================================================================================

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

                               -------------------

                                   FORM 10-QSB

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

    FOR THE QUARTER ENDED                           COMMISSION FILE NUMBER
       MARCH 31, 2002                                       0-12969

                         TOUCHSTONE SOFTWARE CORPORATION
                         -------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                            95-3778226
            --------                                            ----------
  (STATE OR OTHER JURISDICTION                               (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

1538 TURNPIKE ST., NORTH ANDOVER, MASSACHUSETTS                    01845
-----------------------------------------------                    -----
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)


                                 (978) 686-6468
                                 --------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                      NONE
                                      ----
                     (FORMER NAME, FORMER ADDRESS AND FORMER
                   FISCAL YEAR, IF CHANGED SINCE LAST REPORT)

     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 past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.     Yes  [X]   No  [_]

     The number of shares of Common Stock of the Registrant outstanding as of
May 15, 2002 was 11,440,060 shares.
================================================================================
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                                      INDEX
                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

        Consolidated Balance Sheet -- March 31, 2002......................     3
        Consolidated Income Statements -- Three Months Ended
          March 31, 2002 and March 31, 2001...............................     4
        Consolidated Statements of Cash Flows -- Three Months
          Ended March 31, 2002 and March 31, 2001.........................     5
        Notes to Consolidated Financial Statements........................  6-10

ITEM 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations......................................... 11-16

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings................................................    17

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

Signatures................................................................    18


                                        2
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2002
                                   (UNAUDITED)

ASSETS
Current assets:
      Cash and cash equivalents ............................      $     37,178
      Investments, marketable securities ...................           187,200
      Accounts receivable, net .............................            36,096
      Inventories ..........................................            26,720
      Prepaid expenses and other current assets ............             7,776
                                                                  ------------
                Total current assets .......................           294,970

Note receivable, related party .............................            96,811
Investments, other .........................................           397,000
Property, and equipment, net ...............................            38,036
                                                                  ------------
                                                                  $    826,817
                                                                  ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Current maturities of long-term debt .................            28,948
      Accounts payable .....................................           297,631
      Accrued payroll and related expenses .................            58,046
      Other accrued expenses ...............................            44,209
                                                                  ------------
            Total current liabilities ......................           428,834
                                                                  ------------

Long-term debt, net of current maturities ..................            34,319

                                                                  ------------
            Total liabilities ..............................           463,153
                                                                  ------------
Shareholders' equity:
      Preferred stock, $.001 par value, 3,000,000 shares
         authorized, none issued or outstanding
      Common stock, $.001 par value, 20,000,000 shares
         authorized, issued and outstanding,
         11,440,060 2002 ...................................            11,440
      Accumulated other comprehensive loss .................          (475,800)
      Additional paid-in capital ...........................        20,979,684
      Deferred compensation ................................           (45,334)
      Accumulated deficit ..................................       (20,106,326)
                                                                  ------------
            Total shareholders' equity .....................           363,664
                                                                  ------------
                                                                  $    826,817
                                                                  ============

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

                                        3
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                         CONSOLIDATED INCOME STATEMENTS
                                  (UNAUDITED)

                                                        THREE MONTHS ENDED
                                                   ----------------------------
                                                     MARCH 31,       MARCH 31,
                                                       2002            2001
                                                   ------------    ------------

Revenues:
    Product sales .............................    $    507,297    $    505,951
    Royalty income ............................          45,460          59,286
                                                   ------------    ------------
       Total revenues .........................         552,757         565,237
Cost of revenues ..............................          58,399          43,974
                                                   ------------    ------------
       Gross profit ...........................         494,358         521,263
                                                   ------------    ------------

Operating expenses:
    Sales, general and administrative .........         323,362         559,582
    Research and development ..................         132,691         128,928
                                                   ------------    ------------
        Total operating expenses ..............         456,053         688,510
                                                   ------------    ------------
Income (loss) from operations .................          38,305        (167,247)

Loss on investments, net ......................            --          (183,623)
Other income, net .............................          25,583           3,376
                                                   ------------    ------------
Income (loss) before provision for income taxes          63,888        (347,494)
Provision for income taxes ....................           1,824           2,168
                                                   ------------    ------------
Net income (loss) .............................    $     62,064    $   (349,662)
                                                   ============    ============


Basic earnings (loss) per share ...............    $       0.01    $      (0.03)
                                                   ============    ============

Basic weighted average shares outstanding .....      11,440,060      11,440,060

Diluted  earnings (loss) per share ............    $       0.01    $      (0.03)

Diluted weighted average shares outstanding ...      12,434,510      11,440,060
                                                   ============    ============

