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 June 30, 2001

[ ]   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 jurisdiction of                     (IRS Employer
incorporation)                                       Identification No.)

      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 16,185,500 common shares outstanding of as of July 31, 2001.

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


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.          Financial Statements

GENERAL

PC-EPhone, Inc.'s (the "Company's") un-audited financial statements for the six
months ended June 30, 2001 are included with this Form 10-QSB.  The un-audited
financial statements for the six months ended June 30, 2001 include:

     (a)  Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000;
     (b)  Consolidated Statements of Loss and Deficit - for the three month and
          six month periods ended June 30, 2001 and June 30, 2000;
     (c)  Consolidated Statements of Cash Flows - for the six months ended June
          30, 2001 and June 30, 2000;
     (d)  Consolidated Statements of Changes in Shareholders' Equity - for the
          six months ended June 30, 2001 and the year ended December 31, 2000;
     (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 six months ended June 30, 2001 are not necessarily
indicative of the results that can be expected for the year ending December 31,
2001.


<PAGE>

                              PC-EPHONE, INC.
                      (formerly Newlands Oil & Gas Inc.)
                         CONSOLIDATED BALANCE SHEETS
                     June 30, 2001 and December 31, 2000
                           (Stated in US Dollars)
                                (Unaudited)
                                 ---------

                                 ASSETS                June 30   December 31,
                                                        2001         2000
                                                        ----         ----
Current
   Cash                                             $     16,634   $     81,780
   Accounts receivable                                    10,297           -
   Prepaid expenses and deposits                         301,115         35,016
   Inventory                                              16,798           -
                                                    ------------   ------------
                                                         344,844        116,796

Loans receivable                                          31,000         20,000
Capital assets                                            45,590         23,884
Distribution rights - Note 3                           8,570,931      9,230,233
                                                    ------------   ------------
                                                    $  8,992,365   $  9,390,913
                                                    ============   ============

                               LIABILITIES
                               -----------

Current
   Accounts payable                                 $    518,761   $    157,591
   Note payable - Note 5                                  16,050        120,000
   Advances payable                                      613,243          -
                                                    ------------   ------------
                                                       1,148,054        277,591
                                                    ------------   ------------

                           STOCKHOLDERS' EQUITY
                           --------------------

Capital stock - Note 4                                    16,185         16,122
Additional paid-in capital                            10,446,165     10,054,336
Deficit                                               (2,618,039)      (957,136)
                                                    ------------   ------------

                                                       7,844,311      9,113,322
                                                    ------------   ------------

                                                    $  8,992,365   $  9,390,913
                                                    ============   ============

Continuance of Operations - Note 1 (a)
Commitments - Notes 3 and 4
Subsequent Events - Notes 3, 5 and 6
Contingent Liability - Note 6

APPROVED BY THE DIRECTORS:


/s/ Douglas Yee          , Director        /s/ Terrence King          , Director
-------------------------                  ---------------------------

                          SEE ACCOMPANYING NOTES

<PAGE>

                             PC-EPHONE, INC.
                    (formerly Newlands Oil & Gas Inc.)
                CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
       for the six and three month periods ended June 30, 2001 and 2000
                          (Stated in US Dollars)
                               (Unaudited)
                                ---------
<TABLE>
<CAPTION>
                                                      Three months ended June 30,         Six months ended June 30,
                                                           2001           2000              2001            2000
                                                           ----           ----              ----            ----
<S>                                                  <C>              <C>              <C>              <C>
Administrative expenses
   Accounting and audit                              $      7,982     $      1,606     $     19,997     $     3,476
   Amortization of capital assets                           2,299             -               3,842            -
   Amortization of distribution rights                    329,651             -             659,302            -
   Consulting                                             215,229           21,000          402,947          42,000
   Filing                                                   3,643              400            8,618             800
   Legal fees                                              17,588            5,047           91,270           6,111
   Marketing                                               38,625             -              69,927            -
   Office and telephone                                    26,749              265           43,965             364
   Product testing                                          5,311             -              17,769            -
   Rent                                                    18,999              456           30,355           2,061
   Transfer agent                                             791              720            3,402             973
   Travel                                                  26,572             -             110,743            -
                                                     ------------     ------------     ------------     ------------
Net loss before other                                     693,439           29,494        1,462,137           55,785
Other
   Non-cash compensation charge                            73,050             -             201,892             -
   Exploration and development expenses                      -              21,960             -              21,960
   Write-off of oil and gas property                         -              73,000             -              73,000
   Interest income                                         (3,126)             (76)          (3,126)            (156)
                                                     ------------     ------------     ------------     ------------

