<PAGE>

                UNITED STATES 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 the quarterly period ended September 30, 2001

                                       OR

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
        For the transition period from_________, 20__, to________, 20__.

                       Commission File Number: 000-31395
                       ---------------------------------

                                  VillageEDOCS
                                  ------------


          California                                 33-0668917
  ---------------------------------        ------------------------------
   (State or Other Jurisdiction of         I.R.S. Employer Identification
    Incorporation or Organization)                     Number



14471 Chambers Road, Suite 105, Tustin, California             92780
--------------------------------------------------    ------------------------
  (Address of principal executive offices)                  (Zip Code)


Registrant's telephone number, including area code:  (714) 734-1030

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and has been subject to such filing requirements
for the past 90 days.

           X     YES                         ___  NO
          ---


There were 13,997,424 shares of the Registrant's common stock outstanding as of
October 31, 2001.

Transitional Small Business Format (check one) Yes  ___   No X___

                                       i
<PAGE>

                                  VillageEDOCS
________________________________________________________________________________


                         PART I - FINANCIAL INFORMATION



ITEM 1 - FINANCIAL STATEMENTS


     Balance Sheet for September 30, 2001 (Unaudited).........................1

     Statements of Operations for the three and nine months ended
      September 30, 2001 and 2000 (Unaudited).................................2

     Statements of Cash Flows for the nine months ended
      September 30, 2001 and 2000 (Unaudited).................................3
 .
     Notes to Financial Statements............................................4

                                       ii
<PAGE>

                                  VillageEDOCS
                                 Balance Sheet
                                  (Unaudited)
 ______________________________________________________________________________


<TABLE>
<CAPTION>
                                                                       September 30, 2001
                                                                     -----------------------
<S>                                                                   <C>
ASSETS
Current Assets:
  Cash                                                                  $    23,672
  Accounts receivable, net of allowance for doubtful
      accounts of approximately $45,000                                     198,938
  Other current assets                                                       21,633
                                                                       ------------
    Total current assets                                                    244,243

  Property and equipment, net                                               261,204
  Other assets                                                               22,373
                                                                       ------------
                                                                        $   527,820
                                                                       ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Accounts payable                                                      $   226,094
  Accrued expenses                                                           95,798
  Accrued interest on convertible notes
     payable to related parties                                             204,345
  Current portion of capital lease obligations                              100,361
                                                                       ------------
    Total current liabilities                                               626,598

Capital lease obligations, net of current portion                            46,263
Convertible notes payable to related parties                              1,961,992
                                                                       ------------
    Total liabilities                                                     2,634,853
                                                                       ------------
Stockholders' Equity (Deficit):
  Common stock, no par value:
     Authorized - 40,000,000 shares
     Issued and outstanding - 13,997,424                                  4,843,331
   Additional  paid-in capital                                            1,188,632
   Accumulated deficit                                                   (8,138,996)
                                                                       ------------
      Total stockholders' equity (deficit)                               (2,107,033)
                                                                       ------------
                                                                        $   527,820
                                                                       ============
</TABLE>
See accompanying notes to unaudited financial statements

                                       1
<PAGE>

                                  VillageEDOCS
                            Statements of Operations
                                  (Unaudited)
______________________________________________________________________________


<TABLE>
<CAPTION>
                                                         Three Months Ended                      Nine Months Ended
                                                  September 30,      September 30,     September 30,           September 30,
                                                      2001               2000                2001                  2000
                                                ----------------   ----------------   -----------------    -------------------
<S>                                             <C>                <C>                <C>                 <C>
Net Sales                                            $   327,124        $   175,678         $   952,181           $   305,378

Cost of Sales                                            261,856            314,590             712,175               642,261
                                                ----------------   ----------------   -----------------    -------------------
     Gross profit (loss)                                  65,268           (138,912)            240,006              (336,883)
                                                ----------------   -----------------  -----------------    -------------------
Operating Expenses:
    Product and technology development                   127,605             89,349             395,599               273,210
    Sales and marketing                                   83,441            180,632             332,396               473,069
    General and administrative                           135,604            143,045             658,527               461,618
    Depreciation                                          21,837             23,936              70,096                53,147
                                                ----------------   -----------------  -----------------    -------------------
      Total operating expenses                           368,487            436,962           1,456,618             1,261,044
                                                ----------------   -----------------  -----------------    -------------------
      Loss from operations                              (303,218)          (575,874)         (1,216,612)           (1,597,927)

