<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                   FORM 10QSB

   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                                  Act of 1934


                        For Quarter Ended: June 30, 2005

                                 USN CORPORATION
                                 ---------------
        (Exact name of small business issuer as specified in its charter)

          COLORADO                  33-42701                   84-1186026
          --------                  --------                   ----------
(State or other jurisdiction       (Commission                (IRS Employer
      of incorporation)           File Number)              Identification No.)

               5215 NORTH O'CONNOR, SUITE 200, IRVING, TEXAS 76039
               ---------------------------------------------------
                     (Address of principal executive office)

         Issuer's telephone number, including area code - (972) 868-9102

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

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ X ] No [ ].

The number of shares outstanding of registrant's common stock, par value $.0001
per share, as of August 15, 2005 was 22,592,859 shares.

Transitional Small Business Disclosure Format (Check one):  Yes [  ] No [ X ].



<PAGE>


                        USN Corporation and Subsidiaries

                                      INDEX

                                                                          Page

PART I.     FINANCIAL INFORMATION (Unaudited)

Item 1.     Condensed Consolidated Balance Sheet as of June 30, 2005        3

            Condensed Consolidated Statements of Operations for the
            Three Months Ended June 30, 2005 and 2004                       4

            Condensed Consolidated Statements of Cash Flows for the
            Three Months Ended June 30, 2005 and 2004                       5

            Notes to Condensed Consolidated Financial Statements           6-16

Item 2.     Management's Discussion and Analysis or Plan of Operation      17-19

Item 3.     Controls and Procedures                                         20

PART II.    OTHER INFORMATION                                              21-26


                                       2


<PAGE>
<TABLE>

USN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2005

                                             ASSETS
<S>                                                                            <C>
Current assets:
Cash and cash equivalents                                                      $   127,450
Restricted cash                                                                    601,832
Accounts receivable                                                                 64,250
Inventory                                                                        5,604,020
Stock subscription receivable                                                    2,649,959
Prepaid expenses and other assets                                                   92,607
                                                                               ------------
     Total current assets                                                        9,140,118
Property and equipment, net                                                        217,332
Deposits                                                                            94,550
                                                                               ------------
          Total assets                                                         $ 9,452,000
                                                                               ============

                              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable                                                                   $   500,000
Accounts payable                                                                 5,163,829
Accrued expenses and other liabilities                                           3,271,680
Due to affiliates                                                                   94,379
                                                                               ------------
     Total current liabilities                                                   9,029,888
Long-term debt                                                                     250,000
                                                                               ------------
          Total liabilities                                                      9,279,888
                                                                               ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.0001 par value; 5,050,000 shares authorized; no shares
  issued and outstanding                                                                --
Common stock, $.0001 par value; 195,000,000 shares authorized;
  22,592,859 shares issued and outstanding                                           2,259
Additional paid in capital                                                       9,453,119
Unissued common stock                                                            1,021,249
Stock subscriptions receivable                                                  (1,508,641)
Accumulated deficit                                                             (8,795,874)
                                                                               ------------
     Total stockholders' equity                                                    172,112
                                                                               ------------
          Total liabilities and stockholders' equity                           $ 9,452,000
                                                                               ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                                 3


<PAGE>

USN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)

                                                    2005               2004
                                                    ----               ----

PRODUCT SALES                                  $  5,310,055       $  1,378,018
COST OF SALES                                     3,450,463            958,421
                                               -------------      -------------
  GROSS PROFIT                                    1,859,592            419,597

COSTS AND EXPENSES:
Selling and distribution                          3,122,872            868,722
General and administrative                          819,223            139,414
Net interest expense                                 19,028                244
                                               -------------      -------------
    Total operating expenses                      3,961,123          1,008,380
                                               -------------      -------------
LOSS FROM CONTINUING OPERATIONS                  (2,101,531)          (588,783)
Discontinued operations:
Loss from discontinued operations                  (195,294)                --
                                               -------------      -------------
 LOSS FROM DISCONTINUED OPERATIONS                 (195,294)                --
                                               -------------      -------------
NET LOSS                                       $ (2,296,825)      $   (588,783)
                                               =============      =============

NET LOSS PER SHARE, BASIC AND DILUTED:
  CONTINUING OPERATIONS                        $      (0.18)      $      (0.12)
  DISCONTINUED OPERATIONS                             (0.02)                --
                                               -------------      -------------
    NET LOSS PER SHARE, BASIC AND DILUTED      $      (0.20)      $      (0.12)
                                               =============      =============

WEIGHTED AVERAGE SHARES OUTSTANDING              11,776,002          4,850,000
                                               =============      =============

See accompanying notes to condensed consolidated financial statements.

