SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 March 31, 2002

                                       OR

[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES  EXCHANGE ACT
OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO _______________

Commission File Number 0-29459

                                   PACEL CORP.
                 ---------------------------------------------
             (Exact name of registrant as specified in its charter)



VIRGINIA                                                54-1712558
----------------------------------              --------------------------------
(State or other jurisdiction of                 (I.R.S. Employer
incorporation or organization                           Identification Number)


8870 RIXLEW LANE, SUITE 201, MANASSAS, VIRGINIA                 20109-3795
-----------------------------------------------      ---------------------------
(Address of principal executive offices)                        (ZIP Code)


<PAGE>


Registrant's telephone number, including area code: (703) 257-4759

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 day:

Yes [X] No [ ]

Transitional Small Business Disclosure Format (check one)

Yes [ ] No [X]

State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:

As of March 31, 2002, there were 6,484,626 shares of the Registrant's common
stock outstanding.


<PAGE>


                          PACEL CORP. AND SUBSIDIARIES




     PART I. FINANCIAL INFORMATION (unaudited)

Item 1.  Index to Consolidated Condensed Financial Statements                F-1


         Condensed Consolidated Balance Sheets                               F-2


         Consolidated Condensed Statements of Income of Operations           F-3


         Consolidated Statements of Cash Flows                               F-4


         Notes to Consolidated Condensed Financial Statements                F-5

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                 8


   PART II. OTHER INFORMATION                                                 11


             SIGNATURES                                                       12

                                      F-1

<PAGE>


<TABLE>
<CAPTION>
                          PACEL CORP. AND SUBSIDIARIES
                                  Balance Sheet
                                   (Unaudited)

                                                                                      March 31,          December 31,
                                                                                         2002                2001
                                                                                --------------------   -----------------
                                                                                      Unaudited             Audited
<S>                                                                             <C>                    <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                    $             10,527   $          65,761
Accounts receivable, net of allowance for doubtful accounts of $4,326
and $4,326 respectively                                                                      117,265             336,006
   Inventory                                                                                  63,025              63,029
   Other receivables                                                                          34,414              36,684
                                                                                --------------------   -----------------
      Total current assets                                                                   225,231             501,480
                                                                                                       -----------------

Property and equipment, net of accumulated depreciation of
$98,128 and $91,726 respectively                                                             122,907             129,309
                                                                                --------------------   -----------------

Non-current assets:
     Note receivable                                                                          71,000              71,000
     Goodwill                                                                                      -             407,049
     Security deposits                                                                        25,359              10,122
                                                                                --------------------   -----------------
        Total non-current assets                                                              96,359             488,171
      Total assets                                                              $            444,497   $       1,118,960
                                                                                ====================   =================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Accounts payable                                                              $         1,744,184   $       1,596,581
   Accrued expense                                                                           297,779             185,588
   Loans payable officers-Stockholders                                                       279,236             259,686
   Notes payable                                                                             888,988           1,182,343
   Notes payable bank                                                                         50,000              50,000
                                                                                --------------------   -----------------
         Total current liabilities                                                         3,260,187           3,274,198

Long Term liabilities:
   Convertible debentures                                                                    868,629             700,636
                                                                                --------------------   -----------------
         Total long term liabilities                                                         868,629             700,636
      Total liabilities                                                                    4,128,816           3,974,834

Minority interest Commitments:
Stockholders' equity (deficit)
   Preferred stock, no par value, no liquidation value, 5,000,000
shares authorized, issued 1,000,000 shares 1997 class A
convertible preferred stock                                                                   11,320              11,320
   Common stock - no par value, 650,000,000 and 650,000,000 shares
authorized in  2002 and 2001, respectively. 6,484,626 and 2,470,644
shares outstanding  in 2002 and 2001, respectively                                         7,736,972           6,729,122
   Cumulative currency translation adjustment                                               (12,000)            (11,000)
       Deficit                                                                          (11,420,611)         (9,585,316)
   Total stockholders' equity  (deficit)                                                 (3,684,319)         (2,855,874)
                                                                                --------------------   -----------------

   Total liabilities and stockholders' equity                                   $            444,497   $       1,118,960
                                                                                ====================   =================
</TABLE>


     The accompanying notes are an integral part of the financial statements

                                       F-2


<PAGE>


<TABLE>
<CAPTION>
                          PACEL CORP. AND SUBSIDIARIES
                            Statements of Operations
                                   (Unaudited)

