SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K

(Mark One)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)              | 
|- | ---------------------------------------------------------- | 
|  | OF THE SECURITIES EXCHANGE ACT OF 1934                     | 
|  |                                                            | 
|  | For the fiscal year ended December 31, 2011                | 
|  |                                                            | 
| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR                | 
|  | 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934               | 
|  | For the transition period from                          to | 



Commission file number 000-54533



USG1, INC.

(Exact name of registrant as specified in
its charter)



|Delaware                        | 27-2288541         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)



|1126 Madison 9517, Fredericktown, Missouri | 63645     
|------------------------------------------ | ----------
|(Address of principal executive offices)   | (zip code)



Registrant's telephone number, including
area code:    573-561-4283



Securities registered pursuant to Section
12(b) of the Act:     None



Securities registered pursuant to Section
12(g) of the Exchange Act:



Common Stock, $.0001 par value per share

(Title of class)



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act



 ̈
Yes    x No



Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.



 ̈
Yes    x No



Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.



x
Yes      ̈ No



Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).



x
Yes     ̈ No



Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.



x
Yes     ̈ No



Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated
filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule
12b-2 of the Exchange Act.



|Large Accelerated filer      ̈               | Accelerated filer         |  ̈ | 
|------------------------------------------- | ------------------------- | - | 
|Non-accelerated filer         ̈              | Smaller reporting company | x | 
|(do not check if smaller reporting company) |                          



Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).



x
Yes     ̈ No



State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal
quarter.



$ 0



Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.



|                                     | Outstanding at   
|------------------------------------ | -----------------
|Class                                | December 31, 2011
|                                     |                  
|Common Stock, par value $0.0001      | 6,600,000        
|                                     |                  
|Documents incorporated by reference: | None             











PART I



Item 1.  Business



USG1, Inc. ("USG1" or the "Company")
was incorporated on February 27, 2010 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including,
but not limited to, selected mergers and acquisitions. USG1 has been in the developmental stage since inception and its operations
to date have been limited to issuing shares to its original shareholders and filing a registration statement. USG1 has been formed
to provide a method for a foreign or domestic private company to become a reporting company with a class of securities registered
under the Securities Exchange Act of 1934.



The Company registered its common stock
on a Form 10 registration statement filed pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") and Rule
12(g) thereof. The Company files with the Securities and Exchange Commission periodic and current reports under Rule 13(a) of the
Exchange Act, including quarterly reports on Form 10-Q and annual reports Form 10-K.



The Company has no employees and one officer,
who is also the sole director.



USG1 intends to help a company become a
public reporting company. In the event USG1 is successful in a business combination, our advisors may recommend that the company
file a registration statement; most likely on Form S-1, or alternatively that a company first effect a business combination with
USG1 and then subsequently file a registration statement. A company may choose to effect a business combination with USG1 before
filing a registration statement as such method may be an effective way to obtain exposure to the brokerage community.



A combination will normally take the form
of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure
the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal
Revenue Code of 1986, as amended.



As of December 31, 2011, USG1 had not generated
revenues and had no income or cash flows from operations since inception. The continuation of USG1 as a going concern is dependent
upon financial support from its stockholders, its ability to obtain necessary equity financing to continue operations, to successfully
locate and negotiate with a business entity for the combination of that target company with USG1. There is no assurance that USG1
will ever be profitable.



Item 2.  Properties



The Company has no properties and at this
time has no agreements to acquire any properties. The Company currently uses the offices in the home of its sole director in Fredericktown,
Missouri at no cost to the Company. USG1 has agreed to continue this arrangement until the Company completes a business combination.











Item 3.  Legal Proceedings



There is no litigation pending or threatened
by or against the Company.



Item 4.  (Removed and Reserved)



PART II



Item 5.  Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities



There is currently no public market for
the Company's securities.



Following a business combination, a target
company will normally wish to cause the Company's common stock to trade in one or more United States securities markets. The target
company may elect to take the steps required for such admission to quotation following the business combination or at some later
time.



At such time as it qualifies, the Company
may choose to apply for quotation of its securities on the OTC Bulletin Board.



The OTC Bulletin Board is a
dealer-driven quotation service. Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC
Bulletin Board, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial
requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities
exchange is eligible.



As such time as it qualifies, the Company
may choose to apply for quotation of its securities on the Nasdaq Capital Market.



In general there is greatest liquidity for
traded securities on the Nasdaq Capital Market and less on the OTC Bulletin Board. It is not possible to predict where, if at all,
the securities of the Company will be traded following a business combination.



Since inception, the Company has sold securities
which were not registered as follows:



On February 27, 2010 (inception), the Company issued 6,350,000
shares of common stock to 43 individual shareholders at an average price of $.00317 per share for cash in the amount of $20,100.
On the same date, the Company issued 250,000 shares of common stock as payment for legal and consulting services at $.00317 per
share for a total value of $793.



