UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON D.C. 20549

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FORM 10-QSB

(Mark One)

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2002

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 333-60842

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INPURPLE, INC.

DELAWARE(State or other jurisdiction of incorporation)

NO. 33-0947822(IRS Employer Identification No.)600 Anton Boulevard  11th Floor,
Costa Mesa, CA(Address of principal executive offices)

92626(Zip Code)


Registrant's
telephone number, including area code:(714) 371-4034

Not Applicable(Former name of former address, if changed since last report)

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(c) of the Securities Exchange Act of 1934 during the
preceding 12 months (or shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past
90 days. Yes ý    No o

On
May 22, 2002 there were 1,861,007 shares of InPurple, Inc. Common Stock outstanding.

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InPurple, Inc. and Subsidiaries        March 31, 2002        INDEX

|                             |  |                                                                                                              |  | Page
|---------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART IFINANCIAL INFORMATION |  |                                                                                                             
|Item I                       |  | Financial Statements                                                                                         |  |     
|                             |  | Condensed Consolidated Balance Sheets at March 31, 2002 and June 30, 2001                                    |  | 1   
|                             |  | Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2002 and March 31, 2001  |  | 2   
|                             |  | Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2002 and March 31, 2001 |  | 3   
|                             |  | Condensed Consolidated Statements of Changes in Shareholders Equity from July 1, 2000 through March 31, 2002 |  | 4   
|                             |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2002 and 2001            |  | 5   
|                             |  | Notes to Consolidated Financial Statements                                                                   |  | 6   
|Item 2                       |  | Management's Discussion and Analysis of Financial Condition and Results of operations.                       |  | 7   
|PART IIOTHER INFORMATION    |  |                                                                                                             
|Item 1                       |  | Legal Proceedings                                                                                            |  | 8   
|Item 2                       |  | Changes in Securities                                                                                        |  | 8   
|Item 3                       |  | Defaults upon Senior Securities                                                                              |  | 8   
|Item 4                       |  | Submission of Matters to a Vote of Security Holders                                                          |  | 8   
|Item 5                       |  | Other Information                                                                                            |  | 8   
|Item 6                       |  | Exhibits and Reports on Form 8-K                                                                             |  | 8   
|SIGNATURES                   |  | 9                                                                                                           

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PART IFINANCIAL INFORMATION

InPurple, Inc. and Subsidiaries        Condensed Consolidated Balance Sheets        (Unaudited)

|                                                                                                                     |                                       | March 31,
2002 |            | June 30
2001 |  
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | -------------- | ---------- | ------------ | -
|ASSETS                                                                                                               |                                       |                |            |              |  
|Current Assets                                                                                                       |                                       |                |            |              |  
|                                                                                                                     | Cash                                  |                | $          | (37,213      | )
|                                                                                                                     | Accounts Receivable net               |                |            | 68,062       |  
|                                                                                                                     | Inventory                             |                |            | 5,387        |  
|                                                                                                                     |                                       |                |            |              |  
|Total Current Assets                                                                                                 |                                       |                | 36,236     |              |  
|Premises and Equipment                                                                                               |                                       |                |            |              |  
|                                                                                                                     | Leasehold Improvements                |                |            | 219,620      |  
|                                                                                                                     | Furniture and Equipment               |                |            | 259,971      |  
|                                                                                                                     | Vehicles                              |                |            | 37,266       |  
|                                                                                                                     |                                       |                |            |              |  
|Premises and Equipment at Cost                                                                                       |                                       |                | 516,824    |              |  
|Less Accumulated Depreciation                                                                                        |                                       |                | (88,716    | )            |  
|                                                                                                                     |                                       |                |            |              |  
|Net Premises and Equipment                                                                                           |                                       |                | 428,108    |              |  
|Other Assets                                                                                                         |                                       |                | 129,972    |              |  
|                                                                                                                     |                                       |                |            |              |  
|Total Assets                                                                                                         |                                       | $              | 594,349    |              | $
|                                                                                                                     |                                       |                |            |              |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                  |                                       |                |            |              |  
|Current Liabilities                                                                                                  |                                       |                |            |              |  
|                                                                                                                     | Accounts Payable and accrued expenses |                | $          | 392,985      |  
|                                                                                                                     | Payroll and Sales Taxes Payable       |                |            | 446,983      |  
|                                                                                                                     | Notes Payable  Other                 |                |            | 0            |  
|                                                                                                                     | Due to Officers and Directors         |                |            | 0            |  
|                                                                                                                     | Other Short Term Borrowings           |                |            | 82,228       |  
|                                                                                                                     |                                       |                |            |              |  
|Total Current Liabilities                                                                                            |                                       |                | 922,196    |              |  
|Long Term Debentures                                                                                                 |                                       |                | 0          |              |  
|                                                                                                                     |                                       |                |            |              |  
|Total Liabilities                                                                                                    |                                       |                | 922,196    |              |  
|Shareholders Equity                                                                                                  |                                       |                |            |              |  
|Common Stock par value $0.001 per share, 2,500,000 shares                                                            |                                       |                |            |              |  
|Authorized 1,861,007 issued and outstanding at March 31, 2002 1,500,001 issued and outstanding at December, 31, 2001 |                                       |                | 1,861      |              |  
|Additional Paid in Capital                                                                                           |                                       |                | 2,443,307  |              |  
|Accumulated Deficit                                                                                                  |                                       |                | (2,754,940 | )            |  
|Accumulated Comprehensive Income                                                                                     |                                       |                | (18,075    | )            |  
|                                                                                                                     |                                       |                |            |              |  
|Total Shareholders Equity                                                                                            |                                       |                | (327,847   | )            |  
|Total Liabilities and Shareholders Equity                                                                            |                                       | $              | 594,349    |              | $
|                                                                                                                     |                                       |                |            |              |  

