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


                                   FORM 10-QSB
 (Mark One)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

  [ ]       TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from ________________ to _______________


                                    000-27763
                            (Commission file number)

                              SITESTAR CORPORATION
        (Exact name of small business issuer as specified in its charter)

                  NEVADA                                   88-0397234
       (State or other jurisdiction                       (IRS Employer
     of incorporation or organization)                 Identification No.)

           15303 VENTURA BOULEVARD, SUITE 1510, SHERMAN OAKS, CA 91403
                    (Address of principal executive offices)

                                 (818) 380-8180
                           (Issuer's telephone number)


              (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 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 [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity. As of June 30, 2002 - 98,624,892 shares of Common Stock

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




<PAGE>


                              SITESTAR CORPORATION
                                      INDEX

                                                                          Page
                                                                         Number
                                                                         ------
PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheet as of June 30, 2002        3-4

           Condensed Consolidated Statements of Operations for
           the three months ended June 30, 2002 and 2001                    5

           Condensed Consolidated Statements of Operations for
           the six months ended June 30, 2002 and 2001                      6

           Condensed Consolidated Statements of Cash Flows for
           the six months ended June 30, 2002 and 2001                     7-8

           Notes to Condensed Consolidated Financial Statements           9-13

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                           14-20

Part II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                               20

Item 2.    Change in Securities and Use of Proceeds                        20

Item 3.    Defaults Upon Senior Securities                                 20

Item 4.    Submission of Matters to a Vote of Security Holders             20

Item 5.    Other Information                                               20

Item 6.    Exhibits and Reports on Form 8-K                                20

SIGNATURES                                                                 21

Part III.  EXHIBITS










                                       2
<PAGE>


PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

                      SITESTAR CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2002


                                     ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                   $        98,674
   Marketable securities                                                27,248
   Accounts receivable, net of allowance of $434,988                   365,592
   Inventory                                                            94,950
   Other current assets                                                112,672
                                                               ---------------

     Total current assets                                              699,136

PROPERTY AND EQUIPMENT, net                                            381,896
CUSTOMER LIST, net                                                     950,373
GOODWILL                                                             2,472,719
INVESTMENTS                                                            130,500
                                                               ---------------

TOTAL ASSETS                                                   $     4,634,624
                                                               ===============


















       See the accompanying notes to the consolidated financial statements


                                       3
<PAGE>



                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET, CONTINUED
                                  JUNE 30, 2002

                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES
   Accounts payable and accrued expenses                       $       373,914
   Deferred revenue                                                    211,125
   Convertible debenture                                               151,612
   Line of credit                                                       77,493
   Note payable - stockholders, current portion                        123,314
   Notes payable, current portion                                      183,668
   Capital lease obligations, current portion                            6,598
                                                               ---------------

     Total current liabilities                                       1,127,724

NOTES PAYABLE - STOCKHOLDERS, less current portion                     398,854
NOTES PAYABLE, less current portion                                    167,640
CAPITAL LEASE OBLIGATIONS, less current portion                          4,400
                                                               ---------------

TOTAL LIABILITIES                                                    1,698,618
                                                               ---------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred Stock, $.001 par value, 10,000,000 shares
     authorized, 0 shares issued and outstanding                             -
   Common Stock, $.001 par value, 300,000,000 shares
    authorized, 98,624,892 shares issued and outstanding                98,625
   Additional paid-in capital                                       13,608,541
   Accumulated deficit                                             (10,771,160)
                                                               ----------------

     Total stockholders' equity                                      2,936,006
                                                               ---------------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                        $     4,634,624
                                                               ===============







       See the accompanying notes to the consolidated financial statements

                                       4
<PAGE>


<TABLE>
<CAPTION>
                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001

                                                            2002            2001
                                                       -------------   -------------
<S>                                                    <C>             <C>
REVENUE                                                $     995,682   $     919,959

COST OF REVENUE                                              542,024         386,653
                                                       -------------   -------------

GROSS PROFIT                                                 453,658         533,306

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                                     529,611       1,081,634
                                                       -------------   -------------

LOSS FROM OPERATIONS                                         (75,953)       (548,328)

OTHER INCOME (EXPENSES)
  Other income                                                 2,016          13,313
  Increase in market value of marketable securities                -          89,446
  Interest expense                                           (49,833)        (65,601)
                                                       --------------  --------------

LOSS BEFORE INCOME TAXES                                    (123,770)       (511,170)

INCOME TAXES                                                       -               -
                                                       -------------   -------------

NET LOSS                                               $    (123,770)  $    (511,170)
                                                       ==============  =============

BASIC AND DILUTED LOSS PER SHARE                       $      (0.00)   $       (0.01)
                                                       =============   =============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                      98,624,892      68,749,662
                                                       =============   =============
</TABLE>







