UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) x
  QUARTERLY
  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
  1934For the quarterly period
  ended:
  March 31, 2001 OR  ̈
  TRANSITION
  REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition
  period from:
  
  toCommission file number:
  000-30570Phoenix Metals U.S.A.
  II, Inc(Exact
  name of small business issuer as
  specified in its charter)Nevada
  
  95-4571729(State or other jurisdiction
  of incorporation or organization)
  
  (I.R.S. Employer
  Identification No.)801 South Rampart
  Boulevard, Suite 178, Las Vegas, Nevada 89128(Address of principal executive
  offices)(702) 947-2178(Issuers telephone number)(Former name, former address and former
  fiscal year, if changed since last report) 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. YESxNO ̈ APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS 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 court. YES ̈NO ̈ APPLICABLE
ONLY TO CORPORATE ISSUERS State the number of shares
outstanding of each of the issuers classes of common equity, as of the latest
practicable date:  186,360,335 shares of
common stock, $.0001 par value, as of May 2, 2001 Transitional Small Business Disclosure Format (check one); YES ̈NOx   FORM 10-QSB

TABLE OF CONTENTS

PART_I__FINANCIAL_INFORMATIONITEM
  1. FINANCIAL STATEMENTSBALANCE
  SHEET (Unaudited)STATEMENTS
  OF OPERATIONS (Unaudited)STATEMENTS
  OF CASH FLOWS (Unaudited)ITEM
  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONPART II  OTHER INFORMATIONITEM
  1. LEGAL PROCEEDINGSPART I
 FINANCIAL INFORMATION

Item 1.              Financial
Statements

PHOENIX
  METALS U.S.A. II, INC. (A Development Stage Enterprise)BALANCE SHEET (Unaudited)March 31, 2001ASSETSCurrent assetsCash
  $60,190Inventories
  95,419Prepaid expenses
  14,530170,139Property and
  equipment,net of accumulated depreciation and amortization
  1,094,351Mining claims and
  mineral ore rights
  1,712,144$2,976,634LIABILITIES AND
  STOCKHOLDERS EQUITYCurrent
  liabilitiesCurrent portion of long-term debt
  $20,365Notes payable
  20,883Accounts payable
  108,546Accrued expenses
  11,894161,688Long-term debt,net of
  current portion
  39,525Advances from
  stockholders,including accrued interest
  383,793Stockholders
  equityPreferred stock (preferences to be
  determined by the Board of Directors upon issuance), $0.01 par value, 300,000,000 shares
  authorized, none issued.Common stock, $0.0001 par value,
  500,000,000 shares authorized, 186,360,335 shares issued and outstanding
  18,673Additional paid-in capital
  8,322,899Deficit accumulated in the
  development stage
  (5,539,944)Less stock subscription
  receivable, due June 30, 2001
  (410,000)2,391,628$2,976,634See
accompanying notes to financial statements

PHOENIX METALS
  U.S.A. II, INC.
  (A Development Stage Enterprise)STATEMENTS OF OPERATIONS (Unaudited)FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001
AND 2000
  AND THE CUMULATIVE
  PERIOD FROM JULY 1, 1993 THROUGH MARCH 31, 2001Three months ended
  March 31,
  Cumulative
  July 1, 1993
  through2001
  2000
  March 31, 2001Operating costs
  and expensesGeneral and administrative
  $167,108
  $213,395
  $2,360,098Research and development
  60,821
  121,887
  2,386,069Depreciation
  24,640
  21,827
  275,086252,569
  357,109
  5,021,253Interest expense
  6,510
  10,445
  518,691Net loss
  $(259,079)
  $(367,554)
  $(5,539,944)Net loss per
  common share
  $(0.001)
  $(0.002)
  $(0.037)Weighted average
  number of common shares outstanding
  186,360,335
  182,746,168
  150,622,643See
accompanying notes to financial statements