Net loss for the period                                   763,363          124,378        1,660,903          150,589
Deficit, beginning of the period                        1,854,676          294,707          957,136          268,496
                                                     ------------     ------------     ------------     ------------

Deficit, end of the period                           $  2,618,039     $    419,085     $  2,618,039     $    419,085
                                                     ============     ============     ============     ============

Net loss per share                                   $      0.047     $      0.012     $      0.103     $      0.015
                                                     ============     ============     ============     ============

Weighted average number of shares
 outstanding                                           16,152,899       10,047,167       16,137,618       10,047,167
                                                     ============     ============     ============     ============
</TABLE>


                          SEE ACCOMPANYING NOTES

<PAGE>

                             PC-EPHONE, INC.
                    (formerly Newlands Oil & Gas Inc.)
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
       for the six and three month periods ended June 30, 2001 and 2000
                          (Stated in US Dollars)
                               (Unaudited)
                                ---------


                                                     Six months ended June 30,
                                                         2001            2000
                                                         ----            ----
Cash Flows from (used in ) Operating Activities
   Net loss for the period                        $ (1,660,903)    $   (150,589)
   Less: item not involving cash:
     Amortization of capital assets                      3,842             -
     Amortization of distribution rights               659,302             -
     Non-cash compensation charge                      201,892             -
     Write-off of oil and gas property                    -              73,000
   Changes in non-cash working capital
     balances related to  operations
     Accounts receivable                               (10,297)           3,734
     Prepaid expenses and deposits                    (266,099)            -
     Inventory                                         (16,798)            -
     Loans receivable                                  (11,000)            -
     Accounts payable                                  361,170           64,725
     Note payable                                      (13,950)           7,500
     Advances payable                                  613,243             -
                                                  ------------     ------------
                                                      (139,598)          (1,630)

Cash Flows used in Investing Activity
   Acquisition of capital assets                       (25,548)            -
                                                  ------------     ------------

Cash Flows used in Financing Activities
   Increase in capital stock                                33             -
   Increase in additional paid-in capital               99,967             -
                                                  ------------     ------------

                                                       100,000             -
                                                  ------------     ------------

Net decrease in cash during the period                 (65,146)          (1,630)

Cash, beginning of the period                           81,780            4,409
                                                  ------------     ------------

Cash, end of the period                           $     16,634     $      2,779
                                                  ============     ============

Non-cash Transaction - Note 7

                          SEE ACCOMPANYING NOTES

<PAGE>

                             PC-EPHONE, INC.
                    (formerly Newlands Oil & Gas Inc.)
          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
       for the six and three month periods ended June 30, 2001 and 2000
                          (Stated in US Dollars)
                               (Unaudited)
                                ---------

<TABLE>
<CAPTION>
                                                                                           Additional
                                                                   Common Shares              Paid-in
                                                                   -------------
                                                                  #        Par Value          Capital        Deficit        Total
                                                                ------     ---------          -------        -------        -----
<S>                                                         <C>           <C>            <C>            <C>            <C>
Balance, December 31, 1999                                  10,047,167    $    10,047    $   140,661    $  (268,496)   $  (117,788)
Issued pursuant to debt settlement agreements - $0.10        2,500,000          2,500        247,500           -           250,000
Issued pursuant to acquisition of distribution rights -
   $2.70                                                     3,500,000          3,500      9,446,500           -         9,450,000
Issued for cash pursuant to subscription agreements - $3.00     75,000             75        224,925           -           225,000
- commission                                                      -              -            (5,250)          -            (5,250)
Net loss for the year                                             -              -              -          (688,640)      (688,640)
                                                            ----------    -----------    -----------    -----------    -----------
Balance, December 31, 2000                                  16,122,167         16,122     10,054,336       (957,136)     9,113,322
Non-cash compensation charge                                      -              -           128,842           -           128,842
Net loss for the period                                           -              -              -          (897,540)      (897,540)
                                                            ----------    -----------    -----------    -----------    -----------
Balance, March 31, 2001                                     16,122,167         16,122     10,183,178     (1,854,676)     8,344,624
Issued for cash pursuant to subscription agreements - $3.00     63,333             63        189,937           -           190,000
Non-cash compensation charge                                      -              -            73,050           -            73,050
Net loss for the period                                           -              -              -          (763,363)      (763,363)
                                                            ----------    -----------    -----------    -----------    -----------
Balance, June 30, 2001                                      16,185,500    $    16,185    $10,446,165    $(2,618,039)   $ 7,844,311
                                                            ==========    ===========    ===========    ===========    ===========
</TABLE>

