UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               AMENDMENT NO. 2 TO
                                    FORM 8-K


                                 CURRENT REPORT
                     Pursuant to Section 13 OR 15(d) of the
                         Securities Exchange Act of 1934


                                  April 2, 2002
                                 Date of Report
                        (Date of Earliest Event Reported)


                                     USCORP
                               ------------------
             (Exact Name of Registrant as Specified in its Charter)


            Nevada                    000-19061              87-0403330
            ------                    ---------              ----------
 (State or Other Jurisdiction        (Commission       (IRS Federal Employer's
       of Incorporation)             File Number)       Identification Number)


                                    Suite 204
                             4535 West Sahara Avenue
                             Las Vegas, Nevada 89102
                    (Address of Principal Executive Offices)

                                 (702) 933-4034
                         (Registrant's Telephone Number)


                                 Not Applicable
          (Former Name or Former Address, If Changed Since Last Report)


                            TIME FOR FILING REPORT.

     USCorp,  a Nevada  corporation  (the  "Registrant"),  as the  result of the
occurrence  of  certain  extraordinary  events,  is  required  to  file  certain
extraordinary  events on Form 8-K pursuant to Section 13 or Section 15(d) of the
Securities  Exchange Act of 1934 (the "Exchange Act").  However,  the Registrant
was  unable  to timely  file this  report,  or to file a report  indicating  its
incapability  to file this report in a timely  manner,  due to costs  associated
with the preparation of this report and due to the Registrant's  incapability to
gather and assemble the  documents  and exhibits  required to be filed with this
report in the time permitted, until the filing date hereof.

                                       1


                         APPLICATION OF GENERAL RULES.

     This report has been prepared in accordance  with the rules and regulations
in effect as of the date of this report applicable to "small business  issuers,"
as such term is defined under 17 CFR 240.12b-2; the Registrant is preparing this
report in  reliance  on the  applicability  of the  version of this form,  which
expires on March 31, 2003.

                     INFORMATION INCORPORATED BY REFERENCE.

     Any statement  contained in any document,  all or a portion of which may be
incorporated by reference  herein,  shall be deemed to be modified or superseded
for purposes of this report, to the extent that a statement contained herein, or
in any  subsequently  filed  document,  that is also,  or that is  deemed  to be
incorporated by reference,  modifies or supersedes any such statement.  Any such
statement so modified or superseded  shall not be deemed,  except as so modified
or superseded, to constitute a part of this report.

     In addition,  all reports and other documents  filed by the Registrant,  if
any, pursuant to Sections 13(a),  13(c), 14, or 15(d) of the Exchange Act, prior
to the date of this  report,  shall be deemed to be  incorporated  by  reference
herein and to be a part hereof from the filing date of this report.

     Moreover,   the  Registrant  further  incorporates  consents  contained  in
previously  filed  reports  or  statements,  to the  extent  that  the  use  and
applicability of such consent or consents are permitted by 17 CFR 230.439.

         INFORMATION UNKNOWN OR NOT REASONABLY AVAILABLE TO REGISTRANT;
                             DISCLAIMER OF CONTROL.

     This report  contains  summaries  of material  terms of certain  documents,
which the Registrant believes to be accurate;  however, reference is made to the
actual  documents,  copies of which may be  attached  hereto or  contained  in a
schedule or exhibit  hereto and made a part hereof by  reference  thereto.  Such
summaries are qualified in their entirety by reference to any such documents.

     Similarly,  the Registrant has relied on information that it believes to be
accurate  and that was  reasonably  available  to it. The  Commission  should be
informed that certain information contained in this report may be unknown to the
Registrant or that such certain information was not reasonably  available to the
Registrant without considerable effort or undue expense by the it to obtain such
information,  or, because such information rests peculiarly within the knowledge
of another person not directly  affiliated with the Registrant.  To that extent,
the  Registrant  disclaims the  existence of control and any admission  thereof;
however,  the  Registrant  believes that it has stated all of the material facts
necessary  for the  Commission  to make an informed  decision  pertinent  to the
possible existence of control.

                                        2


                                Table of Contents

Description of Item                                               Page Number
-------------------                                               -----------
Time for Filing Report                                                2
Application of General Rules                                          2
Information Incorporated by Reference                                 2
Information Unknown or Not Reasonably Available to Registrant;
 Disclaimer of Control                                                2

Table of Contents                                                     3

Item 1.  Changes in Control of Registrant                             4

Item 2.  Acqusition or Disposition of Assets                          8

Item 5.  Other Events and Regulation FD Disclosure                   29

Item 7.  Financial Statements and Exhibits                           51

Exhibit Index                                                        54

















                                       3



ITEM 1.  CHANGES IN CONTROL OF REGISTRANT.

     As the result of the principal and resultant  extraordinary events reported
to the  Commission  in this  report,  the  senior  executive  management  of the
Registrant  has  determined  that a change  in  control  of the  Registrant  has
occurred of even date on the effect of the  transaction  discussed  in this item
first.

A.   Persons(s) Acquiring Control; Resultant Percentage of Ownership.

     On or about April 2, 2002, the Registrant acquired USMetals, Inc., a Nevada
corporation  ("USMetals"),  which, by virtue of the satisfactory conclusion to a
share exchange transaction,  became a wholly owned subsidiary of the Registrant.
That certain share exchange  transaction was entered into between the Registrant
and the holders of USMetals' common voting equity  securities on March 14, 2002.
(The exchange of the  Registrant's  and  USMetals'  securities,  the  prevailing
transaction, and the resultant effects to the Registrant as the direct result of
the share exchange transaction are more fully described hereinbelow. The details
regarding  USMetals' formation and organization,  plan of operations,  business,
and properties are more fully described in Item 2 hereof.)

     Consequently,  two predominant  stockholders  of USMetals became  principal
stockholders  of the  Registrant.  The table  below  sets  forth the name of the
principal  holders of greater than 10% (ten per cent) of the Registrant's  total
authorized issued and outstanding  Common Stock, which is correct as of the date
of this report.  (All  percentages have been rounded off to the nearest tenth of
one percent.)



                                   Percentage of Shares as                     Total Number of
                                      the Result of the     Shares Subject to  Shares Held in
Name of Principal Stockholder(s)         Acquisition           Options (1)       Registrant
-------------------------------    -----------------------  -----------------  ----------------
                                                                      
 Robert Dultz (2)                           78.0%               650,000          19,997,000

 U. S. Metals and Minerals, Inc.            10.5%                  -              2,700,000


--------------
     (1)  Information  on the  Registrant's  newly  adopted 2002  Directors  and
Officers Stock Option Plan is more fully described in Item 5 of this report.

     (2) The majority stockholder of the Registrant is Robert Dultz, who, as the
result of the acquisition  (without offsets or inclusions for other  stockholder
activity,   activity  as  the  result  of  certain   relationships  and  related
transactions,  as the  result  of  existing  or  recently-adopted  qualified  or
non-qualified stock options,  or, as the result of increases or decreases due to
the  Registrant's  proposed  limited  offering  under Rule 506 of Regulation D),
directly owns approximately 78.0% of the Registrant's common stock.

                                       4


B.   Basis of Control; Effects upon the Registrant's Stockholders.

     The Registrant's  majority  stockholder now owns approximately 78.0% of the
Registrant's duly authorized,  issued,  and outstanding Common Stock. As long as
he holds a majority of the  Registrant's  total  issued and  outstanding  Common
Stock, he will be able to elect the  Registrant's  entire Board of Directors and
to  remove  any  director,  with or  without  cause,  without  calling a special
meeting.  New and existing  stockholders  of the Registrant  will not be able to
affect the  outcome  of any  stockholder  vote.  As a result,  the  Registrant's
principal  stockholder will control all matters affecting the Registrant and its
wholly-owned  subsidiaries,  including:  (i) the composition of the Registrant's
Board of  Directors  and,  through  it, any  determination  with  respect to the
Registrant's  business  direction and policies,  including the  appointment  and
removal of officers;  (ii) the allocation of business  opportunities that may be
suitable for the  Registrant;  (iii) any  determinations  with respect to future
mergers or other future business combinations; (iv) the Registrant's acquisition
or disposition of assets; (v) the Registrant's  financing  objectives;  (vi) the
payment of dividends on the Registrant's Common Stock; and (vii)  determinations
with respect to the Registrant's tax returns.

     Moreover,  new and existing stockholders of the Registrant will not have an
opportunity  to  evaluate  the  specific  merits  or  risks  of any  prospective
acquisition  initiated  by the  Registrant.  As the  result,  new  and  existing
stockholders  will be dependent on the judgment of the Registrant's  management,
and on the judgment of the Registrant's majority stockholder, in connection with
the selection of the properties or businesses to be acquired or developed. There
can be no assurance  that  determinations  ultimately  made by the  Registrant's
management,  or by  the  Registrant's  majority  stockholder,  will  permit  the
Registrant  to  achieve  its  business  objectives,   to  become  or  to  remain
profitable,   or  to  pay  dividends   (regardless  the   profitability  of  the
Registrant).

     Furthermore,  in the event all of the Registrant's  stockholders,  with the
exception of the majority  stockholder - or control person - were to vote on any
matter,  including  the votes  cast by the other  principal  stockholder  of the
Registrant,   U.S.  Metals  and  Minerals,   Inc.,  all  of  those  stockholders
collectively  would be unable to influence  the vote in favor of or opposing any
matter  contrary  to  the  desires  and  resulting  influence  of  the  majority
stockholder.

C.   Description of Transaction That Resulted in Change of Control.

     On March 14, 2002, the Registrant  tendered an offer to the shareholders of
USMetals,  Inc.  (USMetals);  whereby, the Registrant exchanged one share of the
Registrant's  common  stock for one share of  USMetals'  common  stock,  both of
which,  respectively,  were issued and outstanding as of the closing date of the
transaction.  The  transaction  was  exempt  from the  Securities  and  Exchange
Commission's reporting and compliance  requirements under and in accordance with
Regulation  T-O and  Regulation  M-A,  as the target  company  (USMetals)  was a
privately  held  corporation  organized  under  NRS  (Nevada  Revised  Statutes)
78A.020.

                                       5


     That certain share exchange  agreement  provided for an exchange of one (1)
share of the  Registrant's  common  stock  for each one (1)  share of  USMetals'
common  stock.  As the result of this  transaction,  the  control  parties,  and
certain  other  principal  stockholders,  of USMetals  succeeded to becoming the
control parties and principal stockholders of the Registrant.

D.   Consideration Offered by Acquired Control Parties.

     The  consideration  offered by the  Registrant  to the holders of USMetals'
common stock was limited to the value of the shares of the  Registrant's  common
stock (and for such  other  implied  valuable  non-cash  consideration  which is
recognizable by law to validate and enforce the terms and provisions of any like
agreement).

E.   Identity of Former Control Person(s).

     Immediately  prior to the  acquisition of USMetals by the  Registrant,  the
stock transfer ledger of USMetals indicated that 24,200,000 shares of its common
stock were issued and outstanding.

     The table below sets forth the names of each individual or entity that were
deemed to have been former control persons of USMetals,  and the amount of stock
held by them in USMetals, immediately prior to the acquisition by the Registrant
thereof.  (All  percentages  have been  rounded off to the nearest  tenth of one
percent.)
                                              Amount and          Percent of
                    Name and Address          Nature of          Class Before
 Title of Class    of Beneficial Owner   Beneficial Ownership     Acquisition
 --------------    -------------------   --------------------    -------------
 Common               Robert Dultz            19,347,000            79.9%
                                         Direct Beneficial Owner


F. Information Required by Item 403(c) of Regulation S-K.

     1)  Security Ownership of Certain Beneficial Owners.

         The  following  table  sets  forth the  security  ownership  of certain
beneficial  owners of the Registrant as of May 27, 2002. (All  percentages  have
been rounded off to the nearest tenth of one percent.)

                                                    Amount and
   Title        Name and Address                    Nature of           Percent
  of Class      of Beneficial Owner            Beneficial Ownership    of Class
  --------      -------------------            --------------------    --------
  Common        Robert Dultz                        19,997,000            78.0%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

  Common        U. S. Metals and Minerals, Inc.      2,700,000            10.5%
                4706 North Thirty-first Drive   Direct Beneficial Owner
                Phoenix, Arizona  85017

                                       6


     2)  Security Ownership of Management.

         The following table sets forth the security  ownership of management as
of May 27, 2002. (All  percentages have been rounded off to the nearest tenth of
one percent,  except for those persons or entities whose  shareholdings are less
than one  percent,  in which  case,  such  shareholdings  are rounded off to the
nearest one one-hundredth of one percent.)
                                                   Amount and
   Title        Name and Address                    Nature of           Percent
  of Class      of Beneficial Owner            Beneficial Ownership    of Class
  --------      -------------------            --------------------    --------
    Common      Robert Dultz                         19,997,000           78.0%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Larry Dietz
                c/o USCorp                               51,000           0.20%
                Suite 204                      Direct Beneficial Owner
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Spencer Eubank                          230,750           0.90%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Carl O'Baugh                             50,250           0.20%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Don Brown                                50,000           0.20%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Tom Owens                                10,000           0.04%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common      Michael Love                             50,000           0.20%
                c/o USCorp                     Direct Beneficial Owner
                Suite 204
                4535 West Sahara Avenue
                Las Vegas, Nevada  89102

    Common    Officers, as a group                   20,329,000          79.36%
    Common    Directors, as a group                  20,329,000          79.36%
    Common    Officers, as proposed to be a group    20,429,000          79.75%
    Common    Directors, as proposed to be a group   20,339,000          79.40%

                                       7


     3)  Change in Control.

         As of the date of this report,  the Registrant  does not anticipate the
occurrence of any event that would compel a change in control of the Registrant.
However,  if  Robert  Dultz  was to  make an  assignment  of his  shares  in the
Registrant, a change in control of the Registrant would likely occur.

         To the best of the Registrant's  knowledge, no principal stockholder or
control person has pledged,  hypothecated, or in any way encumbered any of their
shares,  the failure of performance of which would result in a change in control
of the Registrant.

         No loans or other forms of evidences of  indebtedness  were utilized by
any party in order to perform and consummate the acquisition  described  herein.
Moreover,  no securities of the Registrant were  hypothecated in the performance
of the acquisition described in this report.

     4) No person disclosed in any of the tables set forth  hereinabove or named
in this section of this report is subject to  disqualification by the provisions
of Rule 230.263(b).


ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.

     The Registrant,  as the result of a special meeting of its stockholders and
directors on March 14, 2002, adopted certain resolutions that directly relate to
the  Registrant's  existing  and  proposed  business  operations;   namely,  the
Registrant is engaging in the mining of precious  metals  business,  through its
acquisition of USMetals (as more fully described in Item 1 hereinabove),  in the
oil and gas and oil and gas royalty speculation businesses,  and to pursue other
acquisitions   that  will   complement  the   Registrant's   existing   business
opportunities.

     For this reason,  the Registrant will describe each segment of its existing
and proposed businesses and plan of operations by segment hereinbelow.

A.   USMETALS, INC.

     The consummation of the share exchange transaction described in this report
has resulted in the acquisition by the Registrant of a wholly-owned  subsidiary,
USMetals, Inc., a Nevada corporation, of which the assets and limited operations
of  said  subsidiary  will  comprise  10%  (ten  per  cent)  or  greater  of the
Registrant's current business and assets as of the date of this report.

1)       The Transaction.

         On or about April 2, 2002, the Registrant  acquired  USMetals,  Inc., a
Nevada corporation ("USMetals"), which, by virtue of the satisfactory conclusion
to a share  exchange  transaction,  became  a  wholly  owned  subsidiary  of the
Registrant. That certain share exchange transaction was entered into between the
Registrant and the holders of USMetals' common voting equity securities on March
14, 2002. The Registrant  exchanged one share of the  Registrant's  common stock
for one share of USMetals' common stock.

                                       8


         a)   Consideration for the Transaction.

              The  consideration  offered by the  Registrant  to the  holders of
USMetals'  common  stock  was  limited  to  the  value  of  the  shares  of  the
Registrant's  common  stock  (and  for  such  other  implied  valuable  non-cash
consideration which is recognizable by law to validate and enforce the terms and
provisions of any like agreement).

         b)   Principles of Valuation.

              No  traditional  principles  of  valuation  were  applied  to  the
determination  of the share purchase  and/or  exchange  price for USMetals.  The
valuation of the  transaction is limited solely to the  explanation  provided as
the consideration for the transaction in the above paragraph.

     2)  The Target Company and Its Shareholders.

         USMetals,  Inc.  (USMetals) was formed and organized  under the laws of
the State of Nevada on May 5, 2000 as "Deco Tek,  Inc." The original  purpose of
USMetals  was to engage in the  business of general  contracting,  interior  and
exterior design, and landscaping. Thereafter, on March 14, 2002, USMetals' Board
of  Directors  changed the name to  "USMetals,  Inc." and  restated its business
purpose  as that of  intending  to  engage  in the  business  of  acquiring  and
developing mineral properties, exploring for gold, silver, and other non-ferrous
metals and  minerals  within the  contiguous  United  States.  It is the further
intention of USMetals to mine and to process any  commercially  proven resources
developed at its properties.

     3)  Certain Relationships and Related Transactions.

         The Registrant discloses the following information  relative  to Robert
Dultz, Larry Dietz, Spencer Eubank, Carl O'Baugh, Donald Brown, and U. S. Metals
and Minerals, Inc. In addition, as the result of Mr. Brown's nomination to serve
as a member of the  Registrant's  board,  the  Registrant is disclosing  certain
relationships  between USMetals,  the Registrant,  and International  Energy and
Resources, Inc.

         a)   Related Party Transactions.

              International Energy and Resources, Inc.  ("IERI"). IERI's  former
President,  Donald E. Brown,  resigned  from that firm on April 2, 2002,  and is
designated to serve as a proposed director of the Registrant. Mr. Brown's former
company was  responsible  for  preparing  the  majority of the  exploratory  and
development  work related to the Mining Claims.  Mr. Brown's company received in
excess of $60,000 for work  performed on the Mining  Claims  during his previous
association with his Company.

         b)   Conflicts of Interest.

              Insofar  as the  officers  and  directors  are  engaged  in  other
business  activities,  management  anticipates they will not devote full time to
the  Registrant's  affairs.  The officers and directors of the Registrant may in
the future become stockholders, officers, or directors of other companies, which


                                       9


may be formed for the  purpose of engaging  in  business  activities  similar to
those  conducted by the  Registrant.  The  Registrant  does not currently have a
right of first refusal  pertaining to  opportunities  that come to  management's
attention insofar as such opportunities may relate to the Registrant's  proposed
business operations.

              The  officers and  directors  are, so long as they are officers or
directors of the Registrant,  subject to the restriction that all  opportunities
contemplated  by  the  Registrant's  plan  of  operation  which  come  to  their
attention,  either in the  performance  of their duties or in any other  manner,
will be considered opportunities of, and be made available to the Registrant and
the companies that they are affiliated  with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
Unless otherwise provided in the next paragraph,  if a situation arises in which
more than one company  desires to merge with or acquire that target  company and
the  principals  of the proposed  target  company have no preference as to which
company will merge or acquire such target  company,  the Registrant of which the
President  first became an officer and director will be entitled to proceed with
the  transaction.  Except as set forth above, the Registrant has not adopted any
other conflict of interest policy with respect to such transactions.

         c)   Certain Relationships.

              Robert Dultz, the Registrant's Chairman,  Chief Executive Officer,
and  Principal  Stockholder,  and the  President of USMetals,  the  Registrant's
wholly owned subsidiary as the result of the transaction discussed  hereinabove,
has been involved with  USMetals'  properties by and through his  association in
several  previous  ventures  over the past 28 years.  Mr.  Dultz (or each of his
representative designees) has contributed significant amounts of capital and has
provided significant funds to develop USMetals' mining properties throughout his
term of  association  with the  properties.  It has been Mr.  Dultz's  principal
effort to develop the  properties,  through the course of his  association  with
them in previous  ventures,  in a manner that would provide value to the holders
of any voting or non-voting  equity securities held by them in the Registrant in
developing  USMetals'  properties and assets. In most every instance,  Mr. Dultz
has foregone  payment for his  services in his  respective  capacities  with the
previous  companies,  in order to permit  the  development  of those  companies'
objectives,  which,  in almost  every case,  was the  development  of  USMetals'
principal mining properties.

              Larry Dietz, the Registrant's  President and a Director,  has been
involved  with  USMetals'   principal  mining  properties  by  and  through  his
association  with the claims in several  previous  ventures  over several  years
prior to the date of this report.

              Carl O'Baugh, the Registrant's  Vice-President and a Director, has
been  involved with  USMetals'  principal  mining  properties by and through his
association  with the claims in several  previous  ventures  over several  years
prior to the date of this report.