Item 6.  Selected Financial Data.



There is no selected financial data required
to be filed for a smaller reporting company.











Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations



The Company has no operations nor does
it currently engage in any business activities generating revenues. The Company's principal business objective is to achieve a
business combination with a target company.



USG1 has entered into a consulting
agreement with Tiber Creek Corporation, a shareholder of the Company, to advise the Company in the Company's search for a
target company. Tiber Creek Corporation has a reputation for its experience in this area. Tiber Creek will give its
recommendations to the Company on matters relating to the search for and choice of a target company when requested but the
Company is solely responsible for locating and targeting potential companies for acquisition and Tiber Creek will not be
seeking target companies on behalf of the Company and is under no obligation to locate a target company for the Company.



In the event that USG1 is successful in
locating a target company, we may recommend the target company engage Tiber Creek Corporation as consultants in the business combination
and to become a public reporting company and for the preparation and filing of a registration statement and the introduction to
brokers and market makers. If the target company chooses to enter into business combination with USG1, the registration statement
will be prepared after such business combination. The terms of a business combination may provide for redemption of all or part
of their stock in USG1, usually at par value.



A combination will normally take the form
of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure
the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal
Revenue Code of 1986, as amended.



No assurances can be given that USG1 will
be successful in locating or negotiating with any target company.



The most likely target companies are those
seeking the perceived benefits of a reporting corporation. Such perceived benefits may include facilitating or improving the terms
on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key
employees, increasing the opportunity to use securities for acquisitions, providing liquidity for shareholders and other factors.
Business opportunities may be available in many different industries and at various stages of development, all of which will make
the task of comparative investigation and analysis of such business opportunities difficult and complex.



USG1 will not restrict its search for any
specific kind of business entities, but may acquire a venture which is in its preliminary or development stage, which is already
in operation, or in essentially any stage of its business life. It is impossible to predict at this time the status of any business
in which USG1 may become engaged, whether such business may need to seek additional capital, may desire to have its shares publicly
traded, or may seek other perceived advantages which USG1 may offer.











In analyzing prospective business opportunities, USG1 may consider
such matters as the available technical, financial and managerial resources; working capital and other financial requirements;
history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience
of management services which may be available and the depth of that management; the potential for further research, development,
or exploration; specific risk factors not now foreseeable but which may be anticipated; the potential for growth or expansion;
the potential for profit; the perceived public recognition or acceptance of products, services, or trades; name identification;
and other relevant factors. This discussion of the proposed criteria is not meant to be restrictive of the virtually unlimited
discretion of USG1 to search for and enter into potential business opportunities.



In implementing a structure for a particular
business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, licensing agreement
or other arrangement with another corporation or entity. On the consummation of a transaction, it is likely that the present management
and shareholders of the Company will no longer be in control of the Company. In addition, it is likely that the officer and director
of the Company will, as part of the terms of the business combination, resign and be replaced by one or more new officers and directors.



It is anticipated that any securities issued
in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state
securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register
all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration
occurs, it will be undertaken by the surviving entity after the Company has entered into an agreement for a business combination
or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market
which may develop in the Company's securities may depress the market value of the Company's securities in the future if such a
market develops, of which there is no assurance.



USG1 will participate in a business combination
only after the negotiation and execution of appropriate agreements. Although the terms of such agreements cannot be predicted,
generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events
of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such
closing and will include miscellaneous other terms.



Results of Operations



The Company has received no income and
has incurred operating expenses for general corporate upkeep, legal fees and accounting fees. Operations will likely remain similar
until USG1 transacts a business combination. Since there is minimal cash on hand, the Company will be reliant on the additional
capital from existing shareholders or will need to issue more shares to continue as a going concern.













Liquidity and Capital Resources



The following summarizes the key component
of the company’s cash flows for the year ended December 31, 2011 and the period from February 27, 2010 (inception) to December
31, 2010:



Net cash used in operating activities was
$6,796 and $22,533 for the year ended December 31, 2011 and for the period from February 27, 2010 (inception) to December 31, 2010,
respectively, which were mainly driven by net losses in the amount of $9,309 and $23,334, partially offset by increases in accrued
interest and accrued expenses in the amount of $2,513 and $8, respectively. Increases in accrued interest was to record unpaid
interest to the CEO of the Company. Increase in accrued expenses was to record unpaid professional fees.