                          SEE ACCOMPANYING NOTES


<PAGE>

                             PC-EPHONE, INC.
                    (formerly Newlands Oil & Gas Inc.)
             NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                              June 30, 2001
                          (Stated in US Dollars)
                               (Unaudited)
                                ---------

Note 1   General
         -------

         (a)   Continuance of Operations

               These consolidated financial statements have been prepared on a
               going concern basis. The company has a working capital deficiency
               of $803,210 as at June 30, 2001 and has an accumulated deficit of
               $2,618,039 since incorporation. Its ability to continue as a
               going concern is dependent upon its ability to generate
               profitable operations in the future and/or to obtain the
               necessary financing to meet its obligations and repay its
               liabilities arising from normal business operations when they
               come due. The outcome of these matters cannot be predicted with
               any certainty at this time. The company has historically
               satisfied its capital needs primarily by issuing equity
               securities and arranging loans. Management plans to continue to
               provide for its capital needs during the year ending December 31,
               2001 by the issuance of equity securities, the arranging of loans
               and the continued development of sales of the PC-EPhone. These
               consolidated financial statements do not include any adjustments
               to the amounts and classifications of assets and liabilities that
               may be necessary should the company be unable to continue as a
               going concern.

         (b)   Interim Statements

               While the information presented in the accompanying interim six
               months consolidated financial statements is unaudited, it
               includes all adjustments which are, in the opinion of management,
               necessary to present fairly the financial position, results of
               operations and cash flows for the interim period presented. All
               adjustments are of a normal recurring nature. It is suggested
               that these interim financial statements be read in conjunction
               with the company's December 31, 2000 annual audited consolidated
               financial statements.

Note 2   Summary of Significant Accounting Policies
         ------------------------------------------

         These consolidated financial statements have been prepared in
         accordance with accounting principles generally accepted in the United
         States of America. Because a precise determination of many assets and
         liabilities is dependent upon future events, the preparation of
         financial statements for a period necessarily involves the use of
         estimates which have been made using careful judgement. Actual results
         may differ from these estimates.

         The consolidated financial statements have, in management's opinion,
         been properly prepared within reasonable limits of materiality and
         within the framework of the significant accounting policies summarized
         below:

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 2   Summary of Significant Accounting Policies - (cont'd)
         ------------------------------------------

         (a)   Principles of Consolidation

               These consolidated financial statements include the accounts of
               the company and its wholly owned subsidiaries, PC-EPhone Ltd. and
               PC-EPhone Canada Enterprises Inc. The company accounts for its
               acquisitions by the purchase method. All intercompany
               transactions and balances have been eliminated on consolidation.

         (b)   Capital Assets and Amortization
               -------------------------------

               Capital assets are recorded at cost. The company provides for
               amortization using the straight- line method at the following
               annual rates:

                     Office furniture and equipment   5 years
                     Computer equipment               4 years

               Website development costs are expensed as incurred.

         (c)   Inventory
               ---------

               Inventory is valued at the lower of cost and net realizable
               value.

         (d)   Distribution Rights and Amortization
               ------------------------------------

               Distribution rights are recorded at the fair value of the non-
               cash consideration paid for these rights (Note 3). The company
               provides for amortization on a straight-line basis over the term
               of the distribution agreement (86 months). In accordance with
               Statement of Financial Accounting Standards No. 121, "Accounting
               for the Impairment of Long-lived Assets and for Long-lived Assets
               to be Disposed Of", the distribution rights will be reviewed for
               impairment on a continuous basis throughout the term of the
               distribution agreement whenever changes in circumstances indicate
               the carrying value of the asset may not be recoverable. An
               impairment loss would be recognized in the period it is
               determined.

         (e)   Foreign Currency Translation
               ----------------------------

               Foreign currency transactions are translated into U.S. dollars,
               the functional and reporting currency, by the use of the exchange
               rate in effect at the date of the transaction, in accordance with
               Statement of Financial Accounting Standards No. 52, "Foreign
               Currency Translation". At each balance sheet date, recorded
               balances that are denominated in a currency other than US dollars
               are adjusted to reflect the current exchange rate.

