<PAGE>
                    SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                             FORM 10-QSB

(Mark One)

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

    For the quarterly period ended May 31, 2002


[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange Act
    For the transition period from ____________ to ____________.


Commission file number  0 - 14188

       		   Surge Components, Inc.
_____________________________________________________________________________
  (Exact name of small business issuer as specified in its charter)

           New York		  			11-2602030
______________________________________  ____________________________________
(State or other jurisdiction of				(I.R.S. Employer
incorporation or organization)		        	Identification No.)

                 95 Jefryn Boulevard, Deer Park, NY 11729
_____________________________________________________________________________
                (Address of principal executive offices)

                             (631) 595-1818
_____________________________________________________________________________
              (Issuer's telephone number, including area code)

_____________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)

     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

          APPLICABLE ONLY TO ISSUERS  INVOLVED IN BANKRUPTCY
            PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes [X] No [ ]

                 APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:  As of  July 10, 2002:
8,752,926 shares of common stock, par value $.001 per share.

     Transitional Small Business Disclosure Format (check one):

Yes [ ] No[X]

<PAGE>

<TABLE>               SURGE COMPONENTS, INC. AND SUBSIDIARIES

<CAPTION>                     Index to Form 10-QSB

                       for the Period Ended  May 31, 2002


<S>                                                                <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

Consolidated Balance Sheets		                             3 - 4

Consolidated Statements of Operations and Comprehensive Loss	     5

Consolidated Statements of Cash Flows		                     6

Notes to Consolidated Financial Statements		             7 - 9

Item 2.  Management's Discussion and Analysis or Plan of Operation. 10- 16


PART II.  OTHER INFORMATION

	Item 1. Legal Proceedings.								   17

Item 6.  Exhibits and Reports on Form 8-K.	                    17


Signatures		                                            17
</TABLE>



                                         2
<PAGE>
                                 PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

<TABLE>               SURGE COMPONENTS, INC. AND SUBSIDIARIES

<CAPTION>                   CONSOLIDATED BALANCE SHEETS



	                                        May 31, 	November 30,
	                                         2002	            2001
                                                 ----               ----
<S>                                           <C>               <C>
ASSETS


Current assets:
Cash and equivalents	                      $1,533,969	$1,030,181
Marketable securities - available for sale	 269,197	 1,176,534
Accounts receivable (net of allowance for
  doubtful accounts of $40,335)                1,304,073	 1,610,032
Due under repurchase agreement	                 470,963	 1,054,602
Inventory, net		                       2,108,917	 2,311,412
Prepaid expenses and income taxes	         206,817	   142,454
                                              ----------        ----------

Total current assets	                       5,893,936	 7,325,215

Fixed assets - net of accumulated depreciation
of $643,300 and $475,706	               1,326,449	 1,478,886

Other assets			                   3,300	     7,985
                                              ----------        ----------

		Total assets		      $7,223,685	$8,812,086
                                              ==========        ==========
</TABLE>

See accompanying notes to consolidated financial statements.

                                     3
<PAGE>

<TABLE>            SURGE COMPONENTS, INC. AND SUBSIDIARIES

<CAPTION>                  CONSOLIDATED BALANCE SHEETS


	                                                    May 31, 	November 30,
	                                                     2002	   2001
                                                             ----          ----
<S>                                                      <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable	                                 $  2,078,576	$  2,315,760
   Accrued expenses and taxes	                              939,648	   1,113,479
                                                         ------------   ------------

      Total current liabilities                             3,018,224	   3,429,239

Deferred rent			                               39,056	      28,910
                                                         ------------   ------------

      Total liabilities	                                    3,057,280	   3,458,149
                                                         ------------   ------------

