U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB


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

                  For the Quarterly Period Ended March 31, 2002

                         Commission File Number 0-25725


                                V-FORMATION, INC.
                                ----------------
          (Exact name of small business issuer as specified in charter)

                                   New Jersey
                                   ----------
         (State of either jurisdiction of incorporation or organization)

                                   22-3345169
                                   ----------
                        (IRS Employer Identification No.)

                         99 Wood Avenue South, Suite 805
                            Iselin, New Jersey 08830
                            ------------------------
                    (Address of principal executive offices)

                                  732-321-4040
                                  ------------
                           (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
                                                              ---     ---

State the number of shares outstanding of each of the issuer's classes of common
equity  as of the  latest  practicable  date:  As of May 13,  2002,  there  were
16,086,744 common shares outstanding.



<PAGE>

                                     PART I

ITEM 1.  FINANCIAL STATEMENTS.

     Our  unaudited  financial  statements  for the three months ended March 31,
2002 are attached hereto.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

     The following  discussion  should be read in conjunction with our unaudited
financial  statements and notes thereto included herein. In connection with, and
because  we desire to take  advantage  of the "safe  harbor"  provisions  of the
Private  Securities  Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following  discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange  Commission.  Forward looking
statements are statements not based on historical  information  and which relate
to future  operations,  strategies,  financial  results  or other  developments.
Forward looking  statements are necessarily based upon estimates and assumptions
that are inherently  subject to significant  business,  economic and competitive
uncertainties and  contingencies,  many of which are beyond our control and many
of which,  with  respect to future  business  decisions,  are subject to change.
These  uncertainties and contingencies can affect actual results and could cause
actual results to differ  materially from those expressed in any forward looking
statements  made by us, or on our behalf.  We disclaim any  obligation to update
forward-looking statements.

Overview

     V-Formation,  Inc. ("we", "us", "our" or "the Company") is a multi-faceted,
innovative,  sports technologies  company that has made significant  advances in
the development and marketing of the first major evolution in inline skates. Our
objective is to become the premier sports and related  technologies  firm in the
sports product and  entertainment  industry.  We  manufacture  and sell patented
V-configuration  roller skates, as well as "cutting edge" extreme sports apparel
under the Nexed brand name, to sporting goods retailers  located  throughout the
United States and Canada.

     While we can provide no assurances,  we believe that, with suitable capital
funding,  we will be well positioned to make substantial market penetration with
respect to our product lines and capture market share, substantially fueling our
growth. Additionally, through the use and acquisition of intellectual properties
which  are  either  owned or  licensed  exclusively  by us, we  believe  we have
effectively  established  the  broad  foundation  we  have  used to  attain  the
accomplishments  we have  experienced to date. We intend to use our intellectual
properties as a

                                        2

<PAGE>



springboard for future growth.  Presently,  all our sports products  incorporate
next generation technology in their design and implementation.  Importantly, all
our key technologies are proprietary, licensable and transferable.

     The  following  information  is intended to highlight  developments  in our
operations  to  present  our  results  of  operations,  to  identify  key trends
affecting our businesses and to identify other factors  affecting our results of
operations for the three-month periods ended March 31, 2002 and 2001.

Results of Operations

Comparison  of Results of  Operations  for the Three Months Ended March 31, 2002
and 2001

     Our sales revenues  increased to $351,915 for the three-month  period ended
March 31,  2002 from  $199,819  for the similar  period in 2001,  an increase of
$152,096 (76.1%).  The increase in revenues was mainly attributable to the sales
of hockey  pants and skates  totaling  $267,916 in 2002  compared to $161,805 in
2001,  an  increase  of  $106,111  (65.6%).  The  increase  in  sales  was  also
attributable  to the sales of jerseys which totaled  $41,610  during the quarter
ended March 31,  2002 but which were not sold  during the similar  period in the
prior year.

     In the three months ended March 31, 2002, costs of sales also increased, to
$245,173  compared to $191,192  for the similar  period in 2001,  an increase of
$53,981,  (28.2%).  This was due primarily to the increase in revenues described
in the paragraph  above offset by attaining  higher margins (48.6%) on increased
volume of pant sales.  Gross  margins  were lower in 2001  because of  inventory
liquidated at lower prices in conjunction  with our factory closing in the first
quarter of 2001.