       See the accompanying notes to the consolidated financial statements

                                       5
<PAGE>



<TABLE>
<CAPTION>
                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

                                                            2002              2001
                                                       -------------   -------------
<S>                                                    <C>             <C>
REVENUE                                                $   2,130,914   $   1,832,133

COST OF REVENUE                                            1,070,189         714,633
                                                       -------------   -------------

GROSS PROFIT                                               1,060,725       1,117,500

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                                   1,166,064       1,813,779
                                                       -------------   -------------

LOSS FROM OPERATIONS                                        (105,339)       (696,279)

OTHER INCOME (EXPENSES)
  Other income                                                 2,016          96,517
  Increase in market value of marketable securities                -         130,688
  Interest expense                                          (104,306)       (168,374)
                                                       --------------  --------------

LOSS BEFORE INCOME TAXES                                    (207,629)       (637,448)

INCOME TAXES                                                       -               -
                                                       -------------   -------------

NET LOSS                                               $    (207,629)  $    (637,448)
                                                       ==============  ==============

BASIC AND DILUTED LOSS PER SHARE                       $      (0.00)   $       (0.01)
                                                       =============   ==============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                      98,372,064      65,669,261
                                                       =============   =============
</TABLE>





       See the accompanying notes to the consolidated financial statements

                                       6
<PAGE>
<TABLE>
<CAPTION>
                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

                                                               2002           2001
                                                        ------------   ------------
<S>                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                             $   (207,629)  $   (637,448)
   Adjustments to reconcile net loss to net
   cash provided by operating activities:
   Depreciation and amortization expense                     237,297        566,928
   Amortization of debt financing costs                            -         97,315
   Increase in market value of marketable securities               -       (130,688)
   Stock issued in lieu of compensation
      and professional fees                                  125,000        450,377
   Value of common shares cancelled                                -        (96,517)
   Net purchases of marketable securities                          -        101,499
   (Increase) decrease in:
     Accounts receivable                                      58,103        (46,686)
     Inventory                                                (4,950)         6,234
     Other assets                                            (21,308)        56,270
   Increase (decrease) in:
     Accounts payable and accrued expenses                     8,011       (228,721)
     Deferred revenue                                         48,531       (103,350)
                                                        ------------   ------------
Net cash provided by  operating activities                   243,055         35,213
                                                        ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                        (24,231)        (7,418)
   Purchase of investments                                   (35,500)             -
   Deposit paid for acquisition                                    -       (150,000)
                                                        ------------   -------------
Net cash used in investing activities                        (59,731)      (157,418)
                                                        ------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net change in line of credit                               (2,316)             -
   Repayment of notes payable                                (59,124)       (29,625)
   Repayment of convertible debenture                       (325,000)             -
   Repayment of notes payable - stockholders                 (55,340)       (30,861)
   Payment on capital lease obligation                       (21,577)       (15,607)
                                                        ------------   -------------
Net cash used in financing activities                       (463,357)       (76,093)
                                                        ------------   -------------
NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                     (280,033)      (198,298)
CASH AND CASH EQUIVALENTS -
   BEGINNING OF PERIOD                                       378,707        289,294
                                                        ------------   ------------
CASH AND CASH EQUIVALENTS -
   END OF PERIOD                                        $     98,674   $     90,996
                                                        ============   ============
</TABLE>
       See the accompanying notes to the consolidated financial statements

                                       7
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (CONTINUED)



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

During the six months ended June 30, 2002 and 2001, the Company paid no income
taxes and interest of approximately $ 104,000 and $ 25,000, respectively.


NON-CASH INVESTING AND FINANCING TRANSACTIONS:

During the six months ended June 30, 2002, the Company issued  3,720,238  shares
of common stock for  executive  compensation  of $125,000  and issued  2,000,000
shares  of  common  stock  to  the  original   Sitestar.net   shareholders  that
represented  the  contingent  shares to be issued if no  additional  liabilities
arose  during  the  first two years  after the  acquisition.  The value of these
shares issued was $60,000 which is recorded as additional goodwill.

During the six months ended June 30, 2001, the Company converted $192,443 of the
convertible  debenture into 4,581,984  shares of common stock,  issued 2,193,674
shares of common  stock for  professional  services  valued at  $93,377,  issued
7,140,000 shares of common stock for officers' salaries of $357,000 and canceled
1,741,418 shares of common stock valued at $96,517. In addition,  during the six
months ended June 30, 2001, the Company  entered into capital lease  obligations
of $12,253.




