                                       4


<PAGE>
<TABLE>

USN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)

                                                                         2005              2004
                                                                         ----              ----
<S>                                                                  <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                             $(2,296,825)      $  (588,783)
 Loss from discontinued operations                                       195,294                --
                                                                     ------------      ------------
   Loss from continuing operations                                    (2,101,531)         (588,783)
Adjustments to reconcile net loss to net
 cash used in operating activities:
  Depreciation                                                            12,538             2,149
  Changes in operating assets and liabilities, net of effect of
    acquisitions and divestitures:
     Restricted cash                                                    (168,844)          (49,578)
     Accounts receivable                                                   6,671           (58,671)
     Inventories                                                      (4,059,851)               --
     Prepaid expenses and other assets                                    87,455            (1,300)
     Due to/from affiliate                                               988,272             4,362
     Accounts payable                                                  4,105,911            74,487
     Accrued expenses and other liabilities                              627,484           472,864
                                                                     ------------      ------------
        Net cash used in continuing operations                          (501,895)         (144,470)
        Net cash used in discontinued operations                        (241,620)               --
                                                                     ------------      ------------
          Net cash used in operating activities                         (743,515)         (144,470)
                                                                     ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                                     (42,445)         (108,045)
                                                                     ------------      ------------
Net cash used in continuing operations                                   (42,445)         (108,045)
        Net cash used in discontinued operations                              --                --
                                                                     ------------      ------------
          Net cash used in investing activities                          (42,445)         (108,045)
                                                                     ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds from related party                                              --            75,000
Loan proceeds                                                                 --           137,000
Repayment of note payable to related party                               (54,000)               --
Collections on stock subscription receivable                           1,000,000                --
                                                                     ------------      ------------
Net cash provided by continuing operations                               946,000           212,000
        Net cash used in discontinued operations                         (44,531)               --
                                                                     ------------      ------------
          Net cash provided by financing activities                      901,469           212,000
                                                                     ------------      ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     115,509           (40,515)
CASH AND CASH EQUIVALENTS, beginning of period                            11,941            44,619
                                                                     ------------      ------------
CASH AND CASH EQUIVALENTS, end of period                             $   127,450       $     4,104
                                                                     ============      ============

See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                                 5


<PAGE>

USN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

          USN Corporation ("USN Corp") was incorporated in the state of Colorado
          in 1988. During 1994, USN Corp purchased certain assets and assumed
          certain liabilities from the bankruptcy estates of American Fashion
          Jewels, Inc. ("Imposters") and, in a separate transaction, Mirage
          Concepts, Inc. ("Mirage"), both of which were retail chains of
          reproduction jewelry stores.

         On October 10, 2003, Premier Concepts, Inc. ("Debtor") filed a
         voluntary petition for relief under Chapter 11 of the United States
         Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
         Court for the Central District of California (the "Bankruptcy Court")
         (Case No. LA 03-36445-EC). The Debtor continued to manage its
         properties and operate its businesses as "debtor-in-possession" under
         the jurisdiction of the Bankruptcy Court and in accordance with the
         applicable provisions of the Bankruptcy Code until December 12, 2004,
         when its plan of reorganization ("Plan") was approved by the Bankruptcy
         Court. The principal elements of the plan of reorganization were as
         follows:

         o        The reorganized debtor changed its name from Premier Concepts,
                  Inc. to USN Corporation;
         o        The acquisition of USN Television Group, Inc. ("USN");
         o        The classification and treatment of creditors and interest
                  holders;
         o        The issuance of New Securities of Reorganized Debtor to
                  certain administrative claimants, USN shareholders and the
                  Plan Trust; and
         o        The liquidation of the New Securities to fund Plan payments.

         All outstanding shares of USN, a Delaware corporation organized on
         April 25, 2003, were acquired by the Debtor from the USN owners in
         exchange for 5,539,655 shares of New Securities with registration
         rights, whereby, USN Corp has agreed to file a registration statement
         with the SEC. The New Securities are exempt under the Bankruptcy Code
         and as a private placement the shares were issued in exchange for the
         obligation owed by USN Corp to USN's shareholders for the acquisition
         of their stock immediately prior to Plan confirmation.

         For accounting purposes, the transaction was treated as the issuance of
         stock by USN for the net monetary assets of USN Corp, accompanied by a
         recapitalization of USN. The accounting treatment is identical to
         accounting for a reverse acquisition, except that no goodwill or other
         intangible asset is recorded. The historical operations prior to
         December 13, 2004, are those of USN.

                                       6


<PAGE>

         On June 17, 2005, USN Corp entered into a stock purchase agreement with
         Global Sun Enterprises, Ltd. ("Global Sun") under which USN Corp
         acquired all of the issued and outstanding shares of Altron Limited
         ("Altron") for approximately 49.8% of the issued and outstanding shares
         of USN Corp's common stock after the transaction.

         The consolidated financial statements include the accounts of USN Corp,
         its direct, wholly owned subsidiaries, USN and Altron, and its indirect
         wholly owned subsidiaries, Gem Manufacturing, Inc. ("Gem") and The
         Diamond Channel ("Diamond") (collectively referred to as the
         "Company"). All material intercompany accounts and transactions have
         been eliminated.

