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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington D.C. 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

Commission File Number 000-29433

USA BROADBAND, INC.(Exact name of registrant as specified in its charter)

Delaware

84-1592698(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)1111 Orange Avenue
Coronado, California

92118(Address of Principal Executive Offices)

(Zip Code)


(619) 435-2929(Issuer's telephone number, including area code)

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(Former
Name, Former Address, and Former
Fiscal Year if Changed Since Last Report)

State
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

The
issuer had 11,552,329 shares of common stock outstanding as of May 1, 2003.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-QSB contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are contained principally in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements involve known and
unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements.

In
some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expects," "plans," "anticipates," "believes," "estimates,"
"projects," "predicts," "potential" and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Actual results could differ materially from
those anticipated in any forward-looking statements as a result of a number of factors, including but not limited to those described in our filings with the Securities and Exchange Commission,
particularly our transition report on Form 10-KSB for the transition period ending June 30, 2002. These forward-looking statements represent our estimates and assumptions
only as of the date of this report, and we do not assume any obligation to update any of these statements.

1

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PART IFINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

USA BROADBAND, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        $000s        ASSETS

|                          |                                           | March 31,
2003             |        | June 30,
2002 |      
|------------------------- | ----------------------------------------- | -------------------------- | ------ | ------------- | -----
|
|CURRENT ASSETS:           |                                           |                            |        |               |      
|                          | Cash                                      |                            | $      | 26            |      
|                          | Restricted cash                           |                            |        |              |      
|                          | Accounts receivable, net                  |                            |        | 97            |      
|                          | Prepaid expenses and other current assets |                            |        | 9             |      
|                          |                                           |                            |        |               |      
|                          |                                           | Total current assets       |        |               | 132  
|PROPERTY AND EQUIPMENT:   |                                           |                            |        |               |      
|                          | Cable properties                          |                            |        | 2,894         |      
|                          | Cable equipment                           |                            |        | 688           |      
|                          | Leasehold improvements                    |                            |        | 2             |      
|                          | Furniture and equipment                   |                            |        | 34            |      
|                          | Computer software and equipment           |                            |        | 113           |      
|                          | Vehicles                                  |                            |        | 7             |      
|                          |                                           |                            |        |               |      
|                          |                                           |                            | 3,738  |               |      
|                          | Less accumulated depreciation             |                            |        | (1,008        | )    
|                          |                                           |                            |        |               |      
|                          |                                           | Net property and equipment |        |               | 2,730
|NOTE RECEIVABLE           |                                           |                            | 418    |               |      
|ASSETS HELD FOR SALE, NET |                                           |                            | 730    |               |      
|OTHER ASSETS              |                                           |                            |        |               |      
|                          | Investment in Cable California            |                            |        | 6,781         |      
|                          | Receivable from Cable California          |                            |        | 36            |      
|                          | Deferred financing costs                  |                            |        | 53            |      
|                          |                                           |                            |        |               |      
|TOTAL ASSETS              |                                           | $                          | 10,880 |               | $    
|                          |                                           |                            |        |               |      

See
accompanying notes to these financial statements.

2

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USA BROADBAND, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS        $000s        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

|                                             |                                                                                                    | March 31,
2003                                                                                                                 |        | June 30,
2002 |      
|-------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ------ | ------------- | -----
|
|CURRENT LIABILITIES:                         |                                                                                                    |                                                                                                                                |        |               |      
|                                             | Line-of-credit                                                                                     |                                                                                                                                | $      | 92            |      
|                                             | Current portion of long-term debt and capital lease obligations                                    |                                                                                                                                |        | 2,754         |      
|                                             | Accounts payable                                                                                   |                                                                                                                                |        | 3,800         |      
|                                             | Notes Payable to Shareholders                                                                      |                                                                                                                                |        | 1,757         |      
|                                             | Notes Payable                                                                                      |                                                                                                                                |        | 334           |      
|                                             | Accrued liabilities                                                                                |                                                                                                                                |        | 944           |      
|                                             | Deferred revenues                                                                                  |                                                                                                                                |        | 155           |      
|                                             |                                                                                                    |                                                                                                                                |        |               |      
|                                             |                                                                                                    | Total current liabilities                                                                                                      |        |               | 9,836
|LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS |                                                                                                    |                                                                                                                                |       |               |      
|DEFERRED REVENUES                            |                                                                                                    |                                                                                                                                | 73     |               |      
|OTHER LIABILITIES                            |                                                                                                    |                                                                                                                                |        |               |      
|                                             | Other                                                                                              |                                                                                                                                |        |              |      
|COMMITMENTS AND CONTINGENCIES                |                                                                                                    |                                                                                                                                |        |               |      
|STOCKHOLDERS' EQUITY (DEFICIT):              |                                                                                                    |                                                                                                                                |        |               |      
|                                             | Preferred stock, $.001 par value; 50,000,000 shares authorized                                     |                                                                                                                                |        |               |      
|                                             |                                                                                                    | Series A convertible preferred stock; 7,000,000 shares designated; 3,873,015 outstanding, liquidation preference of $5,844,000 |        |               | 5,550
|                                             |                                                                                                    | Series B preferred stock; 2,625,000 shares designated; 2,625,000 outstanding, liquidation preference of $2,809,000             |        |               | 2,391
|                                             |                                                                                                    | Series C preferred stock; 7,875,000 shares designated; 7,875,000 outstanding liquidation preference of $7,875,000              |        |               | 7,875
|                                             | Common stock, $.001 par value; 100,000,000 shares authorized; 11,522,329 and 6,299,000 outstanding |                                                                                                                                |        | 12            |      
|                                             | Additional paid in capital                                                                         |                                                                                                                                |        | 13,853        |      
|                                             | Accumulated deficit                                                                                |                                                                                                                                |        | (28,710       | )    
|                                             |                                                                                                    |                                                                                                                                |        |               |      
|                                             |                                                                                                    | Total stockholders' equity                                                                                                     |        |               | 971  
|                                             |                                                                                                    |                                                                                                                                |        |               |      
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   |                                                                                                    | $                                                                                                                              | 10,880 |               | $    
|                                             |                                                                                                    |                                                                                                                                |        |               |      

See
accompanying notes to these financial statements.

3

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USA BROADBAND, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF OPERATIONS    
$                  000s

|                                             |              | Three Months
Ended
March 31, 2003 |            | Three Months
Ended
March 31, 2002 |           | Nine Months
Ended
March 31, 2003 |           | Nine Months
Ended
March 31, 2002 |          
|-------------------------------------------- | ------------ | --------------------------------- | ---------- | --------------------------------- | --------- | -------------------------------- | --------- | -------------------------------- | ---------
|
|REVENUES                                     |              | $                                 | 296        |                                   | 683       |                                  | 670       |                                  | 2,512    
|COST OF REVENUES                             |              |                                   | 89         |                                   | 165       |                                  | 322       |                                  | 999      
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|                                             | Gross profit |                                   |            | 207                               |           | 518                              |           | 348                              |          
|OPERATING EXPENSES:                          |              |                                   |            |                                   |           |                                  |           |                                  |          
|Selling, general and administrative          |              |                                   | 856        |                                   | 1,762     |                                  | 2,940     |                                  | 7,938    
|Depreciation                                 |              |                                   | 177        |                                   | 361       |                                  | 542       |                                  | 1,204    
|Amortization                                 |              |                                   | 22         |                                   |           |                                  | 22        |                                  |          
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|Total operating expenses                     |              |                                   | 1,055      |                                   | 2,123     |                                  | 3,504     |                                  | 9,142    
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|Loss from operations                         |              |                                   | (848       | )                                 | (1,605    | )                                | (3,156    | )                                | (7,629   
|OTHER INCOME (EXPENSE):                      |              |                                   |            |                                   |           |                                  |           |                                  |          
|Interest expense, net                        |              |                                   | (221       | )                                 | (138      | )                                | (574      | )                                | (380     
|Other income(expense), net                   |              |                                   | (87        | )                                 |          |                                  | (62       | )                                | 58       
|Equity in earnings of Cable California       |              |                                   | 53         |                                   |           |                                  | 53        |                                  |          
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|Net Loss from Continuing Operations          |              |                                   | (1,103     | )                                 | (1,743    | )                                | (3,739    | )                                | (7,951   
|Discontinued Operations (Note 5)             |              |                                   |            |                                   |           |                                  |           |                                  |          
|Income (loss) from discontinued operations   |              |                                   | 27         |                                   | 209       |                                  | 554       |                                  | 570      
|Income (loss) from disposal of assets        |              |                                   | (258       | )                                 |          |                                  | (4,242    | )                                |         
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|NET LOSS                                     |              |                                   | (1,334     | )                                 | (1,534    | )                                | (7,427    | )                                | (7,381   
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|ACCRUED CUMULATIVE PREFERRED STOCK DIVIDENDS |              |                                   | (116       | )                                 | (198      | )                                | (348      | )                                | (564     
|NET LOSS APPLICABLE TO COMMON SHAREHOLDERS   |              | $                                 | (1,450     | )                                 | (1,732    | )                                | (7,775    | )                                | (7,945   
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|NET LOSS PER COMMON SHARE                    |              | $                                 | (0.14      | )                                 | (0.36     | )                                | (1.02     | )                                | (1.74    
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING   |              |                                   | 10,126,000 |                                   | 4,800,000 |                                  | 7,660,000 |                                  | 4,553,000
|                                             |              |                                   |            |                                   |           |                                  |           |                                  |          