       See the accompanying notes to the consolidated financial statements

                                       8
<PAGE>


                              SITESTAR CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The unaudited Condensed  Consolidated Financial Statements have been prepared by
Sitestar  Corporation  (the "Company" or "Sitestar"),  pursuant to the rules and
regulations of the Securities and Exchange Commission. The information furnished
herein reflects all  adjustments  (consisting of normal  recurring  accruals and
adjustments)  which are,  in the  opinion  of  management,  necessary  to fairly
present the operating results for the respective  periods.  Certain  information
and  footnote  disclosures  normally  present in annual  consolidated  financial
statements prepared in accordance with generally accepted accounting  principles
have been  omitted  pursuant  to such  rules and  regulations.  These  financial
statements should be read in conjunction with the audited consolidated financial
statements  and footnotes  for the year ended  December 31, 2001 included in the
Company's Annual Report on Form 10-KSB. The results of the six months ended June
30, 2002 are not  necessarily  indicative  of the results to be expected for the
full year ending December 31, 2002.


NOTE 2 - EARNINGS PER SHARE

In 1997, the Financial  Accounting  Standard Board ("FASB") issued  Statement of
Financial  Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the  previously  reported  primary and fully  diluted  earnings per
share with basic and diluted  earnings per share.  Unlike  primary  earnings per
share,  basic  earnings  per share  excludes  any  dilutive  effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously  reported fully diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
during the period. Common equivalent shares are excluded from the computation if
their effect is  anti-dilutive.  As of June 30, 2002 the Company has outstanding
500,000 warrants to purchase shares of common stock at $0.77.














                                       9
<PAGE>


                              SITESTAR CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 3 - CONVERTIBLE DEBENTURE

On May 11,  2000,  the Company  issued two  convertible  debentures  aggregating
$500,000.  The debentures  bear interest at 12% per annum and were due on May 1,
2001. On August 14, 2000, the Company issued another two  convertible  debenture
aggregating  $500,000 to the holders of the  above-mentioned  debentures for the
same terms described above, except for the due date of August 14, 2001.

As of June  30,  2002,  the  holder  of the  debentures  converted  $513,388  in
principal  and  $90,822 of  accrued  interest  into  13,100,906  and  5,176,365,
respectively,  shares of the Company's  common stock.  Also as of June 30, 2002,
the Company has repaid $335,000 of this debenture in cash.

As of June 30, 2002,  the  convertible  debentures  are past their  maturity and
callable at anytime by the  debenture  holders.  The  debenture  holder has also
served notice to the Company that the convertible debentures are in default. The
Company has not  converted  any of the  outstanding  balances into the Company's
common  stock for the last 3 quarters.  The Company also has not redeemed any of
the convertible debentures since February 2002.

As of June 30, 2002,  there is a discrepancy  between the balance  maintained by
the Company and the balance calculated by the debenture holders. The balance the
Company  has  disclosed  in its  financial  statements  is derived  from all the
conversion  notices and confirmation  received from our debenture  holders as of
the last  fiscal  year's  audited  financial  statements.  The  Company  and the
representatives  of the  debenture  holders are working to reconcile and resolve
the balance discrepancies.

The Company believes that it has proper documentation to support its position in
this matter;  however, in the event the Company is not successful in reconciling
and resolving this matter, the outstanding balance of the convertible  debenture
could  increase  significantly.  As of June 30, 2002,  the Company has disclosed
that the outstanding  principal  balance is $151,612.  This outstanding  balance
could increase to over $300,000 if the debenture holders are able to assert that
their balance is the correct balance.


NOTE 4 - COMMON STOCK

During the six months ended June 30, 2002, the Company issued  3,720,238  shares
of common stock for executive compensation of $125,000.

In addition, in January 2002 the Company issued 2,000,000 shares of common stock
to the original Sitestar.net shareholders that represented the contingent shares
to be issued if no additional liabilities arose during the first two years after
the acquisition.  The value of these shares issued was $60,000 which is recorded
as additional goodwill in the accompanying  financial  statements.  The value of
the shares issued was the market value of the shares at the date of issuance.



                                       10
<PAGE>


                              SITESTAR CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 5 - SEGMENT INFORMATION

The Company has four business units that have separate  management and reporting
infrastructures  that offer different products and services.  The business units
have  been  aggregated  into  four  reportable  segments:  Corporate,  Internet,
Development and Retail.  The Corporate group is the holding company and oversees
the operating of the other  business  units.  The Corporate  group also arranges
financing for the entire  organization.  The Internet  group  provides  Internet
access to customers in the  Martinsville  and Lynchburg,  Virginia and Mt. Airy,
North  Carolina  areas.  The  Development   group  provides   customer  software
programming  to companies,  principally  in the  manufacturing  industries.  The
Retail group operates a retail computer store in Lynchburg,  Virginia as well as
providing computer training to customers.