              Spencer  Eubank,  the  Registrant's  Secretary,  Treasurer,  and a
Director,  has been involved with USMetals'  principal mining  properties by and
through his association  with said properties in several previous  ventures.  In
addition,  Mr. Eubank held evidentiary  title to a portion of said properties in
1996 and 1997,  prior to the transfer or  assignment  of the mining  claims to a
prior owner.

                                       10


     4) Source of Funds Related to Acquisition.

         No loans or other forms of evidences of  indebtedness  were utilized by
any party in order to perform and consummate the acquisition  described  herein.
Moreover,  no securities of the Registrant were  hypothecated in the performance
of the acquisition described in this report.

     5) Properties of USMetals.

          The principal  mining  properties  and assets of USMetals (the "Mining
Claims") are located in West-Central  Arizona,  in the Eureka Mining District of
Yavapai County, Arizona,  approximately 5 miles southeast of the town of Bagdad,
population  1,800.  Within the  boundaries  of  USMetals'  Mining  Claims,  more
commonly  referred to as the "Twin Peaks  Mine," are the  historic  sites of the
Crosby, Hayes and Glory Hole Mines, past producers of gold and silver.

         The airport at Bagdad is 42 miles west by air from Prescott, the county
seat, but by road the distance is 68 miles.

         The Bagdad area is geographically  located in the southwestern division
of the Eureka Mining  District,  and includes most of the significant  mines and
prospects of that  district.  The  exceptions are the tungsten mines in the Camp
Wood area, to the  northeast,  the existing  historic gold mines and  prospects,
which abut USMetals'  property to the southeast along the Santa Maria River, and
tungsten,  copper, and zinc mines to the south and southeast from Bagdad. Bagdad
has a long  history  of  mining  activities  and  offers  mining  companies  and
prospectors experienced labor, affordable housing,  equipment repair, and mining
services.

         An excellent road, Highway 96, connects Bagdad with Hillside,  26 miles
to the southeast.  The nearest railroad spur is located to the east in Hillside.
The  Crosby  area of the  claims  group is  reached by dirt road that runs north
westward  from  Highway 96 from a point about 400 yards north of the Santa Maria
River. The distance from Highway 96 to the Crosby area is approximately 2 miles.
The Hayes area of the claims  group is reached by a good dirt road that  follows
the Santa Maria River in a southwestern  direction from Highway 96. This road is
just  south of where the  Highway  crosses  the  river.  About 4 miles  from the
Highway, a jeep trail runs northwest approximately one mile to the area.

         The Santa Maria River  traverses  the Mining Claims and USMetals is the
only company  that holds water  rights to that section of the river,  a valuable
asset for a mining company in this arid country.

         a)   Location of USMetals' Properties.

              The full and complete  list of USMetals'  claims (all of USMetals'
Mining  Claims are located  within  Township 13 North,  Range 8 West, in Yavapai
County,  Arizona) is contained in Schedule 4.10 of Exhibit 2.1,  Share  Exchange
Agreement dated March 14, 2002, filed with the Form 8-K on June 13, 2002, and is
incorporated herein by this reference.


                                       11


         b)   USMetals' Water Rights.

              USMetals  presently owns the water rights that will be required in
order to be able to conduct  mining  operations at USMetals'  claims.  The water
rights to  Sections  3, 4, 7, 8, 9, 10, 16, 17, 18, 20, and 21, all of which are
located in Township 13 North,  Range 8 West, in Yavapai  County,  Arizona,  were
transferred  from the prior  owner to  USMetals,  Inc.  on March 27,  2002,  and
recorded in Book 3912, Page 897 of the Yavapai County Recorder.

         c)   Limitation on Ownership.

              All of USMetals' mining  properties are unpatented  mining claims;
consequently,   USMetals  has  only  possessory   title  with  respect  to  such
properties.  The claims set forth  hereinabove were duly transferred by official
deed from the prior owner to  USMetals,  Inc. on March 22, 2002 and  recorded in
Book 3912, Page 896 of the Yavapai County Recorder's Office on March 27, 2002.

              Moreover,  the real  property  upon  which  USMetals'  claims  are
located, is subject to a paramount lien by the United States of America;  all of
USMetals'  claims are subject to the  applicable  rules and  regulations  of the
United  States  Department  of the Interior,  Bureau of Land  Management,  which
administers USMetals' use and activities on said Mining Claims.

              USMetals  has paid all of the  required  fees in order to maintain
the 141 Mining Claims,  which USMetals owns, for the current periods. All of the
necessary  documents  and  affidavits  have been filed with the  Yavapai  County
Recorder, as was mentioned hereinabove.

     6) Former Use of Assets Prior to Acquisition.

         Early  Exploration  Conducted and  Valuations  Determined by California
Core  Drilling  Company.  Beginning  in 1981,  R. W.  Barnes,  a  geologist  for
California Core Drilling  Company,  performed certain  exploratory  drillings in
order to obtain samples of the contents from the Crosby Mine Site No. 6, located
in  Township  13 North,  Range 8 West,  Section  4 in  Yavapai  County,  Arizona
(included in USMetals' Twin Peaks Mine grouping).  (The  Commission  should note
that at the time these studies were conducted, some mining extraction, recovery,
sampling,  milling,  and refining techniques available now were not available at
that time;  however,  the results of the samplings  fully affirm the presence of
significant deposits on USMetals' properties.)

         Mr.  Barnes  drilled 28 core drill holes on the Crosby  Mine site.  His
report was based on 200-foot depth cores.  (As per operator lease footage 50'W x
50'L x 200' Depth.) This area was 18,519 cubic yards,  or  approximately  20,000
tons of ore reserve. The total area that was drilled was 1,500' x 600' x 200'. A
total of 744 core samples were taken from the 6,000-foot of core hole drillings.
The samples were assayed for gold and silver.

         The  results - then - were .14 ounces of  gold per ton and .595  ounces
of silver per ton. Moreover, this ground value was before processing.

         The core samples also revealed  quartz  monzonite  porphyry  formations
throughout the area of sampling. (The gold is held in the pegmatites,  mica, and
quartz veins, and also in mineralized fractures forming the stock.)

                                       12


         The many faults located in this area were of considerable importance in
controlling supergene enrichment;  the largest quantity and highest grade of ore
occurs when these faults intersect or are closely spaced.  There was significant
evidence of this enrichment recorded from the samples taken from the Crosby Mine
site area.  And, the gold and silver that was found is natural to the formations
of the enrichment zone.

         In Mr. Barnes' report,  his qualified and  professional  conclusion was
that the  sampling  area at the Crosby Mine site (which  consisted  of 1,800,000
tons)  contained  252,000  ounces of gold and 1,260,000  ounces of silver in the
form of proven  reserves.  Mr.  Barnes  certified  these figures as total ground
production values.

         Subject to the Registrant's reservation of its reserves (in its defense
of  certain  statements  made by its  wholly-owned  subsidiary,  USMetals)  (and
certain  disclaimers that are set forth in the section entitled  "Important Note
About Reserves"  contained herein below), at the average New York Spot Prices of
gold and silver as at April 30, 2002, respectively,  the proven reserves of gold
would be worth  $77,716,800  and the proven  reserves  of silver  would be worth
$5,733,000.  Of course,  these  figures  reflect the recovery of the then proven
reserves at only the Crosby Mine site;  further  reports by other  professionals
that follow this section rely on broader  samplings and more  detailed  analysis
from a number of different sites throughout USMetals' Mining Claims.

         Even this early report  demonstrates  reasonable  evidence of USMetals'
decision to explore, develop, and mine its properties.

         a)   Recent  Exploration  and  Samplings by  International  Energy  and
Resources, Inc.

              Through  extensive recent geological  surveys,  the Registrant and
USMetals are gratified by the results of such surveys  provided by International
Energy and Resources, Inc., one of USMetals' principal advisors.

              It was  determined  that  the  Twin  Peaks  Mine  is on  the  same
structure  and flat zone as the  Phelps-Dodge  Cypress  deposit.  The claims and
previous   producing   mines  are  on  the  Jasper  Peak,   with  gold  carrying
mineralization in the Jasperoid.

              To the  date of the  report  (circa  2001),  numerous  geological,
geochemical,  and  geophysical  studies  were  conducted  in  order  to  confirm
historical assays and to establish estimated reserves at USMetals' properties.

              IERI reported,  "over 10,000 feet of core drillings were performed
and over  1,500 fire  assays  were  conducted.  These  assays  showed an overall
average of .14 ounces of gold per ton and .595 ounces of silver per ton,  which,
at today's mining  capability,  proves over 652,000 ounces of gold and 2,488,000
ounces of silver in reserve  using only 1 area of 3 claims.  The  dimensions  of
this area were 300'W x 500'L x 100'D. At today's prices,  this study  represents
over $191,000,000.  If we were to have extended the depth to 400 feet, the total
amount of gold and silver would  increase four times giving a total of 2,608,000
ounces of gold and  9,952,000  ounces of silver.  (It should be noted that early
miners tunneled to a depth of 400 feet and the drilling  results verified ore at


                                       13


this  depth.)  If we were to have  extended  the same  areas to a depth of 2,000
feet,  which is the depth of the  Phelps-Dodge  Mine in Bagdad,  the increase in
estimated  reserves would be 13,040,000  ounces of gold and 49,760,000 ounces of
silver.  (Once again, the Commission should read the section entitled "Important
Note about Reserves"  contained  herein below for the  Registrant's  position on
proven or estimated reserves on its Mining Claims.)

              The  geological,  geophysical,  and  geochemical  studies   stated
above were  reviewed and  evaluated  by Nicholas H.  Carouso,  the  President of
Geo-Processing,  Inc., which was an independent mining, consulting, and geologic
firm.  Mr.  Carouso was engaged to evaluate the  commercial  feasibility  of the
claims.  Mr. Carouso's report and economic study recommended the continuation of
exploration and the start of production."

              In January 2001,  International  Energy and Resources,  Inc. hired
Spooner &  Associates,  Inc.  to conduct  further,  more  extensive,  geological
studies on USMetals'  properties.  After Scott Spooner,  the Senior Geologist of
the  firm,  and  CAD  Drawing  Survey  Specialist  Eric  C.  Monk  reviewed  the
abovementioned  geological  studies,  they visited the Twin Peaks Mine. In March
2002, upon the recommendation of Spooner & Associates,  International Energy and
Resources  mobilized  a crew to  build  approximately  10  miles of road to gain
access to the historic  Hayes Mining area.  This would enable  Spooner's firm to
conduct further, more conclusive and substantiating, geological studies.

              The results,  conclusions,  and estimates of Spooner & Associates,
Hillbrands and Western Mining Company,  and  International  Energy and Resources
are as follows.

              They drilled approximately 30 holes that each measured 100 feet in
depth for a total of 3,000  feet of  drilling  cuttings.  Spooner  &  Associates
retained  over 200  samples  for  assaying.  In  conjunction  with the  drilling
operation,  Spooner & Associates  also took  numerous rock chip samples from two
different locations surrounding the historic Hayes Mine. These samples were also
assayed.  The  result  of the  geological  studies  can  best be  summarized  by
information from the report, as follows:

              "Drill Hole #30.  This drill hole was  subject to a standard  fire
assay as well as  oxidation  prior to  standard  fire  assaying.  This assay and
oxidation  process was  conducted on cuttings  taken at a depth of 40 - 50 feet.
The standard  fire assay  results  revealed  gold values of .2 ounces per ton of
ore, while oxidation followed by fire assaying showed gold values of 1.16 ounces
per ton of ore. This structure is approximately 3,400 feet long by 100 feet wide
by 100 feet deep.

              Our  conclusion  gives us estimated  reserves of 2,014,815 tons of
ore  multiplied  by 1.16 ounces of gold per ton of ore,  which equals  2,337,185
ounces of gold at this site.

              Rock  material  from the hanging  wall and  footwall of the quartz
vein were subject to crushing,  screening,  and fire assaying.  The results from
the  quartz  dike  revealed  an  average  of .57 ounces per ton of ore from fire
assaying and 5.8 times or 3.31 ounces per ton of ore using the oxidation method.
That gives us estimated reserves of 16,694,056 ounces of gold.

                                       14


              Rock chips were taken from the red conglomerate located just south
of the Hayes Mine and just west of the volcanic plug.  The fire assays  revealed
..2 ounces of gold per ton of ore. As stated hereinabove, oxidation prior to fire
assaying  should  increase the gold amount by 5.8 or 1.16 ounces per ton of ore.
This area has ore reserves of 2,395,477 ounces of gold.

              These  three areas give us a combined total of  9,138,687  tons of
ore, which may yield a total of 21,426,718 ounces of gold.

         b) Recommendation on Method of Assaying by Metallurgical Services, Inc.

              In August  2001,  Russell M.  Dugdale,  the  Senior  Metallurgical
Engineer for  Metallurgical  Services,  Inc., in the course of defining an assay
procedure,  recommended to International  Energy and Resources,  Inc. to proceed
with a process  that  requires  the  roasting of the samples  prior to assaying.
Oxidation of the samples,  provided in the roasting process, will remove sulfur,
arsenic,  and halides,  which can interfere with the fire assay procedures.  Mr.
Dugdale  recommended  that all samples should be roasted prior to the fire assay
procedure.

         c)   Supporting Exploratory Reports by Third Parties.

              In 1997, Golden West Mining Services conducted an update report to
confirm the earlier core drills and assays.  Remarkably,  Golden  West's  report
also showed  indications of rare and valuable cores from beryllium to uranium in
significant quantities.

              USMetals senior  executive  management is evaluating the merits of
extracting  these  precious  metals  to  determine  whether  or not it  would be
feasible to conduct all-out operations for recovery;  these metals would need to
be recovered using plasma reactor  processing.  Several  55-gallon  barrels have
been sent to one of the few  facilities  that  recover  metals  using the plasma
reactor process, and, if the results are positive,  the indication of these rare
and precious metals in nominal and feasible amounts could significantly increase
USMetals' reserves' estimates.

         d)   Important Note about Reserves.

              The ore reserve figures  presented  herein are estimates,  and the
Registrant  and USMetals can provide no  assurance  to the  Commission  that the
indicated levels of recovery of gold and silver will be realized. Such estimates
should not be relied upon as being  indicative  of estimates of USMetals'  total
reserves at other gold prices,  nor should the  Commission  deem the gold prices
quoted in this report to be accurate,  unless the Registrant or USMetals  quotes
such figures from identified and reliable sources.

              Changes in the various  assumptions on which the reserve estimates
are based, such as the cutoff grade, may result in increases or decreases in the
reserve estimates from year to year.  Reserve estimates for properties that have
not yet commenced  production may require  revision  based on actual  production
experience.  Also,  sustained market price  fluctuations of gold and silver,  as
well as increased  production  costs or reduced  recovery rates,  may ultimately
result in an adjustment of ore reserves. Moreover, many factors relating to each


                                       15


mine, such as the design of the mine plan,  unexpected  operating and processing
problems, problems with ground stability,  changes in the recovery ratio and the
complexity of the metallurgy of an ore body, may adversely affect production and
operating  costs of a  project.  Neither  reserves  nor  projections  of  future
operations  should  be  interpreted  as  assurances  of  the  economic  life  or
profitability of future operations.

              Exploration  for,  and, if  warranted,  production  of minerals is
highly  speculative and involves greater risks than many other businesses.  Many
exploration  programs do not result in the  discovery of any  minerals  and, any
minerals that may be discovered may not be of sufficient  quantity or quality to
be profitably mined.  Uncertainties as to the  metallurgical  amenability of any
minerals discovered may not warrant the mining of these minerals on the basis of
available technology. Moreover, short-term factors relating to the ore reserves,
such as the need for orderly  development of ore bodies or the processing of new
or different  grades,  may impair the  profitability of a mine in any particular
accounting  period.  Mining  operations  are also  subject  to a number of other
hazards  and  risks  such as  encountering  unusual  or  unexpected  formations,
environmental pollution,  industrial accidents, and rock movements and flooding,
many of which cannot be insured against.

              From time to time,  USMetals may engage in the  development of new
ore bodies.  The  ability of  USMetals to sustain or increase  its level of gold
production is dependent in part on the  successful  development  of such new ore
bodies or the expansion of existing mining operations.  The economic feasibility
of any such development  project, and all such projects  collectively,  is based
on, among other things, estimates of reserves, metallurgical recoveries, capital
and  operating  costs of such  projects  and  future  gold  prices.  Development
projects are also subject to the successful  completion of feasibility  studies,
issuance of necessary permits and receipt of adequate financing.

              Development  projects have no operating history upon which to base
estimates  of  future  cash  operating  costs  and  capital   requirements.   In
particular, estimates of reserves, metal recoveries and cash operating costs are
to a large extent based on the  interpretation  of geologic  data  obtained from
drill holes and other sampling  techniques and feasibility  studies which derive
estimates of cash operating costs based on anticipated tonnage and grades of ore
to be mined and processed,  the configuration of the ore body, expected recovery
rates  of  metals  from  the  ore,  comparable  facility  and  equipment  costs,
anticipated  climate  conditions and other factors.  As a result, it is possible
that actual cash operating costs and economic returns of any and all development
projects may materially differ from the costs and returns initially estimated.

              With regard to  estimates of reserves  processed by standard  fire
assaying,  it is important to note that the lower results from the standard fire
assaying,  where indicated in the respective geologists' and assayers' opinions,
are due to the  presence of sulfides and  arsenides  that tend to drive the gold
and  silver  into the slag phase  during the  standard  fire  assaying  process.
Consequently, it can be assumed that all previous standard fire assays that were
completed would increase 5.8 times through oxidation prior to fire assaying.


                                       16


     7)  Registrant's  Plan of  Operations  Respective to Business and Assets of
USMetals.

         USMetals  intends to submit a Phase I Mining Plan of  Operations to the
Bureau of Land  Management  in 2002.  However,  it first  must  obtain  adequate
financing or receive the portion of proceeds from the Offering  (described  more
fully in Item 5  hereinbelow,  which has been  allocated to USMetals in order to
pay for the cost of such Plan of Operations.

         Based on the  extensive  reports  and studies  conducted  by the mining
team,  it is the present  intention  of USMetals in consort  with  International
Energy and Resources,  Inc. to conduct further drilling to further support these
findings and to determine the best area to commence  production and  operations.
Spooner & Associates are currently designing the mill, which will be constructed
in order to start processing the ore.

         a) Spooner & Associates' Report on Specific Field Work to be Performed.

             Spooner &  Associates,  Inc.  prepared  an  estimate  for  USMetals
relative to the costs  associated  with the preparation of a Mining Notice for a
five acre mining site in Arizona  required by the Bureau of Land  Management  in
accordance with 43 CFR 3809. Additionally, Mr. Spooner made provisions for three
persons involved in this first-stage permitting project, which included himself,
Tom Couste, and Eric C. Monk. Mr. Spooner recommended an initial pilot operation
of 100 tons per day to evaluate the best method of recovery.

              The intended Mining Notice will provide for an area of disturbance
of less than five acres.  Mr. Spooner  recommended that USMetals start with this
area under the  initial  Mining  Notice and then  expand into the formal Plan of
Operations for disturbances  exceeding five acres. This would permit USMetals to
be in production  while in the process of obtaining the necessary Bureau of Land
Management permits and licenses required to conduct full-scale operations.

              The  initial  scope of work is to  submit a Mining  Notice  to the
Bureau of Land  Management  for a  five-acre  mining  pilot  project  in Bagdad,
Arizona.  This involves the  preparation of a separate  mining notice report and
coordination  with  the  Havasu  City,  Arizona  office  of the  Bureau  of Land
Management  and with the State of  Arizona.  In  addition,  air and  groundwater
permit applications will be submitted to the Arizona Department of Environmental
Quality.

              Certain  assumptions  were presumed in preparing these  estimates.
They are: (1) Title V Air Quality Permit: the exact  specification for equipment
is unknown, as is the number of expected tons emissions;  and (2) there may be a
Wetland Delineation or Section 404 permit required to be obtained by USMetals by
the U.S. Army's Corp of Engineers.

