<PAGE>


                 U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549


                                 FORM 10-QSB


                                 (Mark One)
  {X}   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

                   THE SECURITIES EXCHANGE ACT OF 1934
              For the quarterly period ended June 30, 2001

  { }   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE
                   SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from
                   ____________________to________________

                      Commission File Number: 000-24355

                        WEBQUEST INTERNATIONAL, INC.
                        -----------------------------
      (Exact name of small business issuer as specified in its charter)

                 NEVADA                             86-0894019
                 ------                             ----------
    (State or other jurisdiction of               (IRS Employer
    incorporation or organization)                 Identification No.)

             2248 MERIDIAN BLVD., SUITE A, MINDEN, NV 89423-8601
            ----------------------------------------------------
                  (Address of principal executive offices)

                               (775) 782-0350
                               --------------
                         (Issuer's telephone number)

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

                              YES [X]  NO __

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 9,767,593
shares of common stock, $.001 par value, outstanding as of July 30,2001

<PAGE>





                    WEBQUEST INTERNATIONAL, INCORPORATED
            TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
             Form 10-QSB for the quarter ended June 30, 2001


PART I     FINANCIAL INFORMATION

Item 1     Financial Statements:                                  Page
                                                                 ------
         Unaudited Condensed Consolidated Balance
          Sheets, June 30, 2001 and September 30, 2000              3

         Unaudited Condensed Consolidated Statements of
          Operations, for the three and nine months ended
          June 30, 2001 and 2000 and from the period from
          inception on November 5, 1996 through June 30,
          2001                                                      4
         Unaudited Condensed Consolidated Statements of
          Stockholders Equity from inception on November
          5, 1996, through June 30, 2001.                       5 - 8

         Unaudited Condensed Consolidated Statements of
          Cash Flows, for the nine months ended June 30 ,
          2001 and 2000 and for the period from inception
          on November 5, 1996 through June 30, 2001             9 - 10

         Notes to Unaudited Condensed Consolidated
          Financial Statements                                 11 - 17


Item 2   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                       18

         Factors That May Effect Future Results                     22

PART II  OTHER INFORMATION                                          26

Item 1   Legal Proceedings                                          26

Item 2   Changes in Securities and Use of Proceeds                  26

Item 3   Defaults upon Senior Securities                            27

Item 4   Submission of Matters to a Vote of Security
          Holders                                                   27

Item 5   Other Information                                          27

Item 6   Exhibits and Reports on Form 8-K                           27

         SIGNATURES                                                 28
2
<PAGE>

                        PART I-FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS



                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                  ASSETS
                                           June 30,  September 30,
                                             2001         2000
                                         ___________  ___________
CURRENT ASSETS:
  Cash                                    $        -   $1,081,286
  Employee advances                            1,382       18,330
  Accounts receivable                              -       13,479
  Interest receivable                            420        6,882
  Prepaid expenses                            13,096      128,903
                                         ___________  ___________
        Total Current Assets                  14,898    1,248,880

PROPERTY AND EQUIPMENT, net                  802,338      944,315

OTHER ASSETS:
  Refundable deposits                          6,362        6,362
                                         ___________  ___________
                                          $  823,598   $2,199,557
                                         ___________  ___________

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Bank overdraft                          $      516   $        -
  Accounts payable                           136,332       77,823
  Notes payable - related parties             21,618       21,618
  Other accrued liabilities                  274,655       36,808
  Current portion - capital lease
    obligation                                 9,325            -
                                         ___________  ___________
        Total Current Liabilities            442,446      136,249

CAPITAL LEASE OBLIGATION, less
  current portion                             17,602            -
                                         ___________  ___________
        Total Liabilities                    460,048      136,249
                                         ___________  ___________

COMMITMENTS AND CONTINGENCIES
  [See Note 8]                                     -            -

STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value,
    5,000,000 shares authorized, no
    shares outstanding                             -            -
  Common stock, $.001 par value,
    45,000,000 shares authorized
    9,767,593 and 9,493,137 shares
    issued and outstanding, respectively       9,768        9,493
  Capital in excess of par value           8,521,734    8,372,239
  Deficit accumulated during the
    development stage                     (8,167,952)  (6,318,424)
                                         ___________  ___________
        Total Stockholders' Equity           363,550   (2,063,308)
                                         ___________  ___________
                                          $  823,598   $2,199,557
                                         ___________  ___________


NOTE: The balance sheet at September 30, 2000 was taken from the audited
      financial statements at that date and condensed.

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




3
<PAGE>

                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                      From
                                                                    Inception
                          For the Three           For the Nine         on
                          Months Ended            Months Ended     November 5,
                             June 30,                June 30,     1996 Through
                      ___________________  ______________________    June 30,
                         2001      2000        2001        2000        2001
                      _________  ________  __________  __________  __________
REVENUE               $     (41) $  7,450  $   16,805  $   10,975  $   60,455
                      _________  ________  __________  __________  __________

EXPENSES:
 Development,
   marketing, general
   and administrative   427,484   905,253   1,873,468   1,784,610   7,787,355
 Compensation expense
   recorded in
   accordance with
   APB 25 for stock
   options issued
   below market value         -         -           -           -     295,423
                      _________  ________  __________  __________  __________
     Total Expenses     427,484   905,253   1,873,468   1,784,610   8,082,778
                      _________  ________  __________  __________  __________
LOSS FROM OPERATIONS   (427,525) (897,803) (1,856,663) (1,773,635) (8,022,323)
                      _________  ________  __________  __________  __________
OTHER INCOME (EXPENSE):
 Gain (loss) on
   sale of marketable
    securities          (2,398)         -       (2,398)         -      22,708
 Interest income           111     41,105       14,891     58,581      94,930
 Interest expense         (841)   (21,705)      (5,358)  (146,086)   (205,397)
 License
   termination cost          -          -            -   (192,700)          -
                     _________  _________  ___________  _________  __________
     Total Other Income
       (Expense)        (3,128)    19,400        7,135   (280,205)    (87,759)
                     _________  _________  ___________  _________  __________

LOSS BEFORE INCOME
  TAXES               (430,653)  (878,403) (1,849,528) (2,053,840) (8,110,082)

CURRENT TAX EXPENSE          -          -            -          -           -

DEFERRED TAX EXPENSE         -          -            -          -           -
                     _________  _________  ___________  ___________  _________
NET LOSS           $(430,653) $(878,403) $(1,849,528) $(2,053,840) $(8,110,082)

LESS: PREFERRED
  DIVIDEND
  REQUIREMENTS               -          -            -          -     (57,870)
                     _________  _________  ___________  ___________  _________
NET LOSS APPLICABLE
  TO COMMON
  STOCKHOLDERS     $(430,653) $(878,403) $(1,849,528) $(2,053,840) $(8,167,952)
                     _________  _________  ___________  ___________  _________
LOSS PER COMMON
  SHARE              $   (.04)  $   (.14)  $     (.19)  $     (.31)  $   (1.49)
                     _________  _________  ___________  ___________  _________




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




4
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

    UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

   FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996 THROUGH JUNE 30, 2001


                                                                 Deficit
                                                               Accumulated
                    Preferred Stock  Common Stock   Capitalin   During the
                   ________________ ______________  Excess of  Development
                    Shares   Amount  Shares  Amount  Par Value    Stage
                   ________ _______ _________ _______ ___________ __________
BALANCE, November
   5, 1996        $       - $     - $      -   $   -  $       -  $        -


Issuance of
  2,438,333 shares
  of common stock
  for cash at
  $.123 per share,
  January 1997            -       -  2,438,333  2,438     297,562         -

Issuance of
  116,667 shares
  of common stock
  for services
  at $.116
  per share,
  January 1997            -       -    116,667    117      13,417          -

Recapitalization
  of Phaser,
  issuance
  of 200,201
  shares of
  common stock
  for Phaser
  stock, May
  1997                    -       -    200,201    200     (2,282)         -

Issuance of
  93,750 shares
  of preferred
  and common
  stock for cash
  at $1.00 per
  share, March
  through
  September 1997     93,750      94     93,750     94    187,312          -

Issuance of
  30,000 shares
  of common stock
  for services
  at $1.00
  per share,
  August 1997             -       -     30,000     30     29,970          -

Issuance of
  700,000 shares
  of common stock
  for licensing
  agreement
  at $1.00 per
  share,
  September
  1997                    -       -    700,000    700    699,300          -