The Company evaluates the performance of its operating  segments based on income
from operations,  before income taxes, accounting changes,  non-recurring items,
and interest income and expense.

Summarized financial information concerning the Company's reportable segments is
shown in the following table for the six months ended June 30, 2002 and 2001:

<TABLE>
<CAPTION>

                                                    June 30, 2002
                             ----------------------------------------------------------------
                               Corporate    Internet    Development    Retail    Consolidated
                             -----------  ------------  -----------  ----------  ------------
   <S>                       <C>          <C>           <C>          <C>         <C>
   Revenue                   $         -  $  1,692,223  $   144,861  $  293,830  $ 2,130,914
   Operating income (loss)   $  (415,863) $    249,727  $     9,573  $   51,224  $  (105,339)
   Depreciation and
     amortization            $     2,639  $    226,202  $     6,516  $    1,940  $   237,297
   Interest expense          $   (12,014) $    (92,292) $         -  $        -  $  (104,306)
   Intangible assets         $         -  $  3,423,092  $         -  $        -  $ 3,423,092
   Identifiable assets       $   334,247  $  4,106,180  $    28,880  $  165,317  $ 4,634,624


                                                    June 30, 2001
                             ----------------------------------------------------------------
                               Corporate    Internet    Development    Retail    Consolidated
                             -----------  ------------  -----------  ----------  ------------
   Revenue                   $         -  $  1,325,621  $   148,478  $  358,034  $ 1,832,133
   Operating loss            $  (770,000) $     53,164  $   (34,553) $   55,110  $  (696,279)
   Depreciation and
     amortization            $     1,715  $    559,947  $     3,496  $    1,770  $   566,928
   Interest expense          $   135,571  $     33,528  $       (17) $     (708) $   168,374
</TABLE>


                                       11
<PAGE>

                              SITESTAR CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 6 - RECENTLY ISSUED ACCOUNTING PROUNCEMENTS

The Company  has adopted  SFAS No. 142,  "Goodwill  and Other  Intangibles"  and
accordingly  has ceased  amortizing  Goodwill.  Amortization  expense related to
Goodwill  for the six months ended June 30, 2001 was  $237,690.  Pursuant to the
standard, the Company performed the first tier Goodwill impairment test based on
criteria in effect at date of Adoption,  January 1, 2002,  and  determined  that
there is no indication of  impairment.  The Company has not yet  determined  the
date of the annual  impairment  test,  and  therefore may perform the test again
before the year end December 31, 2002,  but does not expect the result to have a
material impact on financial position and results of operations.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment of
Long-Lived  Assets  and for  Long-Lived  Assets  to Be  Disposed  Of."  SFAS 144
addresses  financial  accounting and reporting for the impairment or disposal of
long-lived  assets.  SFAS 144 requires  that  long-lived  assets be reviewed for
impairment  whenever  events  or  changes  in  circumstances  indicate  that its
carrying  amount may not be  recoverable  and is measured by a comparison of the
carrying amount of an asset to undiscounted future net cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future  undiscounted  cash flows,  an impairment  charge is  recognized  for the
amount by which the carrying  amount of the asset  exceeds the fair value of the
asset. SFAS 144 requires companies to separately report discontinued  operations
and extends  that  reporting  to a  component  of an entity that either has been
disposed  of (by  sales,  abandonment  or in a  distribution  to  owners)  or is
classified as held for sale. Assets to be disclosed are reported at the lower of
the  carrying  amount or fair value less costs to sell.  The Company has adopted
SFAS 144 on January 1, 2002.  The  provisions of this  statement for assets held
for sale or other  disposal  generally are required to be applied  prospectively
after the adoption date to newly initiated disposal  activities and,  therefore,
will depend on future actions  initiated by management.  As a result,  we cannot
determine  the  potential  effects  that  adoption  of SFAS 144 will have on our
consolidated financial statements with respect to future disposal decisions,  if
any.

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and
Losses from  Extinguishment  of Debt", and an amendment of that Statement,  FASB
Statement  No.  64,  "Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements"  and FASB Statement No. 44,  "Accounting for Intangible  Assets of
Motor Carriers".  This Statement  amends FASB Statement No. 13,  "Accounting for
Leases",  to eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions. The Company does not expect the adoption to have a material impact
to the Company's financial position or results of operations.


                                       12
<PAGE>


NOTE 7 - SUBSEQUENT EVENT

In July  2002,  the  Company  acquired,  through  its  affiliate,  Sitestar  SMS
Partners,  LLC, a minority  equity  stake in Chikka  Holdings,  Ltd.,  a British
Virgin  Islands  registered  company  operating  in  the  Asia  Pacific  region,
specifically  in  the  Philippines.  Chikka  is a  leading  provider  of  mobile
messaging  and other  enhanced data  services to mobile  carriers.  Sitestar SMS
Partners  is managed by the  Company  and is  composed  of various  third  party
limited  investors,  which include current Sitestar  shareholders.  Sitestar SMS
Partners invested $500,000 in exchange for a minority equity stake in Chikka.




















