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 September 30, 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)


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 November  14,  2002,  there were  353,037,735  shares of the  Registrant's
common stock outstanding.


<PAGE>

                          PACEL CORP. AND SUBSIDIARIES

                    PART I. FINANCIAL INFORMATION (unaudited)

Item 1.  Index to Consolidated Financial Statements      F-1



Consolidated Balance Sheets                              F-2


Consolidated Statements of Income of Operations          F-3


Consolidated Statements of Cash Flows                    F-4


Notes to Consolidated  Financial Statements              F-5



                                                                             F-1


<PAGE>

<TABLE>
<CAPTION>
                                   Pacel Corp.
                           Consolidated Balance Sheet

                                                                             Septmeber 30,     December 31,
                                                                                 2002              2001
                                                                               Unaudited          Audited
                                                                           ----------------- -----------------
             ASSETS
<S>                                                                          <C>                <C>
Current assets:
   Cash and cash equivalents                                                 $        14,110    $       65,761
   Accounts receivable, net of allowance for doubtful accounts of $0 and
$1,311 respectively                                                                      626           324,134
   Inventory                                                                                            61,306
   Other receivables                                                                     105            36,684
                                                                           ----------------- -----------------
      Total current assets                                                            14,841           487,885
                                                                           ----------------- -----------------
Property and equipment, net of accumulated depreciation
of $85,172 and $73,946 respectively                                                   63,963            81,123
                                                                           ----------------- -----------------
Non-current assets:
     Note receivable                                                                           -        71,000
     Goodwill                                                                                  -       407,049
     Security deposits                                                                25,359            10,122
                                                                           ----------------- -----------------
        Total non-current assets                                                      25,359           488,171
                                                                           ----------------- -----------------
      Total assets                                                            $      104,164       $ 1,057,179
                                                                           ================= =================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
   Accounts payable                                                            $    ,458,165     $   1,423,979
   Accrued expense                                                                   184,262           175,511
   Loans payable officers-Stockholders                                               896,211           143,853
   Notes payable                                                                     864,750         1,182,343
   Notes payable bank                                                                 50,000            50,000
   Net liabilities of discontinued operations                                              -           236,731
                                                                           ----------------- -----------------
         Total current liabilities                                                 3,453,388         3,212,417
                                                                           ----------------- -----------------
Long Term liabilities:
   Convertible debentures                                                            647,279           700,636
                                                                           ----------------- -----------------
         Total long term liabilities                                                 647,279           700,636
                                                                           ----------------- -----------------
      Total liabilities                                                            4,100,667         3,913,053
                                                                           ----------------- -----------------
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.  270,537,735 and 2,470,644 shares       outstanding
in 2002 and 2001, respectively                                                     8,369,822         6,729,122
   Cumulative currency translation adjustment
                                                                                    (18,720)          (11,000)
       Deficit                                                                  (12,358,925)       (9,585,316)
                                                                           ----------------- -----------------
   Total stockholders' equity  (deficit)                                         (3,996,503)       (2,855,874)
                                                                           ----------------- -----------------
   Total liabilities and stockholders' equity                                 $      104,164       $ 1,057,179
                                                                           ================= =================
</TABLE>

     The accompanying notes are an integral part of the financial statements


                                                                             F-2



<PAGE>


<TABLE>
<CAPTION>
                                  Pacel Corp.
                Consolidated Statements of Income of Operations




                                                      Nine Months    Nine months     Three Months    Three Months
                                                         Ended        Ended             Ended           Ended
                                                     September 30,  September 30,    September 30,   September 30,
                                                         2002            2001            2002            2001
                                                    --------------- --------------  ---------------  ----------------


<S>                                                  <C>             <C>              <C>               <C>
 Sales                                               $      435,218  $     874,091    $     118,261     $     630,397
 Direct Cost of Goods Sold                                  403,702        665,275           90,890           424,460
                                                    --------------- --------------  ---------------  ----------------
Gross Profit                                                 31,516        208,816           27,371           205,937
                                                    --------------- --------------  ---------------  ----------------


Operating costs and expenses:

