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 June 30, 2005

                                       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)



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


     7621 Little Ave  Suite 101
     Charlotte, NORTH CAROLINA                               28226
----------------------------------------        --------------------------------
(Address of principal executive offices)                  (ZIP Code)


       Registrant's telephone number, including area code: (704) 643-0676

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 August 19, 2005 there were 463,440,333  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
         Consolidated Balance Sheets                                    F - 2-3
         Consolidated Statements of Operations                          F - 4
         Consolidated Statements of Cash Flows                          F - 5-6
         Notes to Consolidated Financial Statements                     F - 7-10


Item 2.  Management's Discussion and Analysis of Financial Results of
         Operations                                                     3-8

Item 3.  Controls and Procedures                                        9

Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                              9

         Item 6.  Exhibits                                              10







































<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                             June 30,                  December 31,
                                                                               2005                       2004
                                                                          --------------              -------------
                                                                           (Unaudited)                  (Audited)

                                     ASSETS
                                     ------

<S>                                                                        <C>                    <C>
Current assets:
       Cash                                                                $     550,386          $         117,052
       Client deposit and advance payments                                        66,129                    826,598
       Accounts receivable                                                        17,873                    230,469
       Accounts receivable-Unbilled                                              393,190                    310,845
       Prepaid expenses                                                           78,906                    110,408
       Workers compensation insurance deposits                                    92,825                    139,089
       Restricted cash                                                           228,114                    913,009
                                                                          --------------              -------------

                Total current assets                                           1,427,423                  2,647,470
                                                                          --------------              -------------

Property and equipment, net of accumulated depreciation of
       $100,355 and $70,436, respectively                                        156,316                    147,831
                                                                          --------------              -------------

Other assets:
       Allegro receivable                                                        104,034                         -0-
       Retirement Plan-Director                                                  138,436                    154,772
       Goodwill                                                                  465,423                  1,075,432
       Security deposits                                                          18,358                     15,182
                                                                          --------------              -------------

                Total other assets                                               726,251                  1,245,386
                                                                          --------------              -------------

                Total assets                                                $  2,309,990               $  4,040,687
                                                                          ==============              =============
</TABLE>











        See accompanying notes to the consolidated financial statements.
                                       F-2
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                           June 30,                 December 31,
                                                                             2005                       2004
                                                                      -------------------        -------------------
                                                                          (Unaudited)                 (Audited)

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

<S>                                                                     <C>                       <C>
Current liabilities:
       Accounts payable                                                 $        599,894          $         242,210
       Payroll and payroll related liabilities                                 2,101,292                  2,511,224
       Accrued worksite employee payroll expense                                 376,429                    300,391
       Accrued expenses                                                        1,747,979                  1,330,456
       Assumed Liabilities                                                       493,133                    493,133
       Client deposits and advance payments                                       66,129                    826,598
       Prepaid Payroll                                                            30,353                         -0-
       Short term payables                                                     2,528,213                  2,158,251
       Sales taxes payable                                                           676                         -0-
                                                                      -------------------        -------------------

                Total current liabilities                                      7,944,098                  7,862,263

Long-term liabilities:
       Notes Payable                                                             232,187                         -0-
       Deferred Compensation-Director Payable                                    138,436                    154,772
                                                                      -------------------        -------------------

       Total long term liabilities                                               370,623                    154,772

                Total liabilities                                              8,314,721                  8,017,035

Stockholders' equity (deficit):
       Preferred stock, .001 par value, no liquidation value,
                5,000,000 shares authorized, 1,000,000 shares
                of 1997 Class A convertible preferred stock issued                 1,000                      1,000
       Common stock, .001 par value, 10,000,000,000 shares
                authorized, 50,975,944 and 1,773
                shares issued respectively                                        50,976                          2
       Additional paid-in capital                                             23,239,158                 22,403,333
       Cumulative currency translation adjustment                                (18,720)                   (18,720)
       Accumulated deficit                                                   (29,277,145)               (26,361,963)
                                                                      -------------------        -------------------

                Total stockholders' (deficit)                                 (6,004,731)                (3,976,348)
                                                                      -------------------        -------------------

                Total liabilities and stockholders' deficit            $       2,309,990          $       4,040,687
                                                                      ===================        ===================
</TABLE>





        See accompanying notes to the consolidated financial statements.

                                       F-3

<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Six months ended                  Three months ended
                                                                             June 30,                          June 30,
                                                                     2005             2004              2005             2004
                                                                     ----             ----              ----             ----

<S>                                                           <C>               <C>              <C>              <C>
Revenue                                                       $    1,490,511    $    1,677,963   $      663,894   $       866,238
Cost of services                                                   1,177,739         1,294,127          537,597           647,178
                                                             ----------------   ---------------   --------------   ---------------
       Gross profit                                                  312,772           383,836          126,297           219,060

Operating costs and expenses:
       General and administrative                                  1,500,434         1,069,695          686,887           491,663
       Sales and marketing                                           350,138           145,197          116,615            58,831
       Depreciation and amortization                                  29,920            13,496           15,476             6,996
       Loss on impairment of goodwill                                131,950                -0-              -0-               -0-
                                                             ----------------   ---------------   --------------   ---------------
             Total operating expenses                              2,012,442         1,228,388          818,978           557,490
                                                             ----------------   ---------------   --------------   ---------------

       Operating Loss                                             (1,699,670)         (844,552)        (692,681)         (338,430)

Other expenses:
       Interest expense                                             (232,708)         (106,181)        (130,908)          (65,024)
       Financing costs                                              (362,143)       (1,355,714)        (101,643)       (1,110,714)
                                                             ----------------   ---------------   --------------   ---------------
             Total other expense                                    (594,851)       (1,461,895)        (232,551)       (1,175,738)

