<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  -----------

                                  FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 For the quarterly period ended DECEMBER 31, 2001

[_]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 For the transition period from _____ to _____

                                  -----------

                       Commission File Number: 000-27693

                              PCSupport.com, Inc.
       (Exact name of small business issuer as specified in its charter)

                 Nevada                                          98-0211769
    (State or other jurisdiction of                           (I.R.S. Employer
     incorporation or organization)                          Identification No.)

      Suite 300, 3605 Gilmore Way                                  V5G 4X5
   Burnaby, British Columbia, Canada                             (Zip Code)
(Address of principal executive offices)

                   Issuer's Telephone Number: (604) 419-4490

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 [_]

There were 15,736,662 shares of the Company's common stock outstanding on
February 8, 2002.

Transitional Small Business Disclosure Format (check one): YES [_] NO [X]
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
PART I - FINANCIAL INFORMATION

         ITEM 1 - FINANCIAL STATEMENTS...................................      1

         ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS ..................     11

PART II - OTHER INFORMATION

         ITEM 1 - LEGAL PROCEEDINGS......................................     21

         ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS..............     21

         ITEM 3 - DEFAULTS UPON SENIOR SECURITIES........................     21

         ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....     21

         ITEM 5 - OTHER INFORMATION......................................     21

         ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.......................     22
</TABLE>
<PAGE>

                        PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

                      Interim Consolidated Balance Sheets
                          (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                           December 31,      June 30,
                                                               2001            2001
                                                           ------------    ------------
                                                            (unaudited)     (audited)
<S>                                                        <C>             <C>
Assets

Current assets:
     Cash and cash equivalents                             $    119,768    $    486,533
     Trade accounts receivable, net of
       allowance for doubtful accounts of $88,166
       (June 30, 2001 $41,741)                                  184,070         165,629
     Other accounts receivable                                  157,262          73,004
     Prepaid expenses and deposits                              160,913         150,120
                                                           ------------    ------------

       Total current assets                                     622,013         875,286

Restricted cash (note 4)                                        137,095         220,000
Property and equipment                                          519,846         730,463
Intangible assets                                               733,066         990,674
                                                           ------------    ------------

                                                           $  2,012,020    $  2,816,423
                                                           ============    ============

Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable and accrued liabilities              $    744,960    $    897,404
     Deferred revenue                                           598,843         253,373
                                                           ------------    ------------

       Total current liabilities                              1,343,803       1,150,777

 Convertible debenture (note 3(b))                              136,154              --

Stockholders' equity (note 3):
     Common stock, $0.001 par value, authorized
       100,000,000 shares; issued 15,736,662 shares
       at December 31, 2001 and 15,736,662 shares at
       June 30, 2001; being net of 285,000 treasury shares
       at December 31, 2001 and June 30, 2001                    16,022          16,022
     Contingent common stock to be
       issued and common share subscriptions (note 3(d))      1,064,682         625,000
     Additional paid-in capital                              19,156,146      18,625,839
     Deferred stock compensation                                (62,662)        (61,905)
     Deficit                                                (19,642,125)    (17,539,310)
                                                           ------------    ------------

       Total stockholders' equity                               532,063       1,665,646
                                                           ------------    ------------

                                                           $  2,012,020    $  2,816,423
                                                           ============    ============
</TABLE>

Commitments and contingencies (note 4)

See accompanying notes to interim consolidated financial statements.

                                       1
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

                 Interim Consolidated Statements of Operations
                          (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                    Six months ended               Three months ended
                                                      December 31,                    December 31,
                                                  2001            2000            2001            2000
                                              ------------    ------------    ------------    ------------
                                                       (unaudited)                     (unaudited)
<S>                                           <C>             <C>             <C>             <C>
Revenue:
  Service contracts                           $  1,573,368    $    399,649    $    705,006    $    303,426
  Sub-lease and other                               54,343          29,580          19,192          27,254
                                              ------------    ------------    ------------    ------------
                                                 1,627,711         429,229         724,198         330,680
Costs and expenses:
  Cost of license fees and services              1,421,741         800,713         630,341         422,248
  Development costs                                316,778         792,186          92,946         481,846
  Marketing and promotion                          408,448       1,335,039         161,168         367,787
  General and administrative                     1,545,931       1,382,262         850,747         723,902
                                              ------------    ------------    ------------    ------------
                                                 3,692,898       4,310,200       1,735,202       1,995,783
                                              ------------    ------------    ------------    ------------

Loss from operations                            (2,065,187)     (3,880,971)     (1,011,004)     (1,665,103)
Interest income (expense), net                     (37,628)        158,097         (40,759)         45,600
                                              ------------    ------------    ------------    ------------
Loss for the period                           $ (2,102,815)   $ (3,722,874)   $ (1,051,763)   $ (1,619,503)
                                              ============    ============    ============    ============
Loss per common share, basic and diluted      $      (0.13)   $      (0.34)   $      (0.07)   $      (0.14)
                                              ============    ============    ============    ============
Weighted average common shares outstanding,
basic and diluted                               15,736,662      10,860,358      15,736,662      11,502,999
                                              ============    ============    ============    ============
</TABLE>

See accompanying notes to interim consolidated financial statements.

                                       2
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

            Interim Consolidated Statements of Stockholders' Equity
                          (Expressed in U.S. Dollars)

                Six months ended December 31, 2001 (unaudited)

<TABLE>
<CAPTION>


                                                                      Common
                                                                 stock to be
                                                                  issued and
                                               Common shares          Common  Additional      Deferred                        Total
                                                                       share     paid-in         stock                stockholders'
                                               Shares   Amount subscriptions     capital  compensation       Deficit         Equity
                                           ----------  -------  ------------  ----------       --------  ------------   -----------
<S>                                        <C>         <C>      <C>          <C>              <C>        <C>            <C>
Balance, June 30, 2001, brought forward    15,736,662  $16,022  $  625,000   $18,625,839      $(61,905)  $(17,539,310)  $ 1,665,646

Fair value of warrants issued
  in conjunction with Convertible
  debenture (note 3(b))                            --       --          --        21,967            --             --        21,967

Amortization of deferred stock
  compensation                                     --       --          --            --        87,532             --        87,532

Common stock subscriptions at $0.12,
  net of cash and non-cash financing
  costs of $468,318 (note 3(d))                    --       --     439,682            --            --             --       439,682

Fair value of warrants issued in
  conjunction with loan agreements
  (note 3(c))                                      --       --          --        39,341            --             --        39,341

Fair value of warrants issued in
  conjunction with subscription for
  common shares (note 3(d))                        --       --          --       372,542            --             --       372,542

Fair value of options issued to employees
  and consultants                                  --       --          --        96,457       (88,289)            --         8,168