Granted options
  to purchase
  400,000 shares
  of common stock
  at below
  market value.
  Compensation
  expense
  calculated
  in
  accordance
  with APB 25.            -       -          -      -    353,600          -

Net loss for
  the period ended
  September 30,
  1997                    -       -          -      -          -   (459,001)
                  _________ _______ __________ ______ __________ ___________
BALANCE, September
  30, 1997        $  93,750 $    94 $3,578,951 $3,579 $1,578,879   $(459,001)


Issuance of
  251,000 shares
  of preferred
  and common
  stock for cash
  at $1.00 per
  share, October
  1997 through
  September 1998    251,000     251    251,000    251    501,498           -

Issuance of
  126,943 shares
  of preferred
  and common
  stock for
  non-cash
  consideration
  at $1.00 per
  share, July
  1998              126,943     127    126,943    127    253,632           -

Issuance of
  18,057 shares
  of preferred
  and common
  stock at
  $1.00 per
  share, accounted
  for as a
  subscription
  receivable,
  July to
  September 1998     18,057     181      8,057     18     36,078           -






                                [Continued]
5
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

    UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

   FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996 THROUGH JUNE 30, 2001

                                [Continued]
                                                                 Deficit
                                                               Accumulated
                    Preferred Stock  Common Stock   Capitalin   During the
                   ________________ ______________  Excess of  Development
                    Shares   Amount  Shares  Amount  Par Value    Stage
                   ________ _______ _________ _______ ___________ __________
Granted options
  to purchase
  150,000 shares
  of common
  stock at
  below market
  value to
  an officer.
  Compensation
  expense
  calculated in
  accordance
  with APB 25,
  October 1997            -       -        -        -    132,600           -

Granted options
  to purchase
  30,000 shares
  of common
  stock at below
  market value to
  an officer.
  Compensation
  expense
  calculated in
  accordance
  with APB 25,
  October 1997            -       -         -       -     26,520           -

Issuance of
  50,000 shares
  of common stock
  at $.116 per
  share upon
  exercise of
  options by
  an officer,
  February 1998           -       -    50,000      50      5,750           -

Issuance of
  50,000 shares
  of common stock
  at $.116 per
  share upon
  exercise of
  options by
  an officer,
  July 1998               -       -    50,000      50      5,750           -

Issuance of
  5,000 shares
  of common stock
  for cash at
  $1.00 per
  share to
  an officer,
  July 1998               -       -     5,000       5      4,995           -

Issuance of
  62,000 shares
  of common stock
  for services
  at $1.00
  per share,
  May 1998                -       -     62,000     62     61,938           -

Issuance of
  22,898 shares
  of common
  stock for
  services at
  $1.00 per share
  to employees,
  officers and
  directors of
  the Company              -       -    22,898     23     22,875           -

Assumed mandatory
  conversion of
  Series B
  preferred stock
  during the year
  ended September
  30, 1998          (93,750)    (94)    93,750     94          -           -

Accrued preferred
  dividends for the
  year ended
  September
  30, 1998                -       -          -      -          -     (30,779)

Shares issued due
  to rounding             -       -         19      -          -           -

Net loss for the
  year ended September
  30, 1998                -       -          -      -          -  (1,058,938)
                  _________ _______ __________ ______ __________ ___________
BALANCE, September
 30,  1998          396,000 $   396  4,258,618 $4,259 $2,630,515 $(1,548,718)



Issuance of 50,000
  shares of common
  stock at $1.00 per
  share upon exercise
  of warrants             -       -     50,000    504      9,950           -

Stock offering costs      -       -          -      -    (40,000)          -

Issuance of 20,000
  shares of common
  stock for Interest
  at $1.00 per share      -       -     20,000     20     19,980           -





                                [Continued]
6
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

    UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

   FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996 THROUGH JUNE 30, 2001

                                [Continued]
                                                                 Deficit
                                                               Accumulated
                    Preferred Stock  Common Stock   Capitalin   During the
                   ________________ ______________  Excess of  Development
                    Shares   Amount  Shares  Amount  Par Value    Stage
                   ________ _______ _________ _______ ___________ __________
Issuance of 20,000
  shares of common
  stock for
  services at
  $1.00 per share        -        -    20,000      20     19,980          -

Issuance of 26,000
  shares of common
  stock for software
  at $1.00
  per share              -        -    26,000      26     25,974          -

Issuance of 100,000
  shares of common
  stock for software
  at $1.75 per share,
  May 1999               -        -   100,000     100    174,900          -

Assumed mandatory
  conversion of
  Series B preferred
  stock during
  the year ended
  September 30,
  1999            (396,000)    (396)  396,000     396          -          -

Accrued preferred
  dividends for
  the year
  ended September
  30, 1999                -       -         -       -          -    (27,991)

Granted options and
  warrants to
  purchase common
  stock at below
  market value.
  Compensation
  expense
  calculated in
  accordance with
  APB 25                  -       -          -      -     22,110           -

Granted warrants to
  purchase common
  stock at
  below market
  value in
  relation to a note
  payable.
  Interest expense
  calculated in
  accordance with
  APB 25                  -       -          -      -      6,500           -

Net loss for the
  year ended
  September
  30, 1999                -       -          -      -          -  (1,990,821)
                  _________ _______ __________ ______ __________ ___________
BALANCE, September
  30, 1999        $       - $     - $4,870,618 $4,871 $2,909,909 $(3,567,530)

Issuance of
  3,431,300
  shares of
  common stock
  In private
  placement
  for cash at
  $1.25 per
  share, net
  stock offering
  costs of
  $345,325                -       -  3,431,300  3,431  3,940,369           -


Cancellation of
  15,000 shares
  of common stock
  for non-payment
  of subscription
  receivable              -       -    (15,000)  (15)    (14,985)          -

Issuance of 200,117
  shares of common
  stock for
  services at $1.00
  to $3.00 per share      -       -    200,117    200     317,902          -

Issuance of 400,000
  shares of common
  stock for
  cancellation of
  license agreements
  and payment on
  payables
  $1.00 per share         -       -    400,000    400     399,600          -

Issuance of 52,500
  shares of common
  stock at $.87 to
  $1.00 per share
  upon exercise of
  warrants                -       -     52,500     52      47,572          -



                                [Continued]
7
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

    UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

   FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996 THROUGH JUNE 30, 2001

                                [Continued]
                                                                 Deficit
                                                               Accumulated
                    Preferred Stock  Common Stock   Capitalin   During the
                   ________________ ______________  Excess of  Development
                    Shares   Amount  Shares  Amount  Par Value    Stage
                   ________ _______ _________ _______ ___________ __________
Issuance of 30,000
  shares of common
  stock at $1.00
  per share upon
  exercise of
  warrants in
  previous year           -       -     30,000     30      29,970          -

Issuance of 40,785
  shares of common
  stock for
  a website at
  $3.31 per share         -       -     40,785     41     134,959          -

Issuance of 57,870
  shares of common
  stock for accrued
  on preferred
  stock dividends         -       -     57,870     58       7,812          -

Issuance of 200,000
  shares of common
  stock for a
  website at $2.25
  per share               -       -    200,000    200     449,800          -

Issuance of 52,104
  shares of common
  stock for
  debt conversion
  at $1.25 per share      -       -     52,104     52      65,078          -

Issuance of 82,500
  shares of common
  stock for loan
  incentives at
  $1.25 per share         -       -     82,500     83     103,042          -

Issuance of
  280,460 shares
  of common stock
  for services at
  $.812 to $3.00
  per share               -       -    280,460    280     248,237          -

Issuance of
  10,000 shares
  of common stock
  for a website
  at $1.00 per
  share, July 2000        -       -     10,000     10      9,990           -

Cancellation of
  stock subscription
  receivable              -       -          -      -     (9,144)          -

Cancellation
  of preferred
  dividends for
  the year ended
  September
  30, 2000                -       -          -      -          -         900

Net loss for the
  year ended
  September
  30, 2000                -       -          -      -          -  (2,751,794)
                  _________ _______ __________ ______ __________ ___________
BALANCE, September
  30, 2000        $       - $     - $9,493,137 $9,493 $8,372,239 $(6,318,424)

Issuance of
  156,523 shares
  of common stock
  for services
  at $.375 to $1.00
  per share,
  October through
  December 2000           -       -    156,523    157    115,349           -

