U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB


   Quarterly Report Section 13 or 15(d) of the Securities Exchange Act of 1934

                      For the quarter ended March 31, 2001

                          Commission File No. 000-26213

                             ARC COMMUNICATIONS INC.
        (Exact name of small business issuer as specified in its charter)

    A New Jersey Corporation                                  22-3201557
 (State or other jurisdiction of incorporation             (I.R.S. Employer
          or organization)                                 Identification No.)

                              788 Shrewsbury Avenue
                         Tinton Falls, New Jersey 07724
                    (Address of principal executive offices)

                    Issuer's telephone number: (732) 219-1766

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X    No ___

     The number of shares outstanding of the Issuer's common stock as of May 10,
2001 was 13,720,622.

<PAGE>

ARC COMMUNICATIONS, INC.

INDEX

PART 1.  FINANCIAL INFORMATION

         Item 1. Financial Statements (Unaudited)

         a)      Consolidated Balance Sheets as of March 31, 2001 .......   3

         b)      Consolidated Statements of Operations for the Three
                 Months Ended March 31, 2001 and 2000 ...................   4

         c)      Consolidated Statements of Cash Flows for the
                 Three Months Ended March 31, 2001 and 2000 .............   5

         d)      Notes to Consolidated Financial Statements ............. 6 to 7


         Item 2. Management's Discussion and
                 Analysis of Financial Condition
                 and Results of Operations .............................. 8 to 9

PART II.  OTHER INFORMATION

         Item 1. Exhibits and Reports on Form 8-K .......................  11

         a)       Exhibits ..............................................  11

         b)       Reports on Form 8-K ...................................  11


<PAGE>


PART 1 - FINANCIAL INFORMATION

Item 1 - Financial Statements


                   ARC COMMUNICATIONS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                    UNAUDITED

<TABLE>
<CAPTION>

                                      ASSETS                                Three Months Ended
                                                                                 March 31,
                                                                                   2000
                                                                                 ----------

CURRENT ASSETS
<S>                                                                              <C>
      Cash and Cash Equivalents                                                  $  314,000
      Accounts Receivable-Net of Allowances for Doubtful Accounts
          of $51,000                                                                407,000
      Inventory                                                                       1,000
      Prepaid Expenses and Other Receivables                                         12,000
      Other Receivables                                                              38,000
                                                                                 ----------
          Total Current Assets                                                      772,000
                                                                                 ----------

PROPERTY AND EQUIPMENT-NET                                                          357,000

OTHER ASSETS
      Goodwill-Net                                                                   65,000
      Security Deposits                                                              11,000
                                                                                  ----------

          Total Other Assets                                                         76,000
                                                                                 ----------

TOTAL ASSETS                                                                     $1,205,000
                                                                                 ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Line of Credit                                                             $  313,000
      Accounts Payable and Accrued Expenses                                         199,000
      Deferred Revenue                                                               96,000
                                                                                 ----------
          Total Current Liabilities                                                 608,000
                                                                                 ----------

COMMITMENTS AND CONTINGENCIES

      Preferred Stock, Stated Value $.20; 5,000,000 Shares Authorized;
          720,000 Shares Issued and Outstanding in 2001                             144,000
      Common Stock, $.001 Par Value, Authorized 45,000,000 Shares, Issued
          and Outstanding 13,720,622 in 2001                                         14,000
      Additional Paid in Capital                                                  1,411,000
      Retained Earnings (Accumulated Deficit)                                      (973,000)
                                                                                 ----------
STOCKHOLDERS' EQUITY                                                                597,000
                                                                                 ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $1,205,000
                                                                                 ==========
</TABLE>



<PAGE>


                   ARC COMMUNICATIONS, INC. AND SUBSIDIARIES 3

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                    UNAUDITED


<TABLE>
<CAPTION>
                                                 Three Months Ended     Three Months Ended
                                                      March 31,              March 31,
                                                        2001                   2000
                                                     ----------             ----------
<S>                                                   <C>                   <C>
NET SALES                                             $734,000              $1,194,000
                                                     ----------             ----------
COSTS AND EXPENSES
      Operating Costs                                   79,000                 151,000
      Selling, General and Administrative              741,000                 809,000
      Depreciation and Amortization                     37,000                  40,000
                                                     ----------              ----------

          Total Costs and Expenses                     858,000               1,000,000
                                                     ----------              ----------

OTHER INCOME (EXPENSES)
      Interest Income                                    2,000                   4,000
      Interest Expense                                  (8,000)                (12,000)
                                                     ----------              ----------

          Total Other Expense                           (6,000)                 (8,000)
                                                     ----------              ----------

NET INCOME (LOSS)                                   $ (129,000)              $  186,000
                                                    ===========              ==========


INCOME (LOSS) PER COMMON SHARE                      $    (0.01)              $     0.01
                                                    ===========              ==========


Weighted Average Number of Shares Outstanding       13,720,000               13,703,000
</TABLE>


See Notes to Consolidated Financial Statements.