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

                                        4
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                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE><CAPTION>
                                                                                           THREE MONTHS ENDED
                                                                                      ---------------------------
                                                                                      MARCH 31,         MARCH 31,
                                                                                         2002              2001
                                                                                      ---------         ---------
<S>                                                                                  <C>               <C>
Cash flows from operating activities:
      Net Income (loss) ......................................................        $  62,064         $(349,662)

      Adjustments to reconcile net income (loss) to net cash used in
operating activities:
            Depreciation .....................................................            5,172             6,345
            Amortization of deferred compensation ............................              450            84,945
            Provision for doubtful accounts ..................................             --              36,244
            Realized loss on investments .....................................             --             183,623
            Accounts receivable ..............................................          (20,650)          135,636
            Inventories ......................................................            5,982            (2,091)
            Prepaid expenses and other current assets ........................             (451)           (6,698)
            Accounts payable .................................................           (9,197)          (46,869)
            Deferred revenue .................................................             --             (76,613)
            Accrued liabilities ..............................................          (65,923)          (36,054)
                                                                                      ---------         ---------
               Net cash used in operating activities .........................          (22,553)          (71,194)
                                                                                      ---------         ---------
Cash flows from investing activities:
      Purchase and sale of investments, net ..................................             --             134,609
      Payments on notes receivable - related party ...........................           66,806              --
                                                                                      ---------         ---------
               Net cash provided by investing activities .....................           66,806           134,609
                                                                                      ---------         ---------
Cash flows from financing activities:
      Payment on long-term debt ..............................................           (7,075)          (22,322)
      Restricted cash released ...............................................             --             100,000
                                                                                      ---------         ---------
               Net cash provided by (used in) financing activities ...........           (7,075)           77,678
                                                                                      ---------         ---------

Net increase in cash and cash equivalents ....................................           37,178           141,093
Cash and cash equivalents, beginning of period ...............................             --              12,890
                                                                                      ---------         ---------
Cash and cash equivalents, end of period .....................................        $  37,178         $ 153,983
                                                                                      ---------         ---------
Supplemental disclosure of cash flow information:
      Cash paid during the period for:
               Interest ......................................................        $   1,405         $   8,470
                                                                                      ---------         ---------
               Income taxes ..................................................        $   1,824         $   2,168
                                                                                      ---------         ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                        5
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS. TouchStone Software Corporation and subsidiaries
("TouchStone" or the "Company") markets, and supports a line of computer
problem-solving utility software and supporting products and engineering
services which simplify personal computer installation, support, and
maintenance. TouchStone operates from one location in the United States. The
Company markets its products, domestically and internationally, directly to
original equipment manufacturers and end users.

PRINCIPLES OF CONSOLIDATION, The 2002 consolidated financial statements of the
Company include the financial statements of the Company's four wholly-owned
subsidiaries; eSupport.com, Inc., TouchStone Investments, Inc., TSC Investments,
LLC, Unicore Software, Inc., (inactive). All inter-company transactions and
balances have been eliminated.

BASIS OF PRESENTATION. The accompanying unaudited financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission regarding interim financial reporting. Accordingly, they
do not include all of the information and footnotes in accordance with generally
accepted accounting principles for complete financial statements and should be
read in conjuction with the audited financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2001. In
the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary for fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods presented.

The operating results for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has suffered recurring operating losses, has an
accumulated deficit of $20,106,326 at March 31, 2002, and is largely dependent
on its investment portfolio to fund future operating losses, and accordingly, is
subject to a number of risks. Principally among these risks are marketing of its
products and services, which are susceptible to competition from other
companies, obsolescence of its products and services and the volatility in the
value of the Company's investment portfolio on which it is dependent to fund its
short-term operating cash deficits. These factors, among others, raise
substantial doubt about the Company's ability to continue as a going concern at
March 31, 2002. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Management's ongoing reorganization plan provides for significant staff
reductions in non-core operating and support functions, limitations on corporate
travel and a realignment of senior management responsibilities; all aimed toward
reducing operating costs to levels commensurate with current revenues. The
Company has also renegotiated certain contracts and agreements in order to
improve its short-term cash flow. In order to meet its cash requirements over
the next twelve months, management expects to supplement cash flow benefits
expected from these initiatives, by liquidating its marketable securities
classified as available for sale, as necessary. Other additional sources of
financing, including additional private debt or equity capital, are being
explored, along with seeking merger candidates with whom the Company has
substantial synergies.

CASH AND CASH EQUIVALENTS. The Company considers temporary liquid investments
with an original maturity of three months or less to be cash equivalents.

INVESTMENTS. The Company accounts for marketable securities under Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). SFAS 115 establishes the accounting and
reporting requirements for all debt securities and for investments in equity
securities that have readily determinable fair values. All marketable securities
must be classified as one of the following: held-to-maturity,
available-for-sale, or trading. Under SFAS 115, marketable security investments
classified as available for sale are carried at fair value, with unrealized
holding gains and losses, reported as a separate component of

                                       6
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                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

shareholders' equity. The Company accounts for held to maturity and
nonmarketable investments using the cost method. Realized gains and losses from
the sale of investments are determined on a specific identification basis.