1

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InPurple, Inc. and Subsidiaries        Condensed Consolidated Statements of Operations        (Unaudited)

|                           |                                 | For the Nine Months Ended March 31, 2002 |            | For the Nine Months Ended March 31, 2001 |           
|-------------------------- | ------------------------------- | ---------------------------------------- | ---------- | ---------------------------------------- | ----------
|Sales                      |                                 | $                                        | 406,254    |                                          | $         
|Cost of Sales              |                                 |                                          | 142,596    |                                          |           
|                           |                                 |                                          |            |                                          |           
|                           | Gross Profit                    |                                          |            | 236,474                                  |           
|Administrative Expenses    |                                 |                                          |            |                                          |           
|                           | Salaries and Employee benefits  |                                          |            | 1,026,312                                |           
|                           | Consultants                     |                                          |            | 11,000                                   |           
|                           | Advertising                     |                                          |            | 65,115                                   |           
|                           | Automobile Expense              |                                          |            | 44,983                                   |           
|                           | Rent                            |                                          |            | 90,532                                   |           
|                           | Legal and Accounting            |                                          |            | 36,742                                   |           
|                           | Telephone                       |                                          |            | 35,679                                   |           
|                           | Depreciation                    |                                          |            | 52,960                                   |           
|                           | Printing postage and stationary |                                          |            | 11,568                                   |           
|                           | Interest expense                |                                          |            | 114,793                                  |           
|                           | Other expenses                  |                                          |            | 223,810                                  |           
|                           |                                 |                                          |            |                                          |           
|                           |                                 | Total Administrative                     |            |                                          | 1,743,494 
|Income (Loss) before taxes |                                 |                                          | (1,479,836 | )                                        |           
|Provision for income taxes |                                 |                                          | 0          |                                          |           
|                           |                                 |                                          |            |                                          |           
|                           |                                 | Net Income (Loss)                        |            | $                                        | (1,479,836
|                           |                                 |                                          |            |                                          |           

2

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InPurple, Inc. and Subsidiaries        Condensed Consolidated Statements of Operations        (Unaudited)

|                           |                                 | For the Three Months Ended March 31, 2002 |          | For the Three
Months Ended
March 31, 2001 |         
|-------------------------- | ------------------------------- | ----------------------------------------- | -------- | ----------------------------------------- | --------
|Sales                      |                                 | $                                         | 60,487   |                                           | $       
|Cost of Sales              |                                 |                                           | 6,303    |                                           |         
|                           |                                 |                                           |          |                                           |         
|                           | Gross Profit                    |                                           |          | 54,184                                    |         
|Administrative Expenses    |                                 |                                           |          |                                           |         
|                           | Salaries and Employee benefits  |                                           |          | 171,782                                   |         
|                           | Consultants                     |                                           |          | 0                                         |         
|                           | Advertising                     |                                           |          | 609                                       |         
|                           | Automobile Expense              |                                           |          | 13,020                                    |         
|                           | Rent                            |                                           |          | 31,779                                    |         
|                           | Legal and Accounting            |                                           |          | 2,339                                     |         
|                           | Telephone                       |                                           |          | 6,842                                     |         
|                           | Depreciation                    |                                           |          | 10,650                                    |         
|                           | Printing postage and stationary |                                           |          | 2,219                                     |         
|                           | Interest expense                |                                           |          | 3,187                                     |         
|                           | Other expenses                  |                                           |          | 159,185                                   |         
|                           |                                 |                                           |          |                                           |         
|                           |                                 | Total Administrative                      |          |                                           | 401,612 
|Income (Loss) before taxes |                                 |                                           | (347,428 | )                                         |         
|Provision for income taxes |                                 |                                           | 0        |                                           |         
|                           |                                 |                                           |          |                                           |         
|                           |                                 | Net Income (Loss)                         |          | $                                         | (347,428
|                           |                                 |                                           |          |                                           |         

