<PAGE>

--------------------------------------------------------------------------------
                         SECURITIES AND EXCHANGE COMMISSION 
                                Washington D.C. 20549
                                      FORM 10-Q

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

                         For the quarter ended June 30, 1998

                           Commission File number 000-23547

                              E.COM INTERNATIONAL, INC.
--------------------------------------------------------------------------------
                (Exact Name of Registrant as specified in its charter)

           Oregon                                     91-1600822
--------------------------------------------------------------------------------
  (State of Incorporation)                        (Federal I.R.S. No.)

7737 S.W. Cirrus Drive, Beaverton, Oregon                  97008
--------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

                     Registrant's Telephone Number: 503-671-9900
--------------------------------------------------------------------------------

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes (X)     No  (  )

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

      As of August 7, 1998, the Registrant had 2,375,577 shares of Common 
Stock outstanding.

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

                      DOCUMENTS INCORPORATED BY REFERENCE:  None

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

<PAGE>

                            PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                             E.COM INTERNATIONAL, INC.
                                          
                                FINANCIAL STATEMENTS
                                          

INDEX

<TABLE>
<S>                                                                 <C>
Balance Sheets as of June 30, 1998 and December 31, 1997. . . . . .  3

Statements of Operations for the Quarters Ended 
   June 30, 1998 and June 30, 1997. . . . . . . . . . . . . . . . .  4

Statements of Cash Flows for the Quarters Ended 
   June 30, 1998 and June 30, 1997. . . . . . . . . . . . . . . . .  5

Notes to Financial Statements . . . . . . . . . . . . . . . . . . .  6
</TABLE>


                                      -2-

<PAGE>

                              E.COM INTERNATIONAL, INC.
                         (A Company in the Development Stage)

                                    BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                        June 30          December 31
                                                                          1998               1997
                                                                      -----------        -----------
                                                                      (Unaudited)
<S>                                                                   <C>                <C>
Current assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . . . .     $   590,333         $ 1,839,281
  Accounts receivable. . . . . . . . . . . . . . . . . . . . . .           2,800                   -
  Inventories. . . . . . . . . . . . . . . . . . . . . . . . . .         338,590             315,023
  Prepaid expenses and other assets. . . . . . . . . . . . . . .          31,189              19,156
                                                                     -----------         -----------
     Total current assets. . . . . . . . . . . . . . . . . . . .         962,912           2,173,460
                                                                     -----------         -----------
Property and equipment, net. . . . . . . . . . . . . . . . . . .         393,515             380,206
Intangible assets, net . . . . . . . . . . . . . . . . . . . . .          13,950              19,833
Prepaid software royalties, net. . . . . . . . . . . . . . . . .          42,373              40,750
                                                                      ----------         -----------
                                                                     $ 1,412,750         $ 2,614,249
                                                                     -----------         -----------
                                                                     -----------         -----------
     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable . . . . . . . . . . . . . . . . . . . . . . .         164,664             237,245
  Accrued liabilities. . . . . . . . . . . . . . . . . . . . . .          58,282              95,558
  Notes payable to shareholder . . . . . . . . . . . . . . . . .               -             195,000
  Current portion of capital lease obligations . . . . . . . . .           4,158               2,144
                                                                     -----------         -----------
     Total current liabilities . . . . . . . . . . . . . . . . .         227,104             529,947
                                                                     -----------         -----------
Capital lease obligations, less current portion. . . . . . . . .          13,307              11,087

Commitments

Shareholders' equity:
  Common stock, no par value, authorized 10,000,000 shares;
     2,375,577  issued and outstanding at June 30,
     1998 and December 31, 1997. . . . . . . . . . . . . . . . .       3,293,359           3,386,025
  Warrants outstanding . . . . . . . . . . . . . . . . . . . . .       1,268,146           1,268,146
  Deficit accumulated during the development stage . . . . . . .      (3,389,166)         (2,580,956)
                                                                     -----------         -----------
     Total shareholders' equity. . . . . . . . . . . . . . . . .       1,172,339           2,073,215
                                                                     -----------         -----------
                                                                     $ 1,412,750         $ 2,614,249
                                                                     -----------         -----------
                                                                     -----------         -----------
</TABLE>

See accompanying notes to financial statements.