Interest income                                               --                 --                  13                23,519
Interest (expense)                                       (50,481)           (23,019)           (132,701)              (69,857)
                                                ----------------   -----------------  -----------------    -------------------
     Loss before provision for income                   (353,700)          (598,893)         (1,349,300)           (1,644,265)
      taxes

Provision for income taxes                                    --                 --                 800                   800
                                                ----------------   -----------------  -----------------    -------------------
     Net loss                                        $  (353,700)       $  (598,893)        $(1,350,100)          $(1,645,065)
                                                ================   ================   =================    ==================
Basic and diluted loss available to
 common stockholders per common share                      $(.03)             $(.04)              $(.10)                $(.12)
                                                 ================   ================   =================    ==================

Weighted average shares outstanding                   13,991,292         13,655,646          13,886,497            13,560,428
                                                ================   ================   =================    ==================
</TABLE>
See accompanying notes to unaudited financial statements.

                                       2
<PAGE>

                                  VillageEDOCS
                            Statements of Cash Flows
                                  (Unaudited)
 _____________________________________________________________________________


<TABLE>
<CAPTION>
                                                                                   Nine Months Ended
                                                                         September 30,           September 30,
                                                                             2001                    2000
                                                                    ---------------------    --------------------
<S>                                                                 <C>                      <C>
Cash Flows from Operating Activities:
  Net loss                                                                    $(1,350,100)            $(1,645,065)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
         Depreciation                                                              70,096                  53,147
         Amortization of discount on convertible notes payable                         --                   5,048
         Provision for loss on doubtful accounts receivable                        17,033                   5,000
         Issuance of common stock for services                                         --                  78,378
         Estimated fair market value of stock options issued to
              non-employees for services rendered                                 170,320                  11,250
         Changes in operating assets and liabilities:
              Accounts receivable                                                 (63,187)                (99,661)
              Other assets                                                        (17,873)                (14,245)
              Accounts payable                                                     65,746                  28,013
              Accrued expenses and other                                          137,528                  53,048
                                                                              -----------             -----------

            Net cash used in operating activities                                (970,437)             (1,525,087)
                                                                              -----------             -----------
  Cash Flows from Investing Activities:
      Purchases of property and equipment                                          (2,730)                (28,147)
                                                                              -----------             -----------
  Cash Flows from Financing Activities:
      Proceeds from convertible notes payable to related parties                1,010,000                      --
      Proceeds from sale of common stock                                               --                 527,500
      Principal payments under capital leases                                     (96,937)                (62,819)
      Proceeds from the exercise of warrants                                        1,510                   2,906
                                                                              -----------             -----------
      Net cash provided by financing activities                                   914,573                 467,587
                                                                              -----------             -----------
      Net decrease in cash                                                        (58,594)             (1,085,647)

      Cash, beginning of period                                                    82,266               1,259,106
                                                                              -----------             -----------
      Cash, end of period                                                     $    23,672             $   173,459
                                                                              ===========             ===========
Supplemental disclosure of cash flow information -
     Cash paid during the period for:

          Interest                                                            $    17,184             $        --
                                                                              ===========             ===========
          Income taxes                                                        $       800             $       800
                                                                              ===========             ===========
</TABLE>

See accompanying notes to unaudited financial statements

                                       3
<PAGE>

                                  VillageEDOCS
          Notes to Unaudited Financial Statements - September 30, 2001
______________________________________________________________________________


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   Management's Representation

The management of VillageEDOCS (the "Company") without audit has prepared the
financial statements included herein.  The accompanying unaudited financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information.
Certain information and note disclosure normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted.  In the opinion of the
management of the Company, all adjustments considered necessary for fair
presentation of the financial statements have been included and were of a normal
recurring nature, and the accompanying financial statements present fairly the
financial position as of September 30, 2001, and the results of operations and
cash flows for the three and nine months ended September 30, 2001 and 2000.

It is suggested that these unaudited financial statements be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 2000, included in the Company's Annual Report on Form 10-KSB filed
with the Securities and Exchange Commission on April 13, 2001.  The interim
results are not necessarily indicative of the results for a full year.