3

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InPurple, Inc. and Subsidiaries        Condensed Consolidated Statements of Shareholders Equity        (Unaudited)

|                                                |                            | Common Stock |  |   |       |  |   | Accumulated
Other
Comprehensive
Income |  |   |           
|----------------------------------------------- | -------------------------- | ------------ |  | - | ----- |  | - | -------------------------------------- |  | - | ----------
|
|
|Balance at July 1, 2000                         |                            | 700,001      |  | $ | 700   |  | $ | 299,524                                |  | $ | (291,184  
|Dividends                                       |                            |              |  |   |       |  |   |                                        |  |   | (70,500   
|Stock Sale                                      |                            | 800,000      |  |   | 800   |  |   | 9,200                                  |  |   |           
|Additional Capital Cont.                        |                            |              |  |   |       |  |   | 45,000                                 |  |   |           
|Fair value of services Provided by shareholders |                            |              |  |   |       |  |   | 204,000                                |  |   |           
|Beneficial conversion feature of debentures     |                            |              |  |   |       |  |   | 213,000                                |  |   |           
|                                                | Comprehensive Income       |              |  |   |       |  |   |                                        |  |   |           
|Net Income                                      |                            |              |  |   |       |  |   |                                        |  |   | (913,420  
|Foreign currency gain                           |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                | Total Comprehensive Income |              |  |   |       |  |   |                                        |  |   |           
|                                                |                            |              |  |   |       |  |   |                                        |  |   |           
|Balance at June 30, 2001                        |                            | 1,500,001    |  | $ | 1,500 |  | $ | 770,724                                |  | $ | (1,275,104
|Fair value of services Provided by shareholders |                            |              |  |   |       |  |   | 175,000                                |  |   |           
|                                                | Comprehensive Income       |              |  |   |       |  |   |                                        |  |   |           
|Net Loss                                        |                            |              |  |   |       |  |   |                                        |  |   | (1,132,408
|Foreign currency loss                           |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                | Total Comprehensive Income |              |  |   |       |  |   |                                        |  |   |           
|Balance at Dec. 31, 2001                        |                            | 1,500,001    |  | $ | 1,500 |  | $ | 945,724                                |  | $ | (2,407,512
|Stock Sale                                      |                            | 361,006      |  |   | 361   |  |   | 1,497,583                              |  |   |           
|                                                | Comprehensive income       |              |  |   |       |  |   |                                        |  |   |           
|Net Loss                                        |                            |              |  |   |       |  |   |                                        |  |   | (347,428  
|Foreign currency loss                           |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                |                            |              |  |   |       |  |   |                                        |  |   |           
|                                                | Total Comprehensive Income |              |  |   |       |  |   |                                        |  |   |           
|Balance at Mar. 31, 2002                        |                            | 1,861,007    |  | $ | 1,861 |  | $ | 2,443,207                              |  | $ | (2,754,940

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InPurple, Inc. and Subsidiaries        Condensed Consolidated Statements of Cash Flows        (Unaudited)

