SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-QSB

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

                       For Quarter Ending September 30, 2001

                        Commission File Number 000-26375


                             NetSalon Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                       84-1472120
------------------------                        ---------------------------
(State of incorporation)                        (I.R.S. Employer ID Number)


              11800 Metro Parkway, Fort Meyers, Florida  33912
         ---------------------------------------------------------
         (Address of principal executive offices)        (zip code)


                                (941) 791-2000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)






Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of Securities Exchange Act of 1934
during the preceding 12 months (or for such a 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 [ ]




As of December 15, 2001, 19,630,900 common shares, $.001 par value per share,
were outstanding.









                             NETSALON CORPORATION

                                     INDEX

                                                                 Page
Part I FINANCIAL INFORMATION

   Item 1.

      Balance Sheet as of September 30, 2001 (Unaudited)           3

      Consolidated Statements of Operations for the
       three months ended September 30, 2001 and
       September 30, 2000 (unaudited)                              4

      Statement of Cash Flows for the three months ended
       September 30, 2001 and September 30, 2000 (Unaudited)       5

      Notes to Unaudited Consolidated Financial Statements         6

   Item 2.  Management's Discussion and Analysis of Financial
      Condition and Results of Operations                         12

PART II - OTHER INFORMATION

   Item 1. Legal Proceedings                                      13

   Item 2. Changes in Securities                                  13

   Item 3. Default on Senior Securities                           13

   Item 4. Submission of Matters to a Vote of Security Holders    13

   Item 5. Other Information                                      13

   Item 6. Exhibits and Reports on Form 8-K                       13

SIGNATURES                                                        13




















                                       2


                             NETSALON CORPORATION

                      Consolidated Balance Sheet (Unaudited)

                              September 30, 2001

ASSETS

Current assets:
   Cash                                                  $     1,475
   Software licenses                                         110,477
                                                         -----------
                                                             111,952

   Capitalized software costs, net of accumulated
     amortization of $4,659                                   27,232
   Property and equipment, net of accumulated
     depreciation of $11,912                                  39,174
                                                         -----------
                                                         $   178,358
                                                         ===========

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
   Accounts payable and accrued expenses                 $   287,700
   Deferred revenue                                          427,619
   Notes payable                                             512,510
   Loans payable to shareholders                             370,019
                                                         -----------
                                                           1,597,848
                                                         -----------

Non current liabilities:
   Deferred revenue                                           27,238
                                                         -----------

Commitments and contingencies (Note 9)                          -

Shareholders' deficit:
   Preferred stock - 20,000,000 shares authorized;
    $.001 Par; no shares issued                                 -
   Common stock - 100,000,000 shares authorized;
    $.001 Par; 19,630,900 shares issued                       19,630
   Additional paid-in capital                                933,921
   Accumulated deficit                                    (2,400,279)
                                                         -----------
                                                          (1,446,728)
                                                         -----------
                                                         $   178,358
                                                         ===========




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

                                       3



                             NETSALON CORPORATION

                Consolidated Statements of Operations (Unaudited)

                                 For the Three Months   For the Three Months
                                       Ended                    Ended
                                  September 30, 2001     September 30, 2000
                                 --------------------   --------------------

Revenue:
  Enterprise implementation          $    22,122            $      -
  Consulting and custom
   programming                            72,550                   -
  Licenses                                56,886                   -
                                     -----------            -----------
                                         151,558                   -

Cost of revenue                           18,881                  7,682
                                     -----------            -----------
Gross margin                             132,677                 (7,682)

