**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

** **

**FORM 10-QSB**

 
| **(Mark One)**                                                                                                                                                                                                                                                                                                             |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                       |   |
| **ý****   QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934.**                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                       |   |
| **For the quarterly period ended March 31, 2003**                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                       |
| **o****   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 0-31193**                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                            |  |  |

 

**USIP.COM, INC.**

(Exactname of small business issuer as specified in its charter)

 

| **Utah**                                                                           |   | **16-1583162**                        |
|------------------------------------------------------------------------------------|--------|---------------------------------------|
| (State or other jurisdiction of  incorporation or organization)                    |   | (I.R.S. Employer  Identification No.) |
|                                                                               |   |                                  |
|                                                                               |   |                                  |
| **7325 Oswego RoadLiverpool, New York 13090**                                      |
| (Address of principal executive offices)                                           |
|                                                                               |   |                                  |
| **(315) 451-7515**                                                                 |
| (Issuer’s telephone number)                                                   |
|                                                                               |   |                                  |
|                                                                               |   |                                  |
| (Former name, former address and former fiscal year  if changed since last report) |

 

Check whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

Yes   ý                                                                 No   o

 

State the number of shares outstanding of each of the issuer’s classesof common equity, as of the latest practicable date: 17,699,388 shares ofCommon Stock, $.01 par value, were outstanding as of March 31, 2003.

 

Transitional Small Business Disclosure Forms (check one):

 

Yes    o                                                                No   ý

 

 

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USIP.COM, INC.

INDEX TO FORM 10-QSB

MARCH 31, 2003

 

 
| PART  I    FINANCIAL INFORMATION |
|------------------------------------------------------|
|                                                 |   |
| ITEM 1.                                              | Financial Statements |
|                                                 |   |
|                                                 | Consolidated Balance Sheets  At December 31, 2002 and March 31, 2003 |
|                                                 |   |
|                                                 | Consolidated  Statements of Income and Retained EarningsFor the three months ended March 31,  2002 and March 31, 2003 |
|                                                 |   |
|                                                 | Consolidated  Statements of Cash Flows  For the three months ended March 31, 2002 and March 31, 2003 |
|                                                 |   |
|                                                 | **Notes to  Consolidated Financial Statements** |
|                                                 |   |
| **ITEM  2.**                                         | **Managements  Discussion and Analysis of Financial Condition and Results of Operation** |
|                                                 |   |
| **ITEM 3.**                                          | **Controls and  Procedures** |
|                                                 |   |
| PART  II    OTHER INFORMATION    |
|                                                 |   |
| ITEM 1.                                              | Legal Proceedings |
|                                                 |   |
| ITEM  2.                                             | Changes  in Securities and Use of Proceeds |
|                                                 |   |
| ITEM 3.                                              | Defaults Upon  Senior Securities |
|                                                 |   |
| ITEM  4.                                             | Submission  of Matters to a Vote of Security Holders |
|                                                 |   |
| ITEM 5.                                              | Other Information |
|                                                 |   |
| ITEM 6.                                              | Exhibits and  Reports on Form 8-K |
|                                                 |   |
|                                                 | Signatures |

 

----

 

**PARTI.     FINANCIAL INFORMATION**

 

**ITEM 1. FINANCIAL STATEMENTS**

 

USIP.COM,INC

CONSOLIDATED BALANCE SHEET

 
|                                                                                                 |   | **(Unaudited)**    |    | **Audited**           |    |
|------------------------------------------------------------------------------------------------------|--------|--------------------|---------|-----------------------|---------|
|                                                                                                 |   | **March 31, 2003** |    | **December 31, 2002** |    |
| ASSETS                                                                                               |   |               |    |                  |    |
| CURRENT ASSETS                                                                                       |   |               |    |                  |    |
| Cash                                                                                                 |   | $                  | 16,699  |                  | 7,021   |   |
| Commissions and Sales Receivable, Net                                                                |   | 108,826            |    | 125,276               |    |
| Inventory                                                                                            |   | 50,782             |    | 50,782                |    |
| Prepaid Expenses                                                                                     |   | 1,630              |    | 3,932                 |    |
| TOTAL CURRENT ASSETS                                                                                 |   | 177,937            |    | 187,011               |    |
|                                                                                                 |   |               |    |                  |    |
| FIXED ASSETS                                                                                         |   |               |    |                  |    |
| Telephone and Office Equipment                                                                       |   | 1,899,487          |    | 1,899,122             |    |
| Vehicle                                                                                              |   | 76,367             |    | 76,367                |    |
|                                                                                                 |   | 1,975,854          |    | 1,975,489             |    |
| Less: Accumulated Depreciation                                                                       |   | (1,204,514         | )       | (1,151,240            | )       |
| Net Fixed Assets                                                                                     |   | 771,340            |    | 824,249               |    |
|                                                                                                 |   |               |    |                  |    |
| TOTAL ASSETS                                                                                         |   | $                  | 949,277 |                  | $       | 1,011,260 |   |
|                                                                                                 |   |               |    |                  |    |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                            |   |               |    |                  |    |
|                                                                                                 |   |               |    |                  |    |
| Current Liabilities                                                                                  |   |               |    |                  |    |
| Accounts Payable                                                                                     |   | $                  | 237,119 |                  | 201,812 |   |
| Line of Credit                                                                                       |   | 513,852            |    | 501,852               |    |
| Accrued Payroll and Payroll Taxes                                                                    |   | 8,538              |    | 5,896                 |    |
| Accrued State Gross Receipts Taxes                                                                   |   | 10,210             |    | 9,621                 |    |
| Other Accrued Expenses                                                                               |   | 37,506             |    | 28,663                |    |
| Current Portion of Long-Term Debt                                                                    |   | 15,500             |    | 13,990                |    |
| TOTAL CURRENT LIABILITIES                                                                            |   | 822,725            |    | 761,834               |    |
|                                                                                                 |   |               |    |                  |    |
| LONG-TERM LIABILITIES                                                                                |   |               |    |                  |    |
| Long-Term Debt, Less Current Portion                                                                 |   | 51,716             |    | 58,312                |    |
| TOTAL LIABILITIES                                                                                    |   | 874,441            |    | 820,146               |    |
| STOCKHOLDERS’ EQUITY                                                                            |   |               |    |                  |    |
| Common Stock, $.01 par value 25,000,000  Shares authorized, 17,699,388 shares issued and outstanding |   | 176,994            |    | 176,994               |    |
|                                                                                                 |   |               |    |                  |    |
| Additional Paid In Capital                                                                           |   | 1,442,608          |    | 1,442,608             |    |
|                                                                                                 |   |               |    |                  |    |
| Retained Earnings                                                                                    |   | (1,544,766         | )       | (1,428,488            | )       |
| TOTAL STOCKHOLDERS’ EQUITY                                                                      |   | 74,836             |    | 191,114               |    |
|                                                                                                 |   |               |    |                  |    |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                      |   | $                  | 949,277 |                  | $       | 1,011,260 |   |

