UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934

For the quarterly period ended March 31, 2002

[ ] Transition Report pursuant to 13 or 15(d) of the Securities  Exchange Act of
1934

    For the transition period from __________ to __________

    Commission File Number 0-26341

                                 PC-EPHONE, INC.
                                 ---------------
        (Exact name of Small Business Issuer as specified in its charter)

Nevada                                                               98-0197707
---------------                                                      ----------
(State or other                                                   (IRS Employer
jurisdiction of                                              Identification No.)
incorporation)

      5375 Mira Sorrento Place, Suite 290, San Diego, California USA 92121
      --------------------------------------------------------------------
                    (Address of principal executive offices)
                    ----------------------------------------

                                  858-550-2020
                                  ------------
                           (Issuer's telephone number)
                           ---------------------------

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. (X) Yes ( ) No

There were 16,957,174 common shares outstanding of as of May 1, 2002.

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





                                       1
<PAGE>





                         PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

GENERAL

PC-EPhone, Inc.'s (the "Company's") un-audited financial statements for the
three months ended March 31, 2002 are included with this Form 10-QSB. The
un-audited financial statements for the three months ended March 31, 2002
include:

    (a)  Consolidated Balance Sheet as of March 31, 2002;
    (b)  Consolidated Statements of Operations - for the three months ended
         March 31, 2002 and March 31, 2001;
    (c)  Consolidated Statements of Cash Flows - for the three months ended
         March 31, 2002 and March 31, 2001;
    (d)  Consolidated Statements of Comprehensive Income for the three months
         ended March 31, 2002 and March 31, 2001;
    (e)  Notes to Consolidated Financial Statements

The un-audited financial statements have been prepared in accordance with the
instructions to Form 10-QSB and Item 310 (b) of Regulation S-B and, therefore,
do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders' equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the three months ended March 31, 2002 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2002.




                                       2
<PAGE>



                                               PC-EPHONE, INC. AND SUBSIDIARIES
                                                                       CONTENTS
                                                     March 31, 2002 (unaudited)
-------------------------------------------------------------------------------


                                                                      Page
CONSOLIDATED FINANCIAL STATEMENTS

       Consolidated Balance Sheet                                   F-2 - F-3

       Consolidated Statements of Operations                           F-4

       Consolidated Statements of Comprehensive Income                 F-5

       Consolidated Statements of Cash Flows                        F-6 - F-7

       Notes to Consolidated Financial Statements                  F-8 - F-14







                                      F-1
<PAGE>




                                               PC-EPHONE, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEET
                                                     March 31, 2002 (unaudited)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
        <S>                                                                              <C>
                                     ASSETS

Current assets
     Accounts receivable, including $8,632 from a related party                   $         11,380
     Other receivables                                                                       9,513
     Prepaid expenses and deposits                                                          83,179
                                                                                  ----------------
         Total current assets                                                              104,072

Note receivable - officer, net of allowance of $20,000                                           -
Property and equipment, net                                                                 60,322
Distribution rights, net of accumulated amortization of $1,868,023                       7,581,978
Other assets                                                                               127,270
Deferred financing costs                                                                    10,650
                                                                                  ----------------
                  Total assets                                                    $      7,884,292
                                                                                  ================
</TABLE>




   The accompanying notes are an integral part of these financial statements.

                                      F-2
<PAGE>



                                               PC-EPHONE, INC. AND SUBSIDIARIES
                                                     CONSOLIDATED BALANCE SHEET
                                                     March 31, 2002 (unaudited)
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
        <S>                                                                                 <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
     Book overdraft                                                                 $          4,887
     Accounts payable, including $17,357 to a related party                                  566,064
     Accrued expenses                                                                        310,846
     Advances payable, including $158,000 to related parties                                 398,087
     Note payable, including $155,311 to related parties                                     255,311
     Subordinated convertible notes payable, including $690,000
         to related parties                                                                  740,000
                                                                                    ----------------
              Total current liabilities                                                    2,275,195
                                                                                    ----------------
Commitments and contingencies

Shareholders' equity
     Preferred stock, $0.01 par value
         1,000,000 shares authorized
         no (unaudited) shares issued and outstanding                                              -
     Common stock, $0.001 par value
         50,000,000 shares authorized
         16,672,039 (unaudited) shares issued and outstanding                                 16,853
     Additional paid-in capital                                                           11,224,227
     Committed common stock                                                                   36,600
     Accumulated other comprehensive income                                                    1,425
     Accumulated deficit                                                                  (5,670,008)
                                                                                    ----------------
              Total shareholders' equity                                                   5,609,097
                                                                                    ----------------
                   Total liabilities and shareholders' equity                       $      7,884,292
                                                                                    ================
</TABLE>






   The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>



                                               PC-EPHONE, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                           For the Three Months Ended March 31,
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                <S>                                                      <C>                   <C>

                                                                           2002               2001
                                                                     ---------------    ----------------
                                                                       (unaudited)        (unaudited)
Sales, including $8,632 to a related party                           $        19,720    $              -

Cost of sales, including $1,597 from a related party                           2,288                   -
                                                                     ---------------    ----------------
Gross profit                                                                  17,432                   -
                                                                     ---------------    ----------------
Operating expenses
     General and administrative expenses                                     423,949             567,889
     Amortization of distribution rights                                     329,651             329,651
                                                                     ---------------    ----------------
         Total operating expenses                                            753,600             897,540
                                                                     ---------------    ----------------
Loss from operations                                                        (736,168)           (897,540)