Operating expenses:
  Research and development                44,618                 68,024
  General and administrative
   expenses                              157,745                239,053
  Selling and marketing                   77,127                 77,716
                                     -----------            -----------
                                         279,490                384,793
                                     -----------            -----------
Operating loss                          (146,813)              (392,475)
                                     -----------            -----------
Other income and (expenses):
  Disposition of fixed assets             (2,933)                  -
  Interest expense                       (17,602)               (11,685)
                                     -----------            -----------
                                         (20,535)               (11,685)
                                     -----------            -----------
Net loss                             $  (167,348)           $  (404,160)
                                     ===========            ===========
Basic and diluted loss per share:
  Basic loss per common share        $    (0.009)           $    (0.021)
                                     ===========            ===========
  Weighted average common shares
   outstanding                        19,630,900             19,630,900
                                     ===========            ===========
  Diluted earnings per common share  $    (0.009)           $    (0.021)
                                     ===========            ===========
  Weighted average diluted common
   shares outstanding                 19,630,900             19,630,900
                                     ===========            ===========



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

                                       4



                             NETSALON CORPORATION

              Consolidated Statements of Cash Flows (Unaudited)

            For the Three Months Ended September 30, 2001 and 2000

                                                    2001           2000
                                                  ---------      ---------
Net loss                                          $(167,348)     $(404,160)

Adjustments to reconcile net loss to cash
 provided by (used in) operating activities:
  Depreciation of property and equipment              4,132          1,972
  Loss on asset disposition                           2,933           -
  Disposition of furniture                           (2,056)          -
  Amortization of capitalized software costs          3,181           -
Changes in operating assets and liabilities:
  Decrease in accounts receivable                       664           -
  Decrease (Increase) in prepaid rent                 4,818         (6,828)
  (Increase) in software licenses                   (19,277)          -
  Increase in accounts payable and accrued
   expenses                                          68,485          8,059
  Increase in deferred revenue                      141,229           -
  Increase in accrued compensation to officer
   (shareholder)                                     45,000           -
  (Decrease) in officer (shareholder) expense
   payable                                             -           (30,955)
                                                  ---------      ---------
     Net cash provided by (used in) operating
      activities                                     81,761       (431,912)
                                                  ---------      ---------
Cash flows from investing activities:
 Capitalized software costs                         (14,796)          -
 Cash receipts from sale of assets                     -             4,700
 Purchase of equipment                                 (490)          -
                                                  ---------      ---------
     Net cash provided by (used in) investing
      activities                                    (15,286)         4,700
                                                  ---------      ---------
Cash flows from financing activities:
 Proceeds from sale of common stock                    -           480,000
 Advances from bank loan                               -           100,000
 Repayment of settlement note payable                  -           (61,500)
 Repayments of shareholder loan                        -           (50,000)
 Repayments of officer (shareholder) advances       (65,000)          -
                                                  ---------      ---------
     Net cash provided by (used in) financing
      activities                                    (65,000)       468,500
                                                  ---------      ---------
Increase in cash                                      1,475         41,288
Cash, beginning of period                              -            70,206
                                                  ---------      ---------
Cash, end of period                               $   1,475      $ 111,494
                                                  =========      =========
Additional cash flow disclosures - Interest paid  $  20,000      $    -
Noncash Transactions - Purchase of office
 furniture and fixtures through direct loan
 installment                                      $  11,293      $    -

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

                                       5


                              NETSALON CORPORATION
               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001

NOTE 1 - ORGANIZATION

OPERATIONS AND BUSINESS DESCRIPTION

NetSalon Corporation ("NetSalon" or the "Company") is an application service
provider and has been actively involved in high-tech product development since
its formation in late 1998.   The Company's products consist of the NetSalon
enterprise including the affiliate portal (portal site replicator),
ezSiteBuilders, AeonCards, and University courses.  The Company's products are
described as follows:

NETSALON ENTERPRISE is a suite of pre-built applications, which can be fully
branded to any company.  Customers of NetSalon select applications that
benefit them best including affiliate portals (Portal / Site Replicator);
AeonCards; ezSiteBuilders for individuals and B2C SiteBuilders for businesses;
and NetSalon Universities (Distance Learning).

The Enterprise is privately branded for each customer with their business's
name, logo, site design, and color scheme utilizing any domain name of choice.
NetSalon stores all data on customer servers. NetSalon Corporation provides
all technical support, second level customer service, upgrades and
maintenance.