 

See Accountant’s Reportand Notes To Financial Statement

 

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USIP.COM,INC

CONSOLIDATED STATEMENT OFINCOME (LOSS)

(Unaudited)

 
|                               |   | **Three Months Ended** |     |
|------------------------------------|--------|------------------------|----------|
|                               |   | **March 31, 2003**     |     | **March 31, 2002** |   |
| SALES                              |   |                   |     |   |   |
| Commissions                        |   | $                      | 6,838    |   | $ | 21,618 |   |
| Coin Collections                   |   | 53,058                 |     | 93,555 |   |
| Dial Around                        |   | 48,246                 |     | 50,274 |   |
| Phone Card Sales                   |   | 4,367                  |     | 13,310 |   |
| Equipment Sales                    |   | 235                    |     | 5,175 |   |
| Service and Repair Sales           |   | 29,361                 |     | 24,726 |   |
| Total Sales                        |   | 142,105                |     | 208,658 |   |
|                               |   |                   |     |   |   |
| COST OF SALES                      |   |                   |     |   |   |
| Telecommunications Costs           |   | 60,699                 |     | 109,575 |   |
| Commissions                        |   | 1,243                  |     | 5,581 |   |
| Repairs and Service Supplies       |   | 2,531                  |     | 19,819 |   |
| Other Direct Expenses - Travel     |   | 2,857                  |     | 1,304 |   |
| Depreciation                       |   | 53,668                 |     | 71,724 |   |
| Subcontractors                     |   | 1,299                  |     | 17,236 |   |
| Total Cost of Sales                |   | 122,297                |     | 225,239 |   |
|                               |   |                   |     |   |   |
| GROSS PROFIT                       |   | 19,808                 |     | (16,581 | ) |
|                               |   |                   |     |   |   |
| OPERATING EXPENSES                 |   |                   |     |   |   |
| Officers’ Salaries            |   | 16,512                 |     | 16,512 |   |
| Salaries and Wages                 |   | 31,042                 |     | 38,677 |   |
| Payroll Taxes                      |   | 5,923                  |     | 7,815 |   |
| Insurance                          |   | 14,716                 |     | 12,689 |   |
| Office Expense                     |   | 5,053                  |     | 4,934 |   |
| Telephone                          |   | 4,011                  |     | 6,171 |   |
| Utilities                          |   | 3,443                  |     | 1,591 |   |
| Vehicle Expenses                   |   | 900                    |     | 1,770 |   |
| Rent                               |   | 15,329                 |     | 18,132 |   |
| Professional Fees                  |   | 26,024                 |     | 59,300 |   |
| Outside Services                   |   | 1,875                  |     | 7,742 |   |
| Total Operating Expenses           |   | 124,828                |     | 175,333 |   |
|                               |   |                   |     |   |   |
| OPERATING INCOME (LOSS)            |   | (105,020               | )        | (191,914 | ) |
|                               |   |                   |     |   |   |
| OTHER INCOME (EXPENSE)             |   |                   |     |   |   |
| Interest Expense                   |   | (11,639                | )        | (5,435 | ) |
| NY State Gross Receipts Tax        |   | (488                   | )        | (90 | ) |
| Interest  & Other Income  |   | 869                    |     | 22 |   |
| Total Other Income                 |   | (11,258                | )        | (5,503 | ) |
|                               |   |                   |     |   |   |
| NET INCOME (LOSS)                  |   | $                      | (116,278 | ) | $ | (197,417 | ) |
|                               |   |                   |     |   |   |
| Weighted Common Shares Outstanding |   | 17,699,388             |     | 17,639,388 |   |
|                               |   |                   |     |   |   |
| Net Loss per Common Share          |   | $                      | —   |   | $ | — |   |

 

See Accountant’s Reportand Notes to Financial Statement

 

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USIP.COM,INC

CONSOLIDATED STATEMENT OFCASH FLOWS

(Unaudited)

 
|                                                                                            |   | **Three Months Ended  March 31** |     |
|-------------------------------------------------------------------------------------------------|--------|----------------------------------|----------|
|                                                                                            |   | **2003**                         |     | **2002** |   |
| Cash Flows From Operating Activities:                                                           |   |                             |     |   |   |
| Net (Loss)                                                                                      |   | $                                | (116,278 | ) | $ | (197,417 | ) |
| Adjustments to reconcile net   (loss) to net cash provided (used) by operating activities: |   |                             |     |   |   |
| Issuance of Common Stock for Professional Services                                              |   | —                           |     | 46,800 |   |
| Depreciation Expense                                                                            |   | 53,668                           |     | 71,724 |   |
| (Increase) Decrease in Commissions and Sales Receivables                                        |   | 16,450                           |     | 20,324 |   |
| (Increase) in Inventory                                                                         |   | —                           |     | (4,372 | ) |
| (Increase) Decrease in Prepaid Expenses                                                         |   | 2,302                            |     | (1,855 | ) |
| Increase (Decrease) in Accounts Payable                                                         |   | 35,307                           |     | (2,074 | ) |
| Increase (Decrease) in Accrued Expenses and Wages                                               |   | 11,092                           |     | (4,999 | ) |
| (Decrease) in Accrued State Gross Receipts Taxes                                                |   | 589                              |     | (13,036 | ) |
|                                                                                            |   |                             |     |   |   |
| Net cash (used) by operating activities                                                         |   | 3,130                            |     | (84,905 | ) |
|                                                                                            |   |                             |     |   |   |
| Cash Flows From Investing Activities:                                                           |   |                             |     |   |   |
| Acquisition of Equipment                                                                        |   | (365                             | )        | 0 |   |
|                                                                                            |   |                             |     |   |   |
| Net cash provided by investing activities                                                       |   | (365                             | )        | — |   |
|                                                                                            |   |                             |     |   |   |
| Cash Flows From Financing Activities:                                                           |   |                             |     |   |   |
| Proceeds Received from Line of Credit                                                           |   | 12,500                           |     | 90,000 |   |
| Principal Payments on Long-term Debt                                                            |   | (5,087                           | )        | (2,937 | ) |
| Repayments on Line of Credit Borrowings                                                         |   | (500                             | )        | (3,000 | ) |
|                                                                                            |   |                             |     |   |   |
| Net cash (used) by financing activities                                                         |   | 6,913                            |     | 84,063 |   |
|                                                                                            |   |                             |     |   |   |
| Net Increase in cash                                                                            |   | 9,678                            |     | (842 | ) |
|                                                                                            |   |                             |     |   |   |
| Cash - Beginning of Period                                                                      |   | 7,021                            |     | 10,825 |   |
|                                                                                            |   |                             |     |   |   |
| Cash - End of Period                                                                            |   | $                                | 16,699   |   | $ | 9,983 |   |
|                                                                                            |   |                             |     |   |   |
| Supplemental Disclosures of Cash Flow Information:                                              |   |                             |     |   |   |
| Cash Paid During Period The Period For:                                                         |   |                             |     |   |   |
| Interest                                                                                        |   | $                                | 2,509    |   | $ | 5,435 |   |
| Income Taxes                                                                                    |   | $                                | —   |   | $ | 13,036 |   |