Net loss before discontinued operations                           (2,294,521)       (2,306,447)        (925,232)       (1,514,168)

Discontinued operations:
       Loss from discontinued operations of Asmara of
         Florida and Partners PEO of the Carolinas                  (134,708)         (171,680)        (112,875)          (76,948)
       Loss from sale of assets to Allegro, Inc.                    (485,953)               -0-         (18,213)               -0-
                                                             ----------------   ---------------   --------------   ---------------
             Total loss on discontinued operations                  (620,661)         (171,680)        (131,088)          (76,948)

Net loss                                                      $   (2,915,182)   $   (2,478,127)    $ (1,056,320)    $  (1,591,116)
                                                             ================   ===============   ==============   ===============

Loss from discontinued operations per common and common equivalent share:
       Basic                                                  $        (0.02)   $     (171,680)    $     (0.007)    $        (.04)
       Diluted                                                $        (0.02)   $     (171,680)    $     (0.007)    $        (.04)

Loss from sale of assets per common and common equivalent share:
       Basic                                                  $        (0.06)   $           -0-    $     (0.001)    $          -0-
       Diluted                                                $        (0.06)   $           -0-    $     (0.001)    $          -0-

Net loss per common and common equivalent share:
       Basic                                                  $        (0.34)   $   (2,478,127)    $      (0.06)    $        (.86)
       Diluted                                                $        (0.34)   $   (2,478,127)    $      (0.06)    $        (.86)

Weighted average shares outstanding:
       Basic                                                       8,622,532                 1       16,967,244         1,842,890
       Diluted                                                     8,622,532                 1       16,967,244         1,842,890
</TABLE>

                                       F-4
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                   Six months ended
                                                                                       June 30,
                                                                             2005                      2004
                                                                      ------------------      ---------------------
<S>                                                                   <C>                     <C>
Cash flows from operating activities:
       Net loss                                                        $     (2,915,182)       $        (2,478,127)
Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
           Depreciation                                                          29,920                     13,496
           Embedded interest                                                    362,143                  1,355,714
           Other non-cash items                                                  27,700                    190,000
           Loss on discontinued operations                                      103,000                         -0-
           Loss on sale of assets                                               485,954                         -0-
           Loss on impairment of goodwill                                       131,950                         -0-
           Changes in operating assets and liabilities:
               (Increase) decrease in assets:
                 Accounts receivable                                            212,597                     61,071
                 Accounts receivable-Unbilled                                   (82,345)                        -0-
                 Other receivables                                                   -0-                    82,901
                 Client deposits                                                760,469                         -0-
                 Insurance deposits                                              46,263                   (171,450)
                 Prepaid expenses                                                50,400                    (78,080)
                 Security deposits                                               (1,926)                    (3,540)
               Increase (decrease) in liabilities:
                 Accounts payable                                               357,684                   (187,749)
                 Accrued expenses                                               417,522                    (11,161)
                 Accrued expenses-Director                                           -0-                  (204,005)
                 Payroll and payroll related liabilities                       (416,050)                  (432,555)
                 Accrued work site employee payroll cost                         76,038                         -0-
                 Deferred revenue                                              (760,469)                        -0-
                 Assumed liabilities                                                 -0-                  (565,622)
                 Prepaid payroll                                                 30,353                         -0-
                 Sales and income taxes payable                                     676                     (2,532)
                                                                      ------------------      ---------------------
                    Net cash (used in) operating activities                  (1,083,303)                (2,431,639)
Cash flows from investing activities:
       Net purchases of property and equipment                                  (13,385)                  (104,137)
       Cash received from sale of assets                                         18,022                         -0-
       Cash CD-Restricted                                                       684,895                   (600,000)
                                                                      ------------------      ---------------------
                Net cash (used in) investing activities                         689,532                   (704,137)
Cash flows from financing activities:
           Repayments of notes payable                                          (12,685)                   (62,218)
           Issuance of notes payable                                                 -0-                    90,000
           Issuance of convertible notes payable                                845,000                  2,680,898
           Repayments of lines of credit                                         (5,210)                    (4,362)
           Repayments of capital lease                                               -0-                    (7,422)
                                                                      ------------------      ---------------------
                Net cash provided by financing activities                       827,105                  2,696,896
                                                                      ------------------      ---------------------

Net increase (decrease) in cash and cash equivalents                            433,334                   (438,880)

Cash and cash equivalents, beginning of period                                  117,052                    682,400
                                                                      ------------------      ---------------------

Cash and cash equivalents, end of period                              $         550,386        $           243,520
                                                                      ==================      =====================
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                     F-5
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                  Six months ended
                                                                                       June 30,
                                                                             2005                     2004
                                                                      ------------------      ---------------------
<S>                                                                   <C>                     <C>
Supplemental  disclosure  of cash flow  information:  Cash paid during the years
     for:
       Interest                                                       $          11,410       $             27,335
       Income taxes                                                   $              -0-      $                 -0-
</TABLE>









































        See accompanying notes to the consolidated financial statements.

                                       F-6

<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                                  June 30, 2005

Note 1.  Basis of Presentation.

         The   unaudited   financial   statements  of  Pacel   Corporation   and
         Subsidiaries  (collectively,  the Company)  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 of the  Securities  and
         Exchange  Act of  1934.  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
         consolidated   financial   statements  and  related  notes  thereto  as
         presented in the Company's certified financial  statements for the year
         ended December 31, 2004. The Company presumes that users of the interim
         financial  information  herein have read or have access to such audited
         financial  statements  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 expected or reported for the full year.

