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


                                   FORM 10-QSB

         (Mark One)

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       OR

            [ ] TRANSITION PERIOD PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                         Commission file number 0-27507

                               e-PERCEPTION, INC.
             (Exact name of registrant as specified in its charter)



                          Nevada                    88-0350448
             (State or other jurisdiction of     (I.R.S. Employer
              incorporation or organization)  Identification Number)



                           27555 Ynez Road, Suite 203
                           Temecula, California 92591
          (Address, including zip code, of principal executive offices)

                                 (909) 587-8773
              (Registrant's telephone number, including area code)



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 (2) has been subject to such
filing requirements for the past 90 days.

                                  Yes X No ____


The  number  of shares of the  Registrant's  Common  Stock,  $0.001  par  value,
outstanding as of May 10, 2002 was 7,972,314.


<PAGE>


                               e-PERCEPTION, INC.

                                   FORM 10-QSB

                                TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION
------------------------------

                                                                            Page
                                                                            ----
Item 1.    Financial Statements (unaudited):

           Condensed Consolidated Balance Sheet                              3
              as of March 31, 2002

           Condensed Consolidated Statements of Operations                   4
              for the Three Months Ended March 31, 2002 and 2001

           Condensed Consolidated Statements of Cash Flows                   5
              for the Three Months Ended March 31, 2002 and 2001

           Notes to Condensed Consolidated Financial Statements              6

Item 2.    Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                          6

Item 3.    Quantitative and Qualitative Disclosures about Market Risk        13


PART II - OTHER INFORMATION
---------------------------

Item 6.    Exhibits and Reports on Form 8-K                                  13

           Signatures                                                        14



<PAGE>


PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.  FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                       e-PERCEPTION, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET

                           MARCH 31, 2002 - UNAUDITED

                                     ASSETS
<S>                                                                      <C>
Current assets:

   Accounts receivable, net                                              $   446,800
   Prepaid and other current assets                                           12,896
                                                                         -----------
       Total current assets                                                  459,696

Property and equipment, net of accumulated
   depreciation and amortization                                             748,057

Intangible and other assets                                                  229,505
                                                                         -----------
                                                                         $ 1,437,258
                                                                         ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Bank overdraft                                                        $     7,220
   Line of credit and note payable                                           164,392
   Current portion of long-term debt                                          30,452
   Accounts payable and accrued expenses                                     568,634
   Deferred revenue                                                           76,025
                                                                         -----------
       Total current liabilities                                             846,723

   Long-term debt, excluding current portion                                   6,991

Stockholders' equity:
   Preferred stock, par value at $0.001, 10,000,000 shares authorized,
     none issued and  outstanding                                               --
   Common stock, par value at $0.001, 25,000,000 shares
     authorized, 7,972,314 shares issued and outstanding                         797

   Additional paid-in capital                                              5,271,970
   Accumulated deficit                                                    (4,679,273)
   Stock subscription receivable                                              (9,950)
                                                                         -----------
       Total stockholders' equity                                            583,544
                                                                         -----------
                                                                         $ 1,437,258
                                                                         ===========
</TABLE>

                                         3
<PAGE>

<TABLE>
<CAPTION>

                       e-PERCEPTION, INC. AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED


                                                      Three Months Ended March 31,
                                                       --------------------------
                                                           2002           2001
                                                       -----------    -----------
<S>                                                    <C>            <C>
Revenues                                               $   504,937    $   245,167

Cost of revenues                                           257,606        219,071
                                                       -----------    -----------
Gross profit                                               247,331         26,096

Operating expenses:
   Sales and marketing                                     393,930        260,369
   Research and development                                106,298         15,667
   General and administrative expenses                     445,210        371,537
                                                       -----------    -----------
Loss from operations                                      (698,107)      (621,477)
                                                       -----------    -----------

Other income (expense):
   Interest expense                                         (8,381)          --
   Interest income                                             366          5,668
   Gain on disposal of fixed assets                           --              612
                                                       -----------    -----------
   Total other income (expense)                             (8,015)         6,280
                                                       -----------    -----------
Loss before provision for income taxes                    (706,122)      (615,197)

Income taxes                                                  --            1,600
                                                       -----------    -----------
Net loss                                               $  (706,122)   $  (616,797)
                                                       ===========    ===========
Net loss per share - basic and diluted                 $     (0.09)   $     (0.40)
                                                       ===========    ===========
Number of weighted average shares - basic and diluted    7,972,314      1,556,697
                                                       ===========    ===========
</TABLE>