Net cash provided by financing activities
was $6,750 and $22,600 for the year ended December 31, 2011 and for the period from February 27, 2010 (inception) to December 31,
2010, respectively. On February 27, 2010 (inception), the Company issued 6,350,000 shares of common stock to 43 individual shareholders
at an average price of $.00317 per share for cash in the amount of $20,100. On the same date, the Company issued 250,000 shares
of common stock as payment for legal and consulting services at $.00317 per share for a total value of $793. On July 6, 2010, the
Company received a loan of $2,500 with written agreement, unsecured, and bearing an interest of 0.43% per annum. During the year
ended December 31, 2011, the Company received additional $6,750 from existing shareholders.



The Company’s financial statements
are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not
yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern.



Management’s Plan to Continue as a Going Concern



In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for
the Company include (1) obtaining capital from the sale of its securities, and (2) short-term borrowings from shareholders or related
party when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of
its plans.



The ability of the Company to continue as
a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually
secure other sources of financing and attain profitable operations.













Item 8.  Financial Statements and Supplementary Data



The financial statements for the year ended
December 31, 2011 are attached hereto.



Item 9.  Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure



There were no changes in or disagreements
with accountants on accounting and financial disclosure for the period covered by this report.



Item 9A.  Controls and Procedures



Pursuant to Rules adopted by the Securities
and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year under the supervision
and with the participation of the Company's principal executive officer (who is also the principal financial officer). There have
been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent
to the date of the evaluation. Based upon that evaluation, she believes that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by
the Company in its periodic reports is recorded, summarized and processed timely. The principal executive officer is directly involved
in the day-to-day operations of the Company.



Management's Report of Internal Control over Financial Reporting



The Company is responsible for establishing
and maintaining adequate internal control over financial reporting in accordance with the Rule 13a-15 of the Securities Exchange
Act of 1934. The Company's sole officer, its president, conducted an evaluation of the effectiveness of the Company's internal
control over financial reporting as of December 31, 2011, based on the criteria establish in Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded
that the Company's internal control over financial reporting was effective as of December 31, 2011, based on those criteria. A
control system can provide only reasonably, not absolute, assurance that the objectives of the control system are met and no evaluation
of controls can provide absolute assurance that all control issues have been detected.



KCCW Accountancy Corp., our
independent registered public accounting firm, has not issued an attestation report on the effectiveness of our internal control
over financial reporting.











Changes in Internal Control Over Financial Reporting



There have been no changes in the Company's
internal controls over financial reporting during its fourth fiscal quarter that have materially affected, or are reasonably likely
to materially affect, its internal control over financial reporting.



PART III



Item 10.  Directors, Executive Officers, and Corporate
Governance;



The Director and Officer of the Company
is as follows:



|Name       |  | Age |  | Positions and Offices Held    
|---------- |  | --- |  | ------------------------------
|Kimi Royer |  | 41  |  | President, Secretary, Director



Management of USG1



USG1 has no full time employees. Kimi Royer
is the sole officer and director of USG1. Kimi Royer will allocate a limited portion of time to the activities of USG1 without
compensation. Potential conflicts may arise with respect to the limited time commitment by management and the potential demands
of the activities of USG1.



There are no agreements or understandings
for the officer or director to resign at the request of another person. The above- named officer and director is not acting on
behalf of nor will act at the direction of any other person.



Set forth below is the name of the director
and officer of USG1, all positions and offices with USG1 held, the period during which she has served as such, and the business
experience during at least the last five years:



Kimi Royer has served as the director,
president and secretary of USG1 since its inception. Ms. Royer has been an active participant in the family's cattle farm and the
related beef industry. The Royers have been in the cattle business for over 30 years. Since 2005, Ms. Royer has been active in
the real estate market working for United Country Homestead from 2007 to 2008, and is a licensed real estate agent specializing
in farm land receiving her real license in the State of Missouri in 2007.



Conflicts of Interest



Tiber Creek Corporation serves as an advisor
to USG1 and is one of its shareholders. Tiber Creek is also a shareholder in other "blank check" companies which are
seeking business combinations with potential targets. Tiber Creek may be a shareholder in more than one company seeking a business
combination and it may serve as an advisor, from time to time, to one or more of these companies seeking a business combination.
However, Tiber Creek does not believe any conflict of interest is created because it does not make any management decisions for
any such seeking company, serves only to advise the seeking company when requested on the search for target companies and does
not select nor assign any such target company for any seeking company.











In addition, any conflict if at all created, may be reduced
because Tiber Creek believes there are numerous target opportunities encompassing a wide variety of different industries and businesses,
different capital structures, different management structures, different locations, and different operating levels each element
of which will singularly appeal differently to companies seeking target companies.