                                                             Three months             Three months
                                                                 Ended                   Ended
                                                            March 31, 2002           March 31, 2001
                                                         ---------------------  ----------------------
<S>                                                      <C>                    <C>
 Sales                                                                 221,168  $              202,821
 Direct Cost of Goods Sold                                             198,013                 176,902
                                                         ---------------------  ----------------------
Gross Profit                                                            23,155                  25,919


Operating costs and expenses:

      Research and development                                         103,371                 115,275
      Depreciation & Amortization                                        6,402                   6,755
      Interest expense                                                  35,295                  12,830
      Sales and Marketing                                               58,901                  50,341
      Financing Expenses                                                 3,500                       -
      General and Administrative                                     1,243,932                 386,040
                                                         ---------------------  ----------------------

     Total operating costs and expenses                              1,451,401                 571,241
                                                         ---------------------  ----------------------
     Loss before cumulative effect of accounting
change                                                              (1,428,246)               (545,322)

     Cumulative effect of accounting change                           (407,049)                      -
                                                         ---------------------  ----------------------
     Net loss                                            $          (1,835,295) $             (545,322)
                                                         =====================  ======================

Net  (loss) per common share
     Basic                                                               (0.56)                  (1.20)
     Diluted                                                             (0.56)                  (1.20)
                                                         =====================  ======================

Weighted Average shares outstanding
     Basic                                                           3,260,666                 454,480
     Diluted                                                         3,260,666                 454,480
                                                         =====================  ======================
</TABLE>




     The accompanying notes are an integral part of the financial statements

                                       F-3


<PAGE>


<TABLE>
<CAPTION>
                          PACEL CORP. AND SUBSIDIARIES
                            Statements of Cash Flows
                                   (Unaudited)

                                                                  2002                   2001
                                                             -----------------  --------------------
<S>                                                          <C>                <C>
Cash flows from operating activities:
   Net (loss)                                                $      (1,835,295) $           (545,322)
Adjustments to reconcile net (loss) to net cash
 (used in) provided by operating activities:
   Cumulative effect of accounting change                              407,049                     -
   Depreciation                                                          6,402                 6,755
   Provision for Bad Debts                                                   0                   861
   Other non cash items                                                832,850               139,922
Increase (Decrease) in Cash from changes in:
    Accounts receivable                                                218,741               (31,707)
    Other receivables                                                    2,270               (16,780)
    Inventory                                                                4                (3,310)
    Security deposits                                                  (15,237)                    0
    Prepaid expenses                                                                          (4,798)
    Accounts payable                                                   147,603               159,590
    Accrued expense                                                    112,191               (27,367)
    Loans Payable Officers-Stockholders                                 19,550                  (119)
 Net cash (used in) operating activities                              (103,872)             (322,275)
                                                             -----------------  --------------------


Cash flows from investing activities:

    Purchase of property and equipment                                       -                (1,968)
                                                             -----------------  --------------------

       Net cash used in investing activities                                 -                (1,968)
                                                             -----------------  --------------------

Cash flows from financing activities:
   Repayment of Notes payable
                                                                      (125,362)                    -
   Notes payable convertible debenture                                  25,000               259,518
   Proceeds from sale of common stock                                  150,000                54,215
                                                             -----------------  --------------------

   Net cash provided by financing activities                            49,638               313,733
Effect of exchange rates on cash                                        (1,000)                1,523
                                                             -----------------  --------------------

Net increase (Decrease) in cash and cash equivalents                   (55,234)               (8,987)

Cash and cash equivalents at beginning of year                          65,761                36,356
                                                             -----------------  --------------------

Cash and cash equivalents at end of period                   $          10,527  $             27,369
                                                             =================  ====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid for interest                                              2,775                 2,380
                                                             -----------------  --------------------
</TABLE>

     The accompanying notes are an integral part of the financial statements

                                       F-4


<PAGE>


                          PACEL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED
                                 MARCH 31, 2002


1.   Basis of Presentation

The  unaudited  financial  statements  included  in the Form  10-QSB  have  been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of  Regulation  SB. The  financial  information  furnished  herein  reflects all
adjustments,  which  in the  opinion  of  management  are  necessary  for a fair
presentation of the Company's financial position,  the results of operations and
cash flows for the periods presented.

Certain  information and footnote  disclosures  normally  contained in financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted, pursuant to such rules and regulations.

These interim statements should be read in conjunction with the audited December
31, 2001  consolidated  financial  statements  and related notes included in the
Company's year ended certified financial  statements.  The results of operations
for the three months are not necessarily indicative of the operating results for
the year. The Company presumes 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. The results of operations
for any interim  period are not  necessarily  indicative  of the results for the
full year.