                                       4
<PAGE>
<TABLE>
<CAPTION>

                             e-PERCEPTION, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS-UNAUDITED

                     INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


                                                             Three Months Ended March 31,
                                                             ----------------------------
                                                                  2002           2001
                                                             -------------   ------------
<S>                                                            <C>           <C>
Cash flows used for operating activities
   Net loss                                                     $(706,122)   $(616,797)

   Adjustments to reconcile net loss to net cash
     used  for operating activities:
       Depreciation and amortization                               58,428       42,515
       Gain on disposal of fixed assets                              --           (612)

   Changes in assets and liabilities:
     (Increase) decrease in assets
       Accounts receivable                                         56,566      (57,712)
       Prepaid and other current assets                            12,906      (22,672)
       Other assets                                               (25,335)     (19,756)

     Increase (decrease) in liabilities
       Accounts payable and accrued expenses                      162,536       73,006
       Deferred revenues                                           36,446       27,839
                                                                ---------    ----------
         Total adjustments                                        301,547       42,608
                                                                ---------    ----------
         Net cash used for operating activities                  (404,575)    (574,189)
                                                                ---------    ----------

Cash flows used for investing activities:
   Purchases of property and equipment                            (15,471)    (111,483)
   Proceeds from sales of property and equipment                     --          3,339
                                                                ---------    ----------
         Net cash used for investing activities                   (15,471)    (108,144)
                                                                ---------    ----------

Cash flows provided by financing activities:
   Bank overdraft                                                   7,220         --
   Principal proceeds from line of credit agreement                 4,642         --
   Proceeds from notes payable                                      6,703         --
   Payments on note payable                                        (5,051)        --
   Proceeds from issuance of common stock                          45,000        5,185
                                                                ---------    ----------

         Net cash provided by financing activities                 58,514        5,185
                                                                ---------    ----------

Net decrease in cash and cash equivalents                        (361,532)    (677,148)
Cash and cash equivalents, beginning of period                    361,532      932,886
                                                                ---------    ----------
Cash and cash equivalents, end of period                        $    --      $ 255,738
                                                                =========    ==========
Supplemental disclosure of cash flow information:

   Interest paid                                                $   3,197    $    --
                                                                =========    ==========
   Income tax paid                                              $    --      $   1,600
                                                                =========    ==========
   Increase in line of credit from accrued interest payable     $   5,184    $    --
                                                                =========    ==========
   Issuance of 12,500 shares of common stock in lieu of
     accrued expenses to vendors                                $  18,750    $    --
                                                                =========    ==========
</TABLE>



                                            5
<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  THREE MONTHS ENDED MARCH 31, 2002 (UNAUDITED)



1.       BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements pursuant to the rules and regulations of the Securities and
Exchange  Commission.  Accordingly,  they do not include certain information and
footnote  disclosures  normally  included in consolidated  financial  statements
prepared in accordance  with generally  accepted  accounting  principles.  These
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements and related notes included in e-Perception's
Annual Report on Form 10-KSB for the year ended December 31, 2001.

The  unaudited  condensed  consolidated  financial  statements  included  herein
reflect all adjustments (which include only normal,  recurring adjustments) that
are, in the  opinion of  management,  necessary  to state  fairly the  financial
position  and results of  operations  as of and for the periods  presented.  The
results for such  periods are not  necessarily  indicative  of the results to be
expected for the full year.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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.
Actual results could differ from those estimates.

2.       TENDER OFFER

In  January  2002,  e-Perception  Technologies  completed  a tender  offer  with
Corporate  Development Centers, Inc. ("CDC"), a Nevada corporation listed on the
OTC Bulletin Board under the symbol,  "CRDM". CDC issued one (1) share of common
stock in  exchange  for every four (4)  shares of  outstanding  common  stock of
e-Perception  Technologies.  As a  result  of  the  tender  offer,  e-Perception
Technologies  became a wholly-owned  subsidiary of CDC. The name of CDC was then
changed to  e-Perception,  Inc. The stock  currently  trades on the OTC Bulletin
Board under the symbol,  "EPER". The Company intends to apply for listing on the
NASDAQ Small-Cap Market if and when applicable listing requirements are met.

3.       NET LOSS PER SHARE

Basic net loss per share is based on the weighted  average  number of all common
shares issued and outstanding,  and is calculated by dividing net loss per share
by the weighted average shares of common stock outstanding during the period.