                                       13
<PAGE>


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

GENERAL

The following discussion and analysis should be read in conjunction with the our
consolidated  financial  statements  and  related  footnotes  for the year ended
December 31, 2001 included in our Annual Report on Form 10-KSB.  The  discussion
of results,  causes and trends  should not be construed to imply any  conclusion
that such results or trends will necessarily continue in the future.

OVERVIEW

We are a  technology  holding  company with a broad  strategy of  acquiring  and
investing in technology related  enterprises.  Our primary strategy is acquiring
and operating small independent Internet Service Providers in the rural areas of
the  mid-Atlantic  region.  Our specific mission is to develop our operating ISP
subsidiaries and future ISP  acquisitions  into a successful  collaborative  ISP
network.  We intend to  achieve  this  success  by  harnessing  the  synergistic
potentials  that  exists  among  these  acquisitions  by  consolidating  all the
administrative functions and streamlining the corporate functions that may exist
with each acquisition.

In July 1999,  we began to  implement  our  broader  strategy of  acquiring  and
investing in emerging technology-based enterprises to create a broad and diverse
set of core electronic businesses that deliver a variety of online solutions. In
addition  to  developing  and  integrating  technology-based  technologies,  our
broader  objective  is to  create  a mix of  Internet  operating  companies  and
technology-related portfolio investments that will enhance the value of our core
holdings.

Our Internet operating  subsidiaries  provide Internet services to our customers
by providing  Internet  access and  enhanced  products and services to small and
medium sized  enterprises in selected high growth markets.  We target  primarily
small and medium  sized  enterprise  customers  located in selected  high growth
secondary  markets.  We currently provide our customers with Internet access and
enhanced products and services in the mid-Atlantic area of the United States. We
have designed our comprehensive  suite of enhanced products and services to meet
the expanding needs of our customers and to increase our revenue per customer.

The products and services we provide include:

o        Internet access services;
o        Web design services;
o        Web hosting services;
o        End to end e-commerce solutions;
o        Online marketing consulting; and
o        Management of mission critical Internet applications.

                                       14
<PAGE>

Our Internet service provider  operating  subsidiaries  derive their income from
the excess of the Internet  service prices we charge our customers over the cost
of service we pay our  suppliers.  Additionally,  our retail  customers  pay for
services by cash or credit card while we pay our suppliers on extended terms. As
a result,  we are able to  increase  our  working  capital  between  the time we
receive  payment for services and the time we are required to pay suppliers.  We
also generate  income from the  development  of computer  software for companies
principally  in the  manufacturing  industries  and from  sales  from our retail
computer store in Lynchburg, Virginia and Mt. Airy, North Carolina.

On July 1, 2001, we acquired 100% of the equity and voting  interest of Advanced
Internet  Services,  Inc., a North Carolina  corporation which is a successor in
interest to two sole proprietorships one having the same name as the corporation
and the other with the name  Professional  Data Systems  (collectively  "ADVI").
ADVI is an Internet service  provider  located in Mt. Airy, North Carolina.  The
purchase price was $965,980,  which consisted of $150,000 in cash,  6,021,818 of
our common shares valued at $301,091 a non-interest  bearing promissory note for
$1,199,990 payable in 24 quarterly installments of $49,995 and transaction costs
of $30,000.  However,  due to the  non-interest  bearing  nature of the note, we
imputed a discount rate of 36% to calculate the present value of the note.  This
discount  rate is an  estimate of our  current  cost of  capital.  Based on this
calculation, the present value of the non-interest promissory note is $484,889.

We believe the acquisition of ADVI, with about 3,000  subscribers,  enhanced our
primary strategy of consolidating  small Internet service providers in the rural
markets of the mid-Atlantic  region by enlarging our service footprint.  We also
believe  this  transaction  opened  other  acquisition  opportunities  for us to
further  increase  our presence in the northern  areas of North  Carolina.  This
recent  acquisition  increases our Internet  access customer base to over 15,000
subscribers.  This acquisition included goodwill of $702,642 that is the premium
we paid to have the  opportunity  to  generate  revenues  and  earnings  in this
market.  Furthermore,  this  acquisition  generated  us cost  savings  with  the
integration and consolidation of ADVI's corporate and  administrative  functions
with our existing  infrastructure.  This estimated cost savings,  along with the
accretive  nature of the  transaction  from an operating cash flow  perspective,
will further allow us to enhance our revenue  streams and increase our operating
cash flow.