 

See Accountant’s Reportand Notes To Financial Statement

 

----

 

**USIP.COM, INC**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

March 31, 2003

(Unaudited)

 

**NOTE 1.                SUMMARY INFORMATION**

 

The accompanying unaudited consolidated financial statements includethe accounts of USIP.Com, Inc. and our three wholly owned subsidiaries: Datone,Inc., NB Payphones Ltd., and The Platinum Funding Corporation. All significantinter-company amounts have been eliminated. Our unaudited consolidatedfinancial statements presented herein, should be read in conjunction with theaudited consolidated financial statements of our company contained in theCompany’s form 10K for the year ended December 31, 2002.

 

In the opinion of our management, the unaudited consolidated financialstatements presented herein reflect all adjustments (consisting only of normalrecurring adjustments) necessary for fair presentation. Interim results are notnecessarily indicative of results to be expected for the entire year.  For purposes of comparability, certain prioryear amounts have been reclassified to conform to current year presentation.

 

**NOTE 2.                COMPANY FORMATION**

 

On January 16, 2002, the Company formed a 100% wholly owned subsidiarycorporation, The Platinum Funding Corporation. This company was formed to takeadvantage of the mortgage brokering business. As of March 31, 2003, there hasbeen no significant activity within Platinum Funding Company.

 

**NOTE 3.                LINE OF CREDIT**

 

REVOLVING LINE OF CREDIT

 

Our Company has revolvinglines of credit, of which $513,852 and $501,852 was outstanding at March 31,2003 and December 31, 2002 respectively. Bank advances on the credit line arepayable on demand and carry an interest rate of 7%-10%.

 

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**ITEM 2.****                 MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**FORWARD LOOKINGSTATEMENTS**

 

The following is a discussion and analysis of theresults of operations of our company and should be read in conjunction with ourfinancial statements and related notes contained in this Form 10-QSB. This Form10-QSB contains forward-looking statements that involve risks anduncertainties. You can identify these statements by the use of forward-lookingwords such as “may,” “will,” “expect,” “anticipate,” “estimate,” “believe”“continue,” or other similar words. You should read statements that containthese words carefully because they discuss our future expectations, containprojections of our future results of operations or financial condition or stateother “forward-looking” information. We believe that it is important tocommunicate our future expectations to our investors. However, there may beevents in the future that we are unable to accurately predict or control. Thoseevents as well as any cautionary language in this Quarterly statement provideexamples of risks, uncertainties and events that may cause our actual resultsto differ materially from the expectations we describe in our forward-lookingstatements. You should be aware that the occurrence of the events described inthis Form 10-QSB could have a material adverse effect on our business,operating results and financial condition. Actual results could differmaterially from current expectations. Among the factors that could effect ouractual results and could cause results to differ from those contained in theforward-looking statements contained herein is our ability to expand ourcustomer base, which will be dependent on business, financial and other factorsbeyond our control, including, among others, seasonal aspects such as thewinter months that tend to reduce the frequency of outdoor payphone use on theeast coast, ability to increase our size and marketing area by purchasingpayphones and locations from independent telephone companies, and whether thepublic uses our payphones, together with all the risks inherent in theestablishment of a new enterprise and the marketing of new products.

 

**PLAN OF OPERATION**

 

USIP.Com, Inc. (“USIP,” the“Company,” “we,” “our” or “us”), was incorporated under the laws of the Stateof Utah on April 6, 1978 as Derby Farms, Inc. On January 19, 1982 our Articlesof Incorporation were amended and the name of our company was changed toCommerce Oil of Kentucky, Inc. On December 31, 1983 our Certificate ofIncorporation was suspended for failure to file an annual report. OurCertificate of Incorporation was reinstated on June 18, 1992 by the UtahDepartment of Commerce, Division of Corporations.

 

On January 31, 2000, DatoneCommunications, Inc. (“Datone”), a New York corporation and an independent payphoneprovider (“IPP”) merged into our company. All the Datone shares were retired.Datone shareholders received 7,268,388 restricted shares of our common stockfor their stock. On February 4, 2000 we amended our Articles of Incorporationand changed our name to USIP.Com, Inc.

 

On April 29, 2000 wepurchased all the shares of NB Payphones, Ltd., (“NB”), the owner of 466****payphones in Pennsylvania, and CointelLeasing, Inc. (“Cointel”), the owner of 45 payphones in Syracuse, NewYork, from Riviera Bay Holding Trust, a Gibraltar Trust for 8,750,000restricted shares of our common stock. NB is a USIP wholly owned subsidiary.

 

On August 30, 2000 we incorporated Datone, Inc. as aDelaware company. Datone, Inc. is a USIP wholly owned subsidiary. All therevenue generating assets and related expenses that we received from the DatoneCommunications Merger were subsequently moved via an intercompany transfer fromUSIP into Datone, Inc. Datone, Inc. was capitalized with $1,017. All of theDatone, Inc. shares were given to USIP. On October 1, 2000 we merged Cointelinto Datone, Inc. by way of an inner company transaction. In an effort to savemoney our management decided to combine these similar companies.

