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 March 31, 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: 9,705,860
shares of common stock, $.001 par value, outstanding as of April 30, 2001
<PAGE>





                    WEBQUEST INTERNATIONAL, INCORPORATED
            TABLE OF CONTENTS AND INFORMATION REQUIRED IN REPORT
             Form 10-QSB for the quarter ended March 31, 2001


PART I     FINANCIAL INFORMATION

Item 1     Financial Statements:                                  Page
                                                                 ------
         Unaudited Condensed Consolidated Balance
          Sheets, March 31, 2001 and September 30, 2000          2 - 3

         Unaudited Condensed Consolidated Statements of
          Operations, for the three and six months ended
          March 31, 2001 and 2000 and from the period from
          inception on November 5, 1996 through March 31,
          2001                                                       4

         Unaudited Condensed Consolidated Statements of
          Stockholders Equity from inception on November
          5, 1996, through March 31, 2001.                       5 - 9

         Unaudited Condensed Consolidated Statements of
          Cash Flows, for the six months ended March 31,
          2001 and 2000 and for the period from inception
          on November 5, 1996 through March 31, 2001           10 - 11

         Notes to Unaudited Condensed Consolidated
          Financial Statements                                  12 -18


Item 2   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                       19

         Factors That May Effect Future Results                     20

PART II  OTHER INFORMATION                                          27

Item 1   Legal Proceedings                                          28

Item 2   Changes in Securities and Use of Proceeds                  29

Item 3   Defaults upon Senior Securities                            28

Item 4   Submission of Matters to a Vote of Security
          Holders                                                   28

Item 5   Other Information                                          28

Item 6   Exhibits and Reports on Form 8-K                           27

         SIGNATURES                                              28-29

<PAGE>




                        PART I-FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


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

           UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              MARCH 31, 2001




















<PAGE>




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




                                 CONTENTS

                                                          PAGE


         Unaudited Condensed Consolidated Balance
          Sheets, March 31, 2001 and September 30, 2000  2 - 3

         Unaudited Condensed Consolidated Statements of
          Operations, for the three and six months ended
          March 31, 2001 and 2000 and from the period from
          inception on November 5, 1996 through March 31,
          2001                                               4

         Unaudited Condensed Consolidated Statements of
          Stockholders Equity from inception on November
          5, 1996, through March 31, 2001.               5 - 9

         Unaudited Condensed Consolidated Statements of
          Cash Flows, for the six months ended March 31,
          2001 and 2000 and for the period from inception
          on November 5, 1996 through March 31, 2001   10 - 11

         Notes to Unaudited Condensed Consolidated
          Financial Statements                          12 -18




<PAGE>


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

              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                  ASSETS





                                          March 31,  September 30,
                                             2001         2000
                                         ___________  ___________
CURRENT ASSETS:
  Cash                                    $        -   $1,081,286
  Employee advances                           18,256       18,330
  Accounts receivable                              -       13,479
  Interest Receivable                          3,053        6,882
  Prepaid expenses                            47,223      128,903
                                         ___________  ___________
        Total Current Assets                  68,532    1,248,880
                                         ___________  ___________

PROPERTY AND EQUIPMENT, net                  906,344      944,315
                                         ___________  ___________
OTHER ASSETS:
  Refundable deposits                          6,362        6,362
                                         ___________  ___________
        Total Other Assets                     6,362        6,362
                                         ___________  ___________
                                          $  981,238   $2,199,557
                                         ___________  ___________


























                                [Continued]

2
<PAGE>


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

              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                [Continued]


                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                          March 31,  September 30,
                                             2001        2000
                                         ___________  ___________
CURRENT LIABILITIES:
  Bank overdrafts                         $      966   $        -
  Accounts payable - related parties           2,000            -
  Accounts payable                            92,393       77,823
  Notes payable - related parties             21,618       21,618
  Other accrued liabilities                   48,283       36,808
  Current portion - capital lease obligation   8,718            -
                                         ___________  ___________
        Total Current Liabilities            173,978      136,249
                                         ___________  ___________

CAPITAL LEASE OBLIGATION, less current
  portion                                     20,126            -
                                         ___________  ___________
        Total Liabilities                    194,104      136,249
                                         ___________  ___________

CONTINGENCIES AND COMMITMENTS                      -            -

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 9,705,860 and 9,493,137
    shares issued and outstanding              9,706        9,493
  Capital in excess of par value           8,514,727    8,372,239
  Deficit accumulated during the
    development stage                     (7,737,299)  (6,318,424)
                                         ___________  ___________
                                             787,134    2,063,308
       Total Stockholders' Equity         ___________  ___________
                                          $  981,238   $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


