UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended: December 31, 2003

                                       OR

     [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        Commission file number: 000-23339


                            US GLOBAL NANOSPACE, INC.
             (Exact name of registrant as specified in its charter)

                               Delaware 13-3720542
                (State or other jurisdiction of (I.R.S. Employer
               Incorporation or organization) Identification No.)


                      2533 North Carson Street, Suite 5107
                            Carson City, Nevada 89706

                    (Address of principal executive offices)

                                  775-841-3246
               (Registrant's telephone number including area code)

                            US Global Aerospace, Inc.
 (Former name, former address and former fiscal year, if changed since last
                                    report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during the  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 [_]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of February 23, 2004 the issuer
had 86,839,680 shares of Common Stock issued and outstanding.

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

<PAGE>

                            US GLOBAL NANOSPACE, INC.

                                      INDEX



                                                                            PAGE
PART I
NUMBER

Item 1 - Financial Information

      Balance Sheets as of December 31, 2003 (unaudited) and
            March 31, 2003                                                   F-1

      Statements of Operations - Three and Nine Months Ended
            December 31, 2003 and 2002, and since inception
            (March 20, 2002) through December 31, 2003 (unaudited)           F-2

      Statement of Stockholders' Deficit - Nine Months Ended
            December 31, 2003                                                F-3

      Statements of Cash Flows - Nine Months Ended
            December 31 2003 and 2002, and since inception (March 20, 2002)
            through December 31, 2003                                        F-4

      Notes to the Financial Statements                               F-5 - F-10

Forward Looking Statements                                                     1

Item 2 - Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                               1-5

Item 3 - Controls and Procedures                                               5

PART II                                                                        5

Item 1 - Legal Proceedings                                                     5

Item 2 - Changes in Securities and Use of Proceeds                             5

Item 3 - Defaults Upon Senior Securities                                       5

Item 4 - Submission of Matters to a Vote of Security Holders                   6

Item 5 - Other Information                                                     6

Item 6 - Exhibits and Reports on Form 8-K                                      6

Signature                                                                      7

<PAGE>

                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)
      Balance Sheets as of December 31, 2003 (unaudited) and March 31, 2003

                                                      December 31    March 31
ASSETS                                                   2003          2003
                                                     ------------- -----------
                                                      (unaudited)
CURRENT ASSETS
  Cash                                                   $   3,005   $  3,239
  Employee Receivables                                     122,125          -
  Deposits                                                  13,485          -
                                                     ------------- -----------

   Total current assets                                    138,615      3,239
                                                     ------------- -----------

      Total assets                                      $  138,615   $  3,239
                                                     ============= ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Current maturities of bank notes
     payable                                           $ 1,200,000 $1,650,000
   Accounts payable                                        264,051    366,242
   Shareholder loans payable                               387,725          -
   Related party payable                                   306,695    306,519
   Accrued salaries and expense                            389,152    297,980
   Accrued interest                                         59,951     81,696
                                                     ------------- -----------


       Total current liabilities                         2,607,574  2,702,437


BANK NOTES PAYABLE, less current portion                   325,000          -


COMMITMENTS                                                      -          -

STOCKHOLDERS' DEFICIT
  Preferred stock authorized, 10,000,000 shares
    $0.01 par value, none issued or outstanding                  -          -
  Common stock authorized, 300,000,000 shares $0.001
    par value                                               86,829     75,789
  Additional paid-in capital                            11,192,514  8,000,120
  Deferred compensation and services                   (1,190,539) (3,720,752)
  Accumulated development stage deficit               (12,882,763) (7,054,355)
                                                     ------------- -----------

      Total stockholders' deficit                      (2,793,959) (2,699,198)
                                                     ------------- -----------
      Total liabilities and
        stockholders' deficit                           $  138,615  $  3,239
                                                     ============= ===========

The accompanying notes are an integral part of these financial
statements.
                                       F-1

<PAGE>


<TABLE>
<CAPTION>
                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                            Statements of Operations
  Three and Nine Months Ended December 31, 2003, and 2002, and since inception

                                                                                            Cumulative
                                                                                            results of
                                                                                            operations
                                                                                            from March
                                                                                             20, 2002
                                                                                             (date of
                              Three months   Three months    Nine months    Nine months     inception)
                                 ended          ended           ended          ended         through
                              December 31,   December 31,    December 31,  December 31,    December 31,
                                  2003           2002            2003          2002            2003
----------------------------------------------------------- ----------------------------- ---------------
<S>                          <C>            <C>             <C>            <C>            <C>
REVENUES                   $     2,152    $   -           $   127,831   $     -        $    127,831

COST OF REVENUES
                                   241        -                28,002         -              28,002
                            ------------   -----------     -----------   ------------   -------------

      Gross Profit
                                 1,911        -                99,829         -              99,829

OPERATING EXEPNSES
  Research and development     622,102      167,265         1,121,898      1,148,516      2,749,560
  General and administrative
    Non-cash compensation
      and services           1,072,180      850,679         2,854,053      2,228,792      5,942,380
      Other                  1,020,447      765,333         1,782,828      2,276,930      4,596,545
                            ------------   -----------     -----------   ------------   -------------

      Total operating
        expenses             2,714,729      1,783,277       5,758,779      5,654,238      13,288,485
                            ------------   -----------     -----------   ------------   -------------

      Operating loss        (2,712,818)    (1,783,277)     (5,658,950)    (5,654,238)    (13,188,656)

OTHER INCOME (EXPENSE)
  Debt restructure              239,185       612,519         239,185        612,519         857,089
  Other income                      -          10,045            -            10,045          10,045
  Interest expense            (228,694)       (92,697)       (408,643)       (93,443)       (561,241)
                            ------------   -----------     -----------   ------------   -------------

