UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 T QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
quarterly period ended June 30, 2008
 
 
 333-117114
 --------------------------------------
 Commission
File number
 
 USA
SUPERIOR ENERGY HOLDINGS, INC.
 ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
 (Exact
name of registrant as specified in its charter)
 
 
 NEVADA
              
              30-0220588-------------------------
              
              ----------------------(State
      or other jurisdiction of incorporation)
              
              (IRS
      Employer Identification No.)
 
 
 1726
Augusta Drive, Suite 105, Houston, Texas 77057
 -------------------------------------------------------------------------
 (Address
of principal executive offices) (Zip Code)
 
 Registrant’s
telephone number, including area code: 832-251-3000
 ------------------
 
 Securities
Registered pursuant to Section 12(b) of the Exchange Act:
 
 
 Common
      Stock, $.001 par value
              
              Over
      The Counter Bulletin Board(Title
      of Class)
              
              (Name
      of exchange on which registered)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes £No T
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
 Large
      accelerated filer £
                
                Accelerated
      filer £Non-accelerated
      filer £
                
                (Do
      not check if a smaller reporting company)Smaller
      reporting company T
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes £No T
  
 
  PART
I- FINANCIAL INFORMATION
 
 Item
1. Financial Statements
 
 IMPORTANT
DISCLOSURE
 
 Contrary
to the rules of the SEC, the Company's consolidated financial statements
included in this filing have not been reviewed by an independent public
accountant in accordance with professional standards for conducting such
reviews.
 
 
 Table
of Contents for Item 1:
 
 
 o
              Consolidated
      Balance Sheets as of June 30, 2008 and December 31,
  2007
 
 o
              Consolidated
      Statements of Operations for the three and six months ended June 30, 2008
      and 2007
 
 o
              Consolidated
      Statement of Stockholders’ Equity for the six months ended June 30,
      2008
 
 o
              Consolidated
      Statements of Cash Flows for six months ended June 30, 2008 and
      2007
 
 o
              Notes
      to the Consolidated Financial Statements – June 30,
  2008
  
  USA
SUPERIOR ENERGY HOLDINGS, INC.
 CONSOLIDATED
BALANCE SHEETS
 As
of June 30, 2008 and December 31, 2007
 
 ASSETS
              
              June
      30, 2008
              
              
              December
      31, 2007Current
      assets
              
              (unaudited)
              
              
              (audited)Cash
      and cash equivalents
              
              $
              23,779
              
              
              $
              256,943Restricted
      cash
              
              
              50,000
              
              
              
              50,000Accounts
      receivable
              
              
              2,500
              
              
              
              -Prepaid
      expenses and other current assets
              
              
              153,270
              
              
              
              24,699Total
      current assets
              
              
              229,549
              
              
              
              331,642Oil
      and gas properties, including $348,086 of unproved properties, net of
      accumulated depletion, depreciation and amortization of $76,311 and
      $36,991, respectively – using full cost method of
    accounting
              
              
              1,528,969
              
              
              
              1,568,289Office
      equipment, net of depreciation of $17,059 and $9,391,
      respectively
              
              
              26,704
              
              
              
              34,372Other
      assets
              
              
              750
              
              
              
              750Total
      assets
              
              $
              1,785,972
              
              
              $
              1,935,053LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilitiesAccounts
      payable and accrued liabilities
              
              $
              651,848
              
              
              $
              326,730Convertible
      demand note, net of unamortized discount of $ 240,260 and $244,154,
      respectively
              
              
              46,961
              
              
              
              27,000Current
      portion of notes payable
              
              
              344,097
              
              
              
              347,762Advances
      payable – related party
              
              
              272,784
              
              
              
              114,259Total
      current liabilities
              
              
              1,315,690
              
              
              
              815,751Convertible
      debenture, net of unamortized discount of $238,852 and $257,316,
      respectively
              
              
              257,764
              
              
              
              215,947Notes
      payable
              
              
              171,522
              
              
              
              363,957Asset
      retirement obligations
              
              
              118,251
              
              
              
              115,520Total
      liabilities
              
              
              1,863,227
              
              
              
              1,511,175STOCKHOLDERS’
      EQUITYCommon
      shares, $0.001 par value, 150,000,000 shares authorized, 56,160,000 and
      55,760,000 shares issued and outstanding, respectively
              
              
              56,160
              
              
              
              55,760Additional
      paid-in capital
              
              
              8,377,720
              
              
              
              7,924,850Stock
      subscription receivable
              
              
              (130,000
              )
              
              
              -Accumulated
      deficit
              
              
              (8,381,135
              )
              
              
              (7,556,732
              )Total
      stockholders’ equity
              
              
              (77,255
              )
              