Commitments and contingencies

Shareholders' equity
   Preferred stock - $.001 par value stock,
      1,000,000 shares authorized: Series A - 260,000
      shares authorized, none outstanding. Series B -
      200,000 shares authorized, none outstanding,
      non-voting, convertible, redeemable. Series C -
      100,000 shares authorized, 42,700 and 62,000
      shares issued and outstanding, redeemable,
      convertible, liquidation preference of $5 per share	  43	         62
   Common stock - $.001 par value stock,
      25,000,000 shares authorized, 8,752,926 and
      9,022,448 shares issued and outstanding 	               8,753	      9,023
   Additional paid-in capital	                          23,001,620	 23,080,835
   Stock subscription receivable	                      (6,300)	     (9,200)
   Accumulated other comprehensive loss-
      unrealized loss on marketable securities-
      available for sale	                             (12,630)	    (61,912)
   Accumulated deficit	                                 (18,825,081)	(17,664,871)
                                                        ------------   ------------

      Total shareholders' equity	                   4,166,405	  5,353,937

      Total liabilities and shareholders' equity        $  7,223,685   $  8,812,086
                                                        ============   ============
</TABLE>
See accompanying notes to consolidated financial statements.

                                          4

<PAGE>

<TABLE>                 SURGE COMPONENTS, INC. AND SUBSIDIARIES

<CAPTION>        CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

			                              Six Months Ended	            Three Months Ended
				                          May 31,			May 31,
			                           2 0 0 2	    2 0 0 1	   2 0 0 2	  2 0 0 1
                                                   -------          -------        -------        -------
<S>                                             <C>              <C>             <C>           <C>
Net sales	                                $ 5,362,399	 $ 9,954,039	 $2,568,322    $ 3,384,372

Cost of goods sold	                          3,881,906	   7,417,494	  1,870,050	 2,411,722
                                                -----------      -----------    -----------   ------------

Gross profit	                                  1,480,493	   2,536,545	    698,272	   972,650
                                                -----------      -----------    -----------   ------------

Operating expenses:
  General and administrative expenses	          1,823,505	   3,645,158	    985,151	 1,683,136
  Selling and shipping expenses                     484,305	     690,396	    250,146	   312,605
  Financial consulting fees	                    268,850	   2,170,838        193,850	 1,042,002
  Provision for bad debts	                         --	     172,922	         --	    43,685
  Loss on investment in MailEncrypt	                 --	     607,188	         --	   607,188
  Recovery on Global settlement                          --	     (46,000)            --	   (46,000)
                                                 ----------	 -----------    -----------   ------------

    Total operating expenses	                  2,576,660	   7,240,502	  1,429,147      3,642,616
                                                 ----------      -----------    -----------   ------------

Loss from operations	                          (1,096,167)	  (4,703,957)	   (730,875)    (2,669,966)
                                                 -----------     -----------    -----------   ------------

Other income (expense):
  Other income	                                          --	   1,000,000	         --	 1,000,000
  Investment income	                              35,376	     160,596	     20,947	    90,344
  Interest expense	                              (9,601)       (114,409)	     (5,466)	   (23,820)
  Loss on sale of marketable securities	             (81,282)	     (39,852)       (72,975)	    (3,824)
                                                 -----------    ------------    -----------   ------------

    Total other income (expense)                     (55,507)	   1,006,335	    (57,494)     1,602,700
                                                 -----------    ------------    -----------   ------------

Loss before income taxes	                  (1,151,674)	  (3,697,622)	   (788,369)	(1,607,266)

Income taxes	                                       8,536	      15,700	      3,493	    12,791
                                                ------------    ------------    -----------   ------------

Net loss		                          (1,160,210)	  (3,713,322)	   (791,862)	(1,620,057)
Dividends on preferred stock	                      15,500	          --	         --	        --
                                                ------------    ------------    -----------   ------------

Net loss available to common shareholders       $ (1,175,710)	$ (3,713,322)	$  (791,862)  $ (1,620,057)
                                                ============    ============    ===========   ============

Other comprehensive loss:
  Net loss	                                  (1,160,210)	  (3,713,322)	   (791,862)	(1,620,057)
  Unrealized holding (loss) gain on
    securities arising during the period             (49,282)	       5,122	    (34,374)	      2,227
  Reclassification adjustment - loss on
    sale of securities	                              81,282	      39,852	     72,975	      3,824
                                                ------------    ------------    -----------   -------------

      Total comprehensive loss  	        $ (1,143,710)   $ (3,668,348)	$  (753,261)  $  (1,614,006)
                                                ============    ============    ===========   =============

Weighted average shares outstanding
  Basic		                                   8,946,189	   6,699,668	  8,871,588	  6,753,798
  Diluted	                                   8,946,189	   6,699,668	  8,871,588	  6,753,798
Loss available to common shareholders, per share
  Basic		                                 $      (.13)	$       (.55)	$      (.09)	$      (.24)
  Diluted	                                 $      (.13)	$       (.55)	$      (.09)	$      (.24)

</TABLE>
See accompanying notes to consolidated financial statements.