     General and  administrative  expenses  were  $520,060  for the three months
ended March 31,  2002,  compared to $834,787  for the similar  period in 2001, a
decrease  of  $314,727  (37.7%).  This  decrease  was  due  primarily  to  costs
associated  with payments to newly  retained  outside  consultants  in the prior
year, for which no costs were recorded in the first three months of 2002.  These
consultants  were  comprised  of  financial  advisors,  a patent  expert  and an
investor relations firm hired in connection with our becoming a public reporting
company. The payments to these consultants during the first three months of 2001
totaled  $108,928  while there were no  payments in the similar  period in 2002.
Also,  in the first three months of 2001, we incurred  approximately  $24,000 of
costs in connection  with settlement with the New Jersey Bureau of Securities in
the matter described under legal  proceedings in previous reports filed with the
SEC.


                                        3

<PAGE>



     Also,  during the  three-month  period ended March 31, 2001,  we incurred a
one-time charge of $102,643  arising from the closing of our warehouse  facility
in  Paterson,  NJ. Our  warehouse  operations  are now handled by a  fulfillment
center located in Aurora,  Colorado.  As a result of this change, profit margins
increased  due to  lower  costs of sales  by  reducing  employee-related  costs,
shipping costs and general factory overhead.

     During the three-month period ended March 31, 2002, selling and promotional
costs  decreased  by $110,206  from  $349,936 to  $239,730.  The decrease is due
primarily to our being more selective in the  scheduling of  promotional  events
which, when combined with the associated travel costs,  accounted for a decrease
of approximately $104,000.

     Research and development  costs during the  three-month  period ended March
31, 2002 were $75,323 as compared to $82,943 for the prior period, a decrease of
$7,620,  which is primarily due to costs  associated  with the  introduction  of
numerous new products/models in the first quarter of the prior year.

     During the three months ended March 31, 2002, depreciation and amortization
expense  was  virtually  unchanged  from  $35,012 to $34,976.  Amortization  and
depreciation is associated with patents, trademarks and equipment.

     Interest and other, which principally  consists of interest expense, net of
interest income,  increased from $8,544 in the three months ended March 31, 2001
to $14,789 for the three  months  ended March 31,  2002,  an increase of $6,245.
This increase was due to higher debt balances on which interest was calculated.

     During the first  quarter of 2002,  we were notified that other parties had
satisfied $85,598 of a note payable obligation, which arose from litigation that
was settled in 1998. As a result,  we recognized  income from elimination of the
obligation.

     During 2001, we  discontinued  the operations of our  subsidiaries,  On Net
Sports, Inc. and Soft Machine,  Inc. The operating expenses of the subsidiaries,
which totaled  $208,555,  have been reported as  discontinued  operations in the
consolidated  statement of operations  during 2001.  Neither of the subsidiaries
had generated any revenues since their inception late in 2000.

     As a result,  we  generated a net loss of  $(710,863)  for the three months
ended March 31, 2002 ($.04 per share) compared to a net loss of $(1,778,793) for
the three months ended March 31, 2001 ($.17 per share).


                                        4

<PAGE>



Liquidity and Capital Resources

     At March  31,  2002,  we had  $454,822  in cash and  cash  equivalents,  an
increase  of  $240,086  from  December  31,  2001.  This  increase  in cash  was
attributable  to net cash used in operating  activities of $348,569 and net cash
used in  investing  activities  of  $112,479,  offset  by net cash  provided  by
financing activities of $701,134.

     Net cash used in operating  activities during the three-month  period ended
March 31,  2002 was  $348,569  versus  $1,339,225  for the same  period in 2001.
Although the net loss for the current year period was  significantly  lower than
the prior year,  accounts  receivable  decreased  by  $178,558 to $294,843  from
$473,401 at December 31, 2001, which our management  attributes to the fact that
seasonal sales at the end of December would normally create a higher  receivable
balance at that time. In addition,  through diligent inventory  management,  our
inventory on hand at March 31, 2002, decreased by $160,383 from the December 31,
2001 balance.

     Net  cash  provided  by  financing  activities  totaled  $701,134  for  the
three-month  period  ended March 31,  2002.  This was mainly  attributable  to a
$635,000  increase  in the  balance of our line of credit  along  with  proceeds
received  from the sale of our common stock  totaling  $212,000,  offset by cash
used for principal payments under loan agreements of $107,703.