PHOENIX METALS
  U.S.A. II, INC.(A Development Stage Enterprise)STATEMENTS OF OPERATIONS (Unaudited)FOR THE NINE MONTH PERIODS ENDED MARCH 31, 2001
  AND 2000 AND THE CUMULATIVE
  PERIOD FROM JULY 1, 1993 THROUGH MARCH 31, 2001,Nine months ended
  March 31,
  Cumulative
  July 1, 1993
  through2001
  2000
  March 31, 2001Operating costs
  and expensesGeneral and administrative
  $531,334
  $485,295
  $2,360,098Research and development
  216,869
  309,252
  2,386,069Depreciation
  70,666
  63,637
  275,086818,869
  858,184
  5,021,253Interest expense
  29,727
  93,634
  518,691Net loss
  $(848,596)
  $(951,818)
  $(5,539,944)Net loss per
  common share
  $(0.005)
  $(0.005)
  $(0.037)Weighted average
  number of common shares outstanding
  184,259,375
  181,185,949
  150,622,643See
accompanying notes to financial statements

PHOENIX METALS U.S.A. II, INC.
  (A Development Stage Enterprise)STATEMENTS OF CASH FLOWS (Unaudited)FOR THE NINE MONTH PERIOD ENDED MARCH 31, 2001 AND 2000 AND
  THE CUMULATIVE
  PERIOD FROM JULY 1, 1993 THROUGH MARCH 31, 2001Nine months endedMarch 31,
  CumulativeJuly 1, 1993
  through
  March 31,2001
  2000
  2001Operating
  activitiesNet cash used in operating
  activities
  $(667,835)
  $(674,892)
  $(4,067,718)Investing
  activitiesPurchases of property and
  equipment
  (64,290)
  (118,170)
  (1,280,585)Financing
  activitiesAdvances from stockholders
  375,332
  613,165
  4,361,125Repayments to stockholders
  (550,000)
  
  (550,000)Proceeds from debt
  
  20,000
  266,251Repayments of debt
  (21,692)
  (20,891)
  (176,833)Stock subscription payments received
  800,000
  1,500
  901,700Proceeds from sale of common stock
  
  90,000
  606,250Net cash provided by financing activities
  603,640
  703,774
  5,408,493Net increase
  (decrease) in cash
  (128,485)
  (89,288)
  60,190Cash, beginning
  188,675
  89,629Cash, ending
  $60,190
  $341
  $60,190See
accompanying notes to financial statements

PHOENIX METALS
  U.S.A. II, INC.
  (A Development Stage Enterprise)
  NOTES TO FINANCIAL STATEMENTS1.          Basis of presentation:

The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and the instructions to Form 10-QSB. 
Accordingly, they do not include all of the information and disclosures
required by generally accepted accounting principles for annual financial
statements.  In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.  The results of operations for any interim
period are not necessarily indicative of results for the full year.  For further information, please refer to the
financial statements of Phoenix Metals U.S.A. II, Inc. (the Company), and the
related notes, included within the Companys Annual Report on Form 10-KSB for
the fiscal year ended June 30, 2000, previously filed with the Securities and
Exchange Commission.

2.          Contingencies:

Legal
  ProceedingsOn
February 24, 1999, an entry of default by the court clerk was entered against
the Company in the amount of $597,913. 
The entry of default stems from a disputed transaction in a period prior
to July 1, 1999.  On November 29, 1999,
the court entered an order of judgment including additional interest to
$609,912.  However, subsequently, the
court entered an order granting the Companys motion for an appeal of the
judgment.  The Company plans to continue
to litigate the matter fully, and, based upon the opinion of counsel,
management expects the judgment will be reversed and the matter tried.  However, since the ultimate outcome of this
matter cannot be determined at this time, no provision has been made in the
financial statements in its regard.