              
              423,878Total
      liabilities and stockholders’ equity
              
              $
              1,785,972
              
              
              $
              1,935,053
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  
 
 USA
SUPERIOR ENERGY HOLDINGS, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 For
the six and three months ended June 30, 2008 and 2007
 (Unaudited)
 
 Three
      months to June 30
              
              
              Six
      months to June 302008
              
              
              2007
              
              
              2008
              
              
              2007Revenue
              
              $
              124,522
              
              
              $
              140,917
              
              
              $
              240,085
              
              
              $
              194,335Operating
      expensesLease
      operating expenses
              
              
              15,358
              
              
              
              93,434
              
              
              
              119,612
              
              
              
              126,423General
      and administrative, including stock based compensation of $207,436 and
      $3,020,000, respectively
              
              
              320,833
              
              
              
              446,807
              
              
              
              784,584
              
              
              
              3,772,662Depreciation,
      depletion and amortization
              
              
              28,476
              
              
              
              
              
              
              
              49,712Total
      operating expenses
              
              
              364,667
              
              
              
              540,241
              
              
              
              953,908
              
              
              
              3,899,085Operating
      loss
              
              
              (240,145
              )
              
              
              (399,324
              )
              
              
              (713,823
              )
              
              
              (3,704,750
              )Other
      income (expense)
              
              
              (23,244
              )
              
              
              3,516
              
              
              
              (23,244
              )
              
              
              3,516Interest
      expense
              
              
              (44,274
              )
              
              
              -
              
              
              
              (87,329
              )
              
              
              -Total
      other expense
              
              
              (67,518
              )
              
              
              3,516
              
              
              
              (110,573
              )
              
              
              3,516Net
      loss
              
              
              (307,663
              )
              
              
              (395,808
              )
              
              
              (824,403
              )
              
              
              (3,701,234
              )Net
      loss per share:Basic
      and diluted
              
              $
              (0.01
              )
              
              $
              (0.09
              )
              
              $
              (0.01
              )
              
              $
              (0.10
              )Weighted
      average shares outstanding:Basic
      and diluted
              
              
              56,067,692
              
              
              
              35,666,630
              
              
              
              56,067,692
              
              
              
              35,666,630
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  
  USA
SUPERIOR ENERGY HOLDINGS, INC.
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
 For
the six months ended June 30, 2008
 (Unaudited)
 
 Common
                Shares
              
              
              Par
                Amount
              
              
              Additional
                Paid-In
                Capital
              
              
              Stock
      Subscription Receivable
              
              
              Accumulated
                Deficit
              
              
              TotalBalance,
      December 31, 2007
              
              
              55,760,000
              
              
              $
              55,760
              
              
              $
              7,924,850
              
              
              $
              -
              
              
              $
              (7,556,732
              )
              
              $
              423,878Shares
      issued in exchange for subscription receivable
              
              
              400,000
              
              
              
              400
              
              
              
              299,600
              
              
              
              (130,000
              )
              
              
              -
              
              
              
              170,000Warrants
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              153,270
              
              
              
              -
              
              
              
              -
              
              
              
              153,270Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (824,403
              )
              
              
              (824,403
              )Balance,
      June 30, 2008
              
              
              56,160,000
              
              
              $
              56,160
              
              
              $
              8,377,720
              
              
              $
              (130,000
              )
              
              $
              (8,381,135
              )
              
              $
              (77,255
              )
 
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  
  USA
SUPERIOR ENERGY HOLDINGS, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For
the six months ended June 30, 2007 and 2008
 (Unaudited)
 
 2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (824,403
              )
              
              $
              (3,701,234
              )Adjustments
      to reconcile net loss to cash used by operating
activities:Depreciation,
      depletion and amortization
              
              
              49,719
              
              
              
              153Amortization
      of debt discount
              
              
              22,358
              
              
              
              248,048Stock
      based compensation
              
              
              207,436
              
              
              
              3,020,000Net
      change in operating assets and liabilities
              
              
              413,826
              
              
              
              (229,926
              )NET CASH
      USED BY OPERATING ACTIVITIES
              
              
              (131,064
              )
              
              
              (662,959
              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of property and equipment
              
              
              -
              
              
              
              (37,945
              )Investment
      in oil and gas properties
              
              
              -
              
              
              
              (400,000
              )Increase
      in restricted cash
              
              
              -
              
              
              
              -CASH
      FLOWS USED IN INVESTING ACTIVITIES
              
              
              -
              
              
              
              (437,945
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from issuance of short-term debt
              
              
              100,000
              
              
              
              27,740Proceeds
      from sale of units
              
              
              -
              
              
              