Issuance of 56,200
  shares of common
  stock for services
  at $.14 to $.75
  per share, January
  through
  March 2001              -       -     56,200     56     27,139           -

Issuance of
  61,733 shares of
  common stock for
  services at $.10
  to $.12 per
  share, May
  through June 2001       -       -     61,733     62     7,007            -

Net loss for
  the period
  ended June
  30, 2001                -       -          -      -         -   (1,849,528)
                 __________ _______ __________ ______ __________ ____________
BALANCE, June
  30, 2001       $        - $     -  9,767,593 $9,768 $8,521,734 $(8,167,952)
                 __________ _______ __________ ______ __________ ____________

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



8
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                          For the Nine        From Inception
                                          Months Ended        on November 5,
                                             June 30,          1996 Through
                                      ________________________    June 30,
                                         2001         2000          2001
                                      ___________ ____________ ____________
Cash Flows from Operating Activities:
 Net loss applicable to
   common stockholders                $(1,849,528) $(2,053,840) $(8,167,952)
 Adjustments to reconcile net
    loss to net cash used by
   operating activities:
   Depreciation and amortization          308,120       51,309    1,663,756
   Loan incentive expense                       -            -      103,125
   Stock issued for non cash expenses     149,770      874,564      648,279
   APB 25 compensation recorded
     for stock options
     issued below market value                  -            -      416,159
   (Gain) loss on sale of
      marketable securities                 2,398            -      (25,708)
   Loss on contract settlement                  -            -      192,700
   Changes in assets and liabilities
     (Increase) decrease in
       employee advances                   16,948      (20,500)      (1,382)
     (Increase) decrease in
       interest receivable                  6,462            -         (420)
     (Increase) decrease in
       accounts receivable                 13,479       (9,095)           -
     (Increase) decrease in
       prepaid expenses                   115,807      (56,985)      40,922
     Increase (decrease) in
       bank overdraft                         516            -          516
     Increase (decrease) in
       accounts payable                    43,509     (188,341)     121,332
     Increase (decrease) in
       accrued liabilities                237,847     (123,715)     396,169
                                      ___________  ____________  __________
        Net Cash (Used) by
          Operating Activities           (954,672)   (1,526,603) (4,612,504)
                                      ___________  ____________  __________
Cash Flows from Investing Activities:
 (Increase) in refundable deposits              -          (464)     (6,362)
 Purchase of equipment                    (14,059)     (409,467)   (128,121)
 Purchase/development of websites        (120,300)            -    (500,300)
 Purchase of software licensing
   rights                                       -             -    (300,000)
 Proceeds from marketable
   securities sales                        12,602             -     289,594
                                       __________  ____________  __________
        Net Cash (Used)
          by Investing Activities        (121,757)     (409,931)   (645,189)
                                       __________  ____________  __________
Cash Flows from Financing Activities:
 Proceeds from notes payable                    -     1,119,017   1,324,827
 Payments on notes payable                      -    (1,396,796) (1,188,393)
 Payments on capital lease obligation      (4,857)            -     (14,746)
 Proceeds from preferred stock issuance         -             -     344,750
 Proceeds from common stock issuance            -     3,901,702   4,733,385
 (Decrease) in accrued dividends payable        -       (58,770)     57,870
                                       __________  ____________  __________
        Net Cash Provided (Used)
          by Financing Activities          (4,857)    3,565,153   5,257,693
                                       __________  ____________  __________

Net Increase (Decrease) in Cash        (1,081,286)    1,628,619           -

Cash at Beginning of Period             1,081,286         2,386           -
                                       __________  ____________  __________
Cash at End of Period                  $        -  $  1,631,005  $        -
                                       __________  ____________  __________





                                [Continued]

9
<PAGE>

                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                [Continued]

Supplemental Disclosures of Cash Flow information:

  Cash paid during the year and from inception for:
    Interest                            $  2,665  $  21,705  $     55,186
    Income taxes                        $      -  $       -  $          -

Supplemental schedule of Non-cash Investing and Financing Activities:

  For the nine months ended June 30, 2001:

     The  Company acquired $15,000 worth of marketable securities, which were
     sold  at a loss of $2,398.  The payment for the securities has not  been
     made and accounts payable includes the $15,000 owed.

     The  Company  issued  61,733  shares of its common  stock  for  services
     rendered,  valued at $7,069 with prices ranging from  $.10  -  $.12  per
     share.

     The  Company  entered  into a capital lease  for  equipment  valued  at
     $31,784.

         The  Company  issued 56,200 shares of its common stock for  services
     rendered,  valued at $27,195 with prices ranging from $.14  -  $.75  per
     share.

         The  Company issued 156,523 shares of its common stock for  services
     rendered, valued at $115,506 with prices ranging from $.375 - $1.00  per
     share.

        The Company assigned the rights to the website "Nancyskitchen.com" to
     a former officer as part of a settlement agreement.

  For the nine months ended June 30, 2000:
     The Company issued 200,000 shares of common stock valued at $450,000 for
     the purchase of the web-site winbridge.com.

     The   Company  issued  200,117  shares  of  common  stock  for  non-cash
     consideration including services rendered valued at $318,102 with prices
     ranging from $1.00 to $3.00 per share.

     The Company issued 400,000 shares of common stock for cancellation of  a
     license  agreement,  payment  of accounts payable  and  a  note  payable
     totaling $400,000 (or $1.00 per share).

     The  Company issued 52,104 shares of common stock for conversion of debt
     valued at $65,130 (or $1.25 per share).

     The  Company issued 40,785 shares of common stock to acquire a web-site,
     www.chessed.com valued at $135,000 (or $3.31 per share).

     The  Company  issued 57,870 shares of common stock to  pay  for  accrued
     dividends.

     The  Company  cancelled 15,000 shares of common stock due to non-payment
     of subscription receivable.

     The  Company issued 82,500 shares as loan incentives, accounted  for  as
     interest expense.


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


10
<PAGE>



                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Organization - WebQuest International, Inc and Subsidiary (the Company) was
  organized  under  the laws of the State of Nevada on November  5,  1996  as
  IPONG  International,  Inc.,  but subsequently  reorganized  with  Webquest
  International, Inc. and Subsidiary (which was formed to serve as a  vehicle
  for  a  reorganization  of the Company).  During April  1997,  the  Company
  entered  into a plan and agreement of merger with Phaser Enterprises,  Inc.
  ["Phaser"], a publicly held Utah corporation wherein the operations of  the
  Company  was the surviving entity.  The Company is considered a development
  stage company as defined in SFAS No. 7.  The Company's present business  is
  the development and marketing of several games on the Internet. The Company
  currently  derives nominal amounts of revenue from the sale of  advertising
  on  its www.winbridge.comTM and www.chessed.com Internet sites. The Company
  plans  to  start generating user fees on its www.winbridge.com bridge  site
  and  its  www.chessed.com chess site in April 2001.  In January  2001,  the
  Company started leasing its MillionDollarPullTM promotion software for  use
  in trade show and Internet promotions.

  Condensed Financial Statements - The accompanying financial statements have
  been  prepared by the Company without audit.  In the opinion of management,
  all adjustments (which include only normal recurring adjustments) necessary
  to  present fairly the financial position, results of operations  and  cash
  flows at June 30, 2001 and for all the periods presented have been made.

  Certain information and footnote disclosures normally included in financial
  statements  prepared  in  accordance  with  generally  accepted  accounting
  principles have been condensed or omitted.  We suggest that these condensed
  financial  statements be read in conjunction with the financial  statements
  and  notes  thereto included in the Company's September  30,  2000  audited
  financial statements.  The results of operations for the period ended  June
  30,  2001 are not necessarily indicative of the operating results  for  the
  full year.

  Property  and  Equipment  -  Property and equipment  are  stated  at  cost.
  Expenditures  for  major renewals and betterments that  extend  the  useful
  lives  of  property  and equipment are capitalized, upon  being  placed  in
  service.   Expenditures for maintenance and repairs are charged to  expense
  as  incurred.  Depreciation is computed for financial statement purposes on
  a  straight-line basis over the estimated useful lives of the assets, which
  ranges from three to seven years.