ACCOUNTS RECEIVABLE. An allowance for doubtful accounts is provided for those
accounts receivable considered to be uncollectible, based upon historical
experience and management's evaluation of outstanding accounts receivable at the
end of the year. At March 31, 2002 the allowance for doubtful accounts was
$5,000.

INVENTORIES. Inventories are stated at the lower of first-in, first-out cost, or
market, and consist mainly of finished goods, media, and packaging supplies.

PROPERTY AND EQUIPMENT. Property and equipment is stated at cost and depreciated
using the straight-line method based on the estimated useful lives of the assets
(two to five years). Leasehold improvements are amortized over the shorter of
the useful life or the life of the related lease.

LONG-LIVED ASSETS. The Company evaluates long-lived assets under Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of" (SFAS 121). This
statement requires that long-lived asset and certain identifiable intangibles
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. In August 2001, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS 144). This statement supersedes SFAS 121. However, it retains the
fundamental provisions of Statement 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. Management has assessed the
implementation and determined that there is no significant impact on the
consolidated financial statements of the Company.

GOODWILL AND INTANGIBLES. Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142) establishes new guidance on
how to account for goodwill and intangible assets after a business combination
is completed. Among other things, it requires that goodwill and certain other
intangible assets will no longer be amortized and will be tested for impairment
at least annually and written down only when impaired. This statement will apply
to existing goodwill and intangible assets, beginning with fiscal years starting
after December 15, 2001. Management has determined there will be no impact on
its results of operations or financial position resulting from the adoption of
SFAS 142 because the Company has not entered into any business combinations
since that time and the Company currently has not recorded any goodwill or
intangible assets.

                                       7
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION. Product sales are recorded at the time products are
shipped. The Company incurs shipping, packaging and handling costs which are
recorded in costs of revenues.

RESEARCH AND DEVELOPMENT. Research and development expenses resulting from the
design, development, and testing of new software and software maintenance and
enhancement costs are expensed as incurred, until technological feasibility has
been established and costs are considered recoverable. Thereafter, certain costs
such as coding and testing would be capitalized in accordance with Statement of
Financial Accounting Standards No. 86, "Accounting for Costs of Computer
Software to be Sold, Leased or Otherwise Marketed" (SFAS 86), until the product
is available for sale. During the first quarter of 2002, no software has been
substantially completed concurrently with the establishment of technological
feasibility; and, accordingly, no costs have been capitalized.

ADVERTISING COSTS. The Company expenses advertising costs as incurred.
Advertising expense was approximately $3,400 and $4,000 for the quarters ended
March 31, 2002 and 2001, respectively.

INCOME TAXES. The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which
requires the recognition of deferred tax assets and liabilities at tax rates
expected to be in effect when these balances reverse. Future tax benefits
attributable to temporary differences are recognized to the extent that
realization of such benefits is more likely than not.

STOCK-BASED COMPENSATION. The Company accounts for stock-based employee
compensation arrangements using the intrinsic value method of accounting
prescribed in accordance with Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees". The Company provides proforma
disclosures of net income (loss) and income (loss) per share as required under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 encourages, but does not require companies to
recognize compensation expense for grants of stock, stock options, and other
equity instruments based on the fair value method of accounting. The Company
accounts for stock options granted to consultants, independent representatives
and other non-employees in accordance with SFAS No. 123 and EITF 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services. In March 2000, the
FASB issued FASB Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation - an Interpretation of APB Opinion No. 25" ("FIN
44"). FIN 44 is generally effective for transactions occurring after July 1,
2000 but applies to certain transactions dating back to December 15, 1998. The
Company believes the adoption of FIN 44 did not have a material impact on the
Company's financial position or results of operation.

EARNINGS PER SHARE. Pursuant to Statement of Financial Accounting Standards No.
128, "Earnings Per Share" (SFAS 128), the Company provides dual presentation of
"Basic" and "Diluted" EPS, replacing "Primary" and "Fully diluted" EPS formerly
under Accounting Principals Board ("APB") Opinion No. 15. Basic EPS EXCLUDES
dilution from common stock equivalents and is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from
common stock equivalents, similar to fully diluted EPS, but uses only the
average stock price during the period as part of the computation.

FAIR VALUE OF FINANCIAL INSTRUMENTS. The recorded amounts of financial
instruments, including cash equivalents, investments, accounts and notes
receivable, accounts payable, accrued liabilities and deferred revenues,
approximate their fair value because of the short maturity of these instruments.
The fair value of the Company's long-term debt approximates its carrying value.