              1,000,000Capital
      contributions from shareholder
              
              
              -
              
              
              
              72,212Repayments
      of notes payable
              
              
              (202,100
              )
              
              
              -CASH
      FLOWS USED BY FINANCING ACTIVITIES
              
              
              (102,100
              )
              
              
              1,099,952NET
      INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (233,164
              )
              
              
              (952
              )Cash
      and cash equivalents, beginning of period
              
              
              256,943
              
              
              
              6,657Cash
      and cash equivalents, end of period
              
              $
              23,779
              
              
              $
              5,705Cash
      paid for:Interest
              
              $
              1,001
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -Supplemental
      Schedule of Non-cash Investing and Financing Activities:Purchase
      oil and gas properties through issuance of notes payable
              
              $
              -
              
              
              $
              750,097Recapitalization
              
              
              -
              
              
              
              18,360Asset
      retirement obligation incurred
              
              
              -
              
              
              
              88,066
 
 The
accompanying notes are an integral part of these consolidated financial
statements
  
  USA
SUPERIOR ENERGY HOLDINGS, INC.
 NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008
 
 Note
1 – Organization and Business Operations
 
 Contrary
to the rules of the SEC, the Company's consolidated financial statements
included in this filing have not been reviewed by an independent public
accountant in accordance with professional standards for conducting such
reviews.
 
 USA
Superior Energy Holdings, Inc. (the “Company” or “USA Superior”), a Nevada
corporation, was originally formed on November 12, 2003 as Comlink
Communications Company (“Comlink”).  In fiscal the fiscal year ended
2006, Comlink was essentially dormant with no operating business, having
discontinued all prior operations in the first quarter of 2006. Prior operations
consisted of an attempt to market two-way radio communication equipment over the
internet. The Company had no capital and no prospects to raise capital to carry
out the prior business plan.
 
 The
current business of the Company is to develop, own and operate prospects and
energy projects in East and Southwest Texas.  The Company primarily
focuses on properties with a potential for enhanced secondary or tertiary
recovery using modern state-of-the-art workover and stimulation
techniques.
 
 On
January 16, 2007, USA Superior and Comlink Communications Company (“Comlink”)
consummated a merger that was effected through a reverse merger in which the
shareholders of USA Superior agreed to receive 34,000,000 shares of common stock
of Comlink in exchange for 100% of the issued and outstanding shares of USA
Superior.  Concurrent with the merger, USA Superior’s executive
management and directors assumed control and responsibility for Comlink’s
activities and its strategic direction.   The merger effected a
change in control of Comlink and immediately following the merger, USA
Superior’s former stockholders held approximately 59% of Comlink’s issued and
outstanding common shares.  After the merger, Comlink’s name was
changed to USA Superior Energy Holdings, Inc., and the stock symbol was changed
to OTCBB: USSU.
  For
Securities and Exchange Commission (“SEC”) reporting purposes, the merger
between USA Superior and Comlink was treated as a reverse merger with USA
Superior being the “accounting acquirer” and, accordingly, it assumed Comlink’s
reporting obligations with the SEC.  In accordance with SEC
requirements, the historical financial statements and related disclosures
presented herein for the period prior to the date of merger
(i.e.,   January 16, 2007) are those of USA
Superior.  The assets and liabilities of Comlink were recorded, as of
completion of the merger, at fair value, which is considered to approximate
historical cost, and added to those of USA Superior.
 
 In
accordance with the terms of the merger agreement, each outstanding share of USA
Superior prior to the reverse merger was converted into 309.8 common shares in
USA Superior (post reverse merger) with a total of 30,980,000 common shares
issued to the former USA Superior stockholders. Of the 63,360,000 shares of
Comlink outstanding at the time of the merger, 45,000,000 shares were
cancelled concurrent with the closing of the
merger.
  
  In
conjunction with the merger, USA Superior issued 3,020,000 shares of common
stock.  In accordance with EITF 95-8, USA Superior determined
that these were shares issued for services and not additional transaction costs
due to the fact that Comlink’s cash balance was minimal prior to the
merger.  These shares had a market value of $3,020,000 on the date of
the reverse merger.  Of the total shares issued for services,
2,720,000 shares were issued to employees of USA Superior.  Immediately
following the merger, a total of 52,360,000 shares of common stock were issued
and outstanding.
  Since its
inception, USA Superior has funded its oil and gas activities through a
combination of equity and debt securities and the contribution of funds and
services by its principal shareholders and
management.
  Note
2 – Summary of Significant Accounting Policies
  Interim
Financial Statements
 
 The
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2007, as filed with the Securities
and Exchange Commission (“SEC”). The financial statements included herein as of
June 30, 2008, and for the six and three month periods ended June 30, 2008 and
2007, are unaudited, and in the opinion of management, the information furnished
reflects all material adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and of the results for
the interim periods presented. Certain minor reclassifications of prior period
financial statements have been made to conform to current reporting practices.
The results of operations for interim periods are not necessarily indicative of
results to be expected for a full year
 
 Basis
of presentation
  USA
Superior’s unaudited consolidated balance sheets as of June 30, 2008 and
December 31, 2007 and related consolidated statements of operations,
stockholders’ equity and cash flow for the six and three months ended June 30,
2008 and 2007 are presented in U.S. dollars and have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) and the rules of the Securities and Exchange Commission.
 