                                            5

<PAGE>

<TABLE>                        SURGE COMPONENTS, INC. AND SUBSIDIARIES

<CAPTION>                     CONSOLIDATED STATEMENTS OF CASH FLOWS

	                                                       Six Months Ended
		                                                    May 31,
	                                                     2 0 0 2	  2 0 0 1
                                                             -------      -------
<S>                                                       <C>           <C>
OPERATING ACTIVITIES:
  Net loss 	                                          $(1,160,210)	$(3,713,322)
  Adjustments to reconcile net loss to net cash provided
  by operating activities:
     Depreciation and amortization	                      167,594	     94,960
     Provision for bad debts	                                   --	     10,000
     Loss on sale of marketable securities	               81,282	     39,852
     Amortization of financial consulting fees	                   --	  2,170,838
     Loss on investment in MailEncrypt	                           --	    607,188
     Issuance of stock for services	                           --	     28,125
     Deferred rent	                                       10,146	         --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
  Accounts receivable	                                      305,959	  1,091,782
  Inventory	                                              202,495	     86,090
  Prepaid expense and other assets	                      (59,678)	    397,764
  Accounts payable	                                     (237,184)	     272,035
  Accrued expenses and taxes	                             (222,185)	   (364,664)
                                                           ----------    ----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	     (911,781)	    720,648
                                                           ----------    ----------

INVESTING ACTIVITIES
  Collections of amounts due under the repurchase agreement   583,639	         --
  Purchase of marketable securities	                      (25,233)	    (66,645)
  Acquisition of fixed assets	                              (15,157)	 (1,063,859)
  Proceeds from sale of marketable securities	              900,590	    850,000
                                                           ----------   -----------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	    1,443,839	   (280,504)
                                                           ----------   -----------

FINANCING ACTIVITIES
  Collections from stock subscription receivable	        2,900	         --
  Repurchase of shares	                                      (31,170)	         --
  Proceeds from exercise of stock options	                   --	     36,238
  Purchase of treasury stock	                                   --	   (650,000)
                                                           ----------   -----------

NET CASH USED IN FINANCING ACTIVITIES	                      (28,270)	   (613,762)
                                                           ----------   -----------

NET CHANGE IN CASH 	                                      503,788	   (173,618)

CASH AT BEGINNING OF PERIOD	                            1,030,181	  2,561,842
                                                           ----------   -----------

CASH AT END OF PERIOD	                                   $1,533,969	$ 2,388,224
                                                           ==========   ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Income taxes paid	                                   $    8,371	$     2,735
                                                           ==========   ===========


  Interest paid                                     	   $    9,601	$    18,961
                                                           ==========   ===========

  Conversion of convertible debt into common stock	   $      --	$ 2,478,655
                                                           ==========   ===========

  Issuance of stock for services	                   $      --	$    28,125
                                                           ==========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                    6

<PAGE>
                    SURGE COMPONENTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               MAY 31, 2002

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

In the opinion of management, the accompanying consolidated
financial statements of Surge Components, Inc.("Surge"), Challenge/Surge, Inc.
("Challenge"), Superus Holdings, Inc. ("Superus"), Mail Acquisition Corp.
("Mail") and SolaWorks, Inc. (collectively the "Company") contain all
adjustments necessary to present fairly the Company's financial position
as of May 31, 2002 and the related statements of operations and comprehensive
loss for the six and three months ended May 31, 2002 and cash flows for the
six months ended May 31, 2002 and 2001.

The consolidated results of operations for the six and three months ended
May 31, 2002 and 2001 are not necessarily indicative of the results to be
expected for the full year.