      Total other income
        (expense)                10,491       529,867        (169,458)       529,121         305,893
                            ------------   -----------     -----------   ------------   -------------

NET LOSS                   $ (2,702,327)  $(1,253,410)    $(5,828,408)  $ (5,125,117)  $ (12,882,763)

Net loss per share, basic
  and diluted              $      (0.03)  $     (0.02)    $     (0.07)  $      (0.08)  $       (0.16)
                           ------------   -----------     -----------   ------------   -------------
---------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements
</TABLE>

                                       F-2

<PAGE>

<TABLE>
<CAPTION>

                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                       Statement of Stockholders' Deficit
                       Nine Months Ended December 31, 2003

                                                                                                        Accumulated
                                                                         Additional       Deferred      Development       Total
                                                 Common Stock             Paid-in       Compensation       Stage      Stockholders'
                                                   Shares       Amount    Capital       and Services      Deficit        Deficit
                                                   ------       ------    -------       ------------      -------        -------
<S>                                               <C>         <C>       <C>            <C>            <C>            <C>
Balance at April 1, 2003                          75,788,890  $ 75,789  $  8,000,120   $ (3,720,752)  $ (7,054,355)  $ (2,699,198)

Issuance of common stock on April 10, 2003 in
consideration for wages at $0.10 per share         2,794,684     2,795       276,674                                      279,469

Issuance of common stock on May 13, 2003 in
consideration for accounts payable at $0.06 per
share                                                583,334       583        34,417                                       35,000

Issuance of common stock on June 23, 2003 in
consideration for services at $0.06 per share         60,000        60         3,540                                        3,600

Issuance of common stock on July 8, 2003 in
consideration for accounts payable at $0.20 per
share                                                388,622       389        77,335                                       77,724

Issuance of common stock on July 9, 2003 in
consideration for accounts payable at $0.22 per
share                                                136,364       136        29,864                                       30,000

Issuance of common stock on July 9, 2003 in
consideration for accounts payable at $0.22 per
share                                                500,000       500       109,500                                      110,000

Issuance of common stock on July 14, 2003 in
consideration for services at $0.06 per share         20,000        20         1,180                                        1,200

Issuance of common stock on July 18, 2003 in
consideration for wages at $0.40 per share           860,343       860       343,277                                      344,137

Issuance of common stock on July 23, 2003 in
consideration for services at $0.34 per share         20,000        20         6,780                                        6,800

Issuance of common stock on July 25, 2003 in
consideration for wages at $0.29 per share         1,000,000     1,000       249,000                                      250,000

Redemption of common stock on July 28, 2003 in
consideration for wages at $0.40 per share          (13,647)      (14)       (5,445)                                      (5,459)

Issuance of common stock on July 30, 2003 in
consideration for services at $0.34 per share         60,000        60        20,340                                       20,400

Issuance of common stock on August 23, 2003
in consideration for services at $0.23 per share      20,000        20         4,580                                        4,600

Issuance of common stock on September 22,
2003 in consideration for services at $0.22 per
share                                                 60,000        60        13,140                                       13,200

<PAGE>

Issuance of common stock on September 22,
2003 in consideration for services at $0.23 per
share                                                 65,218        65        14,935                                       15,000

Issuance of common stock on September 23, 2003
in consideration for legal services at $0.23 per
share                                                327,134       327        74,914                                       75,241

Issuance of common stock on October 1, 2003 in
consideration for wages at $0.17 per share         3,390,138     3,390       572,933                                      576,323

Redemption of common stock on October 14, 2003
in consideration for wages at $0.17 per share       (71,120)      (71)      (12,019)                                     (12,090)

Issuance of common stock on October 22, 2003 in
consideration for accounts payable at $0.17 per
share                                                187,879       188        30,812                                       31,000

Issuance of common stock on October 23, 2003 in
consideration for services at $0.16 per share         20,000        20         3,180                                        3,200

Issuance of common stock on October 27, 2003 in
consideration for services at $0.16 per share         60,000        60         9,540                                        9,600

Issuance of common stock on November 18, 2003 in
consideration for services at $0.21 per share         20,000        20         4,180                                        4,200

Issuance of common stock on November 21, 2003 in
consideration for accounts payable at $0.55 per
share                                                 32,521        33        17,853                                       17,886

Issuance of common stock on November 24, 2003 in
consideration for services at $0.46 per share         20,000        20         9,180                                        9,200

Cancellation of common stock on December 3, 2003
originally issued for services at $0.18 per share  (843,750)     (844)     (115,782)         116,626                            -

Issuance of common stock on December 15, 2003 in
consideration for stock bonus at $1.06 per share   1,328,070     1,328     1,406,426                                    1,407,754

Issuance of common stock on December 18, 2003 in
consideration for services at $0.805 per share        15,000        15        12,060                                       12,075

Amortization of deferred compensation and
Services                                                                                   2,413,587                    2,413,587

Net loss for the period                                                                                (5,828,408)    (5,828,408)
                                                ---------------------------------------------------------------------------------
Balance at December 31, 2003                    $ 86,829,680  $ 86,829  $ 11,192,514   $ (1,190,539) $(12,882,763)  $ (2,793,959)
                                                ---------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       F-3

<PAGE>

<TABLE>
<CAPTION>

                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)
                            Statements of Cash Flows
        Nine Months Ended December 31, 2003 and 2002, and since inception

