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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB/A

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|--- | ----------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2001

|/ / | 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

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USIP.COM, INC.(Exact name of small business issuer as specified in its charter)

Utah(State or other jurisdiction of incorporation or organization)

16-1583162(I.R.S. Employer Identification No.)


7325 Oswego Road
Liverpool, 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)

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Check
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes /x/  No / /

State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 17,619,388 shares of Common Stock, $.01 par value, were
outstanding as of May 11, 2001.

Transitional
Small Business Disclosure Forms (check one): Yes / /  No /x/

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USIP.COM, INC.  INDEX TO FORM 10-QSB/A  March 31, 2001

|        |  |                                                                                                                      |  | Page Nos.
|------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---------
|        |  | PART I FINANCIAL INFORMATION                                                                                         |  |          
|ITEM 1. |  | Financial Statements                                                                                                 |  |          
|        |  | Consolidated Balance Sheets At December 31, 2000 and March 31, 2001                                                  |  | 3        
|        |  | Consolidated Statements of Income and Retained Earnings For the three months ended March 31, 2000 and March 31, 2001 |  | 4        
|        |  | Consolidated Statements of Cash Flows For the three months ended March 31, 2000 and
March 31, 2001                   |  | 5        
|        |  | Notes to Consolidated Financial Statements                                                                           |  | 6        
|ITEM 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operation                                  |  | 7        
|        |  | PART II OTHER INFORMATION                                                                                            |  |          
|ITEM 1. |  | Legal Proceedings                                                                                                    |  | 12       
|ITEM 2. |  | Changes in Securities and Use of Proceeds                                                                            |  | 12       
|ITEM 3. |  | Defaults Upon Senior Security                                                                                        |  | 12       
|ITEM 4. |  | Submission of Matters to a Vote of Security Holders                                                                  |  | 12       
|ITEM 5. |  | Other Information                                                                                                    |  | 12       
|ITEM 6. |  | Exhibits and Reports on Form 8-K                                                                                     |  | 12       

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

USIP.COM, INC  CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                     | March 31, 2001                             |                           | December 31, 2000 |          
|------------------------------------ | --------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------- | ----------------- | ---------
|
|ASSETS                               |                                                                                                     |                                            |                           |                   |          
|CURRENT ASSETS                       |                                                                                                     |                                            |                           |                   |          
|                                     | Cash                                                                                                |                                            | $                         | 39,119            |          
|                                     | Commissions and Sales Receivable, Net                                                               |                                            |                           | 163,702           |          
|                                     | Inventory                                                                                           |                                            |                           | 35,620            |          
|                                     | Prepaid Insurance                                                                                   |                                            |                           | 11,084            |          
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     |                                            | TOTAL CURRENT ASSETS      |                   |          
|                                     |                                                                                                     |                                            |                           |                   |          
|FIXED ASSETS                         |                                                                                                     |                                            |                           |                   |          
|                                     | Telephone and Office Equipment                                                                      |                                            |                           | 1,896,525         |          
|                                     | Vehicle                                                                                             |                                            |                           | 74,542            |          
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     |                                            | 1,971,067                 |                   |          
|                                     | Less: Accumulated Depreciation                                                                      |                                            |                           | (332,356          | )        
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     | Net Fixed Assets                           |                           |                   | 1,638,711
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     |                                            | TOTAL ASSETS              |                   | $        
|                                     |                                                                                                     |                                            |                           |                   |          
|LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                                     |                                            |                           |                   |          
|Current Liabilities                  |                                                                                                     |                                            |                           |                   |          
|                                     | Accounts Payable                                                                                    |                                            | $                         | 231,148           |          
|                                     | Line of Credit                                                                                      |                                            |                           | 118,886           |          
|                                     | Accrued Payroll and Payroll Taxes                                                                   |                                            |                           | 14,910            |          
|                                     | Accrued State Gross Receipts Taxes                                                                  |                                            |                           | 14,551            |          
|                                     | Other Accrued Expenses                                                                              |                                            |                           | 5,250             |          
|                                     | Current Portion of Long-Term Debt                                                                   |                                            |                           | 4,850             |          
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     |                                            | TOTAL CURRENT LIABILITIES |                   |          
|                                     |                                                                                                     |                                            |                           |                   |          
|LONG-TERM LIABILITIES                |                                                                                                     |                                            |                           |                   |          
|                                     | Long-Term Debt, Less Current Portion                                                                |                                            |                           | 44,999            |          
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     |                                            | TOTAL LIABILITIES         |                   |          
|                                     |                                                                                                     |                                            |                           |                   |          
|STOCKHOLDERS' EQUITY                 |                                                                                                     |                                            |                           |                   |          
|                                     | Common Stock, $.01 par value 25,000,000 Shares authorized, 17,619,388 shares issued and outstanding |                                            |                           | 176,194           |          
|                                     | Additional Paid In Capital                                                                          |                                            |                           | 1,378,673         |          
|                                     | Retained Earnings                                                                                   |                                            |                           | (101,225          | )        
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     | TOTAL STOCKHOLDERS' EQUITY                 |                           |                   | 1,453,642
|                                     |                                                                                                     |                                            |                           |                   |          
|                                     |                                                                                                     | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                           | $                 | 1,888,236
|                                     |                                                                                                     |                                            |                           |                   |          