Except as follows, the accounting policies followed by the Company are
set forth in Note B to the Company's financial statements included in
its Annual Report on Form 10-KSB, for the fiscal year ended November 30, 2001.

In July 2000, Surge entered into a joint venture agreement with Lelon
Electronics Corp. to form Surge/Lelon LLP, a Delaware limited liability
partnership. The Company has membership interests in the joint venture
totaling 55%.  There has been no activity with the limited liability
partnership.

In May 2002, Surge and an officer of Surge have become sole owners of Surge
Components, Limited, a Hong Kong corporation. Under current Hong Kong
Law, Surge Components, Limited is required to have at least two
shareholders. Surge owns 999 shares of the outstanding common stock
and the officer of Surge owns 1 share of the outstanding common stock.
The officer of Surge has assigned his rights regarding his 1 share to
Surge. As of May 31, 2002, there has been no activity in Surge Components,
Limited.

NOTE 2 - SETTLEMENT AGREEMENT

In April 2002, in connection with a Mutual Release, Settlement, Standstill
and Non-Disparagement Agreement by and among the Company and Equilink
Capital Partners, LLC, Robert DePalo, Old Oak Fund Inc. and Kenneth
Orr (collectively, the "Investors"), the Investors  transferred back
to the Company 252,000 shares of common stock,  19,300 shares of Series
C preferred stock, and certain warrants, representing all of the
Company's securities held by the Investors, and agreed, among other
things, not to purchase any securities of the Company and not to
disparage the Company in any manner, in exchange for $225,000
($100,000 paid upon signing of the agreement and two payments
of $62,500 due on July 1, 2002 (which was paid) and November 1,
2002), in settlement of potential claims relating to services provided
by the Investors.  The shares

                              7


<PAGE>

                     SURGE COMPONENTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  MAY 31, 2002





NOTE 2 - SETTLEMENT AGREEMENT (CONTINUED)


are being held in escrow until the final payment has been made.
In addition, the Company and the Investors mutually agreed to
release each other from all claims each party had, now has, or
in the future might have against the other.  The Company recorded
a charge of approximately $193,850 to income during the quarter
ending May 31, 2002, in connection with the settlement.


NOTE 3 - DUE UNDER REPURCHASE AGREEMENT

In September 2001, the Company entered into an agreement with
a subsidiary ("Maple Chase") of Invensys Plc pursuant to which
the Company paid approximately $1,250,000 for certain inventory
held by Maple Chase who agreed to repay the Company, in non-
interest bearing installments over 12 months for such inventory
(the "Repurchase Agreement").  For accounting purposes, the amount
paid by the Company under the Repurchase Agreement is being
treated as a one-year financing.  As of May 31, 2002, the
Company had received approximately $784,000.  In July 2002,
the Company received the fourth scheduled payment of
approximately $254,000.

NOTE 4 - REPURCHASE OF SHARES

In March 2002, the Company entered into agreements with
two shareholders to settle a dispute as to the form of
payment of interest on certain 12% Convertible Promissory
Notes. The Company will pay these shareholders an aggregate
of $32,854, of which $18,000 has been paid, in exchange for
17,522 shares of Surge common stock issued to them for
converted interest.

NOTE 5 - PREFERRED DIVIDENDS

The dividends on the Non-Voting Redeemable Convertible Series
C Preferred Stock totaling $15,500 for the semiannual period
ended December 31, 2001 have not been paid.  The Company has
accrued these dividends.  Dividend on these shares for the next
semiannual period ended June 30, 2002 have not been declared.
The Company will accrue dividends for the semiannual period
ended June 30, 2002 totaling $10,675 as of June 30, 2002.


                                   8


<PAGE>

                 SURGE COMPONENTS, INC. AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             MAY 31, 2002





NOTE 6 - SEC INVESTIGATION

During the year ended November 30, 2000 and the quarter ended
February 28, 2001, the Company made certain potentially
questionable payments of approximately $2,137,000 and
$774,000, respectively.  These payments are currently the
subject of an investigation by the Securities and Exchange
Commission.  The recipient of these payments repaid $1
million in cash to the Company in the quarter ending May
31, 2001, which was included in other income.