Note 2.  Use of Estimates

         Our consolidated  financial statements have been prepared in accordance
         with generally accepted accounting  principles in the United States (US
         GAAP).  The  preparation of these financial  statements  requires us to
         make  estimates and judgments  that affect the reported  amounts in the
         financial  statements and accompanying  notes. These estimates form the
         basis for  judgments  we make about the  carrying  values of assets and
         liabilities that are not readily  apparent from other sources.  We base
         our estimates and  judgments on  historical  experience  and on various
         other   assumptions   that  we  believe   are   reasonable   under  the
         circumstances.  However,  future  events are  subject to change and the
         best  estimates and judgments  routinely  require  adjustment.  US GAAP
         requires us to make estimates and judgments in several areas, including
         those related to impairment of goodwill and equity investments, revenue
         recognition,  recoverability  of inventory and receivables,  the useful
         lives of long lived assets such as property and  equipment,  the future
         realization  of  deferred  income tax  benefits  and the  recording  of
         various accruals.  The ultimate outcome and actual results could differ
         from the estimates and assumptions used.

Note 3.  Revenue Recognition.

         We account for our revenues in  accordance  with  Emerging  Issues Task
         Force ("EITF") 99-19,  Reporting  Revenues Gross as a Principal  Versus
         Net as an Agent. Our revenues are derived from our billings,  which are
         based on:

         o        the payroll cost of our worksite employees; and
         o        a markup computed as a percentage of the payroll cost.

         In determining the pricing of the markup component of the billings,  we
         consider  our  estimates  of the  costs  directly  associated  with our
         worksite employees,  including payroll taxes and workers'  compensation
         costs,  plus an acceptable gross profit margin. We invoice the billings
         concurrently  with each  periodic  payroll of our  worksite  employees.
         Revenues,  which  exclude the payroll cost  component of billings,  are
         recognized  ratably  over the  payroll  period  as  worksite  employees
         perform their service at the client worksite.  We include revenues that
         have been recognized but not invoiced in unbilled  accounts  receivable
         on our Consolidated Balance Sheets.

                                       F-7
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                                  June 30, 2005

Note 3.  Revenue Recognition.

         Our revenues are primarily dependent on the number of clients enrolled,
         the resulting  number of worksite  employees paid each period.  Because
         our markup is computed as a percentage  of payroll  cost,  revenues are
         also  affected by the payroll  cost of  worksite  employees,  which can
         fluctuate  based on the  composition  of the  worksite  employee  base,
         inflationary  effects  on wage  levels  and  differences  in the  local
         economies of our markets.

         The  primary  direct  costs  associated  with  our  revenue  generating
         activities are:

         o        employment-related  taxes  ("payroll  taxes");
         o        workers' compensation claim costs.

         Payroll taxes consist of the employer's  portion of Social Security and
         Medicare  taxes  under  FICA,  federal  unemployment  taxes  and  state
         unemployment taxes. Payroll taxes are generally paid as a percentage of
         payroll cost. The federal tax rates are defined by federal regulations.
         State  unemployment  tax rates are subject to claim  histories and vary
         from state to state.

         No allowance for doubtful accounts has been made.

Note 4.  Common Stock.

         In February and June 2005, the Company effected a one-for-one  thousand
         reverse  stock  split  restating  the  number of  common  shares of the
         Company  at  December  31,  2004  from   1,773,000,943  to  1,773.  All
         references to average number of shares,  shares  outstanding and prices
         per share have been restated retroactively to reflect the split.

Note 5.  Stock Compensation.

         The  Company  issued  stock to certain  officers,  key  employees,  and
         non-employee  directors  which  consisted of Series "B" Preferred Stock
         (Series  "B"  Stock).  The  maximum  number of shares of the  Company's
         Series "B" Stock available for issuance was 1 million shares with a par
         value of $0.001.  Each share of the Series "B" Stock is  convertible to
         50  shares  of Common  Stock  without  the  payment  of any  additional
         consideration. Shares issues are compensation to the recipients.

         Effective June 30, the Company  authorized and issued  1,000,000 shares
         of Series"B" Preferred Stock to officers and directors of the Company.

         The Company  determined  compensation  costs based on the fair value at
         the  grant  date for its  stock.  The  value of each  share  price  was
         determined to be .0277 representing $27,700 in total compensation.  The
         Company used the Black-Scholes option-pricing model.

         On June 30, the holders of the  Series"B"  Stock elected to convert all
         of their shares to 50,000,000 shares of Common Stock.

         The  Black-Scholes  option valuation model was developed for estimating
         the fair value of traded options that have no vesting  restrictions and
         are fully transferable. Because option valuation models require the use
         of subjective assumptions,  changes in these assumptions can materially
         affect the fair value of the options,  and the Company's options do not
         have the characteristics of traded options, the option valuation models
         do not necessarily  provide a reliable measure of the fair value of its
         options.

                                       F-8
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                                  June 30, 2005


Note 6.  Acquisitions.

         In January 2005, the Company,  through its wholly-owned  subsidiary The
         Resourcing  Solutions Group, Inc., completed the acquisition of certain
         assets of Rossar HR LLC,  a  Pennsylvania  limited  liability  company,
         which operated under the name "Your Staff Solutions".  Rossar HR LLC is
         a   Professional   Employment   Organization   founded  in  1987  which
         specializes in quality human resource  management services for small to
         medium sized  businesses.  Consideration  under such  agreement did not
         contemplate  any cash paid to the  seller at  closing,  but calls for a
         Promissory  Note of $272,000 to be paid in equal  monthly  installments
         over ten years.  The Company recorded the acquisition as a purchase and
         recorded  $52,000 of fees and $232,950 of goodwill in association  with
         this  acquisition.  The Company  acquired  assets  consisting of office
         equipment  and cash on hand  totaling  $45,170 and assumed  liabilities
         equal to $6,100. During the first quarter of 2005, the Company recorded
         an impairment of $131,950 reducing the value of goodwill to $101,000.

