================================================================================

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

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

                                   FORM 10-QSB

(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

        Commission file number: 000-27841

                           CIRCLE GROUP INTERNET INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

            ILLINOIS                                              36-4197173
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)

                  1011 CAMPUS DRIVE, MUNDELEIN, ILLINOIS 60060
                    (Address of Principal Executive Offices)

                                 (847) 549-6002
                (Issuer's Telephone Number, Including Area Code)

         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       No  X
                                    ---      ---

      The registrant has a single class of common stock, of which there are
         20,375,915 shares issued and outstanding as of August 14, 2002.

         Transitional Small Business Disclosure Format (Alternative 2):
                                Yes  X    No
                                    ---      ---

================================================================================
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1.       Financial Statements
<PAGE>


CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (UNAUDITED)
JUNE 30, 2002

                                 ASSETS

Current Assets

  Cash and cash equivalents                                            $ 60,213
  Accounts receivable                                                    79,475
  Interest receivable and others                                         18,708
  Employee loans and advances                                            12,123
  Inventories                                                            46,576
                                                                        -------
    Total current assets                                                217,094
                                                                       --------

Property and Equipment, net of accumulated
  depreciation of $810,426                                              960,004
                                                                       --------

Other Assets
  Investments                                                           153,716
  Notes receivable, net of allowance for loan
   losses of $100,000                                                         -
  Deposits and others                                                    12,840
                                                                        -------
                                                                        166,556



TOTAL ASSETS                                                        $ 1,343,655
                                                                   ============


                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities,
  Accounts payable and other liabilities                              $ 435,731
                                                                     ----------

Stockholders' Equity
  Common stock, $0.00005 par value; 50,000,000
   shares authorized; 20,375,915 shares issued
   and outstanding                                                        1,019
  Additional paid-in capital                                         19,492,893
  Accumulated deficit                                               (18,598,371)
  Accumulated other comprehensive income                                 23,651
  Treasury stock, at cost                                               (11,269)
                                                                        --------
                                                                        907,924


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 1,343,655
                                                                    ============
See Notes to Consolidated Financial Statements
<PAGE>

CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>

                                                         For Three Months ended                  For Six Months ended
                                                                 June 30,                               June 30,
                                                              2002              2001                 2002              2001
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                <C>                   <C>              <C>
Revenues:
  Products                                                 $ 132,007         $106,391             $ 248,550         $ 240,548
  Services                                                    17,450           16,225                34,349            19,725
                                                          --------------------------------------------------------------------
                                                             149,457          122,616               282,899           260,273
                                                          --------------------------------------------------------------------

Cost of Revenues:
  Products                                                    97,325          103,297               184,632           198,929
  Services                                                   659,983          240,271               984,461           487,350
                                                          --------------------------------------------------------------------
                                                             757,308          343,568             1,169,093           686,279
                                                          --------------------------------------------------------------------

Operating expenses:
  Selling, general and administrative                        612,835          539,883             1,146,841         1,546,896
  Reduction of long-lived assets                              93,145                -                93,145                 -
                                                          --------------------------------------------------------------------
                                                             705,980          539,883             1,239,986         1,546,896
                                                          --------------------------------------------------------------------
     Operating (loss)                                     (1,313,831)        (760,835)           (2,126,180)       (1,972,902)
                                                          --------------------------------------------------------------------
Other incomes (expenses):
  Other income                                                 4,087              180                 4,641             2,680
  Interest income                                                391           47,899                20,884           100,428
  Realized (loss) on securities                               (3,165)               -                (3,165)                -
                                                          --------------------------------------------------------------------
                                                               1,312           48,079                22,359           103,108
                                                          --------------------------------------------------------------------


     Net (loss)                                          $(1,312,518)      $ (712,756)          $(2,103,820)      $(1,869,794)
                                                         =====================================================================

Loss per Share - Basic and Diluted                           $ (0.06)         $ (0.04)              $ (0.10)          $ (0.09)
                                                         =====================================================================