                                                                                          Cumulative
                                                                                          results of
                                                                                          operations
                                                                                         from March 20,
                                                                                             2002
                                                                                           (date of
                                                    Nine months       Nine months         inception)
                                                 Ended December 31, ended December 31, through December 31,
                                                        2003              2002               2003
                                                  ----------------- ---------------  ----------------
Increase  (Decrease) in Cash
<S>                                              <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net loss                                 $(5,828,408)      $(5,125,117)       $(12,882,763)
       Adjustments to reconcile net loss to net
                cash used in operating activities
              Common stock issued for services     2,854,053         2,228,792           5,942,380
              Forgiveness of loans, interest and
                accounts payable                   (239,185)          (612,519)           (857,089)
              Changes in assets and liabilities
                  Employee receivables             (122,125)           (10,000)           (122,125)
                  Accrued interest                  217,440             63,985             336,977
                  Deposits                          (13,485)        -                     (13,485)
                  Accounts payable                   274,660           713,356           1,199,849
                  Accrued salaries                 2,593,915        -                    2,891,895
                  Related party payable                  176           154,363             306,695
                                                  ----------------- ---------------  ----------------

                     Net cash used in
                       operating activities        (262,959)       (2,587,140)         (3,197,666)
                                                  ----------------- ---------------  ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
         Cash acquired in conjunction with share
           exchange agreement                     -                      2,946               2,946
                                                  ----------------- ---------------  ----------------
                     Net cash provided by
                       investing activities       -                      2,946               2,946
                                                  ----------------- ---------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from issuance of common stock      -                 -                     5,000
         Proceeds from shareholder and other
           loans payable                             395,425         1,280,000           1,675,425
         Payments on shareholder and other loans
           payable                                   (7,700)        -                      (7,700)
         Proceeds (Payments) from lines of credit
           and bank loans payable                  (125,000)         1,307,879           1,525,000
                                                  ----------------- ---------------------------------

                      Net cash provided by
                        financing activities         262,725         2,587,879           3,197,725
                                                  ----------------- ---------------  ----------------

Net increase (decrease) in cash                        (234)             3,685               3,005

Cash at beginning of period                            3,239             5,000          -
                                                  ----------------- ---------------  ----------------
Cash at end of period                             $    3,005        $    8,685          $    3,005

                                                  ----------------- ---------------  ----------------

NON-CASH INVESTING AND FINANCING ACTIVITIES
         Accounts payable acquired in conjunction
           with share exchange agreement          $ -               $      2,500        $    2,500
         Common stock issued in exchange for
           accounts payable                       $  376,851        $    476,204        $  937,418
         Common stock issued in exchange for
           loans payable and accrued interest     $                 $    652,349        $  700,817

         Common stock issued in exchange
           for wages                              $2,502,743        $ -                 $2,502,743
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       F-4

<PAGE>


                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                        Notes to the Financial Statements

NOTE 1. FINANCIAL STATEMENTS

The unaudited financial statements of US Global Nanospace, Inc. (the Company)
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 accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations. The results of
operations for interim periods are not necessarily indicative of the results to
be expected for the entire fiscal year ending March 31, 2004. The accompanying
unaudited financial statements and related notes should be read in conjunction
with the audited financial statements and the Form 10-KSB of the Company for its
fiscal year ended March 31, 2003.

Effective July 21, 2003, the Company changed its name from US Global Aerospace,
Inc. to US Global Nanospace, Inc.

NOTE 2. NET LOSS PER SHARE

Basic loss per share is based on the weighted average number of shares
outstanding during each period and income available to common shareholders. Loss
per share assuming dilution is based on the assumption that outstanding stock
options and warrants were exercised. The weighted average shares for computing
basic loss per share were 85,626,441 and 81,894,646, for the three and nine
months ended December 31, 2003 and 56,076,015 and 66,871,050 for the three and
nine months ended December 31, 2002 and 83,088,204 since inception (March 20,
2002) through December 31, 2003, respectively. At December 31, 2003, there were
4,463 shares of potentially issuable common stock. Because of the net loss for
the three and nine months ended December 31, 2003 and 2002 and since inception
(March 20, 2002) through December 31, 2003, potentially issuable common stock
was not included in the calculation of diluted loss per share as their inclusion
would be anti-dilutive.

NOTE 3. MANAGEMENT PLANS

The Company is a development stage enterprise as defined under Statement of
Financial Accounting Standards No. 7. The Company is a nanotechnology company
that specializes in identifying, developing, and commercializing advanced
products the core technologies of which are primarily nanoscience derived. These
products include complex polymer materials, polymer nanofiber materials,
nanofiber filter materials, biological and chemical decontaminants, blast
mitigation materials and nano and micro sound generating devices for breach
barriers and non-lethal weapon applications. The Company is focusing its efforts
on developing a broad range of defense and law enforcement applications for the
materials it creates. Currently, most of the Company's products are being
developed for use by the military and homeland security. Upon the completion of
the development of such products, the Company intends to market and sell to the
aerospace and defense industries. Operating revenues have been generated in the
amount of $127,831 for the nine months ended December 31, 2003.

                                       F-5

<PAGE>



                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                  Notes to the Financial Statements (Continued)

NOTE 3. MANAGEMENT PLANS (CONTINUED)

In fiscal 2003, the Company obtained loans from a bank for amounts up to
$1,650,000. In addition, the Company has received $1,675,425 in loans since
inception from third parties, existing shareholders and directors. At this time,
to conserve cash, the Company does not manufacture its products nor does it
maintain a sales force. These functions are outsourced. In addition, officers of
the Company and certain employees have been deferring their salaries or
accepting shares of the Company's common stock in lieu of cash. The Company has
applied for grants from various government agencies that, if approved, will
provide funding for the development of new products and for the enhancement of
our current products. The Company is also negotiating with various government
agencies and private companies for the sale of its products. During the next 12
months, if the Company cannot generate sufficient funds to operate its business
from grants and product sales, it will be required to seek financing from its
largest stockholder, who has provided financing and a loan guarantee for the
Company in the past. The stockholder is under no obligation to provide such
funds. The Company may also consider selling debt or equity securities. There is
no guarantee that the Company will obtain funds sufficient to continue its
operations during the next 12 months.

