SECURITIES AND EXCHANGE COMMISSION
                             Washington,  D.C.  20549


                                    FORM  10-Q


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

                  For  the  quarterly  period  ended  March  31,  2002


                         Commission  file  number:  0-29651


                           USA  VIDEO  INTERACTIVE  CORP.
             (Exact  name  of  registrant  as  specified  in  its  charter)


                WYOMING                                 06-1576391
     (State  or Other Jurisdiction of       (I.R.S. Employer Identification No.)
     Incorporation  or  Organization)


      70  Essex  Street,  Mystic,  Connecticut                06355
     (Address  of  principal  executive  offices)            (ZIP  code)


                                 (860)  572-1560
              (Registrant's  Telephone  Number,  including  Area  Code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.

Yes  |X|       No  |_|

At  May  15, 2002, there were 91,745,089 shares of the registrant's common stock
outstanding.



PART  I.  FINANCIAL  INFORMATION

Item  1.    Financial  Statements





                                        2
<PAGE>

Item  2.   Management's  Discussion  and  Analysis  of  Financial  Condition and
          Results  of  Operations

CAUTIONARY  STATEMENT

Certain  statements  contained in this Quarterly Report on Form 10-Q ("Report"),
including,  without  limitation,  statements  containing  the  words
"believes,""anticipates,"  "estimates,"  "expects," and words of similar import,
constitute  "forward-looking  statements."  Readers  should  not  place  undue
reliance  on these forward-looking statements.  USA Video's actual results could
differ  materially from those  anticipated in these  forward-looking  statements
for  many  reasons,  including  risks  and  uncertainties set forth in USA Video
Interactive  Corp.'s Annual Report on Form 10-K, the most important of which are
summarized below under Factors Which May Affect Future Results of Operations, as
well as in other  documents  USA  Video  files  with the Securities and Exchange
Commission  ("SEC").

The  following  information  has  not  been  audited.  You  should  read  this
information  in  conjunction with the unaudited financial statements and related
notes  to  financial  statements  included  in  this  report.

OVERVIEW  OF  THE  COMPANY

USA  Video  Interactive Corp. ("USA Video" or the "Company") designs and markets
to  business customers streaming video and video-on-demand systems, services and
source-to-destination  digital  media  delivery  solutions  that  allow  live or
recorded  digitized  and  compressed  video  to be transmitted through Internet,
intranet,  satellite  or  wireless connectivity. The Company's systems, services
and delivery solutions include video content production, content encoding, media
asset  management,  media  and  application  hosting,  multi-mode  content
distribution,  transaction  data  capture and reporting, e-commerce, specialized
engineering  services,  and  Internet  streaming  hardware.

USVO  holds the patent for Store-and-Forward Video-on-Demand (#5,130,792), filed
in  1990 and issued by the United States Patent and Trademark Office on July 14,
1992.  It has been cited by at least 145 subsequent patents.  USVO holds similar
patents  in England, France, Spain, Italy, Germany, and Canada, and has a patent
pending  in Japan.  USVO anticipates actively engaging in licensing this patent.

MARKETS  AND  PRODUCTS:
As  an  outgrowth  of  its  video  streaming  systems  business  and specialized
engineering  services,  USVO  has  identified  emerging markets for global media
streaming  services  and has developed a unique solution to provide a wide range
of  business  customers with value-added streaming media support services.  With
this services-based approach, called StreamHQ(TM), customers can leverage USVO's
infrastructure  and  technical  expertise,  while  focusing  on  their  own core
business  competencies.

StreamHQ(TM)  facilitates  the transmission of digitized and compressed video to
the  user's  desktop  via  multiple  streaming  modes that take advantage of the
available  connectivity.  While  competitive services take a "one-size-fits-all"
streaming  approach, StreamHQ(TM) brings unique value propositions to individual
vertical  markets  with  functionality  designed specifically for those markets.
Beyond  quality  streaming,  USVO's  overriding  goal has been to give customers
media  asset  management  tools and information that provide a basis for them to
calculate  their  return  on  investment  in  streaming  media  expenditures.

StreamHQ(TM)  encompasses a range of end-to-end services from source to viewing,
including content production, content encoding, asset management and protection,
media  and application hosting, multi-mode content distribution, and transaction
data  capture  and  reporting.

USVO  has tailored an initial deployment product, Zmail, which uses StreamHQ(TM)
to  deliver  rich  media  emails.  Zmail  leverages  the  diverse  functional
capabilities  of  this  architecture  to  provide  a  value-added  service  to
advertisers,  as  well  as  other  business  applications,  such  as  corporate
communications,  consumer  notices,  product  recalls,  and  customer  support.

