<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 March 31, 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 Number
     Incorporation or Organization)



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.

              [_] YES                  [X] NO


There were 13,846,459 shares of the Registrant's common stock as of April 30,
2001.

Transitional Small Business Format (check one) Yes [_]  No [X]
<PAGE>

                                 VillageEDOCS

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

                             Financial Statements
                  Three Months Ended March 31, 2001 and 2000
                                  (Unaudited)




                                   Contents

Financial Statements:

         Balance Sheet for March 31, 2001 (Unaudited)......................  1

         Statements of Operations for the three months ended
          March 31, 2001 and 2000 (Unaudited)..............................  2

         Statements of Cash Flows for the three months ended
          March 31, 2001 and 2000 (Unaudited)..............................  3

         Notes to Financial Statements.....................................  4
<PAGE>

                                 VillageEDOCS

                                 Balance Sheet
                                  (unaudited)

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

<TABLE>
<CAPTION>
                                                              March 31, 2001
                                                              --------------
<S>                                                           <C>
     ASSETS
     Current Assets:
       Cash                                                   $       27,950
       Accounts receivable, net of allowance for doubtful
         accounts of $60,000                                         167,865
       Other current assets                                            9,472
                                                              --------------
         Total current assets                                        205,287

       Property and equipment, net                                   304,124
       Other assets                                                   22,373
                                                              --------------
                                                              $      531,784
                                                              ==============
     LIABILITIES and STOCKHOLDERS' EQUITY (deficit)
     Current Liabilities:
       Accounts payable                                       $      135,205
       Accrued expenses                                               72,744
       Accrued interest on convertible notes
         payable to related parties                                  119,277
       Current portion of capital lease obligations                  147,620
                                                              --------------
         Total current liabilities                                   474,846

     Capital lease obligations, net of current portion                73,114
     Convertible notes payable                                     1,351,992
                                                              --------------
         Total liabilities                                         1,899,952
                                                              --------------
     Stockholders' Equity (Deficit):
       Common stock, no par value:
         Authorized - 40,000,000 shares
         Issued and outstanding - 13,846,459                       4,843,331
       Additional  paid-in capital                                 1,187,132
       Accumulated deficit                                        (7,398,631)
                                                              --------------
         Total stockholders' equity (deficit)                     (1,368,168)
                                                              --------------
                                                              $      531,784
                                                              ==============
</TABLE>

See accompanying notes to unaudited financial statements

                                       1
<PAGE>

                                 VillageEDOCS

                           Statements of Operations
                                  (unaudited)

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


<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                      March 31,       March 31,
                                                           2001            2000
                                                    -----------     -----------
<S>                                                 <C>             <C>
     Net Sales                                      $   303,379     $    45,445

     Cost of Sales                                      205,103         126,074
                                                    -----------     -----------
       Gross profit (loss)                               98,276         (80,629)
                                                    -----------     -----------
     Operating Expenses:
       Product and technology development               130,830          94,123
       Sales and marketing                              131,130         132,849
       General and administrative                       382,519         171,314
       Depreciation                                      26,083          14,094
                                                    -----------     -----------
         Total operating expenses                       670,562         412,380
                                                    -----------     -----------
     Loss from operations                              (572,286)       (493,009)

     Interest income                                         13          10,488
     Interest expense                                   (37,460)        (18,461)
                                                    -----------     -----------
         Net loss                                   $  (609,733)    $  (500,982)
                                                    ===========     ===========

     Basic and diluted loss available to common
     stockholders per common share                  $      (.04)    $      (.04)
                                                    ===========     ===========

     Weighted average shares outstanding             13,846,459      13,592,266
                                                    ===========     ===========
</TABLE>

See accompanying notes to unaudited financial statements.

