<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                  Form 10-QSB

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended June 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 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.

                       [X] YES            [_] NO


There were 13,951,559 shares of the Registrant's no par value common stock
outstanding as of July 31, 2001.

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

<PAGE>

                                 VillageEDOCS
________________________________________________________________________________

                             Financial Statements
               Three and Six Months Ended June 30, 2001 and 2000
                                  (Unaudited)




                                   Contents

Financial Statements:

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

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

     Statements of Cash Flows for the six months ended
      June 30, 2001 and 2000 (Unaudited)................................3

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

                                  VillageEDOCS
                                 Balance Sheet
                                  (unaudited)
 ______________________________________________________________________________


<TABLE>
<CAPTION>
                                                         June 30, 2001
                                                         -------------
<S>                                                      <C>
ASSETS
Current Assets:
  Cash                                                     $    33,199
  Accounts receivable, net of allowance for doubtful
      accounts of $45,000                                      178,321
  Other current assets                                          11,526
                                                           -----------
    Total current assets                                       223,046

  Property and equipment, net                                  283,041
  Other assets                                                  22,373
                                                           -----------
                                                           $   528,460
                                                           ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
  Accounts payable                                         $   141,389
  Accrued expenses                                             102,788
  Accrued interest on convertible notes
     payable to related parties                                158,085
  Current portion of capital lease obligations                 112,849
                                                           -----------
    Total current liabilities                                  515,111

Capital lease obligations, net of current portion               74,435
Convertible notes payable to related parties                 1,691,992
                                                          ------------
    Total liabilities                                        2,281,538
                                                          ------------
Stockholders' Equity (Deficit):
  Common stock, no par value:
     Authorized - 40,000,000 shares
     Issued and outstanding - 13,951,559                     4,843,331
   Additional  paid-in capital                               1,188,183
   Accumulated deficit                                      (7,784,592)
                                                          ------------
      Total stockholders' equity (deficit)                  (1,753,078)
                                                          ------------
                                                          $    528,460
                                                          ============
</TABLE>

See accompanying notes to unaudited financial statements

                                       1
<PAGE>

                                  VillageEDOCS
                            Statements of Operations
                                  (unaudited)
______________________________________________________________________________


<TABLE>
<CAPTION>
                                                  Three Months Ended               Six Months Ended
                                              June 30,        June 30,         June 30,        June 30,
                                               2001            2000              2001           2000
                                            -----------     -----------      -----------     -----------
<S>                                         <C>             <C>              <C>             <C>
Net Sales                                   $   322,383     $    84,256      $   625,762     $   129,700

Cost of Sales                                   245,215         201,597          450,319         327,671
                                            -----------     -----------      -----------     -----------
     Gross profit (loss)                         77,168        (117,341)         175,443        (197,971)
                                            -----------     -----------      -----------     -----------
Operating Expenses:
    Product and technology development          137,163          89,737          267,993         183,861
    Sales and marketing                         117,825         159,588          248,955         292,437
    General and administrative                  140,404         148,060          522,924         318,574
    Depreciation                                 22,176          15,678           48,259          29,211
                                            -----------     -----------      -----------     -----------
      Total operating expenses                  417,568         413,063        1,088,131         824,083
                                            -----------     -----------      -----------     -----------
      Loss from operations                     (340,400)       (530,404)        (912,688)     (1,022,054)

Interest income                                      --           8,674               13          19,162
Interest (expense)                              (44,759)        (23,460)         (82,219)        (42,482)
                                            -----------     -----------      -----------     -----------
     Loss before provision for income
      taxes                                 $  (385,159)    $  (545,190)     $  (994,894)    $(1,045,374)

Provision for income taxes                          800              --              800             800
                                            -----------     -----------      -----------     -----------
     Net loss                               $  (385,959)    $  (545,190)     $  (995,694)    $(1,046,174)
                                            ===========     ===========      ===========     ===========
Basic and diluted loss available to
 common stockholders per common share             $(.03)          $(.04)           $(.07)          $(.08)
                                            ===========     ===========      ===========     ===========

Weighted average shares outstanding          13,897,721      13,600,593       13,853,427      13,475,466
                                            ===========     ===========      ===========     ===========
</TABLE>

See accompanying notes to unaudited financial statements.