USE OF ESTIMATES. The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions. Such estimates and assumptions
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the periods then ended. Actual results
could differ from management's estimates.

                                        8
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

COMPREHENSIVE INCOME. In 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). This
statement establishes standards for the reporting and display of comprehensive
income and its components in the financial statements. Comprehensive income, as
defined, includes all changes in equity during a period from non-owner sources.
Examples of items to be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustment and unrealized
gains and losses on available-for-sale securities. For the quarter ended March
31, 2002 the total comprehensive income was $59,464 as compared to a loss of
($304,311) for the same period the prior year. The difference between net loss
and comprehensive loss is unrealized losses on marketable investments

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. In 2001, the
Company adopted Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" (SFAS 133). This statement
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives will be reported in the statement of operations
or as a deferred item, depending on the use of the derivatives and whether they
qualify for hedge accounting. The key criterion for hedge accounting is that the
derivative must be highly effective in achieving offsetting changes in fair
value or cash flows of the hedged items during the term of the hedge. Management
has determined there will be no impact on its results of operations or financial
position resulting from the adoption of SFAS 133 because the Company currently
does not hold derivative instruments.

REVENUE RECOGNITION IN FINANCIAL STATEMENTS. In December 1999, the Securities
and Exchange Commission ("SEC") issued Staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements" ("SAB 101") which provides guidance related
to revenue recognition based on interpretations and practices followed by the
SEC. SAB 101A was released on March 24, 2000 and deferred the effective date to
no later than the second fiscal quarter beginning after December 15, 1999. In
June 2000, the SEC issued SAB 101B which delays the implementation date of SAB
101 until no later than the fourth fiscal quarter of fiscal years beginning
after December 15, 1999. SAB 101 requires companies to report any changes in
revenue recognition as a cumulative change in accounting principle at the time
of implementation in accordance with Accounting Principles Board Opinion No. 20,
"Accounting Changes". Management has assessed the implementation and determined
that there is no significant impact on the consolidated financial statements of
the Company.

RECENTLY ISSUED ACCOUNTING STANDARDS. In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 141,
"Business Combinations" (SFAS 141). SFAS 141 provides new guidance on the
accounting for a business combination at the date a business combination is
completed. Specifically, it requires use of the purchase method of accounting
for all business combinations initiated after June 30, 2001, thereby eliminating
use of the pooling-of-interest method.

2. EARNINGS (LOSS) PER SHARE

The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share," ("EPS") which replaces the presentation of "primary"
earnings per share with "basic" earnings per share and the presentation of
"fully diluted" earnings per share with "diluted" earnings per share. All
previously reported EPS amounts have been restated based on the provisions of
the new standard. Basic EPS amounts are based upon the weighted average number
of common shares outstanding. Diluted EPS amounts are based upon the weighted
average number of common and common equivalent shares outstanding. Common
equivalent shares include stock options using the treasury stock method. Common
equivalent shares are excluded from the calculation of diluted EPS in loss
years, as the impact is anti-dilutive. At March 31, 2002, the number of

                                        9
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                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

outstanding stock options and warrants were 994,450. There was no difference
between basic and diluted EPS for each period presented. The number of shares
used in computing EPS is as follows:

                                                          FOR THE THREE MONTHS
                                                             ENDED MARCH 31,
                                                            2002         2001
                                                         ----------   ----------
Weighted average number of shares outstanding basic:     11,440,060   11,440,060


Weighted average number of shares outstanding diluted:   12,434,510   11,440,060


3. NOTE RECEIVABLE - RELATED PARTY

     During 2000, TSC Investments, LLC entered into an agreement to advance up
to $500,000 to Metro Investments, LLC ("Metro"), to invest in internet-based
companies. Metro is owned 100% by Pierre Narath, the Company's Chairman and
Jason Raza, the Company's President and Chief Executive Officer. The advances
are supported by a 5-year promissory note. The terms of the note require
interest to accrue at the rate of 12% per annum payable monthly, beginning
January 2002. The note is secured by 100% of the investments held by Metro.
Proceeds from the sale of any of the underlying investments must be used to pay
outstanding principal and interest. All outstanding principal and interest is
due December 31, 2004.

     During 2001, the Board of Directors approved an amendment to the note. In
consideration of the contribution by Nr. Narath and Mr. Raza of their 20%
interest in TSC investments, LLC to TSC Investment Inc. and Metro's commitment
to accelerate repayment of the note, the Company agreed to reduce the rate of
interest from 12% to 8% per annum, effective November 1, 2001. A payment of
$20,000 was received during October 2001. During the first quarter of 2002,
aggregate payments of $70,000 including accrued interest were made by Mr. Narath
and Mr. Raza.