|                                                                                             |                                                      | For the Nine Months Ended March 31, 2002 |                                    | For the Nine Months Ended March 31, 2001 |                      
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------- | ---------------------------------- | ---------------------------------------- | ---------------------
|OPERATING ACTIVITIES                                                                         |                                                      |                                          |                                    |                                          |                      
|Net Income (Loss)                                                                            |                                                      | $                                        | (1,479,836                         | )                                        | $                    
|Adjustments to reconcile net income (loss) to net cash provided (used) operating activities. |                                                      |                                          |                                    |                                          |                      
|                                                                                             | Depreciation                                         |                                          |                                    | 32616                                    |                      
|                                                                                             | Contributed services reported as salaries            |                                          |                                    |                                          |                      
|                                                                                             | Amortization of discount on debentures               |                                          |                                    | (103,658                                 | )                    
|                                                                                             | (Increase) decrease in accounts receivable           |                                          |                                    | 66,896                                   |                      
|                                                                                             | (Increase) decrease in inventory                     |                                          |                                    | 23,944                                   |                      
|                                                                                             | (Increase) decrease in other assets                  |                                          |                                    | 70,924                                   |                      
|                                                                                             | (Increase) decrease in sales and payroll taxes       |                                          |                                    | 381,801                                  |                      
|                                                                                             | Increase (decrease) in accounts payable and accruals |                                          |                                    | 115,287                                  |                      
|                                                                                             |                                                      |                                          |                                    |                                          |                      
|                                                                                             |                                                      |                                          | CASH PROVIDED (USED) BY OPERATIONS |                                          |                      
|INVESTING ACTIVITIES                                                                         |                                                      |                                          |                                    |                                          |                      
|                                                                                             | Equipment and other assets purchased                 |                                          |                                    | 139,339                                  |                      
|                                                                                             |                                                      |                                          |                                    |                                          |                      
|                                                                                             |                                                      |                                          | CASH USED BY INVESTING ACTIVITIES  |                                          |                      
|FINANCING ACTIVITIES                                                                         |                                                      |                                          |                                    |                                          |                      
|                                                                                             | Proceeds from the sale of stock                      |                                          |                                    | 1,497,944                                |                      
|                                                                                             | Proceeds from notes payable others                   |                                          |                                    | (725,057                                 | )                    
|                                                                                             | Proceeds from loans from officers and directors      |                                          |                                    |                                          |                      
|                                                                                             | Other comprehensive income                           |                                          |                                    | (32,906                                  | )                    
|                                                                                             | Long term debentures                                 |                                          |                                    | (142,128                                 | )                    
|                                                                                             | Net change in other short term borrowings            |                                          |                                    | 28,054                                   |                      
|                                                                                             |                                                      |                                          |                                    |                                          |                      
|                                                                                             |                                                      | CASH PROVIDED BY FINANCING ACTIVITIES    |                                    |                                          | 625,907              
|                                                                                             |                                                      |                                          |                                    |                                          |                      
|                                                                                             |                                                      |                                          | NET INCREASE (DECREASE) IN CASH    |                                          |                      
|                                                                                             |                                                      |                                          |                                    | CASH AT BEGINNING OF PERIOD              |                      
|                                                                                             |                                                      |                                          |                                    |                                          |                      
|                                                                                             |                                                      |                                          |                                    |                                          | CASH AT END OF PERIOD
|                                                                                             |                                                      |                                          |                                    |                                          |                      

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InPurple, Inc. and Subsidiaries        Notes to Consolidated Financial Statements

Note 1Basis Of Presentation and Management Representation

The accompanying financial information has been prepared in accordance with the Securities and Exchange Commission rules and regulations for quarterly reporting
and therefore does not necessarily include all information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles.

The
consolidated financial statements include the accounts of the InPurple, Inc. and its wholly owned subsidiaries, InPurple Limited and Talkpoint Co., Ltd. All significant
intercompany balances and transactions have been eliminated in consolidation.

InPurple
Limited and Talkpoint Co., Ltd. were acquired by InPurple, Inc. on April 30,2001 for $10,000 in cash and 700,001 shares of common stock of
InPurple, Inc. Since the acquired companies were under common control the acqistio0n was accounted for as a reorganization of the entities under common control in a manner similar to a pooling
of interests. The consolidated financial statements give retroactive effect to the reorganization transaction. The excess of the fair value of the 700,001 shares was recorded as a deemed distribution
to the controlling shareholder of InPurple, Inc. with a related credit to additional paid-in capital. For purposes of this transaction, the shares of InPurple, Inc. were
valued at $8,750 or $0.125 per share the same value assigned to the initial stock sale. The net book value of the acquired companies was $(190,767) resulting in a deemed distribution and offsetting
credit to additional paid-in capital of $199,517.

In
March of 2002 InPurple, Inc. sold shares of its stock in a public offering under an SB-2 registration with the Securities and Exchange Commission. The last
subscription agreement approved was dated March 20, 2002. The financial statements contained herein reflect the sale of 361,006 shares of common stock for $1,497,944. The proceeds from this
offering were used to retire debt. InPurple, Inc. filed a
notice of closure with the Securities and Exchange Commission which was posted on the EDGAR data base on April 11, 2002.

Operating
results for interim periods are not necessarily indicative of operating results for an entire fiscal year. In the opinion of management, the unaudited financial information for
the nine-month periods ended March 31, 2002 and 2001 reflect all adjustments, consisting only of normal recurring accruals and provisions, necessary for a fair presentation thereof.