Code of Ethics



The Company has not at this time adopted
a Code of Ethics pursuant to rules described in Regulation S-K. The Company has one person who is the sole shareholder and serves
as the sole director and officer. The Company has no operations or business and does not receive any revenues or investment capital.
The adoption of an Ethical Code at this time would not serve the primary purpose of such a code to provide a manner of conduct
as the development, execution and enforcement of such a code would be by the same person and only that person to whom such code
applied. Furthermore, because the Company does not have any activities, there are activities or transactions which would be subject
to this code. At the time the Company enters into a business combination or other corporate transaction, the current officer and
director will recommend to any new management that such a code be adopted. The Company does not maintain an Internet website on
which to post a code of ethics.



Corporate Governance



For reasons similar to those described
above, the Company does not have a nominating nor audit committee of the board of directors. At this time, the Company consists
of one shareholder who serves as the sole corporate director and officer. The Company has no activities, and receives no revenues.
At such time that the Company enters into a business combination and/or has additional shareholders and a larger board of directors
and commences activities, the Company will propose creating committees of its board of directors, including both a nominating and
an audit committee. Because there is only one shareholder of the Company, there is no established process by which shareholders
to the Company can nominate members to the Company's board of directors. Similarly, however, at such time as the Company has more
shareholders and an expanded board of directors, the new management of the Company may review and implement, as necessary, procedures
for shareholder nomination of members to the Company's board of directors.



Item 11.  Executive Compensation



The Company's officer and director does
not receive any compensation for her services rendered to the Company, nor has she received such compensation in the past. The
officer and director is not accruing any compensation pursuant to any agreement with the Company.



No retirement, pension, profit sharing,
stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.











The Company does not have a compensation
committee for the same reasons as described above.



Item 12.  Security Ownership of Certain Beneficial
Owners and Management and Related Stockkholder Matters



The following table sets forth each person
known by USG1 to be the beneficial owner of five percent or more of its common stock, all directors individually and all directors
and officers of USG1 as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.



|Name of                                                    |  | Amount of Beneficial |         |  | Percentage of | 
|---------------------------------------------------------- |  | -------------------- | ------- |  | ------------- | 
|Beneficial Owner                                           |  | Ownership            |         |  | Class (1)     | 
|                                                           |  |                      |         |  |               | 
|Kimi Royer President and director                          |  |                      | 550,000 |  |               | 
|                                                           |  |                      |         |  |               | 
|Robert Blessing                                            |  |                      | 550,000 |  |               | 
|                                                           |  |                      |         |  |               | 
|Preston Jones                                              |  |                      | 550,000 |  |               | 
|                                                           |  |                      |         |  |               | 
|Roger Dredge                                               |  |                      | 350,000 |  |               | 
|                                                           |  |                      |         |  |               | 
|Trevor Stephens                                            |  |                      | 350,000 |  |               | 
|                                                           |  |                      |         |  |               | 
|All Executive Officers and Directors as a Group (1 Person) |  |                      | 550,000 |  |               | 



(1) Based upon 6,600,000 shares of common stock outstanding.



Item 13.  Certain Relationships and Related Transactions
and Director Independence



USG1 has issued a total of 6,600,000 shares
of common stock pursuant to Section 4(2) of the Securities Act for a total of $20,100 in cash.



Kimi Royer is the sole officer and director
of USG1 and a shareholder of USG1. USG1 has an outstanding unsecured note payable to Ms. Royer in the amount of $2,500 bearing
an interest of 0.43% and 0.57% as of December 31, 2011 and December 31, 2010, respectively.



USG1 is not currently required to maintain
an independent director as defined by Rule 4200 of the Nasdaq Capital Market nor does it anticipate that it will be applying for
listing of its securities on an exchange in which an independent directorship is required. It is likely that Ms. Royer would not
be considered an independent director if it were to do so.

















Item 14. Principal Accounting Fees and Services.





The Company has limited activities, along
with no income and administrative expenses. The Company's president has donated her time in preparation and filing of state and
federal required taxes and reports.



Audit Fees



The following chart sets forth public accounting
fees paid and payable to KCCW Accountancy Corp. (“KCCW”) during the year ended December 31, 2011 and the period from
February 27, 2010 (inception) through December 31, 2010:



|                   |  | December 31, 2011 |       |  | December 31, 2010 |  
|------------------ |  | ----------------- | ----- |  | ----------------- | -
|Audit Fees         |  | $                 | 6,500 |  |                   | $
|Audit-Related Fees |  | $                 | -     |  |                   | $
|Tax Fees           |  | $                 | -     |  |                   | $
|All Other Fees     |  | $                 | -     |  |                   | $



Audit fees were for professional services
rendered by KCCW for the audit of our annual financial statements and the review of the financial statements included in our quarterly
reports, and services that are normally provided by KCCW in connection with statutory and regulatory filings or engagements for
that fiscal year.