                                       17


Task 1 - Bureau of Land Management Notice for Five Acre Site       Cost Estimate
--------------------------------------------------------------------------------
1. Field Inspection of the Mining Site
     a. Collect Field Data Required for Mining Notice
2. Coordination with Bureau of Land Management Phoenix Office and
   State of Arizona
3. Develop Mining Plan
     a. Site Plan and Location Maps
     b. Description of Operation
     c. Process Description
     d. Site geology (Groundwater Area)
     e. Reclamation Plans
4. Submit Mining Notice to Bureau of Land Management
5. CAD Drawings
6. Coordinate Cultural, Threatened, and Endangered Species Surveys
--------------------------------------------------------------------------------
     Cost Estimate, this Task First                                    $6,900.00
--------------------------------------------------------------------------------

Task 2 - Groundwater Protection Permit                             Cost Estimate
--------------------------------------------------------------------------------
1. Prepare and Submit a Groundwater Protection Application
2. Develop BADCT Report and Support Data
3. Coordinate with the Arizona Department of Environmental Quality
4. CAD Drawings
--------------------------------------------------------------------------------
     Cost Estimate, this Task Second                                  $10,500.00
--------------------------------------------------------------------------------

Task 3 - Air Quality Permit for Mining and Furnace                 Cost Estimate
--------------------------------------------------------------------------------
1. Title V Permit Application
2. Prepare and Submit Air Quality Permit Application
3. Develop Supporting Chemical Data
4. Coordination with Arizona Department of Environmental Quality
5. CAD Drawings
--------------------------------------------------------------------------------
     Cost Estimate, this Task Third                                   $26,000.00
--------------------------------------------------------------------------------

Task 4 - Travel                                                    Cost Estimate
--------------------------------------------------------------------------------
1. per diem, $95.00 per day for 10 days for three people
2. Rental Car and Fuel, 10 days at  $90.00  per day
3. Air  fare  for  three  persons
4.  Miscellaneous Expenses, Maps, Field Equipment, etc.
--------------------------------------------------------------------------------
     Cost Estimate, this Task Second                                   $5,750.00
--------------------------------------------------------------------------------
Total Cost Estimate                                                   $49,150.00
================================================================================

                                       18


B.       THE REGISTRANT'S PROPOSED OIL AND GAS OPERATIONS.

     The  Registrant,  by and through a subsidiary to be formed for the business
purpose  hereafter stated (the "Development  Subsidiary"),  intends to engage in
the business of oil and gas exploration and  development  and, also,  intends to
speculate on oil and gas royalties  associated  with oil and gas properties that
the Development Subsidiary will not own or control.

     1)  Development Subsidiary's  Plan  of  Operations  and  Proposed  Business
Strategy.

         The  Development   Subsidiary's  ability  to  develop  and  maintain  a
meaningful  level of revenues  from its  contemplated  oil and gas  exploration,
drilling,  and production operations is dependent on its ability to successfully
drill  exploration  and  development  wells  and  complete   producing  property
acquisitions.

         The Development Subsidiary's exploration efforts will be focused in the
Texas and Louisiana  region.  The Registrant  will target  selected,  negotiated
acquisitions of proved properties.  Presently,  the Registrant does not have any
firm targets, as it will require the immediate expense of capital to develop its
prospects.

         The  Development  Subsidiary's  goal will be to  achieve  and  maintain
profitability  and to create  value for the  Registrant's  stockholders  through
natural gas and oil  exploration  and development and through the acquisition of
proved properties.  The Development Subsidiary's strategy will be to achieve its
goals including:

         a.   Funding exploration prospects developed by talented geoscientists;

         b.   The negotiated acquisitions of proved properties;

         c. Strict  control of general and  administrative  and  geological  and
geophysical costs;

         d. Using creative deal structures to access acreage, seismic, prospects
and capital;

         e. Using  equity  ownership  incentives  to align the  interests of the
Registrant's   management  and  of  its  alliance  partners  with  that  of  the
Registrant's stockholders; and

         f. Investing in other energy industry entrepreneurial opportunities.

         The  Registrant's  principal  focus is on the funding  and  drilling of
exploratory  wells in the  Louisiana  area  and,  beyond  that,  in  Texas.  The
Registrant's strategy, through that of the Development Subsidiary, is to control
overhead  costs by  keeping  employee  levels  low and  outsourcing  geological,
geophysical,  engineering,  land,  and operating  activities  and as much of the
Development Subsidiary's  administrative  activities as possible. In particular,
the  Development   Subsidiary  intends  to  outsource  all  of  the  Development
Subsidiary's natural gas and oil prospect generation and evaluation functions to
its alliance partners.

                                       19


         Natural gas and oil exploration is an exceptionally  high-risk business
that requires significant outlays of capital. The Development  Subsidiary's goal
will be to enhance the Development Subsidiary's chances for success by using 3-D
seismic technology, keeping its cost structure low and managing financial risk.

         In addition to exploration  activities,  the  Development  Subsidiary's
intention  will be to target  negotiated  acquisitions  and  thereby  avoid more
competitive  bidding  situations.   Nonetheless,   the  Development   Subsidiary
anticipates to always face competition from companies that in many instances are
well  established,  successful  and  frequently  may be  willing to pay more for
properties than what the  Development  Subsidiary may consider to be prudent or,
otherwise,  which it may be able to pay for. Thus, the Development  Subsidiary's
success will depend on its ability to quickly identify promising  opportunities,
prioritize  these  opportunities  to focus on situations  where it will have the
most potential for success,  and then negotiate  creative deal structures  that,
whenever possible,  avoid the payment of more up-front cash than competitors are
willing to pay.

Anticipated Competition.

         The  Development  Subsidiary  expects to compete  with a broad range of
natural  gas and oil  companies  in its  exploration  and  property  acquisition
activities.   Many  of  the  Development   Subsidiary's  competitors  will  have
substantially   greater  financial  and  other  resources.   In  addition,   the
Development  Subsidiary's larger competitors may be able to absorb the burden of
changes in Federal,  state and local laws and regulations  more easily than will
be able the Development Subsidiary, which could adversely affect the Development
Subsidiary's   competitive  position.  Many  of  the  Development   Subsidiary's
competitors are also expected to be able to pay more for  exploratory  prospects
and  productive  natural gas and oil  properties  and will be able to  identify,
evaluate, bid for and purchase a greater number of properties and prospects than
the  Development  Subsidiary  may be able to do. In addition,  it is anticipated
that most of the Development  Subsidiary's  competitors will have been operating
for a much longer time than the development  Subsidiary will have been operating
and will be able to demonstrate the ability to operate through  industry cycles.
It is  expected  that the  Development  Subsidiary's  competitors  may also have
greater access to equipment and materials than will the  Development  Subsidiary
(or the Registrant in support of its  subsidiary),  which could adversely affect
the Development Subsidiary's day-to-day operations.

         The Development Subsidiary's ability to explore for natural gas and oil
and to acquire  proved  properties in the future will depend upon its ability to
evaluate  and  select  suitable  prospects  and  properties  and  to  consummate
transactions   in  this  highly   competitive   industry  and  the   surrounding
environment.  It is  expected  that  the  Development  Subsidiary  will  also be
dependent upon the ability of its alliance partner(s), to identify prospects and
secure leases in, what will be then, the current competitive environment.

     2)  Anticipated Government Regulations.

         a) Federal  Regulation  of Sales and  Transportation  of  Natural  Gas.
Historically,  the  transportation  and  sale  for  resale  of  natural  gas  in
interstate commerce have been regulated pursuant to the Natural Gas Act of 1938,


                                       20


the Natural Gas Policy Act of 1978 and the regulations promulgated thereunder by
the Federal Energy Regulatory  Commission.  In the past, the Federal  government
has  regulated the prices at which  natural gas could be sold.  Deregulation  of
natural  gas sales by  producers  began with the  enactment  of the  Natural Gas
Policy Act. In 1989,  Congress  enacted the Natural Gas Wellhead  Decontrol Act,
which removed all remaining Natural Gas Act and Natural Gas Policy Act price and
non-price controls affecting producer sales of natural gas effective in 1993.
Congress could, however, reenact price controls in the future.

              It is expected that the Development  Subsidiary's sales of natural
gas  will  be  affected  by  the  availability,  terms,  and  cost  of  pipeline
transportation. The price and terms for access to pipeline transportation remain
subject to extensive Federal  regulation.  Commencing in April 1992, the Federal
Energy  Regulatory  Commission  issued  Order No.  636 and a series  of  related
orders,   which   required   interstate   pipelines   to   provide   open-access
transportation  on a basis  that is equal for all  natural  gas  suppliers.  The
Federal  Energy  Regulatory  Commission has stated that it intends for Order No.
636 to  foster  increased  competition  within  all  phases of the  natural  gas
industry.  Although  Order No. 636 will not directly  regulate  the  Development
Subsidiary's  production and marketing activities,  it is not expected to affect
how buyers and sellers gain access to the  necessary  transportation  facilities
and how the Development  Subsidiary's  and its competitors will sell natural gas
in the marketplace. The courts have largely affirmed the significant features of
Order  No.  636  and  the  numerous  related  orders  pertaining  to  individual
pipelines,   although  some  appeals  remain  pending  and  the  Federal  Energy
Regulatory  Commission continues to review and modify its regulations  regarding
the transportation of natural gas.

              For  example,  in February  2000,  the Federal  Energy  Regulatory
Commission  concluded  a  broad  review  of its  transportation  regulations  by
revising its regulations in Order No. 637 (and subsequent, related orders), with
the goal of improving competition in the interstate  transportation  markets and
to remove a perceived bias in existing  policies toward  encouraging  short-term
transportation  arrangements.  Order No. 637 eliminates (for a two-year  period)
rate caps in the secondary market for  transportation  arrangements of less than
one year's  duration.  Order No. 637 also requires  pipelines to provide greater
comparability  of service  between  secondary  market sales and pipeline  sales,
requires  pipelines  to  increase  the  rights  and  options  of  transportation
customers,  requires  expanded  reporting  requirements  regarding  (among other
information)  interstate  capacity  and  its  utilization,   and  imposes  other
regulatory  changes. In addition,  Order No. 637 permits,  but does not require,
pipelines  to file new types of rates,  including  differing  rates for peak and
off-peak periods,  term-differentiated rates, and rates established by voluntary
auctions  -  although  the Order does not depart  from  current  policies  as to
cost-based rates for long-term or pipeline-provided transportation services. The
Federal   Energy   Regulatory   Commission   has  also  commenced  a  proceeding
characterized  as a  "discussion"  with the industry on the  potential  for more
fundamental  changes in its  ratemaking  policies,  but has not yet proposed any
specific further changes. The Development Subsidiary will not be able to predict
what action the Federal Energy Regulatory Commission will take on these matters,
nor will the  Development  Subsidiary be able to accurately  predict whether the
Federal  Energy  Regulatory  Commission's  actions  will  achieve  the  goal  of
increasing competition in markets in which the Development  Subsidiary's natural
gas will be sold. However, the Registrant does not believe that any action taken
will affect it in a way that  materially  differs from the way it affects  other
natural gas producers, gatherers and marketers.

                                       21


              Commencing in May 1994, the Federal Energy  Regulatory  Commission
issued a series of orders  that,  among other  matters,  slightly  narrowed  its
statutory tests for establishing gathering status and reaffirmed that, except in
situations  in which the gatherer  acts in concert with an  interstate  pipeline
affiliate to frustrate the Federal Energy Regulatory Commission's transportation
policies,  it does not have  pervasive  jurisdiction  over natural gas gathering
facilities and services and that such  facilities and services  located in state
jurisdictions  are most properly  regulated by state  authorities.  This Federal
Energy Regulatory Commission action may further encourage regulatory scrutiny of
natural gas gathering by state  agencies.  The Registrant  does not believe that
the  Development  Subsidiary  will be affected by the Federal Energy  Regulatory
Commission's  gathering policy any differently than other natural gas producers,
gatherers and marketers.

              Additional proposals and proceedings that might affect the natural
gas  industry  are  pending  before  Congress,  the  Federal  Energy  Regulatory
Commission and the courts.  The natural gas industry  historically has been very
heavily regulated; therefore, the Registrant, through this report, cannot assure
the Commission that the less stringent  regulatory  approach recently pursued by
the Federal Energy Regulatory Commission and Congress will continue.

         b) Federal Leases. The Registrant and the Development Subsidiary in the
future expect to have operations  located on Federal natural gas and oil leases,
which are  administered  by the  Minerals  Management  Service.  Such leases are
issued through competitive  bidding,  contain relatively  standardized terms and
require  compliance with detailed Minerals  Management  Service  regulations and
orders pursuant to other acts, which are subject to interpretation and change by
the  Minerals  Management  Service.  The  Minerals  Management  Service also has
regulations  restricting  the flaring or venting of natural gas and has proposed
to amend such regulations to prohibit the flaring of liquid hydrocarbons and oil
without prior  authorization.  Similarly,  the Minerals  Management  Service has
promulgated  other  regulations  governing the plugging and abandonment of wells
and the  installation  and removal of all  production  facilities.  To cover the
various  obligations  of lessees,  the  Minerals  Management  Service  generally
requires  that  lessees  have  substantial  net  worth  or post  bonds  or other
acceptable assurances that such obligations will be met. The cost of these bonds
or other  surety  can be  substantial,  and the  Registrant  cannot  assure  the
Commission that it will be able to obtain bonds or other surety in all cases.

              In  March  2000,  the  Minerals  Management  Service  amended  its
regulations  governing the  calculation  of royalties and the valuation of crude
oil produced from Federal  leases.  This rule modifies the valuation  procedures
for both arm's length and non-arm's  length crude oil  transactions  to decrease
reliance  on oil  posted  prices  and  assigns a value to crude oil that  better
reflects its market value.  The Registrant  cannot  predict how this  regulation
will affect it.

         c)  State  and  Local  Regulation  of  Drilling  and  Production.   The
Registrant  expects  that  the  Development  Subsidiary  will own  interests  in
properties  located in Texas and Louisiana.  These states regulate  drilling and
operating  activities by requiring,  among other  things,  drilling  permits and
bonds and reports concerning operations.  The laws of these states also govern a
number of  environmental  and conservation  matters,  including the handling and


                                       22


disposing  of waste  materials,  unitization  and pooling of natural gas and oil
properties and establishment of maximum rates of production from natural gas and
oil wells.  Some states prorate  production to the market demand for natural gas
and oil.

              Oil Price  Controls  and  Transportation  Rates.  The  Development
Subsidiary's anticipated sales of crude oil, condensate, and natural gas liquids
are not currently  regulated and are made at market  prices.  This situation may
change by the time, if at any time, the Registrant or the Development Subsidiary
begins to sell crude oil, condensate,  and/or natural gas liquids.  Effective as
of  January  1, 1995,  the  Federal  Energy  Regulatory  Commission  implemented
regulations  establishing  an indexing system for  transportation  rates for oil
that could increase the cost of transporting oil to the purchaser. In July 2000,
the Federal  Energy  Regulatory  Commission  commenced a proceeding to determine
whether to change the index,  but  initially  proposing  to retain the  existing
index.  Other factors being equal, the indexing system,  and any orders amending
the index, may tend to increase  transportation  costs or reduce wellhead prices
for crude oil.  However,  the Registrant does not believe that these regulations
affect it any  differently  than other  natural gas  producers,  gatherers,  and
marketers.

         d)   Environmental Regulations.

              The anticipated  operations by the  Development  Subsidiary (or by
the Registrant through its subsidiary(ies)) will be subject to numerous laws and
regulations  governing  the  discharge  of  materials  into the  environment  or
otherwise  relating  to  environmental   protection.   Public  interest  in  the
protection  of the  environment  has  increased  dramatically  in recent  years.
Offshore drilling in some areas has been opposed by environmental groups and, in
some areas, has been restricted or eliminated. To the extent laws are enacted or
other governmental action is taken that prohibits or restricts offshore drilling
or imposes environmental  protection requirements that result in increased costs
to the natural gas and oil  industry in general,  the  Development  Subsidiary's
anticipated business and activities could be adversely affected.

              The  Comprehensive  Environmental  Response,   Compensation,   and
Liability Act, also known as the "Superfund"  law,  imposes  liability,  without
regard to fault or the  legality of the  original  conduct,  on some  classes of
persons that are  considered to have  contributed  to the release of a hazardous
substance into the  environment.  These persons include the owner or operator of
the  disposal  site or sites  where the  release  occurred  and  companies  that
disposed or arranged for the disposal of the hazardous  substances  found at the
site.  Persons who are or were responsible for releases of hazardous  substances
under the  Superfund  law may be subject to joint and several  liability for the
costs of cleaning up the hazardous  substances  that have been released into the
environment  and for damages to natural  resources,  and it is not  uncommon for
neighboring  landowners  and other  third  parties to file  claims for  personal
injury and property damage allegedly caused by the hazardous substances released
into the environment.


                                       23


              The  contemplated  operations of the  Development  Subsidiary will
also be subject to  regulation  of air  emissions  under the Clean Air Act,  and
comparable state and local requirements. Implementation of these laws could lead
to the gradual  imposition  of new air  pollution  control  requirements  on the
Development  Subsidiary's  future operations.  Therefore,  the Registrant or the
Development  Subsidiary may incur capital  expenditures in the future to upgrade
air  pollution  control  equipment.  The  Registrant  does not believe  that its
operations would be materially  affected by any such requirements,  nor does the
Registrant  expect such  requirements  to be any more  burdensome  to us than to
other  companies  involved in natural  gas and oil  exploration  and  production
activities.

              In addition,  legislation  has been proposed in Congress from time
to  time  that  would  reclassify  some  natural  gas and  oil  exploration  and
production wastes as hazardous wastes,  which would make the reclassified wastes
subject to much more stringent handling, disposal and clean-up requirements.  If
Congress  were to enact this  legislation,  it could  increase  the  Development
Subsidiary's  operating  costs,  as well as  those  of the  natural  gas and oil
industry in general. Initiatives to further regulate the disposal of natural gas
and oil wastes are also pending in some states,  and these  various  initiatives
could  have a  similar  impact on the  Development  Subsidiary.  The  Registrant
believes  that it will be able to  substantially  comply  with all  current  and
future applicable environmental laws and regulations.

              In accordance with industry  practice,  the Registrant  intends to
maintain  insurance  against  some,  but not all,  potential  risks and  losses.
Presently,  because  the  Registrant  does  not  actively  conduct  oil  or  gas
operations, it does not carry business interruption insurance for this industry.
In the future, should the Registrant, through its Development Subsidiary, engage
in oil and gas  exploration  and  development,  in the case of some  risks,  the
Registrant or the Development  Subsidiary may not be able to obtain insurance if
the cost of available insurance is excessive relative to the risks presented. In
addition,  pollution and environmental  risks generally are not fully insurable.
If a  significant  accident  or other event  occurs and is not fully  covered by
insurance,  it could adversely affect the Development  Subsidiary and, possibly,
the Registrant.

     3)  Acquisitions   of  Prospective  Oil  and  Gas  Properties;   Operations
Alliances.

         The Registrant intends that a proposed "Development Subsidiary" will be
an independent natural energy provider and distributor which explores, develops,
drills,  and  produces,  including  wholesale  and  retail  sales  of  oil  (and
petroleum-related  products  and  byproducts)  and  gas,  in  selected  domestic
markets.

         The Registrant, by and through the Development Subsidiary, will seek to
pursue acquisition  opportunities in the rapidly changing global energy markets,
with the Development  Subsidiary  focusing on the operating  segments of oil and
gas  exploration  and  development,  by  seeking to make  significant  financial
investments  in  these  industries  using a  portion  of the  proceeds  from the
Offering (See Item 5. describing the Registrant's  limited offering  pursuant to
Rule 506 of Regulation D).

                                       24


         In general,  the Registrant expects to gather assets in the Development
Subsidiary that will support both long-term growth and near-term  earnings.  The
Registrant  seeks to  balance  risk,  return,  timing of cash  flow,  and growth
objectives  by  creating  a  complementary  blend  of  operating  assets  in the
Development Subsidiary.  The Registrant is hopeful that Development Subsidiary's
assets  generate  cash flow and earnings in the near term,  while  operating and
administrative  investments  generally  have a longer time to develop and mature
before  achieving  expected  cash  flow  and  earnings.  Also,  the  Development
Subsidiary's  passive lower-risk assets,  such as its proposed plan to engage in
royalty speculation from proven oil or gas reserves, serve to balance the higher
risk  associated  with operating  assets such as field oil and gas  exploration,
drilling, and production activities.

         Deregulation and new technologies that are available (and will continue
to improve) for exploration and development,  as well as growth in the demand in
the United  States (as the direct  result of  changing  political  climates  and
increased  usage created by a bettering  economy),  will provide the opportunity
for the  Registrant  to  advance in the  implementation  and  development  of it
operations.  The development  Subsidiary,  once organized,  will concentrate its
acquisition activities in markets where it believes most of the best exploration
and  development  opportunities  will  be in the  next  five  years.  All of the
Development  Subsidiary's  contemplated  acquisitions  will have an  established
presence  in their  respective  markets in order to access  and better  evaluate
potential investment opportunities.

         When assessing acquisition  opportunities,  the Registrant (through its
proposed  Development  Subsidiary)  will  identify oil and gas  properties  that
demonstrate a need for executive, administrative, and operations infrastructure,
including  prospects for  incremental  growth that the Registrant  believes will
withstand potential  short-term economic and capital turbulence.  The Registrant
expects that much of its new  acquisition  activity will be in domestic  markets
due to the current and anticipated growth in required oil and gas consumption in
the regions in which it anticipates it will maintain a presence.

         Generally, the Registrant will seek to minimize risk in its acquisition
projects by selecting alliance operatives with complementary skills, structuring
long-term  oil  or  gas  sales  contracts,  arranging  financing  prior  to  the
commencement of operations and contracting for adequate  equipment and supplies.
As the  Development  Subsidiary  grows,  its objective will evolve from being an
equal  partner to seeking to be the majority or sole owner of many or all of its
properties.