Net loss                                           --       --          --            --            --     (2,102,815)   (2,102,815)
                                           ----------  -------  ----------   -----------      --------   ------------   -----------
Balance, December 31, 2001                 15,736,662  $16,022  $1,064,682   $19,156,146      $(62,662)  $(19,642,125)  $   532,063
                                           ==========  =======  ==========   ===========      ========   ============   ===========
</TABLE>

                                       3
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

                 Interim Consolidated Statements of Cash Flows
                          (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                  Six months ended
                                                                     December 31,
                                                                    2001           2000
                                                             -----------    -----------
                                                             (unaudited)    (unaudited)
<S>                                                          <C>            <C>
Cash flows from operating activities:
     Loss for the period                                     $(2,102,815)   $(3,722,874)
     Items not affecting cash:
         Depreciation and amortization                           483,575        261,382
         Amortization of deferred stock compensation              87,532        177,751
         Amortization of discount on convertible debenture         7,110             --
         Fair value of warrants issued on bridge loan             39,341             --
         Intangible assets in exchange for services                   --         22,000
         Fair value of options issued to contractor                8,168             --
         Unrealized foreign exchange gain                         (4,188)            --
     Changes in operating assets and liabilities:
         Trade receivables                                       (18,441)      (462,454)
         Other receivables                                       (34,258)        82,541
         Prepaid expenses                                        (10,793)        89,033
         Deposits                                                     --        133,833
         Accounts payable and accrued liabilities               (152,444)       (96,493)
         Deferred revenue                                        345,470        157,372
                                                             -----------    -----------
           Net cash used in operating activities              (1,351,743)    (3,357,909)
                                                             -----------    -----------

Cash flows from investing activities:
     Purchase of property and equipment                          (15,350)      (437,059)
     Deferred Acquisition and acquisition cash costs                  --         17,244
     Purchase of intangible assets                                    --     (1,530,962)
                                                             -----------    -----------
           Net cash used in investing activities                 (15,350)    (1,950,777)
                                                             -----------    -----------

Cash flows from financing activities:
     Cash acquired in acquisition                                     --         84,654
     Bridge financing received                                   150,000             --
     Repayment of bridge financing                              (150,000)            --
     Proceeds from exercise of stock options                          --         44,000
     Convertible debenture                                       155,199             --
     Net proceeds from sale of common stock                      762,224      1,810,807
     Cash released from reserve, net                              82,905             --
                                                             -----------    -----------
           Net cash provided by financing activities           1,000,328      1,939,461
                                                             -----------    -----------

Net decrease in cash and cash equivalents                       (366,765)    (3,369,265)
Cash and cash equivalents at beginning of period                 486,533      5,149,290
                                                             -----------    -----------
Cash and cash equivalents at end of period                   $   119,768    $ 1,780,065
                                                             ===========    ===========
</TABLE>

                                       4
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

           Interim Consolidated Statements of Cash Flows (continued)
                          (Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                            Six months ended
                                                                              December 31,
                                                                             2001           2000
                                                                        ---------    -----------
                                                                      (unaudited)    (unaudited)
<S>                                                                     <C>          <C>
Supplemental disclosure
     Cash paid for interest                                             $      --    $     4,220
     Non-cash activities:
         Deferred stock compensation on grant of employee options         (88,289)      (125,860)
         Common stock issued for acquisition of license                        --        175,000
         Common stock issued on acquisitions                                   --      1,450,000
         Contingent common stock to be issued                                  --        625,000
         Fair value of warrants allocated as
          discount on convertible debenture (note 3(b))                    21,967             --
         Fair value of warrants issued in conjunction
            with loan agreements (note 3(c))                               39,341             --
         Fair value of warrants issued or amended in conjunction
           with subscription for common shares (note 3(d))                372,542             --
         Common share subscription receivable                              50,000             --
</TABLE>

See accompanying notes to interim consolidated financial statements.

                                       5
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

              Notes to Interim Consolidated Financial Statements
                          (Expressed in U.S. Dollars)

                Six months ended December 31, 2001 (unaudited)

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

1. Nature of business:

            These interim consolidated financial statements have been prepared
            on a going concern basis in accordance with United States generally
            accepted accounting principles. The going concern basis of
            presentation assumes the Company will continue in operation for the
            foreseeable future and will be able to realize its assets and
            discharge its liabilities and commitments in the normal course of
            business. Certain conditions, as discussed below, currently exist
            which raise substantial doubt upon the validity of this assumption.
            The financial statements do not include any adjustments that might
            result from the outcome of this uncertainty.

            The Company's future operations are dependent upon the market's
            acceptance of its services and the Company's ability to secure
            cost-effective third party license service supply agreements. There
            can be no assurance that the Company's services will be able to
            secure market acceptance or that cost effective license and service
            supply agreements will exist, continue to exist, or that the Company
            will become profitable. Operations have primarily been financed
            through the issuance of equity instruments and debt. Although the
            Company believes that the financing described in Notes 3(c) and 3(d)
            will provide the Company with sufficient working capital to sustain
            its current level of operations until at least April 2002,
            additional financing may be required in the future to sustain its
            operations if the Company's currently projected operating results
            are not realized or if the Company expands the scope of its
            operations. The Company does not have any commitments from third
            parties to provide additional financing, and further financings may
            not be available or may not be available on reasonable terms. If
            additional working capital is required and unavailable, the Company
            will be required to curtail operations.

2. Significant accounting policies:

   (a)      Basis of presentation:

            These interim consolidated financial statements have been prepared
            using generally accepted accounting principles in the United States.
            The interim financial statements include the accounts of the Company
            and its wholly owned subsidiary, Reconnaissance International Ltd.,
            and reflect all adjustments, consisting solely of normal recurring
            adjustments, which, in management's opinion, are necessary for a
            fair presentation of the financial results for the interim periods.
            The financial statements have been prepared on a basis consistent
            with the accounting policies described in the Company's Annual
            Report on Form 10-KSB filed with the Securities and Exchange
            Commission for the fiscal year ended June 30, 2001, and should be
            read in conjunction therewith. Certain comparative figures have been
            reclassified to conform to the presentation adopted in the current
            period.

                                       6
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

          Notes to Interim Consolidated Financial Statements, page 2
                          (Expressed in U.S. Dollars)

                Six months ended December 31, 2001 (unaudited)

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

2.    Significant accounting policies (continued):

      (b)   Use of estimates:

            The preparation of interim consolidated financial statements in
            accordance with United States generally accepted accounting
            principles requires management to make estimates and assumptions
            that affect the reported amounts of assets and liabilities and the
            disclosure of contingent assets and liabilities at the date of the
            consolidated financial statements and reported revenues and expenses
            for the reporting periods. Actual results may significantly differ
            from these estimates.

      (c)   Intangible assets:

            Intangible assets are carried at cost less accumulated amortization,
            which is calculated on a straight-line basis over the estimated
            useful lives of the assets which management estimates to be three
            years.