         The financial statements included in this report have been prepared by
         the Company pursuant to the rules and regulations of the Securities and
         Exchange Commission for interim reporting and include all adjustments
         (consisting only of normal recurring adjustments) that are, in the
         opinion of management, necessary for a fair presentation. These
         financial statements have not been audited.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with U.S. generally
         accepted accounting principles have been condensed or omitted pursuant
         to such rules and regulations for interim reporting. The Company
         believes that the disclosures contained herein are adequate to make the
         information presented not misleading. However, these financial
         statements should be read in conjunction with the Company's March 31,
         2005 consolidated financial statements and accompanying notes included
         in the Company's annual report on Form 10-KSB (the "Annual Report). All
         terms used but not defined elsewhere herein have the meanings ascribed
         to them in the Annual Report.

         NATURE OF BUSINESS
         USN is a retailer of consumer products through interactive electronic
         media using broadcast, cable and satellite television and the Internet.
         USN focuses on presenting consumer products at attractive prices that
         can leverage the visual appeal of television, including jewelry,
         watches, coins and other collectibles. USN's programming is transmitted
         by satellite to cable television systems, direct broadcast satellite
         systems and television broadcasting stations across the United States.
         Revenues are primarily generated from sales of merchandise and services
         offered through USN's television home shopping programming.

         USN segments its programming into product or theme categories and each
         program uses a show-host approach, with the host conveying information
         about the products. The viewers can purchase any product USN offers,
         subject to availability.

         DISCONTINUED OPERATIONS
         In December 2004, immediately after the approval of the bankruptcy
         plan, management approved a plan to dispose of its retail jewelry store
         operations. On January 6, 2005, the Board of Directors of the Company
         unanimously ratified management's plan to immediately dispose of its
         retail jewelry store operations.

                                       7


<PAGE>

         On June 17, 2005, and as amended on August 2, 2005, the Company
         completed the sale of its retail stores to LGS Holdings, Inc. (see Note
         3). Accordingly, the net results of operations for the Company's
         jewelry store operations are included in discontinued operations for
         the three months ended June 30, 2005.

         FISCAL YEAR
         Prior to the acquisition of USN by USN Corp, USN Corp's fiscal year was
         a 52/53-week period ending on the last Sunday in January. With the
         acquisition of USN, the Company adopted the March 31 year-end of USN.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH EQUIVALENTS
         The Company considers all liquid investments with original maturities
         of three months or less to be cash equivalents. At June 30, 2005, cash
         equivalents consist of money fund investments, money market accounts
         and business checking accounts.

         INVENTORY
         Inventory consists primarily of jewelry, watches, coins and other
         collectibles and is carried at the lower of FIFO cost or market. The
         inventory is marked down for estimated unmarketable inventory equal to
         the difference between the cost of inventory and the estimated market
         value based upon assumptions about future demand and market conditions.
         Management records these inventory markdowns periodically based on the
         various assumptions, including customer demand and preferences.

         The Company satisfies the majority of its inventory supply needs
         through direct purchase or right-of-return arrangements with vendors.
         Currently, the company uses consignment arrangements with vendors to
         satisfy only a small portion of its inventory needs.

         PROPERTY AND EQUIPMENT
         Property and equipment are recorded at cost, net of accumulated
         depreciation. Depreciation is calculated by using the straight-line
         method over the estimated useful lives of the assets, which is five to
         seven years for all categories. Leasehold improvements are amortized
         over the life of the lease if it is shorter than the estimated useful
         life. Repairs and maintenance are charged to expense as incurred.
         Expenditures for betterments and renewals are capitalized. The cost of
         property and equipment and the related accumulated depreciation are
         removed from the accounts upon retirement or disposal with any
         resulting gain or loss being recorded as other income or expense.

         INCOME TAXES
         The Company accounts for income taxes under the provisions of
         Statement of Financial Accounting Standards No. 109, "Accounting for
         Income Taxes" ("SFAS 109"). Under SFAS 109, the liability method is
         used in accounting for income taxes and deferred tax assets and
         liabilities are determined based on differences between the financial
         reporting and tax bases of assets and liabilities. Deferred tax assets
         and liabilities are measured using enacted tax rates expected to apply
         to taxable income in the years in which those temporary differences
         are expected to be recovered or settled. The effect on deferred tax
         assets and liabilities of a change in tax rates is recognized in
         income in the period that includes the enactment date.

                                       8


<PAGE>

         REVENUE AND COST RECOGNITION
         The Company recognizes revenue in accordance with the Securities and
         Exchange Commissions Staff Accounting Bulletin No. 101, "Revenue
         Recognition in Financial Statements" ("SAB 101"). Revenue related to
         merchandise sales is recognized when the product is shipped, reduced
         by a provision for returns, in accordance with SFAS No 48, "Revenue
         Recognition When Right of Return Exists." The provision for sales
         returns is based on historical evidence of the Company's historical
         return rate. Payments received for unfilled orders are reflected as a
         component of accrued expenses and other liabilities.