2.   Accounting for Business Combinations

In July 2001,  the FASB issued  Statements  of  Financial  Accounting  Standards
("Statement") No. 141, "Business  Combinations" and No. 142, "Goodwill and Other
Intangible  Assets"  ("FAS 142").  These  standards  change the  accounting  for
business combinations by, among other things, prohibiting the prospective use of
pooling-of-interests  accounting  and  requiring  companies  to stop  amortizing
goodwill and certain intangible assets with an indefinite useful life.  Instead,
goodwill and intangible  assets deemed to have an indefinite useful life will be
subject to an annual review for  impairment.  The new standards  generally  were
effective  for  Pacel in the first  quarter  of 2002 and for  purchase  business
combinations  consummated  after June 30, 2001.  Upon adoption of FAS 142 in the
first quarter of 2002, Pacel recorded a one-time,  noncash charge of $407,049 to
reduce the carrying  value of its  goodwill.  Such charge is  nonoperational  in
nature and is  reflected as  cumulative  effect of an  accounting  change in the
accompanying consolidated statement of operations..

3.   Subsequent events

a. In April 2002, David Calkins president,  director and F. Kay Calkins director
of Pacel were  granted a noncash  option to purchase  100,000,000  shares of the
company's  common  stock in exchange  for the a loan made to the company in 1999
amounting to $124,000 and securing and loaning to the Company,  a personal  line
of credit of up to $3,000,000 using the stock as collateral. Our ability to draw
on this line is based on the volume of the Common Stock  multiplied  by the VWAP
for the thirty days preceding funding must be a minimum of $75,000.  The maximum
amount of  collateral  at any  closing  may not  exceed  4.9% of the  issued and
outstanding  shares of the Company.  Loan to value is 35%. The interest  rate is
prime+2 payable in cash quarterly and financing  expense of 9% of the draws. The
Company will pay these expenses directly. The terms and conditions set fourth in
the agreement we may not be able to meet.

b. On April 5, 2002 the Company  effected a  one-for-one  hundred  reverse split
restating the number of common shares as of March 31, 2002 from  648,462,600  to
6,484,626 and December 31, 2001 from 247,064,400 to 2,470,644. All references to
average  number of shares  outstanding  and prices per share have been  restated
retroactively to reflect the split.

                                      F-5





<PAGE>


FORWARD-LOOKING STATEMENTS

     When used in this  document  and in our  filings  with the  Securities  and
Exchange  Commission,  in our press  releases  or other  public  or  shareholder
communications,  and in oral  statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated,"  "estimate," "project" or similar expressions
are intended to identify "forward-looking  statements" within the meaning of the
Private  Securities  Litigation Reform Act of 1995. These statements are subject
to certain  risks and  uncertainties,  which could  cause our actual  results to
differ materially from our historical results and those we presently  anticipate
or  project.  You  should  not  place  undue  reliance  on  any  forward-looking
statements,  which speak only as of the date made.  Various factors could affect
our financial  performance and could cause our actual results for future periods
to differ  materially from any opinions or statements we express with respect to
future  periods in any current  statement.  These factors  include,  but are not
limited to, the  following:  increases in our operating  expenses  outpacing our
revenues;  our  inability  to expand our sales and  distribution  channels;  the
failure of  strategic  relationships  to  implement  and  promote  our  software
products;  the failure of third parties to develop software components necessary
for the  integration  of  applications  using our  software;  and the use of our
intellectual property by others.

     We  do  not  undertake--and  we  specifically  decline  any  obligation--to
publicly  release  the  result  of  any  revisions  which  may  be  made  to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

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

GENERAL BUSINESS

Item 6. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

     Management's discussion and analysis of results of operations and financial
condition,  include  a  discussion  of  liquidity  and  capital  resources.  The
following discussion (presented in hundreds, except per share amounts) should be
read in  conjunction  with  the  consolidated  financial  statements  and  notes
thereto.