  Income  Taxes  -  The Company accounts for income taxes in accordance  with
  Statement of Financial Accounting Standards No. 109, "Accounting for Income
  Taxes."   This  statement  requires an asset  and  liability  approach  for
  accounting for income taxes.

  Dividend Policy - The Company has not paid any dividends on common stock to
  date  and  does  not  anticipate paying dividends on common  stock  in  the
  foreseeable future.  The Company previously had a dividend requirement with
  respect to its preferred stock.

  Revenue  Recognition - Revenue is recognized at the time of the  sale.   In
  accordance  with  industry  standards, revenues  are  shown  net  of  prize
  payments.

  Earnings  (Loss)  Per  Share - The Company calculates earnings  (loss)  per
  share in accordance with Statement of Financial Accounting Standards (SFAS)
  No.  128 "Earnings Per Share", which requires the Company to present  basic
  earnings  (loss) per share and dilutive earnings (loss) per share when  the
  effect is dilutive.




11
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]

  Cash  and  Cash Equivalents - For purposes of the statement of cash  flows,
  the  Company considers all highly liquid debt investments purchased with  a
  maturity  of three months or less to be cash equivalents.  The Company  had
  $0  and  $981,286 in excess of federal insured amounts in its bank accounts
  at June 30, 2001 and September 30, 2000, respectively.

  Consolidation  -  All  significant inter-company transactions  between  the
  parent and subsidiary have been eliminated in consolidation.

  Stock  Based  Compensation  -  The Company accounts  for  its  stock  based
  compensation in accordance with Statement of Financial Accounting  Standard
  123  "Accounting for Stock-Based Compensation".  This statement establishes
  an  accounting method based on the fair value of equity instruments awarded
  to employees as compensation.  However, companies are permitted to continue
  applying  previous accounting standards in the determination of net  income
  with disclosure in the notes to the financial statements of the differences
  between  previous accounting measurements and those formulated by  the  new
  accounting   standard.   The  Company  has  adopted  the  disclosure   only
  provisions  of  SFAS  No.  123, accordingly, the  Company  has  elected  to
  determine net income using previous accounting standards.

  Recently  Enacted Accounting Standards - Statement of Financial  Accounting
  Standards  (SFAS)  No.  136,  "Transfers of Assets  to  a  not  for  profit
  organization  or  charitable trust that raises or holds  contributions  for
  others",  SFAS No. 137, "Accounting for Derivative Instruments and  Hedging
  Activities - deferral of the effective date of FASB Statement No.  133  (an
  amendment  of  FASB  Statement No. 133)", SFAS  No.  138,  "Accounting  for
  Certain  Derivative  Instruments  and  Certain  Hedging  Activities  -  and
  Amendment  of SFAS No. 133", SFAS No. 139, "Recission of SFAS  No.  53  and
  Amendment  to  SFAS  No. 63, 89 and 21", and SFAS No. 140,  "Accounting  to
  Transfer   and   Servicing  of  Financial  Assets  and  Extinguishment   of
  Liabilities", were recently issued.  SFAS No. 136, 137, 138,  139  and  140
  have  no  current  applicability to the Company  or  their  effect  on  the
  financial statements would not have been significant.

  Accounting   Estimates  -  The  preparation  of  financial  statements   in
  conformity   with   generally  accepted  accounting   principles   requires
  management  to  make  estimates and assumptions that  effect  the  reported
  amounts of assets and liabilities, the disclosures of contingent assets and
  liabilities  at  the  date of the financial statements,  and  the  reported
  amounts  of  revenues  and  expenses during the reporting  period.   Actual
  results could differ from those estimated by management.

NOTE 2 - MARKETABLE SECURITIES

  On  May  21,  2001,  the  Company  accepted  30,000  shares  of  marketable
  securities  valued at $15,000 from a third party.  The Company agreed  that
  90  days  from  the  transfer of the marketable securities  to  either  pay
  $15,000 cash or issue 30,000 shares of common stock of the Company  as  re-
  payment.   As  of  June 30, 2001, the Company had sold all  the  marketable
  securities.   A  loss of $2,398 was realized during the nine  months  ended
  June 30, 2001.





12
<PAGE>



                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 3 - PROPERTY AND EQUIPMENT

  The  following  is  a summary of property and equipment  -  at  cost,  less
  accumulated depreciation as of:

                                          June 30, September 30
                                            2001       2000
                                         __________  _________
         Office equipment                $   64,566  $  72,687
         Computer equipment                 126,858    102,910
         Leased Equipment                    31,784          -
         Software                            52,194     74,354
         Websites                         1,095,300    975,000
                                         __________  _________
                                          1,370,702  1,224,951

         Less:  accumulated
          depreciation                     (568,364)  (280,636)
                                         __________  _________
                                         $  802,338  $ 944,315
                                         __________  _________

  Depreciation  expense  for the nine months ended June  30,  2001  and  2000
  amounted to $308,120 and $51,209, respectively.


NOTE 4 - CAPITAL LEASE

Capital  Lease  - During October 2000, the Company entered into  a  capital
lease for computer equipment which expires in September 2003. The asset and
liability  under  the capital lease was recorded at $31,784.   Depreciation
expense for the nine months ended June 30, 2001 amounted to $7,063.

  Total future minimum lease payments, executory costs and current portion of
  capital lease obligations are as follows:

  Future minimum lease payments for the twelve-month periods ended:

               June 30,                     Lease Payments
              ____________                  ______________
                 2002                       $   16,180
                 2003                           16,180
                 2004                            5,388
                                            ______________
  Total future minimum lease payments       $   37,748

  Less: amounts representing interest          (10,821)
                                            ______________
  Present value of the future
    minimum lease payments                      26,927

  Less: current portion                         (9,325)
                                            ______________
  Capital lease obligations - long-term     $   17,602
                                            ______________



13
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - CAPITAL STOCK

  Preferred  Stock  -  The Company authorized 5,000,000 shares  of  preferred
  stock,  $.001 par value with such rights, preferences and designations  and
  to  be  issued in such series as determined by the Board of Directors.   At
  June  30,  2001 and September 30, 2000, no shares of preferred  stock  were
  issued and outstanding.

  Common  Stock-  The Company authorized 45,000,000 shares of  common  stock,
  $.001 par value, and at June 30, 2001 and September 30, 2000, 9,767,593 and
  9,493,137 shares were issued and outstanding.

  From May to June 2001, the Company issued 61,733 shares of common stock for
  services rendered valued at $7,069 for prices ranging from $.10 - $.12  per
  share.

  From  January through March 31, 2001, the Company issued 56,200  shares  of
  common  stock  for services rendered valued at $127,195 for prices  ranging
  from $.14 - $.75 per share.

  From  October through December 31, 2000, the Company issued 156,523  shares
  of common stock for services rendered valued at $156,506 for prices ranging
  from $.375 - $1.00 per share.

  Nancy's  Kitchen  - During May 1999, the Company entered  into  a  purchase
  agreement  with  an  individual to purchase a  website  (with  all  rights,
  software, programs, source codes, copyrights, trade secrets, patent rights,
  and  other  applicable  rights  for use on  the  Internet)  called  Nancy's
  Kitchen.   As  consideration for this purchase agreement the  Company  paid
  $19,000 cash during May and June 1999 and issued 6,000 shares of its common
  stock valued at $6,000 or $1.00 per share.  The rights to the website  have
  been assigned to a former officer as part of a settlement agreement.

  Stock  Option  Plan - On January 19, 2000, the Board of  Directors  of  the
  Company  adopted  the  2000 Stock Option Plan, which was  approved  by  the
  Company's  shareholders  on  June 16, 2000.   The  plan  provides  for  the
  granting  of awards of up to 5,000,000 shares of common stock to  officers,
  directors,  and  employees.   Awards under the  plan  will  be  granted  as
  determined  by  the board of directors.  As of June 30,   2001  options  to
  purchase a total of 1,819,333 shares of common stock are outstanding  under
  the plan.

  During  October  through December 2000, the Company  issued  624,500  stock
  options  to purchase common stock at prices ranging from $.53 to  $.84  per
  share.  Also, during this period the Company cancelled options to  purchase
  1,054,375 shares of common stock at prices ranging from $2.25 to $9.00  per
  share.  Options to purchase 180,000 shares of common stock at  a  price  of
  $.12 per share expired.