The
Company is also engaged in a dispute with the United State Department of
Interior, Bureau of Land Management (BLM) over its rights of occupancy under
the General Mining Law of 1872, as amended, with respect to its millsite on certain
public lands. The Company intends to vigorously defend its rights in the
matter. Management cannot determine at this time the ultimate effect of this
dispute on its future operations or financial condition, if any, but it could
be required to relocate its millsite processing facilities to another
location.  The cost of any such move,
however, is not expected to be significant.

The
Company is also party to various legal proceedings, most of which relate to
routine matters incidental to its business. 
Management does not believe that the outcome of such proceedings will
have a material adverse effect on the Companys financial position or future
operations.


Environmental
  ObligationsThe
Company is obligated under federal and state legislation to perform
environmental reclamation at its refinery and testing facility.  Managements estimate of the costs of
meeting such obligations, as approved by the state, is not material

PHOENIX METALS
  U.S.A. II, INC.
  (A Development Stage Enterprise)
  NOTES TO FINANCIAL STATEMENTS (continued)Going
  ConcernThe
Company has not had any revenues to date and has accumulated a development
stage deficit of $5,539,944 as of March 31, 2001.  The Company plans to conduct only a modest level of increased
processing and relatively modest capital expenditures and product research and
development during the next 12 months (because it believes it is unnecessary)
in transition to commercial application unless required to comply with the
terms of a specific customer contract that may arise.  In such event, the Company would expect to fund such activity
with customer prepayments to be required under the contract.  Accordingly, in all other respects, the Company
plans to continue to fund its limited operations, with additional advances from
its principal stockholders, who are both able and committed to provide such
funding as may be necessary, and new capital inflow.  Commercial production, once achieved, will allow the Company to
sell modest quantities of its doré metal bars to refineries and commercial
purchasers and generate revenues.

3.          Income taxes:

Because
the Company has not generated any revenues or otherwise commenced operations,
and has engaged in extensive development stage activities over a period that
exceeds seven years, it has incurred substantial net operating losses for
income tax reporting purposes, the realization of benefits of which cannot be
viewed at this time as more likely than not and, accordingly, have effectively
been offset by a valuation allowance.

Item 2.              Managements
Discussion and Analysis or Plan of Operation

The following discussion contains
various forward-looking statements, such as statements relating to the
Companys anticipated performance, current litigation, financing sources and
the possible relocation of the Companys operations.  Such statements can be identified by the use of forward-looking
words such as anticipate, believe, estimate, likely, intend, expect
or similar words.  Any forward-looking
statement made by the Company necessarily is based on a number of estimates and
assumptions that, while considered reasonable by the Company, are inherently
subject to significant business, economic and competitive contingencies, many
of which are beyond the control of the Company and are subject to change or may
prove to be incorrect.   Actual results
may vary materially from any forward-looking statement made by or on behalf of
the Company.  Forward-looking statements
should not be regarded as a representation by the Company or its management, or
any other person, that the forward-looking statement will be achieved.  Undue reliance should not be placed on
forward-looking statements.

Plan of Operation Over the Next 12 Months

Since becoming
the Companys principal stockholders, Robert F. and Diana Lee
Flaherty agreed to advance money, from time-to-time, to the Company to cover
capital acquisitions and working capital requirements.  This arrangement with the Flahertys was
memorialized in December 1999 when the Company and the Flahertys entered into
an Advance Agreement (the Advance Agreement), as amended, setting forth the
terms under which the Flahertys advanced sums to the Company. As a result,
generally all of the Companys future plans are based on the Companys
assumption that the Flahertys will continue to lend their financial support
pursuant to the Advance Agreement. However, there is nothing in the Advance
Agreement that requires the Flahertys to advance money to the Company. The
Advance Agreement only sets forth the terms and conditions of such loans if so
effected by the Flahertys. 
Additionally, the Company, from time-to-time, has repaid the Flahertys
for sums so advanced in cash or securities of the Company.