      (d)   Net loss per share:

            Basic loss per share is computed using the weighted average number
            of shares of common stock outstanding during the periods. Diluted
            loss per share is computed using the weighted average number of
            shares of common and potentially dilutive common stock outstanding
            during the period. As the Company has a net loss in each of the
            periods presented, basic and diluted net loss per share is the same.

            Excluded from the computation of diluted loss per share for the
            periods ended December 31, 2001 are warrants to purchase 4,530,088
            (December 31, 2000 - 2,965,838) shares of common stock and options
            to purchase 2,343,971 (December 31, 2000 - 2,428,800) shares of
            common stock because their effects would be anti-dilutive.

3.    Stockholders' equity:

      (a)   Stock options and stock-based compensation:

            During the six months ended December 31, 2001, the Company granted
            305,000 stock options with exercise prices per share ranging from
            $0.17 to $1.63 and vesting from immediate up to 36 months (2000 -
            1,528,875 with exercise prices per share ranging from $0.72 to $3.44
            and vesting from immediate up to 36 months). During the six months
            ended December 31, 2001 473,267 stock options expired or were
            cancelled (2000 - nil). Stock compensation expense for the six
            months ended December 31, 2001 totaling $87,532 (2000 - $177,751)
            has been allocated $nil (2000 - $4,562) to Cost of license fees and
            services, $nil (2000 - $114,333) to Development costs, $nil (2000 -
            $19,527) to Marketing and promotion costs, and $87,532 (2000 -
            $39,329) to General and administrative costs.

                                       7
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

          Notes to Interim Consolidated Financial Statements, page 3
                          (Expressed in U.S. Dollars)

                Six months ended December 31, 2001 (unaudited)

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

3.    Stockholders' equity (continued):

      (b)   Common shares and share purchase options and warrants:

            During July and August 2001, pursuant to a June 2001 private
            placement offering, the Company sold 50 units at a price of Cdn.
            $5,000 per unit. Each unit consisted of one Cdn. $5,000 principal
            amount 12% convertible subordinated debenture and 3,500 common share
            purchase warrants. Each whole warrant entitles the holder to
            purchase one common share of the Company for a period of twelve
            months from the date of closing at a price of U.S. $0.75 per share.
            The debentures mature on June 22, 2003, are unsecured and rank pari
            passu with other Canadian debentures and other unsecured
            subordinated indebtedness and liabilities of the Company. The
            principal amount of the debenture is convertible at the option of
            the holder at any time prior to maturity into common shares at a
            price of Cdn$0.71428571 for each common share. The debentures may be
            converted prior to maturity on the same basis at the option of the
            Company if, over a period of 20 consecutive trading days, at least
            500,000 common shares of the Company have traded in aggregate and
            the average closing price of the Company's common shares exceeded
            $1.00 per share.

            The beneficial conversion feature, equal to the intrinsic value of
            the conversion option, was determined to be nil. The estimated fair
            value of the common share purchase warrants of $21,967 has been
            recognized as a deduction from the carrying value of the convertible
            debt on the issuance date, and the convertible debt is presented at
            the net amount. The discount related to the common share purchase
            warrant is amortized from the date of issuance to the maturity date
            on June 22, 2003 of the debentures.

      (c)   Loan agreements and related share purchase warrants

            In October 2001 the Company entered into two separate loan
            agreements for a total of $150,000, each bearing interest at a rate
            of 10% annually. Under the terms of the agreements, the Company
            issued to the lenders warrants with an estimated fair value of
            $39,341 to purchase a total of 240,000 common shares of the Company
            at a price of $0.20 for a period of two years. The fair value of the
            warrants has been recorded as a discount and amortized over the term
            to maturity of the loans and was determined using a pricing model
            with the following weighted average assumptions; volatility of 154%,
            risk-free interest rate of 2.73%, and dividends rate of 0%. Both of
            these loans were repaid in cash in October 2001.

      (d)   Contingent common stock issued and common stock subscriptions

            Pursuant to the Company's November 27, 2000 MyHelpDesk, Inc.
            acquisition, the Company was obligated to issue a further 500,000
            common shares on November 27, 2001. The Company is in the process of
            issuing and registering these common shares.

            During the three months ended December 31, 2001, the Company sold
            7,566,661 shares of common stock at a price of $0.12 per share in a
            private placement, for gross cash proceeds to the Company of
            $908,000 of which $50,000 of subscription proceeds was collected in
            January 2002. Under the terms of this offering, the Company paid
            cash finder's fees of $79,980 and further issued as finder's fees
            378,000 common share purchase warrants with an exercise price of
            $0.20 per share and an expiry date of

                                       8
<PAGE>

            December 31, 2003 and 378,000 common share purchase warrants with an
            exercise price of $0.40 per share and an expiry date of December 31,
            2004. The fair value of these warrants was estimated to be $124,841.
            Also as a finder's fee, the Company reduced the exercise price and
            extended the expiry date of 1,500,000 previously issued and
            outstanding common share purchase warrants. The estimated
            incremental value of these modified warrants is $247,701. The
            Company realized net cash proceeds from the offering of $812,224
            after allowing for the aforementioned fees and $15,796 of expenses
            related to the offering.

            The fair value of the warrants granted or amended as a finder's fee
            were determined using a pricing model with the following weighted
            average assumptions; volatility of 152%, risk-free interest rates
            ranging from 3.11% of 3.62%, and dividends rate of 0%.

                                       9
<PAGE>

                      PCSUPPORT.COM, INC. AND SUBSIDIARY

          Notes to Interim Consolidated Financial Statements, page 4
                          (Expressed in U.S. Dollars)

                Six months ended December 31, 2001 (unaudited)

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

4.    Commitments and contingencies:

      (a)   In May 2000 the Company entered into a lease of office premises for
            a 5-year term, commencing in September 2000. From time to time the
            Company has entered into partial sublease agreements of these
            premises. In August 2001, the sub-lessee under a partial sublease
            filed for bankruptcy, and the Company assumed the entire operating
            commitments for the premises as follows after December 31, 2001 and
            during the Company's fiscal years ending:

                       2002                     $135,000
                       2003                      270,000
                       2004                      270,000
                       2005                      270,000
                       2006                       45,000

      (b)   As at December 31, 2001, the Company had issued letters of credit
            totaling $137,005 to a lessor and other service providers. Funds
            totaling $137,095 are held in term deposits to secure these letters
            of credit and are disclosed as restricted cash.

                                      10
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

All statements, other than statements of historical fact, included in this Form
10-QSB involve assumptions, known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements, to be
materially different from any future results, performance or achievements
expressed or implied by such statements contained in this Form 10-QSB. These
potential risks and uncertainties include, without limitation, those described
below under "Risk Factors". This Management's Discussion and Analysis should be
read in conjunction with our consolidated Financial Statements for the six
months ended December 31, 2001, included herein.