         The Development Subsidiary will attempt to limit its financial exposure
to each  project and to  mitigate  development  risk,  interest  rate risk,  and
operating  risk,  through  the  active  use and  application  of  contracts.  In
addition,  project loan  agreements  are generally  structured on a non-recourse
basis. Further, the Development Subsidiary will structure its project financings
and operations so that a default under one project's loan or operating agreement
will have no effect on the loan or operating agreements of other projects or the
Development Subsidiary's debt.

         It  is  expected  that  the   Development   Subsidiary's   analysis  of
acquisition  opportunities  will  be  based  on an  in-depth  assessment  of the


                                       25


regulatory environment, expected growth in the exploration and development area,
and  related  oil and  gas  opportunities.  The  only  disadvantage  will be the
Development  Subsidiary's  lack of  experience  in the  technical  and operating
aspects  following its  acquisition of each oil or gas property.  When required,
the Registrant or the  Development  Subsidiary  will contract with its qualified
advisors  and  operations  alliance  partners  or  consultants  to assist in the
acquisition  and  investment  evaluation  and  project  assessment  and  provide
facility management and operation services, respectively.

         The  Registrant,  through  the  Development  Subsidiary,  will focus on
multiple project acquisitions and development in a particular geographic area in
order to minimize  development  and  operating  costs and  maximize the value of
existing  and planned  acquisitions.  The  development  Subsidiary  will seek to
balance revenue and cost  volatility  associated with the development of oil and
gas properties by an inexperienced  operator with the stability of knowledge and
experience to be provided by the  development  Subsidiary's  operating  alliance
partners.

         As time progresses,  after the Development  Subsidiary maximizes on the
use of any oil and gas property it acquires, or, if any oil or gas property that
the  Development  Subsidiary  proves  to be  unyielding  and  unprofitable,  the
Development  Subsidiary  (or  the  Registrant,  in  the  event  the  Development
Subsidiary  fails to act) will seek  opportunities to divest assets which are no
longer strategically important or do not achieve profitability objectives.

C.   THE REGISTRANT'S PROPOSED ACQUISITION STRATEGY.

     As a part of the Registrant's overall restated business purpose and overall
plan of operations, the Registrant intends to aggressively pursue an acquisition
strategy to enhance its  position  in its current  markets and acquire  business
entities  and  operations  in  new  markets.   The  Registrant  will  focus  its
acquisition  strategy  on  candidates  that  either fit into or  complement  the
Registrant's  current  or  contemplated   operations.   This  will  include  the
acquisition of other companies in the United States or internationally  that are
engaged in the Registrant's  lines of business or proposed business and that can
be efficiently consolidated into the Registrant's current operations.

     The Registrant's  present strategy is to (i) acquire  additional  companies
that are intended to supplement the  Registrant's  existing  market  presence as
"tuck-in" acquisitions; and (ii) establish a significant presence in new markets
or geographic areas through the acquisition of established  regional competitors
as "platform" acquisitions to be followed by additional "tuck-in" acquisitions.

     1)  Platform  Acquisitions.  A  "platform  acquisition"  is  defined by the
Registrant's  senior  executive  management  as one that  creates a  significant
presence for the Registrant in a new geographic  market or market  segment.  The
Registrant intends,  where possible,  to make platform acquisitions by acquiring
established  companies  that are engaged in  business  similar to those that are
being  conducted or planned to be conducted by the Registrant.  In general,  the
Registrant  intends  to  retain  the  management  as well as the  operating  and
administrative  personnel  of  a  platform  acquisition  in  order  to  maintain
continuity of operations and  performance.  The Registrant will seek to increase
an acquired  company's revenues and improve its profitability by integrating the


                                       26


acquired company into the  Registrant's  network.  The Registrant  believes that
these  acquisitions  could  provide  significant  inter-company  cross-marketing
opportunities by providing  national and  international  services and support to
what then would be subsidiaries on a more competitive and cost-effective  basis.
These  acquisitions  are also intended to provide a significant  market presence
from which additional "tuck-in" acquisitions can be undertaken.

     2) Tuck-In Acquisitions.  A "tuck-in" acquisition will more likely occur in
an existing market, will be smaller than a platform  acquisition and will enable
the Registrant to offer additional  services,  support, or expand into secondary
markets  within a region  that is  already  served  by the  Registrant.  In most
instances,   management   believes  that  the  operations  acquired  by  tuck-in
acquisition  can  be  integrated  into  the  Registrant's  existing  operations,
resulting  in the  elimination  of  duplicative  overhead,  administrative,  and
operating  costs  and  ultimately  increasing  operating  margins  and/or  price
competitiveness.

     3) Sustaining and Managing  Growth.  The  Registrant  proposes to undergo a
period of rapid  growth and there can be no  assurance  the  Registrant  will be
sustained or managed  successfully.  This proposed growth would result in, or is
expected  to  create,  the  need  for  additional  capacity,  new and  increased
responsibilities   for  management   personnel,   and  added  pressures  on  the
Registrant's  proposed  operating and financial  systems.  While the  Registrant
believes it will have adequate  personnel and  management  systems to manage its
operations for the  foreseeable  future,  there can be no assurances  that these
levels of facilities,  personnel,  and management  systems would be sufficiently
adequate to manage and sustain its  proposed  future  growth.  The  Registrant's
ability to manage its projected future growth  effectively and to accomplish its
overall  proposed goals will depend on its ability to hire and retain  qualified
management  and  technical  personnel.  Competition  for such  personnel  in the
Registrant's  respective  industries is not high. If the Registrant is unable to
manage growth  effectively,  or to hire and to retain qualified  personnel,  the
Registrant's  prospective  business and  projected  operating  results  could be
materially and adversely affected.

     4) Maintaining Independent Contacts To Develop Businesses. The Registrant's
strategy for the development and  commercialization  of its business depends, in
large part,  upon the  formation  of  collaborative  arrangements  with  several
collaborative  partners.  The Registrant must enter into these collaborations to
successfully  develop and commercialize its business.  Such  collaborations  are
necessary in order for the  Registrant  to: (a) fund the  Registrant's  existing
subsidiary and operations; (b) fund the Registrant's new acquisitions;  (c) seek
and obtain regulatory approvals; and (d) successfully commercialize existing and
future operations candidates.

         Only a limited  number of  acquisition  candidates  have been generated
following  the  Registrant's  proposed  collaborations.  None of these  proposed
collaborative  product  candidates have demonstrated that it can develop,  or be
commercially successful, with regard to their respective industries.  Future and
proposed  collaborative  arrangements  may not be successful.  If the Registrant
fails to  maintain  its  proposed  collaborative  arrangements  or to enter into
future  additional  collaborative   arrangements,   the  Registrant's  business,
financial  condition,  and results of operations  will be  materially  adversely
affected.

                                       27


         The Registrant's  dependence on collaborative  arrangements  with third
parties subjects it to a number of risks.  Such  collaborative  arrangements may
not be on terms  favorable  to the  Registrant.  Agreements  with  collaborative
partners  will  typically  allow  partners  significant  discretion  in electing
whether to pursue any of the planned  activities.  The Registrant cannot control
the amount and timing of resources its collaborative  partners may devote to the
product  candidates.  The Registrant's  proposed  partners may not perform their
obligations  as expected.  Business  combinations  or  significant  changes in a
collaborative  partner's  business  strategy  may  adversely  affect a partner's
willingness or ability to complete its obligations  under the arrangement.  Even
if the Registrant fulfills its obligations under any such proposed collaborative
agreement,  the Registrant's proposed partner can terminate the agreement at any
time  following  proper written  notice.  If any  collaborative  partner were to
terminate or breach the  Registrant's  agreement  with it, or otherwise  fail to
complete  its  obligations  in  a  timely  manner,  the  Registrant's  business,
financial  condition,  and results of  operations  may be  materially  adversely
affected.  If the  Registrant  is not able to  establish  further  collaborative
arrangements  or  any  or  all  of  the  Registrant's   existing   collaborative
arrangements  are  terminated,  the  Registrant  may be  required  to  seek  new
collaborative   arrangements   or   to   undertake   product   development   and
commercialization  at the  Registrant's  expense.  Such an undertaking  may: (a)
limit the number of candidates  that the Registrant  will be able to develop and
commercialize;  (b) reduce the likelihood of successful  business  introduction;
(c) significantly increase the Registrant's capital requirements;  and (d) place
additional strain on management's time.

         Existing  or  future  collaborative  partners  may  pursue  alternative
technologies,  including  those of the  Registrant's  competitors.  Disputes may
arise  with  respect to the  ownership  of rights to any  technology  or systems
developed with any current or future collaborative partner. Lengthy negotiations
with  potential  new  collaborative   partners  or  disagreements   between  the
Registrant and its  collaborative  partners may lead to delays or termination in
the research,  development, or commercialization of product candidates or result
in  time  consuming  and  expensive  litigation  or  arbitration.  If any of the
Registrant's  collaborative partners were to pursue alternative  technologies or
fail to develop or commercialize  successfully  any business  candidate to which
they  have  obtained  rights  from  the  Registrant,  its  business,   financial
condition, and results of operations may be materially adversely affected.

     5)  Internal  Growth  and  Increased  Operating  Efficiencies.  The  senior
executive  management and directors of the  Registrant are currently  evaluating
potential  acquisitions and are considering the  implementation  of a formalized
arrangement that requires  prospective  candidates or prospective  collaborative
partners to operate within strict quality  controlled  procedures  utilizing the
Registrant as the monitoring  system,  creating an additional revenue source for
the Registrant.  Management is considering creating a clearinghouse  arrangement
that would  utilize a system of debits and credits to collect and disburse  fees
from and to its  subsidiaries  in order to equalize the economic  benefits among
the subsidiaries.

         The  senior  executive  management  of  the  Registrant  believes  that
accurate  and  centralized  accounting  is  critical to  maintaining  consistent
margins.  These aspects,  finance and accounting,  of the Registrant's  proposed
operations  would be largely  controlled by the Registrant as opposed to turning
over such responsibilities to independent contractors or collaborative partners.
The management of the Registrant  believes that dedicated attention to detail by
the Registrant is essential to the efficient operation of the Registrant.

                                       28


ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.

A. Directors, Proposed Directors, Officers, and Proposed Officers of Registrant;
New Committees of the Registrant's Board of Directors.

     As the result of acquisition  of USMetals,  the  Registrant's  stockholders
have elected certain  individuals to become directors and executive officers and
the Registrant's  shareholders  have nominated  certain  individuals to serve as
proposed executive officers and proposed directors.  (The Registrant's  existing
directors and officers are included in the table below, in addition to the newly
elected  directors  and newly  appointed  officers.  Individuals  identified  as
proposed  officers and proposed  directors will begin to serve the Registrant as
soon as is practicable.)

     The following  table sets forth,  for the  directors,  executive  officers,
proposed directors, and proposed executive officers of the Registrant, (i) their
names,  addresses and ages at May 27, 2002, (ii) their respective positions with
the  Registrant,  (iii) the  number of  shares  of Common  Stock the  Registrant
expects to be beneficially owned by its directors and executive  officers,  (iv)
the percentage of  outstanding  shares such number will  represent,  and (v) the
number of shares  subject to warrants and options the  Registrant may expect the
officers and directors to receive.



                                     Percentage of Shares Before
Name and Address of                        Acquisition/After       Shares Subject to    Total Number
Individual and Position       Age            Acquisition               Options           of Shares
-----------------------       ---    ---------------------------   -----------------    ------------
                                                                            
Robert Dultz                  60                0%/                  650,000(1)          19,997,000
c/o USCorp                                     78.0%
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102

Larry Dietz                   48                .22/                     -                   51,000
c/o USCorp                                      .20
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102

Spencer Eubank                50                .17/                     -                  230,750
c/o USCorp                                      .90
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102

Carl O'Baugh                  71                .05/                     -                   50,250
c/o USCorp                                      .20
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102


                                       29



                                     Percentage of Shares Before
Name and Address of                        Acquisition/After       Shares Subject to    Total Number
Individual and Position       Age            Acquisition               Options           of Shares
-----------------------       ---    ---------------------------   -----------------    ------------
                                                                            
Don Brown                     51                 0/                      -                   50,000
c/o USCorp                                      .20
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102

Tom Owens                     50                 0/                      -                   10,000
c/o USCorp                                      .04
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102

Michael Love                  50                 0/                      -                   50,000
c/o USCorp                                      .20
Suite 204
4535 West Sahara Avenue
Las Vegas, Nevada  89102


     (1) Non-Offering Options. The options granted to the individuals identified
by this reference are options related to the issuance of the Registrant's  stock
to be issued under the  Registrant's  2002  Directors and Officers  Stock Option
Plan.


     The following are brief biographical  summaries of each of the Registrant's
directors,  proposed  directors,  executive  officers,  and  proposed  executive
officers.

     1)  Executive Officers and Directors.

         a) Robert  Dultz,  age 60, is  Chairman of the Board,  Chief  Executive
Officer,  and  the  Principal  Stockholder  of  the  Registrant.  Mr.  Dultz  is
responsible for coordinating and directing the Registrant's  Board of Directors,
and chairing the direction of the Registrant. Specializing in finance, Mr. Dultz
has acted as an investor and  consultant  for longer than the past 10 years.  He
has served on the boards of a number of  publicly  traded  companies  and on the
boards of a number of privately held companies  nationally and  internationally.
Mr. Dultz has worked with multi-million  dollar budgets. He has been responsible
for over $150 million dollars in real estate development and investment.

         b) Larry Dietz,  age 48, is President  and Director of the  Registrant.
Mr. Dietz is in charge of Land Management and  Development.  Mr. Dietz brings to
the  Registrant  a  seasoned  expertise  in the field of  mining,  as well as an
extensive  knowledge of the entire mining  industry in the western United States


                                       30


and  especially  in the State of Arizona.  He is  responsible  for  managing the
properties  owned or under the control of the  Registrant as well as identifying
additional properties for the Registrant to acquire and/or lease for the purpose
of  developing  their  mineral  resources.  While in the U.S.  Navy he had a Top
Secret/Crypto security clearance.  He attended the University of Nebraska School
of Technology and  Agriculture  where he earned a degree in Drafting,  Surveying
and Soil Science.  He has been a consultant to the mining industry since 1982 as
President  of Dietz and  Associates.  He  authored  and  released  the  updated,
corrected and expanded  versions of the Arizona Mineral Industry Location System
(MILS) which is a database  system for use on micro  computers  identifying  all
known  mineral  occurrences  in Arizona.  Mr. Dietz also  developed and released
Mineral Databases from the U.S. Bureau of Mines for the western U.S., as well as
a program called DLG1-2 which consists of the Digital Line Graph (DLG) data at a
scale of 1:250,000 for the entire U.S. providing graphic displays of the mineral
data for use on micro computers. Mr. Dietz is approved by the U.S. Department of
Justice to provide  title  evidence and  abstracts  for both surface and mineral
rights to lands located in the State of Arizona, and his Land Status Reports are
recognized  by the  Vancouver  Stock  Exchange.  He is  registered  as an Expert
Witness with the Technical  Advisory Services for Attorneys.  He is currently an
associate member of the Society of Mining Engineers of the American Institute of
Mining,  Metallurgical and Petroleum Engineers.  Mr. Dietz is also proficient in
the  use  of   computers,   database,   word-processing,   CAD,   graphics   and
communications software.

         c) Carl W.  O'Baugh,  age 71, is Vice  President  and  Director  of the
Registrant.  Mr.  O'Baugh is a past  President of American  Metals and Minerals,
Inc., a Nevada  Company  which owned mining  claims in central  Arizona.  He was
President of Golconda  Gems,  Inc.,  from 1973 to 1985, a wholesale gem cutting,
importing  and  distribution  company with  operations  in the United States and
Mexico.  Mr.  O'Baugh has served on the Boards of several  public  Companies and
brings to the Registrant his knowledge and experience  concerning gems, minerals
and  metals,  as well  as his  wholesale,  retail  marketing  and  import-export
expertise.  Mr. O'Baugh has  demonstrated  his  capabilities in effective senior
corporate management and, in general, in business, by employing over 200 persons
and directing the affairs of a corporation  capable of sustaining that number of
employees.

         d) Spencer Eubank, age 50, is Secretary,  Treasurer and Director of the
Registrant.  Mr.  Eubank is  responsible  for  maintaining  the  records  of the
Registrant  and  works  closely  with the  senior  executive  management  of the
Registrant  in  day-to-day  operations.  Mr.  Eubank has served on the boards of
several public, private and not-for-profit  companies as an officer and director
including  Pla.Net.Com,  Inc.  (February 1997 to July 1999) and EssxSport  Corp.
(January 1996 to March 1998). Mr. Eubank is the owner of an independent research
and consulting  service.  Mr. Eubank has degrees in Theology  (B.Th.,  1985) and
Sociology (B.A.,  1988).  For 10 years, Mr. Eubank worked in various  capacities
for not-for-profit organizations, which served disadvantaged and developmentally
disabled  adults  in the  greater  Los  Angeles  area,  and for  over  10  years
participated  in the  general  employ  and  management  of  retail  grocery  and
department stores.


                                       31


     2)  Proposed Directors.

         a) Tom Owens, age 50 is a Director for the Registrant. Mr. Owens is the
owner of a private company that provides  investigation  services throughout the
country.  In the Los Angeles area he conducted  investigations for Rodney King's
defense and most recently for several victims of the Rampart  Division  scandal.
Mr. Owens served four tours of duty in Vietnam  with the U.S.  Marines.  He most
recently  served  his  country  as  the  Army's  Communications  Officer  in the
occupation of Bosnia-Herzegovina. Mr. Owens is a retired Captain in the US Army.
He is also a retired  Captain in the Los Angeles Police  Department.  While with
the LAPD Mr.  Owens was  involved in every  major case from the  Charles  Manson
Tate-LaBianca  murders to O.J.  Simpson's  trial. Mr. Owens is the author of the
book  "Lying  Eyes."  Mr.  Owens  will serve the  Registrant  as an  independent
Director and on the Registrant's Audit Committee.

     3)  Proposed Officers.

         a) Michael Love,  age 50, is proposed to serve as a  Vice-President  of
the  Registrant.  Mr.  Love has  demonstrated  his  capabilities  as a corporate
executive  with  more  than 25  years  of  progressive  high-level  professional
domestic and  international  business  experience.  Mr. Love has  demonstrated a
proven  ability to develop new  business and maintain  existing  business  using
thorough industry knowledge. From 1976 to 1983 Mr. Love was an Account Executive
with MuniciCorp of California,  Merrill, Lynch, Pierce, Fenner & Smith and Smith
Barney,  Harris & Upham trading  municipal  bonds and equities with annual gross
volume from $200  million to over $800  million.  From 1983 to 1988 Mr. Love was
the CEO of North Star  Metals and North Star  Metals  Development  Corp.  in Los
Angeles.  While with North Star Metals,  he traded in minor  metals,  negotiated
international contracts in amounts of $200 million, raised $25 million to fund a
development  project and  developed an  investment  sales  training  program for
account executives. From 1988 to 1992 he was the CEO of CML Promotions. Mr. Love
promoted  boxing,  6 world title fights,  including Tubbs vs. Tyson in Tokyo. He
also  negotiated  contracts  for fights in the U.S. and  internationally  in the
amount of $40  million.  In 1997 and 1998 Mr.  Love  served as  Chairman  of The
African  Times  Newspaper.  As  Chairman  he  was  able  to  increase  worldwide
distribution by 300%, increase advertising revenue by 200%, increase circulation
by  100%  within  the  first  six  months,  and he  raised  $2  million  through
international  events. Mr. Love has been an exceptional  producer,  raising more
than a billion  dollars  and  generating  revenue in excess of $10  million  for
various  projects  in the  fields of  fundraising,  municipal  bonds,  commodity
trading,  marketing of investment and high tech products,  real estate sales and
acquisitions,  sports promotions and newspaper  operations.  Mr. Love is a board
member of The  African  Times  Newspaper,  a member of the Minor  Metals  Trader
Association  (Western Europe),  and a former board member of Archie Moore's "Any
Body Can" Foundation. In addition, Mr. Love will serve on the Registrant's Audit
Committee.

         b) Donald Brown,  age 51, is proposed to serve as a  Vice-President  of
the Registrant. Mr. Brown's primary area of responsibility will be to manage and
direct the proposed oil and gas  development  subsidiary and to advise the Board
of Directors  regarding  oil and gas business  matters.  Mr. Brown most recently
served as President of International  Energy and Resources,  Inc.  ("IERI") from
January  2001 through  March 2002.  From April 1999 to January  2001,  Mr. Brown


                                       32


served  PetroQuest  Exploration,  Inc. as Vice President.  Mr. Brown founded two
successful construction companies: D.E. Brown Construction in Buffalo, New York,
which he ran from 1971 until its sale in 1981, and Custom  Cabinets & Interiors,
Inc., in Dallas, Texas, which he ran from 1982 until 1989. From 1989 to 1991, he
worked in sales for B & R Builders,  Inc. In 1991, Mr. Brown entered the oil and
gas industry,  working for Kinlaw Petroleum  Company,  Inc., until 1992, and for
Gibraltar Securities, Inc. as Vice President of Investor Relations until the end
of 1992. While with Gibraltar  Securities Mr. Brown held Series 22 and Series 63
licenses.  Also in 1992,  he  started H. Moon  Resources,  Inc.,  which  drilled
wildcat and development wells,  primarily in West Texas, until its sale in 1995.
After the sale of his company,  he joined TBX Resources,  Inc. as Vice President
from 1996 to 1997, and Thor-Max  Resources,  Inc. as Vice President from 1997 to
1999.  Mr. Brown has also been  involved in music,  having a  successful  career
since 1971,  which included  performing and music production and engineering for
several  albums.  Mr. Brown enjoys  performing  and recording  music in his home
studio  as a  hobby.  He  has  also  been a  licensed  fitness  and  nutritional
consultant since 1994.