                                       2
<PAGE>

                                 VillageEDOCS

                           Statements of Cash Flows
                                  (unaudited)

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

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                         March 31,          March 31,
                                                                              2001               2000
                                                                    --------------     --------------
<S>                                                                 <C>                <C>
Cash Flows from Operating Activities:
  Net loss                                                          $     (609,733)    $     (500,982)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
      Depreciation                                                          26,083             14,094
      Amortization of discount on convertible notes payable                     --                561
      Provision for loss on doubtful accounts receivable                    14,500                 --
      Estimated fair market value of stock options issued to
        non-employees for services rendered                                170,331                 --
      Changes in operating assets and liabilities:
        Accounts receivable                                                (29,581)            20,041
        Other assets                                                        (5,712)            (2,022)
        Accounts payable                                                   (25,146)           (31,414)
        Accrued expenses                                                    (1,043)            16,279
        Accrued interest on convertible notes payable                       30,449             (7,865)
                                                                    --------------     --------------

        Net cash used in operating activities                             (429,852)          (491,308)

Cash Flows from Investing Activities:
  Purchases of property and equipment                                       (1,637)           (16,580)

Cash Flows from Financing Activities:
  Proceeds from convertible notes payable to related parties               400,000                 --
  Proceeds from sale of common stock                                            --             54,552
  Principal payments on capital leases                                     (22,827)           (13,858)
                                                                    --------------     --------------
  Net cash provided by financing activities                                377,173             40,694
                                                                    --------------     --------------
  Net decrease in cash                                                     (54,316)          (467,194)

  Cash, beginning of period                                                 82,266          1,259,106
                                                                    --------------     --------------
  Cash, end of period                                               $       27,950     $      791,912
                                                                    ==============     ==============
</TABLE>

See accompanying notes to unaudited financial statements

                                       3
<PAGE>

                                 VillageEDOCS
           Notes to Unaudited Financial Statements - March 31, 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 March 31, 2001, and the results of operations and cash
flows for the three months ended March 31, 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 financings. If the planned
financings are obtained in the amounts being sought, the Company anticipates
that 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 in an amount that 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 March 31,
     2001, the Company has recorded an allowance for doubtful accounts of
     $60,000.  One customer accounted for approximately 10% of accounts
     receivable at March 31, 2001 and approximately 20% of total sales for the
     three months ended March 31, 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 during the quarter ended March 31, 2001
     include, 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 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 outstanding during the period of
     computation. Stock options and warrants outstanding are not 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.

     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

                                       5
<PAGE>

     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.

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

     During the three months ended March 31, 2001, the Company borrowed $400,000
     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 March 31, 2000 the outstanding
     principal balance of all convertible notes payable was $1,351,992.

     Total interest expense recognized on all the convertible notes payable was
     $30,449 and $13,800 during the three months ended March 31, 2001 and 2000,
     respectively. Total interest accrued and not paid on the convertible notes
     payable to related parties as of March 31, 2001 totaled $119,277 and is
     included in the accompanying balance sheet.

                                       6
<PAGE>

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

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

     The Company did not issue any common stock during the three months ended
     March 31, 2001.

     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 three months ended March 31,
     2001, vesting on various dates from the date of grant through 2006.
     490,000 options were cancelled during the quarter ended March 31, 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 $170,331 and $0 during the
     three months ended March 31, 2001 and 2000, respectively, for previously
     issued option and warrants.

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

     Basic and diluted loss per common share is computed as follows:

<TABLE>
<CAPTION>
                                                                       March 31,       March 31,
                                                                            2001            2000
                                                                     -----------     -----------
    <S>                                                              <C>            <C>
    Numerator for basic and diluted loss per common share:
       Net loss available to common stockholders                     $  (609,733)    $  (500,982)
                                                                     ===========     ===========

     Denominator for basic and diluted loss per common share:
       Weighted average common shares outstanding                     13,846,459      13,592,266
                                                                     ===========     ===========
     Net loss per common share available to common stockholders

            Net loss per share                                       $     (0.04)    $     (0.04)
                                                                     ===========     ===========
</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.