     As of March 31,  2002,  we have a note  receivable  from an officer  with a
principal balance of $258,823. The principal balance was $207,229 as of December
31, 2001, an increase of $49,595. The note bears interest at 8% and is repayable
upon  demand.  Interest on the note,  which is also  payable on demand,  totaled
$4,595 for the three-month period ended March 31, 2002. We are in the process of
negotiating  specific repayment terms.  However, we do not expect the loan to be
repaid within the next twelve months.

     During  September 2001, we obtained a $1,250,000  line of credit  agreement
with a bank. The line of credit is available through July 1, 2002. Amounts drawn
on the line  bear  interest  at the  prime  rate  plus 2% (6.75% as of March 31,
2002). The obligation is collateralized by personal  guarantees and by mortgages
on specific real estate assets of one of our officers and one of our directors.

     At March 31, 2002, we had certain  outstanding  notes payable,  including a
note payable in 18 equal quarterly  installments of $33,066,  including interest
at 8%, which commenced April 1, 1998 and is due July 1, 2002. As of May 1, 2002,
the  outstanding  principal  balance  on this  note was  $32,417.  This  note is
collateralized  by consent judgments in favor of the creditors and is guaranteed
by certain of our officers.  The agreement also contains certain  covenants that
restrict officers' compensation,

                                        5

<PAGE>



the making of loans and prohibit the  declaration  or payment of cash  dividends
during the term of the note.

     In addition,  we have an  outstanding  note  payable  which had a principal
balance of $105,000 at March 31, 2002.  This note is unsecured,  payable in five
annual installments of $35,000 without interest,  which payments commenced March
31,  2001.  The unpaid  balance of the note is payable in full in the event of a
sale or merger of our  company,  or in the event we receive  net funding of $1.5
million or more from an equity offering.

Trends

     Our strategy is to direct our current  efforts to increase sales and market
penetration  along with  developing  an income  stream from the licensing of our
patented technologies.  While no assurances can be provided, we believe that our
core  business,  the wholesale  distribution  and  marketing of "Nexed"  branded
roller skates, apparel and accessories, will substantially grow over the next 12
months.  In  support  of  this  contention,  the  Sporting  Goods  Manufacturing
Association  activity  report  dated April 30,  2001,  cites the sport of inline
skating  as "the  third  most  popular  sports  for  youth,  based  on  frequent
participation"  for ages 6-17. We remain  confident  that this growth trend will
continue and as a result,  our sales  revenues and market share will continue to
grow in a proportional manner.  Therefore, we believe that we will be profitable
by the first half of 2003 without  taking into account the  potential  inflow of
revenue from the outstanding  patent  infringement  lawsuits,  since there is no
assurance of a favorable outcome to us in these matters.

Inflation

     Although our operations are influenced by general economic  conditions,  we
do not believe that inflation had a material effect on the results of operations
during the three months ended March 31, 2002.

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     As of the  date of this  Report,  we are  party  to  various  judicial  and
administrative matters, including the following:

     In January  2001,  we filed a complaint  against  Benetton  Group,  SPA and
Roller Blade, Inc. in the United States District Court, Southern District of New
York,  Docket No. 01 CIV 510,  wherein we have alleged  willful  infringement of
certain of our patent  rights for  Toeplate  with Dual  Flanges for Inline Skate
Frames.  Upon  information  and belief,  the  defendants  are making,  using and
offering to sell inline skate products which infringe on our

                                        6

<PAGE>



patents.  The defendants have filed an answer and the matter is currently in the
discovery  phase. Our complaint  requests  injunctive  relief,  an accounting of
profits and an award of monetary  damages.  While no assurances can be provided,
we are optimistic about the likelihood of success.

     In February 2001, we filed a complaint in the United States District Court,
Southern  District of New York,  Docket No. 01 CV 7179,  against adidas America,
Salomon North America,  Inc.,  Salmon S.A., adidas AG and adidas Salomon AG, The
Sports Authority,  Inc., Princeton Ski Outlet Corp., dba Princeton Ski Shops and
Paragon  Sporting Goods Co., Inc. for willful  infringement  of certain  patents
held by us, including  Toeplate with Dual Flanges for Inline Skate Frames.  Upon
information  and belief,  the defendants are making,  using and offering to sell
inline skate products  which  infringe on certain of our patents.  Our complaint
requests  injunctive  relief,  an accounting of profits and an award of monetary
damages.  All of these  defendants  have  filed  answers  to our  complaint  and
discovery has commenced.  While no assurances can be provided, we are optimistic
about the likelihood of success.