2.   Background and Organization
     ---------------------------

VillageEDOCS, formerly known as VillageFax.com, Inc. and SoftTek Technologies,
Inc., was incorporated in 1995 in Delaware and reincorporated in California in
1997. The Company develops and markets Internet-enabled fax services to
organizations throughout the United States and internationally.


3.   Going Concern
     -------------

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has a working capital
deficit and has incurred significant losses from operations in each year since
inception.  The Company's losses are continuing and are expected to continue
until such time as the Company is able to sufficiently expand its internet-
enabled fax services.

The Company's success is dependent upon numerous items, certain of which are the
successful implementation and marketing of its internet-enabled fax services,
its ability to obtain new customers in order to achieve levels of revenues
adequate to support the Company's current and future cost structure, and its
success in obtaining financing for equipment and operations, for which there is
no assurance. Unanticipated problems, expenses, and delays are frequently
encountered in establishing a new business.  These include, but are not limited
to, competition, the need to develop customer support capabilities and market
expertise, setbacks in product development, technical difficulties, market
acceptance and sales and marketing.  The failure of the Company to meet any of
these conditions could have a materially adverse effect upon the Company and may
force the Company to reduce or curtail operations. No assurance can be given
that the Company can or will ever operate profitably.

These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern.  The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the classification of liabilities that might result
from the outcome of these uncertainties.

Until sufficient revenue levels are achieved, the Company will require
additional financing to support its operations. Such sources of financing could
include capital infusions, additional equity financing or debt offerings.
Management plans to obtain convertible debt and equity financing from existing
shareholders and equity financing from new shareholders during the remainder of
2001.  Management is actively pursuing both of these financing arrangements.  If
the planned financings are obtained, the Company believes it will have adequate
cash to sustain operations until it becomes profitable.  There can be no
assurance that funding will be available on acceptable terms, if at all, or that
such funds, if raised, would enable the Company to achieve and maintain
profitable operations.

                                       4
<PAGE>

4.   Summary of Significant Accounting Policies
     ------------------------------------------

     Concentration of Credit Risk
     ----------------------------

     The Company extends credit to its customers and performs ongoing credit
     evaluations of such customers.  The Company does not obtain collateral to
     secure its accounts receivable.  The Company evaluates its accounts
     receivable on a regular basis for collectibility and provides for an
     allowance for potential credit losses as deemed necessary.  At September
     30, 2001, the Company has recorded an allowance for doubtful accounts of
     $45,000.  One customer accounted for approximately 11% of accounts
     receivable at September 30, 2001.  Another customer accounted for
     approximately 17% of total sales for the nine months ended September 30,
     2001.

     Use of Estimates in the Preparation of Financial Statements
     -----------------------------------------------------------

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of contingent assets and
     liabilities at the date of the financial statements and the reported
     amounts of revenues and expenses during the reporting period. Significant
     estimates made by management are, among others, provisions for doubtful
     accounts, losses on property and equipment and valuation of deferred tax
     assets.   Actual results could differ from those estimates.

     Revenue Recognition
     -------------------

     The Company provides internet-enabled fax services to businesses and
     charges for these services on either a per- page faxed or per- minute used
     basis. Service revenues are recognized when the services are performed.

     In December 1999, the Securities and Exchange Commission issued Staff
     Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition," which outlines
     the basic criteria that must be met to recognize revenue and provides
     guidance for presentation of revenue and for disclosure related to revenue
     recognition policies in financial statements filed with the Securities and
     Exchange Commission. The effective date of this pronouncement is the fourth
     quarter of the fiscal year beginning after December 15, 1999. The adoption
     of SAB 101 did not have a material impact on the Company's financial
     position and results of operations.


     Risks and Uncertainties
     -----------------------

     The Company operates in a highly competitive industry that is subject to
     intense competition, government regulation and rapid technological change.
     The Company's operations are subject to significant risks and uncertainties
     including financial, operational, technological, regulatory and other risks
     associated with an emerging business, including the potential risk of
     business failure.

     Loss per Share
     --------------

     The Company has adopted Statement of Financial Accounting Standards No. 128
     ("SFAS 128"), "Earnings per Share." Under SFAS 128, basic loss per share is
     computed by dividing income available to common shareholders by the
     weighted-average number of common shares assumed to be outstanding during
     the period of computation. Diluted earnings per share is computed similar
     to basic loss per share except that the denominator is increased to include
     the number of additional common shares that would have been outstanding if
     the potential shares had been issued and if the additional common shares
     were dilutive. No stock options or warrants outstanding were considered
     common stock equivalents, as the effect on net loss per share would be
     anti-dilutive.