 Use
of estimates
  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect 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 periods.  Actual results could materially differ from those
estimates.
  Management
believes that it is reasonably possible the following material estimates
affecting the financial statements could significantly change in the coming
year:  (1) estimates of proved oil and gas reserves, and (2) forecast
forward price curves for natural gas and crude oil.   The oil and
gas industry in the United States has historically experienced substantial
commodity price volatility, and such volatility is expected to continue in the
future.   Commodity prices affect the level of reserves that are
considered commercially recoverable; significantly influence USA Superior’s
current and future expected cash flows; and impact the PV10 derivation of proved
reserves presented in USA Superior’s supplemental oil and gas reserve
disclosures made herein.
  
  Principles
of consolidation
  The
financial statements include the accounts of its 100% owned subsidiaries USA
Superior Energy, Inc. and Superior Energy, LLC and its 80% interest in the
subsidiary Skyrider Energy, LLC.
  Revenue
and cost recognition
  USA
Superior uses the sales method to account for sales of crude oil and natural
gas. Under this method, revenues are recognized based on actual volumes of oil
and gas sold to purchasers. The volumes sold may differ from the volumes to
which USA Superior is entitled based on our interest in the
properties.  These differences create imbalances which are recognized
as a liability only when the imbalance exceeds the estimate of remaining
reserves.  USA Superior had no imbalances as of June 30, 2008 and
December 31, 2007.  Costs associated with production are expensed in
the period incurred.
  New
Accounting Pronouncements
  USA
Superior does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on their results of operations,
financial position or cash flows
  Note
3 – Going Concern
  USA
Superior has raised limited financing and has incurred operating losses since
its inception in October 2005.  These factors raise substantial doubt
about USA Superior’s ability to continue as a going
concern.   USA Superior’s ability to achieve and maintain
profitability and positive cash flow is dependent on its ability to secure
sufficient financing to fund the acquisition, drilling and development of
profitable oil and gas properties.  Management is seeking financing
that it believes would allow USA Superior to establish and sustain commercial
production.   There are no assurances that USA Superior will be
able to obtain additional financing from investors or private lenders and, if
available, such financing may not be on commercial terms acceptable to USA
Superior or its stockholders. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
  Note
4 – Notes Payable and Convertible Debentures
 
 Notes
Payable – Bastrop and Caldwell County, Texas Leases
 
 As a
portion of the consideration for the purchase of the Bastrop and Caldwell
County, Texas leases, USA Superior issued a $350,000 note payable to the
seller.  The note bears interest at 5% and requires monthly payments
of $15,000 plus interest.  As of December 31, 2007, USA Superior was
in default on the payments of the note.  On April 11, 2008, USA
Superior paid the lender $50,000 for attorney fees and a partial payment on the
note and entered into a Renewal and Extension Promissory Note which settled the
default.  Under the terms of the new note, USA Superior must make
monthly payments of $15,000 plus 8% interest beginning May 15,
2008.  All unpaid principal and interest is due October 15,
2008.  This note is secured by 500,000 shares of USA Superior’s common
stock which were pledged by the Company’s CEO and USA Superior’s interest in the
Bastrop County leases.
  
  As
additional consideration for the purchase of the Bastrop County, Texas leases,
USA Superior agreed to assume the seller’s noninterest bearing liability to a
third party in the total amount of $440,000.  This note requires
payments of 25 percent of the net revenue from the production of the leases,
with minimum payments of $7,500 per month and $120,000 per year.  This
note was recorded at the present value of the future cash payments of
$400,097.  Management used an interest rate of 5% to discount this
rate, because it was the same as the rate on the note payable to the seller
described above.  USA Superior is currently in default on the note due
to the fact that all required payments have not been made on the
note.
 