     In March 2001,  we filed a complaint in the United States  District  Court,
Southern  District of New York,  Docket No. 01 CIV 2262,  against MGM SPA,  Fila
Holding SPA. and Fila USA, Inc.,  for willful  infringement  of certain  patents
held by us,  including  Toeplate  with Dual  Flanges  for Inline  Skate  Frames.
Subsequent to March 31, 2002, we entered into a settlement with these defendants
in which we received a compensatory award for previous infringement,  as well as
a future royalty on sales for roller skates  utilizing our patented  technology.
These royalty  payments are scheduled to commence in July 2002,  for skates made
or sold  during the  second  calendar  quarter of 2002.  As part of the terms of
settlement,  the Court issued a protective  order deeming the  settlement  terms
confidential.

     In April 2001,  we filed a complaint in the United States  District  Court,
Southern  District  of New York,  Docket  No. 010 CIV 1693,  against  First Team
Sports,  Inc. for willful  infringement of certain patents held by us, including
Toeplate  with  Dual  Flanges  for  Inline  Skate  Frames,  as well as breach of
contract. In February 2002, we entered into a settlement of this matter in which
we received a compensatory award for previous infringement,  as well as a future
royalty on sales for roller skates utilizing our patented technology. As part of
the terms of  settlement,  the  Court  issued a  protective  order  deeming  the
settlement terms confidential.

     V-Formation, Inc. v. John B.M. Frohling, Esq. was commenced in the Superior
Court of New Jersey for Essex County in June 1999.  We have alleged  malpractice
in connection with our previous legal counsel.  We are seeking the full recovery
of fees and additional recovery for punitive damages. The matter is still in the

                                        7

<PAGE>



discovery phase.  However,  the defendant has filed for protection in the United
States Bankruptcy Court. Appropriate applications have been made for relief from
the automatic stay.

     In April 2001,  Vertex  Capital  Corp.  filed a complaint  against us in US
Federal  Court for the  Southern  District  of New York,  seeking  damages in an
amount to be  established at trial,  but no less than $5.5 million,  for alleged
breach of contract and unjust  enrichment.  We have filed our answer, as well as
counterclaims  and  discovery  has been  completed.  We have  filed a Motion for
Summary  Judgment  in this  matter  and  cross  claims  have  been  filed by the
plaintiff.  As of the date of this  Report,  our Motion for Summary  Judgment is
under advisement with the Court. It is our position that the plaintiff's  claims
are without merit and are being vigorously defended.

     In October 2001,  we filed an action  against USCO  Distribution  Services,
Inc., d/b/a USCO Logistics ("USCO"), in the United States District Court for the
District of Colorado,  asserting  claims  arising from USCO's failure to perform
according to its "order fulfillment" contracts,  which resulted in our incurring
six  figure  losses.  USCO has  asserted  counterclaims  totaling  approximately
$103,000  based on its charges for services  under the  contracts and asserted a
possessory lien on our inventory in their possession,  which has a cost basis of
approximately  $80,000.  USCO subsequently  liquidated the inventory pursuant to
their  possessory  lien. At trial,  we intend to assert various claims  alleging
wrongful  conduct by the defendant in the  foreclosure of its  possessory  lien.
Discovery has  commenced  but a trial date has not yet been  scheduled as of the
date of this Report.

     In January 2002, we filed a complaint in the United States  District Court,
Southern District of New York, Docket No. 010 CIV 1693,  against K-2 Corporation
for willful  infringement of certain patents held by us, including Toeplate with
Dual  Flanges  for  Inline  Skate  Frames.  Upon  information  and  belief,  the
defendants  are making,  using and offering to sell inline skate  products which
infringe on certain of our patents. Our complaint requests injunctive relief, an
accounting of profits and an award of monetary damages.  The defendant has filed
an answer to our  complaint,  but no discovery  has  commenced as of the date of
this Report.  While no assurances can be provided,  we are optimistic  about the
likelihood of success.

     In February  2002, we filed a complaint  against  National  Sporting  Goods
Corp. in the United States District Court, Southern District of New York, Docket
No. 02 CIV 1273,  wherein we have alleged willful  infringement of patent rights
held by us for  Toeplate  with  Dual  Flanges  for  Inline  Skate  Frames.  Upon
information  and belief,  the  defendant  is making,  using and offering to sell
inline skate products which infringe on our patents.  An answer to our complaint
has been filed. We are currently engaged

                                        8

<PAGE>



in settlement discussions with this defendant. Our complaint requests injunctive
relief,  an  accounting  of profits and an award of monetary  damages.  While no
assurances can be provided, we are optimistic about the likelihood of success.