In May 2001, the law firm Mintz Levin Cohn Ferris Glovsky
and Popeo, P.C., was formerly engaged to assist in an
investigation concerning the payments and to recommend policies
to prevent any similar future payments. Due, in part to the
previously disclosed resignation of our outside counsel and
such counsel's refusal to be interviewed as part of the
investigation, the Company was unable to confirm what legal
advice was rendered as to the making of such payments. The
investigation did not uncover any additional payments similar
to the previously disclosed "potentially questionable payments".
The Company has taken steps to ensure that such payments are not
made in the future, including requiring that payments above
$5,000 not be made to any party except a party on a list approved
by our audit committee, requiring co-signatures on each check for more
than $10,000 and adopting a Code of Conduct. Except for proceedings
relating to the SEC inquiry commenced in October 2001, the Company
is not aware of any pending proceedings relating to the
questionable payments. There can be no assurance that these
potentially questionable payments and related investigation
will not lead to other proceedings.


                                      9

<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

     Statements contained in this report include "forward-looking
statements" within the meaning of such term in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which could cause actual
financial or operating results, performances or achievements
expressed or implied by such forward-looking statements not
to occur or be realized. Such forward-looking statements generally
are based on our best estimates of future results, performance or
achievements, based upon current conditions and the most recent
results of the companies involved and their respective industries.
Forward-looking statements may be identified by the use of forward-
looking terminology such as "may," "will," "project," "expect,"
believe," "estimate," "anticipate," "intends," "continue,"
"potential," "opportunity" or similar terms, variations of
those terms or the negative of those terms or other variations
of those terms or comparable words or expressions. Potential
risks and uncertainties include, among other things, such factors as:

      -	our business strategies and future plans of operations,

      -	general economic conditions in the United States and elsewhere, as
         well as the economic conditions affecting the industries in
         which we operate,

      -	political and regulatory matters affecting the foreign countries
          in which we operate or purchase goods and materials,

      -	the market acceptance and amount of sales of our products and
          services,

      - the extent that our distribution network and marketing programs
          achieve satisfactory response rates,

      - the effect of the current surplus of electronic component parts in the
          broker distributor market on sales by our Challenge subsidiary,

      - our historical losses,

      - the competitive environment within the electronic components industry,

      -	our ability to raise additional capital, if and as needed,

      -	the cost-effectiveness of our product development activities,

      -	the effect of the delisting of our common stock from The Nasdaq Stock
          Market,

      - the extent of any further investigations or proceedings with respect to
          the potentially questionable payments.

                                       10




<PAGE>

     Shareholders and others reading this report should carefully
consider such risks, uncertainties and other information, disclosures
and discussions which contain cautionary statements identifying
important factors that could cause actual results to differ materially
from those provided in the forward-looking statements. We undertake
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. Readers are urged to carefully review and consider
the various disclosures made by the Company in this Report and the
Company's Annual Report on Form 10-KSB for the year ended November
30, 2001, both of which have been filed with the Commission.
These reports attempt to advise interested parties of the risks
and factors that may affect the Company's business, financial
condition and results of operations and prospects.

Results of Operations

     Consolidated net sales for the six months ended May 31, 2002
decreased by approximately $4,592,000, or 46%, to $5,362,000 as
compared to consolidated net sales of $9,954,000 for the six
months ended May 31, 2001.  Consolidated net sales for the three
months ended May 31, 2002 decreased by $816,000, or 24%, to
$2,568,000 as compared to consolidated net sales of $3,384,000
for the three months ended May 31, 2001.

     The net sales for the six months ended May 31, 2002 for Surge
exclusive of our Challenge subsidiary decreased by approximately
$1,145,000, or 25%, when compared to Surge's net sales for the
six months ended May 31, 2001.  Net sales for the three months
ended May 31, 2002 for Surge decreased by $287,000, or 14%, when
compared to the three months ended May 31, 2001.  The Company had
lower sales during the current year as a result of a slowdown in
the electronics industry.