  During  September through November of 1997, the Company issued a  total  of
  580,000  options  to  officers and employees of the Company  at  $.116  per
  share, which was below the current market value of the Company common stock
  of  $1.00.   In  accordance  with APB 25, the Company  has  recorded  total
  compensation  expense  of $295,423 for the period  from  inception  through
  September  30, 2000.  During 1998 an officer exercised 100,000 options  for
  $11,600.  During  January 1999, an officer terminated  his  employment  and
  forfeited his remaining 200,000 options. As of June 30, 2001, none  of  the
  options remain outstanding.

  Stock Warrants - At June 30, 2001, the Company had warrants outstanding  to
  purchase  3,156,750 shares of common stock at prices ranging from  $.50  to
  $5.50  per  share and expiring through June 26, 2005 that  were  issued  in
  conjunction  with  the  Company  obtaining  financing  and  for  consulting
  services.

  During  October  through  December 2000, the  Company  issued  warrants  to
  purchase  300,000 shares of common stock at $.66 per share  for  consulting
  related  to  the  Company's  planned poker  site.   The  Company  cancelled
  warrants  to  purchase 200,000 shares of common stock with  prices  ranging
  from  $2.00 to $3.00 and reissued  warrants to purchase 200,000  shares  of
  common stock at a price of $.91 per share.

14
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 6 - INCOME TAXES

  The  Company  accounts  for income taxes in accordance  with  Statement  of
  Financial Accounting Standards (SFAS) No. 109 Accounting for Income  taxes.
  SFAS  109  requires  the  Company to provide a net deferred  tax  asset  or
  liability  equal to the expected future tax benefit or expense of temporary
  reporting  differences between book and tax accounting  and  any  available
  operating loss or tax credit carryforwards.  At June 30, 2001 and September
  30, 2000, the total of all deferred tax assets was approximately $2,620,000
  and $1,990,000 and the total of the deferred tax liabilities was $0 and $0,
  respectively.  The amount of and ultimate realization of the benefits  from
  the deferred tax assets for income tax purposes is dependent, in part, upon
  the  tax  laws  in effect, the Company's future earnings, and other  future
  events,  the  effects  of  which  cannot be  determined.   Because  of  the
  uncertainty  surrounding the realization of the deferred  tax  assets,  the
  Company  has established a valuation allowance of approximately  $2,620,000
  and  $1,990,000  as of June 30, 2001 and September 30, 2000,  respectively,
  which  has been offset against the net deferred tax assets.  The net change
  in  the  valuation  allowance during the nine months ended  June  30,  2001
  amounted to approximately $630,000.

NOTE 7 - RELATED PARTY TRANSACTIONS

  Notes  Payable  -  At June 30, 2001, the Company had two notes  payable  to
  shareholders of the Company totaling $21,618.  The notes accrue interest at
  12% per annum and are due upon demand.

  Employment  Agreements  - At June 30, 2001, the Company  had  entered  into
  three  employment agreements with officers and employees of the Company  as
  follows:

  Chief  Financial Officer - April 2000 through September 2002, 300,000 stock
  options  for  common stock at $1.25 to $5.00 per share  vesting  25,000  on
  January 19, 2000 and 25,000 shares vesting quarterly starting on March  31,
  2000.  The agreement also states that one-half of the compensation shall be
  paid in stock issued quarterly. Should termination of employment occur,  an
  amount  equal to the balance of the agreement shall be due and  payable  to
  the  employee. During April 2001, employment was terminated.  In May  2001,
  the  Company  settled  with the former officer by paying  $2,000  cash  and
  issuing a three year option to purchase 75,833 shares of common stock at  a
  price of $1.00 per share.

  Chief  Executive  Officer - January 2000, five year  term,   $200  a  month
  automobile allowance, 1,100,000 stock options for common stock at $1.25  to
  $9.00  per share vesting 100,000 immediately and 50,000 per quarter over  a
  five  year period.  Should termination of employment occur, an amount equal
  to the balance of the agreement shall be due and payable to the employee.

  President and Chief Operating Officer - January 2000, five year term,  $200
  a  month automobile allowance, 1,100,000 stock options for common stock  at
  $1.25 to $9.00 per share vesting 100,000 immediately and 50,000 per quarter
  over a five year period.  Should termination of employment occur, an amount
  equal  to  the  balance of the agreement shall be due and  payable  to  the
  employee.   During  October 2000, employment was  terminated.   In  January
  2001, the Company negotiated with the former employee to settle the balance
  due under the agreement in exchange for the website Nancyskitchen.com and a
  laptop computer.




15
<PAGE>




                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 8 - EARNINGS (LOSS) PER SHARE

  The  following data show the amounts used in computing earnings (loss)  per
  share and the effect on income and the weighted average number of shares of
  dilutive potential common stock:

                        For the Three           For the Nine      From Inception
                         Months Ended           Months Ended      on November 5,
                           June 30,               June 30,         1996 Through
                    ____________________   _______________________    June 30,
                       2001       2000         2001       2000           2001
                    ________   _________   __________  ___________  ___________
 Income (loss) from
  continuing
  operations       $(430,653)  $(878,403) $(1,849,528) $(2,503,850) $(8,110,082)

 Less: preferred
  dividends                -           -            -            -      (57,870)
                   _________   __________  __________  ___________  ___________
 Income (loss)
  available to
  common
  stockholders
  used in
  earnings (loss)
  per share        $(430,653)  $(878,403) $(1,849,528) $(2,503,850) $(8,167,952)
                   _________  __________  ___________  ___________  ___________
  Weighted average
    number of common
    shares
    outstanding used
    in earnings
    (loss) per
    share during
    the  period    9,713,218   7,984,265    9,610,228    7,297,333    5,400,909
                   __________  __________  ___________  ___________  __________

  Dilutive  earnings (loss) per share was not presented, as  its  effect  was
  anti-dilutive.   The  Company had at June 30, 2001, 2,406,201  options  and
  3,156,750  warrants to purchase shares of common stock, at  prices  ranging
  from $.38 to $5.50 per share, that were not included in the computation  of
  diluted earnings (loss) per share because their effect was anti-dilutive.

NOTE 9 - GOING CONCERN

  The accompanying financial statements have been prepared in conformity with
  generally accepted accounting principles which contemplate continuation  of
  the  Company as a going concern.  However, the Company has incurred  losses
  since  its  inception  and  has  not yet been  successful  in  establishing
  profitable  operations.   Further, the Company has current  liabilities  in
  excess of current assets.  These factors raise substantial doubt about  the
  ability  of  the Company to continue as a going concern.  In  this  regard,
  management is proposing to raise additional funds through loans or  through
  additional  sales  of  its common stock.  There is no  assurance  that  the
  Company will be successful in raising this additional capital.



16
<PAGE>


                WEBQUEST INTERNATIONAL, INC. AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED  FINANCIAL STATEMENTS

NOTE 10 - COMMITMENTS AND CONTINGENCIES

  Consulting  Agreements - On October 20, 2000, the Company entered  into  an
  agreement with an individual to provide consulting services related to  the
  Company's  website "chessed.com."  The Agreement provides for $5,000  worth
  of  common  stock to be issued monthly based on the closing  price  of  the
  Company's stock at the last business day of each month.  The Company issued
  62,147  shares  of  common stock to this consultant for  services  rendered
  October  2000  through  March  2001.  In March  2001,  this  agreement  was
  cancelled.

  On  October  11,  2000,  the  Company entered into  an  agreement  with  an
  individual to provide consulting services related to the Company's  planned
  pokerrush.com  website.  The agreement states that $10,000 of  compensation
  is  to be paid monthly.  The agreement also states that a warrant be issued
  for  300,000  shares  of restricted common stock at $.66  per  share.   The
  shares  vest  as follows: 50,000 shares vest in October 2000,  the  balance
  vest  31,250 shares per quarter starting in January 2001.  In August  2001,
  this agreement was cancelled.

  In  October 2000, the Company organized a wholly owned subsidiary  for  the
  purpose of operating an Internet poker site. In October 2000, the Company's
  wholly  owned  subsidiary entered into an agreement with  Casino  Marketing
  S.A. to develop and operate the Company's Internet poker site.

  Capital  Lease - In October 2000, the Company entered into a capital  lease
  agreement for 36 months.  The lease states that payments of $1,348 be  made
  on a monthly basis.