                                       7
<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
March 31, 2001 and the unaudited statements of operations and cash flows for the
three months ended March 31, 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. 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 March 31, 2001 Compared to Three Months Ended March 31, 2000
-------------------------------------------------------------------------------

Net Sales
---------
Revenues for the three months ended March 31, 2001 were $303,379, a 568%
increase over net sales for prior year quarter of $45,445.  The increase in the
2001 quarter reflected the activity of the direct sales program which commenced
in the second quarter of 2000.

Cost of Sales
-------------
Cost of sales for the three months ended March 31, 2001 increased $79,029 to
$205,103 from the $126,074 reported for the three months ended March 31, 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 three months ended March 31, 2001 was $98,276 as compared
to a gross loss of $(80,629) for the prior year quarter. The increase of
$178,905 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.

                                       8
<PAGE>

Operating Expenses
------------------
Operating expenses for the three months ended March 31, 2001 increased by 63% to
$670,562 from the $412,380 reported in the three months ended March 31, 2000,
an increase of $258,182.  The increase in the 2001 quarter was due to a higher
volume of business as indicated by the 568% increase in Net sales over the prior
year quarter.  Product and technology development increased $36,707 to $130,830
from the $94,123 reported in the prior year quarter due to service enhancements.
Sales and marketing decreased slightly to $131,130 from the $132,849 reported in
the prior year quarter.  General and administrative increased by $211,205 to
$382,519 from the $171,314 reported in the prior year quarter as a result of
increased non-cash compensation charges of $170,331 incurred in connection with
the vesting of certain non-employee stock options during the quarter 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 $11,989 to $26,083 from the $14,094 reported in the prior year
quarter because the Company owned more depreciable computer equipment in 2001.

Interest Income and Expense
---------------------------
Interest income decreased by $10,475 to $13 for the three months ended March 31,
2001 from the $10,488 reported in the prior year quarter due to a reduction in
cash the Company had available to invest in interest-bearing accounts.  Interest
expense for the quarter ended March 31,2001 increased 103% to $37,460 from the
$18,461 reported in the prior year quarter 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 three months ended March 31, 2001
was $609,733, or $0.04 per share, compared to a net loss of $500,982, or $0.04
per share, for the three months ended March 31, 2000.

Liquidity and Capital Resources

During the quarter ended March 31, 2001, the Company's net cash position
decreased by $54,316 to $27,950.  Although the company generated cash in the
amount of $377,173 from financing activities, the Company's operating and
investing activities used net cash of $429,852 and $1,637, respectively.  These
activities contributed to a net working capital deficit of $(269,559) and a
stockholders' deficit of $(1,368,168) as of March 31, 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, 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 April 30,
2001, the Company has received approximately $4,349,000 from the sale of common
stock and convertible notes subsequently converted into common stock. Between
November 2000 and June 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 $950,000 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 July 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

                                       9
<PAGE>

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.

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.

                                       10
<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. Under the settlement
agreement the Company agreed to pay $31,800 over a six-month period. 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 would have a
material adverse effect on the Company.

ITEM 2 - CHANGES IN SECURITIES.

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 three months ended March 31, 2001, vesting
on various dates from the date of grant through 2006. Options to purchase
490,000 shares were cancelled during the quarter ended March 31, 2001 due to the
termination of employment.

During the three months ended March 31, 2001, the Company borrowed $400,000 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

                                       11
<PAGE>

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

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

           None.

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

           Date         Subject
           ----         -------

           2/19/01      Change in Registrant's Certified Accountants



                                  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:  May 14, 2001               By: /s/ K. Mason Conner
                                      ------------------------------------------
                                           K. Mason Conner
                                           Chief Executive Officer and Director



Dated:  May 14, 2001               By: /s/ Michael A. Richard
                                      ------------------------------------------
                                           Michael A. Richard
                                           Controller
                                           (Principal Accounting Officer)

                                       12