 

On December 14, 2001 we incorporated The PlatinumFunding Corporation (“Platinum”), as a New York wholly owned subsidiary for thepurpose of developing a real estate based mortgage brokerage business. OnJanuary 16, 2002 we issued a press release announcing the formation ofPlatinum. On July 11, 2002 Platinum signed a Letter of Intent with ElapSolutions, Inc., (“ELAP”), to acquire 100 percent of ELAP’s issued andoutstanding shares. On July 25, 2002 we issued a second press releaseannouncing the planned acquisition of Elap. On September 4, 2002

 

----

 

we received formal notification that Elap was declining the Letter ofIntent due to financial reasons beyond their control. Because the acquisitiondid not occur, Platinum has had no activity since December 14, 2001.

 

We are continuing our efforts to find a suitablecandidate that will help us develop a real estate based mortgage brokeragebusiness as originally intended. We believe that in time we can service clientsin both the residential and commercial markets throughout the state of NewYork. We cannot predictwhen we might locate target assets or companies, and there is noguarantee that we will be able to develop this business and generate a profit. We anticipate that the analysis of specificproposals and the selection of business opportunities could take many months tofinalize.

 

The acquisition of abusiness opportunity may be made by purchase, merger, exchange of stock, orotherwise, and may encompass assets or a business entity, such as acorporation, joint venture, or partnership. Because we have limited capital, wemust be very selective about which entity we will do business with. We intendto seek opportunities that demonstrate the potential for long-term growth asopposed to short-term earnings.

 

As of March 31, 2003, weowned and operated a network of****approximately656 payphones in three states. Our installed payphone base generatesrevenue through coin calls (local and long-distance), non-coin calls (callingcard, credit card, collect, and third-party billed calls using our pre-selectedoperator services providers such as Qwest and ILD Telecommunications), anddial-around calls (utilizing a 1-800, 1010XXX or similar “toll free” dialingmethod to select a carrier other than our pre-selected carrier).

 

We enter into site leasing agreements with variousbusinesses that are open to the public. Some of the businesses include but arenot limited to retail stores, convenience stores, bars, restaurants, gasstations, colleges and hospitals. The agreements allow us to install ourpayphones in areas that are accessible to the public. We provide the payphones,install them, and pay all maintenance and operational costs for the term ofeach lease. We also sell payphones to some of the site owners. We derive incomefrom the sale of a phone as well as any commission split that we negotiate withthe buyer.

 

**PLANS FORFISCAL YEAR 2003.**

 

Our plans of operation for the remainder ofour 2003 fiscal year will consist of the following activities:

 

•                  Evaluatepotential acquisitions of non-telecommunications businesses that will enhanceand bring value to our company;

•                  Expand our customer base in existing areas;

•                  Develop a marketing plan and infrastructurethat can help us grow into the next year, and

•                  Worktowards developing a successful real estate based mortgage brokerage business.

 

**Basis ofPresentation**

 

Our unaudited consolidated financial statementsinclude the accounts of USIP.Com, Inc. and our three wholly owned subsidiaries:Datone Inc., N.B. Payphones, Ltd., and the Platinum Funding Corporation.  All significant inter-company amounts havebeen eliminated. Our unaudited consolidated financial statements presentedherein, should be read in conjunction with our audited consolidated financialstatements as of, and for the year ended December 31, 2002. In the opinion ofour management, the unaudited consolidated financial statements presentedherein reflect all adjustments (consisting only of normal recurringadjustments) necessary for fair presentation. Interim results are notnecessarily indicative of results to be expected for the entire year.

 

We prepare our consolidated financial statements in accordance withgenerally accepted principles, which require that our management make estimatesand assumptions that affect reported amounts. Actual results could differ fromthese estimates.

 

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**Our revenue is derived from the following three generalsources.**

 

**1.Commission Income**.

 

Commission incomeincludes commissions from operator service telecommunications companies andcommissions for toll free calls from all payphones. The commissions foroperator services are paid 45 days in arrears. Dial around compensation isbilled quarterly, and received three and one half months behind the billedquarter.

 

**2. Coin calls.**

 

Coin calls representcalls paid for by customers who deposit coins into the payphones. Coin callrevenue is recorded as the actual amount of coins collected from the payphones. Some coincollections are made on a daily basis and others more often if a particularpayphone has significant usage. The coins are counted in house and depositedweekly.

 

**3.Payphone sales, repairs and pre-paid phone cards sales.**

 

We derive income from the sale and repair of apayphone. We can negotiate the sale of a payphone to a site owner when itbecomes cost prohibitive to maintain or if a customer offers to buy the phoneat a price that is favorable to our company. The new owner or lessee becomesresponsible for the maintenance and operational costs of the payphone. We sellpre-paid phone cards at some of our payphone locations. Sales and repairs ofpayphones and the sale of pre-paid phone cards are not subject to the samecollection delays as the other types of operating income.

 

**Costsrelated to our operation.**

 

The principle costs related to the ongoing operationof our Company’s payphones include telephone charges, commissions, service,maintenance and network costs. Telephone charges consist of payments made byour Company to LEC or competitive local exchange carriers,and long distance carriers for access to and use of their telecommunications networks.Commission expense represents payments to owners or operators of the premisesat which a payphone is located. Service, maintenance and network costsrepresent the cost of servicing and maintaining our payphones.

 

**THREE MONTHS ENDED MARCH 31, 2003 COMPAREDTO THREE MONTHS ENDED MARCH 31, 2002**

 

**Revenues**

 

Our total revenue decreased by $66,553 orapproximately 31.895 %, from $208,658 in the three months ended March 31, 2002to $142,105 in the three months ended March 31, 2003. This decrease was primarilyattributable to the removal of unprofitable phone locations, as well as lowercall volumes on our payphones due to the growth in wireless communicationservices. We reduced our network of payphones from approximately 1,157 in thethree months ending March 31, 2002 to approximately 656 in the three monthsending March 31, 2003.

 

Our commissions decreased by $14,780 or approximately68.37%, from $21,618 in the three months ended March 31, 2002 to $6,838 in thethree months ended March 31, 2003. This decrease occurred because we reducedthe number of payphones that we own, we had fewer operator assisted calls, andthe competition from the wireless communications business has continued togrow.

 

Our coin call revenues decreased by $40,497 orapproximately 43.29% from $93,555 in the three months ended March 31, 2002 to$53,058 in the three months ended March 31, 2003. The decrease in coin callrevenue was primarily attributable to the removal of unprofitable phones alongwith the reduced call volumes on our payphones.

 

Our non-coin call revenue, which is comprisedprimarily of dial-around revenue and operator service revenue decreased by$2,028 or approximately 4.04% from $50,274 in the three months ended March 31,2002 to $48,246 in the three months ended March 31, 2003. This decrease wasprimarily attributable to the removal of unprofitable phone locations, andlower call volumes on our payphones.