                    For the Three          For the Six   From Inception
                    Months Ended          Months Ended   on November 5,
                      March 31,             March 31,      1996 Through
                 ___________________ _______________________ March 31,
                    2001     2000        2001       2000      2001
                 _________ _________ ___________ ___________ ___________
REVENUE          $  11,282 $     300 $    16,846 $     3,525 $    60,496
                 _________ _________ ___________ ___________ ___________
EXPENSES:
 Development,
   General and
   administrative  655,309   640,493   1,445,984     879,356   7,359,871
 Compensation expense
   recorded in
   accordance with
   APB 25 for stock
   options issued below
   market value          -          -          -           -     295,423
                 _________ _________ ___________ ___________ ___________
   Total Expenses  655,309   640,493   1,445,984     879,356   7,655,294
                 _________ _________ ___________ ___________ ___________
LOSS FROM
  OPERATIONS      (644,027) (640,193) (1,429,138)   (875,831) (7,594,798)
                 _________ _________ ___________ ___________ ___________
OTHER INCOME (EXPENSE):
 Gain on sale of
   marketable
   securities            -         -           -           -      25,106
 Interest income     3,487    17,476      14,780      17,476      94,819
 Interest (expense) (2,473) (114,890)     (4,517)   (124,387)   (204,556)
 License termination
  cost                   -         -           -    (192,700)          -
                 _________ _________ ___________ ___________ ___________
   Total Other Income
     (Expense)       1,014   (97,414)      10,263   (299,606)    (84,631)
                 _________ _________ ___________ ___________ ___________
LOSS BEFORE INCOME
  TAXES           (643,013) (737,607) (1,418,875) (1,175,437) (7,679,429)

CURRENT TAX EXPENSE      -         -           -           -           -

DEFERRED TAX EXPENSE     -         -           -           -           -
                 _________ _________ ___________ ___________ ___________
NET LOSS         $(643,013)$(737,607)$(1,418,875)$(1,175,437)$(7,679,429)

LESS: PREFERRED
  DIVIDEND
  REQUIREMENTS           -         -          -            -     (57,870)
                 _________ _________ ___________ ___________ ___________
NET LOSS APPLICABLE
  TO COMMON
  STOCKHOLDERS   $(643,013)$(737,607)$(1,418,875)$(1,175,437)$(7,737,299)
                 _________ _________ ___________ ___________ ___________
LOSS PER COMMON
  SHARE          $    (.07)$    (.09)$      (.15)$      (.17)$     (1.50)
                 _________ _________ ___________ ___________ ___________

 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 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH MARCH 31, 2001

                                                                Deficit
                                                              Accumulated
            Preferred Stock      Common Stock     Capital in   During the
         ____________________ ___________________ Excess of   Development
           Shares    Amount     Shares    Amount  Par Value      Stage
         __________ _________ __________ ________ ___________ __________
BALANCE,
 November 5,
 1996             - $       -          - $      - $         - $        -

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

Issuance of
 116,667 shares
 common stock
 for services,
 January 1997,
 at $.116 per
 share            -         -    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
 preferred and
 common stock
 for cash,
 March through
 September 1997,
 at $1.00 per
 share       93,750        94     93,750       94     187,312          -

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

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

Granting of
 options to
 acquire 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 preferred
 and common
 stock for cash,
 October, 1997
 through September,
 1998 at
 $1.00 per
 share      251,000       251    251,000      251     501,498          -

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

                                [Continued]

5
<PAGE>


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

         UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH MARCH 31, 2001

                                [Continued]
                                                                Deficit
                                                              Accumulated
            Preferred Stock      Common Stock     Capital in   During the
         ____________________ ___________________ Excess of   Development
           Shares    Amount     Shares    Amount  Par Value      Stage
         __________ _________ __________ ________ ___________ __________
Issuance
 of 18,057
 shares
 preferred
 and common
 stock at
 $1.00 per
 share,
 accounted for
 as a
 subscription
 receivable,
 July to
 September,
 1998        18,057        18     18,057       18      36,078          -

Granting of
 options to
 an officer to
 acquire
 150,000
 shares of
 common stock
 at below
 market value.
 Compensation
 expense
 calculated
 in accordance
 with APB 25,
 October 1997     -         -          -        -     132,600          -