Clicking  on  a  link  within  a  Zmail  accesses  a customized web page with an
embedded,  non-proprietary  streaming  player  (e.g., Windows Media, QuickTime).
The  user  can customize his or her viewing experience and access any of the web
page  links  for  additional  information,  guidance,  or  e-commerce.  Zmail
functionality  monitors  all  media  player  transactions,  as  well  as  web
click-throughs,  and  aggregates  the  data  across  multiple  users  to provide
web-based  campaign  reports  to  the  customer.

                                        3
<PAGE>

TECHNOLOGY  APPROACH:
USVO  is  approaching  the  global media streaming services market with a Tier 1
media-streaming  infrastructure  that the Company has attempted to differentiate
from  competitive  products  and services in terms of architectural, functional,
and  business  features.  Leveraging  some  of  the  industry's  most  prominent
providers  for  data  storage,  networking,  and  data  management, StreamHQ(TM)
strives  to  compete  based  on  service  availability,  an  efficient streaming
process, redundancy and fail-over features, and continuity in the event of power
outages.

USVO has created a modular system that can be scaled to meet the requirements of
a  growing  clientele.  StreamHQ(TM) can also be rapidly replicated to provide a
streaming  utility  in  multiple  Internet  Data  Centers  around  the  world.

StreamHQ(TM)  functionality  is  software driven, allowing USVO to create future
system  enhancements  based on the needs of the marketplace.  Additionally, USVO
can  customize  the  baseline  features  of StreamHQ(TM) and plans to expand the
system  features  to  support  the  specialized  needs  of  additional  types of
customers.

RESEARCH  AND  DEVELOPMENT:
USVO  has  ongoing  research  and  development  (R&D)  efforts that are aimed at
improving the efficiency and security of media delivery to clients.  Among these
R&D  efforts is the ongoing development of technology that will help protect the
intellectual  property  of  content  owners.  USVO  also  has  a  proprietary
still-image  wavelet  compression  technology.

BUSINESS  OBJECTIVES:
USVO  has  established  the  following  near-term  business  objectives:
1.   Establish StreamHQ(TM) as the industry standard in the streaming video and
     rich media marketplace;
2.   Generate services- and systems-based revenues in accordance with the
     corporate business plan;
3.   Attain industry recognition for the superior architectural, functional, and
     business differentiators of the StreamHQ(TM) architecture;
4.   Leverage USVO's digital video patent for licensing fees and partnerships in
     the United States and internationally;
5.   Develop at least one client per year for a complete StreamHQ(TM) system,
     including intellectual property licensing and operational support;
6.   Expand StreamHQ(TM) functionality to provide enhanced support for corporate
     training and education markets; and
7.   Patent and license new technology developed within the corporate R&D
     program.

MARKET  PERSPECTIVE:
With  its  StreamHQ(TM)  service  offering,  USVO's  goals  are:  1) to become a
market-leading  streaming  media  service  provider; 2) to establish itself as a
leader  in  streaming  technology  innovation;  3) to capture revenue and market
share  from  services  and  products  in  advertising, corporate communications,
education,  entertainment,  and  other  markets.  Numerous  published  reports
estimate  the current value of these markets as in excess of 20 billion dollars.
As  a  secondary  objective,  USVO intends to leverage its broad video-on-demand
patent  by  licensing  it  to  other  companies.

The  Company  was  incorporated on April 18, 1986, as First Commercial Financial
Group  Inc. in the Province of Alberta, Canada.  In 1989,its name was changed to
Micron  Metals  Canada  Corp., which purchased 100% of the outstanding shares of
USA  Video  Inc.,  a  Texas  corporation, in order to focus on the digital media
business.  In  1995, the Company changed its name to USA Video Interactive Corp.
and  continued  its corporate existence to the State of Wyoming. The Company has
five  wholly-owned subsidiaries:  USA Video (California) Corp., USA Video Corp.,
USA  Video  Productions  Inc.,  USA Video Technologies, Inc., and USVO, Inc. USA
Video's  executive and corporate offices are located in Mystic, Connecticut, and
its  Canadian  offices  are  located  in  Vancouver,  British  Columbia.

RESULTS  OF  OPERATIONS

Sales

Sales booked during the three-month period ended March 31, 2002 were $26,253, as
compared  to  $1,060  during  the  three  month  period  ended  March  31, 2001.
Approximately  eighty  five percent (85%) of these revenues were attributable to
sales  of  StreamHQ(TM)  services  and  approximately fifteen percent (15%) were
attributable  to  sales  of  engineering  services.