                                       2
<PAGE>

                                  VillageEDOCS
                            Statements of Cash Flows
                                  (unaudited)
 _____________________________________________________________________________

<TABLE>
<CAPTION>
                                                                                        Six Months Ended
                                                                                  June 30,            June 30,
                                                                                    2001                2000
                                                                                 ---------          -----------
<S>                                                                              <C>                <C>
Cash Flows from Operating Activities:
  Net loss                                                                       $(995,694)         $(1,046,174)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
         Depreciation                                                               48,259               29,300
         Amortization of discount on convertible notes payable                          --                  561
         Provision for loss on doubtful accounts receivable                         (2,448)              (1,000)
         Estimated fair market value of stock options issued to
              non-employees for services rendered                                  170,331                   --
         Changes in operating assets and liabilities:
              Accounts receivable                                                  (22,866)             (14,470)
              Other assets                                                          (7,989)              (8,889)
              Accounts payable                                                     (18,962)             (26,698)
              Accrued expenses and other                                            98,258               54,120
                                                                                 ---------          -----------

            Net cash used in operating activities                                 (731,111)          (1,013,250)
                                                                                 ---------          -----------
  Cash Flows from Investing Activities:
      Purchases of property and equipment                                           (2,730)             (11,116)
                                                                                 ---------          -----------
  Cash Flows from Financing Activities:
      Proceeds from convertible notes payable to related parties                   740,000                3,365
      Proceeds from sale of common stock                                                --               81,619
      Principal payments on capital leases                                         (56,277)             (30,454)
      Proceeds from exercise of warrants                                             1,051                   --
                                                                                 ---------          -----------
      Net cash provided by financing activities                                    684,774               54,530
                                                                                 ---------          -----------
      Net decrease in cash                                                         (49,067)            (969,836)

      Cash, beginning of period                                                     82,266            1,259,106
                                                                                 ---------          -----------
      Cash, end of period                                                        $  33,190          $   289,270
                                                                                 =========          ===========
  -Supplemental disclosure of cash flow information -
      Cash paid during the period for:

          Interest                                                               $  12,962          $        --
                                                                                 =========          ===========
          Income taxes                                                           $     800          $       800
                                                                                 =========          ===========
   </TABLE>

   See accompanying notes to unaudited financial statements

                                          3






<PAGE>

                                 VillageEDOCS
            Notes to Unaudited Financial Statements - June 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 June 30, 2001, the results of operations for the three
and six months ended June 30, 2001 and 2000 and the cash flows for the six
months ended June 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 financings.  If the planned
financings are obtained, the Company 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 June 30,
     2001, the Company has recorded an allowance for doubtful accounts of
     $45,000.  One customer accounted for approximately 11% of accounts
     receivable at June 30, 2001 and approximately 19% of total sales for the
     six months ended June 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. 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 six months ended June 30, 2001, the Company borrowed $740,000 from
two stockholders and issued convertible promissory notes bearing interest at 10
percent per annum. During November and December 2000, we borrowed $400,000 from
these individuals pursuant to identical convertible promissory notes. 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 June 30, 2001 the outstanding
principal balance of all convertible notes payable was $1,691,992.

Total interest expense recognized on all the convertible notes payable was
$82,219 and $42,482 during the six months ended June 30, 2001 and 2000,
respectively.  Total interest accrued and not paid on the convertible notes
payable to related parties as of June 30, 2001 totaled $158,085 and is included
in the accompanying balance sheet.

                                       6
<PAGE>

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

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

     During the six months ended June 30, 2001, the Company issued 105,100
     shares of common stock for $1,051 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 six months ended June 30,
     2001, vesting on various dates from the date of grant through 2006.
     505,000 options were cancelled during the six months ended June 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 $170,331 and $0 during the six
     months ended June 30, 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>
                                                                        June 30,        June 30,
                                                                            2001            2000
                                                                      ----------     -----------
      <S>                                                             <C>            <C>
      Numerator for basic and diluted loss per common share:
         Net loss available to common stockholders                    $ (995,694)    $(1,046,174)
                                                                      ===========    ===========
      Denominator for basic and diluted loss per common share:
         Weighted average common shares outstanding                    13,872,090      13,475,466
                                                                      ===========     ===========
      Net loss per common share available to common stockholders
                  Net loss per share                                  $     (0.07)    $     (0.08)
                                                                      ===========     ===========
</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
June 30, 2001 and the unaudited statements of operations and cash flows for the
three and six months ended June 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 June 30, 2001 Compared to Three Months Ended June 30, 2000
-----------------------------------------------------------------------------

Net Sales
---------

Net sales for the three months ended June 30, 2001 were $322,383, a 283%
increase over net sales for prior year quarter of $84,256. 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 June 30, 2001 increased $43,618 to
$245,215 from the $201,597 reported for the three months ended June 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.