NOTE 4. INVENTORIES

Inventories consist of finished goods and are stated at the lower of cost or
market. Cost is determined using a first-in, first-out method

NOTE 5. INTELLECTUAL PROPERTY ASSIGNMENT AND ROYALTY AGREEMENT

On May 14, 2002, USDR Aerospace, Ltd. (Aerospace) entered into an agreement with
the Company to assign certain of its Intellectual Property to the Company for
consideration of $10, and a promise to pay a royalty of 3.5% on all of the
Company's sales until Aerospace has received a total of $15 million and a
royalty of 1% of all of the Company's sales thereafter until all patent rights
of the Intellectual Property have expired. For the nine months ended December
31, 2003, the Company has incurred a total of $4,474 in royalties from this
agreement.

NOTE 6. RELATED PARTY PAYABLE

The Chairman and CEO of the Company controls Aerospace, which has licensed the
intellectual property to the Company as described in note 5. Aerospace has
provided employees and product development services to the Company. Since
inception (March 20, 2002), Aerospace has provided such services totaling
approximately $2.9 million for which the Company currently owes Aerospace
$306,695 as of December 31, 2003. As of January 1, 2003, Aerospace substantially
discontinued all of its operations and the Company hired certain employees from
Aerospace. Aerospace continues to provide certain supplies and services to the
Company.

                                       F-6

<PAGE>



                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                  Notes to the Financial Statements (Continued)

NOTE 7. SHAREHOLDER LOANS PAYABLE

On April 18, 2003, the Company entered into a loan agreement with Aerospace for
amounts up to $100,000. The loan bears interest at 10% and matured on December
31, 2003. Aerospace has extended this loan through June 30, 2004. The Company
owes Aerospace $94,342, including interest, as of December 31, 2003 under this
loan agreement.

The Chairman and CEO of the Company has continued to provide cash to support the
Company's operations until such time the Company generates cash through
operations or financing is obtained from the issuance of debt or equity. The
Chairman and CEO of the Company also controls USDR(NV), Inc. (USDR) and on June
6, 2003 the Company entered into a loan agreement with USDR for amounts up to
$125,000. The loan bears interest at 10% and matures on April 30, 2004. The
Company owes USDR $109,205, including interest, as of December 31, 2003 under
this loan agreement.

On April 11, 2003 and April 18, 2003, the Company entered into two loans
totaling $16,000 from an existing shareholder. The loans bear interest at 10%
and mature on April 30, 2004.

On April 29, 2003, April 30, 2003 and May 9, 2003, the Company entered into
three loans totaling $35,000 from Directors. The loans bear interest at 10% and
mature on June 30, 2004. On August 7, 2003 the Company entered into a loan
agreement with a Director for amounts up to $150,000. The loan bears interest at
10% and matures on June 30, 2004. The Company owes the Director $150,715,
including interest, as of December 31, 2003 under this loan agreement. On
October 3, 2003 the Company entered into a loan agreement with a Director for
amounts up to $100,000. The loan bears interest at 10% and matures on June 30,
2004. The Company owes the Director $6,000 as of December 31, 2003 under this
agreement.

NOTE 8. BANK NOTES PAYABLE

The Company previously had lines of credit with a bank for amounts up to
$1,650,000. The lines of credit have been consolidated into one loan, bearing
interest at 13% and matured on December 31, 2003. The interest rate has been
reduced to 10% and the loan has been extended to March 31, 2005. The terms are
four principal payments of $300,000, plus interest per quarter beginning on
March 31, 2004, and one final principal and interest payment of $25,625 due on
March 31, 2005. The loan is secured by the assets of the Company and guaranteed
by our largest shareholder. As of December 31, 2003, the Company had a total
outstanding principal balance of $1,525,000 and accrued interest totaled
$43,986. During the nine months ended December 31, 2003, the bank forgave
$239,185 of interest and fees related to the lines of credit.

                                            F-7

<PAGE>



                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                  Notes to the Financial Statements (Continued)

NOTE 9. CONSULTING AGREEMENTS

On September 30, 2002, the Company entered into an agreement incident to an
existing consulting agreement pursuant to which 562,500 shares of restricted
common stock were issued subject to vesting conditions. The shares were recorded
at their fair value totaling $309,375 as deferred compensation and services and
the expense was being amortized over the service period. However, on December 3,
2003 the Company and the consultant mutually agreed to terminate the consulting
agreement and 843,750 unvested shares that had been issued, were returned to the
Company and cancelled. As a result, the Company reversed unrecognized deferred
compensation and services under this consulting agreement totaling $116,628.
Accordingly, the 843,750 cancelled shares are not considered issued or
outstanding at December 31, 2003.

NOTE 10. STOCK-BASED COMPENSATION

The Company has a stock-based compensation plan that is accounted for under APB
Opinion 25, Accounting for Stock Issued to Employees, and related
Interpretations. No options were granted under the plan for the periods ended
December 31, 2003 and 2002 and since inception (March 20, 2002). Options
outstanding as of December 31, 2003 that were granted under the stock option
plan of US Global Aerospace (fka Caring Products International) prior to the
merger with the Company and were fully vested as of the merger date (May 17,
2002) have all expired. Accordingly, no compensation expense would have been
recognized had the Company applied the fair value recognition provisions of FASB
Statement 123, Accounting for Stock-Based Compensation, during the periods ended
December 31, 2003 and 2002 and since inception (March 20, 2002).