<PAGE>


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                    UNAUDITED


<TABLE>
<CAPTION>
                                                                           Three Months Ended    Three Months Ended
                                                                                March 31,            March 31,
                                                                                  2001                2000
                                                                             --------------        -------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                            <C>                  <C>
      Net Income (Loss)                                                        $(129,000)           $ 186,000
      Adjustments to Reconcile Net Income (Loss) to Net Cash
          Provided by Operating Activities:
              Depreciation and Amortization                                       41,000               40,000

      Increase (Decrease) in Cash from Changes in:
          Accounts Receivable                                                    140,000             (116,000)
          Inventory                                                               (1,000)                   0
         Prepaid Expenses & Other Current Assets                                  67,000               (8,000)
          Security Deposits                                                       (1,000)                   0
          Accounts Payable and Accrued Expenses                                 (121,000)              51,000
          Deferred Revenue                                                             0              (43,000)
                                                                               ---------            ---------

              Total Adjustments                                                  124,000              (77,000)
                                                                               ---------            ---------

              Net Cash Provided by (Used in) Operating Activities                 (5,000)             110,000
                                                                               ---------            ---------


CASH FLOWS FROM INVESTING ACTIVITIES

      Expenditures for Property and Equipment                                    (18,000)             (30,000)
                                                                               ---------            ---------

              Net Cash Used in Investing Activities                              (18,000)             (30,000)
                                                                               ---------            ---------


CASH FLOWS FROM FINANCING ACTIVITIES

              Capitalized Lease Obligations                                            0               (1,000)

      Repayment to Line of Credit                                                (21,000)                   0
                                                                               ---------            ---------

              Net Cash Used by Financing Activities                              (21,000)              (1,000)
                                                                               ---------            ---------

NET INCREASE IN CASH                                                             (44,000)              79,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 358,000              352,000
                                                                               ---------            ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $ 314,000            $ 431,000
                                                                               =========            =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
      Cash Paid for Interest                                                       8,000               12,000
</TABLE>


See Notes to Consolidated Financial Statements.


<PAGE>



                    ARC COMMUNICATIONS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                    Unaudited

                                 March 31, 2001


1.   Basis of Presentation

     In the opinion of the  Company,  the  accompanying  consolidated  financial
     statements  contain all adjustments  (consisting  only of normal  recurring
     adjustments)necessary  to fairly present the Company's  financial  position
     and its  results of  operations  and cash flows as of the dates and for the
     periods indicated.

     Certain  information  and  footnote   disclosures   normally  contained  in
     financial   statements  prepared  in  accordance  with  generally  accepted
     accounting  principles  have been  omitted.  These  condensed  consolidated
     financial  statements  should  be  read in  conjunction  with  the  audited
     December  31, 2000  consolidated  financial  statements  and related  notes
     included in the  Company's  year end  certified  financial  statement.  The
     results of operations for the three months are not  necessarily  indicative
     of the operating results for the full year.


2.   Principles of Consolidations

     The consolidated  financial statements included the accounts of the Company
     and all of its subsidiaries in which a controlling  interest is maintained.
     All significant intercompany accounts and transactions have been eliminated
     in  consolidation.   For  those  consolidated  subsidiaries  where  Company
     ownership is less than 100%, the outside stockholders'  interests are shown
     as minority interests. Investments in affiliates over which the Company has
     significant  influence  but not a  controlling  interest are carried on the
     equity basis.

3.   Revenue Recognition

     The  Company  recognizes  revenue  from  sales at the date the  product  is
     shipped and as professional services are performed.