Also  during  the  three-month  period  ended March 31, 2002, the Company signed
additional sales contracts that will generate approximately $100,000 of revenue,
which  will  be reflected in future financial statements as recorded after March
31,  2002.

                                        4
<PAGE>

Starting in the fourth quarter of 2000 and continuing during the next 18 months,
the  Company  concentrated its managerial and technical efforts on the remaining
critical  stages  of  developing  and  refining  its  new  streaming  rich media
services.

These  services  are  intended to become the Company's core business in place of
its  hardware-based  systems  for  video  encoding,  decoding and streaming; the
market  for  which has diminished significantly in the last 15 to 18 months. The
Company believes the market declined for a number reasons, the most important of
which  is  that  customers  no longer can afford to invest in expensive hardware
systems  of  this  type.  As  a result, profit margins on the Company's hardware
systems have continued to decline, as the Company has lowered prices in the face
of  declining  demand. A change in focus was necessary to capture the market for
affordable  streaming  media  services.

The  change  in  focus required shifting technical and managerial resources from
sales  of the old line of products to service-based offerings. Additionally, the
Company  was required to make a significant investment in a centralized computer
hardware  and  software  infrastructure  that  will  be  used to provide the new
services,  as well as hiring a core sales team on which to build a growing sales
organization  for  the  future.

Cost  of  Sales

The  cost  of  sales  for  the three months ended March 31, 2002 was $12,072, as
compared  to  $723  for  the  comparable period of 2001. The increase in cost of
sales  is  directly  attributable  to  the  growth  in  sales.

Selling,  General  and  Administrative  Expenses

Selling,  General  and  Administrative  expenses  consisted of product marketing
expenses,  consulting  fees,  office,  professional  fees  and other expenses to
execute  the  business  plan  and  for  day-to-day  operations  of  the Company.

Selling,  General  and  Administrative expenses for the three months ended March
31,  2002 decreased $71,278 to $351,228 from $422,506 for the three months ended
March  31,  2001.  The reduction was due to consolidation efforts of management.

Professional  expense  for  the  three months ended March 31, 2002, decreased to
$40,948  from  $70,241  for the comparable period of 2001.  The Company utilized
its  staff  to  perform  tasks  previously  outsourced.

Product  marketing expenses for the three months ended March 31, 2002, decreased
to  $63,503  from  $113,922  for  the  comparable period of 2001, as the Company
reduced  its  marketing  efforts  and  increased  its  sales  force.

Sales  expense  increases  to  $43,835 for the three months ended March 31, 2002
from  $6,089 for the comparable period in 2001. The Company has hired additional
staff/consultants  and  engaged in marketing activities in an effort to identify
and  assess  appropriate  market  segments,  develop  business arrangements with
prospective  partners,  create  awareness  of  new  products  and  services, and
communicate  to  the  industry  and  potential  customers.  Other  components of
Selling,  General  and  Administrative  expense  did  not  change significantly.

Research  and  Development  Expenses

Research and development expenses consisted primarily of compensation, hardware,
software,  licensing  fees,  and  new  product  applications  for  the Company's
proprietary  StreamHQ(TM).  Research and development expenses decreased by seven
percent  (7%)  to  $218,145  for  the  three  months  ended March 31, 2002, from
$235,234  for  the  comparable  period  in  2001.  The  reduction  was  due  to
consolidation  efforts  of  management.

As  the  Company  consolidates  its  business,  its product development, product
marketing,  and  other  general  and  administrative  expenses  will continue to
decrease.

Non-Cash  Compensation  Charges

Non-cash  compensation  charges  for  the  three  months ended March 31, 2002 of
$12,718 was due to the earnings of a portion of the options issuance to purchase
925,000  common  shares  issued  to  consultants.

Net  Losses

To  date,  the  Company  has not achieved profitability and, in fact, expects to
incur  substantial  net losses for at least the remainder of 2002. The Company's
net loss for the three months ended March 31, 2002 was $676,780 as compared with
a  net  loss  of  $1,298,068  for  the  three  months  ended  March  31,  2001.

                                        5
<PAGE>

LIQUIDITY  AND  CAPITAL  RESOURCES

At  March  31,  2002,  the Company's had a cash position of $70,522, compared to
$104,238  at  December  31, 2001. The Company's principal sources of cash during
the  three  months  ended  March  31,  2002, were advances from shareholders and
insiders  of  the  Company.

The Company will require additional financing to fund current operations through
the  remained  of 2002. The Company has historically satisfied its capital needs
primarily  by  issuing equity securities. The Company will require an additional
$3.0  million  to $3.5 million to finance operations for the rest of fiscal 2002
and  intends  to  seek  such  financing  through sales of its equity securities.