      Research and development                             254,657        306,806           21,831             87,521
      Depreciation & Amortization                           11,246          9,133            3,769             1,323
      Interest expense                                     122,808         52,581           52,500             29,563
      Sales and Marketing                                  218,133         76,227           11,889             27,939
      Financing Expenses                                    50,397        276,273           14,897            195,173
      General and Administrative                         2,053,535        868,833          383,345            239,239
                                                    --------------- --------------  ---------------  ----------------

     Total operating costs and expenses                  2,710,775      1,589,853          488,230            580,758
                                                    --------------- --------------  ---------------  ----------------

      Other Income                                               -          2,796            2,796              2,796

       Loss before extraordinary items
( including discontinued operations and the effect
of an accounting change)                                (2,679,259)    (1,378,241)        (458,063)          (372,025)
     Write-off of loan receibable                          (71,000)                        (71,000)
      Gain on wirte-off of extinguishment of debt          426,150                         426,150
   Discontinued operations (Note 3)
       Loss from operations of discontinued
            E-Bstore business                             (220,268)      (404,357)               -           (153,999)
       Gain on disposal of E-Bstore business               177,817              -                -

     Cumulative effect of accounting change               (407,049)             -                -                  -
                                                    --------------- --------------  ---------------  ----------------

           Net (loss)                               $   (2,773,609) $  (1,782,598)  $     (102,913)  $       (526,024)
                                                    =============== ==============  ===============  ================

Net  (loss) per common share
     Basic                                                   (0.04)         (2.56)               -             (0.50)
     Diluted                                                 (0.04)         (2.56)               -             (0.50)
Weighted Average shares outstanding
     Basic                                              68,243,593        696,065      148,155,127         1,051,719
     Diluted                                            68,243,593        696,065      148,155,127         1,051,719
</TABLE>


     The accompanying notes are an integral part of the financial statements


                                                                             F-3



<PAGE>



<TABLE>
<CAPTION>
                                   Pacel Corp.
                      Consolidated Statements of Cash Flows

                                                                                   2002                 2001
                                                                            -------------------  ------------------

<S>                                                                          <C>                  <C>
Cash flows from operating activities:
   Net (loss)                                                                $       (2,773,609)  $      (1,782,598)
Adjustments to reconcile net (loss) to net cash
 (used in) provided by operating activities:
   Cumulative effect of accounting change                                               407,049                   -
   Depreciation                                                                          11,246              14,364
   Provision for Bad Debts                                                               (1,311)              2,492
   Other non cash items                                                               1,309,112             210,395
   Gain on sale of EB-Store                                                            (177,817)
Increase (Decrease) in Cash from changes in:
    Accounts receivable                                                                 324,819            (348,664)
    Other receivables                                                                    36,579               9,511
    Inventory                                                                            61,306             (47,134)
    Other assets                                                                              0                   0
    Security deposits                                                                   (15,237)             (2,791)

    Prepaid expenses                                                                          0             (16,569)
    Accounts payable                                                                     34,186             705,637
    Accrued expense                                                                       8,751             16,287
    Loans Payable Officers-Stockholders                                                 752,358             143,584
 Net cash (used in) operating activities                                                (22,569)         (1,095,486)
                                                                            -------------------  ------------------

Cash flows from investing activities:
    Purchase of property and equipment                                                                      (13,856)
    Notes Receivable                                                                    (71,000)                  0

       Net cash used in investing activities                                            (71,000)            (13,856)
                                                                            -------------------  ------------------
Cash flows from financing activities:
   Repayment of loans payable                                                          (125,362)            746,718
   Notes payable convertible debenture                                                   25,000              98,582
   Proceeds from sale of common stock                                                   150,000             407,838
                                                                            -------------------  ------------------

   Net cash provided by financing activities                                             49,638           1,253,138
Effect of exchange rates on cash                                                         (7,720)             (4,905)
                                                                            -------------------  ------------------

Net increase (Decrease) in cash and cash equivalents                                    (51,651)            138,891

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

Cash and cash equivalents at end of period                                       $       14,110      $      175,247
                                                                            ===================  ==================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid for interest                                                               6,298               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
                               SEPTEMBER 30, 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 periods ended September 30, 2002 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 September 30, 2001. Upon adoption of FAS 142 in
the first  quarter  of 2002,  Pacel  recorded  a  one-time,  non-cash  charge of
$407,049  to  reduce  the  carrying  value  of  its  goodwill.  Such  charge  is
non-operational  in  nature  and  is  reflected  as a  cumulative  effect  of an
accounting change in the accompanying consolidated statement of operations.