     Segment Information
     -------------------

     The Company adopted Statement of Financial Accounting Standards No. 131
     ("SFAS No. 131"), "Disclosures about Segments of an Enterprise and Related
     Information," during fiscal 2000. SFAS 131 establishes standards for the
     way that public companies report information about operating segments and
     related disclosures about products and services, geographic areas and major
     customers in annual consolidated financial statements. The Company views
     its operations and manages its business as principally one segment.

                                       5
<PAGE>

     Comprehensive Income
     --------------------

     The Company has adopted Statement of Financial Accounting Standards No. 130
     ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes
     standards for reporting and display of comprehensive income and its
     components in a full set of general-purpose financial statements. The
     adoption of SFAS 130 has not materially impacted the Company's financial
     position or results of operations as the Company has no items of
     comprehensive income.

     Derivative Instruments and Hedging Activities
     ---------------------------------------------

     The Company has adopted Statement of Financial Accounting Standards No.
     133, "Accounting for Derivative Instruments and Hedging Activities," as
     amended by SFAS 137 and 138. The new accounting standard requires that all
     derivative instruments be recorded on the balance sheet at fair value.  The
     adoption of this standard did not have a material effect on the Company's
     results of operations or financial position.

     Stock-Based Compensation
     ------------------------

     The Company accounts for non-employee stock-based compensation under
     Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
     "Accounting For Stock-Based Compensation."  SFAS 123 defines a fair value
     based method of accounting for stock-based compensation.  However, SFAS 123
     allows an entity to continue to measure compensation cost related to stock
     and stock options issued to employees using the intrinsic method of
     accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB
     25"), "Accounting for Stock issued to Employees." Under APB 25,
     compensation cost, if any, is recognized over the respective vesting period
     based on the difference, on the date of grant, between the fair value of
     the Company's common stock and the grant price. Entities electing to remain
     with the accounting method of APB 25 must make pro forma disclosures of net
     income and earnings per share, as if the fair value method of accounting
     defined in SFAS 123 had been applied. The Company has elected to account
     for its stock-based compensation to employees under APB 25 (see Note 6).

     In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
     "Accounting for Certain Transactions Involving Stock Compensation, an
     interpretation of APB 25." FIN 44 clarifies the application of APB 25 for
     (a) the definition of employee for purposes of applying APB 25, (b) the
     criteria for determining whether a plan qualifies as a non-compensatory
     plan, (c) the accounting consequence for various modifications to the terms
     of a previously fixed stock option or award, and (d) the accounting for an
     exchange of stock compensation awards in a business combination. FIN 44 is
     effective July 1, 2000, but certain provisions cover specific events that
     occur after either December 15, 1998, or January 12, 2000. The adoption of
     FIN 44 did not have a material effect on the Company's financial
     statements.

     Recent Accounting Pronouncements
     --------------------------------

     In July 2001, FASB issued SFAS No. 141, "Business Combinations," which is
     effective for business combinations initiated after June 30, 2001.  SFAS
     No. 141 eliminates the pooling of interest method of accounting for
     business combinations and requires that all business combinations occurring
     on or after July 1, 2001 are accounted for under the purchase method.  The
     Company does not expect SFAS No. 141 to have a material impact on its
     financial statements.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
     Assets," which is effective for fiscal years beginning after December 15,
     2001. SFAS No. 142 addresses how intangible assets that are acquired
     individually or with a group of other assets should be accounted for in the
     financial statements upon their acquisition and after they have been
     initially recognized in the financial statements. SFAS No. 142 requires
     that goodwill and intangible assets that have indefinite useful lives not
     be amortized but rather be tested at least annually for impairment, and
     intangible assets that have finite useful lives be amortized over their
     useful lives. SFAS No. 142 provides specific guidance for testing goodwill
     and intangible assets that will not be amortized for impairment. In
     addition, SFAS No. 142 expands the disclosure requirements about goodwill
     and other intangible assets in the years subsequent to their acquisition.
     Impairment losses for goodwill and indefinite-life intangible assets that
     arise due to the initial application of SFAS No. 142 are to be reported as
     resulting from a change in accounting principle. However, goodwill and
     intangible assets acquired after June 30, 2001 will be subject immediately
     to the provisions of SFAS No. 142. The Company does not expect SFAS No. 142
     to have a material effect on its financial statements.