OVERVIEW

PCsupport.com, Inc. is a provider of outsourced technical support solutions for
businesses and consumers. We specialize in providing proactive, user-focused
technical support services to personal computer users worldwide using both
online (eSupport) and phone based media. We provide eSupport solutions through
our Technical Support Application to businesses who have an obligation to
provide technical support to their employees or customers, and complement that
central offering with a telephone support call centre. Our PC Support Center
offers a comprehensive eSupport solution directly to consumers, which is
designed to reduce technical support costs and increase user satisfaction,
although we have not been generating significant revenues to date from this
service and do not expect to continue this offering.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2001 AND DECEMBER
31, 2000

REVENUE

Total revenue increased by $393,518 (119%) to $724,198 for the quarter ended
December 31, 2001 from $330,680 for the quarter ended December 31, 2000. For the
six months ended December 31 2001 total revenue increased by $1,198,482 (279%)
to $1,627,711 from $429,229 for the same period ended December 31, 2000. Revenue
from service contracts accounted for $705,006 of revenue recognized during the
three months ended December 31, 2001, and for $303,426 of the revenue recognized
during the three months ended December 31, 2000 for an increase of 132%. A
comparison of the fiscal year to date service revenue shows an increase of
$1,173,719 (294%) from fiscal 2000 ($399,649) to fiscal 2001 ($1,573,368). The
balance of the revenue was earned mainly from sub-leases of certain of our
premises.

The increase in service contract revenue of $1,173,719 for the six months ended
December 31, 2001 from 2000 levels is primarily due to the introduction of our
Technical Support Application to one of our key target markets, the Internet
Service Provider market space during the second half of fiscal 2001, and our
first contract in what is proving to be a developing market for us, that being
retail warranty support. Service revenue was primarily earned from commissioning
fees and the sale of eSupport services.

One customer accounted for approximately 50% of the service contract revenue for
the quarter ended December 31, 2001, and accounted for approximately 57% of the
service revenue for the six months ended December 31,2001. In November 2001 this
customer gave notice of its intention to terminate its contract with us. While
the impact to our revenue base is material, the cash flow and profitability
impacts are mitigated by the fact that approximately 80% of the revenue related
to this contract was passed on to a third party for the provision of telephone
support, and therefore did not generate positive gross margins for the company.
In November 2001 we commenced to provide telephone support directly to our
customers rather than outsourcing this service, with a view to both enhancing
our offering and ultimately improving our margins.

                                      11
<PAGE>

EXPENSES

In September 2001, we restructured our operations to reflect our ongoing move
from primarily a development company to a sales organization focused on building
a recurring revenue base, with technical support of our products continuing to
be a significant ongoing investment. We reduced operating expenses in September
2001 through the elimination of approximately 30 positions in a strategic effort
to move towards becoming cash self-sustaining while continuing to grow our
customer base, but have since recalled or otherwise rehired approximately 20
positions in order to serve our customers and expand our service capabilities to
include telephone support. The restructuring also reflected a lack of sufficient
working capital to maintain the scope of operations that we had been conducting
during the prior recent periods, particularly in the area of marketing and
product development.

      Cost of License Fees and Services

The cost of license fees and services consists primarily of direct labor and
related costs associated with delivering eSupport services through our Technical
Support Application, including payments to third parties for services rendered,
Internet connections, and costs of license fees under technology license
agreements. Cost of license fees and services increased to $630,341 for the
three months ended December 31, 2001 from $422,248 for the same period during
the previous year. The increase in the cost of license fees and services of
$208,093 from the comparative quarter is primarily a function of the increase in
personnel required to serve a growing customer base. These expenses can be
expected to continue to increase relative to potential growth in revenues. We
anticipate that there will be a significant lag between incurring the expenses
to support the offering of our Technical Support Application and generating any
potential revenues from these expenditures. For the six months ended December
31, 2001 the cost of license fees and services increased $621,028 (78%) from
$800,713 for the six months ended December 31, 2000, to $1,421,741. When
represented as a percentage of total revenue, the cost of license fees and
services for the six months ended December 31, 2001 was 87% compared to 187% for
the comparative period ended December 31, 2000.

During the three months ended December 31, 2001 we realized a gross margin of
approximately 13% on our service contracts, compared to approximately 10% for
the three months ended September 30, 2001 and negative margins for all quarters
ending prior to September 30, 2001. The rate of gross margin varies from nil on
certain contracts up to as much as 35% on others. We continue to review our
pricing and contracts in order to eliminate or modify our lower margin accounts,
and add potential new contracts at pricing that will provide acceptable margins.

In November 2001 we implemented the provision of telephone support directly to
our customers via our own call centre in order to broaden the scope of our
technical support capabilities. This is in recognition of the fact that while
eSupport is a more effective tool than telephone support, the market is not
mature enough at this time to recognize eSupport as a full solution offering and
that our potential customer base would be increased by this broadened offering.
We also anticipate that our margins on telephone support, which had been
entirely sub-contracted to a third party prior to December 2001, will increase
as we gain experience in this area of service.

      Development Costs

Development costs consist primarily of payroll and related expenses for research
and development personnel. Development costs decreased to $92,946 for the three
months ended December 31, 2001 from $481,846 for the comparative period. The
decrease in development costs of $475,408 in the first six months of fiscal 2002
($316,778) compared to the same period during fiscal 2001 ($792,186) is
primarily the result of decreased personnel employed in Development combined
with a reduction in software license costs. These decreases in development costs
are also a reflection, in our opinion, of a certain maturity having been reached
in the stage of our product development, with our recent efforts

                                      12
<PAGE>

being directed at feature enhancement as well as support analyst efficiencies,
compared to a more basic development effort in the prior fiscal year.

Our primary research and development effort will be to continue to add features
to the Technical Support Application and to release subsequent versions during
the next year. Due to the constantly evolving nature of the Internet and related
technologies, we will continuously monitor changes in PC support technologies
and Internet-based support offerings with the goal of adding additional
functionality in new releases of the Technical Support Application. There is no
assurance that the current levels of expenditures in product development will be
sufficient to maintain our product as competitive, and expenditure levels may
need to be increased.

      Marketing and Promotion

Marketing and promotion expenses consist primarily of payroll and related
expenses for sales and marketing personnel in the current fiscal year, and had
included significant payments to third parties for web portal and other
advertising in previous fiscal years. Marketing and promotion expenses decreased
to $161,168 during the three months ended December 31, 2001 from a level of
$367,787 for the same period in the previous fiscal year. The decrease of
$206,619 compared to the prior fiscal year's period was the result of a
significant reduction of the personnel assigned to marketing activities, as well
as the minimization of payments to third parties for advertising activities to a
smaller degree. For the six months ended December 31, 2001 marketing and
promotion costs decreased $926,591 to $408,448 from $1,335,039 for the
comparative period. This fiscal year to date comparison and reduction is
substantially the result of reduced third party advertising costs no longer
within our scope of operations. We have no plans to undertake material marketing
efforts at this time due to limited resources. However, marketing efforts may be
increased as and if funds permit.