3.   Discontinued Operations

On May 31, 2002, the Company completed an agreement to sell E-BStor an 80% owned
subsidiary to F. Kay Calkins a director. The Company recorded a gain on the sale
of $177,817.  Ms. Calkins assumed all of the assets and liabilities on the books
as of May 31, 2002. There is an inter-company  receivable of $1,568,815 which we
have taken a 100% reserve  against,  due to our inability to determine when they
will have cash flow to start repayment of this loan. The Consolidated  Financial
Statements  have  been  restated,  where  applicable,  to  reflect  the  E-BStor
discontinued operations. .

4.   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
(volume weighted average price) for the thirty days preceding funding which 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  quarterly in cash plus financing
expense of 9% of the draws.  The Company will pay these expenses  directly.  The
terms and conditions set forth in the agreement we may not be able to meet.

                                                                             F-5

<PAGE>





4.   Subsequent events (continued)


b. On April 5, 2002 the Company  affected 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.

c. In  September,  2002  FCL a  wholly  owned  subsidiary  was  discharged  from
bankruptcy.  We have recorded a gain of $426,150 on the write off of the deficit
capital account.

d. In October, 2002 the Company wrote off a long term receivable of $71,000 from
CTM.  The  note  was due  October  15,2002.  We have  begun  foreclosure  of the
collateral, 100% of outstanding stock of CTM.

e. In October  2002,  we  acquired  100% of the  assets of Bene  Corp.  Business
Services Inc. a human resource support company, for $720,000 to be paid over the
next six months in equal monthly payments of $180,000. We have an agreement with
High Desert  Capital for funding of this  acquisition.  In  connection  with the
acquisition we signed two, two year  employment  agreements with the officers of
Bene Corp. for $75,000 per year.


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.

                                                                             F-6

<PAGE>




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

GENERAL BUSINESS

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 in the process of being revised;  to reflect the change to a
business to business  marketing and sales  methodology  and away from the retail
sales arena. The company has entered the PEO human resources business,  which is
one of the fastest growing markets,  while still intending to provide businesses
with a full suite of products and services  for software and  hardware.  To that
end PACEL has consolidated its subsidiaries into the pacel software division and
has  established  a new wholly owned  subsidiary  in Nevada that will be the PEO
branch of the company.  The existing  software products will be modified to meet
the needs of businesses  and the existing  software  products for consumer sales
will be handled exclusively through the internet.

"Data Protector" 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 small business market places like those  established in the
PEO marketplace.


                              RESULTS OF OPERATIONS

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001

Revenues  decreased  to  $435,218 in 2002  compared  to  $874,091  in 2001.  The
decrease in revenues is directly  attributed to sales  generated  from Advantage
Systems hardware sales.  Hardware sales is a very  competitive  market with very
little profit.  Advantage's sales were concentrated in one customer which is now
using a new  supplier.  With the loss of this  customer  we have  shut  down the
California  manufacturing  site and shifted all  manufacturing  to the  Virginia
offices.  In addition  the sales from Nato  contracts  fell  sharply in the nine
months ended  September  30, 2002 compared to 2001. We have not received any new

                                                                               8

<PAGE>



RFP's from Nato for the last  quarter of 2002.  We had sales for human  resource
services of $125,500 for the period.  The Company is refocusing  it's efforts on
expanding  into the Human  resource  service  markets.  We  believe  that  these
companies  will  provide us with  distribution  channels  for our  hardware  and
software  packages.  The  Company  continues  to  believe  that the Child  Watch
software, Data Protector has sales potential if we can obtain adequate financing
for the marketing.