     4) Committees of the Board of Directors.

         The  Registrant  has   established  the  following   committee.   Other
committees may be established as needed, depending on the progress and extent of
the Registrant's operations.

     5)  Audit and Compliance Committee.

         The Registrant's  Audit and Compliance  Committee will recommend to the
Board of Directors the  independent  public  accountants to be selected to audit
the  Registrant's  annual  financial  statements  and will  approve  any special
assignments  given to them.  The Committee will also review the planned scope of
the annual audit, any changes in accounting  principles,  and the  effectiveness
and efficiency of the Registrant's internal accounting staff. Additionally,  the
Committee  will  provide  oversight  to the  Registrant's  compliance  staff for
adherence  with  regulatory  rules  and  regulations.  The  Committee  will also
establish  appropriate  levels of directors  and officers  insurance and blanket
bond insurance. The members of the Committee will include Mr. Eubank, Mr. Dultz,
Mr. Owens, and Mr. Love. The members of the Committee will be compensated at the
rate of $1,000.00 per meeting, regardless of the method that was used to conduct
the meeting  (i.e.,  in person,  by mail, by telecopier,  electronically,  or by
telephone).

B.  Registrant's Election to Change its Standard Industrial Classification Code.

     As the result of the Registrant's  recently adopted and diversified plan of
operations  (including the acquisition of USMetals discussed  hereinabove),  the
Registrant  has elected to change its Standard  Industrial  Classification  Code
from 7829 to 6719.

     At the  present  time,  the  Registrant  believes  itself  exempt  from the
Investment Holding Company Act of 1940 and the corresponding  Nevada statutes by
relying on certain exemptions.  The Registrant intends on maintaining its exempt
status,  however,  there is no  guarantee it will do so. The  exemptions  may be
modified and/or  abolished by government  agencies  responsible for rule making,
though the Registrant is not aware of any attempts to do so.

                                       33


     In the event that the Registrant loses its exempt status,  the Registrant's
plan will be to correct the problem either by modifying the corporate  structure
or by applying for the appropriate licenses. If the Registrant shall be required
to  comply  with  the  Investment  Company  Act of 1940,  it will  significantly
increase the legal,  accounting,  and administrative expenses of the Registrant,
and,  thus,  may  materially  and  adversely  affect the business and  financial
position of the Registrant.

C. Registrant's  Adoption of a Stock Option Plan; Issuance of Shares to Officers
and Directors.

     At a  special  meeting  of  the  Registrant's  Stockholders  and  Board  of
Directors  on May 1,  2002,  the  Registrant  adopted a stock  option  plan that
provides it with the  flexibility  to grant stock  incentives  described in this
section of this report to its key employees,  officers, directors,  consultants,
and  advisers for the purpose of giving them a  proprietary  interest in, and to
encourage  them to remain in the  employ or  service  of,  the  Registrant.  The
Registrant's  Board of  Directors  has  reserved up to  2,045,356  shares of its
Common Stock for  issuance  through  options that may be granted  under the 2002
Directors and Officers Stock Option Plan (the "Stock Option Plan"). However, the
number of shares of the  Registrant's  Common Stock  reserved for issuance under
the Stock Option Plan will never exceed 10% of the Registrant's then outstanding
shares.

     (It should be noted;  the Registrant is also conducting a limited  offering
under Rule 506 of Regulation D, which is more fully described  hereinbelow.  The
limited offering would significantly  effect the number of shares the Registrant
would be eligible to reserve under its 2002  Directors and Officers Stock Option
Plan.  However,  unless otherwise  stated in the  Registrant's  limited offering
circular,  it is  presently  contemplated  that  only  2,045,356  shares  of the
Registrant's  Common Stock will be reserved for issuance if the Registrant  only
attains the minimum Offering of $5,000, (5,000 shares) while 3,145,356 shares of
the  Registrant's  Common  Stock will be  reserved  for  issuance if the maximum
Offering of  11,000,000  Shares is attained.  The number of shares  reserved for
issuance may change in the event of a stock split,  recapitalization  or similar
event as described in the Stock Option Plan.)

     Administration.  It is expected that a committee of the Registrant's  Board
of  Directors,  which will be comprised of at least one  non-employee  director,
will administer the Stock Option Plan. The Registrant's  Board of Directors will
consider the standards  contained in both Section 162(m) of the Internal Revenue
Code of 1986,  as  currently  in effect  and Rule  16b-3  under  the  Securities
Exchange Act, when  appointing  members to the committee.  The Committee and the
Registrant's  Board of Directors  will have the  authority to grant awards under
the Stock Option Plan,  to determine  the terms of each award,  to interpret the
provisions of the Stock Option Plan, and to make all other  determinations  that
they may deem necessary or advisable to administer the Stock Option Plan.

     The Stock Option Plan permits the  Committee of the  Registrant's  Board of
Directors, to grant stock options to eligible persons. Options may be granted on
an  individual  basis  or to a  group  of  eligible  persons.  Accordingly,  the
Committee or the  Registrant's  Board of Directors,  will determine,  within the
limits of the plan,  the  number of  shares  of the  Registrant's  Common  Stock

                                       34


subject to an option,  to whom an option is granted and the  exercise  price and
forfeiture or termination  provisions of each option. A holder of a stock option
generally may not transfer the option during his or her lifetime.

     Option  Terms.   The  plan   provides  for  incentive   stock  options  and
non-qualified  stock  options.  The  committee  or  the  Registrant's  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 committee or the  Registrant's  Board of Directors  will  determine the
exercise price of an option. The exercise price of an incentive stock option may
not be less than the fair market value of the  Registrant's  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  Registrant's  outstanding  Common  Stock.  When the
incentive  stock option is  exercised,  we will be entitled to place a legend on
the certificates representing the shares of Common Stock purchased upon exercise
of the option to  identify  them as shares of Common  Stock  purchased  upon the
exercise of an incentive stock option. The exercise price of non-qualified stock
options may be greater than,  less than or equal to the fair market value of the
Common Stock on the date that the option is awarded,  based upon any  reasonable
measure of fair market value.  The committee may permit the exercise price to be
paid in cash or by the delivery of previously owned shares of Common Stock, and,
if permitted in the applicable  option  agreement,  through a cashless  exercise
executed  through a broker  or by  having a number  of  shares  of Common  Stock
otherwise issuable at the time of exercise withheld.

     The committee or the  Registrant's  Board of Directors  will also determine
the term of an option.  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 Registrant's
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 become  unexercisable  no later than
three  months  after  the  date  of  termination  of  employment.  If,  however,
termination  of  employment  is due to death  or  disability,  one year  will be
substituted for the three-month period. 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  Registrant's  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 Registrant's  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.

     Termination  of Options.  The terms of particular  options may provide that
they terminate, among other reasons, upon the holder's termination of employment
or other status with the  Registrant,  upon a specified  date, upon the holder's
death or  disability,  or upon the  occurrence  of a change  in  control  of the
Registrant.  An  agreement  may  provide  that if the  holder  dies  or  becomes
disabled,  the  holder's  estate or personal  representative  may  exercise  the


                                       35


option.  The committee or the Registrant's  Board of Directors,  may, within the
terms of the plan  and the  applicable  agreement,  cancel,  accelerate,  pay or
continue  an option that would  otherwise  terminate  for the reasons  discussed
above.

     Reorganizations.  The plan  provides for an  appropriate  adjustment in the
number  and kind of shares  subject to  unexercised  options in the event of any
change in the outstanding shares of the Registrant's Common Stock by reason of a
stock  split,  stock  dividend,   combination  or  reclassification  of  shares,
recapitalization,  merger  or  similar  event.  In the  event  of some  types of
corporate reorganizations, the committee or the Registrant's Board of Directors,
may,  within  the terms of the plan and the  applicable  agreement,  substitute,
cancel, accelerate, cancel for cash or otherwise adjust the terms of an option.

     Amendment  and  Termination  of the Plan.  Our Board of  Directors  has the
authority to amend or terminate the plan. Our Board of Directors is not required
to obtain shareholder approval to terminate the plan or, generally, to amend the
plan,  but  may  condition  any  amendment  or  termination  of  the  plan  upon
shareholder  approval if it determines that shareholder approval is necessary or
appropriate under tax,  securities,  or other laws.  However,  any action by the
Registrant's  Board of Directors may not adversely affect the rights of a holder
of a stock option without the holder's consent.

     Federal  Income  Tax  Consequences.   The  following   discussion  outlines
generally the Federal  income tax  consequences  of  participation  in the plan.
Individual circumstances may vary and each participant should rely on his or her
own tax counsel for advice  regarding  Federal  income tax  treatment  under the
plan.

     Incentive Stock Options.  A participant  will not recognize income upon the
grant of an incentive stock option,  nor will he or she be taxed when exercising
all or a portion of their option. Instead, the participant will be taxed when he
or she sells the shares of Common Stock purchased upon exercise of the incentive
stock option.  The participant will be taxed on the difference between the price
he or she paid for the Registrant's  Common Stock and the amount for which he or
she  sells  the  stock.  If the  participant  does not sell  the  shares  of the
Registrant's  Common  Stock  prior  to two  years  from the date of grant of the
incentive  stock option and one year from the date the stock is  transferred  to
him or her, the gain will be a capital gain and we will not get a  corresponding
deduction.  If the participant sells the shares of the Registrant's Common Stock
at a gain before that time,  the difference  between the amount the  participant
paid  for the  stock  and the  lesser  of its fair  market  value on the date of
exercise  or the  amount  for which the stock is sold will be taxed as  ordinary
income  and we  will  be  entitled  to a  corresponding  tax  deduction.  If the
participant sells the shares of the Registrant's  Common Stock for less than the
amount  he or she  paid  for  the  stock  prior  to the one or  two-year  period
indicated, no amount will be taxed as ordinary income and the loss will be taxed
as a  capital  loss.  Exercise  of an  incentive  stock  option  may  subject  a
participant  to, or increase a  participant's  liability  for,  the  alternative
minimum tax.

                                       36


     Non-Qualified  Options.  A participant  will not recognize  income upon the
grant of a non-qualified option or at any time before the exercise of the option
or a portion of the  option.  When the  participant  exercises  a  non-qualified
option or portion of the option, he or she will recognize  compensation  taxable
as ordinary  income in an amount equal to the excess of the fair market value of
the Registrant's Common Stock on the date the option is exercised over the price
paid for the stock, and we will then be entitled to a corresponding deduction.

     Depending upon the time period for which shares of the Registrant's  Common
Stock are held after exercising an option, the sale or other taxable disposition
of shares acquired by exercising a non-qualified option generally will result in
a short or long-term  capital gain or loss equal to the  difference  between the
amount realized on the disposition and the fair market value of such shares when
the non-qualified option was exercised.

     Special rules apply to a participant who exercises a  non-qualified  option
by paying the exercise  price, in whole or in part, by selling back to us shares
of the  Registrant's  Common  Stock  already  held by the  participant  and to a
participant  who is subject to the reporting  requirements  of Section 16 of the
Securities Exchange Act of 1934.

D. Registrant's Limited Offering Pursuant to Rule 506 of Regulation D.

     The Registrant  will be offering  $20,000,000 of its Common Stock through a
dual platform  integrated  offering to be conducted in two stages.  In the first
stage (the "First  Offering"),  the Registrant will be offering 5,000,000 shares
of its Common Stock at $1.00 per share (the "First  Shares").  Although there is
no minimum amount to be sold,  there is a minimum purchase of shares required in
the First  Offering,  which are 5,000 shares per  prospective  investor.  In the
second  stage (the  "Successive  Offering"),  the  Registrant  will be  offering
6,000,000  shares of its Common Stock at $2.50 per share (the "Second  Shares").
(The First  Shares and the Second  Shares are  referred to  collectively  as the
"Shares"  throughout this report.) The Shares are being offered  directly by the
Registrant  and  the  Registrant  does  not  expect  to use  the  services  of a
broker-dealer,  however,  the Registrant reserves the right to utilize any legal
means to offer the Shares hereby offered.

     The entire offering (the  "Offering,"  when  hereinafter the First Offering
and the Successive  Offering are referred to collectively) is a  "best-efforts,"
no-minimum integrated Offering (other than the requirement by the Registrant for
prospective  investors to purchase a minimum  number of Shares in one purchase),
and  will  not be  underwritten  nor will any  underwriter  be  engaged  for the
marketing,  distribution  or sale of any shares  registered in this report.  The
Registrant  contemplates  closing the  Offering on or about  November  19, 2002.
However,  the  Registrant  reserves the right to terminate the Offering  without
notice at any time  prior to the sale of all the Shares  offered in the  report.
The Registrant may sell Shares from time to time in one or more transactions, in
the First  Offering,  at a minimum price of $1.00 per share,  and the Successive
Offering at $2.50 per share.

     The  Registrant  may close the  transaction  at any time. No Shares will be
sold after the earlier of the sale of  $20,000,000.00  of Shares or the Offering
Termination Date. The Offering may be extended for an additional 60 (sixty) days
by the Registrant, however the Registrant may terminate the Offering on any date
prior to the Offering Termination Date.

                                       37


     The  Registrant is offering the Shares in reliance upon certain  exemptions
from the  registration  and  qualification  requirements  of Federal and various
states'  securities laws.  Utilization of these exemptions  results in a lack of
liquidity.  For this reason, offers and sales of the Shares will be made only to
a limited  number of persons in accordance  with  Regulation D of the Securities
Act of 1933. The Offering is being made only to persons who satisfy the economic
prerequisites  set  forth  below and who  represent  in  writing  that they have
(either alone or in conjunction with a Purchaser  Representative) such knowledge
and experience in financial and business matters  generally,  and in investments
of this nature in particular, that they are capable of evaluating the merits and
risks of an  investment  in the  Registrant,  and are  Suitable  Investors  (see
"Suitability  of  Investors").  The maximum  number of  subscribers  who are not
Accredited  Investors  (as defined by Rule 501 of  Regulation  D as  promulgated
under the Securities Act) will not exceed 35.

     An  investment in the Shares is suitable only for persons who have adequate
means of providing for their current needs and personal  contingencies  and have
no need for liquidity in their investments.

     Shares will be sold only to Suitable  Investors who represent that they are
purchasing the Shares for themselves, for investment purposes only, and not with
a view to resale or distribution.

     There is no market for the Shares and there are significant restrictions on
their  transferability,  including the requirement imposed by 17 CFR 230.506. No
public  market in the  Shares is likely to  develop.  The  Shares  have not been
registered  under the Securities  Act of 1933 or the Securities  Exchange Act of
1934, or under the securities' laws of any state, and, therefore, cannot be sold
by  an  investor  unless  either  they  are  subsequently  registered  with  the
Commission  and  pursuant  to any  applicable  state laws or, in the  opinion of
counsel acceptable to the Board of Directors,  exemptions from such registration
requirements  are  available.  Accordingly,  purchasers  of Shares must bear the
economic risk of an investment in the Shares for an indefinite period of time.

     The Registrant must have  reasonable  grounds to believe that a prospective
investor  satisfies the criteria  described  below and will require  prospective
investors to submit information  detailing their financial status and experience
in investments of this nature.  The Shares are offered subject to prior sale and
to the right of the Registrant to accept or reject  subscriptions in whole or in
part. Similar suitability standards will be applied to any resale of the Shares.

     1)  Use of Proceeds.

         The  Offering  circular  advises   prospective   investors  that  after
reviewing  the portion of the Offering  that  allocates  the payment of Offering
expenses, and to the immediate payment to the management of any salaries (either
current or accrued),  reimbursements,  past  salaries,  or similar  payments,  a
prospective investor should consider whether the remaining portion of his or her
investment,  which would be that part  available for future  development  of the
Registrant's business and operations, would be adequate.

         Proceeds from the Offering will not be held in escrow.  The  Commission
should be aware that all funds  received from the proceeds of this offering will
immediately be available for use by the Registrant, in its sole discretion.

                                       38


         The  anticipated  net proceeds  from the Offering and their  designated
uses and  applications are the  Registrant's  estimates.  The final expenses can
vary significantly from the actual amounts stated herein. If the actual expenses
exceed these projections, or the Registrant's estimates, then, and in such case,
the Registrant reserves the right, in its sole discretion, to apply a reasonable
percentage of the funds from the working  capital  reserve (that the  Registrant
expects  to set aside  from the  proceeds  hereof)  for any  purpose it may deem
necessary in furtherance of the Registrant's  overall objectives as they are set
forth herein.

         In the event the  Registrant  is able to sell only the Minimum Total of
the Shares in the Offering,  the Registrant  will apply the proceeds to USMetals
thereupon.

         Depending  upon the  amount  of the  proceeds  received  from the First
Offering or the  Successive  Offering,  the  Registrant  will, in  proportionate
percentages  apply the funds from the  Minimum  Total to the Maximum  Total,  as
follows:  the proceeds  following the amounts provided for capital  expenditures
for USMetals,  then to the development of the Registrant's  proposed oil and gas
operations  (including  speculation  in oil  and  gas  royalties),  then  to the
salaries and administrative fees and expenses, then to legal and accounting, and
then to  acquisition  development.  The  Registrant  will  reserve a  reasonable
percentage   of  the  proceeds   from  the  Offering  to  working   capital  and
contingencies.

         The Registrant anticipates  immediately expending all proceeds from the
Offering.  The actual amount expended to finance any category of expenses may be
increased  or  decreased  by  the  Registrant's  Board  of  Directors,   in  its
discretion,  if  required  by  the  Registrant's  operating  expenses  or  if  a
reapportionment or redirection of funds, including acquisitions  consistent with
the Registrant's business strategy, is deemed to be in its best interest.

         Pending the use or  application  of any part of the  proceeds  from the
Offering as set forth above,  the Registrant may invest all or a portion of such
proceeds in short-term, interest-bearing securities, U.S. Government securities,
money market  investments and  short-term,  interest  bearing  deposits in major
banks.

--------------------------------------------------------------------------------
         It should be noted that the  Registrant,  in its sole  discretion,  may
accept lesser amounts from one or more investors.
--------------------------------------------------------------------------------

         The following table shows the Registrant's  intended application of the
Use of Proceeds as a percentage of the gross proceeds  received from an adjusted
minimum  of 10% of the  First  Offering  to the  maximum  of 100% for the  First
Offering.


                                       39



                                Intended Use of Proceeds from the First Offering.
                         (Proceeds from the Offering Based on a Percentage of Shares Sold.)

                                   10%             25%               50%               75%                100%
                               -----------    -------------     -------------     -------------       -------------
                                                                                       
Gross Proceeds                 $500,000.00    $1,250,000.00     $2,500,000.00     $3,750,000.00       $5,000,000.00

Commissions and Related        $100,000.00     $ 250,000.00       $500,000.00       $750,000.00       $1,000,000.00
  Selling Fees
USMetals' Funding              $275,000.00     $ 812,500.00     $1,625,000.00     $2,437,500.00       $3,250,000.00
Salaries and                    $75,000.00     $ 187,500.00       $375,000.00       $562,500.00         $750,000.00
  Administrative Fees
Legal and SEC Filings           $50,000.00         -0-               -0-               -0-                 -0-

Total of Expenses              $500,000.00    $1,250,000.00     $2,500,000.00     $3,750,000.00       $5,000,000.00



     The following table shows the Registrant's  intended application of the use
of proceeds as a  percentage  of the gross  proceeds  received  from an adjusted
minimum  of 10% of the  Successive  Offering  to the  maximum  of  100%  for the
Successive Offering.



                                Intended Use of Proceeds from the Successive Offering.
                           (Proceeds from the Offering Based on a Percentage of Shares Sold.)