 

Our service & repair sales increased by $4,635,when compared to the same period in 2002. Our equipment sales decreased by$4,940, from $5,175 in the three months ending March 31, 2002 to $235 in thethree months

 

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ending March 31, 2003. Our phone card sales decreased by $8,943 whencompared to the same period in 2002. This decrease is due to the increasedcompetition from other phone card vendors, and the loss of various sitelocations when companies go out of business. The increased competition anddecreased site location forced us to reduce our phone card sites byapproximately 42%.

 

**Cost ofSales**

 

Ouroverall cost of sales decreased for the three months ending March 31, 2003 by$102,942 or approximately 45.7% from the three months ending March 31, 2002.Our telecommunications costs decreased by $48,876 in 2003. This decreaseoccurred because we reduced the number of payphones that we service from 1,157payphones in 2002 to 656 in 2003. Once a low revenue payphone is identified, weoffer the site owner an opportunity to purchase the equipment. If the siteowner does not purchase the payphone, we remove it from the site. Our installedpayphone base generates revenue through coin calls (local and long-distance),non-coin calls****(calling card,credit card, collect, and third party billed calls using our pre-selectedoperator service).

 

Our commissions payable decreased by $4,338 due to adecrease in payphone usage. We believe this was the result of an increase inthe use of cellular phones and pre-paid phone cards. Our contractor’s feedecreased by $15,937 due to the elimination of contractors, and there-organization of routes in order to manage them more efficiently.Depreciation expense decreased $18,056 when compared to the same period in2002. This decrease is due to certain assets being fully depreciated and our ongoing strategy of identifying unprofitable payphones, selling them to the siteowners or removing them. Once a payphone is sold to the site owner it isremoved from our assets and depreciation schedules. We own telephone equipmentand motor vehicles, which provide a service for a number of years. The term ofservice is commonly referred to as the “useful life” of the asset. Because anasset such as telephone equipment or motor vehicle is expected to provideservice for many years, it is recorded as an asset rather than an expense inthe year acquired. A portion of the cost of the long-lived asset is reported asan expense during the cost of an asset to expense over its life in a rationaland systematic manner.

 

Our cost of sales for repairs, service, travel, andsupplies decreased by $15,735 because of our management team’s ongoing effortsto reduce costs.

 

**Operationand Administrative Expenses**

 

Ouroperating expenses decreased by $50,505 or approximately 28.8% over the sameperiod in 2002. This decrease in operating expense is a direct result of ourefforts to cut expenses and run our company as efficiently as possible.Salaries and related payroll taxes were reduced by $9,527 when compared to thesame expenses for 2002. This decrease is due to the elimination of twoemployees, one technician and one clerical assistant. Our insurance expenseincreased by $2,027 when compared to the fiscal year 2002. Our rent decreasedby $2,803 when compared to 2002. We did not renew the lease for extra officespace in Pennsylvania, and we ended a month-to-month rental agreement forstorage space in New York during 2002. Our telephone, utilities, office, andother miscellaneous expenses, together account for a decrease of $189 whencompared to the same period ending March 31, 2002. Professional fees decreasedby $33,276 over 2002. These are fees we pay to accountants and attorneys andother professionals throughout the year for various tasks. Our expenses foroutside services decreased by $5,867 over 2002 because we no longer usetemporary personnel services. Our vehicle expense decreased by $870 in 2003because we replaced older vehicles with new vehicles that require lessmaintenance.

 

**GOINGCONCERN QUALIFICATION**

 

Inhis Independent Auditor’s Report for the fiscal year ending December 31, 2002,CE Forse & Co. Ltd. stated that we have incurred annual losses sinceinception raising substantial doubt about our ability to continue as a goingconcern.

 

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**LIQUIDITY AND CAPITAL RESOURCES**

 

**CashFlow**

 

Our primary sources ofliquidity have been cash from operations and borrowing from various creditfacilities. As of March 31, 2003, we have a note payable to Key Bank in theamount of $91,052. We have an additional line of credit with Lilly BeterCapital Group, Ltd. in the amount of $500,000. As of March 31, 2003 we haveused $422,800.

 

**COMPETITION**

 

We compete for payphonelocations directly with Regional Bell Operating Companies (RBOCs), such asVerizon Communications, Local Exchange Companies (LECs), such as CitizensCommunications and Alltel Corporation, and other Independent Payphone Providers(IPPs), such as Davel Communications. We also compete, indirectly, withlong-distance companies, which can offer Location Owners commissions onlong-distance calls made from LEC-owned payphones. Most LEC’s, long-distancecompanies and some IPPs may have substantially greater financial, marketing andother resources than our company.

 

We believe that our principal competition is fromproviders of wireless communications services for both local and long distancetraffic. Certain providers of wireless communication services have introducedrate plans that are competitively priced with certain of the products offeredby us and have negatively impacted the usage of payphones throughout thenation.

 

We believe that thecompetitive factors among payphone providers are (1) the commission payments toa Location Owner, (2) the ability to serve accounts with locations in severalLocal Access Transport Areas (LATAs), or states, (3) the quality of service andthe availability of specialized services provided to a Location Owner andpayphone users, and (4) responsiveness to customer service needs. We believethat we are currently competitive in each of these areas.

 

Additionally, a number of domestic IPPs continue toexperience financial difficulties from various competitive and regulatoryfactors impacting the pay telephone industry generally, which may impair theirability to compete prospectively. While no assurances can be given, we believethat these circumstances create an opportunity for us to obtain new locationagreements and reduced site commissions going forward.

 

We compete withlong-distance carriers that provide dial-around services that can be accessedthrough our payphones. Certain national long-distance operator serviceproviders and prepaid calling card providers have implemented extensiveadvertising promotions and distribution schemes which have increaseddial-around activity on payphones owned by LECs and IPPs, including ourcompany, thereby reducing traffic to our primary providers of long-distanceservice. While we do receive compensation for dial-around calls placed from ourpayphones, regulatory efforts are underway to improve the collection system andprovide us with the ability to collect that portion of dial-around calls thatare currently owed.

 

**IMPACT OF INFLATION**

 

Inflation is notconsidered a material factor affecting our business. General operating expensessuch as salaries, employee benefits and occupancy costs are, however, subjectto normal inflationary pressures

 

**SEASONALASPECTS**

 

Weather conditions affect ourrevenue stream because we operate in the Northeastern part of the country.Revenues drop off significantly during the winter because most of our phonesare outdoors. The spring and summer periods show an increase in payphone usage.Revenue and income are generally lowest in the first quarter and highest in thethird quarter.