Note 7.  Contingent Liabilities.

         The  Securities  and  Exchange  Commission  ("SEC")  filed an action in
         Federal District Court asserting various  violations of securities laws
         against the Company and its principal  officer.  The complaint  alleges
         that Mr. Frank Custable  "orchestrated"  a "scheme" to illegally obtain
         stock from various  companies,  including  the Company,  through  "scam
         Commission Form S-8 registration statements, forged stock authorization
         forms  and at least one  bogus  attorney  opinion  letter  arranged  by
         Custable." The complaint  alleges that, in connection with this alleged
         "scheme,"  the  Company  and its former  CEO,  David  Calkins  violated
         Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of
         the  Exchange  Act.  The SEC  asks  that the  Company  and  Calkins  be
         permanently   enjoined   from   future   violations,   ordered  to  pay
         disgorgement  and civil  penalties and Calkins be barred from continued
         service as an officer and director.  As part of an ex parte proceeding,
         the  District  Court  ordered  the  Company  and  Calkins to provide an
         accounting of their assets and the transactions that are the subject of
         the complaint.  Pursuant to an agreement of the parties,  an accounting
         of the transactions at issue was provided on June 30, 2004. The Company
         and Calkins answered the second amended complaint on March 23, 2005. On
         April 7,  2005,  a  federal  grand  jury in the  Northern  District  of
         Illinois  returned  an  indictment  charging  Custable  and  ten  other
         individuals  and entities (The Company was not indicted)  with engaging
         in a  fraudulent  scheme  based on the same  allegations  as the  SEC's
         action.  On April 21, 2005,  the District  Court stayed the SEC's civil
         action pending resolution of the criminal action.

Note 8.  Customer Deposit.

         The Company had $66,129 in Deferred Revenue on June 30, 2005 related to
         amounts  prepaid for 2005  services from a single  client.  The Company
         executed a letter  agreement in conjunction with receipt of these funds
         that  provides  the  funds be held in  separate  trust  account  by the
         Company  and not  commingled  with any other  general  use funds of the
         Company.  The Company draws down the  pre-payment  account as needed to
         fund the payment of payroll,  deposit taxes,  benefits,  fees and other
         costs for this single client  pursuant to the agreement.  The funds are
         required  to be held in a separate  trust  account  and at the  present
         time,  the funds are  commingled  in our  operating  account which is a
         violation of the agreement.

                                       F-9
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                                  June 30, 2005

Note 9.  Short-Term Payables consists of:


<TABLE>
<CAPTION>
                                                                   June 30,          December 31
                                                                     2005                2004
                                                               ---------------     ----------------
<S>                                                             <C>                 <C>
                         Convertible Notes Payable              $   2,017,066       $    1,669,020
                         Other Notes Payable                          465,000              465,000
                         Rossar Note Payable                           27,127                   -0-
                         Bank Line of Credit                           19,020               24,231
                                                               ---------------     ----------------
                         Total Short-Term Payables              $   2,528,213       $    2,158,251
                                                               ===============     ================
</TABLE>


Note 10. Discontinued Operations.

         On May 15, 2005, The Resourcing  Solutions Group,  Inc. a subsidiary of
         the  Company,  discontinued  the  operation  of Asmara of  Florida  and
         Partners  PEO  of the  Carolinas.  The  Company  reported  a loss  from
         discontinued operations for the six months ended June 30, 2005 and 2004
         equal to $134,708 and $171,680 respectively. The consolidated financial
         statements  have  been  restated,  where  applicable,  to  reflect  the
         discontinued operations.

Note 11. Disposition of Assets.

         On May 15, 2005, The Resourcing  Solutions Group, Inc., a subsidiary of
         the Company, sold all the assets of Asmara of Florida,  Partners PEO of
         the  Carolinas,  and Asmara  Services  II, Inc. to  Allegro,  Inc.  for
         $122,055  and  reported  a loss of  $485,953,  of  which  $608,008  was
         goodwill. The Company will receive the $122,055 over the next 12 months
         as it's earned as part of the agreement.

Note 12. Related Party Transactions.

         A.  Employment Agreements

             In July  2005,  The  Company  entered  into a ten  year  employment
             contracts with F. Kay Calkins.  Compensation will include an annual
             base  salary of $240,000  of which  $60,000 is deferred  until July
             2006. Ms.  Calkins is entitled to an incentive  bonus plan based on
             the  EBITDA  (earnings  before  interest,   tax,  depreciation  and
             amortization).  The agreement also includes severance payments upon
             termination  of  employment.  Ms.  Calkins  will  hold the title of
             Chairman of the Board of Directors.

             In July 2005,  Mr.  Calkins  resigned as Chairman and Member of the
             Board of Directors.  Mr.  Calkins was  terminated as an employee of
             the Company.  The Company is currently  negotiating  a  Termination
             Agreement with Mr. Calkins.

Note 13. Recent Accounting Pronouncements.

         The  Company  believes  that any new  accounting  pronouncements  since
         December 31, 2004,  will not have an affect on the Company's  financial
         statements.

                                      F-10
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

Item 2.  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 should be read in conjunction with
         the  consolidated  financial  statements and notes thereto.  Historical
         results are not necessarily  indicative of trends in operating  results
         for any future period.