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 2   Summary of Significant Accounting Policies - (cont'd)
         ----------------------------------------------

         (f)   Basic Loss per Share
               --------------------

               The company reports basic loss per share in accordance with
               Statement of Financial Accounting Standards No. 128, "Earnings
               Per Share". Basic loss per share is computed using the weighted
               average number of shares outstanding during the periods. Diluted
               loss per share has not been provided as it would be antidilutive.

         (g)   Impairment of Long-lived Assets
               -------------------------------

               The company reports the impairment of long-lived assets and
               certain identifiable intangibles in accordance with Statement of
               Financial Accounting Standards No. 121, "Accounting for the
               Impairment of Long-lived Assets and for Long-lived Assets to be
               Disposed Of". Certain long-lived assets and identifiable
               intangibles held by the company are reviewed for impairment
               whenever assets or changes in circumstances indicate the carrying
               amount of an asset may not be recoverable. Accordingly, an
               impairment loss is recognized in the period it is determined.

         (h)   Income Taxes
               ------------

               The company uses the liability method of accounting for income
               taxes pursuant to Statement of Financial Accounting Standards,
               No. 109 "Accounting for Income Taxes".

         (i)   Fair Value of Financial Instruments
               -----------------------------------

               The carrying values of cash, accounts receivable, loan
               receivable, accounts payable, note payable, and advances payable
               approximate fair value because of the short maturity of those
               instruments.

         (j)   Revenue Recognition
               -------------------

               Revenue from product sales is recognized when it is earned, the
               product has been shipped and collection is reasonably assured.

         (k)   Stock-based Compensation
               ------------------------

               The company has accounted for stock-based compensation for non-
               employees and has provided the disclosures required under SFAS
               No. 123, "Accounting for Stock-based Compensation".

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 3   Distribution Rights - Note 2 (d)
         -------------------

                                                            Net Carrying Amount
                                            Accumulated    Jun. 30,     Dec. 31,
                                     Cost   Amortization     2001        2000
                                     ----   ------------     ----        ----
         Distribution rights   $9,450,000   $  879,069   $8,570,931   $9,230,233
                               ==========   ==========   ==========   ==========

         (a)(i)   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, within the United States and
                  Canada, a wireless handheld device which performs internet,
                  personal computer, cellular phone and organizer functions (the
                  "PC-EPhone").

                  In consideration for these rights, the company, on behalf of
                  PC-EPhone Ltd., issued 3,500,000 common shares to Cyberbank,
                  valued at $2.70 per share for total non-cash consideration of
                  $9,450,000 (Note 2 (d)). As a condition of maintaining the
                  rights, PC-EPhone Ltd. must purchase from Cyberbank a minimum
                  of 500,000 units annually upon Cyberbank receiving written
                  approval for the PC-Ephone by the US Federal Communications
                  Commission, which occurred on April 27, 2001.

                  The company granted Cyberbank share purchase warrants
                  entitling Cyberbank the right to acquire 2,500,000 common
                  shares at $3.20 per share. These warrants are exercisable
                  during the period November 1, 2001 to December 31, 2001.
                  PC-EPhone Ltd. has 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 totalling $23,300,000. As
                  at June 30, 2001, this agreement is in default as the company
                  has not paid the $2,000,000 cash obligation that was due on
                  May 21, 2001.

                  The term of this distribution agreement ends December 31, 2007
                  and will automatically renew from year to year thereafter.

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 3   Distribution Rights - Note 2 (d) - (cont'd)
         -------------------

             (ii) By a warrant agreement dated November 6, 2000, Cyberbank
                  granted the company warrants to purchase the number of common
                  shares as determined below at $223.54 per share. The warrants
                  are exercisable during the period from November 1, 2001 to
                  December 31, 2001.

                  The ultimate number of Cyberbank warrants to be issued to the
                  company is to be determined based on the following:
                     If the Average Trading Price of the company's common shares
                     is greater than or equal to $6.00 per share, 35,789
                     Cyberbank warrants will be issued;

                     If the Average Trading Price of the company's common shares
                     is less than $6.00 per share, then the number of Cyberbank
                     warrants shall be determined as follows:

                     Number of Warrants = 35,789 Warrants X (Average Trading
                     Price/$6.00)

                  The "Average Trading Price" of the company's common shares
                  means the average trading price of the common stock of the
                  company for the twenty trading days prior to November 1, 2001
                  determined based on the closing price on each trading day.