The
accompanying Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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USIP.COM, INC  CONSOLIDATED STATEMENT OF INCOME (LOSS)

|                                   |                              | Three Months Ended       |                        
|---------------------------------- | ---------------------------- | ------------------------ | -----------------------
|
|
|SALES                              |                              |                          |                        
|                                   | Commissions                  |                          | $                      
|                                   | Coin Collections             |                          |                        
|                                   | Dial Around                  |                          |                        
|                                   | Phone Card Sales             |                          |                        
|                                   | Equipment Sales              |                          |                        
|                                   | Service and Repair Sales     |                          |                        
|                                   |                              |                          |                        
|                                   |                              | Total Sales              |                        
|                                   |                              |                          |                        
|COST OF SALES                      |                              |                          |                        
|                                   | Telecommunications Costs     |                          |                        
|                                   | Commissions                  |                          |                        
|                                   | Repairs and Service Supplies |                          |                        
|                                   | Other Direct ExpensesTravel |                          |                        
|                                   | Depreciation                 |                          |                        
|                                   | Subcontractors               |                          |                        
|                                   | Bad Debt Expense             |                          |                        
|                                   |                              |                          |                        
|                                   |                              | Total Cost of Sales      |                        
|                                   |                              |                          |                        
|                                   |                              |                          | GROSS PROFIT           
|                                   |                              |                          |                        
|OPERATING EXPENSES                 |                              |                          |                        
|                                   | Officers' Salaries           |                          |                        
|                                   | Salaries and Wages           |                          |                        
|                                   | Payroll Taxes                |                          |                        
|                                   | Insurance                    |                          |                        
|                                   | Office Supplies              |                          |                        
|                                   | Telephone                    |                          |                        
|                                   | Utilities                    |                          |                        
|                                   | Vehicle Expenses             |                          |                        
|                                   | Rent                         |                          |                        
|                                   | Professional Fees            |                          |                        
|                                   | Outside Services             |                          |                        
|                                   |                              |                          |                        
|                                   |                              | Total Operating Expenses |                        
|                                   |                              |                          |                        
|                                   |                              |                          | OPERATING INCOME (LOSS)
|                                   |                              |                          |                        
|OTHER INCOME (EXPENSE)             |                              |                          |                        
|                                   | Interest Expense             |                          |                        
|                                   | NY State Gross Receipts Tax  |                          |                        
|                                   | Interest Income              |                          |                        
|                                   |                              |                          |                        
|                                   |                              | Total Other Income       |                        
|                                   |                              |                          |                        
|                                   |                              |                          | NET INCOME (LOSS)      
|                                   |                              |                          |                        
|Weighted Common Shares Outstanding |                              |                          | 17,619,388             
|Net Loss per Common Share          |                              | $                        |                       
|                                   |                              |                          |                        