Assuming  the  aforementioned  $3.0  million  to  $3.5  million  in financing is
obtained,  the  Company  believes that continuing operations for the longer term
will  be supported through anticipated growth in revenues and through additional
sales  of  the Company's securities. Although longer-term financing requirements
may vary depending upon the Company's sales performance, management expects that
the  Company  will  require additional financing of $5.0 million to $6.0 million
for  fiscal  2002.  The  Company  has no binding commitments or arrangements for
additional  financing, and there is no assurance that management will be able to
obtain  any  additional financing on terms acceptable to the Company, if at all.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS  OF  OPERATIONS

Certain  risks and uncertainties could cause actual results to differ materially
from  the  results  contemplated  by the forward-looking statements contained in
this Report. Risks and uncertainties have been set forth in the Company's Annual
Report  on  Form  10-K, as well as in other documents the Company files with the
SEC.  These  risk  factors  include  the  following:

THE  COMPANY'S  LIMITED  OPERATING  HISTORY  MAKES  IT DIFFICULT TO EVALUATE ITS
BUSINESS  AND  PROSPECTS.

The  Company's  business  and prospects must be considered in light of the risks
encountered  by  companies  in  their  early stages of development, particularly
companies  in  new  and  rapidly  evolving  markets  such  as  streaming  media.

IF  THE COMPANY IS UNABLE TO OBTAIN SUBSTANTIAL ADDITIONAL FINANCING IN THE NEXT
FEW  MONTHS  IT  MAY  NOT  BE  ABLE  TO  MAINTAIN  OPERATIONS AT CURRENT LEVELS.

The  Company requires substantial additional financing to maintain operations at
current  levels beyond the first quarter of 2002. Financing may not be available
when  needed on terms favorable to the Company, or at all. If adequate funds are
not  available  or  are  not  available  on acceptable terms, the Company may be
unable  to  further develop or enhance its products and services, take advantage
of  future  opportunities or respond to competitive pressures, or ultimately, to
continue  in  business.

CONTINUATION OF THE CURRENT SLUMP IN THE TECHNOLOGY SECTOR WILL ADVERSELY AFFECT
DEMAND  FOR  THE  COMPANY'S  PRODUCTS  AND  SERVICES.

The  Company's  sales  have  been adversely affected by the ongoing slump in the
technology  industry segment and the continuation of these market conditions can
be  expected  to  result  in  depressed  demand  for  the Company's products and
services.

THE  COMPANY'S OPERATING RESULTS IN FUTURE PERIODS ARE EXPECTED TO BE SUBJECT TO
SIGNIFICANT  FLUCTUATIONS,  WHICH  WOULD  LIKELY AFFECT THE TRADING PRICE OF ITS
COMMON  SHARES.

Factors  that  could  cause  such  fluctuations include the Company's ability to
attract  and  retain  customers;  the  introduction  of  new  video transmission
services  or products by others; price competition; the continued development of
and  changes in the streaming media market; its ability to remain competitive in
its  product  and  service  offerings; its ability to attract new personnel; and
potential  U.S.  and  foreign  regulation  of  the  Internet.

THE  COMPANY  IS  SUBJECT  TO RAPID TECHNOLOGICAL CHANGE, WHICH COULD RENDER THE
COMPANY'S  PRODUCTS  AND  SERVICES  OBSOLETE.

Keeping  pace  with  the  technological  advances  may  require  substantial
expenditures  and  lead  time,  particularly  with  respect to acquiring updated
hardware  and  infrastructure components of its systems. The Company may require
additional  financing  to  fund such acquisitions. Any such financing may not be
available  on  commercially  reasonably  terms,  if  at  all,  when  needed.

                                        6
<PAGE>

IF  THE COMPANY DOES NOT CONTINUOUSLY IMPROVE ITS TECHNOLOGY IN A TIMELY MANNER,
ITS  PRODUCTS  COULD  BE  RENDERED  OBSOLETE.

These  changes  and  developments  may  render  the  Company's  products  and
technologies  obsolete in the future. As a result, the Company's success depends
on  its  ability  to  develop  or  adapt products and services or to acquire new
products  and  services that can compete successfully. There can be no assurance
that  the  Company  will  be  successful  in  these  efforts.

THE  COMPANY INTENDS TO ISSUE ADDITIONAL EQUITY SECURITIES, WHICH MAY DILUTE THE
INTERESTS  OF  CURRENT SHAREHOLDERS OR CARRY RIGHTS OR PREFERENCES SENIOR TO THE
COMMON  SHARES.