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

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

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

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

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

Issuance of
 22,898 shares
 of common stock
 for consultation,
 programming and
 other services
 rendered 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 period
 ended
 September 30,
 1998         (93,750)      (94)    93,750       94           -         -

                                [Continued]

6
<PAGE>





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

         UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH MARCH 31, 2001

                                [Continued]
                                                                Deficit
                                                              Accumulated
            Preferred Stock      Common Stock     Capital in   During the
         ____________________ ___________________ Excess of   Development
           Shares     Amount    Shares    Amount  Par Value      Stage
         __________ _________ __________ ________ ___________ ___________

Accrued
 preferred
 dividends
 for period
 ending
 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
 upon exercise
 of warrants
 at $1.00
 per share        -         -     50,000       50      49,950           -

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

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

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

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

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

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

Accrued
 preferred
 dividends for
 period ending
 September 30,
 1999             -         -          -        -           -     (27,991)

Granting of
 options and
 warrants to acquire
 common stock at
 below market value.
 Compensation
 expense calculated
 in accordance
 with APB25       -         -          -        -      22,110           -

                                [Continued]

7
<PAGE>


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

         UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH MARCH 31, 2001

                                [Continued]

                                                                Deficit
                                                              Accumulated
            Preferred Stock      Common Stock     Capital in   During the
         ____________________ ___________________ Excess of   Development
            Shares   Amount     Shares    Amount   Par Value      Stage
         __________ _________ __________ ________ ___________ ____________

Granting of
 warrants to
 acquire
 common stock
 at below
 market value
 in relations
 to note
 payable.
 Interest
 expense
 calculated
 in accordance
 with APB25       -         -          -        -       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)

Shares issued
 in private
 placement
 for cash at
 $1.25 per
 share net
 of $345,325
 stock offering
 cost.            -         -  3,431,300    3,431   3,940,369            -

Shares cancelled
 for non-payment
 of subscription
 receivable       -         -    (15,000)     (15)    (14,985)           -

Shares issued
 for cancellation
 of license
 agreements,
 payment of
 accounts payables
 and notes
 payable at
 $1.00 per
 share            -         -    400,000      400     399,600            -

Shares issued
 upon exercise
 of warrants,
 at $.87 to
 $1.00 per
 share            -         -     52,500       52      47,572            -

Shares issued
 for warrants
 exercised in
 previous
 year at
 $1.00 per
 share            -         -     30,000       30      29,970            -

Shares issued
 for the
 acquisition
 of a website,
 (chessed.com)
 at $3.31 per
 share            -         -     40,785       41     134,959            -

Shares issued
 to pay
 accrued
 dividends
 on preferred
 stock            -         -     57,870       58      57,812            -

Shares issued
 for the
 acquisition of
 a web-site,
 (winbridge.com)
 at $2.25 per
 share            -         -    200,000      200     449,800            -

Shares issued
 for conversion
 of debt at
 $1.25 per
 share            -         -     52,104       52      65,078            -

                                [Continued]

8
<PAGE>


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

         UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

              FROM THE DATE OF INCEPTION ON NOVEMBER 5, 1996

                          THROUGH MARCH 31, 2001

                                [Continued]

                                                                 Deficit
                                                               Accumulated
            Preferred Stock      Common Stock     Capital in   During the
         ____________________ ___________________  Excess of   Development
            Shares   Amount     Shares    Amount   Par Value      Stage
         __________ _________ __________ ________ ___________ ___________
Shares
 issued for
 loan
 incentives
 valued at
 $103,125
 or $1.25
 per share        -         -     82,500       83     103,042           -

Shares
 issued for
 non-cash
 consideration
 including
 services
 valued at
 $248,517.
 Prices range
 from $.812
 to $3.00
 per share.       -         -    280,460      280     248,237           -

Shares issued
 in connections
 with the
 acquisition
 of a  website,
(bridgepassion.com)
 at $1.00
 per share,
 July 2000        -         -     10,000       10       9,990           -

Stock
 subscription
 receivable
 cancelled        -         -          -        -      (9,114)          -

Cancellation
 of preferred
 dividends for
 period ending
 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)

October -
 December
 2000, stock
 issued for
 services
 rendered
 with prices
 ranging
 from $.375 -
 $1.00 per
 share            -         -    156,523      157     115,349           -

January  -
 March 2001,
 stock issued
 for services
 rendered with
 prices ranging
 from $.14 -
 $.75 per
 share            -         -     56,200       56      27,139           -

Net loss for
 the period
 ended March 31,
 2001             -         -          -        -           -  (1,418,875)
         __________ _________ __________ ________ ___________ ___________
BALANCE,
 March 31,
 2001             - $       -  9,705,860 $  9,706 $ 8,514,727 $(7,737,299)
         __________ _________ __________ ________ ___________ ___________








  The accompanying notes are an integral part of this unaudited condensed
                     consolidated financial statement.