                                       -3-

<PAGE>

                              E.COM INTERNATIONAL, INC.
                         (A Company in the Development Stage)

                               STATEMENTS OF OPERATIONS
                                     (Unaudited)


<TABLE>
<CAPTION>
                                                                                                                  Period from 
                                                                                                                 April 4, 1996
                                                                                                                   (date of
                                                            Three months ended            Six months ended         inception)
                                                                 June 30,                     June 30,            to June 30,
                                                            1998          1997            1998          1997          1998
                                                       -------------------------     -------------------------    -----------
<S>                                                    <C>             <C>           <C>           <C>            <C> 
Sales . . . . . . . . . . . . . . . . . . . . . .      $   26,795              -     $   49,325              -    $    74,562
Cost of sales . . . . . . . . . . . . . . . . . .          22,718              -         30,850              -         52,647
                                                       -------------------------     -------------------------    -----------
     Gross profit . . . . . . . . . . . . . . . .           4,077              -         18,475              -         21,915
                                                       -------------------------     -------------------------    -----------
Operating expenses:
  Research and development. . . . . . . . . . . .         175,595        280,977        318,836        632,833      1,662,335
  Sales and marketing . . . . . . . . . . . . . .          62,547         69,044        123,010        116,975        451,126
  General and administrative. . . . . . . . . . .         219,267        127,653        405,748        255,101      1,304,362
                                                       -------------------------     -------------------------    -----------
                                                          457,409        477,674        847,594      1,004,909      3,417,823
                                                       -------------------------     -------------------------    -----------
     Loss from operations . . . . . . . . . . . .        (453,332)      (477,674)      (829,119)    (1,004,909)    (3,395,908)

Other income (expense):
  Interest income . . . . . . . . . . . . . . . .           9,313            993         24,494          4,004         43,633
  Interest expense. . . . . . . . . . . . . . . .              53         (5,446)        (3,585)       (16,780)       (36,891)
                                                       -------------------------     -------------------------    -----------
     Loss before provision for income taxes . . .        (443,966)      (482,127)      (808,210)    (1,017,685)    (3,389,166)

Provision for income taxes. . . . . . . . . . . .               -              -              -              -
                                                       -------------------------     -------------------------    -----------
     Net loss . . . . . . . . . . . . . . . . . .       $(443,966)      (482,127)     $(808,210)    (1,017,685)   $(3,389,166)
                                                       -------------------------     -------------------------    -----------
                                                       -------------------------     -------------------------    -----------
Basic loss per share. . . . . . . . . . . . . . .          $(0.19)         (0.39)        $(0.34)         (0.90)        $(2.34)
                                                       -------------------------     -------------------------    -----------
                                                       -------------------------     -------------------------    -----------
Shares used in calculation. . . . . . . . . . . .       2,375,577      1,231,856      2,375,577      1,135,308      1,449,928
                                                       -------------------------     -------------------------    -----------
                                                       -------------------------     -------------------------    -----------
</TABLE>


See accompanying notes to financial statements.

                                      -4-

<PAGE>
                              E.COM INTERNATIONAL, INC.
                         (A Company in the Development Stage)

                               STATEMENTS OF CASH FLOWS
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                                                                       Period from
                                                                                                      April 4, 1996
                                                                          Six months    Six months       (date of
                                                                             ended          ended        inception)
                                                                            June 30,       June 30,      to June 30,
                                                                              1998           1997           1998
                                                                           -----------   -----------    -----------
<S>                                                                        <C>           <C>            <C>
Cash flows from operating activities:
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $  (808,210)   $(1,017,685)   $(3,389,166)
  Adjustments to reconcile net loss to net cash used 
     in operating activities:
     Depreciation and amortization. . . . . . . . . . . . . . . . . .          32,373         29,856        159,454