See
accompanying notes to these financial statements.

4

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USA BROADBAND, INC. AND SUBSIDIARIES        CONSOLIDATED STATEMENTS OF CASH FLOWS        $000s

|                                                                         |                                                            | For the Nine Months Ended
March 31, 2003 |        | For the Nine Months Ended
March 31, 2002 |       
|------------------------------------------------------------------------ | ---------------------------------------------------------- | ---------------------------------------- | ------ | ---------------------------------------- | ------
|
|OPERATING ACTIVITIES:                                                    |                                                            |                                          |        |                                          |       
|Net Loss                                                                 |                                                            | $                                        | (7,427 | )                                        | (7,381
|Adjustments to reconcile net loss to net cash from operating activities: |                                                            |                                          |        |                                          |       
|                                                                         | Depreciation and amortization                              |                                          |        | 564                                      |       
|                                                                         | Loss on disposal of fixed assets                           |                                          |        | 4,264                                    |       
|                                                                         | Amortization of deferred financing costs                   |                                          |        | 33                                       |       
|                                                                         | Stock based compensation                                   |                                          |        |                                          |       
|                                                                         | Allowance for bad debt                                     |                                          |        |                                          |       
|                                                                         | Stock and warrants issued                                  |                                          |        |                                          |       
|                                                                         | Interest                                                   |                                          |        |                                          |       
|                                                                         | Gain on sale of assets                                     |                                          |        |                                          |       
|                                                                         | Amortization of note discount                              |                                          |        | 76                                       |       
|Changes in operating assets and liabilities:                             |                                                            |                                          |        |                                          |       
|                                                                         | Accounts receivable                                        |                                          |        | 39                                       |       
|                                                                         | Accounts Payable                                           |                                          |        | 193                                      |       
|                                                                         | Accrued liabilities                                        |                                          |        | 209                                      |       
|                                                                         | Deferred revenues                                          |                                          |        | (101                                     | )     
|                                                                         | Other liabilities                                          |                                          |        | 446                                      |       
|                                                                         | Other Assets                                               |                                          |        |                                          |       
|                                                                         |                                                            |                                          |        |                                          |       
|                                                                         |                                                            | Net cash used in operating activities    |        |                                          | (1,704
|                                                                         |                                                            |                                          |        |                                          |       
|INVESTING ACTIVITIES:                                                    |                                                            |                                          |        |                                          |       
|                                                                         | Advances to DDC prior to acquisition, net of cash acquired |                                          |        |                                          |       
|                                                                         | Property disposed                                          |                                          |        | 145                                      |       
|                                                                         | Purchases of property and equipment                        |                                          |        |                                          |       
|                                                                         | Advances to Las Americas                                   |                                          |        | (240                                     | )     
|                                                                         | Net proceeds from sale of assets                           |                                          |        | 268                                      |       
|                                                                         | Acquisition costs                                          |                                          |        |                                          |       
|                                                                         | (Increase) decrease in restricted cash                     |                                          |        | 506                                      |       
|                                                                         | Payment of life insurance premiums                         |                                          |        |                                          |       
|                                                                         |                                                            |                                          |        |                                          |       
|                                                                         |                                                            | Net cash used in investing activities    |        |                                          | 679   
|                                                                         |                                                            |                                          |        |                                          |       
|                                                                         |                                                            |                                          |        |                                          |       

5

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|FINANCING ACITIVITES:                             |                                                                        |                                           |     |        |        |      
|------------------------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------- | --- | ------ | ------ | -----
|                                                  | Net proceeds from issuance of common stock                             |                                           |     |        |        | 2,447
|                                                  | Payments on line of credit                                             |                                           |     | (10    | )      | (487 
|                                                  | Principal payments on current portion of long-term debt                |                                           |     | (737   | )      | (537 
|                                                  | Net proceeds from long-term debt and capital lease obligations         |                                           |     |        |        | 600  
|                                                  | Borrowing of notes payable                                             |                                           |     | 1,810  |        | 475  
|                                                  | Payments on notes payable                                              |                                           |     | (100   | )      |      
|                                                  | Proceeds from exercise of warrants                                     |                                           |     |        |        | 4    
|                                                  |                                                                        |                                           |     |        |       
|                                                  |                                                                        | Net cash provided by financing activities |     |        | 963    |      
|                                                  |                                                                        |                                           |     |        |       
|NET INCREASE (DECREASE) IN CASH                   |                                                                        |                                           | (62 | )      | (1,223 | )    
|                                                  |                                                                        |                                           |     |        |       
|CASH, at beginning of year                        |                                                                        |                                           | 88  |        | 1,280  |      
|CASH, at end of period                            |                                                                        | $                                         | 26  |        | 57     |      
|                                                  |                                                                        |                                           |     |        |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                        |                                           |     |        |        |      
|                                                  | Cash paid for interest                                                 |                                           |     |        |        | 121  
|NON-CASH TRANSACTIONS:                            |                                                                        |                                           |     |        |        |      
|                                                  | Accounts payable converted to Notes Payable                            |                                           |     | 600    |        |      
|                                                  | Investment in Cable California                                         |                                           |     | (6,781 | )      |      
|                                                  | Issuance of common stock in relation to investment in Cable California |                                           |     | 6,306  |        |      
|                                                  | Note receivable forgiven in acquisition                                |                                           |     | 500    |        |      
|                                                  | Discount on Notes Payable                                              |                                           |     | (554   | )      |      

See
accompanying notes to these financial statements.

6

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1.     INTERIM FINANCIAL INFORMATION:

The accompanying interim financial statements are unaudited. However, in the opinion of management, the interim data includes all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the interim periods presented are not necessarily indicative of
those to be expected for the fiscal year.

The
financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and
regulations.

Management
believes the disclosures made are adequate to make the information not misleading and suggest that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10KSB for the year ended June 30, 2002.



The Company accounts for stock options using the intrinsic value method wherein compensation expense is recognized on stock options granted only for the excess of
the market price of our common stock over the option exercise price on the day of grant. All options of the Company are granted at amounts equal to or higher than the fair value of our stock so no
compensation expense is recorded.

Some
companies also recognize compensation expense for the fair value of the option right itself. The Company has elected not to adopt this accounting method because it requires the use
of subjective valuation models which the Company believes are not representative of the real value of the option to either the Company or the optionees. However, we are required to disclose the pro
forma effect of accounting for stock options using such a valuation for all options granted. The fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model
with the following assumptions:

2003

2002Risk-free interest rate

2.78% - 3.29%

4.65% - 5.21%Expected dividend yield

0%

0%Expected lives

5 years

5 yearsExpected volatility

122% - 138%

122%


To
estimate option lives for this valuation, it was assumed option would be exercised one year after becoming fully vested. All options are initially assumed to vest. Cumulative
compensation cost recognized in pro forma net income or loss with respect to options that are forfeited prior to vesting is shown as a reduction of pro forma compensation expense in the period of
forfeiture. Fair value computations are highly sensitive to the assumed volatility factorthe greater the volatility, the higher the computed fair value of options granted.