      General and Administrative

General and administrative expense consists principally of payroll expenses and
related costs of administrative personnel and professional fees for legal,
accounting and other professional services, and the level of such costs have
remained relatively steady during the current and comparative periods. General
and administrative expenses incurred during the three months ended December 31,
2001 increased to $850,747 from $723,902 for the same period in the prior year.
For the six months ended December 31, 2001 and 2000, general and administrative
expenses were $1,545,931 and $1,382,262, respectively, for an increase of 12% in
the current year to date level, which increases include depreciation and
amortization discussed below.

      Depreciation and Amortization

We recorded depreciation and amortization expense totaling $242,021 during the
three months ended December 31, 2001, compared to $56,649 during the three
months ended December 31, 2000, such charges being to general and administrative
costs. For the six months ended December 31, 2001 and 2000, depreciation and
amortization were $483,575 and $261,382, respectively. The increases are
primarily due to the amortization of intangible assets acquired in the course of
the MyHelpDesk, Inc. acquisition in November 2000 over their estimated useful
lives, which management estimates range from two to three years.

      Interest Income (expense), net

Net interest income includes interest income from cash and cash equivalents
offset by interest expense. During the six months ended December 31, 2001 we had
net interest expense of $37,628 as compared to a net interest income of $158,097
for the same period in the prior fiscal year. The decrease in interest income
from the previous fiscal year levels is the result of lower cash balances, and
we do not expect a material net interest income circumstance to occur

                                      13
<PAGE>

in future periods, as we will likely be required to work with lower cash
reserves, and may have to finance future operations through interest bearing
debt. During the three months ended December 31, 2001 we incurred an interest
expense charge of $39,341 in connection with the valuation of warrants
associated with an October 2001 bridge loan.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operations was $1,351,743 during the six months ended December
31, 2001, compared to $3,357,909 for the same period in the prior fiscal year.
Net cash used in operations in the period was largely the result of net losses
and an increase in trade and other accounts receivable combined with a decrease
in accounts payable, accrued liabilities and partially offset by an increase in
deferred revenue. Net cash used in investing activities was $15,350 during the
first half of fiscal 2002 compared to $1,950,777 for the same period in fiscal
2001. The decrease in investing activities was due to the cash costs of
acquisitions and investment in equipment and licenses during the six months
ended December 31, 2000, with such acquisitions activities not being undertaken
in the current fiscal year. Net cash provided by financing activities was
$1,000,328 during the first half of fiscal 2002 and $1,939,461 for the
comparative period. The decrease in financing activities from fiscal 2001 to
fiscal 2002 is the result of less financing being raised through the sale of
common stock.

We had negative working capital of ($721,790) at December 31, 2001. Our
principal commitments at December 31, 2001 consisted of obligations under
operating leases, and service credits due to customers to be recorded against
the deferred revenue balance of $598,843 at December 31, 2001. These commitments
and the execution of our business plan, together with the funding of anticipated
operating losses, required working capital in excess of our cash reserves at
December 31, 2001. Approximately $425,000 of the deferred revenue balance as of
December 31, 2001 resulted from the lower usage than the monthly minimum under
the terms of our service agreement with Sears Roebuck ("Sears"). Sears has paid
for these monthly minimums and will be entitled, as a result, to a credit for
services used after April 30, 2002 up to the total amount of service credits
earned to April 30, 2002. This will decrease our cash flow from the Sears
contract after April 30, 2002 unless Sears increases its usage of our services
to such a substantial degree as to consume these service credits prior to April
30, 2002.

We believe that the funds raised from the private placement completed in
December 2001 will provide us with working capital sufficient to sustain our
current level of operations at least through April 2002. In the event that we
are unable to maintain at least our current level of revenues or if we incur
unanticipated expenses, we will require additional capital in the near term. We
do not currently have any commitments from any third party to provide additional
financing and may be unable to obtain financing on reasonable terms or at all.
If additional working capital is required and unavailable we will be forced to
curtail our operations.

We anticipate funding our longer-term working capital requirements from
potential future revenues generated from customers and additional financings, if
needed and possible to obtain. Our private placement that was completed in
December 2001 has caused, and any future financings are likely to cause, our
shareholders to experience dilution.

RISK FACTORS

Our actual future results, performance or achievements may be materially
different from any future results, performance or achievements that may be
expressed or implied by the statements contained in this Form 10-QSB due to
various factors and uncertainties, including without limitation the risk factors
described below.

Our limited operating history makes it difficult to evaluate our business and
prospects.

Our limited operating history makes it difficult to evaluate our current
business and prospects or to accurately predict our future revenue or results of
operations. Our revenue and income potential are unproven, and because the
Internet is constantly changing, we may need to modify our business model to
adapt to these changes. Companies in early stages of development, particularly
companies in new and rapidly evolving Internet industry segments, are generally
more vulnerable to risks, uncertainties, expenses and difficulties than more
established companies.

                                      14
<PAGE>

Our business model is a new and unproven one.

Our model for conducting business and generating revenue is new and unproven.
Our success will depend primarily on our ability to generate revenue from
multiple sources, currently consisting primarily of:

      .     PC vendors, PC retailers and third party warranty vendors
      .     Internet Service Providers

As the market for our services is new and evolving, it is difficult to predict
the size of the market, its future rate of growth, if any, or the level of
prices the market will pay for our services. We are not certain that our
business model will be successful or that we can generate revenue growth or be
profitable. There can be no assurance that any increase in marketing and sales
efforts will result in a larger market or increase in market acceptance for our
services. We may sell service contracts to provide warranty services or bundle
our services for a fixed fee based on only limited historical experience as to
the level of expenditures we will need to incur to satisfy our contractual
obligations. In order to increase our gross margins to acceptable levels from
our existing and future contracts, we will need to migrate the end users of our
services to a greater reliance on Internet use of our services rather than
telephone support. We do not have enough experience to date to know whether we
will be successful in effecting this migration. If markets for our services
develop more slowly than expected or become saturated with competitors, or our
services do not achieve or sustain market acceptance, or we are unable to set
prices for our services that are sufficient to cover our costs and generate a
profit, we will be unlikely to be able to successfully operate our business.

Our history of operating losses and negative cash flow may continue for the
foreseeable future.