  Settlement  Offer  -  In January 2001, the Company's  million  dollar  pull
  promotional  product was leased to a customer for use at a tradeshow.   The
  product malfunctioned and incorrectly reported a $1,000,000 win, payable in
  thirty   annual  installments  of  $33,333.   The  Company   is   currently
  negotiating a settlement with the player and currently has made an offer to
  settle with a lump sum payment of $33,333.  However, the terms of the final
  settlement, if any, are not guaranteed at this time.

  NOTE 11 - SUBSEQUENT EVENTS

  Stock Options -   In July and August 2001, 2,500 stock options expired.


17
<PAGE>


CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-looking Statements

Certain statements contained in this section and elsewhere in this Form
10-QSB  regarding  matters  that are not historical  facts are forward-
looking  statements  (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such forward-looking statements
include risks and uncertainties, actual results may  differ  materially
from those expressed  or  implied  by such forward-looking  statements.
All statements that address operating performance, events or developments
that  management  expects  or  anticipates  to  incur in the  future,
including   statements  relating  to  sales  and  earnings growth  or
statements  expressing general optimism  about future operating results,
are  forward-looking statements. The forward-looking statements are based
on management's current views and assumptions regarding future events and
operating performance.  Many factors could cause actual results to differ
materially  from  estimates  contained  in  management's forward-looking
statements.  The  difference  may  be  caused  by a variety of  factors,
including  but  not  limited to adverse economic conditions, competitive
pressures, inadequate capital, unexpected  costs,  lower revenues,  net
income differing  from  forecasts, the  possibility of fluctuation  and
volatility of our operating results and financial condition, inability to
carry out marketing and sales plans,  loss  of key employees, among other
things.   The "Factors That May Effect Future Results", discussed below,
may also cause  our   actual  results  to differ  materially from these
estimates by management.


RESULTS OF OPERATIONS

Revenue

Revenue for the three months ended June 30, 2001 was minimal,totaling
$41  compared to $7,450 for the three months  ended  June 30, 2000.
This  revenue was generated primarily from banner advertising  on our
Internet Sites.  We anticipate revenues to increase nominally for the
three months ending September 30, 2001,    and  then  to increase slightly
starting with the three months ending  December 31, 2001. We started
operating
our WinBridge Site  product in June, 2001 and anticipate
revenue from this product to ramp up slowly during the three months ending
September 30, 2001 and then accelerate during the three months ending
December 31, 2001. However, there is no guarantee of such results.
Development of these subscription-based sites has taken several months
longer than we had anticipated.  We anticipate revenue from these sites to
start ramping up in October, 2001 if necessary promotional funds are
obtained.

Development, Administrative and Marketing Expenses

Development,   administrative  and  marketing  expenses totaled
$427,484  for  the  three months ending  June 30,  2001, a
decrease of $477,769, or 53% from the $905,253 for the same three
months  in 2000.  We  initiated  for-pay  tournaments on our iPong.com
site  from September  2000 through December 2000 and were unable to
attract enough players to make the site profitable.  We decided to shift
our  focus  and  marketing dollars away from  this  site  to our
Million Dollar Pull promotional product and our chess

18
<PAGE>


and  bridge sites. We were also unable to generate revenue from the Million
Dollar Pull promotional product and sold this product in July, 2001.
We reduced our employee headcount from 16 to 6 employees and the
related costs during the Quarter to focus on generating positive
cash flows from operations as soon as possible.

Net Loss

Our  net loss decreased from $878,403 for the three months ended
June 30,  2000  to  $430,653 for  the  three  months ending
June 30,  2001.   This decrease was  primarily  due  to the
Decrease  in development and marketing personnel described above.


Liquidity and Capital Resources

Operating Activities

We  have  generated  negative cash flows  from  operations since
inception.   We  used   $954,672 of  our  capital  to  fund our
operations  during  the  nine months ending  June   30, 2001
versus  accumulating $ 1,526,603 to  fund our operations for  the
corresponding
prior year period.

Investing activities

We used $ 121,757 `net' for equipment and Web-Sites this year versus
$409,931 for the nine months ended June 30, 2000.



Financing Activities

Cash used in financing activities totaled $4,857 during 2001.  For the nine
months ended June 30,2000 funds of $3,565,153 were accumulated.



We  believe  that  we  will  need to raise  another $200,000  to
$300,000   to  finance  our  core  business  until   it becomes
profitable.   Our  core business presently consists of only our
  bridge and chess products.  Additionally, we believe that
we  will  need to raise another $800,000 to properly  launch our
planned  "pokerrush.com" Internet poker site.  We  are currently
attempting to raise these funds. There are no available funds now.

Our  ability  to meet our liquidity requirements is dependent  on
our  ability to attract capital on terms acceptable to us, if  at
all.  If we are unable to raise sufficient capital there would be
a  material  adverse  effect  on  our  business  and results  of
operations.


              Factors That May Effect Future Results

Need for Additional Capital

Our   business  is   capital  intensive, particularly with
respect to   product   development  costs   associated  with  the
design and  creation  of  interactive  Internet sites. Accordingly, we
require  additional capital to support and expand  our operations.
To  the  extent that  revenues  from  operations  are insufficient
and additional funding is required, public or private financing may
not  be  available  when  needed  or  may not be available on terms
favorable  or  acceptable  to  us,  if  at all.  Failure to secure
additional financing,  if and when needed, will have a material adverse
affect  on our  ability to implement our proposed business strategy.


19
<PAGE>


Initial Software Problems with our Million Dollar Pull Product

We  outsourced the development of our proprietary Million Dollar
Pull  promotional  product.   The  product  has  had operational
problems.   We have terminated our relationship with  the vendor
that  developed  this product and have brought the operation  of
this  product  entirely within our control.  We believe that  we
have  properly  addressed the product's operational shortcomings
and  have established an extensive test operation to validate the
product  before  February 20, 2001.  Should we  not  be able  to
address  these  operational issues, we would opt to  market this
product  less  the million-dollar annuity.  This  could directly
affect our revenue and subsequent growth of our business. In
January, 2001, the Company's million dollar pull promotional
product was leased to a customer for use at a tradeshow.
The product malfunctioned and incorrectly reported a
$1,000,000 win.  The company has made a token offer of
settlement in the matter which has not been responded to by
the claimant.  Final resolution of this matter at this time is uncertain.

Uncertainty  of  Product and Technology Development;
Technological Factors

We  have  not  completed  development  and  testing of certain  of
our   proposed   products  and   proposed  enhancements   to our
products,  some  of  which  are  still  in  the  planning stage or
in relatively  early  stages  of  development.  Our  success will
depend  in  part upon  the  ability  of our  proposed products to
meet   targeted   performance   and  cost  objectives,  and will
also  depend  upon  their timely introduction into the marketplace.
We  will  be  required   to  commit  considerable time, effort and
resources  to finalize development of our  proposed products  and
product  enhancements. Although we anticipate that the development
of  our  products  and technology will be  successfully concluded,
our product development efforts are subject  to  all  of the risks
inherent  in  the  development  of  new  products  and technology
(including unanticipated delay, expenses and  difficulties, as well
as the possible insufficiency of funding to complete development).
There  can  be  no assurance as to when, or whether,  such product
development efforts will be successfully completed.   In addition,
there can  be  no assurance that our products  will satisfactorily
perform the functions for which they are  designed, that they will
meet applicable price or performance objectives or that unanticipated
technical or other problems will not  occur which would result in
increased costs or material delay in  their  development. There
can be no assurance  that, despite testing by us and by current and
potential end users, problems will not  be  found in new products
after the commencement  of customer use, resulting in loss of, or
delay in, market acceptance.




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<PAGE>


Penny Stocks

The Securities and  Exchange  Commission  has adopted regulations
that  generally  define a "penny stock" to be any  equity security
that  has a market price (as defined) of less than $5.00 per share,
subject  to certain exceptions.  Our common stock may be deemed to
be a "penny stock" and thus may become subject to rules that impose
additional sales practice requirements on broker/dealers who  sell
such  securities  to persons other than established customers  and
accredited  investors, unless the common stock  is  listed on  the
NASDAQ Small Cap Market.  Consequently, the "penny stock" rules may
restrict the ability of broker/dealers to sell our securities,  and
may adversely affect the ability of holders of the common stock  to
resell their shares in the secondary market.

We  are  dependent  on the continued development  of  the Internet
infrastructure.