Other expense
     Interest expense                                                        (16,953)                  -
                                                                     ---------------    ----------------
Net loss                                                             $      (753,121)   $       (897,540)
                                                                     ===============    ================
Basic and diluted loss per share                                     $         (0.05)   $          (0.06)
                                                                     ===============    ================
Basic and diluted weighted-average shares outstanding                     16,467,039          16,122,167
                                                                     ===============    ================
</TABLE>






   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>



                                              PC-EPHONE, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                          For the Three Months Ended March 31,
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                <S>                                                 <C>                 <C>
                                                                    2002               2001
                                                              ---------------    ----------------
                                                               (unaudited)        (unaudited)

Net loss                                                      $      (753,121)   $       (897,540)

Other comprehensive income
     Foreign currency translation adjustment                              822                   -
                                                              ---------------    ----------------
         Comprehensive loss applicable to common
              shareholders                                    $      (752,299)   $       (897,540)
                                                              ===============    ================
</TABLE>











   The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>



                                              PC-EPHONE, INC. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          For the Three Months Ended March 31,
------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                <S>                                                                    <C>               <C>
                                                                                      2002               2001
                                                                                ---------------    ----------------
                                                                                  (unaudited)        (unaudited)
Cash flows from operating activities
     Net loss                                                                   $      (753,121)   $       (897,540)
     Adjustments to reconcile net loss to net cash
         used in operating activities
              Depreciation of property and equipment                                      1,000               1,543
              Amortization of distribution rights                                       329,651             329,651
              Amortization of deferred financing costs                                    3,550                   -
              Options issued for services rendered                                            -             128,842
              Common stock committed for services rendered                               30,000                   -
              (Increase) decrease in
                  Accounts receivable                                                   (11,380)             (2,260)
                  Other receivables                                                       3,494                   -
                  Prepaid expenses and deposits                                         (14,760)             26,884
                  Loans receivable                                                            -             (11,000)
                  Deferred financing costs                                              (14,200)                  -
              Increase (decrease) in
                  Accounts payable                                                      112,743             (14,266)
                  Accrued expenses                                                      209,679                   -
                                                                                ---------------    ----------------
                      Net cash used in operating activities                            (103,344)           (438,146)
                                                                                ---------------    ----------------
Cash flows from investing activities
     Purchase of property and equipment                                                       -              (2,234)
     Proceeds from disposal of property and equipment                                     4,598                   -
     Purchase of other assets                                                          (105,081)                  -
                                                                                ---------------    ----------------
                      Net cash used in investing activities                            (100,483)             (2,234)
                                                                                ---------------    ----------------
Cash flows from financing activities
     Book overdraft                                                                       4,887                   -
     Proceeds from advances payable                                                      38,000             475,000
     Proceeds from note payable                                                         155,311               3,058
                                                                                ---------------    ----------------
                      Net cash provided by financing activities                         198,198             478,058
                                                                                ---------------    ----------------
Cumulative translation adjustment                                                           822                   -
                                                                                ---------------    ----------------
                           Net increase (decrease) in cash                               (4,807)             37,678

Cash, beginning of year                                                                   4,807              81,780
                                                                                ---------------    ----------------
Cash, end of year                                                               $             -    $        119,458
                                                                                ===============    ================
</TABLE>






   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>



                                               PC-EPHONE, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           For the Three Months Ended March 31,
-------------------------------------------------------------------------------


Supplemental schedule of non-cash investing and financing activities During the
three months ended March 31, 2002, the Company:

    o    issued 385,000 committed shares (unaudited) of common stock valued at
         $192,500 (unaudited).

    o    committed to issue 95,135 (unaudited) shares of common stock as payment
         for services rendered valued at $30,000 (unaudited).














   The accompanying notes are an integral part of these financial statements.

                                      F-7
<PAGE>




NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

         PC-EPhone, Inc. was incorporated in Nevada on June 17, 1998 as Newlands
         Oil & Gas, Inc. On December 15, 2000, its name was changed to
         PC-EPhone, Inc. PC-EPhone, Inc.'s common shares trade on the NASD
         Over-the-Counter Bulletin Board in the United States.

         PC-EPhone, Inc. holds the exclusive distribution rights in the United
         States and Canada for a wireless handheld device that can be used to
         perform Internet, personal computer, cellular phone, and organizer
         functions (the "PC-EPhone").


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation
         ---------------------------
         The consolidated financial statements include the accounts of
         PC-EPhone, Inc. and its wholly owned subsidiaries, PC-EPhone Ltd. (a
         Bermuda company), PC-eSolutions, Inc. (a Delaware corporation), and
         PC-EPhone Canada Enterprises Inc. (a British Columbia Canada company)
         (collectively, the "Company"). All significant inter-company accounts
         and transactions are eliminated in consolidation.

         Basis of Presentation
         ---------------------
         The accompanying financial statements have been prepared in conformity
         with generally accepted accounting principles for interim financial
         information and with the instructions to Form 10-QSB and Regulation
         S-B. Accordingly, they do not include all of the information and
         footnotes required by generally accepted accounting principles for
         complete financial statements. In the opinion of management, all
         normal, recurring adjustments considered necessary for a fair
         presentation have been included. The financial statements should be
         read in conjunction with the audited financial statements and notes
         thereto included in the Company's Annual Report on Form 10-KSB for the
         year ended December 31, 2001. The results of operations for the three
         months ended March 31, 2002 are not necessarily indicative of the
         results that may be expected for the year ended December 31, 2002.

         Going Concern
         -------------
         The Company has received a report from its independent auditors that
         includes an explanatory paragraph describing the uncertainty as to the
         Company's ability to continue as a going concern. These consolidated
         financial statements contemplate the ability to continue as such and do
         not include any adjustments that might result from this uncertainty.