Weighted Average Number of Shares                         20,241,582       19,846,014            20,120,615        19,843,014
</TABLE>

See Notes to Consolidated Financial Statements
<PAGE>

CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTH PERIOD ENDED JUNE 30, 2002 AND 2001

<TABLE>
<CAPTION>


For Six Months ended June 30,                                                          2002                   2001
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                   <C>
Cash Flows From Operating Activities:
  Net (loss)                                                                           $(2,103,820)           $(1,869,794)
  Adjustments to reconcile net (loss) to net
   cash (used in) operations:
   Depreciation and amortization                                                           114,824                125,830
   Stock issued for employee compensation                                                        0                 90,000
   Stock issued for services                                                               597,920                 50,390
   Realized loss on securities                                                               3,165                      -
   Reduction of long-lived assets                                                           93,145                      -
   (Increase) decrease in:
     Accounts receivable                                                                    (4,422)                12,641
     Interest receivable and others                                                            778                102,041
   Increase (decrease) in:
     Accounts Payable and Accrued Expenses                                                 152,459               (270,763)
                                                                                 -----------------------------------------
   Cash flows (used in) operating activities                                            (1,145,951)            (1,759,655)
                                                                                 -----------------------------------------

Cash Flows From Investing Activities:
  Employee loans and advances                                                                7,600                  6,538
  Purchase of property and equipment                                                        (2,685)              (223,215)
  Capitalized software development costs                                                   (34,498)                     0
  Proceeds from sales of securities                                                        189,990                      0
                                                                                 -----------------------------------------
   Cash flows provided by (used in) investing activities                                   160,407               (216,677)
                                                                                 -----------------------------------------

Cash Flows From Financing Activities:
  Exercise of warrants                                                                      10,000                      -
  Net proceeds from sales of stock                                                         406,250                      -
                                                                                 -----------------------------------------

   Cash flows provided by financing activities                                             416,250                      -
                                                                                 -----------------------------------------

     Net (decrease) in cash and cash equivalents                                          (569,295)            (1,976,332)

Cash and cash equivalents, at beginning of period                                          629,508              3,569,090
                                                                                 -----------------------------------------

Cash and cash equivalents, at end of period                                       $         60,213            $ 1,592,758
                                                                                 =========================================


Supplemental Disclosures of Cash Flow Information:
  Cash receipts for:
    Income Taxes                                                                  $             -               $ (84,179)

Supplemental schedule of noncash investing and financing activities:
  Conversion of notes receivable into investment                                         $ 132,000                    $ -

</TABLE>


See Notes to Consolidated Financial Statements
<PAGE>

                   CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES
          NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Circle Group Internet Inc. and subsidiaries (the "Company") is an Internet
company with e-finance, business consulting, e-tailer and software development
divisions.

A summary of significant accounting policies follows.

Presentation of Interim Information

In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
condition and results of operations of the Company for the periods presented
have been included. Interim results are not necessarily indicative of results
for a full year. Certain information and footnote disclosures normally included
in the financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been omitted unless
significant changes have occurred since the Form 10-SB was filed. The
accompanying financial statements and notes thereto should be read in
conjunction with the Company's Form 10-SB.

Principle of Consolidation and Presentation

The accompanying consolidated financial statements include the accounts of
Circle Group Internet Inc. and its subsidiaries, On-Line Bedding Corporation,
PPI Capital Corp., CGI Capital, Inc. (FKA CGI Securities, Inc.) and Veridisc
Corporation, after elimination of all intercompany accounts and transactions.
Certain prior period balances have been reclassified to conform to the current
period presentation.

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future cash flows
resulting from the use of the asset and its eventual disposition. Measurement of
an impairment loss for long-lived assets and certain identifiable intangible
assets that management expects to hold and use is based on the fair value of the
asset. Long-lived assets and certain identifiable intangible assets to be
disposed of are reported at the lower of carrying amount or fair value less
costs to sell.