     Finally,  in  December  1997,  we entered  into a  Confidential  Settlement
Agreement  and Release in  conjunction  with a Product and License  Agreement to
resolve  outstanding  litigation  in the matter of The  Brander  Corporation  v.
Jeannette L. Brander,  et al., docket no. 96CV 3163 (JRS). The settlement sought
to resolve all outstanding  issues regarding  technology  embraced by Brandner's
patent, no. 5,303,940.  Pursuant to the Product and License  Agreement,  we made
all required  royalty  payments for skates utilizing the technology as set forth
in the License  Agreement.  Brandner  recently  filed a request  with the Court,
seeking royalty  payments for skates not covered by the 940 technology.  We have
filed an opposition to Brandner's request.  The Court has scheduled arguments on
the matter for June 17, 2002.  Although no  assurances  can be provided,  we are
optimistic about the likelihood of our prevailing in this matter.

     We have either commenced  actions or been named as a party in other matters
in the  normal  course of our  business.  In the  opinion of  management,  after
consulting  with legal counsel,  the  liabilities,  if any,  resulting from this
matter will not have a material effect on our financial statements.

ITEM 2. CHANGES IN SECURITIES

     On  March 5,  2002,our  Board  of  Directors  declared  a  dividend  on our
outstanding  Series A, Series B, Series C and Series D Preferred  Stock pursuant
to the  designations  and preferences of each such series of preferred stock. At
December 31, 2001,  dividends on the Series A and Series B Cumulative  Preferred
Stock were in arrears by $30,000 and $24,000,  respectively.  If such  dividends
are in  arrears,  no  dividends  shall  be  declared,  nor  shall  there  be any
redemption  of shares  having a rank lower in priority to the Series A Preferred
Stock  with  respect  to  dividends.  Dividends  on the  Series  C and  Series D
preferred  stock were in arrears  by  $174,834  and  $7,320,  respectively.  All
dividends in arrears for 2001 were paid though the issuance of 78,718  shares of
our common stock during the first quarter of 2002.

     During the three-month period ended March 31, 2002, we sold an aggregate of
70,667  shares  of our  common  stock to five  persons,  receiving  proceeds  of
$212,000 therefrom (approximately $3.00 per share).

     During the quarter  ended March 31, 2002, we issued 16,275 shares of common
stock and 53,775 warrants to purchase our Series C preferred stock to one of our
employees and two of our former  employees in accordance  with their  employment
agreements. Each

                                        9

<PAGE>



applicable  warrant  is  exercisable  to  purchase  one  share  of our  Series C
preferred  stock at an exercise  price of $6.00.  Stock and  warrants  issued to
employees as compensation totaled $48,825 for the quarter ended March 31, 2002.

     In  the  aforesaid   transactions,   we  relied  upon  the  exemption  from
registration  afforded by Section 4(2) and/or Regulation D promulgated under the
Securities Act of 1933, as amended, to issue the securities.

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 - None

     (b) Reports on Form 8-K.

     We did not file any reports on Form 8-K during the three month period ended
March 31, 2002.

                                       10

<PAGE>
<TABLE>
                                V-FORMATION, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                     ------
<CAPTION>
                                                                         March 31,   December 31,
                                                                           2002          2001
                                                                        -----------  ------------
                                                                        (unaudited)
<S>                                                                     <C>          <C>
Current assets:
   Cash and cash equivalents                                            $   454,822  $    214,736
   Accounts receivable, net of allowance for doubtful accounts
      of $60,000 in 2002 and 2001                                           294,843       473,401
   Inventories                                                              816,965       977,348
   Prepaid expenses and other current assets                                 52,911        45,103
   Related party loans receivable                                           110,104        66,940
                                                                        -----------  ------------
               Total current assets                                       1,729,645     1,777,528