On April 10, 2003, the Company adopted the Amended and Restated 2002 Stock Plan
(2002 Stock Plan). Under the 2002 Stock Plan, officers, directors, employees,
consultants, advisors and others related to the Company may be granted incentive
stock options or nonqualified stock options to purchase up to an authorized
15,000,000 shares of common stock. The options are to be granted at not less
than 85% of the fair value of the Company's common stock on the date of the
grant. The options generally vest over five years and expire ten years from date
of grant. The plan also allows for the granting of a stock award whereby the
purchase price of the stock award granted also may not be less than 85% of the
fair value of the Company's common stock. In addition the plan allows for the
granting of stock bonuses. The terms of the awards and bonuses are to be
determined by a committee appointed by the Board of Directors.

On April 10, 2003, the Company granted 2,794,684 shares of common stock under
the 2002 Stock Plan to employees in lieu of salaries and expenses with an award
valuation of $237,547, equaling 85% of the fair market value per share on the
date of grant of the award. When granting stock, accounting principles generally
accepted in the United States of America requires companies to record the
issuance of stock for services at the fair market value of the stock on the
grant date, and as a result, the Company recognized an additional $41,922 as
additional non-cash expense for the difference between the fair value of the
stock and the salaries due.

                                       F-8

<PAGE>

                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                        Notes to the Financial Statements

NOTE 10. STOCK-BASED COMPENSATION (CONT'D)

On July 18, 2003, the Company granted 860,343 shares of common stock under the
2002 Stock Plan to employees in lieu of salaries and expenses with an award
valuation of $344,137, equaling 100% of the fair market value per share on the
date of grant of the award. However, on July 28, 2003, the Company cancelled and
redeemed 13,647 of these shares from an employee in exchange for monies owed the
Company, having a total value of $5,459.

On July 25, 2003, the Company granted 1,000,000 shares of common stock under the
2002 Stock Plan to our CEO in lieu of cash payment of salary with an award
valuation of $250,000, which was the fair market value per share on the date of
grant of the award.

On October 1, 2003, the Company granted 3,390,138 shares of common stock under
the 2002 Stock Plan to employees and our CEO in lieu of cash payment of salaries
with an award valuation of $491,569, equaling 85% of the fair market value per
share on the date of grant of the award. The Company recognized an additional
$84,754 as additional non-cash expense for the difference between the fair value
of the stock and the salaries due. However, on October 14, 2003, the Company
cancelled and redeemed 71,120 of these shares from an employee by mutual
agreement, having a total value of $12,090.

On December 15, 2003, the Company granted 1,328,070 shares of common stock under
the 2002 Stock Plan to employees and our CEO as a stock bonus for services
during January 1, 2003 through December 31, 2003 with an award valuation of
$1,195,260, equaling 85% of the fair market value per share on the date of grant
of the award. The Company recognized an additional $212,494 as additional
non-cash expense for the difference between the fair value of the stock and the
bonus amount due.

The Company has accrued payroll taxes relating to the issuance of stock in lieu
of wages in accrued salaries and expense as of December 31, 2003 and the
Company has recorded employee receivables for the employees portion of the
taxes due to the Company.

NOTE 11.  SUBSEQUENT EVENT

On January 14, 2004, our Board of Directors approved an amendment to the
Company's Amended and Restated Certificate of Incorporation to increase the
authorized common stock from 100,000,000 to 300,000,000 shares and to increase
the authorized preferred stock from 1,000,000 to 10,000,000 shares.

NOTE 12. RECENTLY ISSUED ACCOUNTING STANDARDS

The  Financial  Accounting  Standards  Board (FASB) has  published a revision to
Interpretation   46  ("46R")  to  clarify  some  of  the   provisions   of  FASB
Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities,  and to
exempt certain entities from its requirements.  The additional guidance is being
issued in response to input received from constituents  regarding certain issues
arising in implementing Interpretation 46.


                                      F-9
<PAGE>

                            US Global Nanospace, Inc.
                      (Formerly US Global Aerospace, Inc.)
                          (A development stage company)

                        Notes to the Financial Statements

NOTE 12. RECENTLY ISSUED ACCOUNTING STANDARDS (CONT'D)

Under the new guidance, special effective date provisions apply to enterprises
that have fully or partially applied Interpretation 46 prior to issuance of this
revised Interpretation. Otherwise, application of Interpretation 46R (or
Interpretation 46) is required in financial statements of public entities that
have interests in structures that are commonly referred to as special-purpose
entities for periods ending after December 15, 2003. Application by public
entities, other than small business issuers, for all other types of variable
interest entities is required in financial statements for periods ending after
March 15, 2004. Application by small business issuers to variable interest
entities other than special-purpose entities and by nonpublic entities to all
types of variable interest entities is required at various dates in 2004 and
2005. In some instances, enterprises have the option of applying or continuing
to apply Interpretation 46 for a short period of time before applying this
revised Interpretation. The Company believes that adoption of Interpretation 46
will have no effect on its financial statements.

In May 2003, FASB issued Statement 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. Statement 150
requires that certain financial instruments, which under previous guidance were
accounted for as equity, must now be accounted for as liabilities. Statement 150
is effective for all financial instruments entered into or modified after May
31, 2003. The Company adopted Statement 150 on June 1, 2003. The adoption of
Statement 150 did not have any effect on the Company's financial position,
results of operations, or cash flows.