 Convertible
Note Payable
 
 On
January 23, 2008, USA Superior issued a convertible promissory note payable to a
third party in the amount of $100,000.  The proceeds of this note were
placed in an escrow account to indemnify a broker for potential losses to be
incurred in online trading in the company’s stock.  The note bears
interest at 8%, matures January 23, 2009 and is convertible in the event of a
merger transaction at the lowest rate available to other convertible note
holders.  The note was repaid in June 2008.
  Convertible
Debenture
  On
October 30, 2007, USA Superior issued a $2.5 million secured convertible
debenture to a private investor in exchange for $200,000 cash and a $2.3 million
secured promissory note from the investor.  The convertible debenture
bore interest at 9.75% with interest payments due monthly beginning in April
2008 and matures October 30, 2011.  Principal was due at
maturity.  The debenture could be repaid in portion or in full at any
time at 125% of the then outstanding principal and accrued interest and issuing
warrants to purchase 200,000 shares.  The debenture provided the
lender the right to convert any or all of the outstanding balance to USA
Superior shares of common stock at a conversion rate of the lesser of 80 percent
of the average of the lowest three trading prices of the common share during the
20 days prior to conversion or $0.50 with certain prepayment rights by USA if
the price is below $0.20 on the day the conversion election is
made.  If the lender elects to convert all or a portion of the
debenture and the conversion price is less than $0.16, USA Superior has the
option to prepay the note at 150% rather than converting the note.
  USA
Superior evaluated the terms of the convertible debenture in accordance with
EITF 98-5 and EITF 00-27 and concluded that this debenture did not result in a
derivative.  USA Superior evaluated the terms of the convertible
debenture and concluded that there was a beneficial conversion feature since the
note was convertible into shares of common stock at a discount to the market
value of the common stock.  The discount related to the beneficial
conversion feature was valued at $200,000 at inception based on the intrinsic
value of the discount.  The discount was being amortized using the
effective interest method over the four year term of the
note.    For the period this note was outstanding, $3,593
was charged to interest expense associated with the amortization of the debt
discount.
  
  The
secured promissory note bore interest at 10% with interest payable to USA
Superior monthly beginning in April 2008 and requires monthly payments of
$250,000 to USA Superior, under certain conditions.
  This
debenture was refinanced on November 20, 2007 by the payment of $200,000 to the
lender, the cancelation of the $2.3 million secured promissory note receivable,
and the issuance of a three year noninterest bearing $625,000 convertible
debenture.  The new debenture requires a single payment of $625,000 on
November 20, 2010 and may not be prepaid without the prior approval of the
lender.  USA Superior calculated the present value of the note using
an interest rate of 9.75% which was the same rate as the original
debenture.  The new debenture is recorded at its present value of
$468,136.  The new debenture is convertible into common stock of USA
Superior at a conversion rate of 95% of the average of the three lowest trading
prices during the 20 trading days prior to conversion at the option of the
holder.  USA Superior may choose to prepay the new debenture at 110%
of the principal amount after the lender has issued a notice of
conversion.  USA Superior compared the discounted present value of the
cash flows under the original debenture and the new debenture and determined
that the difference in the cash flows was greater than ten
percent.  Accordingly, the issuance of the new debenture was treated
as an extinguishment of the original convertible debenture and the issuance of a
new debenture and recorded a loss of $403,759 on the transaction.
  USA
Superior evaluated the terms of the convertible debenture in accordance with
EITF 98-5 and EITF 00-27 and concluded that this note did not result in a
derivative.  USA Superior evaluated the terms of the convertible
debenture and concluded that there was a beneficial conversion feature since the
note was convertible into shares of common stock at a discount to the market
value of the common stock.  The discount related to the beneficial
conversion feature was valued at $261,144 at inception based on the intrinsic
value of the discount.  For the period from January 1, 2008, through
June 30, 2008, $18,464 was charged to interest expense associated with the
amortization of the debt discount.  At June 30, 2008, the convertible
debenture was recorded on the balance sheet at $257,764, which is made up of the
discounted face value of the note of $468,136 plus accrued interest of $28,480
offset by the unamortized discount of $238,852.
  Convertible
Demand Note
  On
December 18, 2007, USA Superior received proceeds of $225,000 in exchange for a
$270,000 convertible note payable.   The note bears interest at
12.0% per annum; is convertible at the lesser of 50% of the lowest trading price
during the 20 trading days prior to conversion or $0.79 per share of common
stock; and provided for a payment on maturity or upon the occurrence of certain
events; but no later than December 18, 2010.
  USA
Superior evaluated the terms of the convertible note in accordance with EITF
98-5 and EITF 00-27 and concluded that this note did not result in a
derivative.  USA Superior also concluded that there was a beneficial
conversion feature since the note was convertible into shares of common stock at
a discount to the market value of the stock.  The discount was valued at
$261,144 at inception based on the intrinsic value of the discount at
inception.  The discount is being amortized using the effective
interest method over the three year term of the note.  For the period
from January 1, 2008, through June 30, 2008, $3,894 was charged to interest
expense associated with the amortization of the debt discount.  At
June 30, 2008, the convertible demand note was recorded on the balance sheet at
$46,961, which is made up of the face amount of the note of $270,000 and accrued
interest of $17,221 offset by the unamortized discount of
$240,260.
  