RESULTS OF OPERATIONS

         The following  tables show financial data for the six months ended June
30,  2002  and  2001.  Operating  results  for any  period  are not  necessarily
indicative of results for any future period.




                                       15
<PAGE>

<TABLE>
<CAPTION>

                                           FOR THE SIX MONTHS ENDED JUNE 30, 2002
                                ------------------------------------------------------------
                                CORPORATE     INTERNET   DEVELOPMENT   RETAIL      TOTAL
                                ---------   -----------  -----------  ---------  -----------
<S>                             <C>         <C>          <C>          <C>        <C>
Revenue                         $       -   $ 1,692,223  $  144,861   $ 293,830  $ 2,130,914
Cost of revenue                         -       811,903      76,429     181,857    1,070,189
                                ---------   -----------  -----------  ---------  -----------
Gross profit                            -       880,320      68,432     111,973    1,060,725
Operating expenses                415,863       630,593      58,859      60,749    1,166,064
                                ---------   -----------  -----------  ---------  -----------
Income (loss) from operations    (415,863)      249,727       9,573      51,224     (105,339)
Other income (expense)            (10,105)      (92,046)       (180)         41     (102,290)
                                ---------   -----------  -----------  ---------  -----------
Net income (loss)               $(425,968)  $   157,681  $    9,393   $  51,265  $  (207,629)
                                =========   ===========  ==========   =========  ===========

EBITDA                          $(413,224)  $   475,924  $   16,089   $  53,164  $   131,953
   Corporate expenses paid
     with common stock            125,000             -          -           -       125,000
                                ---------   -----------  -----------  ---------  -----------
Actual cash generated           $(288,224)   $  475,924  $   16,089   $  53,164  $   256,953
                                =========   ===========  ==========   =========  ===========


                                              FOR THE SIX MONTHS ENDED JUNE 30, 2001
                                ------------------------------------------------------------
                                CORPORATE     INTERNET   DEVELOPMENT   RETAIL      TOTAL
                                ---------   -----------  -----------  ---------  -----------
Revenue                         $       -   $ 1,325,621  $  148,478   $ 358,034  $ 1,832,133
Cost of revenue                         -       459,612     101,676     153,345      714,633
                                ---------   -----------  -----------  ---------  -----------
Gross profit                            -       866,009      46,802     204,689    1,117,500
Operating expenses                770,000       812,845      81,355     149,579    1,813,779
                                ---------   -----------  -----------  ---------  -----------
Income (loss) from operations    (770,000)       53,164     (34,553)     55,110     (696,279)

Other income (expense)             91,634       (33,511)         -          708       58,831
                                ---------   -----------  -----------  ---------  -----------
Net income (loss)               $ (678,366) $    19,653  $  (34,553)  $  55,818  $  (637,448)
                                =========   ===========  ==========   =========  ===========

EBITDA                          $ (676,651) $   616,606  $  (34,553)  $  56,880  $   (37,718)
   Corporate expenses paid
     with common stock             450,377            -          -          -        450,377
                                ---------   -----------  -----------  ---------  -----------
Actual cash generated           $(226,274)  $   616,606  $  (34,553)  $  56,880  $   412,659
                                =========   ===========  ==========   =========  ===========
</TABLE>

                                       16
<PAGE>

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

(1) EBITDA  (earnings  before interest,  taxes,  depreciation and  amortization)
consists  of  revenue  less cost of revenue  and  operating  expense.  EBITDA is
provided  because it is a measure  commonly  used by  investors  to analyze  and
compare companies on the basis of operating performance.  EBITDA is presented to
enhance  an  understanding  of our  operating  results  and is not  intended  to
represent  cash flows or results of operations  in accordance  with GAAP for the
periods indicated. EBITDA is not a measurement under GAAP and is not necessarily
comparable with similarly titled measures for other companies. See Liquidity and
Capital  Resource  section  for  further   discussion  of  cash  generated  from
operations.

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO JUNE 30, 2001

REVENUE.  Revenue for the three months ended June 30, 2002  increased by $75,723
or 8.2% from  $919,959  for the three months ended June 30, 2001 to $995,682 for
the same  period in 2002.  The  increase is  attributed  to the  acquisition  of
Advance Internet in July 2001 that contributed revenue of $201,278 for the three
months  ended  June 30,  2002,  offset by a  decrease  in  revenue  of  $125,555
principally  as a result of increased  competition  in the  high-speed  internet
access market.

COST OF  REVENUE.  Costs of revenue  for the three  months  ended June 30,  2002
increased by $155,371 or 40.2% from $386,653 for the three months ended June 30,
2001 to $542,024 for the same period in 2002. As a percentage of revenue cost of
revenue has  increased  from 42.0% to 54.4%.  The  increase as a  percentage  of
revenue is principally due higher internet access fees.