     Net sales for the six months ended May 31, 2002 for Challenge
decreased by approximately $3,449,000, or 64%, when compared to the
six months ended May 31, 2001.  Net sales for the three months
ended May 31, 2002 for Challenge decreased by $530,000, or 38%,
when compared to the three months ended May 31, 2001. Challenge
continues to experience a decline in sales due to a slowdown in
manufacturing among computer, telecommunications and phone
manufacturers. This slowdown is expected to adversely affect
Challenge's sales for at least the remainder of calendar
year 2002.  Any future improvements in sales and possible
profitability are expected to be based on future
demand and supply for Challenge's product mix.


                                  11


<PAGE>

     Our gross profit for the six months ended May 31, 2002
decreased by approximately $1,056,000, or 42%, as compared
to the six months ended May 31, 2001.  Our gross profit for
the three months ended May 31, 2002 decreased by approximately
$274,000, or 28%, as compared to the three months ended May 31,
2001.  Gross profits as a percentage of net sales increased to
approximately 28% in the six months ended May  31, 2002 from
approximately 26% in the six months ended May 31, 2001.  The
decrease in our gross profit was a result of decreased sales
from the economic slowdown of electronic components. The increase
in gross profit percentage is due to Surge making its operations
more efficient by reducing inventory acquisition costs and
instituting a policy of increasing direct shipments to its
customers' factories overseas. This has resulted in a substantial
reduction of import related and shipping fees.

     General and administrative expenses for the six months
ended May 31, 2002 decreased by approximately $1,822,000, or
50%, as compared to the six months ended May 31, 2001.  For
the three months ended May 31, 2002, general and administrative
expenses decreased by approximately $698,000, or 41%, as compared
to the three months ended May 31, 2001.  The decrease is primarily
due to costs associated with funding the operations of MailEncrypt,
which was unwound during the fourth quarter of the fiscal year ended
November 30, 2001, and overhead attributable to Superus, which
was inactive since the second quarter of 2001 and has
subsequently filed for bankruptcy protection under Chapter 7
of the United States Bankruptcy Code.  Superus incurred
approximately $1,270,000 of expenses relating to salaries,
rent, professional fees, public relations and consulting fees
for the six month period ended May 31, 2001.

     Selling and shipping expenses for the six months ended
May 31, 2002, decreased by approximately $206,000, or 30%, as compared
to the six months ended May 31, 2001. For the three months ended May
31, 2002, selling and shipping expenses decreased by approximately
$62,000, or 20%, as compared to the three months ended May 31, 2001.
This decrease primarily is due to the decreased sales commissions
resulting from lower sales in the current fiscal year.

     Financial consulting fees for the six months ended May 31,
2001 were approximately $2,171,000, representing the cost of the securities
issued in payment of such fees.  Financial consulting fees for the three
months ended May 31, 2001 were $1,042,000.  These fees and expenses were
incurred in connection with an agreement with our investment banker
regarding services through May 2001 and reimbursement of expenses.
During the six months ended May 31, 2002, the Company paid $75,000 to its
investment banker for work performed during the current quarter. Also
in April 2002, the Company entered into a settlement with its
investment banker, as more fully explained below in the Liquidity
and Capital Resources section discussing the Investors.


                                  12


<PAGE>
     Investment income decreased by approximately $125,000,
or 78%, for the six months ended May 31, 2002, as compared to the six months
ended May 31,2001.  Investment income decreased by approximately $69,000,
or 77%, for the three months ended May 31, 2002, as compared to the three
months ended May 31, 2001. This decrease is primarily related to our use
of cash and cash equivalents to fund losses and the reduction of interest
rates on our invested funds.

     Interest expense decreased approximately $105,000 or 92% for the
six months ended May 31, 2002 as compared to the six months ended May
31, 2001. Investment expense decreased by approximately $18,000, or 77%,
for the three months ended May  31, 2002, as compared to the three months
ended May 31, 2001. This decrease primarily is related to our conversion
of our private placement notes as of December 31, 2000. In July 2001, in
order to avoid disputes, we decided to accrue additional interest on the
convertible notes through the dates the notes were converted. Previously
interest was accrued only to December 31, 2000.