Audit related fees consist of services by
KCCW that are reasonably related to the performance of the audit or review of our financial statements and are not reported above
under Audit Fees. This category includes accounting consultations on transaction and proposed transaction related matters. We incurred
these fees in connection with registration statements, financing, and acquisition transaction.



KCCW did not bill any other fees for services
rendered to us during the year ended December 31, 2011 and the period from February 27, 2010 (inception) through December 31, 2010
for assurance and related services in connection with the audit or review of our financial statements.



The Company does not currently have an audit
committee serving and as a result its board of directors performs the duties of an audit committee. The board of directors will
evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit
services. The Company does not rely on pre-approval policies and procedures.



Audit of Financial Statements



During the year ended December 31, 2011
and the period from February 27, 2010 (inception) through December 31, 2010, KCCW was our principal auditor and no audit work was
performed by persons outside of KCCW.







PART IV



Item 15.  Exhibits, Financial Statement Schedules





Set forth below are the audited financial statements for USG1 for the period ended December 31, 2011 and
2010. The following financial statements are attached to this report and filed as a part thereof.























USG1, INC.



FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



DECEMBER 31, 2011











USG1, INC.

INDEX TO FINANCIAL STATEMENTS





|                                                        | Page
|------------------------------------------------------- | ----
|                                                        |     
|Report of Independent Registered Public Accounting Firm | F-1 
|                                                        |     
|Financial Statements:                                   |     
|                                                        |     
|Balance Sheets                                          | F-2 
|                                                        |     
|Statements of Operations                                | F-3 
|                                                        |     
|Statements of Changes in Stockholders’ Deficit          | F-4 
|                                                        |     
|Statements of Cash Flows                                | F-5 
|                                                        |     
|Notes to Financial Statements                           | F-6 
|                                                        |     



















| | Audit• Tax• Consulting• FinancialAdvisoryRegistered with Public Company Accounting Oversight Board (PCAOB)
| | ----------------------------------------------------------------------------------------------------------





REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





To the Board of Directors and Stockholders
of

USG1, Inc.:





We have audited the accompanying balance
sheets of USG1, Inc. (a development stage company) (the “Company”) as of December 31, 2011 and 2010, and the related
statement of operations, stockholders' deficit, and cash flows for the year ended December 31, 2011 and for the period from February
27, 2010 (inception) through December 31, 2010. These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is
not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of USG1, Inc. (a development stage company)
as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the year ended December 31, 2011 and
for the period from February 27, 2010 (inception) through December 31, 2010 in conformity with accounting principles generally
accepted in the United States of America.



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As described in Note 2 of the financial statements, the
Company has been in the development stage since its inception (February 27, 2010) and continues to incur expenses. The Company’s
viability is dependent upon its ability to obtain future financing and the success of its future operations. These matters raise
substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these
matters is also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





/s/ KCCW Accountancy Corp.



Diamond Bar, California

March 27, 2012









|KCCW Accountancy Corp.
        22632 Golden Springs Dr. #230,
        Diamond Bar, CA 91765, USA
        Tel: +1 909 348 7228 •
        Fax: +1 626 529 1580 • info@kccwcpa.com
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







F-1









|USG1, INC.                   
|-----------------------------
|(A DEVELOPMENT STAGE COMPANY)
|BALANCE SHEETS               







|                                                                           |  | December 31, |         |   | December 31, |  
|-------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | -
|Assets                                                                     |  | 2011         |         |   | 2010         |  
|                                                                           |  |              |         |   |              |  
|Current Assets                                                             |  |              |         |   |              |  
|Cash and cash equivalents                                                  |  | $            | 21      |   |              | $
|Total Current Assets                                                       |  |              | 21      |   |              |  
|                                                                           |  |              |         |   |              |  
|Total Assets                                                               |  | $            | 21      |   |              | $
|                                                                           |  |              |         |   |              |  
|                                                                           |  |              |         |   |              |  
|Liabilities and Stockholders' Equity                                       |  |              |         |   |              |  
|                                                                           |  |              |         |   |              |  
|Current Liabilities                                                        |  |              |         |   |              |  
|Accrued interest - related party                                           |  | $            | 21      |   |              | $
|Accrued expenses                                                           |  |              | 2,500   |   |              |  
|Note payable - related party                                               |  |              | 2,500   |   |              |  
|Total Current Liabilities                                                  |  |              | 5,021   |   |              |  
|                                                                           |  |              |         |   |              |  
|Stockholders' Deficit                                                      |  |              |         |   |              |  
|Preferred stock - $.0001 par value; 20,000,000 shares authorized, 0 shares |  |              |         |  
|issued and outstanding                                                     |  |              | -       |   |              |  
|Common stock - $.0001 par value; 100,000,000 shares authorized,            |  |              |         |   |              |  
|6,600,000 shares issued and outstanding                                    |  |              | 660     |   |              |  
|Additional paid-in capital                                                 |  |              | 26,983  |   |              |  
|Accumulated deficit                                                        |  |              | (32,643 | ) |              |  
|Total Stockholders' Deficit                                                |  |              | (5,000  | ) |              |  
|                                                                           |  |              |         |   |              |  
|Total Liabilities and Stockholders' Deficit                                |  | $            | 21      |   |              | $















The accompanying notes are an integral part
of financial statements.