         SHIPPING AND HANDLING COSTS
         Shipping and handling costs billed to customers are recorded as
         revenue in the accompanying statements of operations in accordance
         with Emerging Issues Task Force Issue No. 00-10, "Accounting for
         Shipping and Handling Fees and Cost." The Company classifies shipping
         and handling costs in the accompanying statements of operations as a
         component of selling and distribution costs. Shipping and handling
         costs amounted to $138,080 and $44,340 during the three months ended
         June 30, 2005 and 2004, respectively.

         STOCK OPTION PLANS
         The Company accounts for stock-based awards to employees using the
         intrinsic value method described in Accounting Principles Board Opinion
         (APB) No. 25, "Accounting for Stock Issued to Employees" and its
         related interpretations. Accordingly, no compensation expense has been
         recognized in the accompanying consolidated financial statements for
         stock-based awards to employees when the exercise price of the award is
         equal to or greater than the quoted market price of the stock on the
         date of the grant.

         SFAS 123, "Accounting for Stock-Based Compensation" and SFAS 148,
         "Accounting for Stock-Based Compensation - Transition and Disclosure -
         an amendment of SFAS 123" require disclosures as if the Company had
         applied the fair value method to employee awards rather than the
         intrinsic value method. The fair value of stock-based awards to
         employees is calculated through the use of option pricing models, which
         were developed for use in estimating the fair value of traded options,
         which have no vesting restrictions and are fully transferable. These
         models also require subjective assumptions, including future stock
         price volatility and expected time to exercise, which greatly affect
         the calculated values. No awards were granted during the periods
         presented in the condensed consolidated financial statements.
         Accordingly, no disclosure is required of the fair value method as
         compared to the intrinsic value method.

         Options and warrants issued to non-employees are accounted for under
         SFAS 123, "Accounting for Stock Based Compensation." For the options
         and warrants issued to non-employees, the fair value of each award is
         calculated using the Black-Scholes Model in accordance with SFAS 123.

                                       9


<PAGE>

         NET EARNINGS (LOSS) PER SHARE
         The Company has adopted SFAS No. 128, "Earnings Per Share" ("SFAS 128")
         which establishes standards for computing and presenting earnings per
         share (EPS) for entities with publicly held common stock. The standard
         requires presentation of two categories of EPS - basic EPS and diluted
         EPS. Basic EPS excludes dilution and is computed by dividing income
         available to common stockholders by the weighted-average number of
         common shares outstanding for the period. Diluted EPS reflects the
         potential dilution that could occur if securities or other contracts to
         issue common stock were exercised or converted into common stock or
         resulted in the issuance of common stock that then shared in the
         earnings of the Company. Any potential dilutive securities are
         antidilutive for the three months ended June 30, 2005 and 2004.
         Accordingly, basic and diluted EPS are the same for each period.

         USE OF ESTIMATES
         The process of preparing condensed consolidated financial statements in
         conformity with U.S. generally accepted accounting principles requires
         the use of estimates and assumptions regarding certain types of assets,
         liabilities, revenues and expenses. Such estimates primarily relate to
         unsettled transactions and events as of the date of the consolidated
         financial statements. Accordingly, upon settlement, actual results may
         differ from estimated amounts.

         FAIR VALUE DETERMINATION
         Financial instruments consist of cash, cash investments, accounts
         receivable, accounts payable, accrued liabilities, notes payable and
         long-term debt. The carrying amount of these financial instruments
         approximates fair value due to their short-term nature or the current
         rates which the Company could borrow funds with similar remaining
         maturities.

         RECENT ACCOUNTING PRONOUNCEMENTS
         In December 2004, the Financial Accounting Standards Board ("FASB")
         issued a revision to Statement of Financial Accounting Standards No.
         123, "Share-Based Payment" ("SFAS No. 123(R)"). The revision requires
         all entities to recognize compensation expense in an amount equal to
         the fair value of share-based payments granted to employees. The
         statement eliminates the alternative method of accounting for employee
         share-based payments previously available under Accounting Principles
         Board Opinion No. 25. The statement will be effective for public
         companies that file as small business issuers as of the beginning of
         the first interim or annual reporting period that begins after December
         15, 2005. The Company has not completed the process of evaluating the
         full financial statement impact that will result from the adoption of
         SFAS No. 123(R).

         In December 2004, the FASB issued SFAS No. 153, "Exchange of
         Nonmonetary Assets," an amendment of APB Opinion No. 29. SFAS No. 153
         requires all nonmonetary exchanges to be recorded at fair value, unless
         the assets exchanged do not have commercial substance. A nonmonetary
         exchange has commercial substance under SFAS No. 153 if future cash
         flows are expected to change significantly as a result of the exchange.
         SFAS No. 153 will be effective for all nonmonetary asset exchanges
         occurring in fiscal periods beginning after June 15, 2005. The Company
         does not expect the adoption of SFAS No. 153 to have a significant
         impact on its financial statements.