         In 2005, the Company  continued its strategy for  penetrating the Human
         Resources  Outsourcing  ("HRO") industry based on its evaluation of its
         business model and existing business initiatives completed in 2002. The
         Company's  intention  to enter this  business  sector was  announced in
         September  2002 and was based on an  evaluation  of potential  business
         markets that provide the  potential for success.  The Company  provides
         human  capital  solutions  through the  provision  of PEO  services and
         Administrative  Service  Organization ("ASO") services to such clients.
         In 2003,  the Company  successfully  completed the  acquisition  of two
         existing PEO  organizations  and continues to evaluate other  potential
         acquisition   candidates   while  also   reviewing   and   implementing
         opportunities  to support  organic growth in order to secure a position
         as an industry  leader.  The Company sees this  initiative in the Human
         Resources  Outsourcing  ("HRO")  industry as an opportunity to tap into
         the  small  business  market  in  the  United  States  and  intends  to
         compliment  the  provision  of PEO and ASO  services  with  information
         technology   services,   business  consulting  services  and  financial
         services at a future time.

         As part of its goal to bring  the  company  to  profitability  and less
         reliant on equity  financing  for ongoing  operations,  the company has
         developed an aggressive  marketing strategy as well as an investment to
         significantly  upgrade its HRIS  (Human  Resource  Information  System)
         capabilities to service its current and prospective clients.  This plan
         includes  hiring and training  the sales team as well as marketing  the
         company's  services  through  networks  of  national  associations  and
         chains.  The  company  has  successfully   negotiated  joint  marketing
         programs to market the company's products and services. The company has
         also engaged  Thinkware  Corporation  to implement its new HRIS system.
         This system will  provide the  company  with  "state-of-the-art"  human
         resource  data  necessary  to  service  the  growing  needs of small to
         mid-size clients as well as automate the company's internal  processes.
         The HRIS system became fully operational in January 2005.

         Through its PEO/ASO  business unit, the Company  markets to current and
         prospective  clients,  typically small to medium-sized  businesses with
         between  five  and  1,500  employees,  a broad  range of  products  and
         services  that provide an  outsourced  solution for the clients'  human
         resources  ("HR")  needs.   The  Company's   products  include  payroll
         services,   benefits  administration  (including  health,  welfare  and
         retirement plans),  governmental compliance, risk management (including
         safety  training),  unemployment  administration  and other HR  related
         services.  The Company is currently  working to establish  the national
         vendor  relationships  it believes  are  necessary to  effectively  and
         competitively provide such services to a broad range of clients.

         In a further effort to bring the Company to  profitability it evaluated
         its internal  operating  costs and evaluated  each  existing  client to
         determine  profitability.  The Company  determined that certain clients
         were not producing  sufficient  gross profit.  In May 2005, the Company
         sold 16 contracts to Allegro, Inc. for $122,055. The Company recorded a
         receivable for $122,055 that will be collected over the next 12 months.
         The balance of this  receivable at the quarter ended June 30, 3005, was
         $104,034.

         Commensurate  with the sale of the 16 accounts the Company  reorganized
         its  operations.  The Company  reduced its  internal  staff,  and other
         operating  costs to the level  necessary to serve the  existing  client
         base. With the new HRIS system becoming operational the Company will be
         able to add  additional  clients  without  increasing  its  operational
         staff.  The  reorganization  reduces the Company's  heavy  industry and
         "blue  collar"  client base  allowing it to expand at a greater pace in
         other economic  sectors.  The targeted  clients to which the Company is
         marketing its services have a greater  capability to the more automated
         process  integral  to the new  HRIS  system.  The  reorganization  also
         reduced the Company's reliance on outside equity funding.

                                        3
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

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

Six Months ended June 30, 2005 compared to the Six Months ended June 30, 2004

         Revenue for the six months ended June 30, 2005 was $1,490,511  compared
         to  revenue of  $1,677,963  for the six  months  ended  June 30,  2004.
         Revenues generated from the Rossar  acquisition  accounted for $268,858
         of the  increase  offset by a decrease of $456,310  from the  Company's
         existing clients.

         The company experienced a decrease in the number of work site employees
         it provided  PEO  services to during the six months ended June 30, 2005
         compared to the six months ended June 30, 2004.  The company  generates
         its  revenue  from  services  relating  to work  site  employees.  This
         decrease in work site employees was primarily  from large  construction
         and heavy  industrial  clients that  terminated  PEO services  with the
         company for reasons ranging from plant and company  closings to clients
         bringing the services typically offered in a PEO relationship in-house.
         The PEO industry as a whole has found it more  difficult to provide the
         PEO services to construction  and heavy  industrial  clients because of
         its inability to obtain workers compensation insurance. The company has
         focused  its  sales and  marketing  effort  to white  collar  and light
         industrial clients where workers compensation  insurance is readily and
         economically accessible.

         Due to the  significance  of the  amounts  included  in billings to the
         Company's clients and its corresponding  revenue  recognition  methods,
         the Company has provided the  following  reconciliation  of billings to
         revenue for the six months ended June 30, 2005 and June 30, 2004.

<TABLE>
<CAPTION>
                                                                        Six months ended           Six months ended
                                                                             June 30,                  June 30,
                                                                               2005                      2004
                                                                           (Unaudited)               (Unaudited)
<S>                                                                     <C>                        <C>
                Reconciliation of billings to revenue recognized:
                Gross billings to clients                               $     10,974,772           $     10,844,449
                Less - Gross wages billed to clients                          (9,484,261)                (9,166,486)
                                                                        ----------------           ----------------
                Total revenue as reported                               $      1,490,511           $      1,677,963
                                                                        ================           ================
</TABLE>

         Cost of services for the six months ended June 30, 2005 was  $1,177,739
         compared  to cost of services of  $1,294,127  for the six months  ended
         June 30, 2004 and is related  directly  to the  delivery of services to
         its PEO clients.  This decrease was directly related to the decrease in
         revenue.