 Write-off of acquired products in development: . . . . . . . . . . .                                        39,098
 Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . .          (2,800)            --         (2,800)
     Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . .         (23,567)      (264,083)      (336,664)
     Prepaid expenses and other assets. . . . . . . . . . . . . . . .         (13,656)       (88,468)      (104,039)
     Accounts payable and accrued liabilities . . . . . . . . . . . .        (104,466)       420,068        228,337
                                                                           ----------     ----------    -----------
     Net cash used in operating activities. . . . . . . . . . . . . .        (920,326)      (920,312)    (3,405,780)
                                                                           ----------     ----------    -----------
Cash flows from investing activities:
  Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . .         (39,799)      (109,968)      (499,415)
  Acquisition of EnBloc assets
                                                                                   --             --        (31,543)
                                                                           ----------     ----------    -----------
     Net cash used in investing activities. . . . . . . . . . . . . .         (39,799)      (109,968)      (530,958)
                                                                           ----------     ----------    -----------
Cash flows from financing activities:
     Proceeds (expenses) from sale of common stock and 
     warrants, net. . . . . . . . . . . . . . . . . . . . . . . . . .         (92,666)     1,026,694      4,455,709
     Proceeds from issuance of notes payable 
     to shareholders. . . . . . . . . . . . . . . . . . . . . . . . .              --        175,000        420,000
     Principal payments under capital lease obligation. . . . . . . .          (1,157)          (309)        (2,434)
     Repayment of notes payable to shareholders . . . . . . . . . . .        (195,000)      (125,000)      (320,000)
     Repayment of contract payable
                                                                                   --        (32,000)       (32,000)
     Advance payment by shareholders for common 
     stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              --             --             --
     Payments received on subscriptions receivable from
     sale of stock. . . . . . . . . . . . . . . . . . . . . . . . . .              --          4,796          5,796
                                                                           ----------     ----------    -----------
     Net cash provided by (used in) financing activities. . . . . . .        (288,823)     1,049,181      4,527,071
                                                                           ----------     ----------    -----------
     Net increase (decrease) in cash and cash equivalents . . . . . .      (1,248,948)        18,901        590,333
Cash and cash equivalents at beginning of period. . . . . . . . . . .       1,839,281         16,190             --
                                                                           ----------     ----------    -----------
Cash and cash equivalents at end of period. . . . . . . . . . . . . .      $  590,333     $   35,091    $   590,333
                                                                           ----------     ----------    -----------
                                                                           ----------     ----------    -----------
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest. . . . . . . . . . . . . .      $    2,372     $   13,525    $    20,560
                                                                           ----------     ----------    -----------
                                                                           ----------     ----------    -----------
</TABLE>

                                       -5-

<PAGE>

ITEM 1. NOTES TO FINANCIAL STATEMENTS

     NOTE 1

     The unaudited financial information furnished herein reflects all 
adjustments that in the opinion of management are necessary to fairly state 
the Company's financial position, the changes in its financial position and 
the results of its operations for the periods presented.  This report on Form 
10-Q should be read in conjunction with the Company's financial statements 
and notes thereto included on Form 10-K for the year ended December 31, 1997. 
 The Company assumes that users of the interim financial information herein 
have read or have access to the audited financial statements for the 
preceding fiscal year and that the adequacy of additional disclosure needed 
for a fair presentation may be determined in that context.  Accordingly, 
footnote disclosure which would substantially duplicate the disclosure 
contained in the Company's financial statements for the year ended December 
31, 1997 has been omitted.  The results of operations for the six month 
period ended June 30, 1998 are not necessarily indicative of results for the 
entire year ended December 31, 1998.