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

With the exception of historical  information,  the  statements  set forth below
include  forward-looking  statements  within the  meaning of Section  27A of the
Securities Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934.
These   forward-looking   statements  include  statements   regarding  potential
strategic collaborations, future capital needs and funding requirements, product
development plans, and market assessments. These statements are subject to risks
and  uncertainties  that could cause actual  results to differ  materially  from
those in the forward-looking statements. These risks and uncertainties include:

     o    general economic and business conditions;
     o    industry trends;
     o    our overall  market  penetration  and  competition  from  providers of
          alternative products and services;

                                       6
<PAGE>

     o    our actual funding requirements; and
     o    availability, terms and deployment of capital.

OVERVIEW

e-Perception,  Inc., a Nevada  corporation  ("e-Perception" or the "Company") is
the  parent   corporation  of  e-Perception   Technologies,   Inc.,  a  Delaware
corporation,  which develops, markets and supports web-based analytic tools that
enable companies in real time to gather data from their employees, customers and
suppliers and to use that data to better manage their businesses.  Our solutions
are implemented by companies ranging in size from 50-person firms to Fortune 500
companies.  The Company's mission is to help businesses  improve their financial
results through employee productivity and customer loyalty. The Company's online
assessment  tools gather  feedback from  employees,  customers and suppliers and
then integrate such data with existing business information to produce strategic
solutions for clients.  The Company's  offerings consist of a suite of web based
applications.  Using  online  assessments  and  operational  data,  e-Perception
Insight  Solutions(TM)  generates  insights that empower  management to maximize
organizational  effectiveness and cost savings. We market our products primarily
through our direct  sales force and  strategic  alliance  partners to  companies
across a wide  variety of  industries.  The  Company's  sales team  currently is
comprised of nine people, located in Southern California,  Chicago,  Cincinnati,
Baltimore,  and Dallas.  As of April 30,  2002,  we provided  our  products  and
solutions to Dell Computer,  Sharp  HealthCare,  Johnson  Controls,  StorageTek,
eBay,  Northwestern  Mutual,  Electronic  Data  Systems and United  Technologies
Corporation, among others.

Where appropriate,  references to  "e-Perception",  the "Company," "we" or "our"
include both e-Perception, Inc. and e-Perception Technologies, Inc.

RESULTS OF OPERATIONS

Net Revenue

Net revenue increased  $259,770,  or 106.0%, to $504,937 in the first quarter of
2002, as compared to the same period in 2001. This increase was primarily due to
the  expansion of the Company's  internal  sales force and the  development  and
completion by the Company of new product applications.  Approximately 90% of the
Company's net revenue for the first quarter of 2002 was derived from the sale of
assessment  tools in the area of human  relations and  development,  and 10% was
derived from customer loyalty initiatives.

Cost of Revenue

Cost of revenue  consists of  referral  fees paid to third  parties,  operations
overhead (including  launching and deploying  assessment surveys) and outsourced
software  development.  Cost of revenue  increased  by $38,535 or 17.6%,  in the
first quarter of 2002, as compared to the same period in 2001. This increase was
primarily due to increased staffing in the operations department and an increase
in outsourced software development.

Research and Development

Research and development  expenses consist of personnel  expenses and associated
overhead.  The  Company's  investment  in  research  and  development  increased
$90,631,  or 578%,  in the first quarter of 2002, as compared to the same period
in 2001.  The  increase  was  primarily  attributable  to staffing  increases in
product development and employee recruiting.

Costs  incurred in the research  and  development  of new software  products are
expensed as incurred.  e-Perception expects research and development expenses to
continue to increase in absolute  dollars as the Company  continues to invest in
the enhancement of existing products and the development of new products.

Sales and Marketing

Sales  and  marketing  expenses  include  salaries  and  expenses  of sales  and
marketing  personnel,  advertising and promotion expenses,  customer service and
technical  support,  travel and  entertainment,  and other selling and marketing
costs. Sales and marketing expenses increased by $133,561, or 51.3%, to $393,930
in the first  quarter of 2002,  as  compared  to the same  period in 2001.  This
increase was primarily due to increases in personnel related expenses,  web site
development  costs,  marketing  material  expenses,  and trade  show and  travel
expenses.

                                       7
<PAGE>

General and Administrative

General and administrative  expenses, which include personnel costs for finance,
administration,   information  systems,  and  general  management,  as  well  as
facilities expenses, professional fees, legal expenses, and other administrative
costs, increased by $73,673, or 19.8%, to $445,210 in the first quarter of 2002,
as compared to the same period in 2001.  The  increase was  primarily  due to an
increase in staffing,  and higher legal and accounting  expenses  related to the
tender offer transaction with CDC.