<PAGE>



                    ARC COMMUNICATIONS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                    Unaudited

                                 March 31, 2001




4.    Segment Information

<TABLE>
<CAPTION>
                                                   Three Months Ended   Three Months Ended
                                                        March 31,           March 31,
                                                          2001                2000
                                                       ----------          ----------
Revenue
<S>                                                    <C>                <C>
    Multi-Media                                        $  401,000         $  970,000
    Continuing professional education                     333,000             224,000
                                                       ----------         -----------
         Total Consolidated Revenue                    $  734,000         $ 1,194,000
                                                       ----------         -----------

Net Income
    Multi-Media                                        $ (213,000)        $  239,000
    Continuing professional education                      84,000            (53,000)
                                                       ----------         -----------
         Total Consolidated Net Income (Loss)          $ (129,000)        $  186,000
                                                       ----------         -----------

Assets
    Multi-Media                                        $1,064,000         $1,632,000
    Continuing professional education                     141,000            187,000
                                                       ----------         -----------
         Total Consolidated Net Assets                 $1,205,000         $1,819,000
                                                       ----------         -----------
</TABLE>



<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Plan of
        Operation

Three Months Ended March 31, 2001 and March 31, 2000

     Arc's net sales for the three  months  ended  March 31,  2001 and 2000 were
$734,000  and  $1,194,000  respectively,  a  decrease  of 38  percent.  In Arc's
multi-media  segment,  sales for the three  months ended March 31, 2001 and 2000
were  $401,000  and  $970,000  respectively,  a decrease of 59  percent.  In its
continuing  education  segment,  sales for the three months ended March 31, 2001
and 2000 were $333,000 and $224,000 respectively, an increase of 49 percent.

     Revenue decline was driven by the loss of two major customers and decreases
in sales volume from three other  customers.  The loss of the two  customers was
due to the mergers of these companies to larger organizations.  This represented
a loss of $213,000 in revenue. In addition three other major customer's revenues
decreased from $405,000 to $208,000.  Within the  multi-media  segment,  (1) web
site  development  revenue  decreased  $75,000  (or 48 %), (2) full  interactive
multi-media  development  decreased  $487,0000  (or 61%) and,  (3)  professional
services revenue decreased $7,000 (or 58%).

     The increase in revenue for continuing professional education, is primarily
due to the  capability  of  delivering  live  educational  seminars  through its
distance learning company.

     Operating  costs for the three  months  ended  March 31, 2001 and 2000 were
$79,000 and $151,000  respectively.  The decrease is due to the overall  revenue
declines across Arc's core businesses

     Selling,  general and  administrative  expenses  for the three months ended
March 31,  2001 and 2000  were  $741,000  and  $809,000  respectively.  Selling,
general and  administrative  expenses for 2001  decreased  $68,000 (or 8%). This
decrease was primarily due to reductions in selling expenses such as commissions
and travel expenses as a result of the decline in revenues.

     Depreciation and amortization expenses for the three months ended March 31,
2001 and 2000 were  $37,000 and  $40,000  respectively,  a slight  decrease of 1
percent.

     Net  (loss)  income  for the three  months  ended  March 31,  2001 and 2000
amounted to ($130,000) and $186,000  respectively.  Decrease in revenues was the
primary factor for the decrease in net income. As a result,  earnings (loss) per
share were ($0.01) for the three  months ended March 31, 2001  compared to $0.01
for the three months ended March 31, 2000.

Liquidity and Capital Resources

     Cash flow used by operations  for the three months ended March 31, 2001 was
$5,100.  The  Company  believes  that its  present  client  base  will  generate
sufficient  revenue  to  maintain  an  appropriate  level of  liquidity  through
12/31/01.

     The Company  maintains a line of credit of $750,000.  As of March 31, 2001,
$436,000  of the line of credit  remains  available  for future  use  subject to
collateral  restrictions.  The Company  utilizes  the line of credit for working
capital.

     Cash flow from investing activities was negative for the three months ended
March 31, 2001. Net cash used in investing activities for the three months ended
March 31, 2001 was $18,000 used for capital  expenditures.  Financing cash flows
were used to reduce the line of credit by $21,000.

<PAGE>

                                   SIGNATURES

In accordance with requirements of the Exchange Act, the Issuer caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: May 15, 2000                               ARC COMMUNICATIONS INC.



                                                 BY: /s/ Michael Rubel
                                                     ---------------------------
                                                        Michael Rubel
                                                        Chief Operating Officer



<PAGE>


PART  II.  OTHER INFORMATION

Item 1.  Exhibits and Reports on Form 8-K

          a)   A Form 8-K, dated May 10, 2001, was filed reporting the change of
               Director which occurred on April 10, 2001.