                                  10%             25%               50%               75%                100%
                             -------------    -------------     -------------    --------------      --------------
                                                                                      
Gross Proceeds               $1,500,000.00    $3,750,000.00     $7,500,000.00    $11,250,000.00      $15,000,000.00

Commissions and Related        $300,000.00      $937,500.00     $1,500,000.00     $2,250,000.00       $3,000,000.00
  Selling Fees
USMetals' Funding              $825,000.00    $1,375,000.00     $3,125,000.00     $5,000,000.00       $6,250,000.00
Oil and Gas Development              -0-        $500,000.00     $1,000.000.00     $1,200,000.00       $1,800,000.00
Salaries and                   $225,000.00      $562,500.00     $1,125,000.00     $1,687,500.00       $2,250,000.00
  Administrative Fees
Legal and SEC Filings                -0-              -0-               -0-                -0-          $200,000.00
New Acquisitions and           $150,000.00      $375,000.00       $750,000.00     $1,112,500.00       $1,500,000.00
  Corporate Development

Total of Expenses            $1,500,000.00    $3,750,000.00     $7,500,000.00    $11,250,000.00      $15,000,000.00



                  The amounts set forth above  represent the  Registrant's  best
estimate for the use of the net proceeds from the  Offering,  in view of current
circumstances.  However,  actual expenditures could vary considerably  depending
upon  many  factors,   including,   without  limitation,   changes  in  economic


                                       40


conditions,  unanticipated  complications,  delays  and  expenses,  or  problems
relating to the development of additional  businesses  and/or market  acceptance
for  the  Registrant's  existing  or  contemplated  business  enterprises.   The
"Salaries and Administrative Fees" section set forth in each of the above tables
represents  sums that,  in the case of  salaries,  will be paid for  accrued and
current  wages and for incentive and  performance  bonuses;  and, in the case of
administrative  fees,  will be reserved for  disbursement  to the  Registrant in
order to cover  certain  administrative  expenses  related  to the  Registrant's
subsidiaries.  Any reallocation of the net proceeds of the Offering will be made
at the discretion of the  Registrant's  Board of Directors but will be a part of
its  strategy  to further  develop its  business(es)  or its  subsidiaries.  The
Registrant's  working capital  requirements  are a function of its future growth
and expansion,  neither of which can be predicted with any reasonable  degree of
certainty.  The  Registrant  may  need to seek  funds  through  loans  or  other
financing arrangements in the future, and there can be no assurance that it will
be able to make these arrangements in the future should the need arise.

         Pending the Registrant's use of the net proceeds from the Offering, the
funds will be  invested  temporarily  in  certificates  of  deposit,  short-term
government securities, or similar investments.  Any income from these short-term
investments will be used for working capital.

         The net proceeds from the Offering,  together with internally generated
funds and  funds-on-hand at the time of the Offering are expected to be adequate
to fund the  Registrant's  working  capital  needs for at least the next six (6)
months.

         The  accounting  and legal expense item includes the costs incurred for
outside professional services associated with the Offering.  The amount of these
expenses  the  Registrant  will  expect to incur for such  services  rendered in
connection  with the Offering is estimated  at $250,000.  These  amounts will be
paid from the proceeds of the Offering.  The miscellaneous expense item includes
the costs the  Registrant  expects to incur in  establishing  and conducting its
marketing program for the Shares, printing and copying of the Offering circular,
other  miscellaneous  costs including supplies and various costs associated with
offering the Shares.  There are slight rounding  differences  between the sum of
the  percentages  and the actual  percentage  achieved  from  dividing the total
dollar  amount of Offering  expenses by the total dollar  amount of the Offering
proceeds.

         The maximum net  proceeds  the  Registrant  expects to realize from the
Offering,  after  allowance for  estimated  expenses the  Registrant  incurs and
disburses in connection  with the Offering will be  $16,000,000,  if the maximum
numbers of shares are sold.

         Although these are the Registrant's present intentions, the actual uses
may vary  depending upon economic  conditions  and other factors,  including the
results of future  operations.  Factors  that could  affect the  application  of
proceeds  include charges for third party services that exceed the  Registrant's
estimates, and/or initial results that reduce or increase the amount of services
that are necessary to execute the Registrant's strategies.  Pending the specific
application  of the net  proceeds  of the  Offering,  funds will be  invested in
interest bearing certificates of deposit or treasury  certificates and/or mutual
funds.

                                       41


     2)  Determination Of Offering Prices.

         The respective  offering prices for the First Shares and Second Shares,
respectively,   were  determined   arbitrarily  by  the  Registrant's  Board  of
Directors.

     3)  Plan Of Distribution.

         The Offering of the Shares will be made on a "self-underwritten" basis,
which means the Registrant will sell shares through its officers,  directors, or
through  qualified  purchaser  representatives,   without  an  underwriter.  The
Offering  will be made on a continuous  basis until  approximately  November 19,
2002, when the Offering will end. Any extensions to the Offering will be made by
the Registrant's Board of Directors.  The gross proceeds from this offering will
be $20,000,000  if all the Shares offered are sold. The Registrant  reserves the
right to pay  commissions  or other  qualified  and  eligible  fees  directly or
indirectly to any person or firm in connection with the Offering.

         If the  Registrant  elects  to  offer  its  Shares  through  one of its
officers or directors,  then, and in such case: the officer or director will not
be paid a commission  from the sale of any shares,  nor will any such officer or
director  register as a  broker-dealer  pursuant to Section 15 of the Securities
Exchange  Act of 1934 in reliance  upon Rule 3a4-1.  Rule 3a4-1 sets forth those
conditions under which a person associated with an issuer may participate in the
offering  of the  Registrant's  securities  and not be  deemed  to be a  broker-
dealer. The conditions are that:

         a) The person will not be subject to a statutory  disqualification,  as
that term is defined in Section  3(a)(39)  of the Act, at the time of his or her
participation; and,

         b) The person will not be  compensated  in  connection  with his or her
participation by the payment of commissions or other  remuneration  based either
directly or indirectly on transactions in securities; and

         c) The  person  will  not,  at the time of their  participation,  be an
associated person of a broker-dealer; and,

         d) The person will meet the conditions of Paragraph  (a)(4)(ii) of Rule
3a4-1 of the  Exchange  Act,  in that he or she (1)  primarily  performs,  or is
intended primarily to perform at the end of the Offering, substantial duties for
or on behalf of the issuer  otherwise than in connection  with  transactions  in
securities;  and (2) is not a broker or  dealer,  or an  associated  person of a
broker  or  dealer,  within  the  preceding  twelve  months;  and (3)  does  not
participate  in selling and offering of securities for any issuer more than once
every  twelve  months  other  than  in  reliance  on  Paragraphs   (a)(4)(i)  or
(a)(4)(iii).

         None of the  Registrant's  officers  or  directors  would be subject to
disqualification;  they are not being compensated;  and, they are not associated
with a  broker-dealer.  Each of them will  continue  to serve as an  officer  or
director,  respectively, at the end of the Offering and have not been during the
last 12 months, and are currently not a broker-dealer or an associated person of


                                       42


a  broker-dealer.  If the  Registrant's  officers or directors offer the Shares,
then they intend to contact persons with whom they have had a past, or they have
a current,  personal or business  relationship and solicit them to invest in the
Offering.

E.   Amendment to Registrant's Capital Structure.

     The  Registrant  adopted an  amendment  to its  Articles of  Incorporation;
whereby, the Registrant is authorized to issue preferred stock.

     Therefore,  the  Registrant's  Articles  of  Incorporation  authorizes  the
issuance of 100,000,000  shares of Common Stock,  $0.01 par value per share,  of
which  25,613,567  shares were  outstanding  as of the date of this report.  The
holders of shares of common stock are (i) entitled to one vote for each share on
all matters to be voted on by the  stockholders,  (ii) have no cumulative voting
rights,  (iii) are  entitled to share  ratably in  dividends,  if any, as may be
declared,  from  time to time by the  Registrant's  Board of  Directors,  in its
discretion,  from funds legally  available to be distributed.  In the event of a
liquidation,  dissolution or winding up of the Registrant, the holders of shares
of  Common  Stock are  entitled  to share pro rata all  assets  remaining  after
payment in full of all  liabilities.  Holders of Common Stock have no preemptive
rights to purchase the Registrant's Common Stock. There are no conversion rights
or redemption or sinking fund provisions  with respect to the common stock.  All
of the outstanding  shares of common stock are validly  issued,  fully paid, and
non-assessable.

     1)  Preferred Stock.

         The Registrant's  Articles of Incorporation now authorizes the issuance
of 10,000,000 shares of Preferred Stock,  $0.10 par value per share, of which no
shares were  outstanding as of the date of this report.  The preferred stock may
be issued from time to time by the board of  directors  as shares of one or more
classes or series.  The preferred  stock is  convertible  into the  Registrant's
common stock at the ratio of 1:8, and the  Registrant's  board of directors have
not yet  designated  the  number  of  votes  that  holders  of the  Registrant's
preferred  stock are  entitled to per one share of  Preferred  Stock held by any
holder thereof.

         a)   Authorized Board Actions.

              The Registrant's Board of Directors,  subject to the provisions of
the Registrant's  Articles of Incorporation,  and limitations imposed by law, is
authorized to:

              1.  adopt resolutions;

              2.  to issue the shares;

              3.  to fix the number of shares;

              4.  to change the number of shares constituting any series; and

                                       43


              5.  to provide for or change the following:

                    (a)  the voting powers;

                    (b)  designations;

                    (c)  preferences; and

                    (d)  relative,  participating,  optional  or  other  special
                         rights,  qualifications,  limitations or  restrictions,
                         including the following:

                         (1)  dividend rights  (including  whether dividends are
                              cumulative);

                         (2)  dividend rates;

                         (3)  terms of redemption (including sinking fund
                              provisions);

                         (4)  redemption prices;

                         (5)  conversion rights; and

                         (6)  liquidation preferences of the shares constituting
                              any class or series of the Preferred Stock.

              In each of the  listed  cases,  the  Registrant  will not need any
further action or vote by the stockholders.

              One of the  effects  of  undesignated  Preferred  Stock  may be to
enable the Board of  Directors  to render more  difficult  or to  discourage  an
attempt to obtain  control of the  Registrant by means of a tender offer,  proxy
contest,  merger,  or  otherwise,  and thereby to protect the  continuity of the
Registrant's  management.  The issuance of shares of Preferred Stock pursuant to
the Board of  Director's  authority  described  above may  adversely  affect the
rights of holders of Common Stock.  For example,  Preferred  Stock issued by the
Registrant may rank prior to the Common Stock as to dividend rights, liquidation
preference or both may have full or limited voting rights and may be convertible
into shares of Common  Stock.  Accordingly,  the issuance of shares of Preferred
Stock may  discourage  bids for the Common  Stock at a premium or may  otherwise
adversely affect the market price of the Common Stock.

     2)  Nevada Laws.

         The Nevada  Business  Corporation  Law  contains a provision  governing
"Acquisition  of  Controlling  Interest."  This law provides  generally that any
person or entity that acquires 20% or more of the outstanding voting shares of a
publicly-held  Nevada  corporation in the secondary public or private market may
be denied voting rights with respect to the acquired  shares,  unless a majority
of the  disinterested  stockholders  of the  corporation  elects to restore such
voting rights in whole or in part.  The Control Share  Acquisition  Act provides


                                       44


that a person or entity acquires  "control  shares"  whenever it acquires shares
that,  but for the operation of the control share  acquisition  act, would bring
its voting power within any of the following three ranges:

         a)   20 to 33-1/3%,
         b)   33-1/3 to 50%, or
         c)   more than 50%.

         A "control  share  acquisition"  is generally  defined as the direct or
indirect  acquisition of either ownership or voting power associated with issued
and  outstanding  control  shares.  The  stockholders or Board of Directors of a
corporation may elect to exempt the stock of the corporation from the provisions
of the control  share  acquisition  act through  adoption of a provision to that
effect  in the  Articles  of  Incorporation  or Bylaws  of the  Registrant.  The
Registrant's Articles of Incorporation and Bylaws do not exempt the Registrant's
Common Stock from the Control Share Acquisition Act.

         The  Control  Share  Acquisition  Act is  applicable  only to shares of
"Issuing Corporations" as defined by the Act. An Issuing Corporation is a Nevada
corporation, which;

         a)   has  200  or  more  stockholders,   with  at  least  100  of  such
stockholders being both stockholders of record and residents of Nevada; and

         b)  does   business  in  Nevada   directly  or  through  an  affiliated
corporation.

         At this time, the Registrant maintains an office in Nevada and conducts
its business from a location in Nevada; therefore, the provisions of the Control
Share Acquisition Act apply to acquisitions of the Registrant's  Shares but will
not at such time as these  requirements  can no longer be met. The provisions of
the Control Share Acquisition Act may discourage companies or persons interested
in acquiring a significant interest in or control of the Registrant,  regardless
of whether  such  acquisition  may be in the best  interest of the  Registrant's
stockholders.

         The Nevada "Combination with Interested  Stockholders Statute" may also
have an effect of  delaying  or making it more  difficult  to effect a change in
control of the Registrant. This Statute prevents an "interested stockholder" and
a resident  domestic  Nevada  corporation  from entering  into a  "combination,"
unless certain conditions are met. The Statute defines  "combination" to include
any  merger or  consolidation  with an  "interested  stockholder,"  or any sale,
lease,  exchange,  mortgage,  pledge,  transfer  or  other  disposition,  in one
transaction or a series of transactions with an "interested stockholder" having:

         a) an  aggregate  market  value  equal  to 5  percent  or  more  of the
aggregate market value of the assets of the corporation;

         b) an  aggregate  market  value  equal  to 5  percent  or  more  of the
aggregate market value of all outstanding shares of the corporation; or

         c)  representing  10 percent or more of the earning power or net income
of the corporation.

                                       45


         An "interested stockholder" means the beneficial owner of 10 percent or
more of the voting shares of a resident domestic corporation, or an affiliate or
associate  thereof.  A  corporation  affected by the Statute may not engage in a
"combination"  within three years after the interested  stockholder acquires its
shares unless the  combination or purchase is approved by the Board of Directors
before the  interested  stockholder  acquired  such  shares.  If approval is not
obtained,  then after the  expiration  of the  three-year  period,  the business
combination may be consummated  with the approval of the Board of Directors or a
majority  of the voting  power  held by  disinterested  stockholders,  or if the
consideration to be paid by the interested  stockholder is at least equal to the
highest of;

         a) the  highest  price per  share  paid by the  interested  stockholder
within the three years immediately preceding the date of the announcement of the
combination or in the transaction in which he became an interested  stockholder,
whichever is higher;

         b) the market value per common share on the date of announcement of the
combination  or  the  date  the  interested  stockholder  acquired  the  shares,
whichever is higher; or

         c)  if  higher  for  the  holders  of  Preferred   Stock,  the  highest
liquidation value of the Preferred Stock.

     3)  Material Voting Arrangements.

         The Registrant  does not presently  utilize any form of material voting
arrangements, either by its stockholders or by any of its directors.

F.  Determination  of Eligibility  in Reliance of Rule 701 Securities  Issued by
USMetals.

     Any employee, officer, or director of, or consultant to, the Registrant who
purchased  or was  awarded  shares or options to purchase  shares  pursuant to a
written  compensatory  plan or  contract  is  entitled  to  rely  on the  resale
provisions of Rule 701 under the Securities  Act,  which permits  Affiliates and
non-affiliates  to sell their Rule 701 shares without having to comply with Rule
144's holding  period  restrictions,  in each case  commencing 90 days after the
date of this  report.  In  addition,  non-affiliates  may sell  Rule 701  shares
without complying with the public  information,  volume and notice provisions of
Rule 144.  Certain  matters  pertaining  to the  issuance of shares of USMetals'
common  stock  pursuant  to an  Employee  Compensation  Plan  awarded to certain
officers and directors of USMetals  prior to its  acquisition  by the Registrant
must be interpreted pursuant to an opinion of counsel to the Registrant.

     Securities  Act  Rule  701.  If no  class of the  Company's  securities  is
registered  under  Section  12  of  the  Exchange  Act,  then  unless  otherwise
determined by the Committee,  grants of Incentive  Awards to "Rule 701 Grantees"
(as defined  below) and issuances of the underlying  shares of Common Stock,  if
any, on the  exercise or  conversion  of such  Incentive  Awards are intended to
comply with all  applicable  conditions of Securities Act Rule 701 ("Rule 701"),
including,  without limitation,  the restrictions as to the amount of securities
that may be offered  and sold in  reliance  on Rule 701, so as to qualify for an


                                       46


exemption  from  the  registration  requirements  of  the  Securities  Act.  Any
ambiguities or  inconsistencies in the construction of an Incentive Award or the
Plan shall be interpreted to give effect to such  intention.  In accordance with
Rule 701, each Grantee shall receive a copy of the Plan on or before the date an
Incentive Award is granted to him, as well as the additional disclosure required
by Rule 701 (e) if the aggregate sales price or amount of securities sold during
any  consecutive  12-month  period exceeds  $5,000,000 as determined  under Rule
701(e).  If Rule 701 (or any  successor  provision)  is amended to  eliminate or
otherwise  modify  any of the  requirements  specified  in Rule  701,  then  the
provisions  of this  Section  7.8(b)  shall  be  interpreted  and  construed  in
accordance with Rule 701 as so amended.  For purposes of this Section 7.8(b), as
determined  in  accordance  with Rule 701,  "Rule 701  Grantees"  shall mean any
Grantee  other than a director of the Company,  the  Company's  chairman,  chief
executive officer,  president, chief financial officer,  controller and any vice
president  of the  Company,  and any  other  key  employee  of the  Company  who
generally has access to financial and other  business  related  information  and
possesses sufficient sophistication to understand and evaluate such information.

     It is the opinion of Registrant's counsel, that, upon the occurrence of the
share  exchange  described in Item 1 of this report,  whereby  USMetals  becomes
subject to the reporting  requirements  of Section 13 or 15(a) of the Securities
Exchange  Act of 1934 (by  becoming a wholly  owned  subsidiary  of a  reporting
company, and thus, becoming subject to Section 13 or 15(d) of the Exchange Act),
the shares  issued  under  USMetals  Employee  Compensation  Plan will be freely
tradable in the public market, subject to Rule 144 volume limitations applicable
to affiliates  and lock-up  agreements  that may have been executed  between the
Registrant's stockholders and the Registrant.

     Under  Rule  144(k),  a person  who is not  deemed  to have been one of the
Registrant's   affiliates  at  any  time  during  the  90  days   preceding  the
acquisition,  and who has beneficially  owned the shares proposed to be sold for
at least two years,  including the holding  period of any prior owner other than
an affiliate, is entitled to sell those shares without complying with the manner
of sale, public information, volume limitation or notice provisions of Rule 144.

G.   Employment Agreements Adopted by the Registrant and its Officers.

     As the  result of certain  actions  taken and  adopted by the  Registrant's
stockholders   and  directors  at  two  special  meetings  of  stockholders  and
directors,  the  Registrant has adopted  Employment  Agreements for the officers
named hereinbelow.  The following information describes the terms and conditions
of the employment agreements, and other relative terms and provisions applicable
to the  employment of each officer,  respectively,  pursuant to each  employment
agreement.  The employment  agreements,  although  different for each individual
officer, respectively, are substantially identical in form and substance and are
subject to adequate capitalization of the corporation.

     1) Robert Dultz.  Effective  April 2, 2002, the Registrant  entered into an
employment  agreement  with Robert Dultz  regarding  Mr.  Dultz's  employment as
chairman of the  Registrant.  Under the terms of the  agreement,  Mr. Dultz will
receive a base salary of $250,000  per year,  subject to annual  increases in an
amount the  Registrant's  Board of Directors shall determine  appropriate of not
less than 5% per year. The agreement  provides that at the end of each year, Mr.
Dultz  will  be  entitled  to  receive  a  cash  bonus,  to be  awarded  by  the


                                       47


Registrant's  Board of Directors,  based on the  Registrant's  performance.  The
agreement  also provides that the  Registrant  will grant Mr. Dultz an incentive
stock option to purchase that number of shares of the Registrant's  Common Stock
with such number not to exceed 5% of the number of shares outstanding  following
completion  of the Offering,  at $0.50 per share.  The option will vest over one
year, with 25% becoming  exercisable on the one-year  anniversary of Mr. Dultz's
employment,  and with the  remainder  becoming  exercisable  over the next three
years  of  continued  employment.  Mr.  Dultz  will  also  be  provided  with an
automobile  allowance of $1,000 per month and will be provided  with  initiation
fees and monthly dues for one country  club.  Mr. Dultz will also be  reimbursed
for health,  dental,  and life  insurance,  in such amounts as Mr. Dultz and the
Registrant  deem to be  appropriate  upon Mr.  Dultz's  election to receive such
coverage and to be reimbursed by the Registrant.

