company in mineral properties. Sales of minerals will be recognized when delivered to be picked up by the purchaser. Mineral sales from marketing activities will result from sales by the Company of minerals produced by the Company (or affiliated entities) and will be recognized when delivered to purchasers. Mining revenues generated from the Company’s day rate contracts, included in mine services revenue, will be recognized as services are performed or delivered.

2.
Going Concern

The accompanying financial statements have been presented in accordance with generally accepted accounting principles, which assume the continuity of the Company as a going concern. However, the Company has incurred significant losses since its inception and has no business operations and continues to rely on financing and the issuance of shares and warrants to raise capital to fund its business operations.

Management’s plans, which are totally dependent upon the Company obtaining additional sources of capital and/or loans, with regard to this matter are as follows:

* Obtain the necessary approvals and permits to complete exploration and begin test production on our properties as warranted. An application for drilling on Twin Peaks Project has been submitted to the Bureau of Land Management and approved. Applications have been prepared for the Picacho Salton Project and are being reviewed by the Bureau of Land Management; permits are expected soon. Other permits for commercial mining are being prepared and reviewed for submission to Federal, State and local authorities.

* USCorp plans to begin commercial scale operations on one or more of its properties as soon as the required permits and approvals have been granted and funding obtained. Due to the nature of the ore bodies of the Company’s current properties Management believes it will begin commercial scale operations on our Picacho Salton Project. Then Management plans to begin commercial scale operations on the Twin Peaks Project.

* Continue exploration and ramp up permitting process to meet ongoing and anticipated demand for gold, silver, uranium, aggregate, decorative rock and polymetalic ores resulting from our planned commercial scale production activities.

* Augment our mining exploration team with quality and results-oriented people as needed. Upon adequate funding management intends to hire qualified and experienced personnel, including additional officers and directors, and mining specialists, professionals and consulting firms to advise management as needed to handle mining operations, acquisitions and development of existing and future mineral resource properties.

* Put together a strategic alliance of consultants, engineers, contractors as well as joint venture partners when appropriate, and set up an information and communication network that allows the alliance to function effectively under USCorp's management.

* Attend and exhibit at industry and investment trade shows

* Acquire additional properties and/or corporations with properties as subsidiaries to advance the company's growth plans.

* The company has uploaded proprietary information about the company and our properties to a secure web site for the purpose of raising additional capital in order to continue our exploration and development efforts.

* The Company has curtailed its exploration efforts and drilling program due to the unavailability of a sufficient amount of capital or loans. USCorp filed its annual report on form 10-K for fiscal year ending 9-30-2009 and is filing its first quarter fiscal 2010 Form 10-Q completing calendar 2009 filings. After that, if USCorp has not obtained sufficient funding to maintain its status as a fully reporting company trading on the OTC Bulletin Board, management may allow the company to become a pink sheet traded, non-reporting, public company. A Company may be delisted from the OTC Bulletin Board when it fails to make required filings with the SEC or voluntarily delists from the OTC Bulletin Board and then trades on the PinkSheets. Eliminating the cost associated with being a fully reporting company is the last cost cutting measure available to USCorp.

 
12
 

3.   Net Loss per Share

The Company applies SFAS No. 128, “Earnings per Share” to calculate loss per share.  In accordance with SFAS No. 128, basic net loss per share has been computed based on the weighted average of common shares outstanding during the years, adjusted for the financial instruments outstanding that are convertible into common stock during the years.  The effects of the common stock options and the debentures convertible into shares of common stock, however, have been excluded from the calculation of loss per share because their inclusion would be anti-dilutive. Net loss per share is computed as follows:

   
12/31/2009
    
12/31/2008
  
             
Net loss before cumulative preferred dividend
   $ (492,033 )   $ (406,987 )
                 
Cumulative dividend preferred payable
     (37,081 )     (29,997 )
                 
Net loss to common shareholders
   $ (529,114 )   $ (436,984 )
                 
Weighted average
      76,043,451       61,859,459  
                 
Basic & fully diluted net loss per common share
   $ (0.01 )   $ (0.01 )

4.   Gold Bullion Promissory Note

In September 2005, the Company issued a promissory note to a shareholder and received proceeds of $648,282. The note requires the Company to pay the shareholder 1,634 ounces of Gold Bullion (.999 pure). Originally, the promissory note came due in September 2007. In September 2007, the holder of the promissory note agreed to extend the maturity date of the note to September 2009.  In September 2009, the holder of the promissory note extended the maturity date to January 2010 at the previous terms.

The loss on the underlying gold derivative on the promissory note has been calculated as follows.