     Total advances under this agreement amounted to $350,000 plus total accrued
interest of $37,617, of which $290,806 has been repaid through March 31, 2002.

4. OTHER INCOME

     During the quarter ended March 31, 2002, the Company recorded approximately
$25,000 in other income. This amount represents a refund of amounts paid by the
Company in anticipation of foreign taxes due in connection with its now defunct
subsidiary TouchStone Europe Ltd. The Company had previously recorded an expense
for this payment. Upon receipt of the refund the Company recorded the refund as
other income.











                                       10
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

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

OVERVIEW

     TouchStone Software Corporation, Inc. and its consolidated subsidiaries,
("TouchStone" or "the Company") is a provider of system management software,
which includes basic input/output ("BIOS") software upgrades, personal computer
("PC") diagnostics for personal computers and embedded systems. System
management software is one of the fundamental layers in any microprocessor-based
system (including PCs) architecture and provides an essential interface between
the systems's operating software and hardware. Organized in 1982 as a California
corporation, the Company reincorporated in Delaware in January 1997. The
Company's executive offices are located at 1538 Turnpike Street, North Andover,
Massachusetts 01845, and its telephone number is (978) 686-6468.

     We are the world's oldest and largest provider of BIOS Upgrades with over
12 years of unparalleled excellence in the industry. Not only are we the oldest
and largest BIOS Upgrade Company, but we are also the exclusive authorized BIOS
upgrade company and support center for Phoenix Technologies, Inc. (NASDAQ PTEC)
AwardBIOS. For many years, we have enjoyed our relationships with the world's
leading Motherboard Manufacturers and our engineering team works closely with
all of these companies to ensure that we have the latest code to include with
our BIOS Upgrades. It is because of our experience, knowledge and expertise that
we believe that we can upgrade the BIOS on any PC and have long enjoyed the
reputation of being the source for BIOS Upgrades.

     In January 2000, the Company formed eSupport.com, Inc. (a New Hampshire
Corporation), a wholly-owned subsidiary, which currently conducts the day to day
operations. The Companys core product is the BIOS, which is the software
initially executed after the system is turned on, tests and initializes hardware
components, initiates the operating system and then provides advanced interface
functions. BIOS software upgrades allow end-users of desktop PCs to extend the
life of their systems and reduce the overall ownership cost of a PC. During the
past several years, eSupport has grown into a full-service engineering company
supplying not only BIOS software upgrades, but also PC diagnostics software and
NRE (non-recurring engineering) services to both end-users and OEM customers. As
the evolution of software and hardware has become more complex, the need for
compatibility has increased in importance. eSupport believes that its experience
and customer focus allow it to quickly identify solutions and market products
compatible with the array of operating systems, application programs, utilities
and hardware products available.

     eSupport's customers include primarily end-users, enterprises such as a
majority of Fortune 500 corporations, government agencies, major educational and
financial institutions, designers and manufacturers of motherboards, PC systems
and other microprocessor-based or embedded devices. eSupport markets and
licenses its products and services worldwide.

INDUSTRY OVERVIEW

During the last decade, the personal computer industry has grown rapidly -
fueled most recently by the Internet. The Company believes that the market will
continue to expand in the future as technological advances and increased
functionality, combined with lower pricing, will increasingly make personal
computers common for use in both homes and businesses. Future changes in the
operating systems that run personal computers may contain some of the
functionality of certain utility software of the kind marketed by the Company.
The software industry, including the utility market, is increasingly being
dominated by a few very large competitors. However, the Company believes that
the complexities created by the Internet, multimedia and connectivity utilizing
enhanced video, storage, animation, and audio capabilities will continue to
drive the demand for new, sophisticated, separately installed utility software
and BIOS upgrades.


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                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

PRODUCTS AND SERVICES

Our revenue is derived from two principal sources:  software products and
engineering services.

eSupport.com currently offers the following products:

--------------------------------------------------------------------------------
PRODUCT TITLE            DESCRIPTION
--------------------------------------------------------------------------------
BIOS                     The BIOS is the control center of any PC or compatible.
UPGRADE SOLUTIONS        Without a properly functioning one, the operating
                         system will not run correctly, devices will not
                         configure, and thesystem will fail. The Company's BIOS
                         upgrades solutions (known as firmware), allow end-users
                         to keeptheir systems current by enabling the latest
                         technology, such as large drive support, increased RAM
                         size, processor upgrades, etc. Once the BIOS upgrade
                         is installed the operating system (Windows, Linux,
                         etc) will then be able to manage new technology
                         add-ons.