OPERATING EXPENSES.  Operating expenses for the three months ended June 30, 2002
decreased by $552,023 or 51.0% from  $1,081,634  for the three months ended June
30, 2001 to  $529,611  for the same period in 2002.  The  largest  component  of
operating expense is depreciation and amortization that amounted to $285,426 for
the three  months  ended June 30,  2001 and $50,051 for the same period in 2002.
The decrease in depreciation and amortization is due to the adoption of SFAS No.
142 on January 1, 2002 which no longer  requires  us to  amortize  our  goodwill
balance.

OTHER INCOME.  During the three months ended June 30, 2001, certain stockholders
surrendered  a total of 283,856  shares of common  stock  valued at $13,313.  We
determined the value of the shares  surrendered based on the market value of the
common stock on the date of surrender.  The  surrendered  shares were originally
issued in connections with our acquisition of Sitestar, Inc. in July 1999. .

GAIN FROM MARKETABLE SECURITIES. During the three months ended June 30, 2001, we
recognized  $89,446 in gains on the sale of  marketable  securities.  During the
three months ended June 30, 2002 we recognized no such gains. We have classified
the marketable securities in our portfolio as trading securities.

INTEREST  EXPENSE.  Interest  expense for the three  months  ended June 30, 2002
decreased  by $15,768 or 24.0% from  $65,601 for the three months ended June 30,
2001 to $49,833 for the same period in 2002.  This  decrease  was a result of no
loan amortization charges related to the convertible  debenture during the three
months ended June 30, 2002.

                                       17
<PAGE>
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO JUNE 30, 2001

REVENUE. Revenue for the six months ended June 30, 2002 increased by $298,781 or
16.3% from  $1,832,133  for the six months ended June 30, 2001 to $2,130,914 for
the same  period in 2002.  The  increase is  attributed  to the  acquisition  of
Advance Internet in July 2001 that  contributed  revenue of $480,825 for the six
months  ended  June 30,  2002,  offset by a  decrease  in  revenue  of  $152,044
principally  as a result of increased  competition  in the  high-speed  internet
access market.

COST OF  REVENUE.  Costs of  revenue  for the six  months  ended  June 30,  2002
increased  by $355,556 or 49.8% from  $714,633 for the six months ended June 30,
2001 to $1,070,189  for the same period in 2002. As a percentage of revenue cost
of revenue has  increased  from 39.0% to 50.2%.  The increase as a percentage of
revenue is  principally  due some rebates we received from our major supplier of
Internet services during the 1st quarter of 2001.

OPERATING  EXPENSES.  Operating  expenses for the six months ended June 30, 2002
decreased by $647,715 or 35.7% from $1,813,779 for the six months ended June 30,
2001 to  $1,166,064  for the same  period  in 2002.  The  largest  component  of
operating expense is depreciation and amortization that amounted to $566,928 for
the six months ended June 30, 2001 and $237,297 for the same period in 2002. The
decrease in depreciation and amortization is due to the adoption of SFAS No. 142
on January 1, 2002 which no longer requires us to amortize our goodwill balance.

OTHER INCOME.  During the six months ended June 30, 2001,  certain  stockholders
surrendered  a total of 1,741,418  shares of common stock valued at $96,517.  We
determined the value of the shares  surrendered based on the market value of the
common stock on the date of surrender.  The  surrendered  shares were originally
issued in connections with our acquisition of Sitestar, Inc. in July 1999.

GAIN FROM MARKETABLE  SECURITIES.  During the six months ended June 30, 2001, we
recognized  $130,688 in gains on the sale of marketable  securities.  During the
six months ended June 30, 2002 we recognized no such gains.  We have  classified
the marketable securities in our portfolio as trading securities.

INTEREST  EXPENSE.  Interest  expense  for the six months  ended  June 30,  2002
decreased  by $64,068 or 38.1% from  $168,374  for the six months ended June 30,
2001 to $104,306 for the same period in 2002.  This  decrease was a result of no
loan  amortization  charges related to the convertible  debenture during the six
months ended June 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 2002,  we  generated  EBITDA at our  operating
subsidiary level of $545,177.  This amount was offset by EBITDA at the corporate
level of  $(413,224).  However,  at the  corporate  level  we paid  for  certain
salaries of $125,000 by issuing  shares of our common  stock  rather than paying
these expenses with cash.  After taking into account these non-cash  expenses at
the  corporate  level  the  actual  net cash  spent at the  corporate  level was
$288,224.  The following table illustrates the actual cash flow generated during
the six months ended June 30, 2002:

  EBITDA generated at the operating subsidiary level     $         545,177
  EBITDA generated at the corporate level                         (413,224)
  Corporate expenses paid with common stock                        125,000
                                                         -----------------
           ACTUAL CASH GENERATED                         $         256,953
                                                         =================
                                       18
<PAGE>

During  the six  months  ended  June 30,  2002,  we paid  down  our  convertible
debenture  by  $325,000.  We also  repaid  notes  payable  and  notes  payable -
stockholders of approximately $59,000 and $55,000 respectively.