9
<PAGE>


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

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                       For the Six        From Inception
                                       Months Ended       on November 5,
                                        March 31,         1996 Through
                                 ________________________   March 31,
                                     2001         2000        2001
                                 ____________ ___________  ____________
Cash Flows from Operating Activities:
  Net loss applicable to common
   stockholders                  $ (1,418,875)$(1,175,437) $ (7,737,299)
  Adjustments to reconcile net
    loss to net cash used by
    operating activities:
    Depreciation and amortization     204,114      15,367     1,559,750
    Loan incentive expense                  -     103,125       103,125
    Stock issued for goods and
      services                        142,700     313,337       641,209
    APB 25 compensation recorded
      for stock options issued
      below market value                    -           -       416,159
    Gain on sale of marketable
      securities                            -           -       (28,106)
        Loss on contract settlement         -           -       192,700
    Changes in assets and liabilities:
      (Increase) decrease in employee
        advances                           74     (19,829)      (18,256)
      (Increase) decrease in interest
        receivable                      3,829           -        (3,054)
      (Increase) decrease in accounts
        receivable                     13,479      28,664             -
      (Increase) in prepaid expenses   81,680    (243,000)        6,795
      Increase in bank overdraft          966           -           966
      Increase (decrease) in accounts
        payable                        14,571    (198,560)       92,394
      Increase (decrease) in accounts
        payable - related party         2,000           -         2,000
      Increase (decrease) in accrued
        liabilities                    11,475     (94,337)      223,815
      Increase in customer deposits         -           -             -
                                 ____________ ___________  ____________
      Net Cash (Used) by Operating
        Activities                   (943,987) (1,270,670)   (4,547,802)
                                 ____________ ___________  ____________
Cash Flows from Investing Activities:
 (Increase) in refundable deposits          -        (464)       (6,362)
  Purchase of equipment               (14,059)   (120,001)     (128,121)
  Purchase/development of websites   (120,300)          -      (500,300)
  Purchase of software licensing
    rights                                  -           -      (300,000)
  Proceeds from marketable securities
    sales                                   -           -       276,992
                                 ____________ ___________  ____________
      Net Cash Provided (Used) by
        Investing Activities         (134,359)   (120,465)     (657,791)
                                 ____________ ___________  ____________
Cash Flows from Financing Activities:
  Proceeds from notes payable               -     820,502     1,324,827
  Payments on notes payable                 -    (288,411)   (1,188,393)
  Payments on capital lease
    obligation                         (2,940)          -       (12,829)
  Proceeds from preferred stock
    issuance                                -           -       344,750
  Proceeds from common stock issuance       -   4,046,625     4,733,385
  Increase in accrued dividends payable     -     (58,770)       57,870
                                 ____________ ___________  ____________
      Net Cash Provided by
       Financing Activities            (2,940)  4,519,946     5,259,610
                                 ____________ ___________  ____________





                                [Continued]

10
<PAGE>


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

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                [Continued]

                                       For the Six        From Inception
                                       Months Ended       on November 5,
                                        March 31,         1996 Through
                                 ________________________   March 31,
                                     2001         2000         2001
                                 ____________ ___________  ____________

Net Increase in Cash               (1,081,286)  3,128,811             -

Cash at Beginning of Period         1,081,286       2,386             -
                                 ____________ ___________  ____________
Cash at End of Period            $          - $ 3,131,197  $          -
                                 ____________ ___________  ____________

Supplemental Disclosures of Cash Flow information:
  Cash paid during the periods ended for:
    Interest                     $          - $    21,256  $     55,186
    Income taxes                 $          - $         -  $          -

Supplemental schedule of Non-cash Investing and Financing Activities:
  For the six months ended March 31, 2001:
     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 six months ended March 31, 2000:
     The  Company  issued 8,000 shares of common stock for services  rendered
     valued at $8,000, or $1.00 per share.

     The Company issued 400,000 shares of its common stock to HomeSeekers.Com
     for payment of a $50,000 note payable, $3,800 of accrued interest on the
     loan,  $153,500  of  outstanding payables for programming  services  and
     $194,700 to terminate the previous programming contract, that included a
     7% royalty on gross revenues.