Property and equipment, net of accumulated depreciation of $219,337
   in 2002 and $200,661 in 2001                                             264,987       283,663
Patents and trademarks, net of accumulated amortization
   of $186,444 in 2002 and $170,644 in 2001                                 816,246       724,567
Related party loans receivable                                              256,823       207,229
Security deposits                                                            24,130        44,318
                                                                        -----------  ------------
               TOTAL ASSETS                                             $ 3,091,831  $  3,037,305
                                                                        ===========  ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
Current liabilities:
   Line of credit                                                       $ 1,235,000  $    600,000
   Current maturities of long-term debt                                      99,199       257,500
   Accounts payable and accrued expenses                                    830,505       847,640
   Due to officer                                                            50,000             -
                                                                        -----------  ------------
               Total current liabilities                                  2,214,704     1,705,140
                                                                        -----------  ------------
Long-term debt, net of current maturities                                    70,000       105,000
                                                                        -----------  ------------
Mandatorily redeemable, Series A convertible preferred stock no par value,
   500,000 shares authorized 500,000 shares issued and outstanding in 2002 and
   2001
   Aggregate liquidation preference of $30,000 in 2002 and 2001             500,000       500,000
                                                                        -----------  ------------
Stockholders' equity:
  Preferred stock - no par value, 7,000,000 shares authorized, 498,127 shares
    issued, 497,043 shares outstanding in 2002 and 2001
    Aggregate liquidation preference of $303,960 in 2002 and 2001         2,582,857     2,582,857
  Common stock - no par value, 45,000,000 shares authorized,
    16,743,493 shares issued, 16,086,744 shares outstanding in 2002
    16,577,833 shares issued, 15,921,084 shares outstanding in 2001      32,858,940    32,361,961
  Additional paid-in capital                                             30,591,962    30,798,116
  Accumulated deficit                                                   (65,128,643)  (64,417,780)
  Treasury stock at cost, and 657,833 shares in 2002 and 2001              (597,989)     (597,989)
                                                                        -----------  ------------
                Total stockholders' equity                                  307,127       727,165
                                                                        -----------  ------------
                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 3,091,831  $  3,037,305
                                                                        ===========  ============
</TABLE>

                 See notes to consolidated financial statements.

                                       11
<PAGE>
                                V-FORMATION, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

            FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2002 AND 2001

                                                          2002          2001
                                                      ------------  -----------
                                                              (unaudited)

Sales                                                 $    351,915  $   199,819

Cost of goods sold                                         245,173      191,192
                                                      ------------  -----------
Gross profit                                               106,742        8,627
Income from licensing and royalties                         35,000            -
                                                      ------------  -----------
                                                           141,742        8,627
                                                      ------------  -----------
Operating expenses:
   Selling and promotional                                 239,730      349,936
   General and administrative                              520,060      834,787
   Loss on factory closing and disposal of assets            4,500      102,643
   Research and development                                 75,323       82,943
   Depreciation and amortization                            34,976       35,012
   Equity-based compensation                                48,825       15,000
   Reorganization expense                                        -      150,000
                                                      ------------  -----------
          Total operating expense                          923,414    1,570,321
                                                      ------------  -----------
Loss from operations                                      (781,672)  (1,561,694)
                                                      ------------  -----------
Other income (expense):
   Interest income                                           8,859            -
   Interest expense                                        (16,148)      (1,044)
   Equity-based interest expense                            (7,500)      (7,500)
   Settlement adjustment                                    85,598            -
                                                      ------------  -----------
          Total other income (expense)                      70,809       (8,544)
                                                      ------------  -----------
Loss from continued operations                            (710,863)  (1,570,238)
Discontinued operations                                          -     (208,555)
                                                      ------------  -----------
          NET LOSS                                    $   (710,863) $(1,778,793)
                                                      ============  ===========
Loss per common share:
   Continuing operations                              $     (0.04) $      (0.15)
   Discontinued operations                                      -         (0.02)
                                                      -----------  ------------
                                                      $     (0.04) $      (0.17)
                                                      ===========  ============
Weighted average shares outstanding                    15,921,149    10,228,353
                                                      ===========  ============

                 See notes to consolidated financial statements.