                                      F-10

<PAGE>

                           FORWARD-LOOKING STATEMENTS

      This report by US Global Nanospace, Inc. (the "Company") contains
forward-looking statements. These are statements regarding financial and
operating performance and results and other statements that are not historical
facts. The words "expect," "project," "estimate," "believe," "anticipate,"
"intend," "plan," "forecast," and similar expressions are intended to identify
forward-looking statements. Certain important risks could cause results to
differ materially from those anticipated by some of the forward-looking
statements. Some, but not all, of the risks that could cause actual results to
differ from those suggested by the forward-looking statements include, among
other things:

      o     the loss of the services of any member of our management team and,
            in particular, the loss of the services of John Robinson, our
            Chairman and Chief Executive Officer;

      o     our ability to successfully market the products we have developed
            and to continue to develop products with demonstrated competitive
            advantages for the defense and homeland security markets;

      o     whether or not our products are able to compete successfully with
            products of other suppliers and whether or not some or all of our
            products are rendered obsolete by newer products;

      o     the implementation of any government regulation that could make it
            more difficult or more costly to bring our products to market;

      o     our ability to obtain financing as and when we need it; and

other factors, all of which are difficult to predict and many of which are
beyond our control.

You are cautioned not to place undue reliance on these forward-looking
statements, which relate only to events as of the date on which the statements
are made. We undertake no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
You should refer to and carefully review the information in future documents we
file with the Securities and Exchange Commission.

PART 1 - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION

      Management's discussion and analysis of results of operations and
financial condition is based upon our financial statements. These statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America. These principles require management to make
certain estimates, judgments and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

                                       1
<PAGE>

OVERVIEW

      We are a development stage company with expertise in the emerging field of
nanotechnology. We specialize in identifying, developing, and commercializing
advanced products the core technologies of which are primarily nanoscience
derived. These products include complex polymer materials, polymer nanofiber
materials, nanofiber filter materials, biological and chemical decontaminants,
blast mitigation materials and nano and micro sound generating devices for
breach barriers and non-lethal weapon applications. We are currently focusing
our efforts on developing a broad range of defense and law enforcement
applications for the materials we create, including products suitable for
homeland security and force protection applications. Currently, most of our
products are developed for use by the military and homeland security.

      Our capital requirements, particularly as they relate to product research
and development, have been and will continue to be significant. Our future cash
requirements and the adequacy of available funds will depend on many factors,
including the pace at which we are able to launch our products, whether or not a
market develops for our products and, if a market develops, the pace at which it
develops, and the pace at which the technology involved in making our products
changes.

      To date, we have funded our operations through loans in the amount of
$1,650,000 from a bank and loans in the amount of $1,675,425 from unrelated
third parties, directors and a shareholder. We have applied for grants from
various government agencies that, if approved, will provide funding for the
development of new products and for the enhancement of our current products. We
are also negotiating with various government agencies and private companies for
the sale of our products. We cannot guarantee that we will be awarded any grant
or that a market for our products will develop. During the next 12 months, if we
fail to earn revenues in an amount sufficient to fund our operations, we intend
to raise capital through an offering of our securities or from additional loans.
We have no commitments for financing for our future needs and we cannot
guarantee that financing will be available to us, on acceptable terms or at all.
If we do not earn revenues sufficient to support our business and we fail to
obtain other financing, either through an offering of our securities or by
obtaining additional loans, we may be unable to maintain our operations.

RESULTS OF OPERATIONS

      Our earnings for the quarter and the period ended December 31, 2003
continue to reflect our status as a development stage research company. While
many of our products are developed and can be marketed, we do not have the
infrastructure or financial resources to manufacture and distribute our
products. Our efforts are currently focused on establishing worldwide
distribution channels through recognized distributors. However, although we are
currently in negotiations with one or more recognized distributors, we have not
executed any distribution agreements thus far. Therefore, we do not currently
have a significant market presence and our products have not been proven by
consistent commercial use. Additionally, sales of products geared to the defense
and homeland security markets are often tightly controlled and require decisions
to be made by one or more government agencies. There can be no assurance that
our products will be purchased on a significant scale or commercially proven in
the near term. Because we have not yet realized revenues from the sale of our
products, as in the past we will need our majority shareholder to continue
loaning the funds needed to continue our operations for the near term.

                                       2
<PAGE>

QUARTER ENDED DECEMBER 31, 2003 COMPARED TO THE QUARTER ENDED DECEMBER 31, 2002

      Our revenues from operations for the quarter ended December 31, 2003 were
$2,152 as compared to revenues of $0 for the quarter ended December 31, 2002.
Our cost of revenues from operations for the quarter ended December 31, 2003
were $241 as compared to cost of revenues of $0 from the quarter ended December
31, 2002. This increase in revenues and cost of revenues was due to sales of our
products.

      During the quarter ended December 31, 2003 we spent $622,102 on research
and development as compared to $167,265 for research and development during the
quarter ended December 31, 2002. Our research and development costs increased
and will be significant because of on-going research and development of our
products.

      During the quarter ended December 31, 2003 we incurred $1,072,180 in
expense related to non-cash compensation as compared to $850,679 in expense
related to non-cash compensation during the quarter ended December 31, 2002. Of
this amount, $738,435 is non-cash general and administrative expense from the
amortization of deferred compensation and services related to the issuance of
7,308,215 shares of common stock pursuant to consulting agreements we entered
into during the prior year. We will continue to recognize such non-cash expense,
having a total value of $6,560,317, over a two-year period. This amount declined
due to the cancellation of a consultant agreement as a result of which the
Company reversed unrecognized non-cash compensation in the amount of $116,626,
and canceled 843,750 shares. The remaining $333,745 relates to the issuance of
common stock in exchange for services and employee wages. We pay our consultants
and certain of our employees with our common stock in order to conserve cash. We
used, and will continue to use as necessary, consultants for the development and
marketing of our products.