 

**ITEM3.   CONTROLS AND PROCEDURES**

 

a)  As of a date within 90 daysof the filing date of this quarterly report, an evaluation of the effectivenessof the design and operation of the Company’s disclosure controls and procedureswas performed under the supervision and with the participation of the Company’sPresident and Controller, pursuant  toExchange Act Rule 13a-14(c). Based upon that evaluation, the Company’sPresident and Controller have concluded that the Company’s disclosure

 

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controls and procedures are effective for the purpose of ensuring thatmaterial information required to be in this quarterly report is made known tothem by others on a timely basis.

 

b) There have been no changes in the Company’s internal controls or inother factors that could significantly affect these controls subsequent to thedate of their evaluation.

 

**RISKSASSOCIATED WITH OUR BUSINESS**

 

In addition to the otherinformation in this report, the following risks should be considered carefullyin evaluating our business and prospects:

 

**UNLESS WE CAN REVERSE OUR HISTORY OF LOSSES, WE MAY HAVE TO DISCONTINUE OPERATIONS.**

 

If we are unable to achieve or sustain profitability, or if operating losses increase in the future, we may not be able to remain a viable company and may have to discontinue operations. Our expenses have historically exceeded our revenues and we have had losses in all fiscal years of operation, including those in fiscal years 2001 through 2002, and the losses are projected to continue in 2003. Our net losses were $544,645 and $872,178 for fiscal years ended 2001, 2002 respectively. We have been concentrating on the development of our products, services and business plan. Our management believes that we can be profitable and that our business plan will be successful; however, there is no assurance that we will be successful in implementing our business plan or that we will be profitable now or in the future.

 

**WE MAY NOTSUCCEED OR BECOME PROFITABLE.**

 

We will need to generatesignificant revenues to achieve profitability and we may be unable to do so.Even if we do achieve profitability, we may not be able to sustain or increaseprofitability in the future. We expect that our expenses will continue toincrease and there is no guarantee that we will not experience operating lossesand negative cash flow from operations for this fiscal year or for theforeseeable future. If we do not achieve or sustain profitability, then we maybe unable to continue our operations.

 

**WE WILL NEEDADDITIONAL CAPITAL FINANCING IN THE FUTURE.**

 

We may be required to seekadditional financing in the future to respond to increased expenses orshortfalls in anticipated revenues, accelerate product development anddeployment, respond to competitive pressures, develop new or enhanced products,or take advantage of unanticipated acquisition opportunities. We cannot becertain we will be able to find such additional financing on reasonable terms,or at all. If we are unable to obtain additional financing from Lilly BeterCapital Group, Ltd. or Key Bank when needed, we could be required to modify ourbusiness plan in accordance with the extent of available financing.

 

**IF WE AREUNABLE TO COMPETE SUCCESSFULLY IN THIS HIGHLY COMPETITIVE MARKET, OUR BUSINESSWILL FAIL.**

 

The market for payphones isworldwide and highly competitive and we expect competition to intensify in thefuture. There are few substantial barriers to entry, and additional competitionfrom existing competitors and new market entrants will likely occur in thefuture. An increase in competitive pressures in our market or our failure tocompete effectively may result in pricing reductions, reduced gross margins andloss of market share. Many of our current or potential competitors have longeroperating histories, greater name recognition, larger customer bases andsignificantly greater financial, technical, marketing and other resources thanwe do. In addition, our current and potential competitors may establishcooperative relationships among themselves or with third parties that mayfurther enhance their resources. As a result, they may be able to adapt morequickly to new technologies and customer needs, devote greater resources to thepromotion or sale of their products and services, initiate or withstandsubstantial price competition, take advantage of acquisition or otheropportunities more readily or develop and expand their product and serviceofferings more quickly. In addition, our competitors may bundle products thatcompete with ours. If these companies were to use their greater financial,technical and marketing resources in our target markets, it could adverselyaffect our business.

 

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**WEMAY FAIL TO ENGAGE IN STRATEGIC ACQUISITIONS, WHICH COULD LIMIT OUR FUTUREGROWTH.**

 

One of our strategies forgrowth is to engage in selective strategic acquisitions of key products,technologies or companies. Our ability to conduct such acquisitions is limitedby our ability to identify potential acquisition candidates, obtain necessaryfinancing and consummate the acquisitions. In the event we are unable toidentify and take advantage of these opportunities, we may experiencedifficulties in growing our business. In addition, pursuing acquisitionopportunities could divert our management’s attention from our ongoing businessoperations and result in decreased operating performance.

 

**IF WE ENGAGEIN ACQUISITIONS, WE MAY EXPERIENCE SIGNIFICANT COSTS AND DIFFICULTYASSIMILATING THE OPERATIONS OR PERSONNEL OF THE ACQUIRED COMPANIES, WHICH COULDTHREATEN OUR FUTURE GROWTH.**

 

If we make any acquisitions,we could have difficulty assimilating the operations, technologies and productsacquired or integrating or retaining personnel of acquired companies. Inaddition, acquisitions may involve entering markets in which we have no orlimited direct prior experience. The occurrence of any one or more of thesefactors could disrupt our ongoing business, distract our management andemployees and increase our expenses. In addition, pursuing acquisitionopportunities could divert our management’s attention from our ongoing businessoperations and result in decreased operating performance. Moreover, ourprofitability may suffer because of acquisition-related costs or amortizationof acquired goodwill and other intangible assets. Furthermore, we may have toincur debt or issue equity securities in future acquisitions. The issuance ofequity securities would dilute our existing stockholders.

 

**IF WE DO NOT INCREASE OUR BRAND AND NAMERECOGNITION, OUR ABILITY TO SELL OUR PRODUCTS WILL BE REDUCED AND OUR BUSINESSAND OPERATING RESULTS WILL SUFFER.**

 

Most of our target customersare small and medium-sized businesses. We believe that establishing andmaintaining recognition in the payphone business is critical for attracting andexpanding this targeted customer base because we believe these targetedcustomers generally prefer to do business with established companies. We alsobelieve that the importance to us of name recognition and reputation willincrease as competition in our market increases. Promotion and enhancement ofour current or future acquired products will depend on the effectiveness of ourmarketing and advertising efforts and on our ability to continue providing high-qualityproducts and services. We may not be successful in either regard. If we are notsuccessful, our ability to generate revenue will be limited.