     NOTE 2 - INVENTORIES

     Inventories are comprised of the following as of June 30, 1998 and 
December 31, 1997:

<TABLE>
<CAPTION>

                                             1998                1997
                                            ------              ------
                                         (Unaudited)
<S>                                      <C>                  <C>
Raw Materials                              $204,214            $315,023
Work in Process                             134,376                  --
                                           --------            --------
                                           $338,590            $315,023
                                           --------            --------
                                           --------            --------

</TABLE>

                                       -6-

<PAGE>

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

     The following discussion and analysis should be read in conjunction with 
the Company's Financial Statements and Notes thereto included elsewhere in 
this Form 10-Q.  This Form 10-Q contains, in addition to historical 
information, forward-looking statements that involve risks and uncertainties. 
The Company's actual results could differ materially from the results 
discussed in the forward-looking statements.  Factors that could cause or 
contribute to such differences include those discussed below, as well as 
those discussed in the Company's annual report on Form 10-K filed with the 
Securities and Exchange Commission.

OVERVIEW

     Since its formation, the Company has been in the development stage with 
its principal activities consisting of assembling a qualified technical and 
executive management team, continuing the development of its products, 
commencing pre-introduction marketing activities and raising capital.  The 
Company operates in a rapidly changing market and technology.  The Company 
has generated no significant revenues and has incurred substantial losses 
since its inception.  The Company expects to continue to incur significant 
losses in 1998.
 
     The Company expects revenues to be derived primarily from the sale of 
its wireless mobile computing products.  The Company does not expect to have 
any significant revenues until the third quarter of 1998 at the earliest.  
Sales are expected to be through purchase order contracts with each customer 
and will vary in profitability. 

     The Company's primary product is the Discovery I-TM-, a fully integrated 
smart handheld device for wireless data communications.  The Company 
commenced commercial production and shipment of the Discovery I-TM- late in 
the first quarter of 1998. The Company purchased certain manufacturing, 
tooling and test equipment to support its move to commercial production.  In 
addition, the Company expects to add to its engineering, marketing and sales 
staff to support its shift into commercial product sales.  During 1998, the 
Company expects to invest in continuing development of enhancements, upgrades 
and software for its current products as well as limited development of 
additional new products, including both applications software, wireless 
gateway servers, and other network interfaces for the Discovery I-TM-, 
subject to the amount and timing of the Company's achieving additional new 
funding or significant revenues.
     
RESULTS OF OPERATIONS 

     REVENUES

     The Company had revenues of $26,795 and $49,325 for the second quarter 
and first half of 1998, respectively, compared to no revenues in the second 
quarter and first half of 1997.  Revenues were derived from sales of 
commercial units of the Company's Discovery I-TM-.  Sales were made to three 
(3) customers in the first half of 1998, which the Company believes are 
evaluating the Discovery I-TM-product.  Operating expenses decreased by 4% to 
$457,409 in the second quarter of 1998 and by 15% to $847,594 for the first 
half of 1998, as compared to $477,674 and $1,004,909 in the corresponding 
periods of 1997, 

                                       -7-

<PAGE>

primarily reflecting the Company's shift from research and development 
efforts to other areas of the Company in preparation for ongoing production 
and sales.

     RESEARCH AND DEVELOPMENT EXPENSES 

     Research and development expenses since inception have consisted 
primarily of payments to engineering consultants, payments of salaries and 
fringe benefits of employees and purchase of engineering parts and materials. 
To date, the Company has expensed all such costs as incurred.  Engineering 
consulting projects have for the most part been completed, and expenses for 
such projects have been substantially reduced to $70,220 in the first half of 
1998, compared with $357,250 in the first half of 1997, with most continued 
engineering work now being performed by employees of the Company.  The 
Company expects product development expenses associated with the Discovery 
I-TM- to remain at current levels in the near-term, however, the Company 
expects additional costs to be incurred for production support as the Company 
continues to begin commercial manufacturing of its initial products. The 
Company anticipates that it will also devote substantial resources to 
additional product enhancements, application support, application software 
development and development of E.Com's planned back-end wireless gateway 
server.