F-2







|USG1, INC.                   
|-----------------------------
|(A DEVELOPMENT STAGE COMPANY)
|STATEMENTS OF OPERATIONS     







|                                                       |  | For The Year Ended 
December 31,
 2011 |           |   | From February 27, 2010 (Inception) through
 December 31,
 2010 |   |           | From February 27, 2010 (Inception) through
 December 31,
 2011 | 
|------------------------------------------------------ |  | -------------------------------------- | --------- | - | -------------------------------------------------------------- | - | --------- | -------------------------------------------------------------- | 
|Net Revenue                                            |  | $                                      | -         |   |                                                                | $ | -         |                                                                | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|General and Administrative Expenses                    |  |                                        |           |   |                                                                |   |           |                                                                | 
|Legal and professional expenses                        |  |                                        | 9,000     |   |                                                                |   | 23,293    |                                                                | 
|Office supplies                                        |  |                                        | 202       |   |                                                                |   | -         |                                                                | 
|Bank service fees                                      |  |                                        | 94        |   |                                                                |   | 33        |                                                                | 
|Total general and administrative expenses              |  |                                        | 9,296     |   |                                                                |   | 23,326    |                                                                | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Operating loss                                         |  |                                        | (9,296    | ) |                                                                |   | (23,326   | )                                                              | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Interest expense                                       |  |                                        | (13       | ) |                                                                |   | (8        | )                                                              | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Net Loss before Income Taxes                           |  |                                        | (9,309    | ) |                                                                |   | (23,334   | )                                                              | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Income Tax Expense                                     |  |                                        | -         |   |                                                                |   | -         |                                                                | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Net Loss                                               |  | $                                      | (9,309    | ) |                                                                | $ | (23,334   | )                                                              | 
|                                                       |  |                                        |           |   |                                                                |   |           |                                                                | 
|Loss per common share - basic and diluted              |  | $                                      | -         |   |                                                                | $ | -         |                                                                | 
|Weighted average shares outstanding, basic and diluted |  |                                        | 6,600,000 |   |                                                                |   | 6,600,000 |                                                                | 













The accompanying notes are an integral part
of financial statements.





F-3







|USG1, INC.                         
|-----------------------------------
|(A DEVELOPMENT STAGE COMPANY)      
|STATEMENTS OF STOCKHOLDERS' DEFICIT







|                                                                                     |  | Common Stock |           |  | Additional |   |     |         |  |   | Total       | 
|------------------------------------------------------------------------------------ |  | ------------ | --------- |  | ---------- | - | --- | ------- |  | - | ----------- | 
|                                                                                     |  |              |           |  |            |   |     | Paid-in |  |   | Accumulated | 
|                                                                                     |  | Shares       |           |  | Amount     |   |     | Capital |  |   | Deficit     | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Balance at February 27, 2010,    Founders' shares                                    |  |              | 6,600,000 |  |            | $ | 660 |         |  | $ | 20,233      | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Net loss for the period from February 27, 2010 (inception) through December 31, 2010 |  |              | -         |  |            |   | -   |         |  |   | -           | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Balance at December 31, 2010                                                         |  |              | 6,600,000 |  |            | $ | 660 |         |  | $ | 20,233      | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Capital Contributions                                                                |  |              | -         |  |            |   | -   |         |  |   | 6,750       | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Net loss for the year ended December, 31, 2011                                       |  |              | -         |  |            |   | -   |         |  |   | -           | 
|                                                                                     |  |              |           |  |            |   |     |         |  |   |             | 
|Balance at December 31, 2011                                                         |  |              | 6,600,000 |  |            | $ | 660 |         |  | $ | 26,983      | 



















The accompanying notes are an integral part
of financial statements.