Other income (expense)

Other  income and expense  includes  interest  income net of  interest  expense.
Interest income is primarily derived from short-term interest-bearing securities
and money market  accounts.  Interest  expense for the first quarter of 2002 was
$8,381 compared to zero interest  expense for the same period in 2001.  Interest
income for the first  quarter of 2002 was $366  compared  to $5,668 for the same
period in 2001,  primarily  due to a decrease in interest  income due to a lower
average balance of invested cash and short-term investments.


LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2002, our cash and cash equivalents and short-term investments were
negligible.   The  Company's  principal  cash  requirements  are  for  operating
expenses,  including  employee costs,  funding of accounts  receivable,  capital
expenditures  and funding of the  operations.  The Company's  primary sources of
cash had been from private placements of the Company's preferred or common stock
and a revolving line of credit.

During the first  quarter of 2002,  the  Company  used  $712,783  for  operating
activities, as compared to $616,797 for the same period in 2001. The increase in
cash use was primarily due to increased  operating  costs,  including  increased
staffing, research and development and sales and marketing expenses.

San Clemente Capital, LLC, an affiliate of two of the Company's shareholders who
are former directors,  has provided the Company with a revolving loan commitment
of up to $400,000 based on eligible  collateral  levels.  The loan is secured by
certain assets of the Company.  As of March 31, 2002, the outstanding balance on
such loan was approximately  $164,000.  The loan bears interest at a rate of 20%
per annum. The loan is due and payable in full on June 30, 2002.

The Company is planning to undertake a private  placement  of its common  stock,
which we will  seek to  close in the next  three  months.  The  Company  will be
dependent upon the successful completion of this private placement,  and perhaps
upon the  successful  competition  of other  financing  activities,  in order to
operate its business  over the next 12 months.  Given the lack of the  Company's
current cash  position,  such external  sources of financing will be critical to
the Company's future operations.  Our need for such additional financing depends
in part on our  future  performance,  which,  in turn,  is  subject  to  general
economic  conditions,  and business and other factors beyond our control.  There
can be no assurance that we would be able to obtain such financing,  or that any
financing would result in a level of net proceeds required.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain statements contained in this Quarterly Report on Form 10-QSB, including,
without limitation,  statements containing the words "believes,"  "anticipates,"
"estimates,"  "intends,"  "expects"  and  words of  similar  import,  constitute
forward-looking  statements within the meaning of the Private  Securities Reform
Act of 1995.  Actual results could vary materially from those expressed in those
statements.  If  any of the  following  risks  actually  occurs,  our  business,
financial condition or operating results could be materially adversely affected.
The risks set forth below are not the only risks facing us. Additional risks and
uncertainties not presently known to us, or that we currently see as immaterial,
may also harm our business.

WE ARE A NEW COMPANY WITH TWO YEARS OF OPERATING HISTORY.

Our business was  incorporated  in March 2000, and we have commenced  operations
and  introduced  products and  services,  yielding a total of $1.923  million in
revenues through December 31, 2001. We have had only a limited operating history
on which to base an  evaluation  of our business and  prospects.  Such risks and
uncertainties  are frequently more severe for those  companies  operating in new
and rapidly  evolving  markets.  Some of the factors upon which our success will
depend include (but are not limited to) the following:

     o    the rate and timing,  if at all, of the  additional  growth and use of
          Internet-based survey and assessment tools;


                                       8
<PAGE>

     o    the rate and timing,  if at all, at which  existing  survey  providers
          will migrate their existing products to the Internet;
     o    the  existence of a demand for  Internet-based  survey and  assessment
          tools;
     o    the emergence of competitors in our target market, and the quality and
          development of their products and services; and
     o    the market's acceptance of our products and services.

     In order to address these risks, we must (among other things) be able to:

     o    successfully complete the development of our products;
     o    modify our products as necessary to meet the demands of our market;
     o    continue our efforts to develop our core products;
     o    attract and retain highly skilled employees; and
     o    respond to competitive influences.

On an ongoing basis,  we cannot be certain that we will be able to  successfully
address any of these risks.

WE FACE SUBSTANTIAL  COMPETITION FROM BETTER ESTABLISHED COMPANIES THAT MAY HAVE
SIGNIFICANTLY  GREATER  RESOURCES  WHICH  COULD  LEAD TO  REDUCED  SALES  OF OUR
PRODUCTS.