The Company
continues to direct its attention to resolving its dispute with the BLM. See
Part II, Item 1  Legal Proceedings. The Company made significant investments
in infrastructure at its Black Mountain facility during fiscal year 1999 in
anticipation of commercial production. While the dispute is pending, the
Company does not wish to duplicate its mill site facility and/or transfer its
equipment to private land, thereby abandoning its claim and making the action
moot.  For these reasons, the Company
has increased production levels only modestly and remains on the mill site to
protect its right to occupy the property until the matter is resolved by the
administrative law judge; A hearing on the matter was held in September 2000
and the Company is presently awaiting the administrative law judges ruling.

Assuming the Company prevails in
its dispute with the BLM, management believes that the Company has sufficient
commitments from the Flahertys in connection with the Advance Agreement and
from other private equity funding to provide cash for the next 12 months to
continue on its present course and to modestly increase production levels at
its Black Mountain facility sufficient for commercial production. Commercial
production, once achieved, will allow the Company to sell modest quantities of
its doré metal bars to refineries and commercial purchasers and generate
revenues. Thus, if the Company is able to commercially produce its product over
the next 12 months, it hopes that it will not be required to raise additional
funds.  Even if the Company were
required or decided to relocate its processing facilities and equipment to
private land within the next 12 months as a result of the BLM dispute and prior
to achieving commercial production, management believes that the Company has
sufficient commitments from the Flahertys and other potential private equity
investors to allow the Company to successfully undertake this course of action.

The
transition from an essentially research and development operation into a
sustainable commercial production operation, which the Company has delayed
undertaking, could be a difficult and potentially expensive effort, and could
be expected to present barriers to both attracting skilled executive management
and technical manpower. The Company continues to facilitate that transition and
control costs by slowly scaling up the size, scope and capability of its Black
Mountain facility.  Management believes
that, if it prevails in the pending BLM action, modest commercial production
levels are possible at its Black Mountain facility without substantial additional
expense.

The trend of spending less on
research and development activities that started with fiscal year end 2000 has
generally continued. The Company spent $60,821 on research and development
activities for the three months ended March 31, 2001, while it spent $121,887
for the same period in 2000.  This
decrease is attributed to improved efficiencies in testing extraction
techniques and separation methodologies originally commenced during fiscal year
1999.

As management
desires generally to maintain status quo while the BLM dispute is pending, it
does not anticipate the need for additional new equipment during the next 12
months.  However, once the BLM dispute
is concluded, management expects that the Companys research and development
expenses will either remain at current levels or continue to modestly increase
throughout the year.  Notwithstanding
managements current expectations, it is always possible that refinements in
technology may offer the Company the opportunity to replace existing equipment
with newer, more efficient models. Thus, management reserves the right to make
such replacements or acquisitions over the next 12 months. However, the Company
presently has no plans to do so.

In addition to the decreased
research and development expenses, the Company also experienced a decrease in
its general and administrative costs from $213,395 for three months ended March
31, 2000, to $167,108 for the three months ended March 31, 2001. Management
attributes this decrease to lower legal and other professional fees as a result
of re-listing its common stock on the Nasdaq Over-the-Counter Bulletin Board.
However, the Company nonetheless will continue to incur legal and accountants
fees and costs in connection with its reporting obligations under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

Over the next 12
months the Company could choose to seek and/or accept an opportunity to sell a
forward contract of its products on terms that offer pre-payment credit
facilities.  However, this type of sale
transaction, although generating revenues, could require the Company to conduct
further research and development to meet the specific customer needs.  At this time, management believes that
exploring such opportunities would be beneficial to the Company and anticipates
that the Company may seek to enter into these types of transactions in the
future.

Financing and Liquidity

The Company has
not relied on or used traditional outside sources of financing to fund its
current operations or to develop its proprietary technology and processes.  The Company has received substantial funding
from the Flahertys, its principal stockholders, who continue to advance funds
pursuant to the Advance Agreement, repaying those cash advances, in whole or in
part, with common stock or cash when available. The Company, therefore, has not
been required to borrow from banks or other traditional financial or capital
sources.