         General & administrative  expenses,  including  salaries and wages, was
         $1,500,434  for the  six  months  ended  June  30,  2005,  compared  to
         $1,069,695  in the  corresponding  period  of 2004.  The  increase  was
         attributed  to  additional  expenditures  used to support the  existing
         operations  along  with the cost to  integrate  the  acquired  RossarHR
         operation.

         Sales and marketing  expense was $350,138 for the six months ended June
         30, 2005, compared to $145,197 in the corresponding period of 2004. The
         increase was attributed to the company's  continued  transformation  of
         its sales and marketing  function  that began in the second  quarter of
         2004.

         Depreciation  and  amortization  expense was $29,920 for the six months
         ended June 30, 2005,  compared to $13,496 for the corresponding  period
         of 2004. This increase was from the Human Resource  Information  System
         and various other office  equipment  placed in service in the third and
         forth quarter of 2004.

         Interest expense is interest paid and accrued on the Convertible Notes,
         unpaid  payroll  taxes,  notes payable,  and bank  financing.  Interest
         expense was $232,708 for the six months ended June 30, 2005 compared to
         $106,181  for the  same  period  of 2004.  The  increase  is  primarily
         attributable to the continued use of financing for working capital.

                                        4
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

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

Six Months ended June 30, 2005 compared to the Six Months ended June 30, 2004


         Finance  expense for the six months  ended June 30,  2005 was  $362,143
         compared to finance expense of $1,355,714 for the six months ended June
         30, 2004. The decrease was the result of reduced  funding  provided for
         administrative  and operational  needs. The Company  recorded  imbedded
         interest in  conjunction  with the issuance of  convertible  debentures
         during the period assuming  conversion of such debt was available on an
         immediate  basis and has incurred fees  associated  with  accessing its
         lines of credit.

Three  Months  ended June 30, 2005  compared to the Three  Months ended June 30,
2004

         Revenue for the quarter  ended June 30, 2005 was  $663,894  compared to
         revenue of  $866,238  for the  quarter  ended June 30,  2004.  Revenues
         generated  from the Rossar  acquisition  accounted  for $148,696 of the
         increase  offset by a decrease of $351,040 from the Company's  existing
         clients.

         The company experienced a decrease in the number of work site employees
         it provided  PEO  services  to during the  quarter  ended June 30, 2005
         compared to the quarter ended June 30, 2004. The company  generates its
         revenue from services relating to work site employees. This decrease in
         work site  employees was primarily  from large  construction  and heavy
         industrial  clients that  terminated  PEO services with the company for
         reasons ranging from plant and company closings to clients bringing the
         services  typically  offered in a PEO  relationship  in-house.  The PEO
         industry  as a whole has found it more  difficult  to  provide  the PEO
         services to construction  and heavy  industrial  clients because of its
         inability to obtain  workers  compensation  insurance.  The company has
         focused  its  sales and  marketing  effort  to white  collar  and light
         industrial clients where workers compensation  insurance is readily and
         economically accessible.

         Due to the  significance  of the  amounts  included  in billings to the
         Company's clients and its corresponding  revenue  recognition  methods,
         the Company has provided the  following  reconciliation  of billings to
         revenue for the quarters ended June 30, 2005 and June 30, 2004.

<TABLE>
<CAPTION>
                                                                          Three months ended       Three months ended
                                                                               June 30,                 June 30,
                                                                                 2005                     2004
                                                                             (Unaudited)              (Unaudited)
                                                                          ------------------       ------------------
<S>                                                                       <C>                      <C>
                Reconciliation of billings to revenue recognized:
                Gross billings to clients                                 $       4,820,211        $       5,609,017
                Less - Gross wages billed to clients                             (4,156,317)              (4,742,779)
                                                                          ------------------       ------------------
                Total revenue as reported                                 $         663,894        $         866,238
                                                                          ==================       ==================
</TABLE>

         Cost of services  for the three months ended June 30, 2005 was $537,597
         compared to cost of services of  $647,178  for the three  months  ended
         June 30, 2004 and is related  directly  to the  delivery of services to
         its PEO clients.  This decrease was directly related to the decrease in
         revenue.

         General & administrative  expenses,  including  salaries and wages, was
         $686,887 for the three months ended June 30, 2005, compared to $491,663
         in the  corresponding  period of 2004.  The increase was  attributed to
         additional  expenditures used to support the existing  operations along
         with  the  cost  to  complete  the  integration  of  acquired  RossarHR
         operation.

                                        5
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

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

         Sales and  marketing  expense was  $116,615  for the three months ended
         June 30, 2005, compared to $58,831 in the corresponding period of 2004.
         The increase was attributed to the company's  continued  transformation
         of its sales and marketing function that began in the second quarter of
         2004.

         Depreciation and amortization  expense was $15,476 for the three months
         ended June 30, 2005, compared to $6,996 for the corresponding period of
         2004. This increase was from the Human Resource  Information System and
         various other office equipment placed in service in the third and forth
         quarter of 2004.

         Interest expense is interest paid and accrued on the Convertible Notes,
         unpaid  payroll  taxes,  notes payable,  and bank  financing.  Interest
         expense was $130,908 for the three months ended June 30, 2005  compared
         to $65,024  for the same  period of 2004.  The  increase  is  primarily
         attributable   to  the  carrying  costs  of  unpaid   liabilities   and
         Convertible Notes.

         Finance  expense for the three  months ended June 30, 2005 was $101,643
         compared to finance  expense of  $1,110,714  for the three months ended
         June 30, 2004. The decrease was the result of reduced funding  provided
         for administrative and operational needs. The Company recorded imbedded
         interest in  conjunction  with the issuance of  convertible  debentures
         during the period assuming  conversion of such debt was available on an
         immediate  basis and has incurred fees  associated  with  accessing its
         lines of credit.