The market for our  products  is  competitive  and is likely to become even more
competitive  in the  future.  Increased  competition  could  result  in  pricing
pressures,  reduced  sales,  reduced  margins or the failure of our  products to
achieve  or  maintain  market  acceptance,  any of which  would  have a material
adverse effect on our business,  results of operations and financial  condition.
Many of our current and  potential  competitors  enjoy  substantial  competitive
advantages, such as:

     o    greater name recognition and larger marketing budgets and resources;
     o    established  marketing  relationships  and  access to larger  customer
          bases;
     o    substantially greater financial, technical and other resources; and
     o    larger technical and support staffs.

As a result,  they may be able to  respond  more  quickly  than we can to new or
changing opportunities,  technologies,  standards or customer requirements.  For
all of the foregoing reasons, we may not be able to compete successfully against
our current and future competitors.

THE COMPANY HAS A HISTORY OF LOSSES AND MAY NOT BE ABLE TO OPERATE PROFITABLY IN
THE FUTURE.

The Company experienced a net operating loss of approximately  $1.272 million in
the period ended December 31, 2000,  and a net operating  loss of  approximately
$2.688  million for the fiscal year ended  December  31,  2001.  There can be no
assurances that the Company will be able to operate profitably in the future. In
the event that the Company is not successful in implementing  its business plan,
the Company will require additional financing in order to succeed.  There can be
no assurance that additional financing will be available now or in the future on
terms that are acceptable to the Company. If adequate funds are not available or
are not available on acceptable  terms,  the Company may be unable to develop or
enhance its products and services,  take  advantage of future  opportunities  or
respond to  competitive  pressures,  all of which could have a material  adverse
effect on the Company's business, financial condition or operating results.

FUTURE  ISSUANCES  OF EQUITY  SECURITIES  BY THE  COMPANY  MAY DILUTE YOUR STOCK
OWNERSHIP.

In order to raise  additional  capital  in the  future,  the  Company  may issue
additional equity securities.  These securities will dilute your share ownership
of the Company. In addition, the Company may issue securities that are senior in
rights and preferences to the Company's common stock.

WE ARE  DEPENDENT  ON OUR  MANAGEMENT  TEAM AND THE  UNEXPECTED  LOSS OF ANY KEY
MEMBER OF THIS TEAM MAY  PREVENT US FROM  IMPLEMENTING  OUR  BUSINESS  PLAN IN A
TIMELY MANNER OR AT ALL.

Our  success  depends  largely  upon the  continued  services  of our  executive
officers  and  other  key  management  and  development  personnel.  We are also
substantially  dependent on the  continued  service of our  existing  technology
personnel because of the complexity of our products and  technologies.  The loss
of one or more of our key employees could seriously harm our business,


                                       9
<PAGE>

financial condition and results of operations. We cannot assure you that in such
an event we would be able to recruit personnel to replace these individuals in a
timely manner and on acceptable terms.

EVOLVING REGULATION OF THE INTERNET MAY AFFECT US ADVERSELY.

As the Internet continues to evolve,  increasing regulation by federal, state or
foreign agencies becomes more likely.  Such regulation is likely in the areas of
user privacy, pricing, content and quality of products and services. Taxation of
Internet  use or other  charges  imposed by  government  agencies  or by private
organizations  for  accessing  the  Internet  may  also  be  imposed.  Laws  and
regulations  applying to the solicitation,  collection or processing of personal
or consumer information could affect our activities. Furthermore, any regulation
imposing  fees for  Internet  use could  result  in a decline  in the use of the
Internet  and the  viability of Internet  commerce,  which could have a material
adverse effect on our business, results of operations and financial condition.

THE SUCCESS OF OUR BUSINESS  DEPENDS ON THE CONTINUED  GROWTH AND  ACCEPTANCE OF
THE INTERNET AS A BUSINESS TOOL.

Continued  expansion in the sales of our products depends on the adoption of the
Internet  as a widely used  channel  for  corporate  information,  products  and
services.  This business model is not yet proven and may not be successful.  The
Internet  may not  prove  to be a viable  commercial  medium  due to  inadequate
development  of  the  necessary  infrastructure,  such  as  a  reliable  network
backbone,  or timely development of complementary  products,  such as high speed
modems. Additionally, the Internet could lose its viability due to delays in the
development  or adoption of new  standards  and  protocols  to handle  increased
levels  of  Internet  activity,  security,   reliability,  cost,  ease  of  use,
accessibility,  and quality of service.  If the  Internet  does not  continue to
become a widespread communications medium and commercial marketplace, the demand
for our products  could be  significantly  reduced,  which could have a material
adverse effect on our business, results of operations, and financial condition.

OUR SYSTEMS MAY BE  VULNERABLE  TO SECURITY  RISKS OR SERVICE  DISRUPTIONS  THAT
COULD HARM OUR BUSINESS.