The
total fair value of options granted was computed to be approximately $825,000 and $559,000 for the quarters ended March 31, 2003 and 2002 respectively. These amounts are
amortized ratably

7

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over
the vesting periods of the options or recognized at the date of grant if no vesting period is required.

Three Months ended March 31,2003

2002Net loss, as reported

$
1,450,000


1,732,000Pro forma stock compensation expense, Net of tax benefit


825,000


559,000Pro forma net loss

$
2,275,000


2,291,000Net loss per share, basic:As reported

$
0.14


0.36Pro forma stock compensation expense


0.08


0.12Pro forma

$
0.22

$
.48


2.     LIQUIDITY AND BASIS OF PRESENTATION:

The Company's financial statements have been presented on the going concern basis, which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. At March 31, 2003, the Company had a working capital deficit of $9,704,000. The Company's net loss for the three months ended March 31, 2003 was $1,450,000
applicable to common shareholders. At March 31, 2003, the Company was in default of the terms of its debt and capital lease obligations.

The
Company's ability to continue as a going concern is dependent upon its ability to raise the capital necessary to successfully implement its business plan, and ultimately to achieve
profitable operations. Management's plans in this regard are set forth below.

3.     PROPOSED MERGER WITH LAS AMERICAS BROADBAND, INC.:

The Company has decided not to close its proposed merger with Las Americas Broadband, Inc. ("LABN"), and instead has negotiated a transaction, which gives it
control of Cable (Note 4). Neither the Company nor LABN were able to complete the conditions precedent to the merger.

4.     ACQUISITION OF CABLE CALIFORNIA S.A. DE C.V.

On January 10, 2003, the Company entered into an asset purchase agreement with Dick Clark International Cable Ventures, Ltd. ("dcicv"), Cable California
S.A. de C.V, a Mexican Corporation, Las Americas Broadband, Inc.("LABN") and Carlos Bustamante, Sr.

Cable
is in the business of developing and marketing cable television services in the Northern Baja California region of Mexico. Cable is managed by LABN and has a 30-year advanced
telecommunications broadband concession from the Mexican government to construct and operate a 750-MHz fiber-optic network providing high-speed Internet, telephone, data and multi-channel cable
television to residents and businesses. Cable is constructing a 1,300-mile Broadband network and has completed the first phase of this cable build, including its head-end, central operations center,
and over 100 miles of cable plant now serving 2,000 customers.

dcicv
owns one hundred percent (100%) of the Class B stock of Cable, which represents forty-nine percent (49%) of the voting stock of Cable.

Under
the terms of the agreement, the Company issued 2,500,000 (two million five hundred thousand) shares of its common stock to dcicv in exchange for the shares held by dcicv in
Cable. Of these shares, 125,000 shares will be held in escrow for 12 months after closing.

8

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In
addition, LABN transferred to the Company or a subsidiary, the inventory, property, intellectual property, customer lists, receivables, payables, trademarks, contracts, leases,
equipment, and other tangible and intangible assets used in the operations and normal course of business of Cable. LABN assigned to the Company a certain note payable by Cable in favor of LABN, in the
amount of $7,000,000 and the rights to all future payments owed to it under the note.

As
consideration, the Company issued 2,250,000 shares of its common stock to LABN. Of these shares, 125,000 shares will be held in escrow for 12 months after closing. The Company
assumed $1,250,000 in debt, liabilities, and other financial obligations of Cable and of LABN, specifically related to operations in Mexico as agreed to by the parties.

The
Company assumed LABN's obligations, and received an assignment of its rights under a certain agreement dated as of September 26, 2002, among LABN, Cable, Carlos Bustamante,
Sr. and LABN Mexico, S.A. de C.V. The Company reduced the outstanding principal amount of a promissory note issued by Las Americas to the Company from $890,276 to $500,000. The current revised balance
under the note agreement is $492,000 including accrued interest and will be extended until June 30, 2003. The revised and amended note is collateralized by assets of LABN, including its cable
television system in Tehachapi, California.

The
Company also paid to LABN the sum of $250,000 which was used by LABN to pay certain obligations and liabilities specifically related to Cable.

The
Company issued 250,000 shares of the Company common stock in the name of Carlos Bustamante, Sr.

The
company closed this purchase agreement on March 7, 2003.

5.     NOTES PAYABLE:

In July 2002, a shareholder of the Company advanced $170,000 to the Company under a proposed note arrangement, the terms of which are still being
negotiated.

On
July 18, 2002, the Company entered into an unsecured note payable to stockholders in the aggregate amount of $100,000.

On
August 21, 2002, the Company entered into an unsecured note payable to a shareholder in the amount of $150,000.

On
October 30, 2002 the Company obtained a bridge loan from a shareholder in the amount of $500,000. The note bears interest at 18% and is due June 30, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the shareholder a warrant to purchase 250,000 shares of the Company's common stock
at an exercise price of $1.00 per share expiring in 2007.

On
November 4, 2002 the Company obtained a bridge loan from a shareholder in the amount of $25,000. The note bears interest at 18% and is due June 30, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the shareholder a warrant to purchase 12,500 shares of the Company's common stock
at an exercise price of $1.00 per share expiring in 2007.

On
November 5, 2002 the Company obtained a bridge loan from a firm in the amount of $15,254. The note bears interest at 18% and is due June 30, 2003 or at such earlier date
pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 7,627 shares of the Company's common stock at an exercise price
of $1.00 per share expiring in 2007.

9

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On
January 22, 2003 the Company obtained a bridge loan from a firm in the amount of $200,000 the note bears interest at 18% and is due July 31, 2003 or at such earlier date
pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 100,000 shares of the Company's common stock at an exercise
price of $1.00 per share expiring in 2008.

On
January 27, 2003 The Company obtained a bridge loan from an individual in the amount of $50,000 the note bears interest at 18% and is due July 31, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 25,000 shares of the Company's common stock at an
exercise price of $1.00 per share expiring in 2008.

On
February 25, 2003 The Company obtained a bridge loan from a shareholder in the amount of $100,000 the note bears interest at 18% and is due August 31, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 50,000 shares of the Company's common stock at an
exercise price of $1.00 per share expiring in 2008.

On
March 11, 2003 The Company obtained a bridge loan from an individual in the amount of $400,000 the note bears interest at 18% and is due August 31, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 200,000 shares of the Company's common stock at an
exercise price of $.80 per share expiring in 2008.

On
March 13, 2003 The Company obtained a bridge loan from an individual in the amount of $100,000 the note bears interest at 18% and is due September 31, 2003 or at such
earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 50,000 shares of the Company's common stock at an
exercise price of $.80 per share expiring in 2008.

As
of March 31, 2003, the Company had two unsecured notes payable outstanding in the amount of $150,000 each. The holders of these notes, Theodore Swindles and Paul Moore, each
beneficially own over 5% of the Company's common stock. The notes were issued on March 4, 2002, bear interest at the rate of 10% per year and have a due date of October 31, 2002. On
October 18, 2002, the Company entered into a new loan agreement with Mr. Swindells, which extended the due date of the note payable to Mr. Swindells under the same terms and
conditions as the previous note. The Company is currently in default under the note with Mr. Moore.

6.     STOCKHOLDERS' EQUITY:

In July 2002, the Company commenced an offering of up to $10,000,000 of common stock. To date it has raised $229,353 in the offering through the sale of
114,676 shares at a price of $2.00 per share. The price per share of the shares sold in the offering was intended to be at a discount to the market value of the Company's common stock, and may be
reduced below $2.00. If the price is reduced, the Company will increase the number of shares to be issued to investors who have already made purchases in the offering.