         The initial  term of the  employment  agreement  commenced  on April 2,
2002,  and will  continue for a period of five years.  At the end of the initial
term of the  agreement,  and at the end of each year  thereafter,  the agreement
will be extended for a successive  one-year  period unless one of the parties to
the agreement  notifies the other parties of his or its intent not to extend the
agreement. Employment under the agreement may be terminated:

        a) by the Registrant for cause (as defined in the employment agreement);

        b)  by Mr. Dultz if the  Registrant  breaches any material  provision of
the  employment  agreement  or there is a material  diminution  in his duties or
responsibilities; and

        c)  in the event of Mr. Dultz's death or disability, in which all of his
eligible  benefits  and  vestings  would be  succeeded  by his legal  heir(s) or
legatee(s).

         If the Registrant terminates Mr. Dultz's employment without cause or if
Mr. Dultz terminates employment due to a material breach by the Registrant,  the
Registrant will be required to pay the  compensation  and provide the health and
dental insurance coverage due under the agreement for a period of 24 months from
the date of termination.

         In the event of a change in control of the  Registrant,  Mr. Dultz will
be  entitled,  for a period of 90 days after the change of  control,  and at his
election,  to  deliver  notice  to  the  Registrant  of the  termination  of the
employment  agreement,  whereupon we will be required to make a lump sum payment
to Mr. Dultz in an amount equal to 20 times his then  current  compensation  and
benefits, including salaries, bonuses and all perquisites.

     2) Effective  January 14, 2002, the  Registrant  entered into an employment
agreement  with Spencer  Eubank,  regarding  Mr.  Eubank's  service as Executive
Vice-President,  Secretary,  Treasurer,  and a Director of the  Registrant.  Mr.
Eubank's employment  agreement has an initial term of five years.  Following the
expiration of its initial term,  the  employment  agreement will be extended for
successive  one-year  terms  unless one of the  parties  provides  notice of his
intent not to extend the agreement.  Under the employment agreement,  Mr. Eubank
is  entitled to receive an initial  annual  base  salary of $75,000,  subject to
annual  increases in the discretion of the Registrant's  Board of Directors.  In


                                       48


addition,  under his employment agreement,  Mr. Eubank will receive an option to
purchase   shares  of  the   Registrant's   Common   Stock.   The  options  will
distributively  vest equally over three years,  with 33% of the aggregate option
becoming exercisable on each anniversary of continued employment.  The remainder
of the terms and  provisions of the employment  agreement will be  substantially
similar to the Registrant's employment agreement with Mr. Dultz. Mr. Eubank will
be  provided  with a car  allowance  of $500  per  month  in  addition  to being
reimbursed for health, dental, and life insurance.

     3) Effective  January 14, 2002, the  Registrant  entered into an employment
agreement  with Larry Dietz,  regarding Mr.  Dietz's  service as President and a
Director of the Registrant. Mr. Dietz's employment agreement has an initial term
of five years.  Following the  expiration of its initial  term,  the  employment
agreement  will be extended  for  successive  one-year  terms  unless one of the
parties  provides  notice of his intent not to extend the  agreement.  Under the
employment  agreement,  Mr. Dietz is entitled to receive an initial  annual base
salary  of  $75,000,  subject  to  annual  increases  in the  discretion  of the
Registrant's Board of Directors.  In addition,  under his employment  agreement,
Mr. Dietz will receive an option to purchase shares of the  Registrant's  Common
Stock. The options will  distributively  vest equally over three years, with 33%
of the aggregate  option becoming  exercisable on each  anniversary of continued
employment.  The remainder of the  employment  agreement  will be  substantially
similar to the Registrant's  employment agreement with Mr. Dultz. Mr. Dietz will
receive a car  allowance  in the amount of $500 per month in  addition  to being
reimbursed for health, dental, and life insurance.

     4) Effective  January 14, 2002, the  Registrant  entered into an employment
agreement with Carl O'Baugh,  regarding Mr. O'Baugh's  service as Vice-President
and a Director of the  Registrant.  Mr.  O'Baugh's  employment  agreement has an
initial term of five years.  Following the  expiration of its initial term,  the
employment  agreement will be extended for successive  one-year terms unless one
of the parties provides notice of his intent not to extend the agreement.  Under
their respective  employment  agreements,  Mr. O'Baugh is entitled to receive an
initial  annual  base  salary of  $50,000,  subject to annual  increases  in the
discretion  of the  Registrant's  Board of  Directors.  In  addition,  under his
employment  agreement,  Mr. O'Baugh will receive an option to purchase shares of
the Registrant's Common Stock. The options will distributively vest equally over
three years,  with 33% of the  aggregate  option  becoming  exercisable  on each
anniversary of continued  employment.  The remainder of the terms and provisions
contained  in the  employment  agreement  will be  substantially  similar to the
Registrant's employment agreement with Mr. Dultz. Mr. O'Baugh will receive a car
allowance of $500 per month in addition to being reimbursed for health,  dental,
and life insurance.

H.  Indemnification  Agreements  Adopted  by the  Registrant  in  Defense of its
Officers and Directors.

     As the  result of certain  actions  taken and  adopted by the  Registrant's
stockholders  and directors at a special meeting of  stockholders  and directors
held on May 1, 2002, the Registrant has adopted  Indemnification  Agreements for
each of its officers and  directors.  The  following  information  describes the
nature  of  the  indemnification   agreements,  and  other  relative  terms  and
provisions  applicable  to the  indemnification  offered  to  each  officer  and


                                       49


director  pursuant  to  each  indemnification   agreement,   respectively.   The
indemnification  agreements,  although different for each individual officer and
director, respectively, are substantially identical in form and substance.

     1)  Indemnification of Officers and Directors.

         None of the Registrant's  directors will have personal liability to the
Registrant or to any of the  Registrant's  stockholders for monetary damages for
breach of fiduciary duty as a director involving any act or omission of any such
director  since  provisions  have been  made in the  Articles  of  Incorporation
limiting such liability.  The foregoing  provisions shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to  the  Registrant  or to the  Registrant's  stockholders,  (ii)  for  acts  or
omissions  not in good  faith or,  which  involve  intentional  misconduct  or a
knowing violation of law, (iii) under applicable  sections of the Nevada Revised
Statutes,  (iv) the payment of dividends  in violation of Section  78.300 of the
Nevada  Revised  Statutes  or, (v) for any  transaction  from which the director
derived an improper personal benefit.

         The Registrant's  Bylaws provide for  indemnification of the directors,
officers,  and  employees  of the  Registrant  in most  cases for any  liability
suffered by them or arising out of their activities as directors,  officers, and
employees of the  Registrant if they were not engaged in willful  misfeasance or
malfeasance in the performance of his or her duties;  provided that in the event
of a settlement the indemnification  will apply only when the Board of Directors
approves such  settlement and  reimbursement  as being for the best interests of
the Registrant.  The Bylaws, therefore,  limit the liability of directors to the
maximum extent permitted by Nevada law (Section 78.751).

         The  Registrant's  officers  and  directors  are  accountable  to it as
fiduciaries,  which means they are required to exercise  good faith and fairness
in all dealings that may affect the Registrant.  In the event that a stockholder
believes the officers and/or  directors have violated their fiduciary  duties to
the  Registrant,  the  stockholder  may,  subject to  applicable  rules of civil
procedure,  be able to bring a class  action or  derivative  suit to enforce the
stockholder's   rights,   including  rights  under  certain  Federal  and  state
securities  laws  and  regulations  to  recover  damages  from  and  require  an
accounting  by the  Registrant's  management.  Stockholders,  who have  suffered
losses  in  connection  with  the  purchase  or sale of  their  interest  in the
Registrant   in   connection   with  such  sale  or  purchase,   including   the
misapplication  by any such officer or director of the proceeds from the sale of
these securities, may be able to recover such losses from the Registrant.

         In the event that a claim for indemnification  against such liabilities
(other than the  payment by the  Registrant  of  expenses  incurred or paid by a
director,  officer,  or  controlling  person of the Registrant in the successful
defense of any action,  suit,  or  proceeding)  is  asserted  by such  director,
officer,  or controlling person in connection with the securities being offered,
the  Registrant  will,  unless in the opinion of its counsel the matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question  whether such  indemnification  by it is against  public  policy as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.

                                       50


         Insofar as  indemnification  for liability arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been  advised  that in the opinion of the  Commission  that such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer,  or controlling person of the Registrant in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director,  officer,  or controlling  person in connection  with the Shares being
Offered,  the Registrant  will,  unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

     2)  Statement  on the  Securities  and  Exchange  Commission's  Position on
Indemnification.

         Insofar as  indemnification  for liability arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been  advised  that in the opinion of the  Commission  that such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer,  or controlling person of the Registrant in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director,  officer,  or controlling  person in connection  with the Shares being
Offered,  the Registrant  will,  unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


     I. Change of SIC Code.

     The Registrant  has changed its Standard  Industrial  Classification  (SIC)
Code to "1040" (Mining - Gold and Silver Ores et al.).









                                       51


ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.

A.   Financial Statements of Acquired Business.

     The  Registrant  is  filing  with this Form  8-K/A the  audited  financial
statements required to be provided.

   Independent Auditors Report                                       F-1

    Consolidated Balance Sheets as of June 30, 2002 and
     September 30, 2001 ...........................................  F-2

    Consolidated Statements of Operations for the three and nine
     months ended June 30, 2002 and 2001  .........................  F-3

    Consolidated Statement of Shareholders' Equity for the
     period ended June 30, 2002 ...................................  F-4

    Consolidated Statements of Cash Flows for the
     nine months ended June 30, 2002 and 2001 .....................  F-5

    Notes to Consolidated Financial Statements ....................  F-6 - F-16


B.   pro forma Financial Information.

     Not applicable.


C.   Exhibits.

     The following exhibits were filed with the Form 8-K filed on June 13, 2002:

     The  Registrant  has  provided  the  following  exhibits  in  regard to the
extraordinary events disclosed in this report.

     Exhibit 2.1      Share Exchange Agreement dated March 14, 2002.

     Exhibit 3.1      Certificate of Amendment to Articles of Incorporation.

     Exhibit 10.1     USMetals' Employee Compensation Plan

     Exhibit 10.2     USCorp 2002 Directors and Officers Stock Option Plan

     Exhibit 10.2.1   Form of Stock Option

     Exhibit 10.3     USCorp Form of Employment Agreement

     Exhibit 21.1     USMetals' Articles of Incorporation and Bylaws, as amended

     Exhibit 23.1     Opinion and Consent of Roy C. Hopkins, Esq.

     Exhibit 27.1     Financial Data Schedule (1)

     Exhibit 99.1     USCorp Form of Indemnification Agreement.

          (1) Not Available. Please refer to Item 7 of this report.

                                       52



                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT


The Shareholders
USCorp
4535 W. Sahara Ave. Suite 204
Las Vegas, Nevada 89102

I have audited the accompanying consolidated balance sheet of USCorp (formerly
Fantasticon, Inc.) and Subsidiary as of June 30, 2002 and the related
consolidated statements of income and changes in stockholders' equity, and cash
flows for the period ended June 30, 2002 and 2001. These financial statements
are the responsibility of management. My responsibility is to express an opinion
on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements presented are free from
material misstatement. The audit includes assessing the accounting principles
used and significant estimates made by the management, as well as evaluating the
overall financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of USCorp
and Subsidiary, a development stage company, for the dates indicated above and
the results of their consolidated operations, stockholders' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles consistently applied.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in the Notes to
the consolidated financial statements, the Company has suffered losses from
operations and has a lack of net capital that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


Henry Schiffer, CPA
An Accountancy Corporation
Beverly Hills, California
August 16, 2002



                                       F-1




                              USCORP AND SUBSIDIARY
                          (a Development Stage Company)
                           CONSOLIDATED BALANCE SHEET

                                                                  June 30,      September 30,
                                                                    2002            2001
                                                                -----------     -------------
                                                                          
ASSETS
Current Assets:
       Cash                                                     $       118     $          -
                                                                -----------     -------------
Other Assets:
       Mineral properties -- at cost based on successful
        efforts method of accounting, net of accumulated
        depletion and amortization 1975 to 2001                   2,115,758                -

       Annual Assessment Work and Lease Payments to the BLM
        1975 to 2001                                                319,600                -
                                                                -----------     -------------

       Total Assets                                             $ 2,435,476     $          -
                                                                ===========     =============

LIABILITIES & STOCKHOLDERS' EQUITY

Shareholders' Equity:
       Common stock, $.01 par value; authorized 100,000,000
        shares; issued, and outstanding 25,571,067 at
        June 30, 2002; 10,560,657 at September 30, 2001.            255,711          105,607
       Additional paid in capital                                 5,417,693        2,567,777
       Retained deficit                                          (3,237,928)      (2,673,384)
                                                                -----------     -------------

       Total Shareholders' Equity                                 2,435,476                -
                                                                -----------     -------------

       Total Liabilities & Shareholders' Equity                 $ 2,435,476     $          -
                                                                ===========     =============





The accompanying notes are an integral part of these financial statements.

                                       F-2



                              USCORP AND SUBSIDIARY
                          (a Development Stage Company)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE THREE AND NINE MONTHS ENDING
                         JUNE 30,2002 AND JUNE 30, 2001

                                         Nine Months Ended         Three Months Ended
                                      -----------------------    -----------------------
                                               June 30,                 June 30,
                                          2002         2001         2002        2001
                                      ----------   ----------    ----------   ----------
                                                                  
Net Sales                             $        -   $        -    $        -   $        -
Less Cost Of Sales                             -            -             -            -
                                      ----------   ----------    ----------   ----------
Gross Profit                                   -            -             -            -

Administrative Expenses:
  Consulting                              11,000            -         9,000            -
  Public Relations                         2,794            -         2,794            -
  Accounting & Legal                      40,179            -        14,275            -
  Travel                                   2,354            -           869            -
  Corporate Maintenance                    2,248            -           877            -
  Communications & Clerical                8,801            -         4,289            -
  Transfer Agent                           4,084            -         3,000            -
  Bank Charges                                60            -             -            -
  Office Expenses                          4,766            -             -            -
  Officer Expenses                         5,000            -             -            -
  Printing                                   986            -             -            -
  Utilities                                  774            -             -            -
  Entertainment                            1,500            -             -            -
                                      ----------   ----------    ----------   ----------
Total Administrative Expenses             84,544            -        35,104            -

Loss From Operations                     (84,544)           -       (35,104)           -
Other Income (expenses):
   Interest Income                             -            -             -            -
   Interest Expense                            -            -             -            -
                                      ----------   ----------    ----------   ----------

Net Loss Before Income Tax Provision     (84,544)           -       (35,104)           -
Income Tax Expense                             -            -             -            -
                                      ----------   ----------    ----------   ----------

Net Loss                              $  (84,544)  $        -    $  (35,104)  $        -
                                      ==========   ==========    ==========   ==========
Earnings Per Common Share:
  Basic                               $  (   .00)           -    $  (   .00)           -
                                      ==========   ==========    ==========   ==========
Weighted Average Of Common Share:
   Basic                              25,337,083            -    10,560,657            -
                                      ==========   ==========    ==========   ==========

The accompanying notes are an integral part of these financial statements.

                                       F-3



                                         USCORP AND SUBSIDIARY
                               CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
                                    FOR THE PERIOD ENDED JUNE 30,2002


                                                        Common Stock
                                                 ------------------------      Additional       Retained
                                                   Shares        Amount      Paid-In Capital     Deficit        Total
                                                 ----------    ----------    ---------------   -----------    ----------
                                                                                               
Balance at September 30 2001                     10,560,657    $  105,607    $     2,567,777   $(2,673,384)   $        0
Combination of Retained Deficit and
  Development Stage Deficit
                                                 ----------    ----------    ---------------   -----------    ----------

Balance at December 31, 2001                     10,560,657       105,607          2,567,777    (2,673,384)            0

Cancellation of 6,025,000 common stock           (6,025,000)      (60,250)            60,250                           0

Adjustment 1 for 10 split down                   (4,082,091)      (40,821)            40,821                           0

Issue 24,200,000 shares to acquire USMetals      24,200,000       242,000           (242,000)                          0

Issue 650,000 shares per 2002 Employee
 Compensation Plan                                  650,000         6,500             (6,500)     (480,000)     (480,000)

Increase in Paid in Capital                                                        2,435,358                   2,435,358

Expense 650,000 shares @ $.72 per share                                              480,000                     480,000

Issue 310,000 shares to officers and directors      310,000         3,100             (3,100)                          0

Cancellation of 42,500 common stock                 (42,500)         (425)               425                           0

Capital contributed by a stockholder                                                  84,662                      84,662

Loss from Operations                                                                               (84,544)      (84,544)
                                                 ----------    ----------    ---------------   -----------    ----------

Balance at June 30, 2002                         25,571,067    $  255,711       $  5,417,693   $ (3,237,928)   $2,435,476




The accompanying notes are an integral part of these financial statements.


                                       F-4





                              USCORP AND SUBSIDIARY
                          (a Development Stage Company)
                        CONSOLIDATED CASH FLOW STATEMENT
                            FOR THE SIX MONTHS ENDING
                         JUNE 30, 2002 AND JUNE 30, 2001

                                                         June 30,     June 30,
                                                          2002         2001
                                                        ---------    ---------
Operating Activities
         Net Loss
Changes in Other Operating Assets & Liabilities:        $ (84,544)   $       -
         Accrued Expenses                                       -            -
                                                        ---------    ---------

Net Cash Provided By (used by) Operations                 (84,544)           -
                                                        ---------    ---------

Financing Activities:
         Contributed Capital by Stockholders               84,662            -
                                                        ---------    ---------

Net Cash Provided by Financing Activities                  84,662            -
                                                        ---------    ---------

Net Increase (decrease) in Cash During Fiscal Year            118            -
Cash  Balance at beginning of Fiscal Year                       -            -
                                                        ---------    ---------
Cash Balance at End of Period                           $     118    $       -
                                                        =========    =========
Supplemental Disclosures of Cash Flow Information:
         Interest Paid During the Fiscal Year                   -            -
         Income Taxes Paid During the Fiscal Year               -            -















The accompanying notes are an integral part of these financial statements.


                                       F-5


                              USCORP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 2002

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES

Nature of Operations

USCorp (the "Company") is a publicly held corporation formed on May 22, 1989 in
the state of Nevada as The Movie Greats Network, Inc. On August 4, 1992, The
Company changed its name to the Program Entertainment Group, Inc. and on August
5, 1997 the Company changed its name to Santa Maria Resources, Inc. In September
2000 the Company changed its name to Fantasticon, Inc. and in January 2002 the
Company changed its name to USCorp.

On October 15, 2000, pursuant to an agreement signed on September 1, 2000, the
Company's wholly owned subsidiary, Fantasticon.com, Inc., a Nevada corporation,
merged with Fantasticon.Com, Inc., a Delaware corporation, Madman Backstage
Productions, Inc., and Impact Interactive, Inc. Pursuant to the agreement, Santa
Maria Resources Inc. changed its name to Fantasticon Inc. and effected a 1:2
reverse split of its common stock. As a condition of the agreement, Santa Maria
divested itself of its business operations prior to the merger. The merger was
rescinded in its entirety by the shareholders in January 2002. 6,025,000 shares
issued to former management have been cancelled and returned to the Treasury. In
addition, effective March 6, 2002 the Company effected a 1:10 reverse split of
its common stock. Accordingly, equity has been restated to reflect the number of
shares outstanding after the cancellation of said shares and the subsequent
reverse split. The statement of operations presented for the three months ended
June 30, 2002 and 2001 and the balance sheet presented at June 30, 2002
represent the results of operations and financial position of USCorp and
USMetals.

In April 2002 USCorp acquired USMetals, Inc. ("USMetals"), a Nevada corporation
as a wholly owned subsidiary. All of the Company's mining business operations
are conducted at this time through USMetals. USMetals owns 141 Lode Mining
Claims near Bagdad, Arizona, called the Twin Peaks Mine.

Management Plans

The company has incurred a net loss of approximately $84,544 during 2002. At
June 30 2002, current assets are approximately $2,435,476.

In order to improve operations and liquidity and meet its cash flow needs, the
company has or intends to do the following:

         o    Raise $20,000,000 in a private placement.
         o    Resume and complete exploration and drilling on all claims of the
              Twin Peaks mine.
         o    Build a test plant.
         o    Complete feasibility studies on the Twin Peaks mine.
         o    Bring the Twin Peaks mine to full-scale commercial mining.
         o    Obtain a credit facility based in part on the value of its proven
              reserves when necessary and if appropriate given market
              conditions.

                                       F-6


As a result of these plans, management believes that it will generate sufficient
cash flows to meet its current obligations in 2002 and 2003.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, and
its wholly owned subsidiary, USMetals, Inc. ("USMetals"). All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company conducts all of its mining operations through its wholly owned
subsidiary, USMetals. International Energy Resources, Inc. ("IERI"), a
non-affiliated company, has agreed to continue to supervise and direct the work
of the mine Exploration and Development Team upon adequate funding of the
project.