New Accounting Standards

SFAS No. 143, Accounting for Asset Retirement Obligations, addresses financial
accounting and reporting for obligations associated with the Retirement of
tangible long-lived assets and the associated asset retirement costs. The
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period it is incurred if a reasonable estimate
of fair value can be made. The associated retirement costs are capitalized as a
component of the carrying amount of the long-lived asset and allocated to
expense over the useful life of the asset. The statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002
Management believes the adoption of the statement will not have a material
effect on the Company's financial statements.

In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," was issued and establishes accounting and reporting
standards for the impairment or disposal of long-lived assets. This statement
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed." SFAS No. 144 provides one accounting
model to be used for long-lived assets to be disposed of by sale, whether
previously held for use or newly acquired and broadens the presentation of
discontinued operations to include more disposal transactions. The provisions of
SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001. Accordingly, the statement was effective for
the Company for the fiscal quarter beginning January 1, 2002 and it did not have
an impact on its financial position.
<PAGE>


                   CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES
          NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (CONTINUED)

In June 2002, FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance provided by EITF Issue No. 94-3, "Liability Recognition for
Certain employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring) is replaced by this
Statement. Statement 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. Management does not anticipate
that the adoption of this Statement will have a significant effect on the
Company's financial statements.

NOTE 2 - CONTINUING OPERATIONS

The Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. In the near
term, the Company expects operating costs to continue to exceed funds generated
from operations. As a result, the Company expects to continue to incur operating
losses and may not have enough money to grow its business in the future. The
Company can give no assurance that it will achieve profitability or be capable
of sustaining profitable operations. As a result, operations in the near future
are expected to continue to use working capital.

To successfully grow the individual segments of the business, the Company must
decrease its cash burn rate, improve its cash position and the revenue base of
each segment, and succeed in its ability to raise additional capital through a
combination of primarily public or private equity offerings or strategic
alliances. The Company also depends on certain important employees, and the loss
of any of those employees may harm the Company's business.

The Company has generated approximately $416,000 in additional operating capital
through sales of its common stock in an ongoing private placement offering
during the first six months of 2002. In addition, the Company liquidated one of
its investments in second quarter of 2002 and generated approximately $190,000
in additional operating capital.

NOTE 3  - NOTES RECEIVABLE

The Company has a note receivable in the amount of $100,000 that is fully
reserved for losses. The note is currently in default and immediate demand for
payment in full has been made. The note is due on August 31, 2002.

NOTE 4 - INVESTMENTS

As of June 30, 2002, included in investments are available-for-sale securities
primarily consisting of common stock investments. Available-for-sale securities
are carried at fair value based on quoted market prices. Available-for-sale
securities at June 30, 2002 included 11,998 shares of Startech Environmental
Corp. valued at $21,716. A net unrealized holding gain of $23,651 has been
reflected in other comprehensive income in the equity section of the
consolidated balance sheet.

<PAGE>


                   CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES
          NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - COMPREHENSIVE LOSS

The components of the Company's comprehensive loss are as follows:
<TABLE>
<CAPTION>

                                        Three Months ended                Six Months ended
                                             June 30,                         June 30,
                                        2002          2001               2002           2001
                                    -----------------------------    ------------------------------
<S>                                   <C>             <C>              <C>             <C>
Net (loss)                            $(1,312,518)    $(712,756)       $(2,103,820)   $(1,869,794)
Unrealized Gain (Loss) on
  available for sale securities            (7,918)      32,471             23,651         (61,638)
                                      ------------    ----------       ------------   ------------
Comprehensive (loss)                  $(1,320,436)    $(680,285)       $(2,080,169)   $(1,931,432)
                                      ============    ==========       ============   ============
</TABLE>

Due to the Company's net loss for each of the periods presented above, there are
no tax effects allocated to any components of comprehensive net loss for each of
the periods.

NOTE 6 - NONCASH FINANCING ACTIVITIES

During 2002, the Company issued 346,968 shares of common stock to consultants as
payment for professional services rendered. The fair value of the stock at the
time of issuance ranged from $0.75 to $2.50 per share. The total amount of
$597,920 was charged to operations.