      During the quarter ended December 31, 2003 other operating expense totaled
$1,020,447 as compared to other operating expense of $765,333 for the quarter
ended December 31, 2002, an increase of approximately 34%. This increase is
largely due to general and administrative costs and expenses associated with
maintaining a public company.

      We had an operating loss of $2,712,818 for the quarter ended December 31,
2003 as compared to an operating loss of $1,783,277 for the quarter ended
December 31, 2002 and a net loss of $2,702,327 for the quarter ended December
31, 2003 as compared to a net loss of $1,253,410 for the quarter ended December
31, 2002. The increase in operating and net loss is attributable to the on-going
costs to develop and bring our products to market. Also attributed to this
increase is the amount of deferred compensation and services related to the
consulting agreements described above.

      Interest expense for the quarter ended December 31, 2003 totaled $228,694
as compared to interest expense totaling $92,697 for the quarter ended December
31, 2002. Interest expense increased this quarter because of fees and increases
in borrowing. During the quarter ended December 31, 2003, fees of $239,185,
included in debt restructure, were forgiven.

NINE MONTHS ENDED DECEMBER 31, 2003 AS COMPARED TO NINE MONTHS ENDED DECEMBER
31, 2002

      Our revenues from operations for the nine month period ended December 31,
2003 were $127,831 as compared to revenues of $0 for the nine month period ended
December 31, 2002. Our cost of revenues from operations for the nine month

                                       3
<PAGE>

period ended December 31, 2003 were $28,002 as compared to cost of revenues of
$0 from the quarter ended December 31, 2002. This increase in revenues and costs
of revenues was due to sales of our products.

      Research and development costs were $1,121,898 for the nine month period
ended December 31, 2003 as compared to research and development costs of
$1,148,516 for the nine month period ended December 31, 2002, a decrease of
approximately 2%. Our research and development costs overall declined because
the development of many of our products is complete and we are currently
beginning to market these products. However, we expect to continue to incur
significant research and development costs in the future in connection with the
continued development of our products.

      Expense related to non-cash compensation was $2,854,053 for the nine month
period ended December 31, 2003 as compared to $2,228,792 in expense related to
non-cash compensation for the nine month period ended December 31, 2002. Of this
amount, $2,413,587 is non-cash general and administrative expense from the
amortization of deferred compensation and services related to the issuance of
7,308,215 shares of common stock pursuant to consulting agreements we entered
into during the prior year. We will continue to recognize such non-cash expense,
having a total value of $6,560,317, over a two-year period. This amount declined
due to the cancellation of a consultant agreement as a result of which the
Company reversed unrecognized non-cash compensation in the amount of $116,626,
and canceled 843,750 shares. The remaining $440,466 relates to the issuance of
common stock in exchange for services and employee wages. We pay our consultants
and certain of our employees with our common stock in order to conserve cash. We
used, and will continue to use as necessary, consultants for the development and
marketing of our products.

      Other operating expense totaled $1,782,828 for the nine month period ended
December 31, 2003 as compared to other operating expense of $2,276,930 for the
nine month period ended December 31, 2002, a decrease of approximately 22%. This
overall decrease reflects the implementation of cost cutting measures during the
period.

      We had an operating loss of $5,658,950 for the nine month period ended
December 31, 2003 as compared to an operating loss of $5,654,238 for the nine
month period ended December 31, 2002, and a net loss of $5,828,408 for the nine
month period ended December 31, 2003 as compared to a net loss of $5,125,117 for
the nine month period ended December 31, 2002. The increase in operating and net
loss is due to research and development costs incurred in developing our
products and to the non-cash general and administrative expense for deferred
compensation and services relating to certain consulting agreements. We expect
to continue to incur significant research and development costs in the future in
connection with the continued development of our products.

      Interest expense for the nine month period ended December 31, 2003 totaled
$408,643 as compared to interest expense of $93,443 for the nine month period
ended December 31, 2002. Interest expense increased because of fees and
increases in borrowing. During the nine months ended December 31, 2003, fees of
$239,185 had been forgiven and recorded as debt restructure.

      During the next 12 months we will continue upgrading our current products
and developing new products and methods using our lightweight, anti-ballistic
material, G-Lam. We anticipate that expenses relating to upgrading our products
will continue to be significant.

LIQUIDITY AND CAPITAL RESOURCES

      At December 31, 2003 we had cash on hand of $3,005. Our primary source of
cash during the nine months ended December 31, 2003 was loans totaling $395,425
and revenues totaling $127,831. Net cash used in operating activities was
$262,959 during the nine months ended December 31, 2003. The primary uses of
cash for the quarter ended December 31, 2003 consisted of general operating
costs and product research and development expenses. At this time, to conserve
cash, we outsource the manufacture of our products and our sales and marketing
functions. In addition, our officers and certain employees have deferred their
salaries. We have applied for grants from various government agencies that, if
approved, will provide funding for the development of new products and for the
enhancement of our current products. We are also negotiating with various
government agencies and private companies in the areas of defense, homeland
security, law enforcement and aerospace for the sale of our products. We cannot
be certain, however, that we will be awarded any funds through grants or that
sales of our products will ever generate enough cash to fund our business.
During the next 12 months, if we cannot generate sufficient funds to operate our
business from grants and product sales, we will be required to seek financing
from our largest stockholder, who has provided financing and a loan guarantee
for us in the past, although he is under no obligation to loan any money to us.
We may also consider selling debt or equity securities. We cannot be certain
that we will be successful in obtaining financing if we need it. If we cannot
obtain financing when we need it, we may be unable to maintain our operations.