Accordingly,  existing  shareholders may experience additional dilution of their
percentage  ownership  interest  in  the  Company.  In  addition, the new equity
securities  may  have  rights,  preferences  or  privileges  senior  to those of
existing  holders  of  the  Company's  common  shares.

Item  3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk

The  Company  believes  its  exposure  to  overall  foreign currency risk is not
material.  The  Company  does  not  manage  or  maintain  market  risk sensitive
instruments  for  trading or other purposes and is not exposed to the effects of
interest  rate  fluctuations  as  it  does  not  carry  any  long-term  debt.

The  Company  reports  its  operations  in US dollars and its currency exposure,
although  considered  by  the Company as immaterial, is primarily between the US
and  Canadian  dollars. Exposure to other currency risks is also not material as
international  transactions  are  settled  in  US  dollars. Any future financing
undertaken  by  the  Company  will  be denominated in US dollars. As the Company
increases  its  marketing  efforts, the related expenses will be primarily in US
dollars.  In  addition,  90%  of  the Company's bank deposits are in US dollars.

PART  II.  OTHER  INFORMATION

Item  1.   Legal  Proceedings

The  Company  is  not  a  party to any other material pending legal proceedings.

Item  2.   Changes  in  Securities  and  Use  of  Proceeds

None.

Item  3.   Defaults  Upon  Senior  Securities.

None.

Item  4.   Submission  of  Matters  to  a  Vote  of  Security  Holders.

No  matter  was submitted to a vote of the Company's security holders during the
first  quarter  of  2002.

Item  5.   Other  Information.

None.

Item  6.   Exhibits  and  Reports  on  Form  8-K

          (a)  Exhibits

               None

          (b)  Reports  on  Form  8-K

During  the  first  quarter  of  the  fiscal  year  covered  by this Report, the
registrant  filed  the  following  reports  on  Form  8-K:

               (i)  On January 11, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported that it had signed a
                    sales and marketing partnership agreement with Ministry of
                    Media GmbH http://www.ministry.de/, a leading web
                    advertising agency, media consulting and technology
                    provider, and production and marketing company headquartered
                    in Hamburg, Germany.

                                        7
<PAGE>

               (ii) On January 11, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported that it had completed a
                    contract with FamilyLife http://www.familylife.com/ designed
                    to generate more effective communications and increased
                    financial support for its growing non-profit ministry to
                    families in the United States and worldwide.

              (iii) On January 15, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported that the registrant is
                    expanding the scope and breadth of its StreamHQ (TM)
                    infrastructure and services using Speedera Networks,
                    Inc.'s content delivery network to support clients and
                    Consumers around the world.  Speedera is a top tier global
                    provider of content delivery services.

               (iv) On January 22, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported that that it had signed
                    a strategic sales and marketing agreement with eDirect, Inc.
                    (www.edirect.com), the nation's largest owner of opt-in
                    email names.

               (v)  On January 23, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported the latest expansion of
                    its StreamHQ(TM) Internet media-delivery architecture, with
                    the unveiling of mediaClix(TM); billed as "the power behind
                    the click," mediaClix(TM) empowers under-performing
                    "click-through" models with the power of StreamHQ(TM) rich
                    media and the intelligence of its advanced data capture and
                    reporting.

               (vi) On February 5, 2002, the registrant filed a report on Form
                    8-K wherein the registrant reported that it was expanding
                    the scope and breadth of its efforts to enforce its
                    pioneering video technology patents by retaining the
                    services of J. Andrew Huffman, a patent and litigation
                    attorney who will serve the registrant as in-house patent
                    counsel.

              (vii) On February 6, 2002, as amended on February 7, 2002, the
                    registrant filed a report on Form 8-K wherein the registrant
                    reported that World Vacations, Incorporated had contracted
                    to use the registrant's Zmail and mediaClix(TM) services for
                    a promotional campaign targeted to the travel and tourism
                    markets.

             (viii) On February 15, 2002, the registrant filed a report on
                    Form 8-K wherein the registrant reported that it had
                    completed a contract with Miriam Masullo, PhD, to promote
                    her campaign for election to the United States House of
                    Representatives.

               (ix) On February 25, 2002, the registrant filed a report on
                    Form 8-K wherein the registrant reported that it had
                    completed a contract with Mortgage Lenders Network USA, Inc.
                    www.mlnusa.com to deploy Zmail and mediaClix to increase its
                    sales and brand awareness in the nationwide mortgage banking
                    business.