Our industry is new and rapidly evolving. Our  business would  be
harmed if Internet usage does not continue to grow. Internet usage
may be inhibited for a number of reasons, including:

  * inadequate Internet infrastructure;

  * inconsistent quality of service; and

  * unavailability of cost-effective, high-speed service.

If Internet usage grows,  the  Internet  infrastructure  may not  be
able  to  support the  demands  placed  on  it  by  this growth,  or
its performance   and  reliability  may  decline.  In addition,  web
sites, including ours, have experienced interruptions in their service
as a  result  of  outages  and other delays occurring throughout  the
Internet  network infrastructure. We  anticipate  that these  outages
or  delays will occur from time to time in  the future  and, if  they
occur  frequently or  for  extended  periods of  time, Internet usage,
including usage of our web site, could grow  more  slowly or  decline.

Our  long-term success depends on the  development  of  the electronic
commerce market, which is uncertain.

Our  future  revenues  substantially  depend  upon   the widespread
acceptance  and  use  of the Internet  as  an   effective medium  of
commerce  by  consumers.  Demand for recently introduced products and
services   over   the   Internet   is  subject  to  a  high level of
uncertainty.  Although  independent  market  research  firms forecast
that   the   number   of   Internet   users  worldwide will   grow
substantially   in  the  next few years, we cannot  be certain  that
this  growth  will occur or that our sales  will  grow  at the  same
rate.  The  development  of  the Internet   as   a   viable consumer
marketplace is subject to a number of risks including:

   * potential customers may be unwilling to shift their purchasing
from traditional sources to online sources;

  * insufficient availability of, or changes in, telecommunications
services  could   result in   slower  response  times, which  could
delay  the acceptance  of  the  Internet  as  an effective commerce
medium;

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<PAGE>


  * continued growth in the number of Internet users;

  * concerns about transaction security;

  * continued   development  of  the  necessary technological
infrastructure;

  * development of enabling technologies; and

  * uncertain and increasing government regulations.

Rapid  technological change could render our web sites and systems
obsolete and require significant capital expenditures.


The   Internet   and  the   electronic   commerce  industry are
characterized  by  rapid  technological  change,  sudden changes
in customer  requirements and preferences, frequent  new product
and service  introductions  incorporating  new  technologies and
the  emergence of new industry standards and practices that could
render  our existing web sites and transaction processing systems
obsolete. The  emerging nature of these products and services and
their rapid evolution will require that we continually improve the
performance, features and  reliability  of  our  online services,
particularly  in  response  to   competitive  game  and possibly,
tournament  offerings. Our success will  depend,  in  part, on our
ability:

  * to enhance our existing games and services; and

  * to  respond  to technological  advances and emerging industry
standards and practices on a cost-effective and timely basis.

The  development  of  web  sites  and other proprietary technology
entails  significant  technical and  business  risks  and requires
substantial expenditures and lead-time. We may be unable to use new
technologies  effectively  or  adapt  our  web  sites, proprietary
technology   and   transaction-processing   systems    to customer
requirements  or emerging industry standards that  could harm  our
business.  Updating  our technology internally  and licensing  new
technology  from  third parties may require significant additional
capital expenditures and could affect our results of operations.

We  will  be  exposed to risks associated with electronic commerce
security  and  credit card fraud, which may reduce collections  and
discourage online transactions.

Consumer concerns about privacy or the  security  of transactions
conducted  on  the Internet may inhibit the growth of the Internet
and   electronic  commerce.   To  securely   transmit confidential
information, such as customer credit card numbers, we will rely  on
encryption and authentication technology that we will license  from
third parties. We cannot predict whether the algorithms we will use
to   protect   customer  transaction  data   will  be compromised.
Furthermore,  our  servers may be vulnerable to  computer viruses,
physical  or electronic break-ins and similar disruptions. We  may
need  to  expend significant additional capital and other resources
to  protect  against  a  security breach or to  alleviate problems
caused  by  any security breaches. The measures we take to protect
against  security breaches may not be successful.  Our failure  to
prevent security breaches could harm our business.

Under  current credit card practices, a  merchant  is liable   for
fraudulent credit card transactions where, as will be the case with
the transactions we will process, that merchant does not obtain  a

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<PAGE>


cardholder's signature. A failure to adequately control fraudulent
credit  card  transactions could affect our revenues and harm  our
business.

We  could  face  liability  for  information  displayed   on and
communications through our web site.


We  may  be  subject  to   claims   for   defamation, negligence,
copyright or trademark infringement or other claims relating to the
information we publish on our web sites. These types of claims have
been brought, sometimes successfully, against Internet companies as
well as print publications in the past. We also utilize email as  a
marketing medium, which may subject us to potential risks, such as:

  * liabilities or claims resulting from unsolicited email;

  * lost or misdirected messages; or

  * illegal or fraudulent use of email.

These  claims could result in substantial costs and a diversion of
our  management's  attention and resources, which  could harm our
business.

Efforts  to  regulate  or  eliminate the  use  of mechanisms that
automatically collect information on visitors to our web site may
interfere with our ability to target our marketing efforts.

Web  sites typically place a small tracking program  on  a user's
hard  drive without the user's knowledge or consent. These programs
automatically  collect data about any visits that a user makes  to
various web sites.  Web site operators use these mechanisms for  a
variety of purposes, including the collection of data derived  from
users'   Internet  activity.

Most  currently  available   Internet browsers allow users to elect
to remove these tracking programs  at any  time or to prevent  this
information from being stored on their hard  drive. In addition,some
commentators,  privacy   advocates   and  governmental bodies  have
suggested  limiting  or  eliminating  the   use  of  these tracking
mechanisms. Any reduction or limitation  in  the use of this software
could limit the effectiveness of our sales and marketing efforts.

We   could  face  additional  burdens  associated  with government
regulation of and legal uncertainties surrounding the Internet.

New  Internet  legislation or regulation or the application of
existing  laws  and  regulations to  the  Internet  and electronic
commerce  could harm our business, financial condition and results
of   operations.  We  are  subject  to  regulations applicable to
businesses generally and laws or regulations directly applicable to
communications over the Internet and access to electronic commerce.
Although  there  are  currently few laws and  regulations directly
applicable to electronic commerce, it is possible that a number of
laws  and  regulations may be adopted with respect to the Internet
covering issues such as user privacy, pricing, content, copyrights,
distribution, antitrust, taxation and characteristics  and quality
of  products and services. For example, the United States Congress
recently   enacted  Internet  laws  regarding  children's privacy,
copyrights  and  transmission  of sexually  explicit material. In
addition,  the  European Union recently enacted  its  own Internet
privacy regulations. Furthermore, the growth and development of the
market  for electronic commerce may prompt calls for more stringent

23
<PAGE>

consumer  protection  laws that may impose  additional burdens on
those  companies conducting business online.  The adoption of any
additional laws or regulations regarding the Internet may decrease
the growth of the Internet or electronic commerce, which could, in
turn,  decrease the demand for our games and services and increase
our cost of doing business. In addition, if we were alleged to have
violated federal, state or foreign civil or criminal law, we could
be  subject to liability, and even if we could successfully defend
such  claims,  they  may involve significant legal compliance and
litigation costs.

Uncertainty of Emerging Technology and Business

The  Internet based games and leisure activities  industry is  an
emerging  business characterized by an increasing number of market
entrants  who  have introduced or are developing an  array of new
products  and  services.  As is typically the case in  an emerging
industry,   demand  and  market  acceptance  for  newly introduced
products and services is subject to a high level of uncertainty.
In light  of  the evolving nature of this industry, there can  be
no  assurance  as  to the  ultimate level  of  demand  or market
acceptance for  our  products  and services.  In addition, there
can  be no assurance   that  we  will  successfully implement
our business strategies,   expand   our  capacity, maintain
the   cost and technological  competitiveness of our products and
services, meet our  current marketing objectives or succeed in
positioning  us as the  preferred Internet games and entertainment
services provider. There can also be no assurance that the present
trends in growth of Internet  use  and  users will continue or  that
capacity  of the Internet in general will be sufficient to meet
anticipated demands or  that the present pricing structure for
Internet access will be maintained in the future.