NOTE 7 - NET LOSS PER SHARE

Net loss per share is computed based on the weighted average number of shares of
common stock outstanding during the period. Basic net loss per share for three
months ended June 30, 2002 and 2001 was $0.06 and $0.04, respectively and for
six months ended June 30, 2002 and 2001 was $0.10 and $0.09, respectively. Net
loss per share does not include options and warrants, as they would be
anti-dilutive in 2002 and 2001 due to the net loss in those periods.

<TABLE>
<CAPTION>

                                            Three Months ended                            Six Months ended
                                                     June 30,                                 June 30,
                                           2002                   2001                  2002             2001
                                      ----------------         ---------------    --------------     ---------------
<S>                                   <C>                    <C>                  <C>               <C>
Numerator:
  Net Loss                             $ (1,312,518)       $   (712,756)          $(2,103,820)      $(1,869,794)
                                      ----------------       ---------------       ----------------  ---------------
Denominator:
  Weighted average of common Shares      20,241,582          19,846,014            20,120,615        19,843,014
                                      ----------------       ---------------       ----------------  ---------------
Basic and Diluted net loss per share   $      (0.06)       $      (0.04)          $     (0.10)      $     (0.09)
                                      ================       ===============       ================  ===============
</TABLE>

<PAGE>


                   CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES
          NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - SEGMENT INFORMATION

Description of products and services from reportable segments:

The Company organizes its business units into four reportable segments:
e-finance, business consulting, e-tailer and software development.

Measurement of segment profit or loss and segment assets:

The Company reviews the operating companies income to evaluate segment
performance and allocate resources. Operating companies' income for the
reportable segments excludes income taxes, minority interest and amortization of
goodwill. Provision for income taxes is centrally managed at the corporate level
and, accordingly, such items are not presented by segment. The segments'
accounting policies are the same as those described in the summary of
significant accounting policies.

Intersegment transactions: Intersegment transactions are recorded at cost.

Factors management used to identify the reportable segments:

The Company's reportable segments consist of a wholly owned distributor of
pillows, blankets and other bedding products to airlines, hospitals and other
commercial and institutional customers and an investment banking subsidiary that
is a fully licensed broker-dealer with activities focused on the internet sector
and, more generally, on issuers who seek to market their stock offerings to
investors with a technology interest.
The software development subsidiary produces and markets a patent-pending
digital rights management (DRM) system that guides consumers to register and
authorize access to multimedia content and commercial software via the Internet
when utilizing the material on their computers.

<PAGE>

                   CIRCLE GROUP INTERNET INC. AND SUBSIDIARIES
          NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Note 8 - Segment Information (Continued)

Summarized financial information of the Company's results by operating segment
is as follows:
<TABLE>
<CAPTION>

                                    Three Months ended                 Six Months ended
                                  June 30,                         June 30,
                                    2002          2001               2002            2001
                               -----------------------------    -------------------------------
<S>                                    <C>            <C>              <C>              <C>
Net Revenue:
  E-Finance                               $ -           $ -                 $ -            $ -
  Business Consulting                  17,450        16,225              34,349         19,725
  E-tailer                            132,007       106,391             248,550        240,548
  Software Development                      -             -                   -              -
                               -----------------------------    -------------------------------
                                    $ 149,457     $ 122,616           $ 282,899      $ 260,273
Operating Income (Loss):
  E-Finance                          $ (6,562)     $ (2,931)           $ (9,867)      $ (5,552)
  Business Consulting              (1,211,340)     (720,136)         (2,005,130)    (1,732,821)
  E-tailer                             (1,905)       10,864             (10,934)        12,399
  Software Development                (94,024)      (48,632)           (100,249)      (246,928)
                               -----------------------------    -------------------------------
                                  $(1,313,831)   $ (760,835)        $(2,126,180)   $(1,972,902)
Net Income(Loss) before tax:
  E-Finance                          $ (6,545)     $ 27,574             $ 8,936       $ 69,330
  Business Consulting              (1,210,606)     (684,581)         (2,003,035)    (1,712,218)
  E-tailer                             (1,342)       (7,117)             (9,472)        20,022
  Software Development                (94,024)      (48,632)           (100,249)      (246,928)
                               -----------------------------    -------------------------------
                                  $(1,312,517)   $ (712,756)        $(2,103,820)   $(1,869,794)
</TABLE>
<TABLE>
<CAPTION>
                                              June 30,
Total Assets:                        2002                 2001
                                 -----------           -----------
<S>                             <C>                  <C>
  E-Finance                    $    173,860          $  1,968,150
  Business Consulting               950,216             3,042,196
  E-Tailer                          205,230               400,416
  Software                           14,349                    --
                                --------------       -------------
                                $ 1,343,655          $  5,410,762
                                ==============         ==========
</TABLE>