Note 2- Development Stage Operations

The parent company, InPurple, Inc. and its wholly owned subsidiary, InPurple Limited are development stage enterprises. They were formed to develop a
business to business company offering national and international telephony services such as voice communications, teleconferencing, e-mail and Internet communications. Operation since
inception were securing a management team, developing a strategic plan, perfecting patents on its intellectual property and preparing the necessary forma and documents to raise capital and acquire
offices, staff and equipment necessary for the business operations.

Included
in the consolidate loss for the nine month period ending March 31, 2002 was $1,183,410 in losses incurred in the development stage operations form InPurple, Inc.
and InPurple Limited. Since inception the Company has incurred aggregate losses of $2,032,264 from development stage operations. The Company expects to continue to incur losses and to generate
negative cash flow while it completes installation of its offices and develops its customer base. The Company's ability to eliminate operational losses and to generate positive cash flow from
operations will depend upon a variety of factors, many of which it is unable to control. These factors include (1) the cost to equip and staff its facilities,

6

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(2) changes in technology, (3) the level of demand for its services, (4) competitive products and services, (5) general economic conditions and (6) the Company's
ability to obtain additional financing.

In
March of 2002 the Company decided to place its wholly owned subsidiary Talkpoint Limited into voluntary liquidation in order to reduce the losses it was incurring and to resolve
creditor demands. A receiver has been appointed and the assets of the subsidiary, primarily telephone equipment, will be liquidated to satisfy creditors to the extent available through this
liquidation. The staff of Talkpoint Limited has been eliminated reducing average monthly payroll and payroll related expenses by approximately $50,000. The Company anticipates selling debt instruments
to provide it with additional needed working capital.

Note 3 Business Segment Information

InPurple, Inc. was divided into two business segments, the installation of telephone systems and the development stage operations discussed in
Note 2. In order to reduce cash flow demands and to satisfy creditors the Company has abandoned the telephone systems portion of its business as this operation was contributing to the overall
losses being incurred.

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

Introduction

Some matters discussed in this Form 10-QSB may be "forward-looking statements" within the meaning of the Private Litigation Reform Act of 1995
and therefore may involve risks, uncertainties and other factors which may cause our actual results to be materially different from the results expressed or implied by our forward-looking statements.
These statements generally appear with words such as "anticipate," "believe," "estimate," "may," "intend," and "expect.

Current Operations

For the quarter ended March 31, 2002, we incurred a loss of $347,428 or $0.19 per share. This compared to a loss of $505,503 for the quarter ended
December 31, 2001. During March we sold an additional 361,006 shares for $1,497,944. Had the total shares presently issued and outstanding been issued and outstanding on December 31,
2002 the comparable loss per share would have been $0.27.

Consistent
with our development stage plans, we have appointed Mr. Bruce Reid as a director of InPurple, Inc. Mr. Reid takes the place on the board formerly occupied
by Mr. Sean Lewis. Mr. Lewis continues to consult for InPurple, Inc. as our representative in the United States. Mr. Stephen North has been appointed to the position of
Chairman of the Board of Directors and continues as the Company's President. In addition we appointed Ms. Charline Hurst to our board of directors. Ms. Hurst takes the place on the board
formerly occupied by Mr. David Clancy. Mr. Clancy continues to assist us with our public status and is not compensated for his efforts. Neither Mr. Lewis nor Mr. Clancy
resigned under protest. It was the unanimous opinion of the board that Ms. Hurst and Mr. Reid will add expertise that the Company needs.

In
March of 2002 the new board of directors elected to place Talkpoint Ltd. into voluntary receivership in order to reduce demands on working capital and to respond to creditors.

We
believe that the liquidation of Talkpoint Limited, the reduction in staffing, and the appointment of new directors will materially improve our working capital demands and enhance our
management team.

7

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We
are presently exploring the possibility of raising additional working capital through debt financing. We believe that we have a contract in excess of one-million dollars
that will be available to our Company within two months.

PART IIOTHER INFORMATION

Item 1Legal Proceedings



Item
2Changes in Securities



Item
3Defaults upon Senior Securities



Item
4Submission of Matters to a Vote of Security Holders



Item
5Other Information



Item
6Exhibits and Reports on Form 8-K







8

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Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                   |  | InPurple, Inc.                          
|------------------ |  | ----------------------------------------
|Dated May 23, 2002 |  | /s/STEPHEN P. NORTHChairman of the Board

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