F-4







|USG1, INC.                   
|-----------------------------
|(A DEVELOPMENT STAGE COMPANY)
|STATEMENTS OF CASH FLOWS     





|                                                                                |  | For The Year Ended 
December 31,
 2011 |        |   | From February 27, 2010 (Inception) through
 December 31,
 2010 |   |         | From February 27, 2010 (Inception) through
 December 31,
 2011 | 
|------------------------------------------------------------------------------- |  | -------------------------------------- | ------ | - | -------------------------------------------------------------- | - | ------- | -------------------------------------------------------------- | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                            |  |                                        |        |   |                                                                |   |         |                                                                | 
|Net loss                                                                        |  | $                                      | (9,309 | ) |                                                                | $ | (23,334 | )                                                              | 
|Shares issued for legal and consulting services                                 |  |                                        | -      |   |                                                                |   | 793     |                                                                | 
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                        |        |   |                                                                |   |         |                                                               
|Increase in accrued interest                                                    |  |                                        | 13     |   |                                                                |   | 8       |                                                                | 
|Increase in accrued expenses                                                    |  |                                        | 2,500  |   |                                                                |   | -       |                                                                | 
|                                                                                |  |                                        |        |   |                                                                |   |         |                                                                | 
|Net cash used in operating activities                                           |  |                                        | (6,796 | ) |                                                                |   | (22,533 | )                                                              | 
|                                                                                |  |                                        |        |   |                                                                |   |         |                                                                | 
|CASH FLOWS FROM FINANCING ACTIVITIES                                            |  |                                        |        |   |                                                                |   |         |                                                                | 
|Proceeds from issuance of common stocks                                         |  |                                        | -      |   |                                                                |   | 20,100  |                                                                | 
|Proceeds from loans from related party                                          |  |                                        | -      |   |                                                                |   | 2,500   |                                                                | 
|Proceeds from capital contributions                                             |  |                                        | 6,750  |   |                                                                |   | -       |                                                                | 
|                                                                                |  |                                        |        |   |                                                                |   |         |                                                                | 
|Net cash provided by financing activities                                       |  |                                        | 6,750  |   |                                                                |   | 22,600  |                                                                | 
|                                                                                |  |                                        |        |   |                                                                |   |         |                                                                | 
|NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS                              |  |                                        | (46    | ) |                                                                |   | 67      |                                                                | 
|CASH & CASH EQUIVALENTS, BEGINNING BALANCE                                      |  |                                        | 67     |   |                                                                |   | -       |                                                                | 
|CASH & CASH EQUIVALENTS, ENDING BALANCE                                         |  | $                                      | 21     |   |                                                                | $ | 67      |                                                                | 
|                                                                                |  |                                        |        |   |                                                                |   |         |                                                                | 
|SUPPLEMENTAL DISCLOSURES:                                                       |  |                                        |        |   |                                                                |   |         |                                                                | 
|Interest paid                                                                   |  | $                                      | -      |   |                                                                | $ | -       |                                                                | 
|Income taxes paid                                                               |  | $                                      | -      |   |                                                                | $ | -       |                                                                | 















The accompanying notes are an integral part of this statement.



F-5







USG1, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS









NOTE 1: ORGANIZATION



USG1, Inc. (“the Company”)
was incorporated under the laws of the State of Delaware, U.S. on February 27, 2010.  The Company intends to engage in any
lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company will attempt to locate
and negotiate with a business entity for the combination of that target company with it. The combination will normally take the
form of a merger, stock-for-stock exchange or stock-for-assets exchange. In most instances the target company will wish to structure
the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal
Revenue Code of 1986, as amended.



No assurances can be given that USG1 will
be successful in locating or negotiating with any target company.



The proposed business activities described
herein classify USG1 as a “blank check” company. The Securities and Exchange Commission and certain states have enacted
statuettes, rules and regulations limiting the public sale of securities of blank check companies. USG1 will not make any efforts
to cause a market to develop in its securities until such time as it has successfully implemented its business plan and is no longer
classified as a blank check company.



Development Stage Risk



The Company has not earned revenues from
operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise”
as set forth in Accounting Standards Codification (“ASC”) 915 “Development Stage Entities”, which was previously
Statement of Financial Accounting Standards No. 7 (“SFAS 7”). Among the disclosures required by ASC 915 are that the
Company’s financial statements be identified as those of a development stage company, and that the statements of operations,
stockholders’ equity and cash flows disclose activity since the date of the Company’s inception. For the period from
February 27, 2010 (inception) through December 31, 2011, the Company has accumulated losses of $32,643.



Since its inception, the Company has been
dependent upon the receipt of capital investment to fund its continuing activities. In addition to the normal risks associated
with a new business venture, there can be no assurance that the Company’s business plan will be successfully executed. Our
ability to execute our business plan will depend on our ability to obtain additional financing and achieve a profitable level of
operations. There can be no assurance that sufficient financing will be obtained. Further, we cannot give any assurance that we
will generate substantial revenues or that our business operations will prove to be profitable.





NOTE 2: GOING CONCERN



The Company’s financial statements
are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not
yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern.