                                    Overview

     PACEL's mission is to provide consumers and businesses with a full suite of
products and services that provide secure connectivity to and from the Internet,
including  e-commerce  transactions and personnel and company data security.  To
that end PACEL. and its subsidiaries  have been developing  products and methods
that meet that need for both families and  companies.  The  ChildWatch  software
suite of  programs  puts the  controls  for  family  computer  usage,  including
internet  filtering,  access controls and community  support for finding missing
and  abducted  children in the hands of the parents and is readily  available at
Zany Brany and Electronic  Boutique stores nationally.  "e-Centurion" our latest
technology  advancement  (patent pending) software product will provide complete
file and data  security.  This new  software is designed to guard both the Inner
Door (full protection on your PC from existing and new viruses),  i.e., the Love
Bug, and someone trying to penetrate your PC and by-pass your password,  and the
Outer Door (full Intruder  protection from Internet data collection  devices and
programs  or  hackers).  Our  current  goal  is  to  utilize  and  extend  these
technologies in the production of derivative products to provide secure Internet
connectivity  and  enhanced  desktop  security  for  customers  in the  home and
business marketplaces.

                                       8

<PAGE>


                              RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

     Revenues increased 9% to $221,168 in 2002 compared to $202,821 in 2001. The
increase  in  revenues  is  directly  attributed  to the  sales  generated  from
Advantage  Systems.  FCL accounted for 24% of sales,  Advantage 69% of sales and
E-Bstore 7% of sales.  The majority of our sales came from  hardware  sales from
Advantage.  The sales from FCL fell sharply in the first quarter compared to the
first quarter of 2001.  RFP's from Nato were not approved in the fourth  quarter
of 2001 in so delaying those sales to the second quarter of 2002. The Company is
focusing it's efforts on expanding  it's hardware  sales in the United States as
well as through existing NATO contracts.  The Company  continues to believe that
the  Child  Watch  software  has sales  potential  when we can  obtain  adequate
financing for the marketing.

     Cost of Goods Sold  increased  12% to $198,013 in 2002 compared to $176.902
in 2001. The increase is directly attributed to the Advantage division. The sale
of hardware generates a smaller gross profit than our other services.

     Research  and  Development  expenses  consist  principally  of salaries for
software developers,  outside consulting, related facilities costs, and expenses
associated with computer  equipment used in software  development.  Research and
development  expenses  decreased  10% to $103,371  in 2002  compared to $115,275
2001. Our lack of funding has forced us to cut further  research and development
on E-Centurion and as well as development of new products and enhancements.  The
Company  believes  that  research  and  development  activities  are  crucial to
maintaining  a  competitive  edge in  markets  characterized  by rapid  rates of
technological  advancements.  Without  adequate  financing we may not be able to
stay on the cutting edge of technology.

     Sales  and  marketing   expenses  include  salaries  and  benefits,   sales
commissions,  travel  expenses,  and  related  facilities  costs for our  sales,
marketing,  customer support, and distribution consultants.  Sales and marketing
expenses also include the costs of programs aimed at increasing revenue, such as
advertising,  trade  shows,  public  relations,  and  other  market  development
programs. Sales and marketing expenses increased 17% to $58,901 in 2002 compared
to $50,341 in 2001.  The  increase  is  attributed  to the normal  increases  in
salaries and commission expenses related to the sales in Advantage.

     General and  administrative  expenses  consist  principally of salaries and
benefits,  travel  expenses,  and  related  facilities  costs  for  finance  and
administration,  human resources,  legal,  information  services,  and executive
personnel of  E-Business-Stor.Com,  Inc. and PACEL.  General and  administrative
expenses also include outside legal and accounting fees, and expenses associated
with computer equipment and software used in the administration of the business.
General  and  administrative  expenses  increased  322%  $1,243,932  to in  2002
compared  to  $386,040,  in 2001.  The  increase in  administrative  expenses is
directly related to the acquisition of Advantage Systems administrative salaries
and  overhead  expenses.  In  addition  we  issued  $826,000  worth of stock for
services instead of cash. The cost of the services would have been reduced if we
had paid for the services in cash in lieu of stock.

     Interest  expense  and  financing  cost  Increased  302% to $38,795 in 2002
Compared  to  $12,830  in 2001.  The  increase  in  interest  expense is due the
convertible notes not being converted into common stock because of the low price
of our common stock.

Net (Loss) Before the Cumulative Effect of an Accounting Change

     Pacel's  net loss  before the  cumulative  effect of an  accounting  change
increased to $1,428,246 in 2002,  compared to $545,322 in 2001. Pacel's net loss
before the cumulative effect of an accounting change increased due to additional

                                       9

<PAGE>


overhead  expenses related to the acquisition of Advantage in September 2001 and
an increase in interest expense. On several occasions we issued stock in lieu of
cash for various  services with deep discounted rates compared to the cash value
of the services.