                                       8
<PAGE>

Gross Profit
------------
Gross profit for the three months ended June 30, 2001 was $77,168 as compared to
a gross loss of $(117,341) for the prior year quarter.  The increase of $194,509
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 June 30, 2001 increased by 1% to $
417,568 from the $413,063 reported in the three months ended June 30, 2000, an
increase of $4,505.  The increase in the 2001 quarter was due to a higher volume
of business as indicated by the 283% increase in net sales over the prior year
quarter.  Product and technology development increased $47,426 to $137,163 from
the $89,737 reported in the prior year quarter due to service enhancements.
Sales and marketing decreased to $117,825 from the $159,588 reported in the
prior year quarter due to a reduction in outside sales staff.  General and
administrative decreased by $7,656 to $140,404 from the $148,060 reported in the
prior year quarter as a result of decreased legal and accounting, expenses.
Depreciation and amortization expense increased $6,498 to $22,176 from the
$15,678 reported in the prior year quarter because the Company owned more
depreciable computer equipment in 2001.

Interest Income and Expense
---------------------------
Interest income decreased by $8,674 to $0 for the three months ended June 30,
2001 due to a reduction in cash that the Company had available to invest in
interest-bearing accounts.  Interest expense for the quarter ended June 30,2001
increased 91% to $44,759 from the $23,460 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 June 30, 2001
was $385,959, or $0.03 per share, compared to a net loss of $545,190, or $0.04
per share, for the three months ended June 30, 2000.

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000
-------------------------------------------------------------------------

Net Sales
---------
Net sales for the six months ended June 30, 2001 were $625,762, a 382% increase
over net sales for prior year period of $129,700.   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 six months ended June 30, 2001 increased $122,648 to
$450,319 from the $327,671 reported for the six months ended June 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 six months ended June 30, 2001 was $175,443 as compared to
a gross loss of $(197,971) for the prior year period.  The increase of $373,414
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 six months ended June 30, 2001 increased by 32% to
$1,088,131 from the $824,083 reported in the six months ended June 30, 2000, an
increase of $264,048.  The increase in the 2001 period was due to a higher
volume of business as indicated by the 382% increase in net sales over the prior
year period.  Product and technology development increased $84,132 to $267,993
from the $183,861 reported in the prior year six month period due to service
enhancements.  Sales and marketing decreased to $248,955 from the $292,437
reported in the prior year six month period due to a reduction in outside sales
staff.  General and administrative increased by $204,350 to $522,924 from the
$318,574 reported in the prior year six month period 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 six months ended June
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 $19,048, or 65%, to $48,259 from the $29,211
reported in the prior year six month period because the Company owned more
depreciable computer equipment in 2001.

                                       9
<PAGE>

Interest Income and Expense
---------------------------
Interest income decreased by $19,149 to $13 for the six months ended June 30,
2001 from the $19,162 reported in the six months ended June 30, 2000 due to a
reduction in cash the Company had available to invest in interest-bearing
accounts.  Interest expense for the six months ended June 30,2001 increased 94%
to $82,219 from the $42,482 reported in the prior year six 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 six months ended June 30, 2001
was $995,694, or $0.07 per share, compared to a net loss of $1,046,174, or $0.08
per share, for the six months ended June 30, 2000.


Liquidity and Capital Resources

During the six months ended June 30, 2001, the Company's net cash position
decreased by $49,067 to $33,199.  Although the Company generated cash in the
amount of $684,774 from financing activities, the Company's operating and
investing activities used net cash of $731,111 and $2,730, respectively.  These
activities contributed to a net working capital deficit of $(292,065) and a
stockholders' deficit of $(1,753,078) as of June 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 July 31,
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 $1,140,000 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 October 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.

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 and final payment was made
during the six months ended June 30, 2001.

During 1999, a marketing company 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. As of August 3, 2001, no action has been
filed and we are continuing discussions regarding the disputed amount. 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.

In early 1999, the Company 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 are pursued and proven 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.

During the six months ended June 30, 2001, the Company issued 105,100 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 six months ended June 30, 2001, vesting on
various dates from the date of grant through 2006.  505,000 options were
cancelled during the six months ended June 30, 2001 due to the termination of
employment.

During the six months ended June 30, 2001, the Company borrowed $740,000 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
       -------------------

       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:   August 3, 2001          By:   /s/  K. Mason Conner
                                      ---------------------
                                            K. Mason Conner
                                            Chief Executive Officer and Director



Dated:  August 3, 2001           By:    /s/ Michael A. Richard
                                      ------------------------
                                            Michael A. Richard
                                            Controller
                                            (Principal Accounting Officer)

                                       12