 CHECKIT PE(R) 7.0       CheckIt 7.0 Portable Edition is a modular PC testing
 PORTABLE EDITION        and diagnostics tool expressly designed for computer
                         manufacturers, resellers and repair centers. Designed
                         to meet the requirements of demanding professional
                         users, it brings the power of a professional testing
                         laboratory to anyone who installs, checks, develops,
                         refurbishes, or repairs PC hardware. CheckIt 7.0 PE was
                         developed for use by PC manufacturers and after-market
                         professionals - at varying levels and with varying
                         technical requirements. TouchStone is licensed by Smith
                         Micro Software, Inc. to resell this product.

CARDWARE(R)6.0           CardWare enables PCs and other electronic devices to
                         recognize, install, configure and operate peripheral
                         devices that comply with PCMCIA standards. CardWare
                         provides a number of benefits over traditional PC Card
                         software, including the efficient use of system memory,
                         greater portability, ease of maintenance and a more
                         modular design. CardWare can be tailored to an OEM's
                         needs to work with the OEM's power management and plug
                         and play specifications. CardWare is also available in
                         a single user version. A software development kit is
                         available for designers who wish to use our tools to
                         help design their PC Card products. CardWare was
                         designed to operate with Windows NT4.0, DOS & OS/2
                         solutions. TouchStone is licensed by APSoft, Inc to
                         offer this product for resale.

ISA/PCI                  The ISA and PCI Postcard is a plug-in diagnostic card
POSTCARD                 to aid MIS professionals and PC end-users alike to
                         determine the causes of their system failures. It
                         requires no operating system to run and works on any PC
                         or compatible. The ISA POSTcard can be plugged into any
                         XT, AT, ISA or EISA compatible expansion slot and the
                         PCI POSTcard can be plugged into and PCI expansion slot
                         and in seconds POSTcard is displaying test results,
                         often pinpointing the exact bad component. The POSTcard
                         V3 user's manual lists the BIOS POST codes of all major
                         BIOS vendors.
                                       12
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

SERVICES

eSupport.com currently offers the following services:

--------------------------------------------------------------------------------
SERVICE                  DESCRIPTION
--------------------------------------------------------------------------------

BIOS ENGINEERING         TouchStone is a full-service engineering company with
AND OEM SERVICES         software and hardware engineers that have extensive
                         experience in BIOS development, embedded designs, and
                         all aspects of the system management software design
                         and development. As an independent authorized
                         distributor of Award/Phoenix, TouchStone has access to
                         the very latest source code and development techniques.

RESULTS OF OPERATIONS

     The following is a preliminary discussion of the financial condition and
results of operations of the Company as of March 31, 2002 and March 31, 2001 and
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto and the Company's audited consolidated financial
statements and notes thereto for the year ended December 31, 2001, included in
the Company's Annual Report on Form 10-KSB and is qualified in its entirety by
reference thereto.

     The following table sets forth, for the periods indicated certain
consolidated statement of operations information as a percentage of the
Company's total revenues represented by each item. The Company's historical
results are not necessarily indicative of results in any future period.

                                                          THREE MONTHS ENDED
                                                               MARCH 31,
                                                          2002          2001
     Revenues:
         Product sales                                     92%           90%
         Royalty income                                     8            10
     Total revenues                                       100           100
     Cost of revenues                                      11             8
     Gross profit                                          89            92
     Operating expenses:
         Sales, marketing, general and
           administrative                                  59            99
         Research and development                          24            23
                                                        --------------------
                Total operating expenses                   83           122

     Income (loss) from operations                          6           (30)
     Loss on investments, net                               -           (32)
     Other income, net                                      5             -
     Income (loss) before provision for income taxes
                                                           11           (62)
     Provision for income taxes                             -             -
     Net income (loss)                                     11%          (62)%
                                                        ====================

COMPARISON OF THREE MONTH PERIODS ENDED MARCH  31, 2002  AND 2001

           REVENUES. The Company's revenues consist of product sales, royalties
and engineering services revenues. Product revenues are recorded at the time
products are shipped. Royalty income is recognized upon receipt of a royalty
report from the licensor. Engineering services revenue generally consists of
amounts charged for customization of the software prior to delivery and are
generally recognized as the services are performed. Product revenues increased
$1,346 for the three month period ended March 31, 2002 as compared to the same
period a year

                                       13
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

ago. The slight increase in revenues is a result of management's continued focus
on the BIOS upgrade business. BIOS product sales increased approximately 7% as
compared to the same period one year ago. Royalty revenues decreased by
approximately $14,000 or 23% as compared to a year ago. This decline is a result
of our customer's reduction in revenues of which they pay royalties for the use
of our technology. For the quarter ended March 31, 2002 the Company experienced
an overall decline in revenues of only 2% as compared to the same period a year
ago.