In
July 2002, the Company issued a total of 23,161 shares of common stock to RateXchange Corporation, the parent company of RTX Securities who acted as the placement agent in a
prior offering. Of the shares issued, 9,200 shares were issued as compensation for the services of RTX Securities, and the remaining 13,961 shares were issued in lieu of an $18,000 commission, which
the Company had agreed to pay RTX Securities in connection with the offering.

In
addition, on September 15, 2002, the Company issued a warrant to RTX for 100,000 common shares for financial advisory services for the next year. The exercise price is $1.50
per share.

10

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In
September 2002, the Company agreed to issue 30,000 common shares to The Research Works as consideration for research services. In addition, in September 2002 we issued to
Corporate Capital Management warrants to purchase 300,000 shares of our common stock in consideration for financial advisory services.

In
October 2002, the Company issued a total of 21,843 shares of its common stock to three individuals. The shares were sold at a price of $1.60 per share and the Company raised a
total of $39,950 from the transactions.

In
January 2003, the Company issued a total of 5,000,000 shares of its common stock in connection with the purchase of Cable California. The shares were valued at $1.20 per share
in this non-cash transaction.

7.     ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS:

During the nine months ended March 31, 2003 the Company decided to change its business strategy to focus on providing video, data and internet
service in the state of California and in the Northern Baja region of Mexico. As a result of this change in strategy, the Company plans to sell its assets in regions outside of California and the
Northern Baja region of Mexico.

The
related assets to be sold have been reclassified as Assets Held for Sale as of March 31 ,2003 at the lower of carrying amount or net realizable value, and the results of
operations for the three & nine months ended March 31, 2002 have been presented as discontinued operations. Revenues from discontinued operations for the three and
nine months ended March 31, 2002 were $209,000 and $380,000 respectively.

8.     SALE OF ASSETS:

In January 2003, the Company closed its previously disclosed sale of several cable properties in North Dakota, which had a total of 129 basic subscribers.
The sale was for a total of $128,912 and the net proceeds were used to pay down bank debt. In addition, the Company sold a small bulk property located in Memphis for $33,000 and the proceeds went
towards working capital.

9.     SUBSEQUENT EVENTS:

Sale of LABN Note:

On April 1, 2003 USAB completed a sale of the LABN note. A firm purchased the note for $500,000. The note assigns the security interest of all of the
assets of Las Americas Broadband that was held by the Company. Interest on the note is for one year at 15%. Additionally the Company is liable for up to $250,000 if LABN defaults on the note and there
are not sufficient assets to cover the note.

Time Warner Memphis:

On April 7, 2003 USAB completed a sale of assets consisting of 3 Rights of Entry (ROE) serving 352 private cable subscribers in Memphis to Time Warner
Cable for $425,000 in cash, or $1,207 per subscriber.

La Salle Acquires Direct Digital Midwest:

On May 9, 2003, La Salle Bank auctioned the 1,000 shares it held as collateral in Direct Digital Midwest to satisfy the default on a $946,000 promissory
note. La Salle Bank was the highest bidder at auction. The price was undisclosed. Subsequent to this action, the Board of Directors for Direct Digital Midwest has resigned, and the company is in the
process of turning over the remaining assets.

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Bridge Loans

On April 1, 2003 The Company obtained a bridge loan from an individual in the amount of $150,000 the note bears interest at 18% and is due
October 1, 2003 or at such earlier date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 75,000 shares of
the Company's common stock at an exercise price of $.70 per share expiring in 2008.

On
April 3, 2003 The Company obtained a bridge loan from an individual in the amount of $50,000 the note bears interest at 18% and is due October 1, 2003 or at such earlier
date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 25,000 shares of the Company's common stock at an exercise
price of $.80 per share expiring in 2008.

On
May 2, 2003 The Company obtained a bridge loan from a company in the amount of $100,000. The note bears interest at 18% and is due October 1, 2003 or at such earlier
date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 50,000 shares of the Company's common stock at an exercise
price of $.80 per share expiring in 2008.

On
May 2 2003 The Company obtained a bridge loan from an individual in the amount of $25,000 the note bears interest at 18% and is due October 1, 2003 or at such earlier
date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 12,500 shares of the Company's common stock at an exercise
price of $.80 per share expiring in 2008.

On
May 14, 2003 The Company obtained a bridge loan from an individual in the amount of $150,000 the note bears interest at 18% and is due October 1, 2003 or at such earlier
date pending consummation of permanent financing in the amount of $3,000,000. In addition, the Company issued the firm a warrant to purchase 25,000 shares of the Company's common stock at an exercise
price of $1.00 per share expiring in 2008.

12

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

General

We are seeking to position ourselves as an industry leader in providing digital television, entertainment, data, Internet and broadband services. Our current
operations consist of providing video service to multiple dwelling units, or "MDU," subscribers through Cable Concepts, Inc. which we acquired in July 2001. We receive revenues from
subscriber fees and revenue-sharing payments from DirectTV.

Acquisition of Assets of Cable California S.A. De C.V.

On March 7, 2003, we completed the purchase of all of the Class B stock of Cable California, SA de C.V., a Mexican corporation, which we will refer
to as "Cable California," from dick clark international cable ventures, ltd., a Turks and Caicos entity. The Class B stock represents 49% of the voting and economic interest in Cable
California. Cable California possesses a 30-year advanced telecommunications broadband concession from the Mexican government to construct and operate a 750-MHz fiber-optic
network providing high-speed Internet, telephone, data and multi-channel cable television to residents and businesses in the greater Tijuana, Mexico metropolitan area. Cable California is
constructing a 1,300-mile broadband network and has completed the first phase of this cable build, including its head-end, central operations center and over 100 miles of cable
plant now serving approximately 2,000 customers.

In
addition to acquiring the voting and economic interests in Cable California, we acquired various tangible and intangible assets, including office and computer equipment, vehicles,
machinery and satellite equipment from Las Americas Broadband, Inc., a Colorado corporation. These assets are related to Cable California's operations in Mexico. We also acquired Las Americas'
rights and obligations under an agreement dated as of September 26, 2002, between Las Americas, Cable California, Mr. Bustamante and LABN Mexico, SA de C.V., a Mexico corporation, which
will allow us to manage and operate the proposed cable television system in Tijuana.

As
consideration for the above acquisitions, we issued 2,500,000 shares of our common stock to Dick Clark International Cable Ventures, 2,250,000 shares to Las Americas, and 250,000
shares to Bustamante. In addition, we assumed a total of $1,250,000 of debt, liabilities and other financial obligations of Cable California and Las Americas and reduced the outstanding principal
amount of a promissory note issued by Las Americas to us from $890,276 to $500,000. The amended note will remain collateralized by assets of Las Americas, including its cable television system in
Tehachapi, California. We also paid Las Americas $250,000 in cash. Now that the asset purchase has been completed, we intend to operate and manage the proposed cable system in Tijuana while continuing
to manage the approximately 3,600 MDU subscribers we presently serve in California.

Critical Accounting Policies and Estimates

Our condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. The estimates we use are based upon our historical experiences combined
with management's understanding of current facts and circumstances. Some of our accounting policies are considered critical because they are important to the portrayal of our financial condition and
the results of our operations and because they require significant or complex judgments on the part of management. We believe that our critical accounting policies are those relating to deferred
income taxes, allowances for doubtful accounts and recoverability of long-lived assets.

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Deferred
income taxes are recognized for the expected tax consequences in future years stemming from differences between the values of assets and liabilities for tax and financial
reporting purposes, based upon enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Our significant deferred tax assets
relate to net operating loss carry forwards, allowance for bad debts and deferred revenue. We have established a valuation allowance to reduce deferred tax assets to the net amount expected to be
recovered in future periods. The estimates for deferred tax assets and the corresponding valuation allowance require management to exercise complex judgments. We periodically review and adjust those
estimates based upon the most current information available. However, because the recoverability of deferred tax assets is directly dependent upon our future operating results, actual recoverability
of deferred tax assets may differ materially from our estimates.