The
accompanying Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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USIP.COM, INC  CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                   |                                                                                          | Three Months Ended                                       |                                          
|-------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------------- | -----------------------------------------
|
|
|Cash Flows From Operating Activities:              |                                                                                          |                                                          |                                          
|                                                   | Net (Loss)                                                                               |                                                          | $                                        
|                                                   | Adjustments to reconcile net (loss) to net cash provided (used) by operating activities: |                                                          |                                          
|                                                   |                                                                                          | Depreciation Expense                                     |                                          
|                                                   |                                                                                          | Bad Debt Expense                                         |                                          
|                                                   |                                                                                          | (Increase) Decrease in Commissions and Sales Receivables |                                          
|                                                   |                                                                                          | (Increase) in Inventory                                  |                                          
|                                                   |                                                                                          | (Increase) Decrease in Prepaid Insurance                 |                                          
|                                                   |                                                                                          | Decrease in Due From Related Parties                     |                                          
|                                                   |                                                                                          | Increase in Accounts Payable                             |                                          
|                                                   |                                                                                          | Increase (Decrease) in Accrued Expenses and Wages        |                                          
|                                                   |                                                                                          | (Decrease) in Accrued State Gross Receipts Taxes         |                                          
|                                                   |                                                                                          |                                                          |                                          
|                                                   |                                                                                          |                                                          | Net cash (used) by operating activities  
|                                                   |                                                                                          |                                                          |                                          
|Cash Flows From Investing Activities:              |                                                                                          |                                                          |                                          
|                                                   |                                                                                          | Acquisition of Equipment                                 |                                          
|                                                   |                                                                                          | Stockholder Capital Contributions                        |                                          
|                                                   |                                                                                          |                                                          |                                          
|                                                   |                                                                                          |                                                          | Net cash provided by investing activities
|                                                   |                                                                                          |                                                          |                                          
|Cash Flows From Financing Activities:              |                                                                                          |                                                          |                                          
|                                                   |                                                                                          | Proceeds Received from Line of Credit                    |                                          
|                                                   |                                                                                          | Principal Payments on Long-term Debt                     |                                          
|                                                   |                                                                                          | Repayments on Line of Credit Borrowings                  |                                          
|                                                   |                                                                                          |                                                          |                                          
|                                                   |                                                                                          |                                                          | Net cash (used) by financing activities  
|                                                   |                                                                                          |                                                          |                                          
|Net Increase in cash                               |                                                                                          |                                                          | (78,500                                  
|CashBeginning of Period                           |                                                                                          |                                                          | 117,619                                  
|                                                   |                                                                                          |                                                          |                                          
|CashEnd of Period                                 |                                                                                          | $                                                        | 39,119                                   
|                                                   |                                                                                          |                                                          |                                          
|Supplemental Disclosures of Cash Flow Information: |                                                                                          |                                                          |                                          
|                                                   | Cash Paid During Period The Period For:                                                  |                                                          |                                          
|                                                   |                                                                                          | Interest                                                 |                                          
|                                                   |                                                                                          | Income Taxes                                             |                                          

The
accompanying Notes to the Consolidated Financial Statements are an integral part of these Financial Statements.

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USIP.COM, INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  March 31, 2001  (unaudited)

NOTE 1. SUMMARY INFORMATION

The accompanying unaudited consolidated financial statements include the accounts of USIP.Com, Inc. and our two wholly owned subsidiaries: Datone Inc. and NB
Payphones Ltd. All significant inter-company amounts have been eliminated. Our unaudited consolidated financial statements present herein, should be read in conjunction with the audited consolidated
financial statements of our company as of and for the year ended December 31, 2000. In the opinion of our management, the unaudited consolidated financial statements presented herein reflect all
adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessarily indicative of results to be expected for the entire year.

We
prepare our consolidated financial statements in accordance with generally accepted accounting principles, which require that management make estimates and assumptions that affect
reported amounts. Actual results could differ from these estimates.

NOTE 2. ASSET ALLOCATION

On February 1, 2001, we purchased 91 payphones and associated equipment of Chautauqua & Erie Telephone Corporation for the sum of $50,050. This purchase
provided geographical continuity between the New York payphone base and the Pennsylvania payphone base.

As
of March 31, 2001, we owned and operated a network of approximately 1,669 payphones in three states. Our installed payphone base generates revenue through coin calls (local and
long-distance), and non-coin calls (calling card, credit card, collect and third party billed calls using our preselected operator services, Qwest and Pacific Telemanagement Services).

NOTE 3. NOTES PAYABLE

For additional capital requirements, we have increased our line of credit with our banking institution up to $200,000. In March 2001, we drew on this line of
credit in the amount of $20,000 increasing our liability to $48,886. We have an additional, unsecured line of credit with Lilly Beter Capital Group, Ltd. in the amount of $200,000. As of this date
$70,000 has been used in part to fund the purchase of the payphone routes. We intend to use the remaining monies for our continued expansion.