         Advertising Expense
         -------------------
         The Company expenses all advertising costs, including direct response
         advertising, as they are incurred. Advertising expense for the three
         months ended March 31, 2002 and 2001 was $21,049 (unaudited) and $0
         (unaudited), respectively.



                                      F-8
<PAGE>



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Loss Per Share
         --------------
         The Company utilizes Statement of Financial Accounting Standards
         ("SFAS") No. 128, "Earnings per Share." Basic loss per share is
         computed by dividing loss available to common shareholders by the
         weighted-average number of common shares outstanding. Diluted loss per
         share is computed similar to basic loss per share except that the
         denominator is increased to include the number of additional common
         shares that would have been outstanding if the potential common shares
         had been issued and if the additional common shares were dilutive.
         Common equivalent shares are excluded from the computation if their
         effect is anti-dilutive.

         The following potential common shares have been excluded from the
         computation of diluted net loss per share for the periods presented
         because the effect would have been anti-dilutive:
<TABLE>
<CAPTION>
                                        <S>                                        <C>                   <C>
                                                                                   For the Three Months Ended
                                                                                           March 31,
                                                                                ---------------------------------
                                                                                      2002             2001
                                                                                ---------------  ----------------
                                                                                 (unaudited)      (unaudited)
                  Options outstanding under the Company's stock
                      option plans                                                  1,430,000           225,000
                  Warrants issued in conjunction with a distribution
                      agreement with Cyberbank                                              -         2,500,000
                  Convertible notes payable                                         1,480,000                 -
</TABLE>

         Estimates
         ---------
         The preparation of financial statements 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
         revenue and expenses during the reporting period. Actual results could
         differ from those estimates.

         Recently Issued Accounting Pronouncement
         ----------------------------------------
         In April 2002, the Financial Accounting Standards Board ("FASB") issued
         SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
         Amendment of FASB Statement No. 13, and Technical Corrections." SFAS
         No. 145 updates, clarifies, and simplifies existing accounting
         pronouncements. This statement rescinds SFAS No. 4, which required all
         gains and losses from extinguishment of debt to be aggregated and, if
         material, classified as an extraordinary item, net of related income
         tax effect.




                                      F-9
<PAGE>



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       Recently Issued Accounting Pronouncement (Continued)
       ----------------------------------------------------
       As a result, the criteria in Accounting Principles Board No. 30 will now
       be used to classify those gains and losses. SFAS No. 64 amended SFAS No.
       4 and is no longer necessary as SFAS No. 4 has been rescinded. SFAS No.
       44 has been rescinded as it is no longer necessary. SFAS No. 145 amends
       SFAS No. 13 to require that certain lease modifications that have
       economic effects similar to sale-leaseback transactions be accounted for
       in the same manner as sale-lease transactions. This statement also makes
       technical corrections to existing pronouncements. While those corrections
       are not substantive in nature, in some instances, they may change
       accounting practice. The Company does not expect adoption of SFAS No. 145
       to have a material impact, if any, on its financial position or results
       of operations.


NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment at March 31, 2002 consisted of the following:

                  Office furniture and equipment               $         28,548
                  Computer equipment                                     46,356
                                                               ----------------
                                                                         74,904
                  Less accumulated depreciation                          14,582
                                                               ----------------
                      Total                                    $         60,322
                                                               ================

         Depreciation expense was $1,000 (unaudited) and $1,543 (unaudited) for
         the three months ended March 31, 2002 and 2001, respectively.


NOTE 4 - DISTRIBUTION RIGHTS

         Cyberbank Corp.
         ---------------
         By a distribution agreement dated November 6, 2000 and amended February
         8, 2001 with Cyberbank Corp. ("Cyberbank"), a Korean Corporation,
         PC-EPhone Ltd. was granted the exclusive right to market, distribute,
         and sell the PC-EPhone within the United States and Canada. On April
         12, 2002, the distribution rights were transferred to PC-EPhone, Inc.,
         the Nevada corporation.




                                      F-10
<PAGE>



NOTE 4 - DISTRIBUTION RIGHTS (Continued)

         Cyberbank Corp. (Continued)
         ---------------
         In consideration for these rights, the Company issued 3,500,000 shares
         of common stock valued at $2.70 per share to Cyberbank for total
         non-cash consideration of $9,450,000. As a condition for maintaining
         the rights, PC-EPhone Ltd. must purchase from Cyberbank a minimum of
         500,000 units annually upon Cyberbank receiving written approval for
         the product by the United States Federal Communications Commission,
         which occurred on April 27, 2001. The Company also granted Cyberbank
         warrants entitling Cyberbank to acquire 2,500,000 shares of common
         stock at $3.20 per share. These warrants were exercisable during the
         period from November 1, 2001 to December 31, 2001. In addition,
         PC-EPhone Ltd. agreed to issue two binding purchase orders to Cyberbank
         for a total of $25,300,000 to be paid with cash of $2,000,000 and
         letters of credit totaling $23,300,000. As of December 31, 2001, the
         Company has not paid the $2,000,000 cash obligation that was due on May
         21, 2001. The warrants expired on December 31, 2001 without being
         exercised.

         The term of this agreement ends December 31, 2007, but will
         automatically renew from year to year unless terminated earlier in
         accordance with the distribution agreement. The Company is currently
         renegotiating the distribution agreement. In September 2001, Cyberbank
         submitted an application to a wireless carrier to obtain wireless
         access for the PC-EPhone 1.0 on the carrier's networks. Cyberbank is
         still proceeding with the acceptance process.