                                       10


<PAGE>

         In November 2004, the FASB issued SFAS No. 151, "Inventory Costs,"
         ("SFAS 151") an amendment to ARB 43, Chapter 4, "Inventory Pricing," to
         clarify the accounting for abnormal amounts of idle facility expense,
         freight, handling costs, and wasted material (spoilage). ARB 43
         previously stated that "under some circumstances, items such as idle
         facility expense, excess spoilage, double freight, and re-handling
         costs may be so abnormal as to require treatment as current period
         charges." SFAS 151 requires that these items be recognized as
         current-period charges, regardless of whether they meet the criterion
         of "so abnormal." SFAS 151 is effective for inventory costs incurred
         during fiscal years beginning after June 15, 2005. The Company does not
         expect the adoption of SFAS No. 151 to have a significant impact on its
         financial statements.

3.       DISCONTINUED OPERATIONS

         In December 2004, immediately after the acquisition of USN, management
         of the Company approved a plan to dispose of the retail jewelry store
         operations, in order to concentrate its efforts and resources on the
         business of USN. Accordingly, the net results of operations of the
         retail jewelry stores are included in discontinued operations for the
         three months ended June 30, 2005. On January 6, 2005, the Board of
         Directors of the Company unanimously ratified management's plan.

         On June 17, 2005, and as amended in August 2, 2005, the Company entered
         into an asset purchase agreement with LGS Holdings, Inc. ("LGS") under
         which LGS acquired all of the Company's 14 retail jewelry outlets. In
         addition, LGS purchased Spotlight, LLC ("Spotlight"), a related party,
         from two of the Company's major stockholders. In consideration for
         these two transactions, LGS agreed to reduce the Company's liability to
         Spotlight by $2,600,000 and assumed the liabilities associated with the
         retail jewelry outlets in exchange for 1,368,422 shares of the
         Company's common stock. The Company owed Spotlight approximately
         $3,990,000 when they were acquired by LGS, and Spotlight was previously
         one of the Company's major creditors. Additional shares may be issued
         to LGS depending upon the final liabilities assumed, subject to
         approval by the Company's board of directors.

         The following is a summary of the assets and liabilities (net book
         assets and liabilities) transferred from the Company to LGS as of June
         17, 2005:

         Accounts payable, accrued expenses
             and other liabilities                $1,603,278
         Notes payable                               366,424
                                                  ----------
               Total liabilities transferred       1,969,702
                                                  ----------
         Less:
         Current assets                              558,713
         Non-current assets                          389,740
                                                  ----------
               Total assets transferred              948,453
                                                  ----------

              Unissued common stock               $1,021,249
                                                  ==========

                                       11


<PAGE>


         The net amount of $1,021,249 represents liabilities assumed in excess
         of assets transferred and is included as unissued common stock in the
         accompanying condensed consolidated balance sheet, pending a final
         determination on the number of additional shares that will be issued to
         LGS. Accordingly, no gain or loss has been recognized on this
         transaction.

         As of June 30, 2005, the Company owed LGS $1,319,524, which represents
         the Company's remaining liability to Spotlight. This amount is included
         in accounts payable in the accompanying condensed consolidated balance
         sheet.

         The Company's retail jewelry store operations are included in the
         accompanying consolidated statements of operations for the period April
         1, 2005 through June 16, 2005. Revenues during this period were
         $537,550 and net loss was $195,294.

4.       ACQUISITIONS

         On June 17, 2005, the Company entered into a stock purchase agreement
         with Global Sun Enterprises, Ltd. ("Global Sun") under which the
         Company acquired all of the issued and outstanding shares of Altron
         Limited ("Altron") for approximately 49.8% of the issued and
         outstanding shares of the Company's common stock after the transaction.
         Altron has two wholly owned subsidiaries, Gem Manufacturing, Inc.
         ("Gem") and The Diamond Channel ("Diamond"). Gem provides the Company
         with vertical integration, which will enable the Company to directly
         purchase loose diamonds, gems and finished jewelry, as well as,
         manufacture finished jewelry. Diamond provides the Company will the
         ability to sell certified diamonds, both loose and in finished
         settings. The operations of Gem and Diamond had ceased prior to the
         Company's acquisition of Altron, however, the Company plans to continue
         the operations of Gem and Diamond as a part of USN.

         The Company issued 11,251,244 shares of its common stock to Global Sun
         in order to acquire Altron. Altron is a holding company, with
         substantially no assets or liabilities. As of June 30, 2005, Altron's
         only assets were its investments in Gem and Diamond, approximately
         $60,000 in costs related to the development of a website (included in
         other assets in the accompanying condensed consolidated balance sheet),
         and a stock subscription receivable from Global Sun. The original
         amount of the stock subscription receivable was $5,000,000, however,
         the balance as of June 30, 2005 was $4,000,000.

                                       12


<PAGE>

5.       RESTRICTED CASH

         As a part of the agreements with credit card companies, the Company
         maintains a deposit with the credit card companies, which amounted to
         $601,832 at June 30, 2005.