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

FORWARD LOOKING STATEMENTS

The following is a discussion and analysis of the results of operations of our company and should be read in conjunction with our financial statements and
related notes contained in this Form 10-QSB. This Form 10-QSB contains forward-looking statements that involve risks and uncertainties. You can identify these statements by the use of forward-looking
words such as "may," "will," "expect," "anticipate," "estimate," "continue," or other similar words. You should read statements that contain these words carefully because they discuss our future
expectations, contain projections of our future results of operations or financial condition or state other "forward-looking" information. We believe that it is important to communicate our future
expectations to our investors. However there may be events in the future that we are unable to accurately predict or control. Those events as well as any cautionary language in this registration
statement provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be
aware that the occurrence of the events described in this Form 10-QSB could have a material adverse effect on our business, operating results and financial condition. Actual results could differ
materially from current expectations. Among the factors that could effect our actual results and could cause results to differ from those contained in the forward-looking statements contained herein
is our ability to expand our customer base, which will be dependent on business, financial and other factors beyond our control, including, among others, seasonal aspects such as the winter months
that tend to reduce the frequency of outdoor payphone use in the east coast, ability to increase our size and marketing area by purchasing payphones and locations from independent telephone companies,
and whether the public uses our payphones, together with all the risks inherent in the establishment of a new enterprise and the marketing of new products.

PLAN OF OPERATION

USIP.Com, Inc., (the "Company" or "USIP" or "We"), was incorporated under the laws of the State of Utah on April 6, 1978 as Derby Farms, Inc. On January 19,
1982, the Articles of Incorporation were amended and the name of the company was changed to Commerce Oil of Kentucky, Inc. On February 4, 2000 the Articles of Incorporation were amended and the name
of our company was changed to USIP.Com, Inc.

We
own, operate and manage privately owned public payphones in New York, Pennsylvania and Massachusetts. Our revenue comes from commissions that we receive from long distance
carriers' operator services and toll free calls. It also comes from the coins that we collect from the payphones that we own as well as from sales, service of payphones and prepaid phone cards that we
sell at various locations throughout these states. We enter into site leasing agreements with various business sites that are open to the public. Some of the businesses include but are not limited to
retail stores, convenience stores, bars, restaurants, gas stations, colleges and hospitals. The agreements allow us to install our payphones in areas that are accessible to the public. We provide the
payphones, install them, and pay all maintenance and operational costs for the term of each lease. We also sell payphones to some of the site owners. We derive income from the sale as well as any
commission split that we negotiate with the buyer.

PLANS FOR FISCAL YEAR 2001.

Our plans of operation for the remainder of our 2001 fiscal year will consist of the following activities:



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RESULTS OF OPERATIONS

The following discussion is based in part on our unaudited Financial Statements for the three months ended March 31, 2001 and the audited Financial Statements
for the three months ended March 31, 2000. Our revenue is derived from the following three general sources.

Commission
income includes commissions from long distance carriers' operator services and commissions for toll free calls from all payphones. The commissions for operator services are
paid 45 days in arrears. Compensation for toll free calls is billed quarterly and received three and one half months behind the billed quarter.

We
derive income from the sale and repair of a payphone. We can negotiate the sale, of a payphone to a site owner when it becomes cost prohibitive to maintain, or if a customer offers
to buy the phone at a price that is favorable to our company. The new owner or lessee becomes responsible for the maintenance and operational costs of the payphone. We sell pre-paid phone cards at
some of our payphone locations. We also derive a profit from any commission split that is negotiated between the parties as a result of a sale or lease of a payphone. Sales and repairs of payphones
and the sale of pre-paid phone cards are not subject to the same collection delays as the other types of operating income.

Coin
calls represent calls paid for by customers who deposit coins into the payphones. Coin call revenue is recorded as the actual amount of coins collected from the payphones. Some
coin collections are made on a daily basis and others more often if the particular payphone has significant usage. The coins are counted in house and deposited weekly.

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

The following discussion is based in part on our unaudited Financial Statements for the three months ended March 31, 2001 and the three months ended March 31,
2000. Our overall revenue increased for the months ending March 31, 2001 by $69,269 or 30.4% when compared to the first three months of
2000. The components that make up this increase include the following three categories: commission revenue increased by $10,521; coin collection increased by $23,988; dial around, or toll free calling
revenue increased by $17,244, when compared to the same period in 2000. These increases can be attributed to the purchase of new routes from small independent phone companies such as Chautauqua & Erie
Telephone Corporation as well as increased payphone installation in existing areas. Whenever we buy a payphone, it creates revenue as well as an expense for our company. Revenue comes from the long
distance calls that are placed from the phone as well as the coins that are put into the phone by the customer when a call is made. The expenses or costs for the company occur when we pay the purchase
price for the phone as well as when we service the phone. We pay for any parts needed to repair our phone, and we pay the technician to travel to the phone and service it. Equipment sales, phone card
sales, repairs and service added $17,516 to our revenue streams when compared to the period ending March 31, 2000.