AFFILIATE PORTALS (PORTAL / SITE REPLICATOR) is an enterprise wide,
replicating web site. The portal is designed to provide community, content,
and commerce, branded with a customer's information, name, logo, site design
and color scheme and their company's affiliate information.

EZSITEBUILDERS AND B2C BUILDERS are online wizards that provide users the
ability to go online and develop personal and business web sites,
respectively.

AEONCARDS are CD-based business cards comprised of a "flash" movie whereby
advertisements and information can be viewed.  The AeonCard is designed and
built over the Internet using interactive processes.

UNIVERSITIES (DISTANCE LEARNING) are on-line interactive courses that provide
educational material on over 400 courses ranging from basic computer
technology to highly technical areas of programming.

The customers of the Company are primarily direct-selling companies.  NetSalon
also provides custom web development, database design, multi-media application
development and other consulting services.

BASIS OF CONSOLIDATION

These consolidated financial statements include the accounts of NetSalon
Corporation and NetSalon I, Inc.  All significant intercompany transactions
have been eliminated.  These financial statements should be read in
conjunction with the NetSalon June 30, 2001 10-K.

OTHER

The Company is subject to risks and uncertainties common to technology-based
companies, including rapid technological change, growth of the internet and
electronic commerce, new product development, actions of competitors, and
availability of sufficient capital and a limited operating history.

                                      6

                              NETSALON CORPORATION
               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001
                                   (Continued)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements have been prepared using the accrual basis of
accounting consistent with generally accepted accounting principles.

USE OF ESTIMATES

The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses, and disclosure of contingent assets and liabilities at
the date of the financial statements.  Actual results could differ from these
estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments purchased with original
maturities of three months or less to be cash equivalents.  For this report,
cash and cash equivalents is solely comprised of the amount available in
checking accounts.

ACCOUNTS RECEIVABLE

The Company provides an allowance for doubtful accounts equal to the estimated
uncollectible amounts. The Company's estimate is based on historical
collection experience and a review of the current status of trade accounts
receivable. No allowance was necessary as of September 30, 2001.

SOFTWARE LICENSES

Software licenses represent rights to use self-study content purchased from a
third party that is used to support NetSalon University courses.  These
licenses are recorded at cost and are charged to earnings when sold.

CAPITALIZED SOFTWARE COSTS

The Company capitalized $14,796 and $0 during the quarters ended September 30,
2001 and 2000, respectively, of programming and related expenses as required
by Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed".
Capitalized software costs are amortized over a period of 24 months.
Amortization expense for the quarter ended September 30, 2001 amounted $3,181.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated over estimated
useful lives of three to seven years using the straight-line method.
Maintenance and repairs are charged to expense as incurred; major renewals and
betterments are capitalized and depreciated over the estimated remaining
useful life of the asset.  The cost of items sold or otherwise disposed of,
and the related accumulated depreciation or amortization is removed from the
accounts and gains or losses are reflected in current operations.


                                       7

                              NETSALON CORPORATION

               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001
                                   (Continued)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY AND EQUIPMENT (Continued)

In addition, the Company periodically reviews all long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  If the sum of the
estimated future undiscounted cash flows expected to result from the use and
eventual disposition of an asset is less than the carrying value, the asset is
reduced to its fair value. There was no impairment recognized in the periods
presented herein.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets, including tax loss and credit carryforwards, and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Deferred income tax expense represents the change during the
period in the deferred tax assets and liabilities.

The components of the deferred tax assets and liabilities are individually
classified as current and non-current based on their characteristics. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.

Legacy NetSalon converted from a limited liability company to a Subchapter C
Corporation in July 2000.  Prior to the conversion, all federal income taxes
were reported on the individual income tax returns of the members.

REVENUE RECOGNITION AND DEFERRED REVENUE

Fees for enterprise implementation and software licenses are generally paid in
advance. The fees are deferred and recognized on a straight-line basis over
the period of the applicable agreement or contract, which are generally 12 to
24 months.  Revenues for consulting and custom programming is recorded as
earned or using the percent-complete method as appropriate.