Dependence on and Uncertain Acceptance of the Internet as a Medium
for Commerce or Advertising

Use  of  the  Internet  by consumers is at  an  early  stage of
development, and market acceptance of the Internet as a medium for
commerce  is  subject to a high degree of uncertainty.  Our future
success  will  depend  on  its ability  to  significantly increase
revenues, which will require the further development and widespread
acceptance   of  the  Internet  as  a  medium  for commerce  and
advertising. There is no assurance that the Internet will become a
successful retailing channel. The Internet may not prove  to be a
viable commercial marketplace because of inadequate development of
the necessary infrastructure, such as reliable network backbones or
complementary  services,  such as high-speed  modems  and security
procedures  for  financial  transactions.  The  viability of  the
Internet  may prove uncertain due to delays in the development and
adoption  of  new  standards and protocols (for example, the next
generation  Internet  Protocol)  to  handle  increased levels  of
Internet  activity or due to increased government regulations. If
use of the Internet does not continue to grow, or if the necessary
Internet infrastructure or complementary services are not developed
to effectively support growth that may occur, our business, results
of operations and financial condition could be materially adversely
affected.   Further,  there is no assurance  that advertisers  and
advertising  agencies will accept the Internet  as  an advertising
medium. If Internet advertising is not widely accepted by, or if we
are  not  successful in generating significant advertising revenues
from,   advertisers,  our  business,  results  of operations  and
financial condition could be materially and adversely affected.


24
<PAGE>

Uncertain Acceptance of Our Internet Content

There  can  be no assurance that our content will be attractive
to  a  sufficient number of users to generate significant revenues.
There  can also be no assurance that we will be able to anticipate,
monitor and successfully respond to rapidly changing consumer needs
and  preferences to attract a sufficient number of users to our Web
sites.

If we are  unable to  develop Internet content that  allows us to
attract,  retain  and  expand a   loyal user base,  our business,
results  of  operations and financial condition will be materially
and adversely affected.


Security Risks

Despite the implementation of network  security  measures by   us,
our  infrastructure is potentially vulnerable to computer break-ins
and  similar disruptive problems caused by our customers or others.
Consumer  concern  over  Internet  security  has  been,  and could
continue  to  be,  a  barrier  to commercial  activities requiring
consumers  to send their credit card information over the Internet.
Computer  viruses, break-ins or other security problems could  lead
to  misappropriation of proprietary information and interruptions,
delays  or  cessation in service to our customers.  Further,until
more   comprehensive  security  technologies  are developed,   the
security  and privacy concerns of existing and potential customers
may inhibit the growth of the Internet as a merchandising medium.

Government Regulation and Legal Uncertainties

We  are  subject, both directly and  indirectly, to  various laws
and  governmental regulations relating to our business. We believe
that we are currently in compliance with such laws and that they do
not  have a material impact on our operations.  Moreover, there are
currently few laws or regulations directly applicable to access  to,
or  commerce on the Internet. However, due to increasing popularity
and  use of the Internet, it is possible that a number of laws  and
regulations may be adopted with respect to the Internet.
Such  laws and  regulations may cover issues such as user privacy,
pricing and characteristics and quality of products and services. The
enactmentof  any  such laws or regulations in the future may slow the
growthof  the  Internet, which could in turn decrease the demand
for  our services and increase our cost of doing business or
otherwise  have an  adverse  effect  on  our business, results  of
operations  and financial condition. In addition, the applicability to the
Internet of existing laws governing issues such as property
ownership, libel and   personal  privacy  is  uncertain  and  could
expose us  to substantial  liability  for which we might not  be
indemnified  by content  providers. We believe that our use of material
on our  Web sites  is  protected  under current provisions  of
copyright  law. However,  legal rights to certain aspects of Internet
content and commerce  are  not clearly settled. There is no assurance
that we will  be  able  to continue to maintain rights to
information. The failure  to be able to offer such information would have a
material adverse effect on our business, results of operations and
financial
condition.

Legality of Betting on Skill Games on the Internet

We  plan  to initiate bridge and chess sites soon where subscribers
can use  their   credit card to bet on the outcome of  their game.
Our   gambling  attorney  has performed a survey and has advised us
that 33 states in the U.S. do not appear to prohibit such activities

25
<PAGE>


and 17 states appear to prohibit it.  We will block residents of the
17  states  and  will  allow  residents of these 33 states to bet on
themselves.  However, some  of  these  33 states may interpret their
bookmaking  and  gambling  laws different and may require us to stop
serving their state's residents.   Additionally,  we  must withhold
30%  of  foreign  player's  net  winnings  if we operate these games
in  the  U.S.  We  plan  to  move  the operation of these games to a
country  outside  the  U.S.  to  avoid  the administrative burden of
U.S. tax  withholding on  foreign  player's  winnings.   We believe
that  we  can  accurately and  securely  administer  these legal and
tax  requirements,  however,  should  we  fail  we  could be subject
to  legal  proceeding  from  Federal  and/or state prosecutors.

Moreover,  both  United  States  Congress  and  several legislatures
have  considered   legislation  that  may  impact  the legality  of
offering  games,  both  skill  and  chance,  over  the Internet.  If
passed, these laws could impact our ability to offer such games over
the Internet.

Liability for Information Retrieved from the Internet

Since  material  may be downloaded from Web  sites  and  may be
subsequently  distributed  to others, there  is  a potential that
claims   will  be  made  against  us  for  defamation, negligence,
copyright or trademark infringement or other theories based on the
nature and content of such material. Such claims have been brought,
and sometimes successfully pressed, against on-line services in the
past. In addition, we could be exposed to liability with respect to
the  material  that may be accessible through our branded products
and  Web sites. Although we carry general liability insurance,  our
insurance may not cover potential claims of this type or may not be
adequate to cover all costs incurred in defense of potential claims
or to indemnify us for all liability that may be imposed. Any costs
or  imposition of liability that is not covered by insurance or  in
excess  of insurance coverage could have a material adverse effect
on  our business, results of operations and financial condition. We
are currently not aware of any such claims.

Dependence on Executive Officers and Other Key Employees

Our  success  will  depend upon the services  of  our directors,
executive  officers and certain key employees.   There  can be no
assurance  that we will be successful in attracting  and retaining
such  personnel, and our inability to attract such personnel could
have a material adverse effect on us.

There  can  be no assurance that our directors, executive officers,
or  key  employees will remain associated with us in any particular
capacity,  or  that they will not compete, directly or indirectly,
with  us.   The  exception is that our Chief Executive Officer and
our Chief  Financial  Officer  have  agreed,  in  their respective
employment contract, to not compete  with  us  for  two years
from termination of employment.


                         PART II   OTHER INFORMATION

Item 1.  Legal Proceedings

We are subject  to  legal  proceedings  and  claims  arising in the
ordinary  course   of   business.  Although  occasional adverse
decisions  or  settlements  may occur,  we  believe that the final
disposition of any pending  or threatened matters  will not have a
material adverse effect on our business, financial position or results
of operations.


Item 2.  Changes in Securities and Use of Proceeds

We  issued  61,733 shares to employees and consultants for services
rendered   during   the   three  months  ending  June 30,
2001.  These shares were based on

26
<PAGE>

per share prices from $.10 to $.12 and these shares were issued to
employees and consultants pursuant to the exemption from registration
requirements of the Securities Act provided by Section 4(2) thereof.

We  issued  stock  options  to terminating officers  during  the three
months
ending June 30,2001 to  purchase  185,833  shares  of common
stock  at  $1.00 per share and cancelled options of 759,000 shares.
These  options  vest  over  three  years  and  have a life of
three   years.   We  also   cancelled  stock  options  to departed
employees  to  purchase  277,000  shares of common stock during the
quarter  at  prices  ranging  from  $.38  per  share  to $2.25 per
share.   These  stock  options  were  issued to employees pursuant to
the  exemption  from  registration  requirements  of  the Securities
Act provided by Section 4(2) thereof.


Item 3.  Defaults upon Senior Securities

None.


Item 4.  Submission of matters to a vote of Security Holders

None.


Item 5.  Other Information

None.


Item 6.   Exhibits and Reports on Form 8-K


(a) Exhibits

Exhibit No.     Description
-----------     -----------
   27           Financial Data Schedule


(b) Reports on Form 8-K

None.



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<PAGE>

                                 SIGNATURES

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



WebQuest International, Inc.
(Registrant)


 /s/ Kirk Johnson
-------------------------
Kirk Johnson
Chief Executive Officer



Dated:   August 20, 2001




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