LIQUIDITY AND CAPITAL RESOURCES:

         Cash and cash  equivalents  at June 30, 2005 was  $550,386  compared to
         $117,052 at December 31, 2004. The Company used cash from operations of
         $1,083,303  and  $2,431,639  for the six months ended June 30, 2005 and
         June 30, 2004,  respectively.  The net loss of $2,915,182 was offset by
         $1,140,667 of non-cash items, the reductions in accounts receivable and
         payroll and payroll related liabilities,  and the increases in accounts
         payable and accrued expenses.

         Net cash provided by investing activities for the six months ended June
         30,  2005  was  $689,532  compared  to the net cash  used in  investing
         activities  of $704,137 for the six months ended June 30, 2004.  During
         the six months ended June 30,  2005,  the cash  provided by  investment
         activities  was from the redemption of CD's  (certificate  of Deposits)
         used to secure 2 standby  letters  of credit  issued in 2004,  proceeds
         from the sale of assets,  and the cash used in investing  activities is
         attributable  to computer  equipment  and  software  purchased  for the
         company's  business  information.  During the six months ended June 30,
         2004, the cash used in investing activities is attributable to computer
         equipment and software purchased for the company's business information
         and an investment in a CD to secure a standby letter of credits.

                                        6
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

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

         Net cash provided by financing  activities in the six months ended June
         30, 2005 was  $827,105  compared  to  $2,696,896  in the  corresponding
         period ended June 30, 2004.  The cash  provided  during both periods is
         primarily  related to the Company's  execution and  utilization  of its
         equity-based lines of credit.

         In August 2003,  the Company  entered into an equity line of credit for
         $10,000,000  from Compass  Capital Inc.,  Kentan Ltd, Reef Holding Ltd,
         The Escrow Corp, and T&B  Associates,  Inc.  Borrowing from this equity
         line allows the repayment by issuing shares of the Company's stock at a
         discount rate of up to 50%. The line is being used to fund acquisitions
         and shortfalls in working capital. During the six months ended June 30,
         2005,   the  Company  drew  down  $245,000  and  issued   6,170,745,000
         unrestricted  shares of the  Company's  .001 par common  stock,  before
         adjusting  such shares to reflect the effects of reverse  stock  splits
         occurring   subsequent   to  issuance.   After  giving  effect  to  the
         one-for-one  thousand  reverse  split on February 28, 2005 and June 20,
         2005,  970,950 shares were issued in conjunction with this equity line.
         The balance  remaining  on this equity line of credit at August 2, 2005
         was  $2,249,102.  The lenders are not  obligated to fund the  remaining
         balance on this equity line of credit and may  discontinue  funding the
         Company at any time without any further obligation.

         During  the  second  quarter  of  2004,  the  Company  entered  into an
         agreement with a national bank to develop a program that eliminates the
         need for multiple  banks.  During the credit review  process,  the bank
         required  the  Company to secure  its ACH  (automated  clearing  house)
         exposure with a standby letter of credit.  ACH transactions are used to
         collect  funds due from the  Company's  clients for PEO services  along
         with  depositing  funds into  employee  bank accounts that have elected
         direct  deposit as a means of wage  payment.  The Company  secured this
         standby letter of credit with an interest  bearing CD  (certificate  of
         deposit) in the amount of $600,000.  In the first quarter of 2005,  the
         Company reduced the standby letter of credit to $500,000. In the second
         quarter of 2005,  the Company  entered into an  agreement  with another
         financial  institution to process its ACH transaction thus allowing the
         Company to cancel this standby letter of credit and the CD.

         During the second  quarter of 2004, as part of the renewal  process for
         one of its insurance  carriers,  the Company was required to secure the
         annual  policy  premiums with an  irrevocable  letters of credit in the
         amount of $178,790. This irrevocable letters of credit was secured with
         an interest bearing CD's  (certificate of deposits).  During the second
         quarter of 2005, the Company elected to terminate this insurance policy
         thus  allowing the Company to cancel this standby  letter of credit and
         the CD.

         In January 2005, the Company,  through its wholly-owned  subsidiary The
         Resourcing  Solutions Group, Inc., completed the acquisition of certain
         assets of Rossar HR LLC,  a  Pennsylvania  limited  liability  company,
         which operated under the name "Your Staff Solutions".  Rossar HR LLC is
         a  Professional  Employment  Organization  founded  in the  1987  which
         specializes in quality human resource  management services for small to
         medium sized  businesses.  Consideration  under such  agreement did not
         contemplate  any cash  paid to the  seller at  closing,  but call for a
         Promissory  Note of $272,000 to be paid in equal  monthly  installments
         over ten years.  The Company recorded the acquisition as a purchase and
         recorded  $52,000 of fees and $232,950 of goodwill in association  with
         this  acquisition.  The Company  acquired  assets  consisting of office
         equipment  and cash on hand  totaling  $45,170 and assumes  liabilities
         equal to $6,100. During the first quarter of 2005, the Company recorded
         an impairment of $131,950 reducing the value of goodwill to $101,000.

                                        7
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

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

         The Company's  cash  requirements  for funding its  administrative  and
         operating  needs  continue to greatly  exceed its cash flows  generated
         from operations. Such shortfalls and other capital needs continue to be
         satisfied  through equity financing and convertible notes payable until
         additional  funds can be  generated  through  acquisitions  and organic
         business   growth.   The   liabilities   of  the  Company   consist  of
         over-extended accounts payable, payroll taxes, and interest expense.