Deferred revenue consists of $326,751 in deferred enterprise implementation
fees and $128,106  in deferred license fees at September 30, 2001.










                                      8

                               NETSALON CORPORATION
               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001
                                   (Continued)

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment was composed of the following at September 30, 2001:

           Computer equipment                $ 48,965
           Furniture and fixtures               2,120
                                             --------
           Property and equipment, gross       51,085

           Less accumulated depreciation       11,911
                                             --------
           Property and equipment, net       $ 39,174
                                             ========

Depreciation expense amounted to $4,132 and $1,972 for the quarters ended
September 30, 2001 and 2000, respectively.  The Company disposed assets with a
combined net book value of $2,933 during the quarter ended September 30, 2001.

NOTE 4 - NOTES PAYABLE

Notes payable consisted of the following at September 30, 2001:

Note payable to former investor.  Bears interest at
a rate of 9% per annum.  Pursuant to a renegotiated
agreement effective May 2001, monthly payments of
$5,000 were required through October 2001 with monthly
payments of $25,000 beginning in November 2001.  This
note payable has been classified as a current liability
due to payment default.  Accrued interest amounted to
$16,239 at September 30, 2001.                                    512,510
                                                                 ========

NOTE 5 - RELATED PARTY TRANSACTIONS

Related party loans and payables were comprised of the following as of
September 30, 2001:

Note payable to shareholder requiring monthly payments of
$5,000 per month including interest at a rate of 12% per
annum.  Accrued interest amounted to $20,384 at September
30, 2001.  This note payable has been classified as current
due to payment default.  $50,000 and $10,000 were paid
toward this note during the quarters ended September 30,
2001 and 2000, respectively.                                     $177,692

Officer (Shareholder) compensation accrued, but not paid
at September 30, 2001.  No payments were made against this
liability for the quarter ended September 30, 2001.               107,827

Due to an officer/shareholder for working capital advances.
Approximately $65,000 and $0 were paid against this indebted-
ness for the quarters ended September 30, 2001 and 2000,
respectively.                                                      21,500


                                       9


                              NETSALON CORPORATION
               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001
                                   (Continued)

NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

Due to shareholder and ex-officer for unpaid compensation.
No payments were made against this indebtedness during the
quarter ended September 30, 2001.                                  63,000
                                                                 --------
                                                                 $370,019
                                                                 ========

The Company paid legal fees of $12,684 to a law firm that is also a
shareholder of the Company during the quarter ended September 30, 2001 and
2000, respectively.

NOTE 6 - STOCK AND WARRANTS

As of September 30, 2001, no preferred shares are issued.  All shares have
similar voting rights.  Approximately 756,000 class A warrants are outstanding
as of June 30, 2001 that enable the holders to purchase common shares at $5.00
per share. These warrants expire on February 8, 2003.  No new warrants were
issued and no warrants were exercised during the quarter ended September 30,
2001.  The warrants were considered to have no value at September 30, 2001.

As part of an employee agreement, an officer of the Company will receive
1,000,000 stock options with an additional 500,000 and 500,000 options being
granted on January 1, 2002 and 2003, respectively.

NOTE 7 - GOING CONCERN ISSUES ARISING FROM RECURRING LOSSES, CASH FLOW
PROBLEMS AND DEFAULT ON DEBT

As shown in the accompanying financial statements, the Company has incurred
recurring losses from operations.  As of September 30, 2001, the Company's
current liabilities exceeded its current assets by $1,485,896 and its total
liabilities exceeded its total assets by $1,446,728. Additionally, as of
September 30, 2001, the Company was in arrears for principal and interest
payments on certain debt.  Because of the default, the Company has classified
the debt as current liabilities.  Management has been able to reduce certain
operating costs, broadened its marketing efforts on a larger target market,
launched a new advertising campaign and hired a new salesman.  Management
believes that these initiatives will contribute toward profitability.  The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.