Our system  servers  are  vulnerable  to physical or  electronic  break-ins  and
service disruptions, which could lead to interruptions,  delays, loss of data or
the inability to process customer requests.  Such events could be very expensive
to remedy and could damage our reputation,  discouraging  existing and potential
customers from using our products.  Although in the past we have not experienced
attempts at physical or electronic break-ins, we may experience break-ins in the
future.  Any  such  events  could  substantially  harm our  business,  financial
condition and results of operations.

WE MAY NOT BE ABLE TO DEVELOP  ACCEPTABLE  NEW PRODUCTS OR  ENHANCEMENTS  TO OUR
EXISTING PRODUCTS AT A RATE REQUIRED BY OUR RAPIDLY CHANGING MARKET.

Our  future  success   depends  on  our  ability  to  develop  new  products  or
enhancements  to our existing  products that keep pace with rapid  technological
developments and that address the changing needs of our customers.  Although our
products are designed to operate with a variety of network hardware and software
platforms,  we will need to continuously modify and enhance our products to keep
pace with changes in Internet-related hardware, software, communication, browser
and database  technologies.  We may not be successful in either  developing such
products or timely  introducing them to the market.  In addition,  uncertainties
about the  timing  and  nature  of new  network  platforms  or  technologies  or
modifications to existing  platforms or technologies could increase our research
and  development  expenses.  The failure of our products to operate  effectively
with the existing and future  network  platforms  and  technologies  used by our
customers would limit or reduce the market for our products,  result in customer
dissatisfaction  and  seriously  harm our business,  results of  operations  and
financial condition.

IN ORDER TO EXECUTE OUR GROWTH PLAN WE MUST  CONTINUE  TO ATTRACT,  RETAIN,  AND
MOTIVATE HIGHLY SKILLED  EMPLOYEES,  AND WE FACE  SIGNIFICANT  COMPETITION  FROM
OTHER SOFTWARE AND INTERNET COMPANIES IN DOING SO.

To  execute  our  growth  plan we  must  attract  and  retain  highly  qualified
personnel.  We need to hire  additional  personnel in virtually all  operational
areas,  including sales,  marketing,  research and  development,  operations and
technical support,  customer service and  administration.  Competition for these
personnel is intense, especially for engineers with high levels of experience in
designing  and  developing  software and  Internet-related  products.  We cannot
assure you that we will be  successful in  attracting  and  retaining  qualified
personnel.  We have from time to time in the past experienced,  and we expect to
continue to experience in the future,  difficulty in hiring and retaining highly
skilled  employees  with  appropriate  qualifications.  Many of the companies we
compete against for experienced  personnel have greater resources than us. If we
fail to attract new personnel or retain and motivate our current personnel,  our
business and future growth prospects could be severely harmed.

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OUR PRODUCT FEATURES ARE STILL BEING DEVELOPED.

Although our basic products have been developed, a number of significant product
enhancements  are  still  under  development,  and we  still  need to  undertake
significant  effort to "fine tune" the assessment  capabilities of the products.
Furthermore,  e-Perception  faces the difficult task of creating working systems
that will  interface  with client  companies'  database  systems.  If we fail to
create working  systems that interface with client  companies'  systems to their
satisfaction, our revenues and operating results would be harmed.

THE MARKET MAY NOT ACCEPT OUR  PRODUCTS  AND OUR  PRODUCTS  MAY NOT  ADDRESS THE
MARKET'S REQUIREMENTS.

Our products are targeted to the survey and assessment market, a market in which
there are many competing service providers and technologies in use. Accordingly,
the demand for our products and services is very uncertain. Our products provide
a new  alternative  solution  for the  market.  The  market  may not  accept our
products. Even if our products achieve market acceptance,  our products may fail
to address the  market's  requirements  adequately.  If the  products  using our
technologies do not achieve or sustain market  acceptance,  our business will be
materially harmed.

WE MAY FACE UNKNOWN  PRODUCT  DEFECTS THAT COULD PREVENT  MARKET  ACCEPTANCE AND
INTEGRATION OF OUR PRODUCTS AND COULD RESULT IN LOSS OF REVENUES AND/OR BUSINESS
FAILURE.