                                       12
<PAGE>
<TABLE>
                                V-FORMATION, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

            FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2002 AND 2001

<CAPTION>
                                                                 2002       2001
                                                              ---------  -----------
                                                                   (unaudited)
<S>                                                           <C>        <C>
Cash flows from operating activities:
   Net loss                                                   $(710,863) $(1,778,793)
   Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation and amortization                           34,976       35,012
         Settlement adjustment                                  (85,598)           -
         Fees and commissions paid in stock and warrants         48,825       15,000
         Interest accrued on shareholder loans                   (4,595)           -
         Loss on factory closing and disposal of assets           4,500      102,643
         Changes in operating assets and liabilities:
            (Increase) decrease in accounts receivable          178,558       85,597
            (Increase) decrease in inventories                  160,383      188,685
            (Increase) decrease in prepaid expenses
               and other current assets                          (7,808)     (48,107)
            (Increase) decrease in security deposits             20,188       (1,000)
            Increase (decrease) in accounts payable
               and accrued expenses                              12,865       61,738
                                                              ---------  -----------
                  Net cash used in operating activities        (348,569)  (1,339,225)
                                                              ---------  -----------
Cash flows from investing activities:
   Capital expenditures for equipment, patents and trademarks  (112,479)     (81,821)
                                                              ---------  -----------
                 Net cash used in investing activities         (112,479)     (81,821)
                                                              ---------  -----------
Cash flows from financing activities:
   Proceeds from line of credit                                 635,000            -
   Principal payments under loan agreements                    (107,703)     (44,542)
   Proceeds from issuance of common stock                       212,000    3,427,669
   Purchase of treasury stock                                         -     (386,840)
   Advances to related parties                                  (88,163)           -
   Loans from officer                                            50,000            -
                                                              ---------  -----------
                 Net cash provided by financing activities      701,134    2,996,287
                                                              ---------  -----------
Net increase in cash and cash equivalents                       240,086    1,575,241

Cash and cash equivalents- beginning                            214,736      709,351
                                                              ---------  -----------
CASH AND CASH EQUIVALENTS- ENDING                             $ 454,822  $ 2,284,592
                                                              =========  ===========
</TABLE>
                 See notes to consolidated financial statements.

                                       13
<PAGE>
                                V-FORMATION, INC.
                                AND SUBSIDIARIES

                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

                                 March 31, 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTNG POLICIES
--------------------------------------------------

The consolidated financial statements have been prepared by the Company, without
audit,  pursuant to the rules and  regulations  of the  Securities  and Exchange
Commission and reflect all adjustments  which are, in the opinion of management,
necessary to present fairly the information required herein. Certain information
and footnote  disclosures normally included in the financial statements prepared
in accordance with generally  accepted  accounting  principles have been omitted
pursuant to such rules and regulations,  although  management  believes that the
disclosures are adequate to make the information presented not misleading.  This
information  should be read in  conjunction  with the Company's  Form 10-K filed
April 11, 2002.  The results of  operations  for the  three-month  periods ended
March  31,  2002 and 2001  are not  necessarily  indicative  of the  results  of
operations to be expected for the full year.

NOTE 2 - HISTORY AND BUSINESS ACTIVITY
--------------------------------------

V-Formation is a multi-faceted,  innovative sports technologies company that has
made  significant  advances in the  development and marketing of the first major
evolution to the inline skate.  The Company has been  credited with  introducing
the "V" technology,  which  incorporates a proprietary,  patented  angular wheel
technology, which displaces the wheels at alternating angles.

V-Formation,  Inc. (the  "Company") was organized in January 1995 and was in the
development  stage  through  December 31,  1996.  In January  1997,  the Company
commenced the sale of patented  V-configuration  roller skates to sporting goods
retailers  located  throughout  the United States and Canada.  During 1999,  the
Company acquired the Nexed brand of hockey  equipment and apparel.  During 2000,
the Company acquired On Net Sports,  Inc. ("ONSI"),  a development stage company
that has had no operations to date. In addition,  the Company  incorporated Soft
Machine,  Inc. ("SMI") as a wholly-owned  subsidiary to acquire certain software
and intellectual properties. SMI has had no operations to date. During 2001, the
ONSI and SMI discontinued operations.

Effective  March 14, 2001,  pursuant to an Agreement and Plan of  Reorganization
(the "Merger Agreement"),  the Company acquired all of the outstanding shares of
Buckeye Oil and Gas, Inc. ("Buckeye"), a publicly-held corporation,  in exchange
for 478,082  shares of the  Company's  common  stock and a payment of  $150,000,
which was  charged to  reorganization  expense.  The shares  issued  represented
approximately  2.5% of the Company's  outstanding  securities  subsequent to the
transaction.  V-Formation  was the  surviving  corporation  and by virtue of the
merger, became a fully-reporting  publicly-held company under the Securities Act
of 1934.