<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist in understanding the financial
condition and results of operations of Circle Group Internet Inc. You should
read the following discussion along with our financial statements and related
notes included in this Form 10-QSB. The following discussion contains
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance and achievements in 2002 and beyond
may differ materially from those expressed in, or implied by, these forward
looking statements.

FORWARD-LOOKING STATEMENTS

When used in this Form 10-QSB and in future filings by us with the Securities
and Exchange Commission, in our press releases or other public or shareholder
communications, and in oral statements made with the approval of an authorized
executive officer, the words "believes," "intends," "expects," "may," "will,"
"should," "plan," "projected," "contemplates," "anticipates," or similar
statements are intended to identify forward-looking statements. Our ability to
predict results or the actual effect of future plans or strategies is uncertain.
Factors which could have a material adverse effect on our operations include,
but are not limited to, changes in interest rates, general economic conditions,
and legislative/regulatory changes, competition, demand for financial services
in our market areas and accounting principles and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and
you should not place undue reliance on these forward-looking statements, which
apply only as of the date of this filing. We undertake no obligation to release
publicly the result of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date of this Form
10-QSB or to reflect the occurrence of unanticipated events.

BACKGROUND

Circle Group is an Internet company with e-finance, business consulting,
e-tailer, and software development divisions. Our business is built around the
common theme of Internet-enhanced operations.

We believe that the growth of the digital marketplace over the past few years
has created unprecedented business opportunities. We believe that, while some
dot.com companies have grown, very few have profited, and fewer still have
created business models that allow for sustained growth and profitability. As
competition intensifies, business and consumer e-commerce customers become more
demanding of their suppliers, resulting in more expensive financing and an
increased level of difficulty in obtaining funding.

Under our unique business model, a partnership is created with the entrepreneurs
to assist them in many aspects of their business. The specialized
mentor-oriented services offered by our eMentor Capital(TM) business model
differ from traditional methods by empowering entrepreneurs rather than
controlling them.

SUMMARY OF FINANCIAL RESULTS

Total assets decreased by approximately $913,000 to $1,343,655 at June 30, 2002
from $2,257,195 at December 31, 2001. The decrease in total assets resulted
primarily from operating expenses for that period.

Total equity decreased by approximately $1,065,000 to $907,924 at June 30, 2002,
from $1,973,923 at December 31, 2001. The decrease in equity was primarily
comprised of the net loss for the six months ended June 30, 2002 of $2,103,820,
offset by the sale of common stock which raised $416,250.
<PAGE>


RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2002 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 2001

Revenues

Revenues did not change significantly for the six months ended June 30, 2002
from the six months ended June 30, 2001. The following table provides a
breakdown of the revenues for our divisions for the periods indicated:

                                              Six months ended June 30,
                                             2002                   2001
                                           -------------------------------

        Business Consulting                $ 34,349               $ 19,725
        E-Finance                                --                     --
        E-tailer                            248,550                240,548
        Software Development                     --                     --
                                           --------               --------
           Total Revenues                  $282,899               $260,273
                                           ========               ========

Operating expenses

Operating expenses consist of payroll and related costs, insurance, occupancy
expenses, professional fees, and general operating expenses. Total operating
expenses decreased by $276,210 or approximately 25% to $1,237,986 for the six
months ended June 30, 2002 from the six months ended June 30, 2001.