  Note
5 – Stockholders’ Equity
  Issuance
of Common Shares and Warrants
  On March
1, 2008, as modified April 22, 2008, USA Superior entered into an agreement with
a third party for financial advisory services for the period from March 1, 2008
through February 28, 2010.  Under the terms of the contract USA
Superior will make monthly payments of $5,000 for a total of 23
months.  In addition, USA Superior has issued a warrant to purchase
1,000,000 shares of common stock for a period of five years at an exercise price
of $0.17 and USA Superior’s CEO will pay the third-party 1,250,000 shares of the
common stock owned by him.  The warrants were valued at $153,270 using
the Black-Scholes model with the following assumptions:
 
 AssumptionExercise
      price
              
              $
              0.17Stock
      price on the issuance date
              
              $
              0.18Term
      (years)
              
              
              5Risk
      free interest rate
              
              
              2.64
              %Volatility
              
              
              124
              %
 
 The value
of the warrants has been recorded as a prepaid asset and is being amortized over
the two year term of the agreement.  The 1,250,000 shares of stock
have not yet been transferred by the CEO.
 
 Issuance
of Common Stock for Subscription Agreement
  In
January 2008, USA Superior issued 400,000 shares of stock to an employee of the
company in exchange for a stock subscription receivable in the amount of
$130,000.  The shares were valued at $300,000 on the date of
issuances.  USA Superior recognized $170,000 of compensation expense
related to the difference in the market value of the shares and the cash to be
received from the employee.
 
 Note
5 – Subsequent Events
 
 On August
7, 2008, the company  announced that it has executed a letter of
intent to merge with Hunt Global Resources Inc. of Montgomery,
Texas.  The transaction will be in the form of a “reverse
merger”.  Under terms of the agreement, Hunt will assume a majority
stock position and appoint a new board of directors.  Full details of
the transaction will be released upon the execution of a definitive agreement
between the parties.  Closing is based on the completion of required
audits, satisfactory due-diligence, a fairness-opinion and shareholders approval
of the transaction.  Hunt is a natural resource company that plans to
begin mining operations in the fourth quarter of this year on 350 acres of land
containing proven sand and gravel reserves valued at an estimated $1.2 billion
dollars.
  
  Item
2. Management’s Discussion Analysis of Financial Condition and Results of
Operations
 
 The
following discussion will assist you in understanding our financial position,
liquidity, and results of operations. The information below should be
read in conjunction with the consolidated financial statements, and the
related notes to consolidated financial statements. Our discussion contains both
historical and forward-looking information. We assess the risks and
uncertainties about our business, long-term strategy, and financial condition
before we make any forward-looking statements, but we cannot guarantee that
our assessment is accurate or that our goals and projections can or will be met.
Statements concerning results of future exploration, exploitation,
development, and acquisition expenditures as well as expense and reserve levels
are forward-looking statements. We make assumptions about commodity prices,
drilling results, production costs, administrative expenses, and interest costs
that we believe are reasonable based on currently available
information.
 
 Business
Strategy
 
 USA
Superior Energy Holdings, Inc. (the “Company”) is focused on acquiring, owning,
operating and applying enhanced oil recovery (“EOR”) techniques to existing
shallow fields of oil and gas.  The Company performs complete workover
and stimulation services in these existing fields to restart or substantially
increase production. It utilizes state-of-the-art workover and shallow-well
drilling techniques in these fields including new and innovative technologies
under development by the Company.  These new technologies include
specialized shallow-well cased hole horizontal drilling (“CHHD”) and nitrogen
(“N2”) injection which will be utilized to increase production volumes and
reserve recoverability from the Company’s projects. Currently, the Company is
involved in developing, owning and operating energy projects and prospects in
East, Central and South Texas and currently has active projects and prospects in
Bastrop, Caldwell, Navarro and Zavalla counties. These fields are known as the
Bateman Project in Bastrop and Caldwell Counties (comprised of the Bateman
Field and part of the adjacent Dale McBride Field), the Benton Field in
Navarro County and the Del Monte Prospect in
Zavalla County.
 