Products as complex as those that we offer frequently contain undetected defects
or errors.  Despite  testing,  defects or errors may occur which could result in
loss of or delay in revenues,  loss of market share,  failure to achieve  market
acceptance,  diversion  of  development  resources,  injury  to our  reputation,
increased  insurance costs and/or  increased  service costs,  any of which could
materially  harm  our  business.   In  addition,   we  provide   implementation,
customization,  consulting and other  technical  services in connection with the
implementation and ongoing maintenance of our products.  Such services typically
involve  working  with  sophisticated  software,   computing  and  communication
systems.  Our failure or  inability  to meet  customer  expectations  or project
milestones  in a  timely  manner  could  also  result  in a loss of or  delay in
revenues, loss of market share, failure to achieve market acceptance,  injury to
our reputation and increased  costs.  Any  significant  defects or errors in our
products might  discourage  customers from purchasing our products and services.
Such defects or errors could also result in tort or warranty claims. Although we
attempt to reduce the risk of losses resulting from such claims through warranty
disclaimers  and  liability  limitation  clauses  in  our  sales  and  licensing
agreements,  these  contractual  provisions  may  not be  enforceable  in  every
instance.  Furthermore,  insurance coverage may not adequately cover us for such
claims. If the liability-limiting provisions in our contracts are not upheld for
any  reason,  or if  liabilities  arise  that are not  contractually  limited or
adequately covered by insurance, our business could be materially harmed.

IF WE FAIL TO PROVIDE  SERVICES  TO  SUPPORT  OUR  PRODUCTS,  OUR  REVENUES  AND
PROFITABILITY WOULD BE HARMED.

Our services are integral to the successful deployment of our solutions.  If our
professional  services  organization does not effectively  implement and support
our  products  or  if  we  are  unable  to  expand  our  professional   services
organization  and  effectively  use  strategic  third-party  partners to provide
services  directly  to  customers  to keep pace with  sales,  our  revenues  and
operating results would be harmed.  In addition,  if we are unable to expand our
professional  services  organization  and  effectively use these strategic third
party  partners to provide these services  directly to our customers,  we may be
required to  increasingly  subcontract  with third parties to help provide these
services to implement and support our products, which will result in lower gross
margins. In addition,  since we generally recognize revenues on performance of a
client assessment sold together with our implementation services over the period
those services are performed,  delays in providing  implementation services will
delay our recognition of revenue.

CHANGES IN  TECHNOLOGIES  COULD  RESULT IN A FAILURE OF OUR  PRODUCTS TO ACHIEVE
MARKET ACCEPTANCE.

The  emerging  nature of the  Internet  requires  us to  continually  refine our
products,  particularly in response to competitive products.  This rapid rate of
change also means that any  refinements  to our future  products will need to be
introduced as quickly as possible. In addition,  if new Internet,  networking or
communication  technologies  or  standards  are  widely  adopted,  or  if  other
technological  changes  occur,  we may need to expend  significant  resources to
adapt our products.  We may not succeed in developing and marketing new products
that respond to competitive and technological developments and changing customer
needs. This could materially harm our business.

WE MUST MANAGE GROWTH TO ACHIEVE PROFITABILITY.

To be successful,  we will need to implement additional  management  information
systems, develop further our operating, administrative, financial and accounting
systems and  controls  and  maintain  close  coordination  among our  executive,


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<PAGE>

engineering, accounting, finance, marketing, sales and operations organizations.
Any failure to manage growth effectively could materially harm our business.

WE MAY BE SUED BY THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.
The software and Internet  industries  are  characterized  by the existence of a
large number of patents, trademarks and copyrights and frequent litigation based
on  allegations  of patent  infringement  or other  violations  of  intellectual
property  rights.  As the  number of  entrants  into our market  increases,  the
possibility of an intellectual  property claim against us grows. Our technology,
products  and  services  may not be able to sustain  any third  party  claims or
rights  against their use. Any  intellectual  property  claims,  with or without
merit,  could be  time-consuming  and  expensive to litigate or settle and could
divert management attention from administering our core business.

WE ARE DEPENDENT FOR A PORTION OF OUR REVENUES ON RESELLERS, AND IF THEY ARE NOT
SUCCESSFUL  MARKETING  OUR  TECHNOLOGY,  OUR ABILITY TO MAINTAIN OR INCREASE OUR
REVENUES WILL BE HARMED.

We sell a percentage of our  technology  through  resellers in the United States
and abroad. We have no control over our third-party distributors, their shipping
dates,  or the volumes of systems  shipped by them.  These companies may not use
our products in volumes  anticipated  by us. If they fail to do so, our revenues
will be harmed.

OUR FAILURE TO ADEQUATELY  PROTECT OUR  PROPRIETARY  RIGHTS COULD SERIOUSLY HARM
OUR BUSINESS.