F-6







USG1, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS







Management’s Plan to Continue
as a Going Concern



In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for
the Company include (1) obtaining capital from the sale of its securities, and (2) short-term borrowings from shareholders or related
party when needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of
its plans.



The ability of the Company to continue
as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and
eventually secure other sources of financing and attain profitable operations.





NOTE 3: SUMMARY OF ACCOUNTING POLICIES



Basis of Presentation:

The accompanying financial statements have
been prepared by the Company. The Company’s financial statements are prepared in accordance with generally accepted accounting
principles in the United States of America (“US GAAP”).



Fiscal Year:

The Company’s fiscal year end is
December 31.



Cash and Cash Equivalents:

Cash and cash equivalents include cash
and all highly liquid instruments with original maturities of three months or less.



Use of Estimates:

The preparation of financial statements
in conformity with generally accepted accounting principles in the Unites States of America 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 revenue and expenses during the reporting period. Accordingly,
actual results could differ from those estimates.



Share Based Payments:

In December, 2004, the FASB issued SFAS
No. 123(R), “Share-Based Payment”, which replaces SFAS No. 123 and supersedes APB Opinion No. 25. SFAS No. 123(R) is
now included in ASC 718 “Compensation – Stock Compensation”. Under SFAS No. 123(R), companies are required to
measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs
in the financial statements over the period during which employees or independent contractors are required to provide services.
Share-based compensation arrangements include stock options and warrants, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. In March, 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB
107”) which expresses views of the staff regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations
and provides the staff’s views regarding the valuation of share-based payment arrangements for public companies. SFAS No.
123(R) permits public companies to adopt its requirements using one of two methods. On April 14, 2005, the SEC adopted a new rule
amending the compliance dates for SFAS No. 123(R). Companies may elect to apply this statement either prospectively, or on a modified
version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with
the pro forma disclosures required for those periods under SFAS No. 123. To date, the Company has not adopted a stock option plan
nor granted any stock options.





F-7







USG1, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS





Advertising Costs:

The Company expenses all advertising costs
in the current period. The results of future benefits from advertising are minimal based upon the type of advertising involved.
To date, the Company has not incurred any advertising expenses.



Income Taxes:

Income taxes are accounted for under the
assets and liabilities method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect
for the year in which those temporary differences are expected to be recovered or settled.



Net Loss per Common Share:

Basic net loss per share is calculated
by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share
reflects the potential dilution of securities by including common stock equivalents, such as stock options, stock warrants and
convertible preferred stock, in the weighted average number of common shares outstanding for a period, if dilutive. As of December
31, 2011, there were no potentially dilutive securities.



Recently Issued Accounting Pronouncements:

The Company has adopted all recently issued
accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated
to have a material effect on the financial position or results of operations of the Company.





NOTE 4: STOCKHOLDERS’ EQUITY



The Company is authorized to issue a total
of 120,000,000 shares of stock consisting of 100,000,000 shares of Common Stock with par value of $.0001 per share and 20,000,000
shares of Preferred Stock, par value of $.0001.



On February 27, 2010 (inception), the Company
issued 6,350,000 shares of common stock to 43 individual shareholders at an average price of $.00317 per share for cash in the
amount of $20,100. On the same date, the Company issued 250,000 shares of common stock as payment for legal and consulting services
at $.00317 per share for a total value of $793.



F-8







USG1, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS







NOTE 5: RELATED PARTY TRANSACTIONS



The parties primarily refer to the shareholders
and officers of the Company and corporate entities related to the Company through common ownership.



Note Payable



Note payable to officer amounted to
$2,500 as of December 31, 2011 and 2010. The loan was borrowed from the President and Chairman of the Company on July 6, 2010
for short-term with written agreement, unsecured, and bearing an interest of 0.43% and 0.57% per annum as of December 31,
2011 and 2010, respectively. Interest expense incurred for the note payable was $13 for the year ended December 31, 2011 and
$8 for the period from February 27, 2010 (inception) through December 31, 2010. Accrued interest amounted to $21 and $8 as of
December 31, 2011 and 2010. No interest had been paid as of December 31, 2011.





NOTE 6: SUBSEQUENT EVENTS



In accordance with FASB Accounting Standards
Codification Topic 855, “Subsequent Events”, the Company has evaluated subsequent events through March 27, 2012. All
subsequent events requiring recognition as of December 31, 2011, have been incorporated into these financial statements and there
are no subsequent events that require disclosure.





F-9







SIGNATURES



Pursuant to the requirements of Section
13 or 15(d) 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.



| | USG1, Inc.
| | ----------
| |           
| | By:       



Dated:  March 28, 2012



Pursuant to the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.



|NAME           | OFFICE   | DATE          
|-------------- | -------- | --------------
|               |          |               
|/s/ Kimi Royer | Director | March 28, 2012