Cost of Goods Sold  decreased to $403,702 in 2002  compared to $665,275 in 2001.
The decrease is directly attributed to the decrease in sales.

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 decrease to $254,657 in 2002 compared to $306,806 in 2001.
The decrease is attributed  the lack of funds  available for the  development of
new and enhanced products. 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 to $218,133 in 2002  compared to $76,227 in 2001.
The increase is attributed  to focusing  more efforts on developing  markets for
our products and the increase in salaries,  and commission  expenses  related to
the sales in Advantage as well as the hiring of additional sales personal.

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 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  to  $2,053,535  in 2002  compared to  $868,833 in 2001.  Is
attributable to the increase in services and legal fees..

Interest  expense and financing  cost  increased to $122,808 in 2002 Compared to
$52,581 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.  In  addition we  continue  to borrow  short term money at high  interest
rates, instead of obtaining financing from equity.

Net (Loss) from continuing operations

Pacel's net loss before the cumulative  effect of an accounting change increased
to $2,679,259 in 2002,  compared to $1,378,241 in 2001.  Pacel's net loss before
the cumulative effect of an accounting change increase is due to the decrease in
sales, the cost of legal and consulting services being paid in stock, instead of
cash, increased interest and financing costs

                                                                               9

<PAGE>


Three Months Ended  September 30, 2002 Compared to Three Months Ended  September
30, 2001

Revenues  decreased  to  $118,261 in 2002  compared  to  $630,397  in 2001.  The
decrease in revenues is directly  attributed to the loss of sales from Advantage
Systems and Nato contracts..

Cost of Goods Sold  decreased  to $90,890 in 2002  compared to $424,460 in 2001.
The decrease is directly attributed to the decrease in sales.

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  decrease to $21,831 in 2002  compared to $87,521 in 2001.
The decrease is attributed to the decrease in staff.

Sales and marketing expenses increased to $11,889 in 2002 compared to $27,939 in
2001. The decrease is attributed to cut backs due to limited cash flow.

General and administrative expenses increased to $383,345 to in 2002 compared to
$239,239,  in 2001. The increase in administrative  expenses is directly related
to the increase in services and legal fees.

Interest  expense and  financing  cost  increased to $52,500 in 2002 Compared to
$29,563 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 and additional borrowing of short term money at high interest rates.

Net (Loss) from continuing operations

Net loss before the  cumulative  effect of an  accounting  change  increased  to
$458,063 in 2002,  compared  to  $372,025  in 2001.  Pacel's net loss before the
cumulative  effect of an accounting  change increase is due to the cost of legal
and consulting services being paid in stock, instead of cash, increased interest
and financing costs.

Liquidity

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001

Net cash used from operating  activities for the nine months ended September 30,
2002  and 2001  was  $93,569  and  $1,095,486  respectively.  The use of cash in
operating  activities  for the nine months  ended  September  30, 2002  resulted
primarily  from the short fall in sales off set by the  reduction in of accounts
receivable and the increase in accounts payable and loans from stockholders.

Net cash used in investing  activities  for the nine months ended  September 30,
2002 and 2001 was $0 and $13,856 respectively.

Net cash provided by financing activities for the six months ended September 30,
2002 and  2001  was  $49,638  and  $1,253,138,  respectively.  The  decrease  in
financing  activities was attributable to repayment of notes payable of $125,362
and our inability to file an Sb-2.

                                                                              10

<PAGE>


At September 30, 2002, we had $14,110 in cash and cash  equivalents  compared to
$175,247 at September  30, 2001. We will  continue to have  significant  capital
requirements due to limited sales  projections as well as expected  increases in
expenditures for sales and marketing. In July 2002 we laid off all non essential
administrative staff to reduce our cash requirements until significant sales are
projected and we can secure adequate financing.

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
(volume weighted average price) 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  approximately  $850,000.  Due to the low price of the stock
additional  proceeds from this line of credit maybe limited.  We intend to repay
this loan over the next six months.