Other income

Total other income for the six months ended June 30, 2002 was $22,359. Other
income included $25,525 in interest income and a realized loss of $3,165. Total
other income was $103,108 in interest income for the comparable period in fiscal
2001.

Net loss

We reported a net loss of $2,103,820 for the six months ended June 30, 2002 as
compared to a net loss of $1,869,794 for the six months ended June 30, 2001.

THREE MONTHS ENDED JUNE 30, 2002 AS COMPARED TO THREE MONTHS ENDED JUNE 30, 2001

Revenues

Revenues did not change significantly for the three months ended June 30, 2002
from the three months ended June 30, 2001. The following table provides a
breakdown of the revenues for our divisions for the periods indicated:

                                             Three months ended June 30,
                                             2002                   2001
                                           -------------------------------

        Business Consulting                $ 17,450               $ 16,225
        E-Finance                                --                     --
        E-tailer                            132,007                106,391
        Software Development                     --                     --
                                           --------               --------
           Total Revenues                  $149,457               $122,216
                                           ========               ========
<PAGE>


Operating expenses

Operating expenses consist of payroll and related costs, insurance, occupancy
expenses, professional fees, and general operating expenses. Total operating
expenses increased by $166,097 or approximately 16% to $705,980 for the three
months ended June 30, 2002 from the three months ended June 30, 2001.

Other income

Total other income for the three months ended June 30, 2002 was $1,312. Other
income included $4,478 in interest income and a realized loss on securities of
$3,165. Total other income was $48,079 in interest income for the comparable
period in fiscal 2001.

Net loss

We reported a net loss of $1,312,518 for the three months ended June 30, 2002 as
compared to a net loss of $712,756 for the three months ended June 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2002, we had a working deficit of $218,637, a decrease of $724,932
from December 31, 2001. At June 30, 2002, our cash on hand decreased to $60,213
from $629,508 at December 31, 2001.

Net cash used by operating activities was $1,145,951 for the six months ended
June 30, 2002 as compared to net cash used by operating activities of $1,759,655
for the six months ended June 30, 2001.

Net cash provided by investing activities was $160,407 for the six months ended
June 30, 2002, as compared to net cash used by investing activities of $216,677
for the six months ended June 30, 2001.

Net cash provided by financing activities was $416,250 for the six months ended
June 30, 2002 compared to $0 for the six months ended June 30, 2001.

We have primarily funded our operations through the sale of our common stock.
Other than our working capital and trading securities, we do not presently have
any additional sources of liquidity.

In the near term, we expect operating costs to continue to exceed funds
generated from operations. As a result, we expect to continue to incur operating
losses and may not have enough money to grow our business in the future. The
Company can give no assurance that it will achieve profitability or be capable
of sustaining profitable operations. As a result, operations in the near future
are expected to continue to use working capital.

To successfully grow the individual segments of the business, the Company must
decrease its cash burn rate, improve its cash position and the revenue base of
each segment, and continue to succeed in its ability to raise additional capital
through a combination of primarily public or private equity offerings or
strategic alliances. The Company also depends on certain important employees,
and the loss of any of those employees may harm the Company's business.