     The  Company issued 58,600 shares of common stock for services  rendered
     valued at $155,290, or $2.65 per share.

     The  Company issued 7,482 shares of common stock to acquire the  website
     chess.com valued at $135,000, or $3.31 per share.

     The  Company  issued 57,780 shares of common stock to  pay  for  accrued
     dividends.

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

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


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

  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  our 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  - Although  these  statements  have  been
  reviewed  by our independent auditors, they are unaudited.  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 March 31, 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.  It is suggested  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  periods
  ended  March  31,  2001  and  2000 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 [See Note 7].

  Revenue Recognition - Revenue is recognized at the time of the sale.

  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. [See Note 6].

12
<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 March 31, 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 - 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
  March 31, 2001, 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 March 31, 2001, 9,705,860 shares were outstanding.

  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.


13
<PAGE>



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

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - CAPITAL STOCK [Continued]

  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  right,
  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 Company is in the  process
  of  assigning the rights to the website 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 Mach 31,   2001  options  to
  purchase a total of 3,232,832 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 March 31, 2001, none of  the
  options remain outstanding.

  Stock Warrants - At March 31, 2001, the Company had warrants outstanding to
  purchase  3,161,750 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 3 - 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  March  31,  2001  and
  September  30, 2000, the total of all deferred tax assets was approximately
  $2,250,000 and $1,990,000 and the total of the deferred tax liabilities was
  $0  and $0. 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  $2,250,000   and
  $1,990,000  as  of March 31, 2001 and September 30, 2000,  which  has  been
  offset  against  the  net  deferred tax assets.   The  net  change  in  the
  valuation  allowance  during the period ended March 31,  2000  amounted  to
  approximately $260,000.

NOTE 4 - RELATED PARTY TRANSACTIONS

  Employment  Agreements - At March 31, 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.  The Company is
  currently  negotiating with the former employee to settle the  balance  due
  under the agreement.

  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.  The company  is
  currently  negotiating with the former employee to settle the  balance  due
  under the agreement in exchange for the website Nancyskitchen.com, computer
  equipment, and office furniture.

  NOTE 5 - 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 six months ended March 31, 2001 amounted to $4,874.


15
<PAGE>


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

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  NOTE 5 - CAPITAL LEASE [Continued]

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

  Future minimum lease payments for the periods ended:

               March 31,                    Lease Payments
              ____________                  ______________
                  2002                       $ 16,180
                  2003                         16,180
                  2004                          9,272
                                           ______________
  Total future minimum lease payments        $ 41,632
  Less: amounts representing interest         (12,788)
                                           ______________
  Present value of the future minimum
   lease payments                              28,844
  Less: current portion                        (8,718)
                                           ______________
  Capital lease obligations - long-term      $ 20,126
                                           ______________

NOTE 6 - 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 Six   From Inception
                    Months Ended          Months Ended   on November 5,
                      March 31,             March 31,      1996 Through
                 ___________________ _______________________ March 31,
                    2001     2000        2001       2000      2001
                 _________ _________ ___________ ___________ ___________
  Income (loss)
   from continuing
   operations
   applicable to
   common  stock $(643,013)$(737,607)$(1,418,875)$(1,175,437)$(7,679,429)

  Less: preferred
   dividends             -         -           -           -     (57,870)
                 _________ _________ ___________ ___________ ___________
  Income (loss)
   available to
   common
   stockholders
   used in
   earnings (loss)
   per  share    $(643,013)$(737,607)$(1,418,875)$(1,175,437)$(7,737,299)
                 _________ _________ ___________ ___________ ___________
  Weighted average
   number of
   common shares
   outstanding
   used in
   earnings
   (loss) per
   share during
   the  period   9,767,688 7,143,825   9,610,699   6,407,287   5,156,715
                 _________ _________ ___________ ___________ ___________

16
<PAGE>
                WEBQUEST INTERNATIONAL, INC AND SUBSIDIARY
                       [A Development Stage Company]

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - EARNINGS (LOSS) PER SHARE [Continued]

  Dilutive earnings (loss) per share was not presented, as its effect is anti-
  dilutive.   The  Company  had  at March 31,  2001,  3,392,625  options  and
  3,361,750  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 7 - 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  inception and has not yet been successful in establishing profitable
  operations.  Further, the Company may not have adequate working capital  to
  complete  its business plans.  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.

NOTE 8 - 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
  22,561  shares  of  common stock to this consultant for  services  rendered
  during October and November 2000.

  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  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 thirty six 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.