Our
allowance for doubtful accounts reflects a reserve that reduces customer accounts receivable to the net amount estimated to be collectible. Estimating the credit worthiness of
customers and the recoverability of customer accounts requires us to exercise considerable judgment. In estimating uncollectible amounts, we consider factors such as general economic and
industry-specific conditions, historical customer performance and anticipated customer performance. While we consider our processes to be adequate to effectively quantify our exposure to doubtful
accounts, changes in
economic, industry or specific customer conditions may require us to adjust our allowance for doubtful accounts.

Our
long-lived assets will from time to time be analyzed for impairment when events and conditions indicate that an analysis is needed. Factors that we consider in performing
an impairment analysis are current and historical agreements to sell comparable assets, our current business strategy and our expectations of future cash flows for the asset or asset group being
analyzed. Future changes in the economic conditions, the regulatory environment and our strategies may materially affect our estimate of the recoverability of fixed assets.

We
account for stock options using the intrinsic value method, under which compensation expense is recognized on stock options granted only for the excess of the market price of our
common stock over the option exercise price on the day of grant. All of our options are granted at amounts equal to or higher than the fair value of our stock, so no compensation expense is recorded.

Some
companies also recognize compensation expense for the fair value of the option right itself. We have elected not to adopt this accounting method because it requires the use of
subjective valuation models which we believes are not representative of the real value of the option to either us or the optionees. However, we are required to disclose the pro forma effect of
accounting for stock options using such a valuation for all options granted. The fair value of the options was estimated at the date of grant using a Black-Sholes option pricing model with the
following assumptions:

2003

2002Risk-free interest rate

2.78% - 3.29%

4.65% - 5.21%Expected dividend yield

0%

0%Expected lives

5 years

5 yearsExpected volatility

122% - 138

122%


To
estimate option lives for this valuation, it was assumed that options would be exercised one year after becoming fully vested. All options are initially assumed to vest. Cumulative
compensation cost recognized in pro forma net income or loss with respect to options that are forfeited prior to vesting is shown as a reduction of pro forma compensation expense in the period of
forfeiture. Fair value computations are highly sensitive to the assumed volatility factorthe greater the volatility, the higher the computed fair value of options granted.

14

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The
total fair value of options granted was computed to be approximately $1,434,000 and $1,980,000 for the quarters ended March 31, 2003 and 2002 respectively. These amounts are
amortized ratably over the vesting periods of the options or recognized at the date of grant if no vesting period is required.

Comparison of Nine-Month Period Ended March 31, 2003 to The Nine-Month Period Ended March 31, 2002

The following table sets forth our selected operations data for the nine-month periods ended March 31, 2003 and 2002. This data should be read
in conjunction with our financial statements in Item 1 of this Form 10-QSB.

|                                           |  | Nine Months Ended
March 31, 2003 |        | % of Revenues |        | Nine Months Ended
March 31, 2002 |   | % of
Revenues |   | % Change from
March 31, 2002 to
March 31, 2003 |  
|------------------------------------------ |  | -------------------------------- | ------ | ------------- | ------ | -------------------------------- | - | ------------- | - | ---------------------------------------------- | -
|
|Revenues                                   |  | $                                | 670    |               | 100.0  | %                                | $ | 2,512         |   | 100.0                                          | %
|Cost of Revenues                           |  |                                  | 322    |               | 48.1   | %                                |   | 999           |   | 39.8                                           | %
|Gross Profit                               |  |                                  | 348    |               | 51.9   | %                                |   | 1,513         |   | 60.2                                           | %
|Selling, General & Administrative Expenses |  |                                  | 2,940  |               | 438.8  | %                                |   | 7,938         |   | 316.0                                          | %
|Depreciation and Amortization              |  |                                  | 564    |               | 84.2   | %                                |   | 1,204         |   | 47.9                                           | %
|Total Operating Expense                    |  |                                  | 3,504  |               | 523.0  | %                                |   | 9,142         |   | 363.9                                          | %
|Loss from Operations                       |  | $                                | (3,156 | )             | -471.0 | %                                | $ | (7,629        | ) | -303.7                                         | %

The
decline in our revenue for the nine months ended March 31, 2003 from the nine months ended March 31, 2002 is the result of several factors. First, in the past year we
have sold ROE agreements governing many of our properties and had some of our lease contracts terminated. We also changed our business strategy to focus on providing video, data and internet service
in the State of California and in the Northern Baja region of Mexico. As a result of this change in strategy all of our revenue derived from assets outside of California or the Baja region of Mexico
has been presented as discontinued operations and not as revenue. Our cost of revenues also declined as the result of the reduction in the number of subscribers served.

Our
selling, general and administrative expenses were lower for the nine months ended March 31, 2003 than for the comparable period in 2002 because we reduced personnel and staff
as a result of the change in our business focus. We also closed one of our office facilities in the State of Washington.

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Comparison of Three-Month Period Ended March 31, 2003 to The Three-Month Period Ended March 31, 2002

The following table sets forth our selected operations data for the three-month periods ended March 31, 2003 and 2002. This data should be read in
conjunction with our financial statements in Item 1 of this Form 10-QSB.

|                                           |  | Three Months Ended
March 31, 2003 |       | % of Revenues |        | Three Months Ended
March 31, 2002 |   | % of
Revenues |   | % Change from
March 31, 2002 to
March 31, 2003 |  
|------------------------------------------ |  | --------------------------------- | ----- | ------------- | ------ | --------------------------------- | - | ------------- | - | ---------------------------------------------- | -
|
|Revenues                                   |  | $                                 | 296   |               | 100.0  | %                                 | $ | 683           |   | 100.0                                          | %
|Cost of Revenues                           |  |                                   | 89    |               | 30.1   | %                                 |   | 165           |   | 24.2                                           | %
|Gross Profit                               |  |                                   | 207   |               | 69.9   | %                                 |   | 518           |   | 75.8                                           | %
|Selling, General & Administrative Expenses |  |                                   | 856   |               | 289.2  | %                                 |   | 1,762         |   | 258.0                                          | %
|Depreciation and Amortization              |  |                                   | 199   |               | 67.2   | %                                 |   | 361           |   | 52.9                                           | %
|Total Operating Expense                    |  |                                   | 1,055 |               | 356.4  | %                                 |   | 2,123         |   | 310.8                                          | %
|Loss from Operations                       |  | $                                 | (848  | )             | -286.5 | %                                 | $ | (1,605        | ) | -235.0                                         | %

The
decline in our revenue for the three months ended March 31, 2003 from the three months ended March 31, 2003 is the result of several factors. First, in the past year we
have sold ROE agreements governing many of our properties and had some of our lease contracts terminated. We also changed our business strategy to focus on providing video, data and internet service
in the State of California and in the Northern Baja region of Mexico. As a result of this change in strategy all of our revenue derived from assets outside of California or the Baja region of Mexico
has been presented as discontinued operations and not as revenue. Our cost of revenues also declined as the result of the reduction in the number of subscribers served.

Our
selling, general and administrative expenses were lower for the three months ended March 31, 2003 than for the comparable period in 2002 because we reduced personnel and staff
as a result of the change in our business focus. We also closed one of our office facilities in the State of Washington.

During
the three months ending March 31, 2003 we received notices of default from property owners due to non-payment of franchise fees. Due to our continuing severe
liquidity problem, 2 properties were lost when the property owners switched to new providers. As a result we had to write off approximately $145,000 of net asset value related to these properties. To
date for the nine months
ending March 31, 2003, we have lost a total of 30 properties, resulting in asset write-offs exceeding $3,045,000.

Liquidity and Capital Resources

Our financial statements are presented on a going-concern basis. This contemplates the realization of assets and liquidation of liabilities in the normal course
of business. At March 31, 2003, we had a working capital deficit of approximately $9,704,000. Our ability to continue as a going concern depends on our ability to raise the capital necessary to
successfully implement our business plan and ultimately achieve profitable operations. During the three-month period ended March 31, 2003, we continued to implement cost-cutting
measures designed to increase operational efficiency, focus the geographic concentration of our operations and dispose of assets that are not consistent with our plan, either from a geographic or
operational perspective. We intend to use the proceeds of asset sales to repay debt and other obligations, and to reinvest the remaining net proceeds, if any, in existing or new assets.