     As result of the foregoing, the Company on a consolidated basis
had a net loss of approximately $1,160,000 for the six months ended
May 31, 2002, as compared to approximately $3,713,000 for the six
months ended May 31, 2001. The Company had a consolidated net loss
of approximately $792,000 for the three months ended May 31, 2002,
as compared to consolidated net loss of approximately $1,620,000
for the three months ended May 31, 2001.

Liquidity and Capital Resources

     Working capital decreased by $1,020,000 during the six
months ended May 31, 2002 from $3,896,000 at November 30, 2001,
to $2,876,000, at May 31, 2002. This decrease resulted primarily
from the decrease in marketable securities, inventory and
amounts due under a repurchase agreement as partially offset
by a decrease in accounts payable and accrued expenses.
Our current ratio decreased from 2.1:1 at November 30, 2001,
to 2.0:1 at May 31, 2002. Inventory turned 1.8 times during
the six months ended May 31, 2002 as compared to 2.5
times during the six months ended May 31, 2001. The average
number of days to collect receivables decreased from 54
days to 50 days.

     At May 31, 2002 we had no existing lines of credit.


                             13

<PAGE>

     We continue to incur substantial operating costs. These costs
principally consist of rent, payroll, professional fees, insurance
premiums and marketing related charges. Our ability to operate profitably
in the future depends on increasing sales levels and decreasing
our expenses. To accomplish this goal, we are continuing to streamline
our operations and are reviewing other possible reductions.

     During the six months ended May 31, 2002, we had net cash
used in operating activities of approximately $912,000 as
compared to net cash provided by operating activities of
approximately $721,000 in the six months ended May 31, 2001.
The increase in cash used in operating activities resulted
from the Company's net loss, a decrease in accrued expenses
and accounts payable and an increase in prepaid expenses and
income taxes, partially offset by a decrease in accounts receivable
and inventory.

     We had net cash provided by investing activities of $1,443,000
for the six months ended May 31, 2002, as compared to $281,000 used
in investing activities for the six months ended May 31, 2001. The
net cash provided by investing activities during the six months ended
May 31, 2002 resulted primarily from the sale of marketable securities and
collection of amounts due under a repurchase agreement ($584,000).

     We anticipate that in the ordinary course of business our current
cash position, marketable securities available for sale and collections
due under repurchase agreement will be sufficient to meet our current
financial requirements over the next twelve months.

     We had net cash used in financing activities of approximately
$28,000 for the six months ended May 31, 2002, as compared to
approximately $614,000 for the six months ended May 31, 2001. The
cash used in financing activities during the quarter ended May
31, 2001 was a result of the proceeds from the exercise of stock
options and the Company purchasing treasury stock.

     As a result of the foregoing, the Company had a net increase
in cash and equivalents of approximately $504,000 during the six
months ended May 31, 2002, as compared to a net decrease in cash
and equivalents of approximately $174,000 for the six months ended May 31, 2001.

                                  14


<PAGE>
     In April 2002, in connection with a Mutual Release, Settlement,
Standstill and Non- Disparagement Agreement by and among the Company
and Equilink Capital Partners, LLC, Robert DePalo, Old Oak Fund Inc.
and Kenneth Orr (collectively, the "Investors"), the Investors
transferred back to the Company 252,000 shares of common stock,
19,300 shares of Series C preferred stock, and certain warrants,
representing all of the Company's securities held by the Investors,
and agreed, among other things, not to purchase any securities of the
Company and not to disparage the Company in any manner, in exchange
for $225,000 ($100,000 paid upon signing of the agreement and two payments
of $62,500 due on July 1, 2002 (which has been paid) and November 1, 2002),
in settlement of potential claims relating to services provided by the
Investors.  The shares are being held in escrow until the final payment
has been made.  In addition, the Company and the Investors mutually agreed
to release each other from all claims each party had, now has, or in the
future might have against the other.  The Company recorded a charge of
approximately $194,000 to income during the quarter ending May 31,
2002, in connection with the settlement.

     In March 2002, the Company entered into an agreement with two
shareholders to settle a dispute as to the form of payment of interest
on certain 12% Convertible Promissory Notes. The Company agreed to pay
these shareholders an aggregate of $32,854, of which $18,000 has been
paid, in exchange for 17,522 shares of Surge common stock issued to them
for converted interest.