6.       INVENTORY

         Inventory, which includes primarily jewelry, watches, coins and other
         collectibles, at June 30, 2005, consist of:

                  Finished products                         $     5,173,167
                  Raw materials                                     508,841
                                                            ----------------
                                                                  5,682,008
                  Less consigned inventory                          (77,988)
                                                            ----------------
                    Net inventories                         $     5,604,020
                                                            ================

7.       NOTE PAYABLE AND LONG-TERM DEBT

         Note payable consists of an obligation to a company in the amount of
         $500,000, which is due September 21, 2005, with interest payable
         monthly at 8% per annum. The note is collateralized by USN's accounts
         receivable and inventory, and is convertible into the Company's common
         stock at a conversion rate of $2.00 per share.

         Long-term debt consists of a note payable to an individual in the
         amount of $250,000, which is due on December 31, 2006, with interest
         payable monthly at 6% per annum. The note is convertible into the
         Company's common stock at a conversion rate of $.50 per share.

8.       ACCRUED EXPENSES AND OTHER LIABILITIES

         Accrued expenses and other liabilities at June 30, 2005 consist of the
         following:

                  Customer refunds                          $    1,829,027
                  Deferred revenue                                 859,396
                  Reserve for customer returns                     262,406
                  Accrued payroll                                   96,622
                  Other                                            224,229
                                                            --------------
                  Total                                     $    3,271,680
                                                            ==============

9.       RELATED PARTY TRANSACTIONS

         The Company has a number of transactions with related parties during
         the three month periods ended June 30, 2005 and 2004, as follows:

                                       13


<PAGE>

                                                         2005          2004
                                                         ----          ----

         Purchase of inventory                     $   3,693,000   $    47,000
         Payments for inventory purchases              1,380,000        23,000
         Management fees                                 120,000        76,000

         As of June 30, 2005, the Company owed affiliated companies which are
         owned by two principal shareholders a net amount of $94,379.

10.      CAPITAL STOCK

         PREFERRED STOCK
         The Company has 5,050,000 shares of $.0001 par value preferred stock
         authorized and no shares issued or outstanding at June 30, 2005.

         COMMON STOCK
         The Company has 195,000,000 shares of $.0001 par value common stock
         authorized and 22,592,859 shares issued and outstanding at June 30,
         2005.

         STOCK SUBSCRIPTIONS RECEIVABLE
         As a part of the acquisition of Altron (see Note 4), the Company
         acquired a stock subscription receivable with a balance of $4,000,000
         at June 30, 2005. Since June 30, 2005, $2,649,959 of this balance has
         been collected and is included as a current asset in the accompanying
         condensed consolidated balance sheet.

         In addition, two officers of USN have notes payable to USN Corp in the
         aggregate amount of $158,500 for the purchase of 610,000 shares of the
         Company's common stock, which are included in stock subscriptions
         receivable in the accompanying condensed consolidated balance sheet.
         The notes are due each January 2 in four annual installments of $39,650
         plus interest at 3.56%. If the officers are still employed on the
         January 2, anniversary date, USN has agreed to pay the officers a bonus
         equal to the amount due.

         STOCK OPTION PLANS
         Options which were outstanding when the Company filed a voluntary
         petition under Chapter 11 of the Bankruptcy Code were cancelled in the
         plan of reorganization. The 1993 Incentive Stock Option Plan and the
         2002 Nonstatutory Stock Option Plan were terminated in the plan of
         reorganization.

11.      COMMITMENTS AND CONTINGENCIES

         The Company has two office sub-leases which require a combined monthly
         payment of $18,000 through June 2006. The space includes the broadcast
         facility, warehouse, distribution center and operating and corporate
         office.

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<PAGE>

         The Company has a number of media contracts which are contingent upon
         making the required payment for air time in advance.

         In December 2004, the Company entered into a consulting agreement with
         a company owned by two major shareholders which provides for consulting
         fees in the amount of $30,000 per month through November 2005.

         In December 2004, the Company also entered into a lease, license and
         software support agreement with another company owned by these two
         shareholders which provides for monthly payments of $10,000 through
         December 17, 2005.

12.      LEGAL

         USN Corp will remain subject to the jurisdiction of the Bankruptcy
         Court until it makes its final payment to unsecured creditors, which is
         scheduled for January 2006.

         USN Corp had been a party to a number of disputes arising from the
         bankruptcy, principally with former landlords. Management of the
         Company believes that it provided an adequate accrual for any potential
         loss that might result. These liabilities were included in the sale of
         the retail operations.

13.      SEGMENT INFORMATION

         The Company reports segments based upon the management approach, which
         designates the internal reporting that is used by management for making
         operating decisions and assessing performance. Continuing operations
         currently includes only one segment, the retail operations of USN.

14.      GOING CONCERN

         At June 30, 2005, the Company had working capital of $110,230. The
         Company had a net loss of $2,296,825 for the three months ended June
         30, 2005 and a net loss of $5,804,666 for the fiscal year ended March
         31, 2005. The Company does not have sufficient cash flows from its
         operations to meet its obligations currently due within the next 12
         months. These conditions raise substantial doubt about the Company's
         ability to continue as a going concern.