               (x)  On March 18, 2002, the registrant filed a report on Form 8-K
                    wherein the registrant reported that it had been contracted
                    to provide Zmail and mediaClixTM services for a leading
                    European-based sports car manufacturer, with an initial
                    order for a 100,000-name Zmail campaign and a corresponding
                    mediaClix(TM) campaign.

               (xi) On April 15, 2002, the registrant filed a report on Form 8-K
                    wherein the registrant reported that it had placed eight of
                    its twenty employees in the Connecticut office on a
                    temporary furlough.

                                        8
<PAGE>

              (xii) On May 14, 2002, the registrant filed a report on Form 8-K
                    wherein the registrant reported that the prominent
                    intellectual property  and  technology  law  firm  Fish  &
                    Richardson P.C. (www.fr.com) will commence  protection  of
                    the registrant's store-and-forward video-on-demand U.S.
                    patent (number  5,130,792),  beginning  with  an  aggressive
                    licensing  program.


SIGNATURE

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

                                     USA  Video  Interactive  Corp.

Dated:  May  14,  2002               By:  /s/  Anton  J.  Drescher
                                     --------------------------------
                                     Name:  Anton  J.  Drescher
                                     Title:  Chief  Financial  Officer

                                       F1
<PAGE>





                           USA VIDEO INTERACTIVE CORP.

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  MARCH 31, 2002

                                   (UNAUDITED)

                             (STATED IN US DOLLARS)
                              --------------------





                                       F2
<PAGE>

<TABLE>
<CAPTION>

                            USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS
                                       (STATED IN US DOLLARS)


                                                                        MARCH 31,     DECEMBER 31,
                                                                          2002            2001
                                           (UNAUDITED)
<S>                                                                   <C>            <C>
ASSETS

Current Assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . .  $     70,522   $     104,238
Marketable securities - related parties. . . . . . . . . . . . . . .        47,292          42,616
Accounts receivable, net of allowance for doubtful accounts of $-0-.        28,156          30,900
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        12,000          12,000
Prepaid expenses and other current assets. . . . . . . . . . . . . .        16,036          21,613
                                                                      -------------  --------------

      TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . .       174,006         211,367

Property and Equipment - at cost, net of accumulated
  depreciation of $681,121 and $573,015, respectively. . . . . . . .       992,233       1,100,339

Other Assets, net of accumulated amortization of $8,847
 and $8,016, respectively. . . . . . . . . . . . . . . . . . . . . .        69,642          70,472

Deferred Tax Assets, net of valuation allowance
  of $7,498,000 and $7,215,000, respectively . . . . . . . . . . . .             -               -
                                                                      -------------  --------------

      TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .  $  1,235,881   $   1,382,178
                                                                      =============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current Liabilities:
Accounts payable and accrued expenses. . . . . . . . . . . . . . . .  $  1,112,172   $     948,417
Due to related parties . . . . . . . . . . . . . . . . . . . . . . .       453,532          91,480
                                                                      -------------  --------------

      TOTAL CURRENT LIABILITIES. . . . . . . . . . . . . . . . . . .     1,565,704       1,039,897
                                                                      -------------  --------------

Commitments and Contingencies

Stockholders' Equity (Deficiency):
   Preferred stock - no par value; authorized 250,000,000 shares,
   none issued
   Common stock - no par value; authorized 250,000,000 shares,
   issued and outstanding 91,745,088 shares. . . . . . . . .   . . .    29,492,071      29,492,071
   Accumulated other comprehensive loss . . . . . . . . . . .. . . .       (81,811)        (86,487)
   Accumulated deficit. . . . . . . . . . . . . . . . . . . . .. . .   (29,740,083)    (29,063,303)
                                                                      -------------  --------------

      STOCKHOLDERS' EQUITY (DEFICIENCY). . . . . . . . . . . . . . .      (329,823)        342,281
                                                                      -------------  --------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY). . . .  $  1,235,881   $   1,382,178
                                                                      =============  ==============

</TABLE>


                             SEE ACCOMPANYING NOTES

                                       F3
<PAGE>

<TABLE>
<CAPTION>

                  USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (STATED IN US DOLLARS)

THREE MONTHS ENDED MARCH 31,                  2002          2001
                                  (UNAUDITED)
<S>                                       <C>           <C>
Revenue. . . . . . . . . . . . . . . . .  $    26,253   $     1,060
                                          ------------  ------------

Expenses:
  Cost of sales. . . . . . . . . . . . .       12,072           723
  Research and development . . . . . . .      218,145       235,234
  Selling, general and administrative. .      351,228       422,506
  Depreciation and amortization. . . . .      108,937        80,548
  Noncash compensation charges . . . . .       12,718       565,597
                                          ------------  ------------