In
January 2003, we closed the sale of several cable properties in North Dakota, which had a total of 129 basic subscribers. The sale was for a total of $128,912 and a portion of
the proceeds were used

16

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to
pay down bank debt. Also in January 2003, we sold a small bulk property located in Memphis for $33,000 and used the proceeds for working capital.

On
April 7, 2003, we completed the sale of four contracts giving us the right to provide television service to properties in Memphis, Tennessee, and related equipment, to Time
Warner for $432,253. We used the proceeds of this sale to repay indebtedness, to pay creditors and for working capital.

In
recent periods, we have had limited access to investment capital to support working capital deficits or to expand existing operations. Consequently, the financial conditions of our
operating subsidiaries deteriorated in the three months ended March 31, 2003 and have continued to deteriorate since then. We have been focused on negotiations with prospective lenders and
investors as we seek to refinance all outstanding loans and liabilities in order to provide working capital. These negotiations are continuing. We require working capital for existing operations
pending their sale or disposition and in connection with the purchase of assets of Cable California. We are actively seeking to raise additional funds through an offering of debt or equity, and have
entered into several non-exclusive agreements with individuals or entities who would receive a fee for assisting us in obtaining financing. There are no assurances that we will be able to
obtain additional financing.

We
have previously announced our focus on developing a cable television system in Northern Baja, California, and to divest ourselves of some of our operating assets in the United States
in order to enhance our balance sheet and reduce debt associated with the acquisition of our MDU assets in July, 2001. In addition, we are in continued discussions with some of our creditors,
including key advisors and consultants, for the conversion of liabilities owed to them into our common stock in exchange for negotiated cash settlements. In total, we are seeking to eliminate or
convert approximately $1.5 to 2.0 million of our obligations. However, there is no guarantee that these discussions will lead to a reduction in our liabilities.

As
of March 31, 2003, we had two unsecured notes payable outstanding in the amount of $150,000 each. In addition we owed approximately $29,000 in accrued interest on these notes
at March 31, 2003. The holders of these notes, Theodore Swindells and Paul Moore, each beneficially own over 5% of our common stock. The notes were issued on March 4, 2002, bear interest
at the rate of 10% per year and have a due date of October 31, 2002. On October 18, 2002, we entered into a new loan agreement with Mr. Swindells, which extended the due date of
his note payable under the same terms and conditions as the previous note. In consideration of the note extension we assigned service and access agreements to certain properties as a security
interest. We are in default under the note with Mr. Moore.

As
of March 31, 2003, we had a note payable to a vendor in the amount of approximately $225,000. Principal and interest, at 18%, on this note are due in monthly installments with
the final payment due March 2003. The payments due under the note are past due and we are currently in default under the note agreement.

As
of March 31, 2003, we owed a total of approximately $1,257,000 to Geneva Associates Merchant Banking Partners, an entity in which Russell Myers, one of our directors, has an
interest. Of this $1,257,000, $889,000 is due under a promissory note held by Geneva Associates Merchant Banking Partners, consisting of the $750,000 principal value of the note and $139,000 in
accrued interest. This note was due in October 2002 and bears interest at the rate of 14%. We are currently in default under this note. The remaining $368,000 owed to Geneva Associates Merchant
Banking Partners is due under a reimbursement Agreement under which Geneva Associates Merchant Banking Partners, through a financial institution, issued a letter of credit to a bank to be used as
security for a line of credit we have with the bank. Of this $368,000, $300,000 represents the principal owed under the agreement, $38,000 represents accrued and unpaid interest, and $30,000
represents an unpaid 10% fee in connection with the issuance of the letter of credit. The outstanding balance under the reimbursement agreement bears interest at a rate of 16% per year. We are
currently in default under the reimbursement agreement.

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In
addition to our other obligations, we may have an obligation under an asset purchase agreement with Verizon Media Ventures, Inc. and GTE Southwest Incorporated. Before the
quarter ended March 31, 2003, we decided not to complete the purchase of the rights for some of the properties, located in Texas, included in this asset purchase agreement. We believe that
Verizon Media Ventures
and GTE Southwest are attempting to sell the properties in question to third parties, and that these entities may seek to collect from us any difference between the price we agreed to pay and the
prices received in connection with these sales to third parties. We have also signed a performance guarantee in the amount of $250,000 with regard to the asset purchase agreement. This guarantee is in
the form of a deposit note bearing an interest rate of 19% which was to become payable if we failed to perform under the agreement. Verizon Media Ventures and GTE Southwest may seek to hold us liable
for the amount of the performance guarantee. Neither entity has made any claim against us as a result of our decision not to purchase the rights for the properties in question.

In
September, 2002, we issued a promissory note for $600,000 to our outside counsel in connection with unpaid legal fees. A payment of $100,000 was made on this note during the quarter
and $15,000 in interest was accrued, reducing the note total to $531,000 as of March 31, 2003. This promissory note is secured by all of the assets of USAB Video Corp. II, Inc., one of
our subsidiaries.

Between
October 30, 2002 and May 14, 2003, we issued 12 bridge notes in the total amount of $1,750,000 to 11 individuals and one entity. As of March 31, 2003, the
total balance of these notes was $1,556,000, of which $90,000 was accrued interest. The balance on these notes was reduced by $554,000 allocated to paid-in capital for warrants issued to
the noteholders in connection with the notes, resulting in an adjusted carrying value of approximately $912,000. The notes are secured by our interest in some of our
right-of-entry agreements that grant us the right to provide satellite television and other services to subscribers. The holder of two of the notes, in the total principal
amount of $600,000, is Theodore Swindells, who beneficially owns over 5% of our common stock. For a description of the terms of these bridge notes, see Part II, Item 2 of this
Form 10-QSB.

Cash Flows from Operating Activities

Our operations utilized net cash of approximately $1,704,000 for the nine-month period ended March 31, 2003. The use of cash was related
primarily to funding the net losses from our operations, reduced by adjustments for non-cash expenses such as depreciation and loss on disposal of fixed assets and an increase in accounts
payable and accrued liabilities.

Cash Flows from Investing Activities

During the nine-month period ended March 31, 2003, investing activities resulted in an increase of cash of approximately $,679,000. This was a
result of a change in restricted cash of $506,000 and proceeds from the sale of assets.

Cash Flows from Financing Activities

During the nine-month period ended March 31, 2003, financing activities generated cash of approximately $963,000. This resulted primarily from
proceeds of bridge loans, offset by reductions in principal payments on long-term debt and capital lease obligations.

Impact of Recently Issued Accounting Principles

In July 2002, the FASB issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities
("SFAS 146"). SFAS 146 requires a company to recognize costs associated with exit or disposal activities when they are incurred rather than when the company makes a commitment to an exit
or disposal plan. Examples of costs covered by SFAS 146 include lease termination costs and certain employee severance costs that are associated with a

18

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restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS 146 is to be applied prospectively to exit or disposal activities initiated after
December 31, 2002. We do not expect the adoption of SFAS 146 to have a material effect on our financial position or results of operations.

In
August 2002, the FASB issued Statement of Financial Accounting Standards No. 147, "Acquisitions of Certain Financial Institutions" (SFAS 147). SFAS 147
requires financial institutions to follow the guidance in SFAS 141 and SFAS 142 for business combinations and goodwill and intangible assets, as opposed to the previously applied
accounting literature. This statement also amends SFAS 144 to include in its scope long-term customer relationship intangible assets of financial institutions. The provisions of
SFAS 147 do not apply to us.