We  generally  rely on  copyrights,  trademarks,  trade secret laws and software
security measures, along with employee and third-party nondisclosure agreements,
to establish and protect our proprietary  intellectual property rights, products
and  technology.  Our products are  typically  sold  pursuant to contracts  that
restrict  the  use of the  products  to the  customer's  internal  purposes.  We
distribute our software  under  agreements  that are signed by our  distribution
partners  and our  end-users.  Despite  our  precautions  taken to  protect  our
software,  unauthorized parties may attempt to reverse engineer, copy, or obtain
and use information we regard as proprietary.  Policing  unauthorized use of our
products is difficult and software piracy is a persistent problem. Additionally,
the laws of some foreign countries do not protect our proprietary  rights to the
same extent as do the laws of the United  States.  We cannot assure you that our
reliance on contracts with third parties, or copyright,  trademark, trade secret
protection or our software  security  measures,  will be enough to be successful
and profitable in the industry in which we compete.

FUTURE SALES OF RESTRICTED SHARES COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON
STOCK AND LIMIT OUR ABILITY TO COMPLETE ADDITIONAL FINANCING.

Although our shares are currently  trading on the OTC Bulletin Board, the volume
of trading of our common  stock and the number of shares in the public float are
small.  Sales of a  substantial  number of shares of our  common  stock into the
public market in the future could  materially  adversely  affect the  prevailing
market price for our common stock.  In connection  with our  acquisition  of our
Delaware  subsidiary,  we issued  6,872,314 shares of common stock, all of which
will become  eligible for resale  pursuant to Rule 144 of the  Securities Act in
early 2003.  Such a large  "over-hang"  of stock eligible for sale in the public
market may have the effect of depressing the price of our common stock, and make
it difficult or impossible for us to obtain additional debt or equity financing.

THE MARKET PRICE OF OUR STOCK COULD BE VOLATILE.

The market price of our common stock has been subject to volatility  and, in the
future, the market price of our common stock may fluctuate  substantially due to
a variety of factors, including:

     o    quarterly  fluctuations in our operating income and earnings per share
          results;

     o    economic conditions;

     o    disputes concerning patents or proprietary rights;

     o    sales of common stock by existing holders;

     o    loss of key personnel; and

     o    securities class actions or other litigation.


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<PAGE>


OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS.

The results of  operations  for any quarter are not  necessarily  indicative  of
results to be expected in future periods. Our operating results have in the past
been, and will continue to be, subject to quarterly  fluctuations as a result of
a number of factors. These factors include, but are not limited to:

     o    market acceptance of existing or new products;

     o    competitive product introductions;

     o    our ability to control or adjust research and development,  marketing,
          sales and general and  administrative  expenses in response to changes
          in revenues.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no changes in financial  market risk as originally  discussed in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001.


PART II - OTHER INFORMATION
---------------------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)   Exhibits         Description of Document

          2.1(1)    Agreement and Plan of Reorganization, dated as of November
                    20, 2001, by and between the Company and e-Perception, Inc.
          3.1(2)    Articles of Incorporation
          3.2       Certificate of Amendment to the Articles of Incorporation
          3.2(3)    Bylaws
          10.1      Standard  Office Lease by and between  Arden Realty  Limited
                    Partnership and e-Perception Technologies, Inc.

          (1)  Incorporated  by  reference to the  corresponding  exhibit on the
               Registrant's Form 8-K dated January 24, 2002.
          (2)  Incorporated  by  reference to the  corresponding  exhibit on the
               Registrant's Form 10-SB dated October 1, 1999.
          (3)  Incorporated  by  reference to the  corresponding  exhibit on the
               Registrant's Form 10-SB dated October 1, 1999.

     (b) The  following  reports on Form 8-K were filed during the quarter ended
March 31, 2002:

          1.   Report of Form 8-K  filed on  January  24,  2002  related  to the
               Agreement  and Plan of  Reorganization  dated as of November  20,
               2001 between the Company and e-Perception Technologies, Inc.;

          2.   Report of Form 8-K filed on  February  15,  2002  related  to the
               change in the Company's accountants; and

          3.   Report  of Form  8-K/A  filed on April 8,  2002.  related  to the
               Agreement  and Plan of  Reorganization  dated as of November  20,
               2001 between the Company and e-Perception Technologies, Inc.



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<PAGE>


Signatures

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


                                      e-PERCEPTION, INC.


Date:  May 14, 2002                   By:  /s/ William E. Richardson
                                         ------------------------------------
                                           William E. Richardson
                                           Chief Executive Officer and Director
                                           (Principal Executive Officer and
                                           Principal Financial Officer)





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