                                       6
<PAGE>

     In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
     Retirement Obligations."  SFAS No. 143 addresses financial accounting and
     reporting for obligations associated with the retirement of intangible
     long-lived assets and the associated asset retirement costs and is
     effective for fiscal years beginning after June 15, 2002.  The Company does
     not expect SFAS No. 143 to have a material impact on its financial
     statements.

     In August 2001, the FASB issued Statement of Financial Accounting Standards
     No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-
     Lived Assets."  SFAS 144 address financial accounting and reporting for the
     impairment of long-lived assets and for long-lived assets to be disposed
     of.  The provisions of SFAS 144 are effective for financial statements
     issued for fiscal years beginning after December 15, 2001, and interim
     periods within these fiscal years, with early adoption encouraged.  The
     Company does not expect SFAS 144 to have a material impact of its financial
     statements.


5.   Convertible Notes Payable
     -------------------------

During the nine months ended September 30, 2001, the Company borrowed $1,010,000
from two stockholders and issued convertible promissory notes bearing interest
at 10 percent per annum.  The notes and accrued interest are due at the earlier
of one of three events: 1) October 31, 2003; 2) acquisition of controlling
interest in the Company by a third party; or 3) the Company achieves equity
financing of a minimum of $5,000,000.  If the Company is acquired, the notes
plus accrued interest are convertible into shares of the Company's common stock
at the lower of $2.50 per share or the price paid per share by the acquirer.  As
of September 30, 2001 the outstanding principal balance of all convertible notes
payable was $1,961,992.

Total interest expense recognized on all the convertible notes payable was
$115,517 and $71,034 during the nine months ended September 30, 2001 and 2000,
respectively.  Total interest accrued and not paid on the convertible notes
payable to related parties as of September 30, 2001 totaled $204,345 and is
included in the accompanying balance sheet.

6.   Stockholders' Equity (Deficit)
     ------------------------------

     a.   Common Stock Issuances
          ----------------------

     During the nine months ended September 30, 2001, the Company issued 150,965
     shares of common stock for $1,510 in cash in connection with the exercise
     of warrants.

     b.   Stock Options
          -------------

     During 1997, the Board of Directors of the Company adopted a stock option
     plan (the "Plan") that authorizes the issuance of options to acquire up to
     5,000,000 shares of common stock to employees and certain outside
     consultants.  The Plan allows for the issuance of either non-qualified or
     incentive stock options pursuant to Section 422 of the Internal Revenue
     Code. Options vest at the discretion of the Board of Directors as
     determined at the grant date, but not longer than a ten-year term.

     Under the Plan, the exercise price of each option shall not be less than 85
     percent of fair market value on the date the option is granted.

     Options to purchase 235,000 shares of the Company's common stock at  $2.50
     per share (the estimated fair market value on the date of grant was $2.50
     per share) were issued to employees during the nine months ended September
     30, 2001, vesting on various dates from the date of grant through 2006.
     505,000 options were cancelled during the nine months ended September 30,
     2001 due to the termination of employment.

     Pursuant to Accounting Principles Board Opinion No. 25 ("APB 25"),
     "Accounting for Stock Issued to Employees" and Financial Accounting
     Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation,"
     the Company recorded compensation expense of $170,320 and $0 during the
     nine months ended September 30, 2001 and 2000, respectively, for previously
     issued option and warrants.

                                       7
<PAGE>

7.    Earnings per Share
      ------------------

     Basic and diluted loss per common share is computed as follows:
<TABLE>
<CAPTION>
                                                                    September 30,   September 30,
                                                                        2001           2000
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
      Numerator for basic and diluted loss per common share:
       Net loss available to common stockholders                    $(1,350,098)    $(1,645,065)
                                                                    ===========     ===========

      Denominator for basic and diluted loss per common share:
       Weighted average common shares outstanding                    13,886,497      13,560,428
                                                                    ===========     ===========
      Net loss per common share available to common stockholders

          Net loss per share                                        $     (0.10)    $     (0.12)
                                                                    ===========     ===========
</TABLE>


8.    Litigation
      ----------

      The Company is, from time to time, involved in various legal and other
      proceedings which arise in the ordinary course of operating its business.
      In the opinion of management, the amount of ultimate liability, if any,
      with respect to these actions will not materially affect the financial
      position or results of operations of the Company.