Because
we bought more payphones and expanded into other territories during the first quarter of 2001, our cost of sales increased by $78,885 or 44.7% when compared to the same period
of 2000. Our telecommunication costs increased by $145,302 because we now provide service to 1,669 payphones as compared to 686 payphones in 2000. We believe that commissions payable decreased by
$14,695 because of a gradual decrease in payphone usage by the public. We believe that an increase in the use of cellular phones and pre-paid phone cards is contributing to this decreased use of
payphones. Some site owners are no longer receiving a commission and in most cases they are being invoiced monthly for payphone services. The increase of $7,880 in contractors' fees occurred because
we contracted with independent contractors' who will be responsible for the new territories. The increase of $13,046 in depreciation is due directly to our payphone acquisitions, related equipment and
four company vehicles. This increase reflects a continuing investment in our network infrastructure in order to support the growth in our customer base and improved service. We own telephone equipment
and motor vehicles, which provide a service for

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a number of years. The term of service is commonly referred to as the "useful life" of the asset. Because an asset such as telephone equipment or a motor vehicle is expected to provide service for
many years, it is recorded as an asset, rather than an expense, in the year acquired. A portion of the cost of the long-lived asset is reported as an expense during the cost of an asset to expense
over its life in a rational and systematic manner.

Operating
expenses increased by $41,931 over the same period in 2000. These increases in cost are due to the rapid expansion of our company. Rent increased by $3,151 when compared to
2000. This increase is due to the space we rent in Pennsylvania and the additional space that we lease in New York to accommodate our expansion. Salaries, telephone, professional fees, utilities and
office expense added $38,780 to the operating expense increase when compared to the first three months of 2000. Other factors that contributed to this increase were the addition of management and
staff, related operating expenses, increased facilities costs and the costs of upgrading computer hardware and software.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity have been cash from operations and borrowing under various credit facilities. On April 2000, we entered into an agreement with
Lilly Beter Capital Group, Ltd. to obtain a revolving line of credit. This line of credit has a maximum borrowing of $200,000 of which $70,000 was outstanding on March 31, 2001. In September 2000 we
renegotiated our revolving line of credit with our banking institution. Our maximum line of credit was raised to $200,000, as of March 31, 2001, $48,886 was outstanding.

Capital
expenditures for the three months ended March 31, 2001 were $55,898. These expenditures were for the purchase of payphone assets from Chautauqua & Erie Telephone Corporation,
an Independent Telephone Operating Company (ITOC) and the purchase of new computers and associated software.

FEDERAL REGULATION OF LOCAL COIN AND DIAL-AROUND CALLS

The Telephone Operator Consumer Services Improvement Act of 1990 ("TOCSIA") established various requirements for companies that provide operator services and
for call aggregators, including PSPs, who send calls to OSPs. The requirements of TOCSIA as implemented by the FCC included call branding, information posting, rate quotations, the filing of
informational tariffs and the right of payphone users to access any OSP to make non-coin calls. TOCSIA also required the FCC to take action to limit the exposure of payphone companies to undue risk of
fraud upon providing this "open access" to carriers.

TOCSIA
further directed the FCC to consider the need to provide compensation for IPPs for dial-around calls. Accordingly, the FCC ruled in May 1992 that IPPs were entitled to
dial-around compensation. Because of the complexity of establishing an accounting system for determining per call compensation for these calls, and for other reasons, the FCC temporarily set this
compensation at $6.00 per payphone per month based on an assumed average of 15 interstate carrier access code dial-around calls per month and a rate of $0.40 per call. The failure by the FCC to
provide compensation for 800 "toll free" dial-around calls was challenged by the IPPs, and a federal court subsequently ruled that the FCC should have provided compensation for these toll free calls.