     In July 2000, Surge entered into a joint venture agreement with
Lelon Electronics Corp. to form Surge/Lelon LLP, a Delaware limited
liability partnership.  The Company has membership interests in the
joint venture totaling 55%.  There has been no activity with the
limited liability partnership.  The Company expects to commence
operations during the third quarter 2002.

     In May 2002, Surge and an officer of Surge have become sole
owners of Surge Components, Limited, a Hong Kong corporation. As of
May 31, 2002, there has been no activity in Surge Components, Limited.
Under current Hong Kong law, Surge Components, Limited is required to
have at least two shareholders. Surge owns 999 shares of the outstanding
common stock and the officer of Surge owns 1 share of the outstanding
common stock. The officer of Surge has assigned his rights regarding
his 1 share to Surge. The Company expects to commence operations
during the third quarter 2002.

                               15



<PAGE>
Critical Accounting Policies and Estimates

     The preparation of financial statements and related disclosures
in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions
that affect the amounts reported in the unaudited Consolidated Financial
Statements and accompanying notes. Estimates are used for, but not
limited to, the accounting for the allowance for doubtful accounts,
inventories, income taxes and loss contingencies. Management bases
its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results
could differ from these estimates under different assumptions
or conditions.

     The Company believes the following critical accounting policies,
among others, may be impacted significantly by judgment, assumptions
and estimates used in the preparation of the unaudited Consolidated
Financial Statements:

     Revenue is recognized when product is shipped from the Company's
warehouse. For direct shipments, revenue is recognized when product
is shipped from the Company's supplier.

     The allowance for doubtful accounts is maintained to provide for
losses arising from customers' inability to make required payments.
If there is a deterioration of our customers' credit worthiness and/or
there is an increase in the length of time that the receivables are
past due greater than the historical assumptions used, additional
allowances may be required. During February 2002, the Company obtained
$2,000,000 of credit insurance covering most of its customers.

     Inventories, which consist solely of products held for resale, are
stated at the lower of cost (first-in, first-out method) or market.
Products are included in inventory when shipped from the supplier.
The Company, at May 31, 2002, has a reserve against slow moving and
obsolete inventory of approximately $1,032,000.

     The Company's deferred income taxes arise primarily from the
differences in the recording of net operating losses, allowances for
bad debts, inventory reserves and depreciation expense for financial
reporting and income tax purposes. Income taxes are reported under
the liability method pursuant to SFAS No. 109 "accounting for income
taxes". A valuation allowance is provided when the likelihood of
realization of deferred tax assets is not assured.


Inflation And Increasing Interest Rates

     In the past two fiscal years, inflation has not had a significant
impact on our business. We have generally been able to offset the impact
of rising costs through purchase price reductions and increases in
selling prices. However, any significant increase in inflation and
interest rates could have a significant effect on the economy in
general and, thereby, could affect our future operating results.

                                   16
<PAGE>
                          PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

     As disclosed in our public filings and in this Quarterly Report,
there have been certain potentially questionable payments which have
led to the delisting of the Company's stock from Nasdaq and which are
currently the subject of an informal inquiry by the Securities and
Exchange Commission which began in October 2001. There can be no
assurance that the potentially questionable payments and related
investigations will not lead to any other proceedings and we have
received threats of litigation related to such events.

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

(a)	Exhibits.


      3.1  Certificate of Incorporation of the Company, as amended.  (1)
      3.2  By-Laws of the Company. (1)
----------
  (1)      Incorporated by reference from the Company's Registration Statement
           on Form SB-2 (No. 333-630 NY) declared effective by the Securities
           and Exchange Commission on July 31, 1996.

(b)	Reports on Form 8-K.

     On June 7, 2002, the Company filed a current report on Form 8-K
reporting, as an Item 4 matter, the change in our certifying accountant.


SIGNATURES

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

		        SURGE COMPONENTS, INC.



		  By:   /s/ Steven J Lubman
                        -------------------
			Steven J. Lubman
			Vice President, Principal
			Financial Officer, Secretary and
			Director



Dated:  July 18, 2002

                                          17