                                       8
<PAGE>

                                  VillageEDOCS

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


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-QSB includes forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
These statements are based on our beliefs and assumptions, and on information
currently available to us. The words "anticipated," "believe," "expect," "plan,"
"intended," "seek," "estimate," "project," "will," "could," "may," and similar
expressions are intended to identify forward-looking statements. These
statements include, among others, information regarding future operations,
future capital expenditures, and future net cash flow. Such statements reflect
the Company's current views with respect to future events and financial
performance and involves risks and uncertainties, including, without limitation,
general economic and business conditions, changes in foreign, political, social
and economic conditions, regulatory initiatives and compliance with governmental
regulations, the ability to achieve further market penetration and additional
customers, and various other matters, many of which are beyond the Company's
control, including, without limitation, the risks described under the caption
"DESCRIPTION OF BUSINESS-RISK FACTORS " in the Company's Form 10-SB filed with
the Securities and Exchange Commission on December 20, 2000. Our future results
and stockholder values may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict. Investors are
cautioned not to put undue reliance on any forward-looking statements. For these
statements, we claim the protection of the safe harbor for forward-looking
statements contained in Section 21E of the Exchange Act.

GENERAL OVERVIEW

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited balance sheet as of
September 30, 2001 and the unaudited statements of operations and cash flows for
the three and nine months ended September 30, 2001, and 2000 and the related
notes thereto as well as the audited financial statements of the Company for the
years ended December 31, 2000 and 1999 included in the Company's Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission on April 13,
2001.   This discussion contains forward-looking statements based upon current
expectations that involve risks and uncertainties, such as our plans,
objectives, expectations, and intentions.  Our actual results and the timing of
certain events could differ materially from those anticipated in these forward-
looking statements as a result of certain factors.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2001 Compared to Three Months Ended September
------------------------------------------------------------------------------
30, 2000
--------

Net Sales
---------

Revenues for the three months ended September 30, 2001 were $327,124, an 86%
increase over net sales for prior year quarter of $175,678.  The increase in the
2001 quarter reflected a significant improvement in the volume of sales to more
profitable customers.

Cost of Sales
-------------

Cost of sales for the three months ended September 30, 2001 decreased $52,734 to
$261,856 from the $314,590 reported for the three months ended September 30,
2000.  The overall decrease in 2001 was characterized by significant decreases
in fixed costs of sales, including salaries and benefits for operations
personnel which were partially offset by higher variable telecommunications
costs incurred as a result of higher business volume.

                                       9
<PAGE>

Gross Profit
------------

Gross profit for the three months ended September 30, 2001 was $65,268 as
compared to a gross loss of $(138,912) for the prior year quarter.  The increase
of $204,180 is attributable to both a reduction in fixed costs of sales and a
significant increase in sales volume and pricing for the Company's internet fax
delivery services.

Operating Expenses
------------------

Operating expenses for the three months ended September 30, 2001 decreased by
16% to $ 368,487 from the $436,962 reported in the three months ended September
30, 2000, a decrease of $68,475.  Product and technology development increased
$38,256 to $127,605 from the $89,349 reported in the prior year quarter due to
service enhancements.  Sales and marketing decreased by $97,191 to $83,441 from
the $180,632 reported in the prior year quarter due to a reduction in outside
sales staff.  General and administrative decreased by $7,441 to $135,604 from
the $143,045 reported in the prior year quarter as a result of decreased legal
and accounting expenses.  Depreciation and amortization expense decreased
$2,099 to $21,837 from the $23,936 reported in the prior year quarter.

Interest Income and Expense
---------------------------

Interest expense for the quarter ended September 30,2001 increased 119% to
$50,481 from the $23,019 reported in the prior year quarter due primarily to an
increase in debt financing provided by related parties in consideration for
convertible notes payable to related parties.

Net Loss
--------
As a result of the foregoing, net loss for the three months ended September 30,
2001 was $353,700, or $0.03 per share, compared to a net loss of $598,893, or
$0.04 per share, for the three months ended September 30, 2000.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
--------------------------------------------------------------------------------
2000
----

Net Sales
---------

Revenues for the nine months ended September 30, 2001 were $952,181, a 212%
increase over net sales for prior year period of $305,378.   The increase in the
2001 quarter reflected a significant improvement in the volume of sales to more
profitable customers.