NOTE 5 - NOTE PAYABLE

         Note payable at December 31, 2001 was unsecured, bearing interest at
         12% per annum, and due on June 30, 2001. In April 2002, the note
         payable was converted into 220,000 shares of common stock and warrants
         to purchase 100,000 shares of common stock at an exercise price of
         $0.50 per share. 50,000 of the warrants vest on April 11, 2003, and
         50,000 vest on April 11, 2004. All of the warrants expire on April 12,
         2004.


NOTE 6 - NOTE PAYABLE TO RELATED PARTY

         On January 15, 2002, a shareholder loaned the Company $142,000, bearing
         interest at a rate of the London Inter-Bank Offering Rate, plus 2
         points for a total of 4.37% simple interest per annum. The note is due
         on demand and is unsecured.



                                      F-11
<PAGE>



NOTE 7 - SUBORDINATED CONVERTIBLE NOTES PAYABLE

         August 2001
         -----------
         During August 2001, the Company issued nine convertible promissory
         notes in exchange for $550,000, of which $500,000 was received from a
         director, three shareholders, a relative of a shareholder, and three
         employees of the Company and of which $232,500 was converted from
         advances payable. No sales commissions or underwriting discounts were
         paid in connection with the offering. The convertible promissory notes
         bear interest at 6% per annum, with interest due in November 2001,
         February 2002, and May 2002, and principal and unpaid interest are due
         at maturity in August 2002. The notes are convertible at the option of
         the holder at any time before maturity into shares of the Company's
         common stock at a conversion price of $1.25 per share during the first
         six months after the issuance of the notes and at a rate of $0.50 per
         share during the subsequent six-month period until the notes mature.

         If the Company's common stock trades for 10 consecutive trading days
         above $3.75 per share, the Company can demand conversion of the notes
         at 50% of the conversion price in effect at that time. If the Company's
         common stock trades for 10 consecutive trading days above $5.75 per
         share, the Company can demand conversion of the notes at the conversion
         price in effect at that time. The Company is in default on the February
         2002 interest payment; however, it has obtained waivers from all
         lenders extending payment to May 2002. The Company paid the interest in
         May 2002. The Company is in default on the May 2002 interest payment.

         November 2001
         -------------
         On November 8, 2001, the Company received bridge financing from
         Cyberbank in the amount of $190,000 in the form of a subordinated
         convertible debenture (the "Cyberbank Debenture") providing for a total
         aggregate amount of up to $700,000 to the Company to be received as
         follows: $150,000 on or before October 15, 2001, $150,000 on or before
         November 1, 2001, up to $250,000 on or before November 15, 2001, and
         $150,000 on or before December 1, 2001.

         The Cyberbank Debenture as currently negotiated matures in one year
         from the date of receipt of the funds and is non-interest-bearing
         unless the Company defaults on one of the terms of the Cyberbank
         Debenture, in which case any amounts owing would bear interest at 10%
         per annum from the date of default until repayment, or such time as the
         event of default is cured. In addition, an event of default permits
         Cyberbank to demand full repayment of the debenture immediately. The
         funds are voluntarily convertible by Cyberbank into the Company's
         common stock at a price of $0.50 per share at any time before the
         Cyberbank Debenture matures. The Company cannot force conversion. To
         date, the Company has received $190,000 from Cyberbank. In December
         2001, the Company defaulted on the Cyberbank debenture. The Cyberbank
         Debenture is subordinate to the bridge loan from Process Control
         (Holdings) Limited dated April 8, 2002.



                                      F-12
<PAGE>



NOTE 8 - SHAREHOLDERS' EQUITY

         Common Stock
         ------------
         During the three months ended March 31, 2002, the Company issued
         385,000 shares (unaudited) of common stock that had been previously
         committed as payment for advances payable for $192,500 (unaudited).

         Consulting Services
         -------------------
         On January 1, 2002, the Company entered into an agreement with a
         consultant to provide investor relations services and sponsor the
         Company's participation at its investor conferences. The monthly fee
         for such services is $10,000, payable in shares of the Company's
         restricted common on a monthly basis. As of March 31, 2002, the Company
         was committed to issue 95,135 shares of its common stock to the
         consultant.


NOTE 9 - JOINT VENTURE AGREEMENT

         On March 27, 2002, the Company entered into an agreement with Process
         Control (Holdings) Limited ("PCHL") which contemplates the formation of
         a joint venture with Whitelite Communications Ltd. ("WCL"), a
         corporation organized under the laws of the Republic of Ireland and a
         wholly owned subsidiary of PCHL. If formed, the joint venture entity
         would distribute the Company's products on a worldwide basis, subject
         to certain exclusions described below. The Company would own 15% of the
         joint venture entity and the remaining 85% would be owned by PCHL.

         Upon formation of the joint venture, the Company would agree to
         contribute all of its rights and obligations under any future
         distribution agreements that it enters into with Cyberbank or Seoul
         Systems Co., Ltd. ("SSC"), a Korean corporation, for the territories of
         Europe, the Middle East, Africa, and China. For a six-month period
         following the formation of the joint venture, PCHL would have an option
         to convert all of its interest in the joint venture into a fully
         diluted 65% of the Company's issued and outstanding common stock at the
         time of conversion. Upon conversion, PCHL would be entitled to appoint
         four of the seven members on the Company's Board of Directors, and WCL
         and the joint venture entity would become the Company's wholly owned
         subsidiaries. Either party may terminate this agreement upon written
         notice.