                                       14
<PAGE>

                                V-FORMATION, INC.
                                AND SUBSIDIARIES

                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

                                 March 31, 2002

NOTE 3 - LOSS PER COMMON SHARE
------------------------------

Loss per common  share is  computed  using  Statement  of  Financial  Accounting
Standards  (SFAS) No.  128,  "Earnings  per  Share."  SFAS No.  128  established
standards  for the  computation,  presentation,  and  disclosure of earnings per
share.  Basic per share  amounts are  computed  by dividing  the net loss by the
weighted  average  number of  common  shares  outstanding  during  the  periods.
Treasury  stock is  subtracted  from shares  issued to  determine  the  weighted
average of shares  outstanding.  Diluted loss per share  amounts are the same as
the basic amounts since the assumed  exercise of the Company's stock options and
warrants and assumed conversion of convertible  preferred stock would reduce the
loss per share.  Such stock options,  warrants and conversions could potentially
dilute  earnings  per share in the  future.  Potential  common  shares  totaling
5,184,361 and 4,991,914,  which consist of outstanding  warrants and convertible
preferred   shares  are  considered  to  be   antidilutive  at  2002  and  2001,
respectively.

NOTE 4 - EQUITY TRANSACTIONS
----------------------------

Dividends
---------

On March 5, 2002,  the Board of  Directors  declared a dividend on the Series A,
Series B, Series C and Series D preferred stock pursuant to the designations and
preferences  of each such  series of  preferred  stock.  At December  31,  2001,
dividends  on the  Series A and  Series B  Cumulative  Preferred  Stock  were in
arrears by $30,000 and $24,000,  respectively. If such dividends are in arrears,
no dividends  shall be  declared,  nor shall there be any  redemption  of shares
having a rank lower in priority to the Series A Preferred  Stock with respect to
dividends.  Dividends  on the  Series C and  Series D  preferred  stock  were in
arrears by $174,834 and $7,320, respectively.  All dividends in arrears for 2001
were paid though the  issuance of 78,718  shares of the  Company's  common stock
during the first quarter of 2002.

Common stock sold
-----------------

For the  three-month  periods ended March 31, 2002 and 2001, the Company sold an
aggregate of 70,667 and 190,165 shares of its common stock,  receiving  proceeds
of $212,000 and $570,495, respectively.

Employee compensations
----------------------

During the quarter  ended March 31, 2002,  the Company  issued  16,275 shares of
common  stock and 53,775  warrants  to purchase  its common  stock to one of its
employees and two of its former  employees in accordance  with their  employment
agreements.  Stock and  warrants  issued to employees  as  compensation  totaled
$48,825 for the quarter ended March 31, 2002.

                                       15
<PAGE>

                                V-FORMATION, INC.
                                AND SUBSIDIARIES

                         NOTES TO UNAUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

                                 March 31, 2002

NOTE 4 - EQUITY TRANSACTIONS (CONTINUED)
----------------------------------------

Warrants exercised
------------------

During  March 2001,  investors  exercised  an  additional  20,000  common  stock
warrants at an exercise price of $3 per share,  raising  proceeds of $60,000 and
officers of the Company exercised 3,712,966 common stock warrants at an exercise
price of $0.10 per share.

NOTE 5 - LINE OF CREDIT
-----------------------

The Company extended its $1,250,000 line of credit agreement with a bank through
July 1, 2002.  Amounts  drawn on the line of credit  bear  interest at the prime
rate plus 2% (6.75% as of March 31, 2002). The obligation is  collateralized  by
personal  guarantees  and by mortgages on specific  real estate assets of one of
the Company's officers and one of its directors.  At March 31, 2002,  $1,235,000
was drawn against this line of credit.

NOTE 6 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

Settlement agreement
--------------------

In February  2002,  the Company  entered into a  settlement  of its suit against
First Team Sports, Inc. which provided for the Company to receive an undisclosed
amount of cash,  as well as future  royalties on all sales of roller skates made
by the defendant that incorporate the Company's technology.

Settlement adjustment
---------------------

During the quarter  ended March 31, 2002,  the Company was  notified  that other
parties had  satisfied  $85,598 of a note payable  obligation,  which arose from
litigation that was settled in 1998. As a result,  the Company recognized income
from elimination of the obligation.

                                       16
<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of Section 12 of the Securities and Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        V-FORMATION, INC.
                                        (Registrant)

                                        Dated: May 15, 2002


                                        By:s/ Richard Stelnick
                                           -------------------------------------
                                           Richard Stelnick, Chief Executive
                                           Officer


                                       17