In
December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based compensationTransition and
Disclosurean amendment of FASB Statement 123" (SFAS 123). For entities that change their accounting for stock-based compensation from the intrinsic method to the fair value method
under SFAS 123, the fair value method is to be applied prospectively to those awards granted after the beginning of the period of adoption. This is known as the "prospective method." The
amendment permits two additional transition methods for adoption of the fair value method. In addition to the prospective method, the entity can choose to either restate all periods presented, which
is known as the "retroactive restatement method" or recognize compensation cost from the beginning of the fiscal year of adoption as if the fair value method had been used to account for awards, which
is known as the "modified prospective method." For fiscal years beginning December 15, 2003, the prospective method will no longer be allowed. We currently account for our stock-based
compensation using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and plan on continuing using this method to
account for stock options. Therefore, we do not intend to adopt the transition requirements as specified in SFAS 148.

ITEM 3CONTROLS AND PROCEDURES

Based on the evaluation by Mr. Grant Miller, who is both our principal executive officer and chief financial officer, of the effectiveness of our
disclosure controls and procedures conducted as of a date within 90 days of the filing date of this quarterly report, Mr. Miller concluded that, as of the evaluation date,
(i) there were no significant deficiencies or material weaknesses in our disclosure controls and procedures, (ii) there were no significant changes in the internal controls or in other
factors that could significantly affect internal controls after the evaluation date and (iii) no corrective actions were required to be taken. There were no significant changes in our internal
controls or in other factors that could significantly affect our internal controls after the date of this evaluation of the controls. We continue to monitor our controls and procedures on an
on-going basis and will make any adjustments necessary to produce effective disclosure.

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PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

We are involved in various proceedings and subject to various claims as described in our Transition Report on Form 10-KSB for the transition
period ended June 30, 2002, and our Quarterly Report on Form 10-QSB for the three-month period ended September 30, 2002. This report describes only proceedings
instituted or claims arising during or subsequent to the quarter ended March 31, 2003, or material events that occurred during or subsequent to the quarter in connection with
previously-reported proceedings or claims. Many of the actions described in this Section have been filed against Cable Concepts, Inc., which we acquired in July 2001 and which does
business under the name Direct Digital Communications.

In
January 2003 we received notice of a default judgment in the amount of $89,000 entered against Cable Concepts in connection with a lawsuit originally filed in July 2002
by the The Telecom Group, which does business under the name Gale Telecom Services. We are seeking to negotiate a payment plan with The Telecom Group in connection with this judgment. In
February 2003, in connection with a lawsuit filed against us in August 2002 by L.A. Commercial Group, Inc., which does business under the name Continental Group, Inc., we
received notice of the entry of a default judgment against Cable Concepts in the amount of approximately $67,000, which includes the money allegedly owed, plus interest, costs and attorneys' fees.

On
January 13, 2003, Chateau Marina LP filed an action against Cable Concepts in the Superior Court for the State of California, Los Angeles County, for breach of contract and
intentional and negligent interference with contractual relations in connection with a contract under which we agreed to provide satellite video and audio programming to residents of Chateau Marina.
In the complaint Chateau Marina is seeking termination of the contract, damages for the alleged breach of the contract in the amount of approximately $25,000, injunctive relief and cancellation of a
cloud on the title of properties covered by the agreement. In early February 2003, we received an eviction notice from our landlord, Knobb Family Trust, due to non-payment of past
due rents and common area maintenance charges. We owe rent and maintenance charges from October 2002, and the arrearage amounts to $25,996.

On
February 12, 2003, Federal Express Corp. filed a complaint against Cable Concepts in the Superior Court of the State of California, Los Angeles County, for past due services,
interest and fees. The amount sought in the complaint is $30,000. On February 17, 2003, in Texas state court, a default judgment was entered against Cable Concepts in the amount of
approximately $87,000, including $70,000 in damages and $17,000 in attorneys' fees, in favor of Tri-Tek Communications, Inc.

On
February 24, 2003, Volt Management, Inc. filed a complaint against Cable Concepts in the Superior Court for the State of California, Los Angeles County, alleging breach
of contract in connection with its hiring of temporary employees through Volt Management, and seeking damages of approximately $21,000. On April 8, 2003, Protocol Communications, Inc.
filed a complaint against Cable Concepts in the Superior Court of the State of California, Los Angeles, County, seeking damages of approximately $208,000 and attorneys' fees in the amount of
approximately $4,000. In the complaint, Protocol Communications alleges breach of contract in connection with an agreement for the provision of marketing services.

ITEM 2CHANGES IN SECURITIES

In March 2003, in connection with the acquisition of the Class B stock of Cable California, SA de C.V., and assets from Las Americas
Broadband, Inc., described in Part I, Item 2, we issued 2,500,000 shares of our common stock to Dick Clark International Cable Ventures, Ltd., 2,250,000 shares to Las Americas
Broadband, Inc., and 250,000 shares to Carlos Bustamante, Sr. In April 2003, we issued

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104,110
shares of our common stock to an individual in consideration for services rendered to us. We have the right, until April 7, 2003, to repurchase these shares at a price of $1.00 per
share.

Between
October 2003 and May 2003, we issued bridge notes with a total principal value of $1,750,000 to various individuals and entities. In connection with the bridge
loans evidenced by these notes, we issued to the investors warrants to purchase a total of 875,000 shares of our common stock. The exercise prices of the warrants are between $0.70 and
$1.00 per share. Each of the bridge notes bears interest at 18% and is due on June 30, 2003, or on the date we receive permanent financing in the amount of at least $3,000,000, if
earlier. If we obtain permanent financing, each note holder has the right to convert all, but not part, of the principal amount and accrued interest on his or her note into shares of our common stock
or preferred stock in connection with the permanent financing at a discount of 10% to the offering price. Additionally, for every month that any principal payment is overdue, each note holder will
receive 10,000 warrants per $100,000 in principal under the note, or pro-rata portion thereof, with a strike price of the lower of $1.00 or the average bid price for our common stock for
the 20 trading days preceding issuance of warrants.

On
May 1, 2003, we entered into a consulting agreement with an entity which has agreed to provide investor relations services. The agreement provides that it will continue for
four three-month periods unless terminated. In connection with this agreement, we agreed to issue the consultant 15,000 restricted shares of our stock at the beginning of each three-month period that
the agreement is in effect. In addition, we agreed to issue to the consultant, upon execution of the agreement, warrants to purchase 300,000 shares of our common stock, in four equal portions, each to
purchase 75,000 shares, with exercise prices of $1.00, $1.50, $2.00 and $2.50 per share, respectively. The contract may be terminated by either party upon 30 days' written notice.

No
underwriting commissions or discounts were paid in connection with any of the above transactions. We relied upon the exemption from the registration requirements of the Securities Act
under Section 4(2) of the Securities Act with respect to the offer and sale of the unregistered securities described above. We conducted no general solicitation or advertising in connection
with any of the transactions described above. Each of the persons that acquired unregistered securities had a preexisting relationship with us or one of our placement agents or founders. In addition,
each purchaser was required to complete a subscription document and confirm his or her status as a "sophisticated investor." We provided each potential investor with an opportunity to meet with, and
ask questions of, our management.

ITEM 3DEFAULTS UPON SENIOR SECURITIES

We are required to use 10% of the net proceeds from future sales or grants of equity through July, 2004, toward payment of a note payable held by Geneva
Associates Merchant Banking Partners, then for redemption of our Series B Preferred Stock, followed by redemption of our Series C Preferred Stock. We are not currently in compliance with
this requirement as it relates to either the note payable or the preferred stock.

As
of March 31, 2003, we are in default on both principal and interest of a note payable to a bank in the amount of approximately $392,000. The note matured in April 2003
and we are currently seeking a waiver of some of the note's provisions. There is no guarantee that we will obtain a waiver. As of March 31, 2003, we were in default under a promissory note in
the principal amount of $150,000 issued to Paul Moore, who beneficially owns over 5% of our common stock.

We
are also in default to Geneva Associates Merchant Banking Partners for both principal and interest due on notes totaling approximately $1,257,000. As of March 31, 2003, we have
yet to make a payment of either principal or interest on our obligations to the entity.