Total expenses . . . . . . . . . . . . .      703,100     1,304,608
                                          ------------  ------------
Loss from operations . . . . . . . . . .     (676,847)   (1,303,548)
                                          ------------  ------------

Other income (expense)
  Interest income. . . . . . . . . . . .           67         3,591
  Other. . . . . . . . . . . . . . . . .            -         1,889
                                          ------------  ------------

                                                   67         5,480
                                          ------------  ------------

Net loss . . . . . . . . . . . . . . . .  $  (676,780)  $(1,298,068)
                                          ============  ============

Net loss per share - basic and diluted .  $      (.01)  $      (.02)
                                          ============  ============
  Weighted-average number of common
  shares outstanding - basic and diluted   91,745,088    82,277,867
                                          ============  ============
</TABLE>

                             SEE ACCOMPANYING NOTES

                                       F4
<PAGE>

<TABLE>
<CAPTION>

                  USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
                             (STATED IN US DOLLARS)


THREE MONTHS ENDED MARCH 31,                    2002         2001

                                  (UNAUDITED)
<S>                                          <C>         <C>
Net loss. . . . . . . . . . . . . . . . . .  $(676,780)  $(1,298,068)

Other comprehensive loss:
  Change in unrealized loss on investments.      4,676       (33,112)
                                             ----------  ------------

Comprehensive loss. . . . . . . . . . . . .  $(672,104)  $(1,331,180)
                                             ==========  ============

</TABLE>

                             SEE ACCOMPANYING NOTES


                                       F5
<PAGE>

<TABLE>
<CAPTION>

                                     USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                                (STATED IN US DOLLARS)

                                                     (UNAUDITED)

<S>                              <C>          <C>            <C>        <C>            <C>
                                      COMMON STOCK          ACCUMULATED
                                                               OTHER                      STOCKHOLDERS'
                                                           COMPREHENSIVE  ACCUMULATED        EQUITY
                                   SHARES         AMOUNT        LOSS       DEFICIT         (DEFICIENCY)


Balance at December 31, 2001     91,745,088  $   29,492,071  $(86,487)  $(29,063,303)  $    342,281
Change in unrealized loss
 on investments. . . . . . .              -               -     4,676              -          4,676
Net loss . . . . . . . . . .              -               -         -       (676,780)      (676,780)
                              -------------  --------------  ---------  -------------  -------------


Balance at March 31, 2002. .     91,745,088  $   29,492,071  $(81,811)  $(29,740,083)  $   (329,823)
                              =============  ==============  =========  =============  =============

</TABLE>

                             SEE ACCOMPANYING NOTES

                                       F6
<PAGE>
<TABLE>
<CAPTION>

                          USA VIDEO INTERACTIVE CORP. AND SUBSIDIARIES
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (STATED IN US DOLLARS)


<S>                                                                    <C>         <C>
THREE MONTHS ENDED MARCH 31,. . . . . . . . . . . . . . . . . . . . .       2002          2001

                                        (UNAUDITED)
Cash flows from operating activities:
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(676,780)  $(1,298,068)
  Adjustments to reconcile net loss to net cash
  used in operating activities:
    Depreciation and amortization . . . . . . . . . . . . . . . . . .    108,936        80,548
    Noncash compensation charge . . . . . . . . . . . . . . . . . . .     12,718       565,597
    Changes in operating assets and liabilities:
     Decrease in accounts receivable . . . . . . . .. . . . . . . . .      2,744        89,253
     Increase in inventories . . . . . . . . . . . .. . . . . . . . .          -        (7,100)
     Decrease in prepaid expenses and other current assets . .. . . .      5,577         9,514
     Increase in other assets. . . . . . . . . . . . . . . . .. . . .          -        (4,000)
     Increase (decrease) in accounts payable and accrued expenses....    151,037      (410,907)
     Decrease in accounts payable and accrued expenses -
      related parties. . . . . . . . . . . . . . . . . . . . . . .. .          -       (20,830)
     Increase (decrease) in due to related parties. . . .  . . .  . .    362,052        (4,273)
                                                                       ----------  ------------

       NET CASH USED IN OPERATING ACTIVITIES . .. . . . . . . . . . .    (33,716)   (1,000,266)
                                                                       ----------  ------------

Cash flows from investing activities:
  Purchases of property and equipment, net. . . . . . . . . . . . . .          -       (13,774)
                                                                       ----------  ------------

Cash flows from financing activities:
  Proceeds from the issuance of common stock. . . . . . . . . . . . .          -     1,333,260
  Proceeds from the issuance of common stock upon exercise of warrants         -        15,625
                                                                       ----------  ------------

        NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . .          -     1,348,885
                                                                       ----------  ------------

Net increase (decrease) in cash and cash equivalents. . . . . . . . .    (33,716)      334,845

Cash and cash equivalents at beginning of period. . . . . . . . . . .    104,238       231,197
                                                                       ----------  ------------

Cash and cash equivalents at end of period. . . . . . . . . . . . . .  $  70,522   $   566,042
                                                                       ==========  ============
</TABLE>


                             SEE ACCOMPANYING NOTES

                                       F7
<PAGE>
NOTE  A  -  BASIS  OF  PRESENTATION

The  accompanying unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  for  interim
financial  information  and  with  the  instructions  to  Form  10-Q  and  Rule
10-01(a)(5)  of  Regulation  S-X.  Accordingly,  they  do not include all of the
information  and  footnotes required by generally accepted accounting principles
for  complete  financial  statements.  In  the  opinion  of  the management, all
adjustments  (consisting  of normal recurring accruals) considered necessary for
fair  presentation  have  been included. The results for the interim periods are
not  necessarily  indicative  of  the results that may be attained for an entire
year  or  any  future  periods.  For further information, refer to the Financial
Statements and footnotes thereto in the Company's annual report on Form 10-K for
the  fiscal  year  ended  December  31,  2001.

NOTE  B  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

Basic  loss  per  common  share  ("EPS")  is computed as net loss divided by the
weighted-average  number of common shares outstanding during the period. Diluted
EPS  includes  the impact of common stock potentially issuable upon the exercise
of  options  and  warrants.  Potential  common  stock has been excluded from the
computation  of  diluted  net  loss  per  share  as  their  inclusion  would  be
antidilutive.

Inventory,  which consists of computer equipment, is stated at the lower of cost
or  market  using  the  specific-identification  method.

The assets and liabilities of the Company's foreign subsidiaries are translated
into  U.S.  dollars  at  current  exchange  rates,  and revenue and expenses are
translated  at  average  rates  of  exchange  prevailing  during the period. The
aggregate  effect of translation adjustments is immaterial at March 31, 2002 and
2001.

NOTE  C  -  CONTINGENT  LIABILTIY

The Company is party to a default judgement entered against one of the Company's
subsidiaries.  During  the year ended December 31, 1995, a claim was made to the
Company  for  the  total  amount  payable  under the terms of the lease with the
Company's  subsidiaries  for  office  space  in  Dallas Texas through 2002.  The
Company's  management  is of the opinion that the amount payable under the terms
of  this  judgement  is  not  estimable  or determinable at this time and may be
substantially  mitigated  by the landlord renting the property to another party.
The  range  of  possible  loss  is  from  $-0-  to  approximately $500,000.  Any
settlement  resulting  from the resolution of this contingency will be accounted
for in the period of settlement when such amounts are estimable or determinable.

NOTE  D  -  STOCKHOLDERS'  EQUITY  (DEFICIENCY)

During  January  2002  the  Company  issued 4,680,000 options to purchase common
stock  to  certain  officers  and  directors of the Company under the 2001 Stock
Option  Plan ("the "2001 Plan"). The stock options are exercisable at a price of
$0.50  (U.S.)  per  share  for  a  term  of  two  years  from the date of grant.

During  January 2002 the Company issued 925,000 options to purchase common stock
to  certain  service  providers  of  the  Company under the 2001 Plan. The stock
options  are  exercisable at a price of $0.50 (U.S.) per share for a term of two

                                       F8
<PAGE>

years  from the date of grant. In accordance with the provisions of Statement of
Financial  Accounting  Standards  ("SFAS")  123,  the  Company  has  charged  to
operations for the three-month period ended March 31, 2002 approximately $13,000
which  is based on the fair value of the stock options as services are provided.
At  March  31,  2002  since  such  options  have  not yet vested, this amount is
included  in  accounts  payable  and  accrued  expenses  in  the  accompanying
consolidated  balance  sheet.

NOTE  E  -  RELATED  PARTY  TRANSACTIONS

During the three-month period ended March 31, 2002 advances were made by certain
directors  and  officers  of  the  Company  of  approximately  $161,000,  net of
repayments. These advances are non-interest bearing and are due on demand. These
advances are included in due to related parties on the accompanying consolidated
balance  sheet.

During  the  three-month  period  ended  March  31,  2002  advances were made by
shareholders  of  the  Company  of  approximately  $201,000.  These advances are
non-interest  bearing  and are due on demand. These advances are included in due
to  related  parties  in  the  accompanying  consolidated  balance  sheet.