Our  business  plan has  required,  and is  expected  to  continue  to  require,
substantial capital to fund the growth of our operations,  capital expenditures,
and expansion of sales and marketing capabilities and acquisitions.

On May 11, 2000 we issued two convertible  debentures  aggregating $500,000. The
debentures bear interest at 12% per annum and were due on May 1, 2001. On August
14,  2000,  we issued  another two  convertible  debenture  for an  aggregate of
$500,000 to the  holders of the  above-mentioned  debentures  for the same terms
described  above.  The debenture bears interest at 12% per annum and were due on
August 14, 2001. These convertible  debentures are currently callable at anytime
since it is past  its  maturity  date.  The  debenture  holders  can call  these
debentures  upon  sufficient  written  advance  notice  as  agreed  upon  in the
convertible debenture agreement.

As of June  30,  2002,  the  holder  of the  debentures  converted  $513,388  in
principal  and  $90,822 of  accrued  interest  into  13,100,906  and  5,176,365,
respectively,  shares of our common  stock.  Also as of June 30,  2002,  we have
repaid $335,000 of this debenture in cash.

As of June 30, 2002,  the  convertible  debentures  are past their  maturity and
callable at anytime by the  debenture  holders.  The  debenture  holder has also
served notice to us that the convertible  debentures are in default. We have not
converted any of the  outstanding  balances into our common stock for the last 3
quarters.  We also have not redeemed  any of the  convertible  debentures  since
February 2002.

As of June 30, 2002, there is a discrepancy between the balance maintained by us
and the  balance  calculated  by the  debenture  holders.  The  balance  we have
disclosed in our financial statements is derived from all the conversion notices
and  confirmation  received  from our  debenture  holders as of the last  fiscal
year's  audited  financial  statements.  The  representatives  of the  debenture
holders and us are working to reconcile and resolve the balance discrepancies.

We believe  that we have proper  documentation  to support our  position in this
matter; however, in the event we are not successful in reconciling and resolving
this matter, the outstanding balance of the convertible debenture could increase
significantly.  As of June 30,  2002,  we have  disclosed  that the  outstanding
principal balance is $151,612.  This outstanding  balance could increase to over
$300,000 if the  debenture  holders are able to assert that their balance is the
correct balance.

We  believe  that  our  existing  cash  and  cash  equivalents,  and  short-term
investments  and cash  flow  from  operations,  will be  sufficient  to meet our
working capital and capital  expenditure  requirements  for at least the next 12
months.  Additional financing may not be available when needed or, if available,
such financing may not be on terms favorable to our  shareholders or us. If such
sources of  financing  are  insufficient  or  unavailable,  or if we  experience
shortfalls in anticipated revenue or increases in anticipated  expenses,  we may
need to slow down or stop the  expansion of our Internet  Service  Providers and
reduce our marketing and development efforts. Any of these events could harm our
business, financial condition or results of operations.


                                       19
<PAGE>

FORWARD LOOKING STATEMENTS

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,   our  ability  to  expand  our  customer   base,   make   strategic
acquisitions,  general market conditions,  and competition and pricing. Although
we believe the assumptions  underlying the forward-looking  statements contained
herein  are  reasonable,  any  of  the  assumptions  could  be  inaccurate,  and
therefore,  there  can  be no  assurance  that  the  forward-looking  statements
contained in the report will prove to be accurate.

Part II.   OTHER INFORMATION

Item 1.    Legal Proceedings

None


Item 2.    Change in Securities and Use of Proceeds

None


Item 3.    Defaults Upon Senior Securities

None


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

Not applicable


Item 5.    Other Information

Not applicable

Item 6.    Exhibits and Reports on Form 8-K

(a)      Exhibits

   99.1   Certification  of the Chief  Executive  Officer  Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002

   99.2   Certification  of the Chief  Financial  Officer  Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002

(b)      Reports on Form 8-K

None

                                       20
<PAGE>




                                   SIGNATURES

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

                                              SITESTAR CORPORATION



                                          By: /s/ Frederick T. Manlunas
                                              -------------------------
                                              Frederick T. Manlunas
                                              Executive Chairman and
                                              Chief Financial Officer


Date:  August 19, 2002









                                       21