In September  2002, we entered in an Equity line of credit for  $5,000,000  from
High Desert Capital at a discount rate of 12% . We can borrow up to $500,000 per
month.  The line will be used for the  acquisition of BeneCorp.  , Staff Leasing
and working capital. . Restricted stock of 45,000,000 for $180,000 as been until
a filing is complete.

Our cash  requirements  for funding our  operations  have greatly  exceeded cash
flows from operations.  We continually  satisfy our capital needs through equity
financing which has become difficult due to the current investment  environment.
Our liabilities consist of over extended accounts payable,  payroll taxes, loans
from officers and officer's compensation.

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
it 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.

On  August  1,  2002 , we formed a wholly  owned  subsidiary,  Entremetrix.  The
company has started a human  resource  support  company,  out of our  California
offices.  The  company  has been  granted  various  contracts.  We believe  that
development of this business will provide us with a direct marketing channel for
our IT consulting, System Security, hardware and Web based technologies.

                                                                              11

<PAGE>



In October 2002,  Pacel,  Corp. and NeoTactix have come to an agreement to sever
their  relationship.  Neotactix has was  instrumental in bringing Bene Corp. and
several other  acquisitions  to Pacel.  To restore each party back to hole Pacel
Corp.  has released the corporate  name and any clients  brought by NeoTactix to
the  organization.  In turn  NeoTactix  has  agreed  to  waive  any fees for the
BeneCorp or future acquisitions introduced to Pacel, Corp.

In October 2002, we acquired 100% of the assets of Bene Corp.  Business Services
Inc. a human resource support company, for $720,000 to be paid over the next six
months in equal monthly  payments of $180,000.  We believe that this acquisition
will expand the  Entremetrix  business.  We have an  agreement  with High Desert
Capital for funding of this  acquisition.  In connection with the acquisition we
signed two, two year  employment  agreements with the officers of Bene Corp. for
$75,000 per year.

In October  2002, we signed  definitive  agreement to acquire Staff Leasing Inc.
for  $2,000,000  paid over the next two years  depending  upon the  retention of
clients as well as profitability.  We have an agreement with High Desert Capital
for the funding of this acquisition.

In September, 2002 FCL a wholly owned subsidiary was discharged from bankruptcy.
We have  recorded a gain of  $426,150  on the write off of the  deficit  capital
account.


In May 31, 2002, we sold our 80% ownership in EB-Store to F Kay Calkins.  F. Kay
Calkins  assumed all of the assets and all of the  liabilities  of record on May
31, 2002.  There is an inter-company  receivable of $1,568,815.  We have taken a
100% percent  reserve  against the  receivable due to our inability to determine
when EB-Store will be able to start repayment if at all. The Company  recorded a
gain on the sale of $177,817.  or $0.0064 per  share-diluted  and reflected this
business as a discontinued operation in September 2002.


                                     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.  However,  the  Company  has
responded to subpoenas addressed to the Company from the Securities and Exchange
Commission  and  the  United  States  Attorney's  Office  requesting   documents
involving  transactions  between the Company and Suburban  Capital  Corporation,
North Coast Investments, Inc., Frank Custable and certain other individuals. The
Company  has been  advised  that it has not been  identified  as a target of the
investigation by the U.S. Attorney's Office.

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

During the quarter,  the following  directors  resigned due to personal reasons:
Keith P. Hicks and Corey M. LaCross.  Neither  furnished the  Registrant  with a
letter requesting that any matter be disclosed.

                                                                              12

<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:    November 14, 2002


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


<PAGE>
                                 CERTIFICATIONS

     I, David F. Calkins, certify that:

     1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp. ;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report; and

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

Date: November 14, 2002

 /s/ David F. Calkins
 -----------------------------------
 David F. Calkins
 Chief Executive Officer (or equivalent thereof)



     I, David F. Calkins, certify that:

     1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp.;

     2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report; and

     3. Based on my knowledge,  the financial  statements,  and other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

Date: November 14, 2002


/s/ David F. Calkins
 -----------------------------------
 David F. Calkins
Chief Financial Officer (or equivalent thereof)