 

**IF WE CANNOT ATTRACT, RETAIN,MOTIVATE AND INTEGRATE ADDITIONAL SKILLED PERSONNEL, OUR ABILITY TO COMPETEWILL BE IMPAIRED.**

 

Many of our current andpotential competitors have more employees than we do. Our success depends inlarge part on our ability to attract, retain and motivate highly qualifiedmanagement and technical personnel. We face intense competition for qualifiedpersonnel. The industry in which we compete has a high level of employeemobility and aggressive recruiting of skilled personnel. If we are unable tocontinue to employ our key personnel or to attract and retain qualifiedpersonnel in the future, our ability to successfully execute our business planwill be jeopardized and our growth will be inhibited.

 

**OUR FAILURE TO MANAGE PLANNED GROWTH COULDADVERSELY AFFECT OUR ABILITY TO INCREASE REVENUES AND BECOME PROFITABLE.**

 

Ifwe do not effectively manage our planned growth, our ability to significantlyincrease revenues and become profitable will be limited. Our growth hasstrained and will continue to strain our management, financial controls,operations systems, personnel and other resources. If we do not manage ourplanned future growth effectively, our efforts to increase our customer baseand product and service offerings may not be successful. In addition, ourplanned growth could adversely affect our ability to provide services and technicalsupport in a timely manner and in accordance with customer expectations. Tomanage growth of our operations, we must:

 

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•                  improveexisting operational, financial and management information controls, reportingsystems and procedures;

 

•                  hire, train and manage additional qualifiedpersonnel; and

 

•                  effectively manage multiple relationships withour customers, vendors and     otherthird parties.

 

We may not be able to install managementinformation and control systems in an efficient and timely manner, and ourcurrent or planned personnel, systems, procedures and controls may not beadequate to support our future operations.

 

**WE MAY BEUNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS OR MAY BE SUED BY THIRDPARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.**

 

The telecommunicationsindustry is characterized by the existence of a large number of patents andfrequent litigation based on allegations of trade secret, copyright or patentinfringement. We may inadvertently infringe a patent of which we are unaware.In addition, because patent applications can take many years to issue, theremay be a patent application now pending of which we are unaware that will causeus to be infringing when it is issued in the future. If we make anyacquisitions, we could have similar problems in those industries. Although weare not currently involved in any intellectual property litigation, we may be aparty to litigation in the future to protect our intellectual property or as aresult of our alleged infringement of another’s intellectual property, forcingus to do one or more of the following:

 

•                  Cease selling, incorporating or using productsor services that incorporate the challenged intellectual property;

•                  Obtain from the holder of the infringedintellectual property right a license to sell or use the relevant technology,which license may not be available on reasonable terms; or

•                  Redesign those products or services thatincorporate such technology.

 

A successful claim ofinfringement against us, and our failure to license the same or similartechnology, could adversely affect our business, asset value or stock value.Infringement claims, with or without merit, would be expensive to litigate orsettle, and would divert management resources.

 

Our employees may be bound byconfidentiality and other nondisclosure agreements regarding the trade secretsof their former employers. As a result, our employees or we could be subject toallegations of trade secret violations and other similar violations if claimsare made that they breached these agreements.

 

**BECAUSE OUR OFFICERS AND DIRECTORS AREINDEMNIFIED AGAINST CERTAIN LOSSES, WE MAY BE EXPOSED TO COSTS ASSOCIATED WITHLITIGATION.**

 

If our directors or officers becomeexposed to liabilities invoking the indemnification provisions, we could beexposed to additional unreimbursable costs, including legal fees. Our articlesof incorporation and bylaws provide that our directors and officers will not beliable to us or to any shareholder and will be indemnified and held harmlessfor any consequences of any act or omission by the directors and officersunless the act or omission constitutes gross negligence or willful misconduct.Extended or protracted litigation could have a material adverse effect on ourcash flow.

 

**WEWILL DEPEND ON OUTSIDE MANUFACTURING SOURCES AND SUPPLIERS.**

 

We may contract with thirdparty manufacturers to produce our products and we will depend on third partysuppliers to obtain the raw materials necessary for the production of ourproducts. We do not know what type of contracts we will have with such thirdparty manufacturers and suppliers. In the event we outsource the manufacture ofour products, we will have limited control over the actual production process.Moreover, difficulties encountered by any one of our third party manufacturers,which result in product defects, delayed or reduced product shipments, costoverruns or our inability to fill orders on a timely basis, could have anadverse impact on our business. Even a

 

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short-term disruption in our relationship withthird party manufacturers or suppliers could have a material adverse effect onour operations. We do not intend to maintain an inventory of sufficient size toprotect ourselves for any significant period of time against supply interruptions,particularly if we are required to obtain alternative sources of supply.

 

**OUR STOCK PRICE MAY BE VOLATILE.**

 

The market price of our common stock willlikely fluctuate significantly in response to the following factors, some ofwhich are beyond our control:

 

•                  Variations in our quarterly operating results;

•                  Changes in financial estimates of our revenues and operatingresults by securities analysts;

•                  Changes in market valuations of telecommunications equipmentcompanies;

•                  Announcements by us of significant contracts, acquisitions,strategic partnerships, joint ventures or capital commitments;

•                  Additions or departures of key personnel;

•                  Future sales of our common stock;

•                  Stock market price and volume fluctuations attributable toinconsistent trading volume levels of our stock;

•                  Commencement of or involvement in litigation.

 

In addition, the equity markets haveexperienced volatility that has particularly effected the market prices ofequity securities issued by technology companies and that often has beenunrelated or disproportionate to the operating results of those companies.These broad market fluctuations may adversely effect the market price of ourcommon stock.

 

**WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS ON OURCOMMON STOCK.**

 

We have not paid any dividends on ourCommon Stock since inception and do not anticipate paying any dividends on ourCommon Stock in the foreseeable future. Instead, we intend to retain any futureearnings for use in the operation and expansion of our business.

 

**IF WE ARE SUBJECT TO SEC REGULATIONS RELATING TOLOW-PRICED STOCKS, THE MARKET FOR OUR COMMON STOCK COULD BE ADVERSELY AFFECTED.**

 

The Securities and Exchange Commission hasadopted regulations concerning low-priced (or “penny”) stocks. The regulationsgenerally define “penny stock” to be any equity security that has a marketprice less than $5.00 per share, subject to certain exceptions. If our sharesare offered at a market price less than $5.00 per share, and do not qualify forany exemption from the penny stock regulations, our shares may become subjectto these additional regulations relating to low-priced stocks.