17
<PAGE>


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

      NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - SUBSEQUENT EVENTS

  Settlement Offer  -  In April 2001, the employment of the Company's  former
  CFO was terminated.  According to the terms of an employment agreement [See
  Note  4],  the  balance  of  the contract is due.  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.

18
<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 March 31, 2001 was minimal,totaling
$11,282  compared to $300 for the three months  ended  March 31, 2000.
This  revenue was generated primarily from banner advertising  on our
Internet Sites.  We anticipate revenues to increase nominally for the
three months ending June 30, 2001,    and  then  to increase significantly
starting with the three months ending  September 30, 2001. We started leasing
our Million Dollar Pull promotional product in January 2001 and anticipate
revenue from this product to ramp up slowly during the three months ending
June 30, 2001 and then accelerate during the three months ending
September 30, 2001. However, there is no guarantee of such results.  See
"Initial Software Problems with our Million Dollar Pull Product" under
"Factors That May Effect Future Results".  We plan to launch our
subscription-based chess and bridge sites during July 2001.  The
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 July 2001.

Development, Administrative and Marketing Expenses

Development,   administrative  and  marketing  expenses totaled
$655,309  for  the  three months ending  March  31,  2001, an
increase of $15,000, or 2% from the $640,493 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

19
<PAGE>


and  bridge sites.   We  believe these three products will generate
operating profits faster than focusing on our for-pay iPong tournaments.

We reduced our employee headcount from 23 to 16 employees and the
related costs during January 2001 to focus on generating positive
cash flows from operations as soon as possible.

Net Loss

Our  net loss decreased from $737,607 for the three months ended
March  31,  2000  to  $643,013 for  the  three  months ending
March  31,  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   $378,000  of  our  capital  to  fund our
operations  during  the  three months ending  March   31, 2001
versus  $284,000  to  fund our operations for  the corresponding
prior year period.

Investing activities

None.



Financing Activities

None.



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 consists of our  Million Dollar
Pull,  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.

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, may have a material adverse
affect  on our  ability to implement our proposed business strategy.


20
<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.

Challenges of Growth

We  anticipate  a period of rapid growth that is  expected to place
a  strain  on our administrative, financial and operational resources.
Our ability to manage any staff and facilities growth effectively will
require  us  to  continue  to improve our operational, financial   and
management  controls,   reporting   systems and procedures, to install
new management information and control systems  and to train, motivate
and manage our employees. However, there  can  be  no assurance that
we will install such management information  and control systems in an
efficient and timely manner or  that  the  new systems will be adequate
to support our future operations.  If we are unable to hire, train and
retain qualified systems  engineers and consultants to implement these
services or are  unable  to manage the post-sales process effectively,
our ability  to  attract  repeat sales could  be  materially adversely
affected,   thereby  limiting   our   growth opportunities.  If  our
management is unable to manage  growth  effectively,  such as  if our
sales  and  marketing  efforts  exceed  our  capacity  to install,
maintain and service our products or if new employees are unable to
achieve   adequate  performance  levels,  our  business, operating

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<PAGE>


results  and  financial  condition could  be  materially adversely
affected.

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

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<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.


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<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

26
<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  56,200 shares to employees and consultants for services
rendered   during   the   three  months  ending  March 31,
2001.  These shares were based on

27
<PAGE>

per share prices from $.14 to $.75 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  employees  during  the three  months
ending December  31,  2000 to  purchase  624,500  shares  of common
stock  at  market  prices  ranging  from  $.38  per share to $.88 per
share.  These  options  vest  over  three  years  and  have a life of
three   years.   We  also   cancelled  stock  options  to departed
employees  to  purchase  1,054,375  shares of common stock during the
quarter  at  prices  ranging  from  $2.25  per  share  to $9.00 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.

We  issued  stock  warrants  to  purchase  200,000  shares of common
stock at $.66 per share to  a  consultant  as  partial consideration
for  marketing  services  to  be  performed.   These  stock warrants
vest  over  a  two-year  period.  We  also  cancelled  and reissued
warrants  as  partial  consideration  for  financial public relations
services.  The  cancelled  stock  warrants  were  to purchase 100,000
shares at $3.00 per share and 100,000  shares  at  $2.00 per   share
and  were  reissued  at  $1.25  per  share.   Both  the cancelled an
reissued  warrants  were  fully  vested.   These  stock warrants were
issued  to  consultants  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.



                                 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.

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<PAGE>


WebQuest International, Inc.
(Registrant)


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



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





Dated:   June 5, 2001


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