To date, we have incurred operating losses and negative cash flow from our
operating activities. We anticipate that our operating losses and negative cash
flow will continue for at least the immediately foreseeable future unless we are
able to generate somewhat greater revenues than we have had in recent prior
periods. Moreover, we may need to significantly increase our expenditures in the
future for sales and marketing, content development, and technology and
infrastructure development to enhance our business or to maintain our
competitive position. Consequently, it is possible that we may never achieve
profitability, and even if we do achieve profitability, we may not sustain or
increase profitability on a quarterly or annual basis in the future. If we do
not achieve or sustain profitability in the future, we may be unable to continue
our operations. The auditors' report with respect to our financial statements
for the fiscal year ended June 30, 2001 includes an additional explanatory
paragraph on these conditions that raise substantial doubt about our ability to
continue as a going concern. The financial statements do not include any
adjustment that might result from the outcome of these uncertainties.

We will need additional capital if our operations do not reach breakeven in the
near future.

As of December 31, 2001, we had negative working capital on an unaudited basis
of approximately $722,000. We will need to raise additional capital to sustain
our operations if our operations do not reach a breakeven cash flow level in the
near future. In addition, we may need additional capital in the future to
support an increase in the scope of our operations or any potential shortfall in
revenues. We anticipate funding any additional working capital requirements
either through the proceeds from a private placement of our common stock or a
debt financing, together with anticipated revenues generated from customers. We
do not currently have any commitment from any third party to provide the
potential debt or equity financing. We may be unable to obtain financing on
reasonable terms or at all. Furthermore, if we raise additional working capital
through equity, our shareholders will experience dilution. If we are unable to
secure additional financing when needed and our revenues are inadequate to
provide the necessary working capital, we may be required to slow down or
suspend our growth or reduce the scope of our then current level of business
operations, any of which would have a material adverse effect on our business.

We are dependent on large customers.

Internet Services Management Group ("Skyenet"), an Internet Service Provider,
accounted for approximately 57% of our monthly recurring revenue base for the
six-month period ended December 31, 2001. In November 2001, Skyenet notified us
of its intention to terminate its agreement with us. We have recently entered
into an agreement to provide online technical support services to Sears-Roebuck
("Sears"). We anticipate that Sears will account for a substantial portion of
our revenues in fiscal 2002 and potentially in subsequent years. However, the
actual revenues from this agreement will depend upon the usage of our services
by Sears' customers. The level of our services consumed by Sears may be limited
if we are unable to provide specifically defined levels of service under this
agreement.

                                      15
<PAGE>

Our Technical Support Application will need to be continually enhanced.

Due to the constantly evolving nature of the Internet and related technologies,
we must continuously monitor changes in PC support technologies and
Internet-based support offerings with the goal of adding additional
functionality in new releases of our products. Our Technical Support Application
will have to be updated and enhanced on a timely basis in order for us to
compete effectively. There can be no assurance that we will have access to the
working capital, technology, or skilled personnel and outside contractors
necessary in order to deliver these updates and enhancements to the market on a
timely basis.

Sale of our services to large and medium-sized enterprise customers requires us
to allocate substantial marketing resources and involves long sales cycles.

We have increased our efforts to sell our services to large and medium-sized
enterprise customers and have devoted significant management and financial
resources to achieving this goal. If our efforts are successful, large and
medium-sized enterprise customers are expected to use our services in business
critical operations which involve significant capital and management commitments
by such customers. Potential large and medium-sized enterprise customers
generally commit significant resources to an evaluation of available PC support
alternatives and may require us to expend substantial time, effort and money
educating them about the value of our solutions. Sales of our services to such
customers require an extensive sales effort throughout a customer's organization
because decisions to purchase generally involve the evaluation of the
alternative solutions by a significant number of customer personnel in various
functional and geographic areas, each often having specific and conflicting
requirements. Since we have had only limited experience to date in understanding
or anticipating the complex and rapidly changing needs of such corporations, we
may need to constantly revise and expand our service offerings. A variety of
factors, including factors over which we have little or no control, may cause
potential large and medium-sized enterprise customers to favor a particular
supplier or to delay or forego a purchase. As a result of these or other
factors, including our relative inexperience in selling to such enterprise
customers, the sales cycle for our services may be long, typically ranging
between three and nine months. As a result of the length of the sales cycle and
the significant selling expenses from selling into the large enterprise, our
ability to forecast the timing and amount of specific sales is limited, and the
delay or failure to complete one or more large transactions to which we have
devoted significant resources could have a material adverse effect on our
business, operating results or financial condition and could cause significant
variations in our operating results from quarter to quarter.

The market for our services is highly competitive and we may not be able to
compete successfully against our current and future competitors, resulting in
reduced revenues or profitability.

The market for PC support services through the Internet is a new and highly
competitive market, which is subject to rapid change and has few barriers to
entry. We face competitive pressures from numerous actual and potential
competitors.

Competition in the PC support business is likely to increase significantly as
new companies enter the market and current competitors expand their services.
Many of our current and potential competitors have substantial competitive
advantages, including:

      .     significantly greater financial, technical and marketing resources
      .     relationships with strong partners
      .     longer operating histories
      .     greater brand name recognition
      .     larger existing customer bases

Our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements and devote greater resources
to develop, promote and sell their products or services. Existing and potential
customers may perceive that competitor services are superior to ours. In
addition, increased competition could result in reduced subscriber fees, reduced
margins and loss of market share, any of which could harm our business.

                                      16
<PAGE>

We will need to develop brand recognition to effectively compete in the market.

To attract users we must develop a brand identity and increase public awareness
of the services we offer. To increase brand awareness and revenue, we intend, to
the extent we have adequate financial and other resources to do so, to increase
our advertising and promotional efforts. Our marketing activities may, however,
not result in increased revenue and, even if they do, any increased revenue may
not offset the expenses incurred in building brand recognition. Moreover,
despite these efforts we may be unable to increase public awareness of our
brands, which would have an adverse effect on our business.

We rely on partners to provide us with technologies for our Technical Support
Application.

Many of the online support technologies used in the Technical Support
Application are licensed from unrelated third parties or have been acquired from
third parties, and we anticipate that we will need to gain access in the future
to additional technologies through licenses or acquisitions. We are highly
reliant on the technologies that we license or have acquired. There can be no
assurance that our licensors will take the necessary steps to assure that these
technologies will keep pace with technological changes. There also can be no
assurance that our licensors will continue to grant us licenses in the future.
We also may encounter unanticipated difficulties in integrating the technologies
that we license or the technologies, personnel or operations that we acquire
with our existing technologies or operations. The loss of the right to use one
or more of these technologies or our inability to successfully integrate these
technologies with our existing technologies may have a material adverse effect
on our business.

We are subject to rapid technological change affecting our services.

The market for Internet products and services is characterized by rapid change,
evolving industry standards and frequent introductions of new technological
developments. These new standards and developments could make our existing or
future products or services obsolete. In addition, personal computers, operating
systems software, and applications software are constantly improving. Computer
manufacturers and software developers may develop more robust technologies for
their products which could render our services obsolete or reduce the demand for
our services below the level required to profitably support them.