 Going
Concern
 
 We
incurred a net loss of $824,403 for the six months ended June 30, 2008 and have
a working capital deficit of $1,239,411 at June 30, 2008, excluding prepaid
expenses relating primarily to services paid for with common
stock.  We require significant additional funding to sustain our
operations and satisfy our contractual obligations for our planned oil and gas
exploration and development operations. Our ability to establish the Company as
a going concern is dependent upon our ability to obtain additional financing, in
order to fund our planned operations and ultimately, to achieve profitable
operations.
 
 Liquidity
and Capital Resources
 
 Our main
sources of liquidity and capital resources for the six months ended June 30,
2008 were shareholder loans and draw down of our cash balances. During the
period, we entered into a financing arrangement with our oil purchasing
customers which allows for immediate payment on barrels delivered. While this
may reduce the price we might otherwise receive for our production, we have been
able to accelerate cash flow from revenues to enhance our liquidity by receiving
cash upon the delivery of our barrels.
  
  During
the six months ended June 30, 2008, net cash flow used by operating activities
was $131,064.  Excluding the effects of significant unforeseen
expenses or other income, our cash flow from operations fluctuates primarily
because of variations in oil and gas production rates and in commodity
prices. In addition, our oil and gas production from either of our properties
may be curtailed due to maintenance and weather-related factors beyond our
control.
 
 Our
realized oil and gas prices vary significantly due to world political events,
supply and demand for products, product storage levels, and
weather patterns, among other factors. We sell 100% of our production at
spot market prices. Accordingly, product price volatility will affect our cash
flow from operations.
 
 We
anticipate making capital expenditures of approximately $4,000,000 over the next
several years to drill additional wells on our existing
properties.  The remainder of our 2008 capital budget will be
funded from a combination of our cash flow from operations, our cash and cash
equivalents and the proceeds from offerings of debt and/or equity
securities.
 
 On June
30, 2008, our current liabilities exceeded our current assets by $1,239,411,
excluding prepaid expenses relating primarily to services paid for with common
stock. In order to achieve positive cash flow from operations during 2008,
we will require additional funding in order to complete our plans to maintain,
workover and begin EOR operations on existing wells and to develop additional
wells on existing properties.
 
 
 Results
of Operations
 
 Comparison
of the three and six months ended June 30, 2008, to the results of the
corresponding prior periods:
 
 Revenue
 
 Revenue
for the three months ended June 30, 2008, was $124,522, a decrease of $16,395
(11.65%) compared to revenue of $140,917 for the same period last
year.  The decline in revenue was primarily due to mechanical problems
related to field operations.  For the six months ended June 30, 2008,
revenue was $240,085, an increase of $45,750 (23.5%) compared to revenue of
$194,335 for the comparative six month period of the prior year.  The
Bateman Project was acquired on March 20, 2007, and thus the prior period does
not represent a full period of production.
 
 The
Company’s ability to maintain and increase sales from recent levels is dependent
on its ability to raise funds to correct its working capital deficit and for the
investment of additional funds into the extensive maintenance, workover and
planned enhancement operations to accelerate the realization of production
volumes.
 
 
 Lease
operating expense and production taxes
 
 Lease
operating expenses totaled $15,358 for the second quarter, and $119,612 for six
months ended June 30, 2008.  This compares to lease operating expenses
of $93,434 and $126,423 for the comparative periods of the prior
year.  The current year decreases are the result of reduced field
operations, primarily in the second quarter, due to mechanical problems
encountered with the Bateman Project.
  
  General
and administrative expense (G&A expense)
 
 General
and administrative expense for the six months ended June 30, 2008 were $784,584
compared to $3,772,662 from the comparable 2007 period.  The largest
portion of the reduction came from a decrease in stock based compensation
of $2,812,564 from the same period in 2007 which related to the reverse merger
and compensation of key employees and consultants.
 
 Net
loss
 
 For the
quarter ended June 30, 2008, our net loss was $307,663, compared to our same
quarter 2007 net loss of $395,808.   For the six months ended
June 30, 2008, our net loss was $824,403 compared to a net loss of $3,701,234
for the first half of 2007.  The major components of the loss
were general and administrative expenses of $320,833 and $446,807 for the three
month periods ended June 30, 2008 and 2007, respectively, and general and
administrative expenses of $784,585 and $3,772,662 for the six month periods
ended June 30, 2008 and 2007, respectively.  Included in the six month
general and administrative expenses were stock based compensation of $207,436 in
2008 and $3,020,000 in 2007.
 
 
 Item
3. Quantitative and Qualitative Disclosures About Market Risk
 
 The
Company’s results of operations and operating cash flows can be significantly
impacted by changes in market prices for oil and gas.  The Company has
not to date utilized derivative contracts, costless collars, or other similar
economic hedging arrangements as a means to reduce its exposure to unfavorable
changes in oil prices or that may expose the Company to risk of financial loss
and limit the benefit of future increases in prices.
 