      We had no investing activities that used or generated cash during the nine
months ended December 31, 2003 as compared to $2,946 of cash from investing
activities that was acquired in conjunction with the share exchange we entered
into on May 17, 2002 with USDR Global Aerospace, Ltd., a Delaware corporation,
and its stockholders.

      Cash flows from financing activities for the nine months ended December
31, 2003 included loan proceeds in the amount of $395,425. Cash flows from
financing activities for the nine months ended December 31, 2002 consisted of
proceeds from lines of credit in the amount of $1,307,879 from a bank, and
$1,280,000 from a shareholder and other third parties.

      During the nine months ended December 31, 2003, in order to conserve cash,
we issued our common stock to satisfy accounts payable totaling $376,851 and
wages totaling $2,502,743.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      In consultation with our Board of Directors, we have identified the
following accounting principles that we believe are key to an understanding of
our financial statements. These important accounting policies require
management's most difficult, subjective judgments.

      Our Chairman and Chief Executive Officer controls USDR Aerospace, Ltd.
("Aerospace"), which has licensed its intellectual property to us. In the past,
Aerospace provided employees and product development services to us. During the
period from May 17, 2002 through May 1, 2003 management was required to estimate
the value of the property and services (including product development services)
provided to us by Aerospace. Since inception (March 20, 2002), management
estimated that Aerospace provided property and services to us totaling
approximately $2.9 million for which, as of December 31, 2003, we owed Aerospace
$306,695.

RECENTLY ISSUED ACCOUNTING STANDARDS

The  Financial  Accounting  Standards  Board (FASB) has  published a revision to
Interpretation   46  ("46R")  to  clarify  some  of  the   provisions   of  FASB
Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities,  and to
exempt certain entities from its requirements.  The additional guidance is being
issued in response to input received from constituents  regarding certain issues
arising in implementing Interpretation 46.

                                       4
<PAGE>


Under the new guidance, special effective date provisions apply to enterprises
that have fully or partially applied Interpretation 46 prior to issuance of this
revised Interpretation. Otherwise, application of Interpretation 46R (or
Interpretation 46) is required in financial statements of public entities that
have interests in structures that are commonly referred to as special-purpose
entities for periods ending after December 15, 2003. Application by public
entities, other than small business issuers, for all other types of variable
interest entities is required in financial statements for periods ending after
March 15, 2004. Application by small business issuers to variable interest
entities other than special-purpose entities and by nonpublic entities to all
types of variable interest entities is required at various dates in 2004 and
2005. In some instances, enterprises have the option of applying or continuing
to apply Interpretation 46 for a short period of time before applying this
revised Interpretation. The Company believes that adoption of Interpretation 46
will have no effect on its financial statements.

      In May 2003, FASB issued Statement 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. Statement 150
requires that certain financial instruments, which under previous guidance were
accounted for as equity, must now be accounted for as liabilities. Statement 150
is effective for all financial instruments entered into or modified after May
31, 2003. The Company adopted Statement 150 on June 1, 2003. The adoption of
Statement 150 did not have any effect on the Company's financial position,
results of operations, or cash flows.

PART 1 - ITEM 3   CONTROLS AND PROCEDURES

      The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's President and
Chief Financial Officer of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. The evaluation was undertaken in consultation with the Company's
accounting personnel. Based on that evaluation, the President and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported in
accordance with the Securities and Exchange Commission's rules and forms. We
have experienced considerable problems from our accounting software. We have
upgraded our equipment in response to these problems. Our internal procedures
have been adjusted to reflect this change.

      There were no other significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of their evaluation.

PART II

       ITEM 1.     LEGAL PROCEEDINGS

       Not applicable.

       ITEM 2.  CHANGES IN SECURITIES

       Not applicable.

       ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

       Not applicable.

                                       5
<PAGE>

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

On January 14, 2004, the Company's Board of Directors and it majority
shareholder voted to increase the Company's authorized shares of Common Stock
from 100,000,000 to 300,000,000 and to increase the Company's authorized shares
of Preferred Stock from 1,000,000 to 10,000,000.

       ITEM 5.  OTHER INFORMATION

       Not Applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits

      2.    Agreement and Plan of Share Exchange between Caring Products
            International, Inc. and USDR Global Aerospace, Ltd. and the
            Shareholders of US Global Aerospace, Ltd. dated as of May 15, 2002
            (1)

      3.1   Certificate of Incorporation, as amended (2)

      3.2   Bylaws (3)

      31.1  Certification Pursuant to Rule 13a-14(a) and 15d-14(a). (4)

      31.2  Certification Pursuant to Rule 13a-14(a) and 15d-14(a). (4)

      32.   Certification Pursuant to Section 1350 of Title 18 of the United
            States Code. (4)

---------------------------------------------------
(1)   Incorporated by reference from a Form 8-K filed by USGA with the
      Securities and Exchange Commission on May 30, 2002.

(2)   Incorporated by reference from amendment number 1 to the registration
      statement on Form SB-2 filed with the Securities and Exchange Commission
      on March 20, 1996.

(3)   Incorporated by reference from the registration statement on Form SB-2
      filed with the Securities and Exchange Commission on September 12, 1995.

(4)   Attached hereto.

(b)   Reports on Form 8-K

      Not applicable.

                                       6
<PAGE>

                                   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.

                               US GLOBAL NANOSPACE, INC.



                              By:  /s/John Robinson
                                   -----------------------------------------
Date:  February 23, 2004           John Robinson, Chief Executive Officer




                              By:  /s/Julie Seaman
                                   -----------------------------------------
Date:  February 23 2004            Julie Seaman, Chief Financial Officer


                                       7