Our keeping pace with the introduction of new standards and technological
developments could result in significant additional costs or prove difficult or
impossible. The failure to keep pace with these changes and to continue to
enhance and improve the responsiveness, functionality and features of our
services could harm our ability to attract and retain users. Among other things,
we may need to enhance our existing services or license or develop new services
or technologies, which may not be available to us on attractive terms or at all.

We may be unable to sufficiently protect our intellectual property.

We may be unable to acquire or maintain trademark or Web domain names in the
United States and other countries in which we may conduct business. We have
applied for trademark protection for the name "MyHelpDesk" and currently hold
various relevant domain names, including PCSUPPORT.com, GLOBALREPLACE.com,
PCREPLACE.com, PDASUPPORT.com, PCSUPPORTCENTER.com, PCSUPPORTCENTER.net,
PCRESTORE.com, and RECON-TECH.com. The acquisition and maintenance of domain
names generally is regulated by governmental agencies and their designees and is
subject to change. The relationship between regulations governing domain names
and laws protecting trademarks and similar proprietary rights is unclear.
Therefore, we could be unable to prevent third parties from acquiring or using
domain names that infringe or otherwise decrease the value of our brand names
and other proprietary rights.

Also, third parties may assert trademark, copyright, patent and other types of
infringement or unfair competition claims against us. If forced to defend
against any such claims, whether they are with or without merit or are
determined in our favor, then we may face costly litigation, diversion of
technical and management personnel, or product shipment delays. As a result of
such a dispute, we may have to develop non-infringing technology, enter into
royalty or licensing agreements or alter our business practices. Such royalty or
licensing agreements, if required, may be unavailable on terms acceptable to us,
or at all. If there is a successful claim of product infringement against us and
we are unable to develop non-infringing technology or license the infringed or
similar technology on a timely basis, it could materially harm our business.

We rely on confidentiality, non-disclosure and non-competition arrangements with
our employees, representatives and other entities engaged in joint product or
business development with us, and expect to continue to enter into such
agreements with such persons. There can be no assurance that these agreements
will provide meaningful protection.

                                      17
<PAGE>

There can be no assurance that other companies will not acquire and use
information that we consider to be proprietary, and we may be unsuccessful in
enforcing our intellectual property rights against these companies.

System disruptions may adversely affect our services.

Our ability to attract and retain subscribers depends on the performance,
reliability and availability of our services and network infrastructure. We may
experience periodic service interruptions caused by temporary problems in our
own systems or software or in the systems or software of third parties upon whom
we rely to provide service or support. Fire, floods, earthquakes, power loss,
telecommunications failures, break-ins, denial of service attacks and similar
events could damage these systems and interrupt our services. Computer viruses,
electronic break-ins or other similar disruptive events also could disrupt our
services. System disruptions could result in the unavailability or slower
response times of our Technical Support Application, which would lower the
quality of our customers' experience. Service disruptions could adversely affect
our revenue and, if they were prolonged, would seriously harm our business and
reputation. We do not carry business interruption insurance to compensate for
losses that may occur as a result of these interruptions. In addition, our
customers will be dependent on Internet service providers and other Web site
operators for access to our Technical Support Application. These providers and
operators have experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. Moreover, the Internet network infrastructure may not be able to
support continued growth. Any of these problems could adversely affect our
business.

The failure of online security measures could adversely affect our customer
relationships.

Our relationships with our customers would be adversely affected if the security
measures that we use to protect their personal information were ineffective. We
cannot predict whether events or developments will result in a compromise or
breach of the technology we use to protect a customer's personal information.

The infrastructure relating to our services is vulnerable to unauthorized
access, physical or electronic computer break-ins, computer viruses and other
disruptive problems. Internet service providers have experienced, and may
continue to experience, interruptions in service as a result of the accidental
or intentional actions of Internet users, current and former employees and
others. Anyone who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
Security breaches relating to our activities or the activities of third-party
contractors that involve the storage and transmission of proprietary information
could damage our reputation and our relationships with our subscribers and
strategic partners. We could be liable to our subscribers for the damages caused
by such breaches, or we could incur substantial costs as a result of defending
claims for those damages. We may need to expend significant capital and other
resources to protect against such security breaches or to address problems
caused by such breaches. Security measures that we take may not prevent
disruptions or security breaches.

Our business is dependent upon the continued development and maintenance of the
Internet and the availability of increased bandwidth to users.

The success of our business will rely on the continued improvement of the
Internet as a convenient means of consumer interaction and commerce. Our
business will depend on the ability of our customers to use our Technical
Support Application without significant delays or aggravation that may be
associated with decreased availability of Internet bandwidth and resultant
limits to access to our Technical Support Application. This will depend upon the
maintenance of a reliable network with the necessary speed, data capacity and
security, as well as timely development of complementary products, such as
high-speed modems, for providing reliable Internet access and services. The
failure of the Internet to achieve these goals may reduce our ability to
generate significant revenue.

Our penetration of a broader consumer market will depend, in part, on continued
proliferation of high speed Internet access. The Internet has experienced, and
is likely to continue to experience, significant growth in the numbers of users
and amount of traffic. As the Internet continues to experience increased numbers
of users, increased frequency of use and increased bandwidth requirements, the
Internet infrastructure may be unable to support the demands placed on it. In
addition, increased users or bandwidth requirements may harm the performance of
the Internet. The Internet has experienced a variety of outages and other delays
and it could face outages and delays in the future. These outages and delays
could reduce the level of Internet usage as well as the level of traffic, and
could result in the Internet becoming an inconvenient or uneconomical source of
products and services, which would cause its revenue to decrease. The
infrastructure and complementary products or services necessary to make the
Internet a viable commercial marketplace for the long term may not be developed
successfully or in a timely manner. Even if these

                                      18
<PAGE>

products or services are developed, the Internet may not become a viable
commercial marketplace for the products or services that we offer.

We may need to change the manner in which we conduct our business if government
regulation increases or changes.

There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Laws and regulations may be adopted
in the future, however, that address issues such as user privacy, pricing,
taxation, content, copyrights, distribution, security, and the quality of
products and services. For example, the United States Telecommunications Act of
1996 sought to prohibit transmitting certain types of information and content
over the Web. Several telecommunications companies have petitioned the United
States Federal Communications Commission to regulate Internet service providers
and online services providers in a manner similar to long distance telephone
carriers and to impose access fees on these companies. Any imposition of access
fees could increase the cost of transmitting data over the Internet. In
addition, the growth and development of the market for online commerce may lead
to more stringent consumer protection laws, both in the United States and
abroad, that may impose additional burdens on us. The United States Congress
recently enacted Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The law of the
Internet, however, remains largely unsettled, even in areas where there has been
some legislative action. Moreover, it may take years to determine the extent to
which existing laws relating to issues such as property ownership, libel and
personal privacy are applicable to the Web. Any new, or modifications to
existing, laws or regulations relating to the Web could adversely affect our
business.