NOTE 8 - CONCENTRATIONS

For the quarter ended September 30, 2001, one customer accounted for 60
percent of revenue and another customer accounted for 33 percent.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Certain disagreements exist between the Company and 4N International (4N), an
unrelated document production organization, concerning certain marketing and
other products created by 4N.  4N stipulates that the Company owes them
approximately $40,000.  The Company's management believes that 4N owes them an
unspecified amount.  Management believes that the Company will be successful
in this dispute.

                                      10

                              NETSALON CORPORATION

               Notes to Consolidated Financial Statements (Unaudited)
                               September 30, 2001
                                   (Continued)


NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

The President of the Company has issued a lawsuit against a terminated
employee (Defendant) originally hired to market certain aspects of the
Company.  The Defendant has filed a counterclaim against the President and
NetSalon.  The Defendant, in the counterclaim, seeks to recover actual damages
of $70,000 and other unspecified damages for alleged misrepresentation
concerning compensation arrangements and opportunities with the Company.  The
ultimate outcome of this litigation cannot presently be determined.  However,
in management's opinion, the likelihood of a material adverse outcome is
remote.  Accordingly, adjustments, if any, that might result from the
resolution of this matter have not been reflected in the consolidated
financial statements.

Effective October 2001, the Company entered into a twelve month operating
lease in Fort Myers, Florida for internet and office space.  Monthly rental
payments are $3,800.



































                                      11


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

OVERVIEW

     NetSalon is an application service provider and has been actively
involved in high-tech product development since its formation in late 1998.
NetSalon has developed various Internet-related products which it originally
intended to sell through a multi-level marketing distribution system.  As of
August 17, 2000, product development essentially was complete, but the Company
had not built a successful multi-level marketing distribution system.  On that
date, the Company publicly announced its abandonment of the multi-level
marketing distribution model, and announced its intention to sell products
through affiliates who maintain Internet sites where products can be sold,
through distributors, and through multi-level marketing companies on a
private-label basis.

     During the fiscal year ended June 30, 2001, the Company was involved in
developing marketing plans and seeking distributors and other resellers for
the products, and the Company entered into several contracts with distributors
and multi-level marketing companies.  These contracts generate fees to
NetSalon for implementation of the web sites and technology required for
distribution of the products, as well as revenues from product sales made by
the distributors and multi-level marketing companies themselves.

RESULTS OF OPERATIONS

     During the three months ended September 30, 2001 the Company reported
revenue of $151,558 compared to no revenue during the three months ended
September 30, 2000.  During August 2000, the Company made the decision to
abandon the use of a multilevel marketing distribution model, and to sell its
products through distributors, other multilevel marketing companies, and
affinity organizations.  The Company was successful in entering into several
contracts with distributors and multilevel marketing companies, and the first
sales were generated during the three months ended December 31, 2000.  The
Company expects the level of sales to increase during the current year.

     During the three months ended September 30, 2001, the cost of revenue was
$18,881 or 12.5% of sales.

     Operating expenses for the three months ended September 30, 2001 were
$279,490 compared to $384,793 for the three months ended September 30, 2000.
Research and development and general and administrative decreased as the
Company attempted to reduce its expenses until revenues increase.

     Interest expense increased from $11,685 in the three months ended
September 30, 2000 to $17,602 in the three months ended September 30, 2001 due
to the increased level of debt outstanding.

     The net loss was $167,348 in the three months ended September 30, 2001
compared to a net loss of $404,160 in the three months ended September 30,
2000.  The reduced loss was due to the increase in revenues and the decrease
in operating expenses.





                                      12

LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 2001, the Company had a working capital deficit of
$1,485,896.  The Company's future existence is dependent upon closing those
contracts now in negotiation, or alternatively to seek additional capital.  It
would be difficult for the Company to raise additional capital, particularly
in view of the Company's poor financial condition and the reluctance of the
participants in the equity markets to invest in speculative ventures.

                         PART II - 0THER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     None.

ITEM 2.  CHANGES IN SECURITIES.

     None.

ITEM 3.  DEFAULTS OF 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.

     None.



                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                   NETSALON CORPORATION



                                   By:/s/ Robert Proctor
Date:  December 19, 2001              Robert Proctor, COO







                                      13