                                      F-13
<PAGE>



NOTE 9 - JOINT VENTURE AGREEMENT (Continued)

         In connection with the agreement with PCHL, PCHL recently placed an
         order with SSC for 35,000 units of a flexible keyboard for distribution
         in the territories of Europe, China, the Middle East, and Africa. PCHL
         also posted a letter of credit in the amount of $673,450 on March 5,
         2002 in connection with this purchase. If the joint venture is formed,
         the keyboards and the proceeds from the sale of the keyboards will be
         contributed to the joint venture entity. If the joint venture is not
         formed, PCHL will retain possession of the flexible keyboards and be
         entitled to distribute them in the territories of Europe, China, the
         Middle East, and Africa. At March 31, 2002, the Company had an accounts
         receivable balance of $8,632 from WCL and an accounts payable balance
         of $17,357 to WCL. During the three months ended March 31, 2002, the
         Company had recognized sales and cost of sales of $8,632 and $0,
         respectively, from transactions with WCL.

         PCHL and the Company have entered into letters of intent with SSC,
         whereby SSC agreed to grant to the proposed joint venture entity the
         exclusive, worldwide distribution rights to certain products
         manufactured or developed by SSC that enhance or expand the Company's
         current product offerings. PCHL and the Company have also entered into
         a letter of intent with Cyberbank whereby Cyberbank agreed to grant to
         the proposed joint venture entity the exclusive, worldwide (excluding
         Australia, Korea and Japan) distribution rights to the PC-E PDA and the
         PC-EPhone 2.0 GSM/GPRS.

         On April 8, 2002, the Company entered into a bridge loan facility with
         PCHL to provide the Company with bridge financing up to the maximum
         principal amount of $480,000, payable by PCHL in monthly increments of
         $160,000 during the period from April to June 2002. The Company
         executed a promissory note that is secured by a lien on the Company's
         assets.

         The shares issuable under the promissory note are subject to certain
         demand and piggyback registration rights. No sales commissions or
         underwriting discounts were paid in connection with the offering. The
         convertible promissory note bears interest at 7% per annum, and
         principal and unpaid interest are due within 90 days of either entering
         into a definitive joint venture agreement or the termination of
         negotiations regarding the joint venture. The notes are convertible at
         the option of the holder into shares of the Company's common stock at a
         conversion price of $0.192 per share only upon the occurrence and
         continuance of an event of default as defined in the bridge loan
         agreement. The Company has received $430,332 under this agreement.


NOTE 10 - SUBSEQUENT EVENT

         In April 2002, the Company issued 10,000 committed shares of Common
         Stock valued at $6,600 to a consultant for investor relations services
         rendered in 2001.



                                      F-14
<PAGE>




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

         Certain statements in this Quarterly Report on Form 10-QSB, or the
Report, are "forward-looking statements." These forward-looking statements
include, but are not limited to, statements about the plans, objectives,
expectations and intentions of PC-EPhone, Inc., a Nevada corporation and its
subsidiaries (collectively referred to in this Report as "we," "us" or "our")
and other statements contained in this Report that are not historical facts.
Forward-looking statements in this Report or hereafter included in other
publicly available documents filed with the Securities and Exchange Commission,
or the Commission, reports to our stockholders and other publicly available
statements issued or released by us involve known and unknown risks,
uncertainties and other factors which could cause our actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) or achievements expressed or
implied by such forward-looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations. When used in this Report, the words "expect,"
"anticipate," "intend," "plan," "believe," "seek," "estimate" and similar
expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including our
plans, objectives, expectations and intentions and other factors discussed under
"Risk Factors."

         The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements and related notes included elsewhere
in this Report.

Overview of Business Plan
-------------------------

         We are a convergence technology company with distribution rights to
several products manufactured by third parties, including the "PC-EPhone 1.0,"
our handheld computer products, such as the PC-E PDA and the MIA Pocket PC, and
the flexible keyboard. We were originally formed to explore and develop oil and
gas properties. On August 18, 2000, we abandoned the oil and gas exploration
business and began to pursue opportunities in the wireless convergent technology
market. On November 6, 2000, we obtained the distribution rights to the
PC-EPhone 1.0 and focused on distributing the PC-EPhone 1.0 in the United States
and Canada.

         In 2001, we adopted a new business plan to develop this company into a
convergence technology company with a broad base of convergence technology
product offerings. On July 1, 2001, we hired David Meltzer, our Chief Executive
Officer, to implement our new business plan.

         Under our new business plan, we intend to market our products to the
following three markets: (i) hardware and accessories; (ii) applications; and
(iii) networks. We are relying on the sales of our hardware, accessories and
software applications integrated into our handheld computer devices to generate
revenues in the near future. We anticipate launching our PC-EPhone, either in
its current form, the PC-EPhone 1.0, or a next-generation model that is to be
developed, the PC-EPhone 2.0 GSM/GPRS, and generating revenues from wireless
networks if we receive government approval and carrier acceptance of our current
and future wireless products.

         Although we have made discrete sales of products to our
sub-distributors in the United States and Israel for marketing and testing
purposes, we have not launched distribution of any of our products, as of the
date of this Report and have made very limited sales of our products. We intend
to commence distribution of our products, other than the PC-EPhone products,
upon receipt of at least $3,500,000 dollars in financing, and, in the case of
the PC-EPhone Products, upon receipt of carrier acceptance and governmental
approvals, where applicable. In anticipation of furthering our business plan as
a convergence technology company, we have developed relationships with network
operators and application providers. We are also in the process of co-developing
certain products with our manufacturing partners. We do not manufacture our own
products and rely upon independent third parties to manufacture our products.