         (b)   By a subdistributor agreement dated November 15, 2000 with
               FutureCom Global, Inc. ("FutureCom"), PC-EPhone Ltd. granted
               FutureCom the exclusive right to market, distribute and sell,
               within the United States and Canada, the PC-Ephone. As a
               condition of maintaining these rights, FutureCom was required
               to purchase from PC-EPhone Ltd. a minimum of 250,000 units
               quarterly, once Cyberbank had received written approval for the
               PC-EPhone by the US Federal Communications Commission. On July 5,
               2001, the company terminated its agreement with FutureCom.

         (c)   On February 9, 2001 the company, Cyberbank and FutureCom entered
               into a tri-party agreement (the "Tri-Party Agreement") that
               clarified some of the terms of the contractual relationships
               among the three companies. On July 5, 2001, FutureCom, rights
               and obligations were terminated.

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 4   Capital Stock
         --------------

         (a)   Authorized:

               50,000,000 common shares , $0.001 par value
               1,000,000 preferred shares, $0.01 par value

         (b)   Warrants:

               At June 30, 2001, there were share purchase warrants outstanding
               entitling the holder thereof the right to purchase 2,500,000
               common shares of the company at $3.20 per share. These warrants
               are exercisable during the period November 1, 2001 to December
               31, 2001.

         (c)   Stock-based Compensation:

               At June 30, 2001, 62,500 stock options are outstanding to
               consultants of the company. Each option entitles the holder
               thereof the right to acquire one common share of the company at
               $3.00 per share. The options granted have terms ranging from 6 to
               20 months.

               Presented below is a summary of the stock option activity during
               the period:

                                                                        Weighted
                                                     Number of          Average
                                                   Stock Options         Price
                                                   --------------        -----
               Balance, December 31, 2000                   -              -
               Granted                                   225,000          $3.00
               Exercised                                    -              -
               Cancelled                                (162,500)        ($3.00)
                                                       ---------         ------
               Balance, June 30, 2001                     62,500          $3.00
                                                       =========         ======

               The number of stock options vested at June 30, 2001 is 62,500.

               Pursuant to APBO No. 25, a non-cash compensation charge
               associated with consultants' options has been recorded in the
               consolidated financial statements. The total compensation charge
               determined based on the number of stock options originally
               expected to vest (75,000 stock options) is $257,684. As 62,500
               stock options have actually vested at June 30, 2001, the company
               has expensed $201,892 as a non-cash compensation charge. The
               remaining balance of the total compensation charge will not be
               charged as these stock options were cancelled during the period.

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 4   Capital Stock - (cont'd)
         -------------

         (c)   Stock-based Compensation: - (cont'd)

               The fair value of the options granted was estimated on the date
               of the grant using the Black-Scholes option-pricing model with
               the following assumptions:

               Expected dividend yield                             0.0%
               Expected volatility                                49.0%
               Risk-free interest rate                             4.8%
               Expected term in years                               1-2

               The stock options outstanding at June 30, 2001 expire as follows:

                                   Number                  Expiry
                                 Of Options                 Date
                                -----------                 ----
                                     12,500          November 30, 2001
                                     50,000          February 1, 2003
                                -----------
                                     62,500
                                ===========

Note 5   Subsequent Event- Note 6
         -----------------

         Subsequent to June 30, 2001, the company closed a subordinated
         convertible debenture (the "Debenture") offering for a total aggregate
         amount of $550,000. The Debenture bears interest at 6% per annum
         payable on a quarterly basis until conversion or at maturity, which is
         one year from the date of issuance. The holder of the Debenture may
         convert at $1.25 per share during the first six months after closing or
         during the subsequent six months at $0.50 per share. The company may
         also demand conversion of the Debenture at one-half of the conversion
         price if the company's common shares close at a price greater than
         $3.75 per share for ten consecutive trading days, and the company may
         demand conversion at the conversion price if the company's common
         shares close at a price greater than $5.75 per share for ten
         consecutive trading days. Included in the total aggregate amount of the
         offering of $550,000 was $132,500 which was received prior to June 30,
         2001 and was recorded as advances payable at June 30, 2001.