If one or more states or any foreign country successfully asserts that we should
collect sales or other taxes on the provision of our services, our net sales and
results of operations could be harmed. We do not currently collect sales or
other similar taxes on the provision of our services in any state. However, one
or more states may seek to impose sales tax collection obligations on companies,
which engage in or facilitate the provision of services on the Internet. A
number of proposals have been made at the state and local level that would
impose additional taxes on the sale of products and services through the
Internet. Such proposals, if adopted, could substantially impair the growth of
electronic commerce and could adversely affect our opportunity to derive
financial benefit from the provision of our services. Moreover, if any state or
foreign country were to successfully assert that we should collect sales or
other taxes on the provision of our services, our results of operations could be
adversely affected.

Legislation limiting the ability of the states to impose taxes on Internet-based
transactions has been enacted by Congress. However, this legislation, known as
the Internet Tax Nondiscrimination Act, imposes a moratorium ending on October
31, 2003 on state and local taxes on electronic commerce where such taxes are
discriminatory and on Internet access unless such taxes were generally imposed
and actually enforced before October 1, 1998. Failure to renew this legislation
would allow various states to impose taxes on Internet-based commerce.

We may be exposed to product liability claims by our customers.

Our license agreements with customers typically contain provisions designed to
limit our exposure to potential product liability claims. In selling our
services, we rely on "click wrap" (electronic sales transmitted via the
Internet) licenses that are not signed by licensees and, therefore, it is
possible that such licenses may be unenforceable under the laws of certain
jurisdictions. For these and other reasons, it is possible that the limitation
of liability provisions contained in our license agreements may not be
effective. Although we have not experienced any product liability claims to
date, the sale and support of our services may entail the risk of such claims. A
successful product liability claim brought against us could have a material
adverse effect upon our business, operating results and financial condition.

We may be required to collect taxes in foreign jurisdictions, which will impose
additional administrative burdens on us.

As our business grows, we hope to generate sales from consumers and businesses
around the world. Each jurisdiction collects sales taxes of various kinds in
different ways. We may need to quickly develop an understanding of a myriad of
tax regimes and to customize our electronic commerce and accounting systems to
collect and remit such taxes for each one. There can be no assurance that we
will be able to develop an understanding of every system and collect and remit
such taxes in a timely manner. Failure to do so may expose us to significant
sanctions, penalties and fines that may have a material adverse impact on our
business.

Our operating results may be adversely affected by fluctuations in the U.S. and
Canadian currencies.

                                      19
<PAGE>

We expect a substantial portion of our revenues to be based on sales and
services rendered to customers in the United States, while a significant amount
of our operating expenses will be incurred in Canada. As a result, our financial
performance will be affected by fluctuations in the value of the U.S. dollar to
the Canadian dollar. At the present time, we have no plan or policy to utilize
forward contracts or currency options to minimize this exposure, and even if
these measures are implemented there can be no assurance that such arrangements
will be available, be cost effective or be able to fully offset such future
currency risks.

Our operating results may prove unpredictable, and may fluctuate significantly.

Our operating results are likely to fluctuate significantly in the future due to
a variety of factors, many of which are outside of our control. Because our
operating results may be volatile and difficult to predict, in the future the
operating results may fall below the expectations of securities analysts and
investors. In this event, the trading price of our common stock may fall
significantly. Factors that may cause operating results to fluctuate
significantly include the following:

      .     rapid changes in the prices and costs of online services
      .     fluctuations in the levels of users served by our Technical Support
            Application and the amount of time that users spend on the Technical
            Support Application using labor intensive online support services
      .     new Web sites, services or products introduced by us or by our
            competitors
      .     the timing and uncertainty of advertising sales cycles and seasonal
            declines in advertising sales
      .     general economic conditions, as well as economic conditions specific
            to users of our services and the public markets for Internet-related
            companies

                                      20
<PAGE>

                          PART II - OTHER INFORMATION

      ITEM 1 - LEGAL PROCEEDINGS

            None.

      ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)   In October 2001 the Company entered into two separate loan agreements,
      with lenders who were not residents of the United States, for a total of
      $150,000. In consideration for these loans the Company issued two-year
      common share purchase warrants to the lenders to purchase a total of
      240,000 common shares of the Company's stock at $0.20 per share. The
      Company relied upon Regulation S in issuing these warrants without
      registration under the Securities Act of 1933.

(b)   In December 2001 the Company completed the sale of 7,566,661 shares of our
      common stock to 45 accredited investors at a price of $0.12 per share. In
      connection with this private placement the Company issued warrants to
      purchase a total of 756,000 shares of common stock as a finder's fee to
      two accredited investors. Warrants covering 378,000 of these shares expire
      on December 31, 2003 and have an exercise price of $0.20 per share. The
      remaining 378,000 of these warrants expire on December 31, 2004 and have
      an exercise price of $0.40 per share. The Company relied upon Regulation D
      in issuing these shares and warrants without registration under the
      Securities Act of 1933.

      ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

            None.

      ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On December 12, 2001 the Company held its 2001 Annual Meeting of
Stockholders, at which the Company's shareholders approved the following, which
were the only matters acted upon by the shareholders at this meeting:

      a. Election of the following individuals as all of the Company's
      directors: Mike McLean, Steve Macbeth and Jerome DeLuccio (FOR -
      7,893,747, AGAINST - 0, ABSTAIN - 1,730, BROKER NON VOTE - 0).

      b. Appointment of KPMG, LLP as the Company's independent auditors for the
      fiscal year ending June 30, 2002 (FOR - 7,895,099, AGAINST - 0, ABSTAIN -
      400, BROKER NON-VOTE - 0).

      ITEM 5 - OTHER INFORMATION

            None.

                                      21
<PAGE>

      ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

      a.    The exhibits listed in the accompanying Index to Exhibits are filed
            as part of this Quarterly Report on Form 10-QSB.

      b.    Reports on Form 8-K.

            None.

      SIGNATURES

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

                                       PCSUPPORT.COM, INC.


      Date: February 12, 2002          By:         /s/ Michael G. McLean
                                           -------------------------------------
                                                        Michael G. McLean
                                                        President and Chief
                                                        Executive Officer


      Date: February 12, 2002          By:         /s/ Michael S. Hillhouse
                                           -------------------------------------
                                                        Michael S. Hillhouse
                                                        Chief Financial Officer

                                      22
<PAGE>

                               INDEX TO EXHIBITS
                               -----------------

Exhibit

Number      Description
------      -----------

10.1        Warrant issued on December 31, 2001 to Canaccord Capital
            Corporation.

10.2        Warrant issued on December 31, 2001 to Canaccord Capital
            Corporation.

10.3        Warrant issued on December 31, 2001 to Bolder Investment Partners
            Ltd.

10.4        Warrant issued on December 31, 2001 to Bolder Investment Partners
            Ltd.

                                      23