     COST OF REVENUES. Cost of revenues consists of the cost of materials,
freight expenses, royalties paid to other software development companies and
direct costs associated with engineering services revenues. Cost of revenues as
a percentage of revenue increased to 11% of revenues for the three month period
ended March 31, 2002. The increase is due to a higher percentage of revenues
being generated from product sales and an increase in packaging and shipping
costs associated with these sales. For the quarter ended March 31, 2002, 16% of
the Company's revenue related to royalties and other revenue that had no costs
associated with it as compared to only 9% in 2001

     SALES, MARKETING, GENERAL AND ADMINISTRATIVE. Sales, marketing, general and
administrative expenses consist primarily of sales salaries & commissions,
professional services and facilities costs. Sales, marketing, general and
administrative expenses decreased by approximately $236,000, or 42%, for the
three month period ended March 31, 2002, from the same period of the prior year
due primarily from a 53% reduction in administrative and executive salaries, a
100% reduction in travel related costs, 100% reduction in bad debt expense,
along with various other reduction related to professional fees and outside
services such as co-location services for the Company's data servers.

     RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of engineering personnel and related expenses. Research and
development expenses increased by approximately $4,000 or 3%, for the three
month period ended March 31, 2002, from the same period of the prior year
primarily due to the addition of an engineer who had previously been working on
a consulting basis as needed.

     OTHER INCOME,(EXPENSE), NET. Other income, (expense) net consists of
interest income associated with the related party note and interest expense
associated with the settlement note. Also, included in other income is
approximately $25,000, which represents a refund of amounts previously paid by
the Company in anticipation of foreign taxes due in connection with its now
defunct subsidiary, TouchStone Europe Ltd. The Company had previously recorded
an expense for this payment. Upon receipt of the refund the Company recorded the
refund as other income.

LIQUIDITY AND CAPITAL RESOURCES

     During the quarter ended Machr 31, 2002, the Company used cash resources of
$23,000 for operating activities as compared to $71,000 during the same quarter
a year ago.

     The Company's cash balance at March 31, 2002 was $37,000 as compared to
$154,000 a year ago. Investments and marketable securities totaled $187,200 at
March 31, 2002, as compared to $364,000 a year ago. This decrease is mainly
related to the sale of all 102,600 shares of Smith Micro capital stock during
2001. These shares were received in connection with the sale of the CheckIT
product line to Smith Micro Software in 2000. The decrease is also due from a
$0.28 per share decrease in the fair-market value of the 260,000 share held in
PartsBase Inc. Proceeds from the sale of the Smith Micro shares were
approximately $210,000, all of which was used to fund operations during 2001.

     Working capital decreased from $183,000 at March 31, 2001 to a $134,000
deficit at March 31, 2002. During the quarter ended March 31, 2002 three
payments were made on the debt related to the settlement agreement with a former
CEO, aggregating $7,075, along with a lumpsum payment of $25,000. The remaining
outstanding principal balance as of March 31,2002 was $63,267 and is scheduled
to be repaid through April 2004.

     Management's ongoing reorganization plan provides for significant staff
reductions in non-core operating and support functions, limitations on corporate
travel and a realignment of senior management responsibilities; all aimed toward
reducing operating costs to levels commensurate with current revenues. The
Company has also

                                       14
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

renegotiated certain contracts and agreements in order to improve its near-term
cash flow. As part of the Company's continued reorganization plan, effective
April 1, 2002, and concurrent with the expiration of his employment agreement,
the Company's CEO and President, Pierre Narath, has resigned his position as
President and Chief Executive Officer and will serve as Chairman of the Board of
Directors of the Company. Mr. Raza, the Company's Vice President assumed the
duties of President and Chief Executive Officer at that time. Commencing April
1, 2002, Mr. Raza and Mr. Narath have agreed to annual base salaries of
approximately $150,000 and $70,000 per year, respectively and they are each
employees at will. Resulting in an overall reduction in executive compensation
of approximately $175,000.

     In order to meet its cash requirements over the next twelve months,
management expects to supplement cash flow benefits expected from these
initiatives, by liquidating its marketable securities classified as available
for sale, as necessary. Other additional sources of financing, including
additional private debt or equity capital are being explored, along with seeking
merger candidates with whom the Company has substantial synergies.

     The Company continues to operate with no material commitments for capital
expenditures and we anticipate that expenditures will continue to decrease in
the immediate future as we continue to cut costs during our efforts to
restructure current operating expenditure in line with our current revenue
stream.