         If the Company is (i) unable to grow its business or improve its
         operating cash flows as expected, (ii) unable to raise additional funds
         through private placement sales of its common stock, or (iii) unable to
         borrow additional funds, then the Company may be unable to continue as
         a going concern. There can be no assurance that additional financing


                                       15


<PAGE>

         will be available when needed, or if available, that it will be on
         terms favorable to the Company and its stockholders. If the Company is
         not successful in generating sufficient cash flows from operations, or
         in raising additional capital when required in sufficient amounts and
         on terms acceptable to the Company, these failures would have a
         material adverse effect on the Company's business, results of
         operations and financial condition. If additional funds are raised
         through the issuance of equity securities, the percentage ownership of
         the Company's current shareholders would be diluted. These condensed
         consolidated financial statements do not include any adjustments that
         may result from the outcome of these uncertainties.



                                       16


<PAGE>

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

From time to time, we may publish forward-looking statements relative to such
matters as anticipated financial performance, business prospects, technological
developments and similar matters. The Private Securities Litigation Reform Act
of 1995 provides a safe harbor for forward-looking statements. All statements
other than statements of historical fact included in this section or elsewhere
in this report are, or may be deemed to be, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Important factors that could cause actual
results to differ materially from those discussed in such forward-looking
statements include, but are not limited to, the following: changes in the
economy or in specific customer industry sectors; changes in customer
procurement policies and practices; changes in product manufacturer sales
policies and practices; the availability of product and labor; changes in
operating expenses; the effect of price increases or decreases; the variability
and timing of business opportunities including acquisitions, alliances, customer
agreements and supplier authorizations; our ability to realize the anticipated
benefits of acquisitions and other business strategies; the incurrence of debt
and contingent liabilities in connection with acquisitions; changes in
accounting policies and practices; the effect of organizational changes within
the Company; the emergence of new competitors, including firms with greater
financial resources than ours; adverse state and federal regulation and
legislation; and the occurrence of extraordinary events, including natural
events and acts of God, fires, floods and accidents.

LIQUIDITY AND CAPITAL RESOURCES

GOING CONCERN
At June 30, 2005, we had working capital of $110,230. We had a net loss of
$2,296,825 for the three months ended June 30, 2005 and a net loss of $5,804,666
for the fiscal year ended March 31, 2005. We do not have sufficient cash flows
from operations to meet our obligations currently due within the next 12 months.
These conditions raise substantial doubt about our ability to continue as a
going concern.

If we are (i) unable to grow our business or improve our operating cash flows as
expected, (ii) unable to raise additional funds through private placement sales
of our common stock, or (iii) unable to borrow additional funds, then we may be
unable to continue as a going concern. There can be no assurance that additional
financing will be available when needed or, if available, that it will be on
terms favorable to us and our stockholders. If we are not successful in
generating sufficient cash flows from operations, or in raising additional
capital when required in sufficient amounts and on terms acceptable to us, these
failures would have a material adverse effect on our business, results of
operations and financial condition. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our current
shareholders would be diluted. These condensed consolidated financial statements
do not include any adjustments that may result from the outcome of these
uncertainties.

                                       17


<PAGE>

RECENT EVENTS
On June 17, 2005, and as amended on August 2, 2005, we entered into an asset
purchase agreement with LGS Holdings, Inc. ("LGS") under which LGS acquired all
of our retail jewelry outlets. In addition, LGS purchased Spotlight, LLC
("Spotlight"), a related party, from two of our major stockholders. In
consideration for these two transactions, LGS agreed to reduce our liability to
Spotlight by $2,600,000 and assumed the liabilities associated with the retail
jewelry outlets in exchange for 1,368,422 shares of our common stock. We owed
Spotlight approximately $3,990,000 when they were acquired by LGS, and Spotlight
was previously one of our major creditors. Additional shares may be issued to
LGS depending upon the final liabilities assumed, subject to approval by our
board of directors.

On June 17, 2005, we also entered into a stock purchase agreement with Global
Sun Enterprises, Ltd. ("Global Sun") under which we acquired all of the issued
and outstanding shares of Altron Limited ("Altron") for approximately 49.8% of
the issued and outstanding shares of our common stock after the transaction.
Altron has two wholly owned subsidiaries, Gem Manufacturing, Inc. ("Gem") and
The Diamond Channel ("Diamond"). Gem provides us with vertical integration,
which will enable us to directly purchase loose diamonds, gems and finished
jewelry, as well as, manufacture finished jewelry. Diamond provides us will the
ability to sell certified diamonds, both loose and in finished settings.

We issued 11,251,244 shares of our common stock to Global Sun in order to
acquire Altron. Altron is a holding company, with substantially no assets or
liabilities. As of June 30, 2005, Altron's only assets were its investments in
Gem and Diamond, approximately $60,000 in costs related to the development of a
website, and a stock subscription receivable from Global Sun. The original
amount of the stock subscription receivable was $5,000,000, however, the balance
was $4,000,000 as of June 30, 3005. We have collected an additional $2,649,959
of the remaining balance since June 30, 2005.