In
1996, recognizing that IPPs had been at a severe competitive disadvantage under the existing system of regulation and had experienced substantial increases in dial-around calls
without a corresponding adjustment in compensation, Congress enacted Section 276 to promote both competition among payphone service providers and the widespread deployment of payphones throughout the
nation. Section 276 directed the FCC to implement rules by November 1996 that would:



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In
September and November 1996, the FCC issued its rulings implementing Section 276 (the "1996 Payphone Order"). In the 1996 Payphone Order, the FCC determined that the best way to
ensure fair compensation to independent and LEC PSPs for each and every call was to deregulate, to the maximum extent possible, the price of all calls originating from payphones. For local coin calls,
the FCC mandated that deregulation of the local coin rate would not occur until October 1997 in order to provide a period of orderly transition from the previous system of state regulation.

To
achieve fair compensation for dial-around calls through deregulation and competition, the FCC in the 1996 Payphone Order directed a two-phase transition from a regulated market. In
the first phase, November 1996 to October 1997, the FCC prescribed flat-rate compensation payable to the PSPs by the interexchange carriers ("IXCs") in the amount of $45.85 per month per payphone.
This rate was arrived at by determining that the deregulated local coin rate was a valid market-based surrogate for dial-around calls. The FCC applied a market-based, deregulated coin rate of $0.35
per call to a finding from the record that there was a monthly average of 131 compensable dial-around calls per payphone. This total included both carrier access code calls dialed for the purpose of
reaching a long distance company other than the one designated by the PSP as well as 800 "toll free" calls. The monthly, per phone flat-rate compensation of $45.85 was to be assessed only against IXCs
with annual toll-call revenues in excess of $100 million and allocated among such IXCs in proportion to their gross long-distance revenues. During the second phase of the transition to deregulation
and market-based compensation (initially from October 1997 to October 1998, but subsequently extended in a later order by one year to October 1999), the FCC directed the IXCs to pay the PSPs on a
per-call basis for dial-around calls at the assumed deregulated coin rate of $0.35 per call. At the conclusion of the second phase, the FCC set the market-based local coin rate, determined on a
payphone-by-payphone basis, as the default per-call compensation rate in the absence of a negotiated agreement between the PSP and the IXC. To facilitate per-call compensation, the FCC required the
PSPs to transmit payphone-specific coding digits, which would identify each call as originating from a payphone, and required the LECs to make such coding available to the PSPs as a tariffed item
included in the local access line service.

In
July 1997, a federal court (the "Court") responded to an appeal of the 1996 Payphone Order, finding that the FCC erred in (1) setting the default per-call rate at $0.35 without
considering the differences in underlying costs between dial-around calls and local coin calls, (2) assessing the flat-rate compensation against only the carriers with annual toll-call revenues in
excess of $100 million, and (3) allocating the assessment of the flat-rate compensation based on gross revenues rather than on a factor more directly related to the number of dial-around calls
processed by the carrier. The Court also assigned error to other aspects of the 1996 Payphone Order concerning inmate payphones and the accounting treatment of payphones transferred by an RBOC to a
separate affiliate.

In
response to the Court's remand, the FCC issued its modified ruling implementing Section 276 (the "1997 Payphone Order") in October of 1997. The FCC determined that distinct and
severable costs of $0.066 were attributable to coin calls that did not apply to the costs incurred by the PSPs in providing access for dial-around calls. Accordingly, the FCC adjusted the per call
rate during the second phase of interim compensation to $0.284 (which is $0.35 less $0.066). While the FCC tentatively concluded that the $0.284 default rate should be utilized in determining
compensation during the first phase and reiterated that PSPs were entitled to compensation for each and every call during the first phase, it deferred a decision on the precise method of allocating
the initial interim period (November 1996 through October 1997) flat-rate payment obligation among the IXCs and the number of calls to be used in determining the total amount of the payment
obligation.

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On March 9, 1998, the FCC issued a Memorandum Opinion and Order, FCC 98-481, which extended and waived certain requirements concerning the provision by the LECs of payphone-specific
coding digits that identify a call as originating from a payphone. Without the transmission of payphone-specific coding digits, some of the IXCs have claimed they are unable to identify a call as a
payphone call eligible for dial-around compensation. With the stated purpose of ensuring the continued payment of dial-around compensation, the FCCs Memorandum and Order issued on April 3, 1998 left
in place the requirement for payment of per-call compensation for payphones on lines that do not transmit the requisite payphone-specific coding digits but gave the IXCs a choice for computing the
amount of compensation for payphones on LEC lines not transmitting the payphone-specific coding digits of either accurately computing per-call compensation from their databases or paying per-phone,
flat-rate compensation computed by multiplying the $0.284 per call rate by the nationwide average number of 800 subscriber and access code calls placed from RBOC payphones for corresponding payment
periods. Accurate payments made at the flat rate are not subject to subsequent adjustment for actual call counts from the applicable payphone.