Carrying value of loan
   $ 879,549  
         
Fair value of loan
     2,136,539  
         
Life to date loss on unhedged underlying derivative
   $ (1,256,990 )

 
13
 

5.   Equipment

A summary of equipment-net at December 31, 2009 and September 30, 2009 is as follows:

   
31-Dec-09
    
30-Sep-09
  
             
Office equipment
   $ 17,555     $ 17,555  
Accumulated depreciation
     (16,802 )     (16,525 )
                 
Equipment- net
   $ 753     $ 1,030  

6.   Issuances of Common Stock and Preferred Stock

During fiscal year 2009, the Company issued 12,261,765 shares of common stock and received proceeds of $427,463. Purchasers of the common stock also received the option to purchase an additional 5,354,637 shares of common stock at $0.03 per share expiring in fiscal year 2010.

During fiscal year 2009, the Company issued 845,064 shares of common stock to consultants for services received valued at $62,390.  In addition, the Company issued 200,000 shares of common stock to settle a lawsuit against the Company by a former consultant.  These shares were valued at $12,000 and recorded in the consolidated statement of operations.

In September 2009, a holder of the preferred A convertible stock converted 50,000 shares of preferred A into 400,000 shares of common stock.  Also in September 2009, the Company issued 1,393,750 preferred A shares and received proceeds of $1,394.

During the first quarter of fiscal year 2010, the Company issued 3,633,956 shares of common stock and received proceeds of $105,780.

In December 2009, the Company issued 238,636 shares of commons stock to consultants for services rendered valued at $7,159.

7.   Common Stock Options

During fiscal year 2009, the Company issued 5,354,637 options to purchase common stock at $0.03 per share as discussed in Note 6.  These options expire in fiscal year 2010.
 
Also in fiscal year 2009, the Company issued 1,600,000 options exercisable at $.40 per share to the purchasers of the debentures discussed in Note 10 and the holders of the gold bullion promissory note discussed in Note 6. These options expired worthless at the beginning of fiscal year 2010 as discussed in note 14.
 
During the first quarter of fiscal year 2010, the Company issued 4,942,912 options to buy its common stock at $0.03 per share to the purchasers of the common stock described in Note 6.  The options expire in fiscal year 2011. Also during the quarter, 4,136,666 options to purchase common stock expired unexercised
 
The Company applies SFAS No. 123, “Accounting for Stock-Based Compensation” to account for its option issues.  Accordingly, all options granted are recorded at fair value using a generally accepted option pricing model at the date of the grant.  For purposes of determining the option value at issuance, the fair value of each option granted is measured at the date of the grant by the option pricing model with the following assumptions:
 
The fair values generated by option pricing model may not be indicative of the future values, if any, that may be received by the option holder.

 
14
 
 
The Company provides for a Stock Incentive Plan for its employees. The plan provides for incentive stock options and non-qualified stock options. The Board of Directors will determine whether an option is an incentive stock option or a non-qualified stock option when it grants the option and the option will be evidenced by an agreement describing the material terms of the option. The Board of Directors will determine the exercise price of an employee’s option at the date of the grant. The exercise price of an incentive stock option may not be less than the fair market value of the common stock on the date of the grant, or less than 110% of the fair market value if the participant owns more than 10% of the outstanding common stock. The Board of Directors will also determine the term of an option at the date of the grant. The term of an incentive stock option or non-qualified stock option may not exceed ten years from the date of grant, but any incentive stock option granted to a participant who owns more than 10% of the outstanding common stock will not be exercisable after the expiration of five years after the date the option is granted. Subject to any further limitations in the applicable agreement, if a participant’s employment terminates, an incentive stock option will terminate and expire no later than three months after the date of termination of employment.
 
Incentive stock options are also subject to the further restriction that the aggregate fair market value, determined as of the date of the grant, of the market value of the common Stock as to which any incentive stock option first becomes exercisable in any calendar year is limited to $100,000 per recipient. If incentive stock options covering more than $100,000 worth of the common stock first become exercisable in any one calendar year, the excess will be non-qualified options. For purposes of determining which options, if any, have been granted in excess of the $100,000 limit, options will be considered to become exercisable in the order granted.
 
The following is a summary of common stock warrants outstanding at December 31, 2009:
 
         
Wgtd Avg
    
Wgtd Years
  
    
Amount
    
Exercise Price
    
to Maturity
  
                   
Outstanding at September 30, 2008
     5,736,666     $ 0.40       1.01  
                         
Issues
     6,954,637                  
Exercises
     0                  
Expires
     (3,200,000 )                
                         
Outstanding at September 30, 2009
     9,491,303     $ 0.33       0.54  
                         
Issues
     4,942,912                  
Exercises
     0                  
Expires
     (4,136,666 )                
                         
Outstanding at December 31, 2009
     10,297,549     $ 0.03       0.78  

8.   Convertible Debentures

During the fiscal year 2007, the Company issued convertible debentures with a face value of $1,200,000. The debentures were convertible into common stock at $0.125 per share.  The debentures had an interest rate of 5% and a maturity date from December 2009 to September 2010. During the fiscal year 2008, the holder of these debentures converted $900,000 of the debentures to 7,200,000 shares of common stock.  The remaining $300,000 of 2007 debentures is convertible into common stock at $0.125 per share, matures in September 2010, and has an interest rate of 5%

In fiscal year 2008 the Company issued an additional convertible debenture to the same holder and received proceeds of $200,000.  This debenture matures in March 2010, is exercisable into common stock at $0.125 per share, and has an interest rate of 4%. The Company recorded $56,000 to its stockholder equity as a result of this issuance and is amortizing the amount to interest expense over the life of the debenture.