 
 Item
4. Controls and Procedures
 
 Disclosure Controls and
Procedures
  Disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) are controls and other
procedures that are designed to ensure that the information that we are required
to disclose in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
  In
connection with the preparation of this Annual Report on Form 10-K, our
management has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2007. The disclosure
controls and procedures are not effective and during the third quarter of fiscal
2008 management will be implementing effective disclosure controls and
procedures.
 
 Management’s Report on
Internal Control Over Financial Reporting
  
  Our
management, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting
as such term is defined in Rules 13a-15(f) under the Exchange Act. Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with existing policies or procedures may deteriorate.
 
 Under the
supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, during the third quarter of the current fiscal year, our
management will implement an assessment of our internal control over financial
reporting, based on the criteria established in Internal Control — Integrated
Framework, issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”).  It is the opinion of our management
that our internal control over financial reporting is currently not
effective.
 
 
 PART
II- OTHER INFORMATION
 
 
 Item
1. Legal Proceedings
 
 On March
6, 2007, the Company entered into an Agreement of Sale and Purchase with Orbis
Operating, LLC (“Orbis”), in which it agreed to purchase a substantial portion
of the property Orbis acquired under a previous R&S Sale Agreement. Part of
the purchase price included a Promissory Note in the amount of $350,000.00.
After alleged numerous defaults by the Company, Orbis filed suit on March 10,
2008 in United States District Court in Bastrop County, Texas (Cause No.
26,952). The parties then entered into negotiations and reached agreement
through a Loan Workout and Security Agreement on April 11, 2008. Orbis filed a
Rule 11 Agreement with the Bastrop County court whereby it shall dismiss the
suit with prejudice upon the full performance of USA Superior.
 
 The terms
of the settlement included:
 ·
              The
      Company paying $50,000 cash, in which all was allocated towards Orbis’
      legal fees
 ·
              Principal
      Balance = $310,000
 ·
              The
      Company is to make monthly payments on the 15th
      day in the amount of $15,000 plus accrued interest, (6 payments for
      May-Oct)
 ·
              The
      Company is to make a final payment of entire Principal ($202,000) on
      October 15, 2008
 ·
              Once
      the Company fulfills obligation to plug the Gabriel wells it assumed (must
      be done by July 31, 2008), it will be given a $60,000 credit towards final
      Principal payment
 
 Outside
of the Orbis settlement disclosures above, the Company knows of no material,
active or pending legal proceedings against the Company nor are we involved as a
plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any directors, officers, or affiliates, or any registered
or beneficial shareholder, is an adverse party or has material interest adverse
to the Company’s interest.
  
  Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 In
January 2008, the Company issued 400,000 shares of stock to an employee of the
company in exchange for a stock subscription receivable in the amount of
$130,000.  The shares were valued at $300,000 on the date of
issuances.  The shares were sold pursuant to the private offering
exemption under Section 4(2) of the Securities Act of 1933.
 
 On March
1, 2008 the Company issued a warrant to Masynda Corporation in connection with
advisory services to be provided by Masynda.  The warrant provides
Masynda the right to purchase 1,000,000 shares of Company common stock for a
period of five years at an exercise price of $0.17 per share.  The
delivery of the warrant in exchange for services to be rendered was delivered
pursuant to the private offering exemption under Section 4(2) of the Securities
Act of 1933.
 
 Item
3. Defaults Upon Senior Securities
 
 NONE
 
 Item
4. Submission of Matters to a Vote of Security Holders.
 
 NONE
 
 Item
5. Other Information
 
 See the
discussion under Part 1 – FINANCIAL INFORMATION, Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations regarding
information required to be disclosed on Form 8-K during the period covered by
this Form 10-Q, but not reported.
 
 Security
holders of the Company may recommend nominees to the Company’s board of
directors by directing such nominations to the board of directors at the
Company’s principal office.
 
 Item
6. Exhibits
 
 31.1
              Certification
      of Chief Executive Officer of the Company pursuant to 15 U.S.C. Section
      7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
 
 31.2
              Certification
      of Chief Financial Officer of the Company pursuant to 15 U.S.C. Section
      7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.
  32.1
              Certification
      of Chief Executive Officer of the Company pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 
 32.2
              Certification
      of Chief Financial Officer of the Company pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
  
  SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 USA
      Superior Energy Holdings, Inc.(the
      “Registrant”)By:
              /s/
      G. Rowland CareyG.
      Rowland CareyPresident,
      Chief Executive Officer,&
      Chief Financial Officer
 
 
 Dated:  August
19, 2008