On
May 15, 1998, the Court again remanded the per-call compensation rate to the FCC for further explanation without vacating the $0.284 per call rate. The Court opined that the FCC
had failed to explain adequately its derivation of the $0.284 default rate. The Court stated that any resulting overpayment would be subject to refund and directed the FCC to conclude its proceedings
within a six-month period from the effective date of the Court's decision.

In
response to the Court's second remand, the FCC conducted further proceedings and sought additional comment from interested parties to address the relevant issues posed by the
Court. On February 4, 1999, the FCC released the Third Report and Order on Reconsideration of the Second Report and Order (the "1999 Payphone Order"), in which the FCC abandoned its efforts to derive
a "market-based" default dial-around compensation rate and instead adopted a "cost-based" rate of $0.24 per dial-around call. Both PSPs and IXCs petitioned the Court for review of the 1999 Payphone
Order's determination of the dial-around compensation rate. On June 16, 2000, the Court affirmed the 1999 Payphone Order setting a 24-cent dial-around compensation rate. On all the issues, including
those raised by the IXCs and the payphone providers, the Court applied the "arbitrary and capricious" standard of review, and found that the FCC's rulings were lawful and sustainable under that
standard. As a result of the Court's June 16, 2000 decision, the 24-cent dial-around compensation rate is likely to remain in place until at least the end of 2001, when the FCC has stated its
intention to complete a third-year review of the rate. With respect to the Petition for Reconsideration of the 1999 Payphone Order filed with the FCC by the IPPs, this Petition is still pending and
has yet to be ruled on by the FCC. In view of the Court's affirmation of the 1999 Payphone Order, it is unlikely that the FCC will adopt material changes to the key components of the Order pursuant to
the pending Reconsideration Petition, although no assurances can be given.

The
new 24-cent rate became effective April 21, 1999, and will serve as the default rate through January 31, 2002. The new rate will also be applied retroactively to the period
beginning on October 7, 1997, less a $0.002 amount to account for FLEX ANI payphone tracking costs, for a net compensation of $0.238. The 1999 Payphone Order deferred a final ruling on the interim
period (November 7, 1996 to October 6, 1997) treatment to a later, as yet unreleased, order. Upon establishment of the interim period rate, the FCC has further ruled that a true-up may be made for all
payments or credits (with applicable interest) due and owing between the IXCs and the PSPs, including USIP, for the payment period commencing on November 7, 1996 through the effective date of the new
$0.24 per call rate. It is possible that the final implementation of the 1999 Payphone Order, including resolution of this
retroactive adjustment and the outcome of any related administrative or judicial review, could have a material adverse effect on our Company.

COMPETITION

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

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We believe that our principal competition is from providers of wireless communications services for both local and long distance traffic. Certain providers of wireless communication
services have introduced rate plans that are competitively priced with certain of the products offered by us and have negatively impacted the usage of payphones throughout the nation.

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

Additionally,
a number of domestic IPPs continue to experience financial difficulties from various competitive and regulatory factors impacting the pay telephone industry generally,
which may impair their ability to compete prospectively. While no assurances can be given, we believe that these circumstances create an opportunity for us to obtain new location agreements and
reduced site commissions going forward.

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

Weather
conditions affect our revenue stream because we operate in the Northeastern part of the country. Revenues drop off significantly during the winter because most of our phones
are 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 the third quarter.

PART II OTHER INFORMATION.

Item 1.

Legal Proceedings.Not applicable.Item 2.

Changes in Securities and Use of Proceeds.Not applicable.Item 3.

Defaults Upon Senior Securities.Not applicable.Item 4.

Submission of Matters to a Vote of Security Holders.Not applicable.Item 5.

Other Information.Not applicable.Item 6.

Exhibits and Reports on Form 8-K.(a)
Exhibits.The following exhibits required by Item 601 of Regulation S-B are attached.There are no Exhibits filed with this report.(b)
Reports on Form 8-K.None


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SIGNATURES

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

|Dated: |  | June 19, 2001 |  |                                      
|------ |  | ------------- |  | -------------------------------------
|       |  |               |  | USIP.COM, INC.(Registrant)           
|       |  |               |  | /s/CRAIG BURTONCraig Burton President

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