     SALES, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES
     
     Sales, marketing, general and administrative expenses include payroll 
and related costs for the Company's administrative and executive personnel, 
costs related to the Company's marketing and promotional efforts, office 
lease expenses and other overhead costs, and legal and accounting costs and 
fees of consultants and professionals.  Sales, marketing, general and 
administrative expenses for the quarter ended June 30, 1998 were $281,814, as 
compared to $196,697 for the quarter ended June 30, 1997.  For the six months 
ended June 30, 1998, and the six months ended June 30, 1997, these expenses 
were $528,758 and $372,076, respectively, reflecting primarily increased 
introduction activities for the Discovery I-TM-. The Company expects sales, 
marketing, general and administrative expenses to continue to increase 
substantially in future periods as the Company invests in marketing 
activities to promote its products.  In addition, the Company continued to 
incur significant accounting and legal expenses associated with the 
registration of its securities for public trading on the OTC Bulletin Board 
as required by the terms of the most recent private offering as well as the 
increased statutory reporting requirements that such registration dictates.  
Legal and accounting expenses resulting from this registration for the six 
month period ended June 30, 1998 were $44,865 and $15,000 respectively.  The 
Company expects ongoing legal and accounting expenses to remain above those 
of 1997 levels due to its ongoing business development activities.

     NET LOSS

     Net cumulative loss from corporate inception through June 30, 1998 was 
approximately $3.4 million or $2.34 per share. For the quarter ended June 30, 
1998, the Company recorded a net loss of $443,966 or $0.19 per share, versus 
a net loss of $482,127 or $0.39 per share for the quarter ended June 30, 1997.
     
     For the six month period ended June 30, 1998, the Company recorded a net 
loss of $808,210 or $0.34 per share, versus a net loss of $1,017,685 or $0.90 
per share for the six month period ended June 30, 1997, primarily reflecting 
ongoing operating expenses prior to establishment of a significant revenue 
stream.

                                      -8-

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     To date, the Company has financed its operations primarily through 
private placements of common stock.  At December 31, 1997, the Company had 
shareholders' equity of approximately $2.1 million, although from inception 
through December 31, 1997, the Company had incurred an accumulated deficit of 
approximately $2.6 million.  The Company had cash and cash equivalents of 
$1.8 million at December 31, 1997.  As of June 30, 1998, the Company had 
shareholders' equity of approximately $1.2 million and cash and cash 
equivalents of $0.6 million.  

     The Company applied the proceeds from the most recent private offering 
to payment of outstanding accounts payable, tooling costs, retirement of a 
shareholder loan, and salaries, benefits and other regular monthly expenses.  
The Company also expects that its operating costs will increase as the 
Company hires additional staff to expand its marketing, engineering support 
and production capabilities. If and when higher volume sales of the Company's 
products occur, working capital needs will also increase to finance inventory 
and accounts receivable. 

     The Company's future expenditures and capital requirements will depend 
on numerous factors, including the progress of its product development, 
manufacturing, sales and marketing programs and sales growth.  The Company 
expects its cash requirements to increase significantly each year as it 
expands its activities and operations to finance increased personnel costs, 
inventory and accounts receivable. Additionally, the Company will continue to 
evaluate possible acquisitions of, or investments in businesses, products, 
and technologies that are complementary to those of the Company, which may 
require the use of cash.  The Company currently expects that its cash and 
cash equivalents will satisfy its working capital needs for approximately 
four months, assuming that the Company generates no unanticipated revenues 
and makes no acquisitions of assets or companies during such period.  The 
Company anticipates needing to raise additional capital, debt or equity, in 
public or private offerings or loan transactions to finance its continued 
growth.  As of August 7, 1998, the Company has held discussions with various 
investors and investment bankers concerning additional financing, but has not 
reached any agreement concerning additional financing.  There is no guarantee 
that additional funding will occur in the required time frame.  Failure of 
the Company to obtain additional financing could have a material adverse 
impact on the Company, including its ability to continue as a going concern.