As a result of the Altron acquisition, we are currently able to satisfy the
majority of our inventory supply needs through direct purchase or right of
return arrangements, rather than purchasing on consignment. Altron has
relationships with numerous sightholders, which now allows us to purchase
finished jewelry directly from manufacturers. We believe that the shift in our
inventory purchasing arrangement to primarily direct purchases will result in
significant improvement to both gross margins and operating margins.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2005 AND 2004

SALES - During the three months ended June 30, 2005, sales increased $3,932,037
(285%) from the year earlier period. Prior to May 2004, USN's sales came from 12
hours of weekly programming. Commencing in May 2004, USN increased its
programming to include over 80 hours of live broadcasting per week. Furthermore,
in May 2005, USN increased its programming to 15 hours per day. USN currently
broadcasts in over 29 million homes nationwide, which includes over 14 million
DirecTV subscribers, 6.9 million cable subscribers and 8.4 million Dish
Network/Echostar subscribers.

                                       18


<PAGE>

COST OF SALES - Cost of sales includes the direct cost of product. During the
three months ended June 30, 2005, cost of sales increased $2,492,042 (260%) from
the year earlier period, which is consistent with the sales increase in the same
period. Gross profit increased to 35.0% during the three months ended June 30,
2005, from 30.4% during the year earlier period.

SELLING AND DISTRIBUTION - Selling and distribution costs increased $2,254,150
(259%) during the three months ended June 30, 2005, as compared to the year
earlier period. Operating media costs represented 66.0% and 65.2% of selling and
distribution costs during the three months ended June 30, 2005 and 2004,
respectively. Labor costs represented 19.8% and 17.9% of selling and
distribution cost during the three months ended June 30, 2005 and 2004,
respectively. The significant increases in operating media and labor costs are
primarily a result of the change from 12 hours of weekly programming to over 80
hours of weekly programming in May 2004, and the expansion of programming to 15
hours per day in May 2005.

GENERAL AND ADMINISTRATIVE EXPENSE (G&A) - G&A increased $679,809 (488%) during
the three months ended June 30, 2005, as compared to the year earlier period,
which is consistent with the overall increase in sales. Labor cost, including
management fees, represent $292,857 and $116,483 of the total G&A costs during
the three months ended June 30, 2005 and 2004, respectively. In addition,
professional fees increased by $158,852 during the second quarter of 2005, as
compared to the same period in 2004.

DISCONTINUED OPERATIONS - Discontinued operations include the net earnings from
operating 14 jewelry stores for the period April 1, 2005 to June 16, 2005. On
June 17, 2005, we sold our retail stores to LGS Holdings, Inc.

                                       19


<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in the reports that
are filed or submitted under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports that are filed under the Exchange Act is
accumulated and communicated to management, including the principal executive
officer and principal accounting officer, as appropriate to allow timely
decisions regarding required disclosure. Under the supervision of and with the
participation of management, including the principal executive officer and
principal accounting officer, the Company has evaluated the effectiveness of the
design and operation of its disclosure controls and procedures as of June 30,
2005, and based on its evaluation, our principal executive officer and principal
accounting officer have concluded that these controls and procedures are
effective.

(b)  Changes in Internal Controls

There have been no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of the
evaluation described above.


                                       20


<PAGE>

PART II - OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three month period ended June 30, 2005, the Company issued 12,619,666
shares of its common stock; 11,251,244 shares were issued to acquire all of the
issued and outstanding stock of Altron Limited; and 1,368,422 shares were issued
pursuant to an asset purchase agreement dated June 17, 2005, under which the
Company agreed to sell its retail stores in exchange for the purchaser's
assumption of certain liabilities.

These shares were sold pursuant to an exemption from registration under Section
4(2) promulgated under the Securities Act of 1933, as amended.

ITEM 5.  OTHER INFORMATION

On August 1, 2005, the Company hired Anthony Runnels as its Chief Financial
Officer. Mr. Runnels replaced Terry Washburn as the Company's principal
accounting officer.


ITEM 6.  EXHIBITS


         31.1     Certification of Chief Executive Officer pursuant to
                  18 U.S.C. Section 1350, Section 302 of the
                  Sarbanes-Oxley Act of 2002                             Page 23

         31.2     Certification of Chief Financial Officer pursuant to
                  18 U.S.C. Section 1350, Section 302 of the
                  Sarbanes-Oxley Act of 2002                             Page 24

         32.1     Certification of Chief Executive Officer pursuant to
                  18 U.S.C. Section 1350, Section 906 of the
                  Sarbanes-Oxley Act of 2002                             Page 25

         32.2     Certification of Chief Financial Officer pursuant to
                  18 U.S.C. Section 1350, Section 906 of the
                  Sarbanes-Oxley Act of 2002                             Page 26


                                       21


<PAGE>


                                    SIGNATURE

         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.

                                                 USN CORPORATION

         Date:    August 25, 2005                By:  /S/ Anthony Runnels
                                                      --------------------------
                                                      Anthony Runnels
                                                      Chief Financial Officer

                                       22