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As
of March 31, 2003, we were in default with regard to a promissory note in the principal amount of $945,000 issued by Direct Digital Midwest, which was owned by Cable Concepts
and held by LaSalle Bank. The collateral for this promissory note was all of the outstanding stock and all of the assets of Direct Digital Midwest, which were pledged to the lender by Cable Concepts.
On May 9, 2003, LaSalle Bank conducted an auction of these shares and purchased the shares itself in the auction. As a result, LaSalle Bank owns Direct Digital Midwest.

On
April 18, 2003, we received a notice from USBancorp that Cable Concepts was in default under a loan agreement with USBancorp. USBancorp has stated that the total amount owed
under the agreement is $649,227. We believe the actual amount owed is approximately $400,000, but are seeking to negotiate with USBancorp to obtain a waiver of the default or otherwise to resolve this
debt.

ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5OTHER INFORMATION

On February 10, 2003, we hired Margot Ritcher as our Corporate Controller. We have agreed to pay Ms. Ritcher a salary of $110,00 per year, and she
is eligible for a bonus of up to 50% of her base salary. We also have agreed to grant her options to purchase 100,000 shares of our common stock at the market price at the time of grant, with options
to purchase 25,000 shares vesting immediately and options to purchase 25,000 shares vesting on each of the first, second and third anniversaries of her employment with us.

On
February 12, 2003, we entered into a management services agreement with Richard Lubic, who we anticipate will become the Chairman of our Board of Directors. The agreement has a
three-year term beginning on March 1, 2003, and become effective upon the closing of the purchase of the Class B and Class N stock of Cable California, SA de C.V. and
the purchase of assets from Las Americas Broadband described in Part I, Item 2 of the Form 10-QSB. Under the agreement Mr. Lubic is to act as our Senior Management
Consultant with responsibility for strategic operations. In consideration for Mr. Lubic's services, we have agreed to pay, for the first year of the term of the agreement, a consulting fee of
$250,000 to DL Communications, Inc., a company controlled by Mr. Lubic. Payment under the agreement is to begin once we receive at least $1,000,000 in additional funding, except that if
Mr. Lubic provides services before we receive this funding, we are to pay DL Communications $2500 per day. We also agreed to issue to Mr. Lubic an option to purchase up to 1,000,000
shares of our common stock. Of these options, options to purchase 100,000 shares of our common stock vested upon execution of the agreement, and options to purchase 300,000 shares of our
common stock will vest on each of the first, second and third anniversaries of the execution of the agreement. The options all have an exercise price of $1.25 per share.

Under
the management services agreement, Mr. Lubic is also eligible for a discretionary bonus payable in cash, common stock, options, stock appreciation rights, or some
combination of the above in an amount to be determined by our board of directors. We also may adopt a performance incentive plan for Mr. Lubic under which Mr. Lubic could receive options
or stock appreciation rights. Any options granted to Mr. Lubic under the agreement will be assignable to the extent legally permissible. The management services agreement provides that in the
event of a change of control, we will require the surviving entity to preserve Mr. Lubic's rights under the agreement. We may terminate the agreement at any time for cause, and without cause on
30 days' written notice. If we terminate the agreement without cause, or if Mr. Lubic terminates the agreement for cause, we must continue to pay the consulting fee called for by the
agreement to Mr. Lubic for the remaining term of the agreement or two years, whichever is greater.

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On
March 18, 2003, Lewis Suders resigned as our chief operating officer, effective February 15, 2003. Also on March 18, 2003, we entered into a severance agreement
with Mr. Suders under which we agreed to pay Mr. Suders, in addition to back pay and reimbursement of expenses, a total of $25,000 in resolution of all claims Mr. Suders may have
with regard to a signing bonus, severance pay, or any other compensation.

On
April 15, 2003, we entered into an advisory agreement with Jon Eric Landry, who is one of our directors, under which Mr. Landry agreed to provide us with advice in
connection with our corporate finance strategy, business plan and investor relations and other matters. The agreement has a 36-month term. In consideration for Mr. Landry's
services, we agreed to pay him $1.00 per year. In addition, if we secure permanent financing of $5,000,000 or more, or if a significant financing event occurs that allows us to realize sufficient
liquidity to satisfy current operating expenses, Mr. Landry will be entitled to additional compensation, in an amount to be agreed upon between us and Mr. Landry and approved by our
board of directors.

The
agreement relating to our acquisition of Cable Concepts called for a potential downward adjustment to the purchase price based on the amount of Cable Concepts' accounts payable as of
the effective date of the acquisition, which is July 16, 2001. Accordingly, some of the shares we issued in consideration for the merger were placed in escrow, and were not to be released
unless it was determined that a downward adjustment was not appropriate. We believe that a downward adjustment is appropriate, and that a portion of the shares of our common stock in escrow should
revert back to us rather than being released to the former shareholders of Cable Concepts. However, Cable Concepts' former shareholders have disputed the accuracy of our calculation. We are attempting
to resolve this matter with these shareholders. Geneva Associates Merchant Banking Partners, an entity in which Russell Myers, one of our directors, has an interest, was a major shareholder of Cable
Concepts and is therefore representing itself and the other former Cable Concepts shareholders in these discussions.

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ITEM 6EXHIBITS AND REPORTS ON FORM 8-K



Number

Description of Document10.1

Advisory Agreement dated April 15, 2003, by and between USA Broadband, Inc. and Jon Eric Landry10.2

Addendum to Employment Agreement between Richard G. Lubic and USA Broadband, Inc. dated February 12, 200310.3

Management Services Agreement dated as of February 12, 2003 by and between Richard G. Lubic and USA Broadband, Inc.10.4

Severance agreement dated March 18, 2003 by and between Lewis Suders and USA Broadband, Inc.10.5

Asset Purchase Agreement dated as of January 9, 2003, by and among USA Broadband, Inc., Dick Clark International Cable Ventures, Ltd., Cable California, SA de C.V., Las Americas Broadband, Inc., and Carlos Bustamante Sr.*99.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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On
March 6, 2003, we filed a Form 8-K to report the sale by Cable Concepts of various right-of-entry agreements and related assets
covering 55 cable properties in several states with approximately 1,900 subscribers to Digital Service, Inc. for total consideration of $1,685,268, comprised primarily of debt assumption by
Digital Service. The Form 8-K also reported Cable Concepts' transfer of a property in the State of Washington to Digital Service in exchange for the assumption of a debt owed by
Cable Concepts to a third party. The Form 8-K included pro forma statements of operations for the nine-month transition period ended June 30, 2002, and for the
six-month period ended December 31, 2002, giving effect to the acquisition.

On
March 21, 2003, we filed a Form 8-K to report the acquisition of the Class B stock of Cable California, SA de C.V., and assets from Las Americas
Broadband, Inc., described in Part I, Item 2.

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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: May 20, 2003 |  | USA BROADBAND, INC.
|------------------- |  | -------------------
|                    |  | By:                
|                    |  | Its:               

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CERTIFICATIONS

I, Grant Miller, certify that:

1.     I
have reviewed this quarterly report on Form 10-QSB of USA Broadband, Inc.;

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

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

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):



6.     The
registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|Date: May 20, 2003 |  | /s/GRANT MILLERGrant Miller, PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
|------------------ |  | ------------------------------------------------------------------------------------

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EXHIBIT INDEXTITLE

|Number |  | Description of Document                                                                                                                                                                                                      
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1   |  | Advisory Agreement dated April 15, 2003, by and between USA Broadband, Inc. and Jon Eric Landry                                                                                                                              
|10.2   |  | Addendum to Employment Agreement between Richard G. Lubic and USA Broadband, Inc. dated February 12, 2003                                                                                                                    
|10.3   |  | Management Services Agreement dated as of February 12, 2003 by and between Richard G. Lubic and USA Broadband, Inc.                                                                                                          
|10.4   |  | Severance agreement dated March 18, 2003 by and between Lewis Suders and USA Broadband, Inc.                                                                                                                                 
|10.5   |  | Asset Purchase Agreement dated as of January 9, 2003, by and among USA Broadband, Inc., Dick Clark International Cable Ventures, Ltd., Cable California, SA de C.V., Las Americas Broadband, Inc., and Carlos Bustamante Sr.*
|99.1   |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                          
|99.2   |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                          

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