The Company has generated approximately $416,00 in additional operating capital
through sales of its common stock in a private placement offering during the
first six months 2002. In addition, we liquidated one of our investments over
the second quarter generating additional operating capital of $190,000.
<PAGE>


SPECIAL CAPITAL CONSIDERATIONS OF CGI CAPITAL

CGI Capital, a wholly owned subsidiary of Circle Group must follow the SEC's
Uniform Net Capital Rule, Rule 15c3-1, which is designed to measure the
financial integrity and liquidity of a broker-dealer, and the minimum net
capital deemed necessary to meet its commitments to its customers. Rule 15c3-1
provides that a broker-dealer doing business with the public must not permit its
aggregate indebtedness to exceed 15 times its net capital or, alternatively,
that it not permit its net capital to be less than 2% of aggregate debit items
as calculated by the rule. As of this date, CGI Capital is required to maintain
a minimum net capital of $5,000. As of June 30, 2002, it had net capital in
excess of the minimum net capital required of $5,512. The minimum net capital
required is based upon the nature of CGI Capital's broker-dealer business. If
CGI Capital remains principally engaged in the offer and sale of private
placement securities, then its net capital requirement remains at $5,000.

NEW ACCOUNTING STANDARDS

SFAS No. 143, Accounting for Asset Retirement Obligations, addresses financial
accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. The
statement requires that the fair value of a liability for an asset retirement
obligation be recognized in the period it is incurred if a reasonable estimate
of fair value can be made. The associated retirement costs are capitalized as a
component of the carrying amount of the long-lived asset and allocated to
expense over the useful life of the asset. The statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002.
Management believes the adoption of the statement will not have a material
effect on the Company's financial statements.

In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," was issued and establishes accounting and reporting
standards for the impairment or disposal of long-lived assets. This statement
supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed." SFAS No. 144 provides one accounting
model to be used for long-lived assets to be disposed of by sale, whether
previously held for use or newly acquired and broadens the presentation of
discontinued operations to include more disposal transactions. The provisions of
SFAS No. 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001. Accordingly, the statement was effective for
the Company for the fiscal quarter beginning January 1, 2002 and it did not have
an impact on its financial position.

In June 2002, FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance provided by EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring) is replaced by this
Statement. Statement 146 is to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. Management does not anticipate
that the adoption of this Statement will have a significant effect on the
Company's financial statements.
<PAGE>


FACTORS THAT MAY AFFECT FUTURE RESULTS AND INFORMATION CONCERNING
FORWARD-LOOKING STATEMENTS

Statements contained in this filing which are not statements of historical fact
are forward-looking statements within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934. Forward-looking statements are made by
us based upon management's current expectations and beliefs concerning future
developments and their potential effects upon the company. There can be no
assurance that future developments affecting Circle Group will be those
anticipated by management, and there are a number of factors that could
adversely affect Circle Group's future operating results or cause our actual
results to differ materially from the estimates or expectations reflected in
such forward-looking statements, including, without limitation, the factors set
forth below:

ABILITY TO OBTAIN ADDITIONAL FINANCING. Circle Group does not anticipate that
its revenues in the foreseeable future will be sufficient to fulfill its
business plan without the need for additional capital. Therefore, we need to
raise additional funds to finance our operations, fund expansion and respond to
competitive pressures. There can be no assurance that we will be able to obtain
additional financing, if needed, on acceptable terms, or at all.

COMPETITIVE AND RAPIDLY CHANGING MARKETPLACE. There is significant competition
in the e-finance, business consulting e-tailer, and software development
divisions in which the Company conducts its business. In addition, the market
for our business is rapidly changing and there are many uncertainties. Many of
our competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing and other
resources than us. These competitors may be able to devote substantially more
resources to developing their business than we may. Our ability to compete
depends upon a number of factors within and outside our control, including
market conditions, the capital raising environment and industry acceptance of
our web development services and software products.

DEPENDENCE ON INTELLECTUAL PROPERTY. Our success depends in part on our ability
to obtain patents, copyrights and trademarks, maintain trade secret protection
and operate without infringing the proprietary rights of others. Current or
future claims of intellectual property infringement could prevent us from
obtaining technology of others and could otherwise adversely affect our
operating results, cash flows, financial position or business, as could expenses
incurred by us in enforcing our intellectual property rights against others or
defending against claims that our product infringe the intellectual property
rights of others.