         On March 27, 2002, we entered into an agreement with Process Control
(Holdings) Ltd. ("PCHL") whereby we would agree to form a joint venture with
PCHL's wholly owned subsidiary, Whitelite Communications Ltd. ("WCL"). PCHL is a
telecommunications, electrical design and distribution company based in Ireland.
If formed, the joint venture entity would distribute our products on a worldwide
basis, subject to certain exclusions. We would own 15% of the joint venture
entity. The remaining 85% would be owned by PCHL.


                                       3
<PAGE>


         Upon formation of the joint venture, we would agree to contribute all
of our rights and obligations under any future distribution agreements that we
enter into with Cyberbank or Seoul Systems Co., Ltd. ("SSC") for the territories
of Europe, the Middle East, Africa and China. For a six-month period following
the formation of the joint venture, PCHL would have an option to convert all of
its interest in the joint venture into a fully diluted 65% of our issued and
outstanding Common Stock at the time of conversion. Upon conversion, PCHL would
be entitled to appoint 4 of the 7 members on our board of directors and WCL and
the joint venture entity would become our wholly owned subsidiaries.

         Under our agreement with Cyberbank, we have agreed to purchase an
annual minimum of 500,000 units of the PC-EPhone 1.0. Additionally, we have
agreed to place two binding purchase orders for a total of $25,300,000, to be
paid with cash of $2,000,000 on May 21, 2001, and letters of credit totaling
$23,300,000. We have not made the $2,000,000 payment. In addition, we have
issued $550,000 principal amount of convertible debentures, which mature in
August 2002 and $190,000 of subordinated convertible debentures, which mature in
November 2002 or on such earlier date as may be permitted pursuant to the
debentures upon an event of default. We have outstanding $142,000 of unsecured
loans bearing interest at the rate of 4.37% per annum and $411,399 of unsecured,
non-interest bearing loans payable on demand, as of the date of this Report.
Further, as of the date of this Report, we owed approximately US $430,332 with
respect to the bridge loan facility with PCHL. The principal amount of the loan
accrues interest at a rate of 7% per annum, and is secured by a lien on our
assets. The note matures 90 days after termination of our letter of intent with
PCHL, or the date that the parties execute and deliver definitive agreements
regarding the described joint venture transaction, whichever occurs earlier.

         We have had very limited income from our new business operations. In
order to implement our business plan, launch the distribution of our products,
provide the prospect of future revenues and repay our outstanding debt, we will
need significant amounts of financing or business partners who will be able to
provide us with the necessary financing. We anticipate that we will need to
obtain $3,500,000 in order to launch the commercial distribution of our
products. Our failure to receive such additional financings or to find such
business partners could have a material adverse effect upon our financial
condition and our ability to continue to operate.

         In addition, our PC-EPhone 1.0 product has not received network carrier
approval and our PC-EPhone 2.0 GSM/GPRS has not received government or network
carrier approval for commercialization. Even if we are able to obtain financing
and launch our products, recent economic downturns in the general economy, and
particularly in the wireless communications industry, reflect trends that may
have an adverse effect on our ability to implement our business plan.

Results of Operations
---------------------

         Results of Operations for the Quarters Ended March 31, 2002 and 2001.
We generated sales and miscellaneous income of $19,720 and $0 during the
quarters ended March 31, 2002 and 2001, respectively, which related to sales of
PDAs (PC-E PDAs and MIAs), 802.11b access points and various accessories for a
wireless local area network (WLAN) pilot (test) installation, and sample
devices, including MIAs and accessories, to one international customer and one
domestic customer. The increase in sales in 2002 related to new relationships
with customers and sub-distributors that we began developing in the latter part
of 2001 and to our distribution of products that we added to our set of
offerings in the latter part of 2001.

         Cost of sales increased to $2,288 during the quarter ended March 31,
2002 from $0 during the quarter ended March 31, 2001. Cost of sales during the
quarters ended March 31, 2002 and 2001 primarily related to the cost of
purchasing sample devices and other accessories from our manufacturers.

         Selling, general and administrative expenses during the quarter ended
March 31, 2002 decreased to $723,600 from $768,698 (excluding non-cash
compensation expenses) during the quarter ended March 31, 2001. The decrease
primarily related to reductions in consulting fees, legal fees and travel offset
by increases in salaries, benefits and other costs.



                                       4
<PAGE>



         Non-cash compensation expenses decreased to $30,000 during the quarter
ended March 31, 2002 from $128,842 during the quarter ended March 31, 2001. The
decrease relates to the reduction of consulting services.

         Amortization of distribution rights was $329,651 during the quarter
ended March 31, 2002 which was consistent with the amount for March 31, 2001.
These amounts related to the amortization of our distribution rights obtained
from Cyberbank.

         Net interest expense during the quarters ended respectively on March
31, 2002 and 2001 was $16,953 and $0. Net interest expense during the quarter
ended March 31, 2002 primarily related to our subordinated convertible
debentures issued in August 2001 and other borrowings.

         As a result of the foregoing, we incurred a net loss of $753,121 or
$0.05 per share, during the quarter ended March 31, 2002, as compared to a net
loss of $897,540, or $0.06 per share, during the quarter ended March 31, 2001.

         Liquidity and Capital Resources. We have historically financed our
operations through working capital provided from operations, private placements
of equity and debt securities and loans. In the three month period ended March
31, 2002, we received proceeds, before deducting of fees, of $142,000 through a
loan from an affiliate, a loan in the amount of $13,331 that was subsequently
converted into a portion of a bridge loan facility from PCHL and we received
$38,000 from advances payable from two affiliates. We have had very limited
income from our new business operations.

         In August 2001, we issued convertible debentures to certain persons,
including our directors, executive officers and a principal shareholder
resulting in net proceeds of $550,000, of which $232,500 was converted from
advances payable. These convertible debentures mature in August 2002. We have
defaulted on interest payments totaling approximately $9,000 which were due in
May 2002 on the $550,000 (principal) subordinated convertible debentures.