 
15
 
 
In fiscal year 2009 the Company issued an additional convertible debenture to the same holder and received proceeds of $200,000.  This debenture matures in April 2010, is exercisable into common stock at $0.125 per share, and has an interest rate of 4%. The Company recorded $3,000 to its stockholder equity as a result of this issuance and is amortizing the amount to interest expense over the life of the debenture.

The balance of the convertible debt at December 31, 2009 and September 30, 2009 is as follows:

   
31-Dec-09
    
30-Sep-09
  
             
Convertible debt payable
   $ 700,000     $ 700,000  
Unamortized beneficial conversion feature
     (38,798 )     (59,384 )
                 
Net convertible debt payable
   $ 661,202     $ 640,616  

9. Income Tax Provision

Provision for income taxes is comprised of the following:
            
   
31-Dec-09
    
31-Dec-08
  
             
Net loss before provision for income taxes
   $ (492,033 )   $ (406,988 )
                 
Current tax expense:
                
Federal
   $ 0     $ 0  
State
     0       0  
Total
   $ 0     $ 0  
                 
Less deferred tax benefit:
                
Tax loss carryforwards
     (2,421,827 )     (2,205,332 )
Allowance for recoverability
     2,421,827       2,205,332  
Provision for income taxes
   $ 0     $ 0  
                 
A reconciliation of provision for income taxes at the statutory rate to provision for income taxes at the Company's effective tax rate is as follows:
                 
Statutory U.S. federal rate
     34 %     34 %
Statutory state and local income tax
     10 %     10 %
Less allowance for tax recoverability
     -44 %     -44 %
Effective rate
     0 %     0 %
                 
Deferred income taxes are comprised of the following:
                 
Tax loss carryforwards
   $ 2,421,827     $ 2,205,332  
Allowance for recoverability
     (2,421,827 )     (2,205,332 )
Deferred tax benefit
   $ 0     $ 0  

Note:  The deferred tax benefits arising from the timing differences begin to expire in fiscal year

 
16
 

10. Class B Common Shares

The Class B Common shares are non-voting shares that trade on the Frankfurt stock exchange under the symbol U9C.F. There are 250,000,000 shares authorized and 5,000,000 issued and outstanding. The par value of these shares is $0.001. These shares do not trade in the United States on any market and the Company has no plans to register these shares for trading on any U.S. market.

11. Subsequent Events

The Company has reviewed its activities as the date of this report for significant subsequent events.  There are no significant subsequent events as of the date of this report.

 
17
 
 
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with the Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Report.

The information set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21 E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company’s revenues and profitability, (ii) prospective business opportunities and (iii) the Company’s strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes", "anticipates", "intends" or "expects". These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.

The Company’s revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: (i) changes in external competitive market factors, (ii) termination of certain operating agreements or inability to enter into additional operating agreements, (iii) inability to satisfy anticipated working capital or other cash requirements, (iv) changes in or developments under domestic or foreign laws, regulations, governmental requirements or in the mining industry, (v) changes in the Company’s business strategy or an inability to execute its strategy due to unanticipated changes in the market, (vi) various competitive factors that may prevent the Company from competing successfully in the marketplace, and (ix) the Company’s lack of liquidity and its ability to raise additional capital. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
 
Significant Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to reserves and intangible assets.  Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of certain assets which are not readily apparent from other sources, primarily allowance for the cost of the Mineral Properties based on the successful efforts method of accounting.  These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2009.

 
18
 

Results of Operations
 
Comparison of operating results for the three months ended December 31, 2009 and December 31, 2008:
 
The Company has no revenues through the date of this report.

General and administrative expenses were $120,933 compared to $315,296 for the same period a year ago. Consulting costs decreased from $84,723 to $64,109 in the three months ended December 31, 2009, which is mainly due to a reduction in investor and public relations costs. Administration costs decreased from $247,663 in the three months ended December 31, 2008 to $49,941 for the three months ended December 31, 2009 due to decreased costs for clerical help, office staff and salaried employees who were laid off at the end of May 2009.

As a result of general and administrative costs, the Company experienced a loss from operations of $492,033 for the three months ended December 31, 2009, compared to loss from operations of $351,296 for the same period last year.