KEY PERSONNEL. Our future success depends to a significant extent on the
continued services of senior management and other key personnel. The loss of the
services of any of our executive officers or other key employees could harm our
business. Our future success also depends on our ability to attract, retain and
motivate highly skilled employees. Competition for qualified employees in the
industries in which we engage is intense. If we fail to hire and retain a
sufficient number of qualified employees, our business can be adversely
affected.

Factors unrelated to our operating performance, including economic and business
conditions; the loss of significant customers; the outcome of future litigation
and market conditions could also adversely affect our operating results.

GOING CONCERN. Our consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. In
the near term, we expect operating costs to continue to exceed funds generated
from operations. As a result, we expect to continue to incur operating losses
and may not have enough money to grow our business in the future. We can give no
assurance that we will achieve profitability or be capable of sustaining
profitable operations. As a result, operations in the near future are expected
to continue to use working capital.
<PAGE>


                                     PART II
                                OTHER INFORMATION

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)  Exhibits

Exhibit No.                        Description
-----------                        --------------
2.1           Articles of Incorporation of Circle Group Internet Inc.
              [Incorporated by reference to Exhibit 2.1 to Circle Group's Form
              1-A (SEC File No. 24-3874)]

2.2           Bylaws of Circle Group Internet Inc. [Incorporated by reference
              to Exhibit 2.2 to Circle Group's Form 1-A (SEC File No. 24-3874)]

3.1           Specimen Certificate for Common Stock [Incorporated by reference
              to Exhibit 3.1 to Circle Group's Registration Statement on Form
              10-SB (SEC File No. 000-27841)]

6.1           Gregory J. Halpern Employment Agreement [Incorporated by reference
              to Exhibit 6.1 to Circle Group's Registration Statement on Form
              10-SB (SEC File No. 000-27841)]

6.2           Arthur Tanner Employment Agreement [Incorporated by reference to
              Exhibit 6.2 to Circle Group's Registration Statement on Form 10-SB
              (SEC File No. 000-27841)]

6.3           Michael Theriault Employment Agreement [Incorporated by reference
              to Exhibit 6.3 to Circle Group's Registration Statement on Form
              10-SB (SEC File No. 000-27841)]

6.4           Dana Dabney Employment Agreement [Incorporated by reference to
              Exhibit 6.4 to Circle Group's Registration Statement on Form 10-SB
              (SEC File No. 000-27841)]

6.5           Addendum to Gregory J. Halpern's Employment Agreement
              [Incorporated by reference to Exhibit 6.5 to Circle Group's
              Registration Statement on Form 10-SB (SEC File No. 000-27841)]

6.6           Circle Group Internet Inc. 1999 Stock Option Plan [Incorporated by
              reference to Exhibit 6.6 to Circle Group's Registration Statement
              on Form 10-SB (SEC File No. 000-27841)]

6.7           Industrial Lease Agreement between CLO Enterprises and Circle
              Group Internet Inc. dated May 20, 1999 [Incorporated by reference
              to Exhibit 6.7 to Circle Group's Registration Statement on Form
              10-SB (SEC File No. 000-27841)]

6.8           Industrial Lease Agreement between CLO Enterprises and Circle
              Group Internet Inc. dated June 18, 1999 [Incorporated by reference
              to Exhibit 6.8 to Circle Group's Registration Statement on Form
              10-SB (SEC File No. 000-27841)]

              (b)  Reports on Form 8-K

                   None.
<PAGE>


                                   SIGNATURES

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


                                           CIRCLE GROUP INTERNET INC.
                                           (Registrant)


Date: August 14, 2002
                                           By: /s/ Gregory J. Halpern,
                                               ---------------------------------
                                               Gregory J. Halpern, President and
                                               Chief Executive Officer


                                           By: /s/ Arthur C. Tanner,
                                               ---------------------------------
                                               Arthur C. Tanner, Chief Financial
                                               Officer


                                           By: /s/  James H. Schneider,
                                               ---------------------------------
                                               James H. Schneider, Principal
                                               Accounting Officer