<PAGE>

PC-EPhone, Inc.
(formerly Newlands Oil & Gas Inc.)
Notes to the Consolidated Financial Statements
June 30, 2001
(Stated in US Dollars)
(Unaudited)
 ---------

Note 6   Contingent Liability
         --------------------

         A statement of claim has been filed against the company's subsidiary,
         PC-EPhone Canada Enterprises Inc. claiming breach of contract.
         Management of the company is of the opinion that the claim is without
         foundation or merit and that the company's subsidiary will likely be
         successful in its defence of the claim. The amount claimed is $39,910.
         Any settlement resulting from the resolution of this contingency will
         be accounted for in the period of settlement. Subsequent to June 30,
         2001, $16,328 was garnished from the company's bank account.

Note 7   Non-Cash Transaction
         --------------------

         Investing and financing activities that do not have a direct impact on
         current cash flows are excluded from the statements of cash flows.
         During the period ended June 30, 2001, the company issued 30,000 common
         shares at $3.00 per share pursuant to a subscription agreement, paid
         for by the settlement of a portion ($90,000) of the note payable
         outstanding. This transaction has been excluded from the statements of
         cash flows.


<PAGE>




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

Results of Operation

During the six months ended June 30, 2001, the Company did not generate any
sales revenue because the PC-EPhone product was progressing through approval
processes with the United States Federal Communications Commission (the "FCC"),
Industry Canada and wireless network carriers.  Both the FCC and Industry Canada
approvals were granted in the second quarter.  However, no wireless network
carrier has granted approval yet.  After the second quarter, on July 31, 2001,
the Company began taking orders of the PC-EPhone for wireless data capabilities
only.

General and administrative expenses increased by $1,510,314 in the six months
ending June 30, 2001 compared to the same period in 2000, which primarily
reflects an increase in:  (a) marketing and promotion expenses; (b) consulting
and management fees expenses; (c) amortization expense associated with the
distribution rights obtained from Cyberbank; (d) non-cash expenses associated
with the granting of options (at fair value) to consultants; (e) legal fees
associated with an increase in securities filings and corporate activities; and
(f) general office expenses.  Since the Company did not initiate its new
business until the latter part of year 2000, the Company expected general and
administrative expenses to increase in 2001 compared to year 2000 to reflect an
increase in active operations.

In the six months ended June 30, 2001, the Company attended the Consumer
Electronics Show in Las Vegas, the CTIA show in Las Vegas, the CEBIT trade show
in Germany, as well as the PC Expo trade show in New York, all of which were the
primary causes of the increase in marketing and promotion expenses as well as
the increase in travel expenses.  Consulting and management fees expenses
increased due to the additional efforts associated with attempts to raise
financing and efforts to develop the distribution network for the PC-EPhone.
The amortization of the distribution rights is on a straight-line basis over the
term of the agreement. In the six months ended June 30, 2001, six of 86 months
were amortized.  Expenses are expected to increase for the remainder of the year
due to increased advertising, increased attendance by the Company at trade shows
and events, additional management fees and salaries, as well as an increase in
corporate filings and legal fees.  During the quarter, a total of 162,500
options of 225,000 outstanding options were cancelled.  The Company reported an
expense of $201,892, based on the fair value of 62,500 vested options.

The Company realized a net loss in the six months ended June 30, 2001 of
$1,660,903 or $0.103 per share, or a net loss of $763,363 or $0.047 per share in
the three months ended June 30, 2001, compared to a net loss of $150,589, or
$0.015 per share, and $124,378 or $ 0.12 per share in the respective periods in
2000.

<PAGE>

Liquidity and Capital Resources

As of June 30, 2001, the Company had a working capital deficit of $803,210
compared to a deficit of $160,795 at December 31, 2000.  The Company has been
unable to secure any short-term bank financing to address the working capital
deficiency and does not expect to be able to secure such bank financing unless
operations increase.  The Company has been financing its operations primarily
from related-party loans. Significant additional financing is required before
the end of 2001 in order to meet the Company's cash needs.

The Company, through PC-EPhone, Ltd., is obligated by the Distribution Agreement
to sell a minimum of 500,000 PC-EPhones during each 12-month period beginning
from April 30, 2001.  In addition, PC-EPhone Ltd., has 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 totalling $23,300,000.  The first
purchase order was completed in fiscal 2000.  On February 8, 2001 the Company
executed a letter agreement with Cyberbank, whereby Cyberbank deferred the
second purchase until fifteen (15) business days after Cyberbank forwards final,
written confirmation of FCC approval to the Company, which occurred on April 30,
2001.  The Company's obligation to pay the $2,000,000 was due on May 21, 2001,
however the obligation has not yet been met.