Cost of Sales
-------------

Cost of sales for the nine months ended September 30, 2001 increased $69,914 to
$712,175 from the $642,261 reported for the nine months ended September 30,
2000.  The overall increase in 2001 was characterized by higher variable
telecommunications costs incurred as a result of higher business volume which
were partially offset by significant decreases in fixed costs of sales,
including salaries and benefits for operations personnel.

Gross Profit
------------

Gross profit for the nine months ended September 30, 2001 was $240,006 as
compared to a gross loss of $(336,883) for the prior year period.  The increase
of $576,889 is attributable to both a reduction in fixed costs of sales and a
significant increase in sales volume and pricing for the Company's internet fax
delivery services.

Operating Expenses
------------------

Operating expenses for the nine months ended September 30, 2001 increased by 16%
to $1,456,618 from the $1,261,044 reported in the nine months ended September
30, 2000, an increase of $195,573.  The increase in the 2001 period was due to a
higher volume of business as indicated by the 212% increase in net sales over
the prior year period.  Product and technology development increased $122,389 to
$395,599 from the $273,210 reported in the prior year nine month period due to
service enhancements.  Sales and marketing decreased by $140,673 to $332,396
from the $473,069 reported in the prior year nine month period due to a
reduction in outside sales staff.  General and administrative increased by
$196,909 to $658,527 from the $461,618 reported in the prior year nine month
period as a result of increased non-cash compensation charges of $170,320
incurred in connection with the vesting of certain non-employee stock options
during the nine months ended September 30, 2001 in addition to increased legal
and accounting, insurance and bad debt expenses resulting from the overall
increase in business volume.  Depreciation and amortization expense increased by
$16,949, or 32%, to $70,096 from the $53,147 reported in the prior year nine
month period because the Company owned more depreciable computer equipment in
2001.

                                       10
<PAGE>

Interest Income and Expense
---------------------------

Interest income decreased by $23,506 to $13 for the nine months ended September
30, 2001 from the $23,519 reported in the nine months ended September 30, 2000
due to a reduction in cash the Company had available to invest in interest-
bearing accounts.  Interest expense for the nine months ended September 30,2001
increased 90% to $132,701 from the $69,857 reported in the prior year nine month
period due to an increase in debt financing provided by related parties in
consideration for convertible promissory notes.

Net Loss
--------
As a result of the foregoing, net loss for the nine months ended September 30,
2001 was $1,350,100, or $0.10 per share, compared to a net loss of $1,645,065,
or $0.12 per share, for the nine months ended September 30, 2000.


LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 2001, the Company's net cash position
decreased by $58,594 to $23,672.  Although the Company generated cash in the
amount of $914,573 from financing activities, the Company's operating and
investing activities used net cash of $970,437 and $2,730, respectively.  These
activities contributed to a net working capital deficit of $(382,355) and a
stockholders' deficit of $(2,107,033) as of September 30, 2001.

Since our inception, our operating and investing activities have used
substantially more cash than they have generated. Because we will continue to
need substantial amounts of working capital to fund the growth of our business,
we expect to continue to experience negative operating and investing cash flows
for the foreseeable future. We have a history of losses.  Although we intend to
continue our strategy of increasing sales to more profitable clients while
attempting to reduce variable costs of sales and overhead, we have never been
profitable and may never achieve profitability.  If we do achieve profitability
in any period, we cannot be certain that we will sustain or increase such
profitability on a quarterly or annual basis. We currently anticipate that our
available cash resources will be insufficient to meet our anticipated working
capital and capital expenditure requirements through December 31, 2001.
Accordingly, we have significant additional capital requirements.

To date, we have funded our capital requirements and our business operations
primarily with funds provided from the sale of common stock and from borrowings,
supplemented by revenues from sales of our services. From inception to October
31, 2001, the Company has received approximately $4,349,000 from the sale of
common stock and convertible notes subsequently converted into common stock.
During the nine months ended September 30, 2001, our operating shortfalls have
been, and are anticipated to be, funded by two shareholders, one of whom is also
a director, who have loaned us $1,961,992 for that purpose. As long as these
shareholders continue to fund our operations, we will be able to sustain
operations at current levels. However, these shareholders have no obligation to
continue to fund our operating shortfalls and could stop doing so at any time.