         In November 2001, we issued $190,000 of subordinated convertible
debentures to Cyberbank Corp, one of our major shareholders. These convertible
debentures mature in November 2002, or on such earlier date as may be permitted
pursuant to the debentures upon an event of default. We have defaulted on
certain terms and conditions under the subordinated convertible debentures with
Cyberbank.

         In November 2001, one of our creditors agreed to convert $102,500 of
our debt obligations into 205,000 shares of Common Stock at a conversion price
of $0.50 per share. These shares were issued in the first quarter of 2002. In
December 2001, one of our creditors agreed to convert $90,000 of our debt
obligations into 180,000 shares of Common Stock at a conversion price of $0.50
per share. These shares were issued in the first quarter of 2002. In April 2002,
we agreed to issue 220,000 shares of Common Stock and warrants to purchase up to
100,000 shares of Common Stock in settlement of a debt obligation in the
principal amount of $100,000, plus accrued interest on such amount.

         In April 2002, we entered into a bridge loan facility with PCHL to
provide us with loans of up to the maximum principal amount of US $480,000,
payable by PCHL in monthly increments of US $160,000 during the period from
April to June 2002. The promissory note accrues interest at a rate of 7% per
annum, secured by a lien on our assets and is convertible into shares of our
Common Stock only upon the occurrence and continuance of an event of default.
The note matures 90 days after termination of our letter of intent with PCHL, or
the date that the parties execute and deliver definitive agreements regarding
the described joint venture transaction, whichever occurs earlier. As of the
date of this Report, we have received US $430,332 under the bridge loan
facility.

         At March 31, 2002, the ratio of current assets to current liabilities
was 0.05 to 1.00 compared to 0.18 to 1.00 at March 31, 2001 and 0.05 to 1.00 at
December 31, 2001. As of March 31, 2002, we had a working capital deficit of
$2,171,123 and an accumulated deficit of $5,670,008.

         Cash and cash equivalents and short-term investments were overdrawn
resulting in a negative cash balance of $4,887 as of March 31, 2002, as compared
to positive cash of $119,458 as of March 31, 2001. This decrease was primarily
attributable to net cash used in operations and investing activities, net of
cash provided by financing activities.



                                       5
<PAGE>



         As of March 31, 2002, we had borrowings in the aggregate amount of
$1,393,398. As of March 31, 2001, we had borrowings in the aggregate amount of
$598,058. The increase in borrowings related primarily to increases in notes
payable and advances payable, and the issuance of the convertible debentures in
2001.

         Net cash used in operating activities was $103,344 and $438,146 for the
quarters ended March 31, 2002 and 2001, respectively.

         Net cash used in operating activities during the quarter ended March
31, 2002 primarily consisted of net losses, increases in accounts receivable,
and increases in prepaid expenses and deposits offset by depreciation of
property and equipment and amortization of our distribution rights related to
the PC-EPhone products, increases in accounts payable and accrued expenses, and
the payment in our securities (including common stock and options) of fees for
services by consultants.

         Net cash used in operating activities during the quarter ended March
31, 2001 primarily consisted of net losses, increases in loans and accounts
receivable, and decreases in accounts payable, offset by depreciation of
property and equipment and amortization of our distribution rights related to
the PC-EPhone products, increases in prepaid expenses and deposits, and issuance
of options for services rendered.

         Net cash used in investing activities was $100,483 and $2,234 for the
quarters ended March 31, 2002 and 2001, respectively. In the quarter ended March
31, 2002, our investing activities primarily consisted of legal costs in
connection with the agreement with PCHL. In the quarter ended March 31, 2001, we
utilized $2,234 to acquire property and equipment for our new business
operations.

         Net cash provided by financing activities was $198,198 and $478,058
during the quarters ended March 31, 2002 and 2001, respectively. In the quarter
ended March 31, 2002 we received $155,311 from the proceeds of two loans,
$38,000 from the proceeds of certain unsecured, non-interest bearing loans
payable on demand, and $4,887 from a book overdraft. In the quarter ended March
31, 2001, we received $475,000 from the proceeds of certain unsecured,
non-interest bearing loans payable on demand, and $3,058 from the proceeds of a
note payable.

         The Company has received a report from its independent auditors that
includes an explanatory paragraph describing the uncertainty as to the Company's
ability to continue as a going concern. These consolidated financial statements
contemplate the ability to continue as such and do not include any adjustments
that might result from this uncertainty.

         Our ability to meet our operating and capital requirements and expand
our business operations is currently dependent on financing from external
sources. There can be no assurance that changes in our marketing, research and
development plans or other changes affecting our operating expenses and business
strategy will not result in the expenditure of such resources before such time
or that we will be able to develop profitable operations prior to such date, or
at all, or that we will not require additional financing at or prior to such
time in order to continue operations. There can be no assurance that additional
capital will be available on terms favorable to us, if at all. To the extent
that additional capital is raised through the sale of additional equity or
convertible debt securities, the issuance of such securities could result in
additional dilution to our stockholders. Moreover, our cash requirements may
vary materially from those now planned because of results of marketing, product
testing, changes in the focus and direction of our marketing programs,
competitive and technological advances, the level of working capital required to
sustain our planned growth, litigation, operating results, including the extent
and duration of operating losses, and other factors. In the event that we are
not able to secure such additional financing or we experience the need for
additional capital, and are not able to generate capital from financing sources
or from future operations, management may be required to modify, suspend or
discontinue our business plan, which would have a material adverse effect on our
business prospects and financial condition.