 

The penny stock regulations require thatbroker-dealers, who recommend penny stocks to persons other than institutionalaccredited investors make a special suitability determination for thepurchaser, receive the purchaser’s written agreement to the transaction priorto the sale and provide the purchaser with risk disclosure documents thatidentify risks associated with investing in penny stocks. Furthermore, thebroker-dealer must obtain a signed and dated acknowledgment from the purchaserdemonstrating that the purchaser has actually received the required riskdisclosure document before effecting a transaction in penny stock. Theserequirements have historically resulted in reducing the level of tradingactivity in securities that become subject to the penny stock rules.

 

The additional burdens imposed uponbroker-dealers by these penny stock requirements may discourage broker-dealersfrom effecting transactions in the common stock, which could severely limit themarket liquidity of our common stock and our shareholders’ ability to sell ourcommon stock in the secondary market.

 

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**PART IIOTHER INFORMATION.**

 

**ITEM 1.  LEGAL PROCEEDINGS**

Notapplicable.

 

**ITEM 2.  CHANGESIN SECURITIES AND USE OF PROCEEDS.**

Not applicable

 

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES.**

Notapplicable.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

Notapplicable.

 

**ITEM 5.  OTHER INFORMATION**

Notapplicable.

 

**ITEM 6. EXHIBITS AND REPORTS ON FORM8-K**

 

(a)           Exhibits

 
| **EXHIBIT  NO.** |   | **DESCRIPTION**                                                                                                                         |
|------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                    |
| 3                |   | Articles of Incorporation  (incorporated by reference to Exhibit 3 of the Company’s Form 10-SB) filed on  July 28, 2000.           |
| 3.1              |   | Amended Articles of  Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Form  10-SB) filed on July 28, 2000. |
| 3.2              |   | Amended Articles of  Incorporation (incorporated by reference to Exhibit 3.2 of the Company’s Form  10-SB) filed on July 28, 2000. |
| 3.3              |   | Bylaws (incorporated by  reference to Exhibit 4 of the Company’s Form 10-SB) filed on July 28, 2000.                               |
| 4                |   | Specimen Stock Certificate  (incorporated by reference to Exhibit 5 of the Company’s Form 10-SB). filed  on July 28, 2000.         |

 

(b)           Reports on Form 8K

 

No reports on Form 8-K were filed in the first quarterof 2003.

 

**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 
|                                 | USIP.Com, Inc.        |
|--------------------------------------|-----------------------|
|                                 |                  |
|                                 | (Registrant)          |
|                                 |                  |
|                                 |                  |
| Dated:   May  8, 2003 | /s/ CRAIG BURTON      |   |
|                                 | Craig Burton          |
|                                 | President             |
|                                 |                  |
|                                 |                  |
| Dated:   May  8, 2003 | /s/ KATHY CHRISTOPHER |   |
|                                 | Kathy Christopher     |
|                                 | Controller            |

 

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**CERTIFICATION**

 

I, Craig Burton, certify that:

 

1. I have reviewed this quarterly report on Form10-QSB of USIP.Com, Inc.;

 

2. Based on my knowledge, this quarterly report doesnot contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances underwhich such statements were made, not misleading with respect to the periodcovered by this quarterly report;

 

3. Based on my knowledge, the financial statements,and other financial information included in this quarterly  report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrantas of, and for, the periods presented in this quarterly report;

 

4. The registrant’s other certifying officers and Iare responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

 

a) designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

 

b) evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this quarterly report (the “Evaluation Date”); and

 

c) presented in this quarterly report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officers and Ihave disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent functions):

 

a) all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

b) any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant’sinternal controls; and

 

6. The registrant’s other certifying officers and Ihave indicated in this quarterly report whether or not there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 
| Date: May 8, 2003 |                    |
|-------------------|-------------------------|
|              |                    |
|              |                    | /s/ Craig Burton |   |   |
|              | Craig Burton, President |   |

 

 

CERTIFICATIONPURSUANT TO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

 

Inconnection with the Quarterly Report of USIP.Com, Inc. (the “Company”) on Form10-QSB for the period ended March 31, 2003 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Craig

 

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Burton,President of the Company, certify, pursuant to 18 U.S.C. section 1350, asadopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to thebest of my knowledge:

 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all materialrespects, the financial condition and result of operations of the Company.

 
| /s/ Craig Burton           |   |
|----------------------------|--------|
| Craig Burton               |
| President,  USIP.Com, Inc. |
|                       |
| May 8, 2003                |

 

 

**CERTIFICATION**

 

I, Kathy Christopher, certify that:

 

1. I have reviewed this quarterly report on Form10-QSB of USIP.Com, Inc.;

 

2. Based on my knowledge, this quarterly report doesnot contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances underwhich such statements were made, not misleading with respect to the periodcovered by this quarterly report;

 

3. Based on my knowledge, the financial statements,and other financial information included in this quarterly report, fairlypresent in all material respects the financial condition, results of operationsand cash flows of the registrant as of, and for, the periods presented in thisquarterly report;

 

4. The registrant’s other certifying officers and Iare responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:

 

a) designed such disclosure controls and procedures toensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

 

b) evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this quarterly report (the “Evaluation Date”); and

 

c) presented in this quarterly report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5. The registrant’s other certifying officers and Ihave disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent functions):

 

a) all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

b) any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant’sinternal controls; and

 

6. The registrant’s other certifying officers and Ihave indicated in this quarterly report whether or not there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent

 

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to the date of our most recent evaluation, includingany corrective actions with regard to significant deficiencies and materialweaknesses.

 
| Date: May 8, 2003 |                           |
|-------------------|--------------------------------|
|              |                           |
|              |                           | /s/ Kathy Christopher |   |   |
|              | Kathy Christopher,  Controller |   |
|                   |                                |  |  |  |  |

 

 

CERTIFICATIONPURSUANT TO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

 

Inconnection with the Quarterly Report of USIP.Com, Inc. (the “Company”) on Form10-QSB for the period ended March 31, 2003 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Kathy Christopher,Controller of the Company, certify, pursuant to 18 U.S.C. section 1350, asadopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to thebest of my knowledge:

 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) ofthe Securities Exchange Act of 1934; and

 

(2)The information contained in the Report fairly presents, in all materialrespects, the financial condition and result of operations of the Company.

 

 
| /s/  Kathy Christopher      |   |
|-----------------------------|--------|
| Kathy  Christopher          |
| Controller,  USIP.Com, Inc. |
|                        |
| May  8, 2003                |

 

USIP.Com, Inc. does not have a “Chief FinancialOfficer,” Kathy Christopher is the principal financial and accounting officer.

 

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