We will require additional financing to support our operations until we become
profitable. Such sources of financing could include capital infusions,
additional equity financing, or debt offerings. In our opinion our current
revenue stream can provide sufficient cash to operate at current staffing levels
through November 30, 2001. This estimate is a forward-looking statement that
involves risks and uncertainties. The actual time period may differ materially
from that indicated as a result of a number of factors so that we cannot assure
you that our cash resources will be sufficient for anticipated or unanticipated
working capital and capital expenditure requirements for this period.
Management is actively pursuing obtaining additional funds. There can be no
assurance that additional funding will be available on acceptable terms, if at
all, or that such funds if raised, would enable the Company to achieve and
maintain profitable operations. If we raise additional funds through the
issuance of securities, these securities may have rights, preferences or
privileges senior to those of our common stock, and our stockholders may
experience additional dilution to their equity ownership. If we are not able to
obtain sufficient additional funds from investors, we may be unable to sustain
our operations.

The Independent Auditors' Report on our December 31, 2000 financial statements
includes an explanatory paragraph stating that the recurring losses incurred
from operations and a working capital deficiency raise substantial doubt about
our ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

                                       11
<PAGE>

The Company presently has no material commitments for capital expenditures other
than those expenditures incurred in the ordinary course of business.

Management does not believe that inflation has had a material effect on the
Company's financial condition or results of operations.

                                       12
<PAGE>

                                  VillageEDOCS
______________________________________________________________________________


PART II


ITEM 1 - LEGAL PROCEEDINGS.

The Company is not a party in any lawsuits.

The Company was involved in a dispute with a prior law firm regarding legal
fees. The law firm demanded $63,600 for nonpayment of services it believes were
rendered on behalf of the Company. We contested this claim. A negotiated
settlement of $31,800 was reached in September 2000 and final payment was made
during the nine months ended September 30, 2001.

A marketing company has threatened legal action related to its claim that the
Company owes it $48,000 for services rendered. The Company agrees that it owes
$24,000 for such services, which amount is recorded as a liability in the
Company's financial statements. The Company believes the claim for the
additional $24,000 is without merit, and that the outcome of any legal action
will not have a material adverse effect on the Company.

The Company has received communications from a company asserting the ownership
of certain United States and Canadian patents and making a licensing proposal
for these patents on unspecified terms. The Company has not accepted the
licensing proposal. If these claims prove accurate and the Company is not able
to enter into a licensing agreement on acceptable terms, it could have a
material adverse effect on the Company.


ITEM 2 - CHANGES IN SECURITIES.

During the nine months ended September 30, 2001, the Company issued 150,965
shares of common stock for cash in connection with the exercise of warrants
pursuant to an exemption from registration described in Section 4(2) of the
Securities Act of 1933, as amended.

Options to purchase 235,000 shares of the Company's common stock at  $2.50 per
share (the estimated fair market value on the date of grant was $2.50 per share)
were issued to employees during the nine months ended September 30, 2001,
vesting on various dates from the date of grant through 2006.  505,000 options
were cancelled during the nine months ended September 30, 2001 due to the
termination of employment.

During the nine months ended September 30, 2001, the Company borrowed $1,010,000
from two stockholders and issued convertible promissory notes bearing interest
at 10 percent per annum.  The notes and accrued interest are due at the earlier
of one of three events: 1) October 31, 2003; 2) acquisition of controlling
interest in the Company by a third party; or 3) the Company achieves equity
financing of a minimum of $5,000,000.  If the Company is acquired, the notes
plus accrued interest are convertible into shares of the Company's common stock
at the lower of $2.50 per share or the price paid per share by the acquirer.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

None.

ITEM 5 - OTHER MATTERS.

Not Applicable

                                       13
<PAGE>

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.

   (a)  Exhibits
        --------

        None.

   (b)  Reports on Form 8-K
        -------------------

        None.




                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized, in the capacities and on the dates indicated:


                                    VillageEDOCS (Registrant)


Dated:   November 13, 2001               By:   /s/  K. Mason Conner
                                              ---------------------
                                         K. Mason Conner
                                         Chief Executive Officer and Director



Dated:  November 13, 2001                By:    /s/ Michael A. Richard
                                               ------------------------
                                         Michael A. Richard
                                         Controller
                                         (Principal Accounting Officer)

                                       14