                                       6
<PAGE>



                           Part II - Other Information

Item 1.  Legal Proceedings.

         FutureCom. We received a demand letter dated June 13, 2001, from
FutureCom Global, Inc., or FutureCom. The demand letter relates to a Tri-Party
Agreement by and among us, FutureCom and Cyberbank Corp. dated February 9, 2001
and a related Sub-distributor Agreement between FutureCom and us, dated November
15, 2000. The demand letter, among other things, seeks a full refund of all
monies paid with respect to 1,000 units of personal digital assistants ordered
from Cyberbank, in the amount of approximately $800,000. We are investigating
our rights and obligations with respect thereto. Based on the information
currently available to us, we are unable to evaluate the likelihood of an
unfavorable outcome, if FutureCom should commence a legal proceeding against us
with respect to this dispute. If FutureCom elects to commence a legal proceeding
against us, we intend to vigorously defend against such legal proceeding.

         Euromerica. We have been sued in the Supreme Court of British Columbia.
The title of the case, filed on or about June 26, 2001, is Euromerica Capital
Group, Inc. v. PC-EPhone Canada Enterprises, Inc., d/b/a PC- EPhone, Inc.,
PC-EPhone, Inc., Douglas Yee and Negar Towfigh, Supreme Court of British
Columbia, Vancouver Registry No. S013585. The Further Amended Statement of Claim
filed on January 25, 2002, alleges that Euromerica entered into a contract with
us, the terms of which were partly oral and partly in writing, whereby
Euromerica would provide us with technical analysis, a combined press campaign
concept and investor relations for the German market place and dissemination
services in Germany. Euromerica alleges that we breached an agreement by failing
to make payments to Euromerica in the sum of $39,910. We have filed a responsive
pleading denying liability and raising affirmative defenses, and we have also
filed a Counterclaim against Euromerica seeking declaratory relief and damages.
We intend to vigorously defend against the Further Amended Statement of Claim
and to pursue the claims stated in our Counterclaim.

         Except as set forth above, we are not a party to any material
litigation and is not aware of any pending or threatened litigation that could
have a material adverse effect on our business, operating results or financial
condition.

Item 2.  Changes in Securities and Use of Proceeds

         In the first quarter of 2002, we issued 205,000 new shares of
restricted stock in consideration for the conversion of advances payable in the
amount of $102,500. We relied on the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended, in respect of this issuance.

         Also in the first quarter of 2002, we issued 180,000 new shares of
restricted stock in consideration for the conversion of advances payable in the
amount of $90,000. We relied on exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended, in respect of this issuance.

         In April 2002, the Company issued 95,000 options to one employee and
one consultant with an average strike price of $0.50.

         In April 2002, we agreed to issue 220,000 shares of Common Stock
and warrants to purchase up to 100,000 shares of Common Stock in settlement of a
debt obligation in the principal amount of $100,000, plus accrued interest on
such amount. We are relying on exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended, in respect of this issuance.

         Also in April 2002, we issued 95,135 shares of Common Stock to a
consultant for investor relations services rendered in the first quarter of
2002. Also in April 2002, we issued 10,000 committed shares of Common Stock
valued at $6,600 to a consultant for investor relations services rendered in
2001. The Company relied on exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended, with respect to the issuance of the
foregoing securities.

         In the three month period ended March 31, 2002, we received proceeds,
before deducting of fees, of $142,000 through a loan from an affiliate, a loan
in the amount of $13,331 that was subsequently converted into a portion of a
bridge loan facility from PCHL and we received $38,000 from advances payable
from two affiliates. We have had very limited income from our new business
operations.



                                       7
<PAGE>



         In April 2002, we entered into a bridge loan facility with PCHL to
provide us with loans of up to the maximum principal amount of US $480,000,
payable by PCHL in monthly increments of US $160,000 during the period from
April to June 2002. The promissory note accrues interest at a rate of 7% per
annum, secured by a lien on our assets and is convertible into shares of our
Common Stock only upon the occurrence and continuance of an event of default.
The note matures 90 days after termination of our letter of intent with PCHL, or
the date that the parties execute and deliver definitive agreements regarding
the described joint venture transaction, whichever occurs earlier. As of the
date of this Report, we have received US $430,332 under the bridge loan
facility.


Item 3.   Defaults upon Senior Securities

         We have defaulted on interest payments totaling approximately $9,000
which were due in May 2002 on the $550,000 (principal) subordinated convertible
debentures. We have also defaulted on certain terms and conditions under the
subordinated convertible debentures with Cyberbank Corp., one of our major
shareholders.

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

          None.

Item 5.   Other Information


          None.

Item 6.   Exhibits and Reports on Form 8-K

16.1   We filed a report on Form 8K with the Securities & Exchange Commission on
       March 19, 2002 and amended on March 26, 2002. This report described the
       termination of the our relationship with Amisano Hanson Chartered
       Accountants as principal independent accountants and that we engaged the
       firm of Singer Lewak Greenbaum & Goldstein LLP to serve as our principal
       independent accountants.

       The same Form 8K also described the resignation and replacement of one of
       our directors. On March 6, 2002, Jaekil Song resigned as one of our
       Directors. On the same day, the Board of Directors appointed Se-Yup Choi
       as a Director to replace Mr. Song. Mr. Choi is the Manager of
       International Marketing for Cyberbank Corp., the developer of the
       PC-EPhone and one of our major shareholders.



                                       8
<PAGE>



                                    SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  June 19, 2002

PC-EPHONE, INC.



By:  /s/ David C. Meltzer
----------------------------
David C. Meltzer
President, CEO, and Director