The Company will need to increase its liquidity and capital resources to
purchase bulk inventory to fulfill large orders and, therefore, will need to
obtain additional financing for that purpose.  If the Company is able in the
future to demonstrate its creditworthiness, it is anticipated that some
financing of inventory purchases will occur through the use of letters of
credit, but there is no guarantee that such financing can be obtained.

In the second quarter of 2001, Cyberbank Corp. was granted FCC approval and
Industry Canada approval of the PC-EPhone, which enables PC-EPhone units to be
sold in the United States and Canada.  The Company did commence initial sales
subsequent to the end of the second quarter.  However, the PC-EPhones must also
obtain carrier approval in order for all of the features of the product to be
completely available.   If carrier approvals are not granted, the Company will
not be able to effectively generate significant sales of the PC-EPhone, thus
precluding development of substantial revenues.  The Company's ability to
continue as a going concern is dependent on its ability to raise capital,
arrange loans or continue development of sales of the PC-EPhone to sustain
operations.  These factors, particularly with respect to the Company's lack of
established source of revenue, raise substantial doubt that the Company will be
able to continue as a going concern.  The Company expects carrier approvals to
be forthcoming, however there can be no assurance in this regard.

Other

Effective February 27, 2001, the Company executed an option agreement with
Euromerica Capital Group Inc. ("Euromerica").  In consideration for Euromerica
providing consulting services to the Company, Euromerica was granted an option
to purchase a total of 25,000 shares of Common Shares of the Company at $3.00
per share on or before November 30, 2001.  As of May 30, 2001, the Company
terminated the option agreement along with the 12,500 unvested options, leaving
a balance of 12,500 options vested and exercisable.

<PAGE>

Subsequent to the second quarter, on July 5, 2001, the Company, through its
wholly owned subsidiary, PC-EPhone Ltd., terminated the Subdistribution
Agreement between PC-EPhone Ltd. and FutureCom Global, Inc. ("FutureCom") dated
November 15, 2000, along with the amendments in the Tri-Party Agreement dated
February 9, 2001.

Pursuant to section 7 of the Tri-Party Agreement (among PC-EPhone Ltd.,
Cyberbank, and FutureCom), FutureCom was obligated to issue a purchase order and
a $50 million Standby Letter of Credit or Standby Letters of Credit on or before
February 28, 2001.  As of July 5, 2001, no such letter(s) of credit had been
issued to Cyberbank Corp. or to PC-EPhone Ltd.  Therefore, PC-EPhone Ltd.
terminated the Subdistribution Agreement and the Tri-Party Agreement.

Subsequent to the second quarter, the Company closed a subordinated convertible
debenture (the "Debenture") offering for a total aggregate amount of $550,000.
The Debentures bear interest at rate of 6% per annum payable on a quarterly
basis until conversion or maturity which is one year from the date of issuance.
The holder of the Debentures may voluntarily convert at $1.25 per share during
the first six months after closing, and during the subsequent six months, they
may voluntarily convert at $0.50 per share.  The Company may also demand
conversion of the Debentures at one-half of the conversion price if the
Company's common shares close at above $3.75 per share for ten consecutive
trading days, and the Company may demand conversion at the conversion price if
the Company's common shares close at above $5.75 per share for ten consecutive
trading days.

Item 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is not materially exposed to foreign currency and interest rate
changes as it deals primarily in U.S. dollars and has very few loans
outstanding.  However, Cyberbank may be subject to foreign currency risks and
interest rate changes in connection with its dealings with its suppliers who may
be based in foreign countries.

The Company does not currently hedge the foreign currency exposure that results
from the translation of foreign subsidiary financial statements into U.S.
dollars in consolidation. The Company intends to assess the need to utilize
financial instruments to hedge foreign currency exposures on an ongoing basis.

<PAGE>


                           PART II - OTHER INFORMATION

Item 1     LEGAL PROCEEDINGS.

No material legal proceedings.


Item 2     CHANGES IN SECURITIES AND USE OF PROCEEDS.

On April 30, 2001, the Company sold 30,000 restricted common shares to an
accredited investor, at a price of $3.00 per share, for an aggregate purchase
price of $90,000.  The Company relied upon the exemption from registration
provided under Regulation S promulgated under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the issuance of the foregoing
securities.