Interest expense loss decreased to $35,006 during the first three months of fiscal 2010 compared to -$70,948 the first three months of fiscal year 2009 as a result of the Gold Bullion Loan borrowed at the end of September 2005 and the change in the price of gold compared to the same period one year ago. The loan is payable in gold bullion at the prevailing rate price and is not hedged. The Company’s loss on the unhedged loan is $336,094 for the first three months of fiscal year 2010 due to the increase in the price of gold over the past year.

Net loss for the first three months of fiscal year 2010 was $492,033 or $0.01 per share compared to a loss of $406,987, or $0.01 per share for the same period last year.

Discussion of Financial Condition: Liquidity and Capital Resources

At December 31, 2009 cash on hand was $30,936 as compared with $18,527 at September 30, 2009. During the first three months of fiscal year 2010, the Company used $120,933 for its operations.

At December 31, 2009, the Company had working capital of $30,936 compared to a working capital of $18,527 at September 30, 2009. The increase is due to costs of continuing exploration and preparations for development of Company’s mining properties offset by the Company’s on-going financing efforts.

Total assets at December 31, 2009 were $31,689 as compared to $19,557 at September 30, 2009. The increase is due to costs of continuing exploration and preparations for development of Company’s mining properties offset by the Company’s on-going financing efforts.

The Company’s total stockholders’ deficit increased to a deficit of $16,021,235 at December 31, 2009 compared to a deficit of $15,529,202 at September 30, 2009. The increase in stockholders’ deficit was the result of an increase in additional paid in capital and operating losses of $492,033 for the three months ended December 31, 2009.

As discussed in our January 22, 2010 press release, Robert Dultz, President, Chairman and CEO, and other members of the management and exploration team have been involved in correspondence, conference calls, site visits, meetings and review of USCorp’s proprietary data, with a variety of people representing more than 10 mining companies, including some contacts directly with their CEOs. The mining companies range in size from junior to major, and from regional to international in scope. These communications have as their object completing one or more of the following: to acquire USCorp, or do a joint venture, merger, or other business combinations whose purpose is development of the Company’s California and Arizona properties by well-financed and highly experienced miners. As of the date of this report, USCorp has not received any formal written proposals.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

 
19
 

ITEM 4T.          CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2009. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to our Company required to be included in our reports filed or submitted under the Exchange Act.

Changes in Internal Controls

There were no significant changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the quarter ended December 31, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the first quarter of fiscal year 2010, the Company issued 3,633,956 shares of common stock and received proceeds of $105,780.

In December 2009, the Company issued 238,636 shares of commons stock to consultants for services rendered valued at $7,159.

During the first quarter of fiscal year 2010, the Company issued 4,942,912 options to buy its common stock at $0.03 per share to the purchasers of the common stock described above. The options expire in fiscal year 2011. Also during the quarter, 4,136,666 options to purchase common stock expired unexercised.

As previously reported, in fiscal 2008 we received commitments to finance fiscal 2009 operations in the amount of $2.19 million. In the last quarter of fiscal 2008 and the last quarter of calendar 2008 the Company received $400,000 of the $2.19 million in commitments for fiscal 2009, however no additional payments were received, in breach of their agreement. We have no expectation the Company will receive the rest of the committed funds.

As a result of the failure to meet the commitments to fund USCorp operations in fiscal 2009 there has been substantial damage done to USCorp. During the first nine months of fiscal 2009 we were assured on several occasions that the funds were coming and we delayed seeking other sources of financing while providing the lender with requested due diligence documentation regarding USCorp, our properties, historical mining on those properties and our contemporary exploration efforts on those properties. In addition we were unable to complete the third phase of the Twin Peaks drilling program and therefore were unable to update our resource measurements, making it more difficult to obtain additional financing from other sources, and to complete permitting, causing the inability to pay the bullion loan when due. The bullion loan due date was extended and after January 31, 2010 it is extended on a day-to-day basis. We continue to pursue other sources of financing (see” Discussion of Financial Condition: Liquidity and Capital Resources” above).

 
20
 

The Company claimed an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) for the private placement of these securities pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction did not involve a public offering, the Investor was an “accredited investor” and/or qualified institutional buyers, the Investor had access to information about the Company and its investment, the Investor took the securities for investment and not resale, and we took appropriate measures to restrict the transfer of the securities.

Item 3. Defaults Upon Senior Securities.

None.
 
Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters requiring a vote of security holders during this period. Significant matters voted on were reported in our Form 10-K for period ending September 30, 2009.
 
Item 5. Other Information.

None.
 
ITEM 6. EXHIBITS

(a) Exhibits:

31.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

USCORP
 
By:  /s/ ROBERT DULTZ
 
Robert Dultz
Chairman, Chief Executive Officer and Acting Chief Financial Officer
Dated: February 11, 2010

 
21