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     CERTAIN STATEMENTS CONTAINED IN THIS ANNUAL REPORT ON FORM 10-KSB,
INCLUDING INFORMATION WITH RESPECT TO FUTURE BUSINESS PLANS, CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT. STATEMENTS CONTAINED HEREIN
THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING
STATEMENTS. WITHOUT LIMITING THE FOREGOING, THE WORDS "ANTICIPATES," "BELIEVES,"
"PLANS," "EXPECTS," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT
EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF FACTORS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS or outcomes to differ materially from those described or
implied in such forward-looking statements.

     o    that we will continue to enter reseller and original equipment
          manufacturer relationships;
     o    that we anticipate our gross margins may increase;
     o    that we currently anticipate that our available cash resources will be
          sufficient to meet our anticipated needs for working capital and
          capital expenditures for at least the next year;

     We caution investors that there are a number of important factors that
could cause our results to differ materially from those indicated by such
forward-looking statements. These factors include those set forth below in the
"Factors that May Affect Future Results and Market Price of Stock" and elsewhere
throughout this report.

        FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK

     Until this quarter the Company had suffered recurring operating losses, has
an accumulated deficit of $20,106,326 at March 31, 2002, and is largely
dependent on its investment portfolio to fund any future operating losses. If
our revenue grows more slowly than we currently anticipate or if our operating
expenses increase, our business, results of operations and financial condition
will be materially and adversely affected. These factors, among others, raise
substantial doubt about the Company's ability to continue as a going concern at
March 31, 2002.

     Our quarterly operating results are subject to significant fluctuations,
and you should not rely on them as and indication of our future results.

     Our revenue and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. Future
revenue is difficult to forecast and for the foreseeable future will be
influenced by the timing and amount of sales to new customers.

                                       15
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

     Although we have reduced operating expenditures through various methods,
many of our continuing expenses are relatively fixed and are incurred in part
based on expectations of future revenue. We may be unable to adjust spending
quickly enough to offset any unexpected revenue shortfall. Accordingly, any
shortfall in revenue may cause significant variation in operating results in any
quarter.

     Because of these factors, you should not rely on quarter-to-quarter
comparisons or our results of operations as an indication of our future
performance. It is possible that, in future periods, our results of operations
may be below the expectations of public market analysts and investors. This
could cause the trading price of our common stock to decline.

     Competition could reduce our market share and harm our business.
     Competitors may be able to develop products and services that are more
attractive to businesses than our products and services.
     If we cannot deliver satisfactory support and maintenance services to our
customers, our revenues may be harmed.
     Our business may suffer as a result or our reduction in workforce.
     Our business will not grow if we do not keep pace with the rapidly changing
technologies.
     We may need additional financing which could be difficult to obtain.
     Our business may suffer if we cannot protect our intellectual property.

     The Company's Common Stock was traded on The NASDAQ National Market from
May 19, 1995, until July 9, 1999 under the symbol "TSSW." On July 9, 1999, the
NASDAQ Listing Qualification Panel (the "Panel") determined to delist the
Company's shares from the NASDAQ National Market and noted the Company did not
comply with the requirements for continued listing on the NASDAQ Small Cap
Market. The Panel based its decision primarily on its lack of confidence in the
Company's ability to achieve and maintain compliance with the minimum bid price
requirement of Rule 4450(a) (5). The Panel also cited its concern that the
Company would not maintain the level of net tangible assets required by
Marketplace Rule 4450(a) (3). The Company's shares now trade on the OTC Bulletin
Board.

     The price at which our common stock will trade has been and is likely to
continue to be highly volatile and may fluctuate substantially due to a number
of factors, many of which are beyond our control, including:

     o    actual or anticipated fluctuations in our results of operations
     o    our ability to raise additional capital if needed
     o    technological innovations by us or our competitors
     o    increase competition
     o    additions or departures of key personnel
     o    conditions and trends in our industry
     o    general market conditions

                                       16
<PAGE>

                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     THE COMPANY IS CURRENTLY UNAWARE OR SUBJECT TO ANY LEGAL PROCEEDINGS AND
CLAIMS, OTHER THAN THOSE WHICH ARISE, IN THE ORDINARY COURSE OF ITS BUSINESS.
ALTHOUGH OCCASIONAL ADVERSE DECISIONS (OR SETTLEMENTS) MAY OCCUR, THE COMPANY
BELIEVES THAT THE FINAL DISPOSITION OF SUCH MATTERS WILL NOT HAVE A MATERIAL
ADVERSE EFFECT ON THE FINANCIAL POSITION OR RESULTS OF OPERATIONS OF THE
COMPANY.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed by the Company during the quarter
          ended March 31, 2002.



















                                       17
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                TOUCHSTONE SOFTWARE CORPORATION AND SUBSIDIARIES

                                   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.

                                          TOUCHSTONE SOFTWARE CORPORATION
                                                    (Registrant)


NAME                              TITLE                           DATE
----                              -----                           ----

 /s/ Jason K. Raza                Chief Executive Officer         May 15, 2002
------------------------------    and President
JASON K. RAZA



 /s/ Christopher J. Gaudette      Controller, Principal           May 15, 2002
------------------------------    Accounting Officer,
CHRISTOPHER J. GAUDETTE           and Secretary












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