On June 1, 2001, the Company sold 33,333 restricted common shares to an
accredited investor, at a price of $3.00 per share, for an aggregate purchase
price of $100,000.  The Company relied upon the exemption from registration
provided under Section 4(2) of the Securities Act with respect to the issuance
of the foregoing securities.

Subsequent to the second quarter, the Company closed a subordinated convertible
debenture (the "Debenture") offering for a total aggregate amount of $550,000.
The Debentures bear interest at rate of 6% per annum payable on a quarterly
basis until conversion or maturity which is one year from the date of issuance.
The holder of the Debentures may voluntarily convert at $1.25 per share during
the first six months after closing, and during the subsequent six months, they
may voluntarily convert at $0.50 per share.  The Company may also demand
conversion of the Debentures at one-half of the conversion price if the
Company's common shares close at above $3.75 per share for ten consecutive
trading days, and the Company may demand conversion at the conversion price if
the Company's common shares close at above $5.75 per share for ten consecutive
trading days.  With respect to such issuances, the Company relies upon the
exemption from registration provided by Rule 506 under Regulation D promulgated
under the Act.


Item 3     DEFAULTS UPON SENIOR SECURITIES.

None.

Item 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

<PAGE>

Item 5     OTHER INFORMATION.

On June 18, 2001, Douglas Yee resigned as President of the Company, but was
appointed Chief Financial Officer by the Board of Directors and continues to
serve as a Director.  On the same day, David C. Meltzer was appointed as Chief
Executive Officer and President of the Company.  Mr. Meltzer has over 10 years
of experience in the area of management, sales and marketing.  He has worked at
Everypath, Inc., one of Silicon Valley's leading wireless solution platform
company, and served as CEO of Global Web Video, based in San Diego, California,
as well as having worked with Westlaw (a Thompson Corporation), a leading
provider of legal research and business information online.   Mr. Meltzer has
spent the past 8 years in the area of enterprise solutions with a particular
emphasis on wireless products and the Internet.

On July 5, 2001, Negar Towfigh resigned as a Director of the Company, but
remains on as Corporate Secretary.  On the same day the Board of Directors
appointed Mr. Meltzer as a Director of the Company.

Also on July 5, 2001, the Company, through its wholly owned subsidiary,
PC-EPhone Ltd., terminated the Subdistribution Agreement between PC-EPhone Ltd.
and FutureCom dated November 15, 2000, along with the amendments in the
Tri-Party Agreement dated February 9, 2001.

Pursuant to section 7 of the Tri-Party Agreement (among PC-EPhone Ltd.,
Cyberbank, and FutureCom), FutureCom was obligated to issue a purchase order and
a $50 million Standby Letter of Credit or Standby Letters of Credit on or before
February 28, 2001.  As of July 5, 2001, no such letter(s) of credit had been
issued to Cyberbank Corp. or to PC-EPhone Ltd.  Therefore, PC-EPhone Ltd.
terminated the Subdistribution Agreement and the Tri-Party Agreement.

On July 31, 2001, the Company began taking orders in the United States and
Canada for the PC-EPhone.  Initially, the PC-EPhone will be sold for wireless
data only.  Its built-in standard Compact Flash (CF) slot provides immediate
access to major wireless networks via carrier-accepted CF cards from third-party
vendors.  The data capabilities are expected to be accessible via Enfora's
PocketSpider which is certified on all the major CDPD networks, as well as via
Socket's CDMA CF card which is certified on all major CDMA networks.

Item 6     EXHIBITS AND REPORTS ON FORM 8-K

11.2     A report on Form 8K was filed with the Securities & Exchange Commission
         on May 18, 2001.  This report announced the resignation of Douglas Yee
         as President, his appointment as Chief Financial Officer and the
         appointment of David Meltzer as Chief Executive Officer and President.

11.3     A report on Form 8K was filed with the Securities & Exchange Commission
         on July 19, 2001.  This report described the termination of the
         Subdistribution Agreement between the Company and FutureCom, along with
         the termination of the amendments in the Tri-Party Agreement.  Also
         disclosed was the resignation of Negar Towfigh as a Director of the
         Company and the appointment of David Meltzer as a Director.

<PAGE>

                                   SIGNATURES

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:  August 14, 2001

PC-EPHONE, INC.



By:  /s/ Douglas Yee

Douglas Yee
Chief Financial Officer & Director



<PAGE>