Mineral Properties

The Company uses the successful efforts method of accounting for mineral
properties. Under this methodology, costs incurred to acquire mineral interest
in properties, to drill and equip exploratory sites within the Twin Peaks claims
groups are capitalized. Costs to conduct exploration and assay work that does
not find proved reserves, geological and geophysical costs and costs of carrying
and retaining unproved sites will be expensed.

Potential mineral properties that are individually significant will be
periodically assessed for impairment of value and a loss will be recognized at
the time of impairment by providing an impairment allowance. Other unproved
properties will be amortized based on the Company's experience of successful
drilling and historical lease expirations.

An impairment loss is indicated whenever net capitalized costs exceed expected
future net cash flow based on engineering estimates. In this circumstance, the
Company will recognize an impairment loss for the amount by which the carrying
value of the properties exceeds the estimated fair value (based on discounted
cash flow).

On the sale or retirement of a complete claim of proved property, the cost and
related accumulated depletion and amortization will be eliminated from the
property accounts, and the resultant gain or loss will be recognized. On the
retirement or sale of a partial claim of property, the cost will be charged to
accumulated depletion and amortization with a resulting gain or loss recognized
in earnings.

NOTE 2  MINING CLAIMS ACQUIRED AND PURCHASED -- APPRAISED VALUES:

The Company owns 141 unpatented contiguous mining claims totaling approximately
2,820 acres in Township 13, Yavapai County, Arizona. These claims have a history
of mining activity from the middle of the 19th century to the beginning of World
War II. Gold, silver, copper and other minerals were recovered in important
quantities. The previous owners started acquisition of this claim group in the
early 1940's and by 1978 the group totaled 134 claims. Exploration, drilling and
assessment work was done and several geological reports were completed
indicating the presence of economically viable deposits of precious metals and
complex ores.

                                       F-7


Appraisal and Valuation

The Late Mr. N. H. Carouso, formerly President of Geo-Processing, Inc., was
retained in 1985 by the prior owners of these claims to prepare an Economic
Evaluation of the 134 claims in the group at that time. Mr. Carouso earned a
Bachelor of Arts and a Master of Science degree from the University of
California, College of Engineering, Department of Mineral Technology and Mining.
This report was for the recovery of gold and silver only.

The following is a statement from Mr. Carouso's report:

"The mining claims project area offers excellent economic potential. With the
gold and silver mineralization cropping out at the surface and the favorable
topography for surface mining techniques, it is felt that an early cash flow can
be expected. The gross dollar potential of the areas evaluated, which the writer
(Mr. Carouso) feels represents only about 30% of the potential of the entire
group of claims, if combined, could be $280,836,000.00. Even if one then takes a
50% confidence factor as to the grade of ore, the gross dollar potential would
be $115,418,000, and with an expected 70% recovery of precious metals, the
adjusted gross dollar potential would be $80,792,600.00 based on a spot price of
$325/oz, for gold and $6.00/oz. for silver, and mining to a depth of 100 feet."

Other minerals are available from these claims as reported from the United
States Geological Survey conducted in 1940. Of the minerals listed, one of the
most notable was a content of Uranium Ore, U308 (Yellow Cake) which has a
content ranging from .43% to 1.77% by volume. The Company has discussed the
potential of mining U308 Uranium Ore. Management intends upon receipt of
adequate funding to determine viability of economical recovery of uranium.

Additional minerals referred to as "Complex Ores" that have been identified on
these claims have been ignored due to the expensive and sophisticated process of
mining "Complex Ores." Management intends upon receipt of adequate funding to
determine the extent of "Complex Ore" deposits and the feasibility of their
economical recovery.

Revenue Recognition

Mineral sales 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.


                                       F-8


Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts based on enacted laws and statutory rates applicable to the
period in which the differences are expected to affect taxable income. Valuation
allowances are established when, in management's opinion, it is more likely than
not that a portion or all of the deferred tax assets will not be realized.


Use of Estimates

In preparing financial statements, generally accepted accounting principles
require management to make estimates and assumptions in determining the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Recent Accounting Pronouncements

On July 20, 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 141, Business Combinations,  and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 is effective for all business combinations  completed after
June 30,  2001.  SFAS No. 142 is  effective  for fiscal  years  beginning  after
December 15, 2001; however, certain provisions of SFAS No. 142 apply to goodwill
and other intangible assets acquired between July 1, 2001 and the effective date
of SFAS No. 142.

Major  provisions  of SFAS Nos.  141 and 142 and their  effective  dates for the
Company are as follows:

o    All  business  combinations  initiated  after  June 30,  2001  must use the
     purchase method of accounting. The pooling of interest method of accounting
     is prohibited, except for transactions initiated before July 1, 2001.

o    Intangible  assets  acquired  in a business  combination  must be  recorded
     separately  from  goodwill  if they arise from  contractual  or other legal
     rights  or are  separable  from  the  acquired  entity  and  can  be  sold,
     transferred,  rented  or  exchanged,  either  individually  or as part of a
     related contract, asset or liability.

o    Effective  January 1, 2002,  goodwill and intangible assets with indefinite
     lives will be tested  for  impairment  annually  and  whenever  there is an
     impairment indicator.

o    All acquired  goodwill must be assigned to reporting  units for purposes of
     impairment testing and segment reporting.



                                       F-9


In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, and in August 2001, issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 143 requires entities to
record the fair value of liability for an asset retirement obligation in the
period in which it is incurred and a corresponding increase in the carrying
amount of the long-lived asset. Subsequently, the asset retirement cost should
be allocated to expense using a systematic and rational method. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. SFAS No. 144 addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of. It supersedes, with exceptions, SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,
and is effective for the fiscal years beginning after December 15, 2001. The
Company is currently assessing the impact of SFAS Nos. 143 and 144. However, at
this time, the Company does not feel that the impact of these statements will be
material to its consolidated financial position or results of operations.

NOTE 3 - STOCKHOLDERS' EQUITY

On May 1, 2002, the Company adopted an employee stock option plan for certain
employees with a maximum of 2,045,357 shares, which may be issued and granted
exercisable at $.72 per share. During 2002, the Company issued and granted a
total of 650,000 options under the plan.

Option Terms. The plan provides for incentive stock options and non-qualified
stock options. The committee or the Registrant's 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 committee or the
Registrant's Board of Directors will determine the exercise price of an option.
The exercise price of an incentive stock option may not be less than the fair
market value of the Registrant's 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
Registrant's outstanding Common Stock. When the incentive stock option is
exercised, we will be entitled to place a legend on the certificates
representing the shares of Common Stock purchased upon exercise of the option to
identify them as shares of Common Stock purchased upon the exercise of an
incentive stock option. The exercise price of non-qualified stock options may be
greater than, less than or equal to the fair market value of the Common Stock on
the date that the option is awarded, based upon any reasonable measure of fair
market value. The committee may permit the exercise price to be paid in cash or
by the delivery of previously owned shares of Common Stock, and, if permitted in
the applicable option agreement, through a cashless exercise executed through a
broker or by having a number of shares of Common Stock otherwise issuable at the
time of exercise withheld.




                                      F-10


The committee or the Registrant's Board of Directors will also determine the
term of an option. 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 Registrant's
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 become unexercisable no later than
three months after the date of termination of employment. If, however,
termination of employment is due to death or disability, one year will be
substituted for the three-month period. 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 Registrant's 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 Registrant's 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 Company has decided to expense the value of the options when granted to
account for its employee option plan in which compensation is recognized at the
date of the grant. The fair market value exercise price of all options was the
average of the closing price of the Company's stock for the five day period
preceding the registration of the option shares. Accordingly, the compensation
cost has been recognized for the options issued.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

General Commitments

The company has secured various commitments related to development and
production of its mineral properties contingent upon receipt of adequate
funding. It is management's belief that such commitments will not have
significant adverse impact to the Company's financial position or results of
operations.

Leases

As of the date of this report, all office furniture and equipment has been
contributed by a shareholder. In March 2002, the 141 lode mine claims leases
were transferred to USMetals, Inc. These claims leases are renewable annually by
USMetals. Rent expense under these leases is $14,100 each year.

Litigation

The Company is not a party to any matters of litigation.




                                      F-11


NOTE 5 - RELATED PARTY TRANSACTIONS

Joint Venture Agreements

USMetals, Inc. has no joint venture agreements at this time. Mining exploration
and development has been performed under the general supervision and direction
of International Energy and Resources, Inc., ("IERI") which was under agreement
with prior owners of the property. IERI has agreed to provide similar services
to the Company upon securing adequate financing. IERI will supervise and direct
third parties for the purpose of completing the exploration and development of
the Twin Peaks Mine claims group.


NOTE 6 - ACQUISITION OF BUSINESS

On April 2, 2002, the Company acquired USMetals, Inc. ("USMetals") for
24,200,000 shares of its common stock in a share-for-share exchange whereby
USMetals became a wholly owned subsidiary of USCorp. USMetals owns the 141 lode
mining claims known as the Twin Peaks mine near Baghdad, Arizona. The fair value
of the property  is based upon the values that were estimated by field
personnel. The estimated fair market values of the assets acquired and
liabilities assumed in the acquisition of USMetals are as follows:

Estimated fair value of assets acquired
    Property                                                         319,600
    Mine Development
         Hayes Mining, Phillips Mining                               400,000
         American Metals and Minerals                                297,758
         Santa Maria Resources                                       600,000
         International Energy and Resources                          818,000
                                                                   ---------
                  Total fair value of assets                       2,435,358

Liabilities assumed
    Annual Lease Payment                                                   -
                                                                  ----------
                  Estimated fair value of acquisition             $2,435,358
                                                                  ==========

The following summarizes pro forma unaudited projections of results of
operations for the first five years of full scale commercial production. These
estimates were prepared for a prior owner of the property by Ernst and Whinney.
Management believes these projections are a fair representation of the potential
of the Twin Peaks Mine. However, management cannot guarantee any particular
result in any given year, or that full scale commercial production will commence
in any given year or will continue in any succession of years. These pro forma
projections are not necessarily indicative of future results.

Please note that the price per ounce of Gold used by Ernst and Whinney in these
projections is $400. This price and the corresponding values in the projections
which follow should be reduced by 25% in order to reflect the current range of
prices per ounce of Gold.


                                      F-12



                                                                PROJECTED
                                                                CASH FLOW
                                                              FIRST 5 YEARS

                                          YEAR          YEAR           YEAR           YEAR           YEAR           TOTAL
                                           1             2              3              4              5
                                       -----------   -------------  ------------   -------------  ------------   -------------
                                                                                               
Statistics
      Tons of ore mined (000)                  276            690          1,380          2,760          4,140           9,246
      Ore reserve, beginning of year   3.6 million   10.8 million   25.1 million   48.7 million   95.9 million
      New Proven Reserves (Tons)       7.5 million   15.0 million   25.0 million     50 million    100 million   191.8 million
      Ore Grade - Gold (oz/ton)               0.12           0.12           0.12           0.12           0.12
                - Silver (oz/ton)             0.57           0.57           0.57           0.57           0.57
      Tons of Ore processed (000)              276            690          1,380          2,760          4,140           9,246
      Recoverable oz - Gold                 33,120         82,800        165,600        331,200        496,800       1,109,520
                     - Silver              157,320        393,300        786,600      1,573,200      2,359,800       5,270,220
      Sales in oz - Gold                    33,120         82,800        165,600        331,200        496,800       1,109,520
                  - Silver                 157,320        393,300        786,600      1,573,200      2,359,800       5,270,220

------------------------------------   -----------   -------------  ------------   -------------  ------------   -------------
Revenue - Gold @ $400/oz.               13,248,000     33,120,000     66,240,000    132,480,000    198,720,000     443,808,000
        - Silver @ $5/oz.                  786,600      1,966,500      3,933,000      7,866,000     11,799,000      26,351,100
                                       -----------   -------------  ------------   -------------  ------------   -------------
Total Revenue                           14,034,600     35,086,500     70,173,000    140,346,000    210,519,000     470,159,100

Operating Costs:  Mining                 1,290,000      1,770,100      2,760,000      4,560,000      5,904,000      16,284,100
                  Processing             2,021,800      2,692,200      4,162,700      6,517,600      8,805,600      24,199,900
                  G&A (site)               364,200        439,800        666,600       1,069,800     1,473,000       4,013,400
                                       -----------   -------------  ------------   -------------  ------------   -------------
Total Operating Expenses                 3,676,000      4,902,100      7,589,300     12,147,400     16,182,600      44,497,400
Capital Expenditures                     4,629,700      3,846,750      6,574,600     10,135,300     20,456,300      45,642,650
                                       -----------   -------------  ------------   -------------  ------------   -------------
Total Expenditures                       8,305,700      8,748,850     14,163,900     22,282,700     36,638,900      90,140,050
Income Taxes                             4,284,742     13,240,579     27,803,954     57,545,435     87,006,857     189,881,567
Net Cash Flow after Taxes                1,444,158     13,097,071     28,205,146     60,517,865     86,873,243
Accumulated Net Cash Flows               1,444,158     14,541,229     42,746,375    103,264,240    190,137,483     190,137,483
Present Value - Beginning of Year
      10%                                1,312,871     10,824,026     21,190,943     41,334,516     53,941,449     128,603,805
      12%                                1,289,427     10,440,904     20,075,865     38,460,197     49,294,211     119,560,604
      14%                                1,266,805     10,077,771     19,037,670     35,831,434     45,119,240     111,332,920
      16%                                1,244,964      9,733,257     18,069,843     33,423,478     41,361,482     103,833,024









                                      F-13



                                                            PROJECTED
                                                           PROFIT/LOSS

                                                          FIRST 5 YEARS


                                       YEAR           YEAR           YEAR            YEAR            YEAR
                                        1              2              3               4               5
                                     ---------     -----------   ------------     ------------     -----------
                                                                                    
Net Cash Flow Before Taxes           5,728,900      26,337,650     56,009,100      118,063,000     173,880,100

      Add - Capital Expenditures     4,629,700       3,846,750      6,574,600       10,135,300      20,456,300
      Less - Depreciation             (462,970)       (847,645)    (1,505,105)      (2,518,635)     (4,564,265)
      Less - Depletion (15% Gross)  (2,105,190)     (5,262,975)   (10,525,950)     (21,051,900)    (31,577,850)
                                     ---------     -----------   ------------     ------------     -----------
Taxable Income                       7,790,440      24,073,780     50,552,645      104,627,765     158,194,285

State Income Tax (10%)                 779,044       2,407,378      5,055,265       10,462,777      15,819,429
                                     7,011,396      21,666,402     45,497,381       94,164,989     142,374,857
federal Income Tax (50%)            (3,505,698)    (10,833,201)   (22,748,690)     (47,082,494)    (71,187,428)

Net Income                           3,505,698      10,833,201     22,748,690       47,082,494      71,187,428



The operations of USMetals are included in the accompanying consolidated
financial statements subsequent to the acquisition.

NOTE 7 - MINERAL RESERVE DATA (UNAUDITED)

The following estimates of proved reserve quantities and related standardized
measure of discounted net cash flows are estimated only, and do not purport to
reflect realizable values or fair market values of the Company's reserves. The
Company emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries are more imprecise than those of producing mining
properties.

Accordingly, these estimates are expected to change as future information
becomes available. All of the Company's reserves are located in the United
States, in the State of Arizona.

The following is a quote from a report prepared by International Energy and
Resources, Inc. (The full report is available from the Company upon written
request). All references to "Exhibits" refer to Exhibits of IERI's Report.




                                       F-14


"...The Twin Peaks Mine is on the same structure and flat zone as the Phelps
Dodge deposit. The claims and previous producing mines are on the Jasper Peak
with gold carrying mineralization ... To date, numerous geological, geochemical,
and geophysical studies have been conducted to confirm historical assays and
establish estimated reserves. In the 1980's over 10,000 feet of core drillings
were done and over 1,500 fire assays were conducted. These assays showed an
overall average of .14 ounces of gold per ton and .595 ounces of silver per ton,
which proves over 652,000 ounces of gold and 2,488,000 ounces of silver in
reserve using 1 area covering 3 claims. At $250 per ounce for gold and $5.00 per
ounce for silver this represents $175,440,000.00. If we extend the depth to 400
ft. (early miners tunneled to this depth and the drilling results verified ore
to this depth) the total amount would be multiplied by 4 and the value would be
$701,760,000.00. If we extend the same areas to a depth of 2,000 ft, which is
the depth that the Phelps Dodge Mine in Bagdad is being mined, the estimated
inferred reserves would be approximately: $3,508,800,000.000 (over 3.5 billion
dollars).

Some of the geological, geophysical, and geochemical studies listed above were
audited and evaluated by Nicholas H. Carouso, President of Geo-Processing, Inc.
which was an independent mining, consulting, and geology firm. Mr. Carouso's
report and economic study recommended the continuation of exploration and start
of production. (*Excerpts from Carouso's report and assays mentioned above are
part of exhibits #4, #5, and #6 [of IERI's Report])

In January 2001, International Energy and Resources, Inc. hired Spooner and
Associates to do further geological studies. Spooner and Associates have over
100 years of mining experience (*see Twin Peaks Mine Mining Team). After Spooner
and Associates' Senior Geologist Scott Spooner and Cad Drawing Survey Specialist
Eric C. Monk audited the geological studies previously mentioned they visited
The Twin Peaks Mine in late January 2001. In March of 2001, by recommendation of
Spooner and Associates, International Energy and Resources, Inc. mobilized a
crew to build approximately 10 miles of road to gain access to the historic
Hayes Mining area. This would enable them to conduct further geological studies.
(*see exhibit #1 [of IERI's Report]).

In late March 2001 International Energy and Resources, Inc. hired Hillbrands and
Western Mining Co. to drill holes so that ore samples could be collected and
assayed. They have currently drilled approximately 30 holes measuring 100 ft. in
depth for a total of 3,000 ft. of drill cuttings. Spooner and Associates
retained over 30 samples for assaying. In conjunction with the drilling
operation, Spooner and Associates have also taken numerous ground samples from
two different locations surrounding the historic Hayes Mine. These samples have
also been assayed. The results of the geological studies were as follows:

Drill hole #30 was subject to a standard fire assay as well as oxidation prior
to standard fire assaying. This assay and oxidation process was conducted on
cuttings taken at a depth of 40-50ft. The standard fire assay results revealed
gold values of .20 opt (ounces of ore per ton); while oxidation followed by fire
assaying showed gold values of 1.16 opt. This structure is approximately 3,400
ft. long x 100 ft. wide x 100 ft. in depth. This yields reserves of 2,014,815
tons of ore x 1.16 opt gold equaling 2,337,185 ounces of gold. The lower results
from the standard fire assaying are due to the presence of sulfides and
arsenides that tend to drive the gold and silver into the slag phase during
standard fire assaying (*see exhibit #2 [of IERI's Report]). With this in mind
it is reasonable to assume that all previous standard fire assays done would
increase 5.8 times through oxidation prior to fire assaying.

                                       F-15


Rock material from the hanging wall and footwall of the quartz vein were subject
to crushing, screening, and fire assaying. The results from the quartz dike
revealed an average of .57 opt from fire assaying and 5.8 times or 3.31 opt
using the oxidation method. That yields reserves of 16,694,056 ounces of gold.
Rock chips were taken from the red conglomerate located just south of the Hayes
Mine and just west of the volcanic plug. The fire assays revealed .20 opt of
gold. As stated previously oxidation prior to fire assaying should increase the
gold amount by 5.8 times to 1.16 opt. This area has ore reserves of 2,395,477
ounces of gold. These three areas have a combined total of 9,138,687 tons of
ore, which yields a total of 21,426,718 reserves ounces of gold.

From these studies it is International Energy and Resources, Inc.'s and Spooner
and Associates' recommendation that USMetals, Inc...do a fly over to determine
areas of mineralization...a six month drilling program using reverse circular
and core drilling to depths of 500 ft. per hole in conjunction with a pilot mill
to further prove and develop reserves. It is important to note that
International Energy And Resources, Inc. hasn't done any work on the Crosby area
of the claims, and that history of this area is very favorable to further
development."

Potential ore reserves are estimated reserves of ore that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known ore deposits under existing economic and operating
conditions.

Operating costs and production taxes are estimated with respect to production of
mineral properties. Future development costs are based on the best estimate of
such costs assuming current economic and operating conditions.

Income tax expense is computed based on applying the appropriate statutory tax
rate to the excess of future cash inflows less future production and development
costs over the current tax basis of the properties involved, less applicable
carryforwards, for both regular and alternative minimum tax.

The future net revenue information assumes no escalation of costs or prices,
except for mineral sales which may be made under terms of contracts which would
include fixed and determinable escalation. Future costs and prices could
significantly vary from estimated amounts and, accordingly, revisions in the
future could be significant.





                                       F-16






                                   SIGNATURES

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

                                              USCORP
                                            (the Registrant)



Dated:   October 8, 2002                    /s/ Larry Dietz
                                            ---------------
                                                Larry Dietz
                                                President




                                       53