                                      -9-

<PAGE>

                             PART II - OTHER INFORMATION


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

     The annual meeting of the Company's shareholders was held on June 12, 
1998. The shareholders of 55.18 percent of the Company's outstanding shares 
were present in person or represented by proxy.  The following individuals 
were elected by the margins indicated to serve as directors of the Company 
until the next annual meeting of shareholders or until their successors are 
elected:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------
                                                      Number of Shares
---------------------------------------------------------------------------------------
                 Name                           For                   Withheld
---------------------------------------------------------------------------------------
         <S>                                 <C>                      <C>
         William F. Stephens                 1,310,958                   0
---------------------------------------------------------------------------------------
           Steven A. Larson                  1,308,458                 2,500
---------------------------------------------------------------------------------------
         Lawrence C. Neitling                1,310,958                   0
---------------------------------------------------------------------------------------
          Merrill A. McPeak                  1,310,958                   0
---------------------------------------------------------------------------------------

</TABLE>

     The appointment of KPMG Peat Marwick LLP as the Company's accountants was
also approved by a unanimous vote.
 
ITEM 6(a).     EXHIBITS.

<TABLE>
<CAPTION>

        EXHIBIT
          NO.                   DESCRIPTION
        -------         -------------------------------------------------------------
        <C>             <S>
          3.1+          Articles of Incorporation of the Company
          3.2+          Bylaws of the Company
          4.1+          Form of Warrant Number One for Purchase of Common Stock
          4.2+          Form of Warrant Number Two for Purchase of Common Stock
          4.3+          Warrant Agreement including Form of Warrant
          4.4+          Form of Warrant for Purchase of Units
         10.1+          Employment Agreement between the Company and William F. Stephens
         10.2+          Employment Agreement between the Company and Jonathan D. Birck
         10.3+          Contract between Company and Motorola Wireless Data Group
         10.4+          Agreement between Company and L.G. Zangani, Inc.
         10.5+          1997 Incentive Compensation Plan
         10.6+          Lease with Gateway Columbia Properties
         27             Financial Data Schedule

</TABLE>

------------------
+    Filed previously with the Company's Registration Statement on Form 10 (No.
     000-23547) filed with the Securities and Exchange Commission on December
     24, 1997.

                                      -10-

<PAGE>

                                      SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.


By   /s/  William F. Stephens                 Date:    August 11, 1998
   -----------------------------------
          William F. Stephens
     Principal Executive Officer and
       Principal Financial Officer




                                       -11-

<PAGE>

                                   EXHIBIT INDEX
                                          
                                     FORM 10-Q
                                          
                             E.COM INTERNATIONAL, INC.

<TABLE>
<CAPTION>

        EXHIBIT
          NO.                  DESCRIPTION                                             PAGE
        -------     -----------------------------------------------------------        ----
        <C>         <S>                                                                <C>
         3.1+       Articles of Incorporation of the Company
         3.2+       Bylaws of the Company
         4.1+       Form of Warrant Number One for Purchase of Common Stock
         4.2+       Form of Warrant Number Two for Purchase of Common Stock
         4.3+       Warrant Agreement including Form of Warrant
         4.4+       Form of Warrant for Purchase of Units
        10.1+       Employment Agreement between the Company and William F. Stephens
        10.2+       Employment Agreement between the Company and Jonathan D. Birck
        10.3+       Contract between Company and Motorola Wireless Data Group
        10.4+       Agreement between Company and L.G. Zangani, Inc.
        10.5+       1997 Incentive Compensation Plan
        10.6+       Lease with Gateway Columbia Properties
        27          Financial Data Schedule

</TABLE>

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

+    Filed previously with the Company's Registration Statement on Form 10 (No.
     000-23547) filed with the Securities and Exchange Commission on December
     24, 1997.


                                       (i)