While the
Flahertys continue to promise their financial support during the transition
into commercial production, there is no assurance that such financial support
will continue, or that the Company may not find it desirable to seek funding
from more traditional financial and capital sources, or that the Company may
decide to raise additional debt or equity capital to finance its transition
into commercial exploitation of its technology. There is no assurance that, if
the Flahertys should terminate the Advance Agreement and thereby terminate
their financial support, the Company will be able to borrow from traditional
institutional financial or other sources on acceptable terms or raise debt or
equity capital. In such event, the Company may have to suspend operations, sell
its technology or seek a merger, combination or other strategic alternative.

As of March 31,
2001, the Company had cash of $60,190 compared with cash of $341 as of March
31, 2000.  Over the next 12 months,
management believes that the Company will require additional funding, from
either the Flahertys or other potential private equity investors, to cover
operating expenses, including without limitation, payroll, overhead, modest
capital expenditures, repairs and replacement parts, supplies, compliance and
professional services, taxes and permit fees in an amount between $800,000 and
$1,000,000, excluding any payments that may be required in respect of the
default judgment currently pending against the Company. See Part II, Item 1 
Legal Proceedings.

While the Company does not
anticipate a need to raise additional capital from outside sources to support
its operations during the next 12 months in reliance on the Advance Agreement
and other potential private equity investors, the Company has nonetheless begun
to take measures and explore various options in connection with potentially
raising additional equity capital.

Expected Significant Changes in Number of Employees

The Company expects to increase its
number of employees gradually over the next 12 months. While the proceeding
concerning its Black Mountain facility is pending, the Company will continue to
maintain its personnel at current levels. Thereafter, the Company expects to
add key senior management to support the administrative and marketing
infrastructure and to plan, control and grow the business. The Company
anticipates employing two key people within the next 12 months, specifically a
chief financial officer and chief technical manager. In addition, the Company
is preparing to add chemical and technical personnel to assist in the
commercial application of the Companys technology. However, no offers have
been made at this time, and there is no assurance that the Company will be able
to actually find and hire qualified people to fill these positions within the
next 12 months.

PART II  OTHER INFORMATION

Item 1.              Legal
Proceedings

Ralph
C. Gustin, III v. Thornton Duard Barnes, a/k/a T.D. Barnes; Doris Barnes;
Geneva Minerals, Inc.; Phoenix Metals U.S.A. II, Inc; Robert F. Flaherty; and
Diana Lee Flaherty, consolidated with Robert F. & Diana L. Flaherty, Inc.;
Phoenix Metals U.S.A. II, Inc.; Robert F. Flaherty; and Diana Flaherty v.
Thornton D. Barnes and Doris W. Barnes; and Geneva Minerals, Inc.Another
settlement conference has been scheduled for May 17, 2001.

900
Capital Services, Inc. v. Phoenix Metals U.S.A. II, Inc., et al.The time within which
discovery may be conducted has expired. 
The Company and the Flahertys made a motion to the court to continue the
trial date and requested additional time to conduct discovery.  The court granted the motion to continue the
trial; however, the motion to conduct additional discovery was denied.  Numerous motions are currently before the
court which await decision.  These
motions include motions to dismiss, motions for judgment on the pleadings and
motions for summary judgment. 
Currently, management does not believe that a trial date will be set
until a determination on the Companys appeal has been made.

SIGNATURES

In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Phoenix
  Metals U.S.A. II, Inc.Date:
  May
  11, 2001
  
  /s/
  Diana Lee FlahertyDiana
  Lee FlahertyChairperson
  of the Board, Chief Executive Officer, Secretary and TreasurerDate:
  May
  11, 2001
  
  /s/
  Robert F. FlahertyRobert
  F. FlahertyDirector,
  Chief Operating Officer and President