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001

     Net cash used from operating activities for the three months March 31, 2002
and 2001 was $103,872 and  $322,275  respectively.  The use of cash in operating
activities for the three months ended March 31, 2002 resulted primarily from the
short fall in sales off set by the reduction in of accounts  receivable  and the
increase in accounts payable.

     Net cash used in investing  activities for the three months ended March 31,
2002 and 2001 was $-0- and $1,968 respectively. This decrease was due to lack of
funds available for investing activities.

     Net cash provided by financing  activities for the three months ended March
31,  2002 and 2001 was  $49,638  and  $313,733.  respectively.  The  decrease in
financing  activities was attributable to repayment of notes payable of $125,362
and our inability to file an SB-2 in 2001.

     At March 31, 2002, we had $10,527 in cash and cash equivalents  compared to
$27,369  at  March  31,  2001.  We will  continue  to have  significant  capital
requirements due to expected increases in our capital expenditures and sales and
marketing  commitments  consistent  with our  anticipated  growth in operations,
infrastructure and personnel.  We currently  anticipate that we will continue to
experience  significant  growth in our  operating  expenses for the  foreseeable
future and that our operating expenses will be a material use of our cash.

     In  December  2001,  we entered  into a  $5,000,000  Equity  line of Credit
arrangement. Under the terms of the equity line agreement, the Company will have
the right to sell up to $5 million of its common  stock.  The  Company  has sole
discretion,  subject to certain volume limitations and conditions,  to draw down
upon such funds,  as its capital needs dictate.  We are in the process of filing
an SB-2 to register the stock.  There are no guarantees that the $5,000,000 will
be available to us when we need it. The terms and  conditions  set fourth in the
agreement we may not be able to meet, or the available credit due to those terms
and conditions may not be sufficient to cover our immediate cash flow needs.  We
do not expect to have access to these funds until the third quarter of 2002.

     In April  2002,  David  Calkins  president,  director  and F.  Kay  Calkins
director of Pacel were granted a noncash option to purchase  100,000,000  shares
of the company's  common stock in exchange for the a loan made to the company in
1999  amounting to $124,000 and securing and loaning to the Company,  a personal
line of credit of up to $3,000,000 using the stock as collateral. Our ability to
draw on this line is based on the volume of the Common Stock  multiplied  by the
VWAP for the thirty days  preceding  funding  must be a minimum of $75,000.  The
maximum  amount of  collateral  at any closing may not exceed 4.9% of the issued
and outstanding  shares of the Company.  Loan to value is 35%. The interest rate
is prime+2  payable in cash quarterly and financing  expense of 9% of the draws.
The Company  will pay these  expenses  directly.  The terms and  conditions  set
fourth  in the  agreement  we may  not be able to  meet.  To date we have  drawn
$165,500 net of expenses.

     Our cash requirements for funding our operations have greatly exceeded cash
flows from operations.  We continually  satisfy our capital needs through equity
financing.  Our liabilities  consist of over extended accounts payable,  payroll
taxes, loans from officers and officer's compensation.

                                       10

<PAGE>


     We  continually  look for  strategic  relationships  that will  enhance our
products and services.  Due to the present economic conditions in technology and
our  lack of  available  cash  flow  it is  becoming  harder  to  develop  these
relationships.  If we do not develop  these  relationships  and find  additional
sources of financing will hinder our ability to continue as a going concern.

     We expect to continue our investing activities,  including expenditures for
computer  systems for research and  development,  sales and  marketing,  product
support, and administrative staff, as funds become available.

     In May 2002,  we signed a letter of intent for the  acquisition  of a human
resource support company, for $7,500,000 in Pacel's common stock equal to 60% of
the issued and outstanding  shares. We believe that this acquisition will expand
the type of services we can offer.  In addition we will have a direct  marketing
channel  for  our  IT  consulting,  System  Security,  hardware  and  Web  based
technologies. We are still in the process of performing due diligence.


Part II

Item 1. Legal Proceedings.

     The  Company  knows  of no legal  proceedings  to which it is a party or to
which any of its  property  is the  subject  which are  pending,  threatened  or
contemplated or any unsatisfied judgments against the Company.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults in Senior Securities

None.

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

None.

Item 5. Other Information

     Subsequent  to March 31,  2002,  the  following  directors  resigned due to
personal reasons: Keith P. Hicks and Corey M. LaCross.

                                       11

<PAGE>



                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                               Pacel, Corporation
                                  (Registrant)





Date:    May 20, 2002

                                /s/ David F. Calkins
                                -----------------------------------
                                David F. Calkins, CEO & Chairman



                                       12