         As part of its goal to bring  the  company  to  profitability  and less
         reliant on equity  financing  for ongoing  operations,  the company has
         developed an aggressive  marketing strategy as well as an investment to
         significantly  upgrade its HRIS  (Human  Resource  Information  System)
         capabilities to service its current and prospective clients.  This plan
         includes  hiring and training  the sales team as well as marketing  the
         company's  services  through  networks  of  national  associations  and
         chains.  The  company  has  successfully   negotiated  joint  marketing
         programs to market the company's products and services. The company has
         also engaged  Thinkware  Corporation  to implement its new HRIS system.
         This system will  provide the  company  with  "state-of-the-art"  human
         resource  data  necessary  to  service  the  growing  needs of small to
         mid-size clients as well as automate the company's internal  processes.
         The HRIS system became fully operational in January 2005.

         In May 2005, The Resourcing  Solutions Group,  Inc. a subsidiary of the
         Company,  sold 16 PEO accounts  located  primarily  in North  Carolina,
         South Carolina and Florida to Allegro, Inc. for $122,055 and reported a
         loss of $485,953.  The Company will receive the $122,055  over the next
         12 months.  Commensurate with the sale of the 16 accounts,  the Company
         reorganized its operations. The Company reduced its internal staff, and
         other  operating  costs to the level  necessary  to serve the  existing
         client base. The Company  anticipates a future  continued  reduction in
         administrative  costs as a as a result of this  sale and the  continued
         focusing of marketing efforts on the non-"blue-collar" industries. With
         the new HRIS system  becoming  operational  the Company will be able to
         add additional  clients without  increasing its operational  staff. The
         reorganization  reduces the Company's  heavy industry and "blue collar"
         client base  allowing it to expand at a greater pace in other  economic
         sectors  which  has been a stated  goal of the  Company.  The  targeted
         clients to which the Company is marketing  its services  have a greater
         capability  to the  more  automated  process  integral  to the new HRIS
         system.  The  reorganization  also  reduced the  Company's  reliance on
         outside equity funding.

         The Company relies on equity  financing to fund its ongoing  operations
         and investing activities. The Company expects to continue its investing
         activities,   including   expenditures  for  acquisitions,   sales  and
         marketing  initiatives,  HRIS (Human Resource  Information System), and
         administrative  support. The loss of its current equity financing would
         seriously hinder the Company's ability to execute its business strategy
         and impair its ability to continue as a going concern.









                                        8
<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

Forward Looking Statements

         The  Company is making  this  statement  in order to satisfy  the "safe
         harbor"  provisions  contained  in the  Private  Securities  Litigation
         Reform Act of 1995.

         This Form 10-QSB includes  forward-looking  statements  relating to the
         business of the Company. Forward-looking statements contained herein or
         in other  statements made by the Company are made based on management's
         expectations and beliefs concerning future events impacting the Company
         and are subject to uncertainties  and factors relating to the Company's
         operations  and  business  environment,  all of which are  difficult to
         predict and many of which are beyond the control of the  Company,  that
         could cause  actual  results of the Company to differ  materially  from
         those matters  expressed in or implied by  forward-looking  statements.
         The Company believes that the following  factors,  among others,  could
         affect its future  performance  and cause actual results of the Company
         to  differ   materially   from  those   expressed   in  or  implied  by
         forward-looking statements made by or on behalf of the Company: (a) the
         effect of technological changes; (b) increases in or unexpected losses;
         (c) increased competition; (d) fluctuations in the costs to operate the
         business; (e) uninsurable risks; and (f) general economic conditions.


Item 3.  CONTROLS AND PROCEDURES.

         As of June 30, 2005, an evaluation was performed  under the supervision
         and with the participation of the Company's  management,  including the
         Principal  Executive  Officer,  of the  effectiveness of the design and
         operation of the Company's disclosure controls and procedures. Based on
         that  evaluation,  the  Company's  management,  including the Principal
         Executive Officer and the Principal Accounting Officer,  concluded that
         the Company's  disclosure  controls and procedures were effective as of
         June 30, 2005. There have been no significant  changes in the Company's
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to June 30, 2005.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         The  Securities  and  Exchange  Commission  ("SEC")  filed an action in
         Federal District Court asserting various  violations of securities laws
         against the Company and its principal  officer.  The complaint  alleges
         that Mr. Frank Custable  "orchestrated"  a "scheme" to illegally obtain
         stock from various  companies,  including  the Company,  through  "scam
         Commission Form S-8 registration statements, forged stock authorization
         forms  and at least one  bogus  attorney  opinion  letter  arranged  by
         Custable." The complaint  alleges that, in connection with this alleged
         "scheme,"  the  Company  and its former  CEO,  David  Calkins  violated
         Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of
         the  Exchange  Act.  The SEC  asks  that the  Company  and  Calkins  be
         permanently   enjoined   from   future   violations,   ordered  to  pay
         disgorgement  and civil  penalties and Calkins be barred from continued
         service as an officer and director.  As part of an ex parte proceeding,
         the  District  Court  ordered  the  Company  and  Calkins to provide an
         accounting of their assets and the transactions that are the subject of
         the complaint.  Pursuant to an agreement of the parties,  an accounting
         of the transactions at issue was provided on June 30, 2004. The Company
         and Calkins answered the second amended complaint on March 23, 2005. On
         April 7,  2005,  a  federal  grand  jury in the  Northern  District  of
         Illinois  returned  an  indictment  charging  Custable  and  ten  other
         individuals  and entities (The Company was not indicted)  with engaging
         in a  fraudulent  scheme  based on the same  allegations  as the  SEC's
         action.  On April 21, 2005,  the District  Court stayed the SEC's civil
         action pending resolution of the criminal action.

                                        9


<PAGE>
                          PACEL CORP. AND SUBSIDIARIES

Item 6.  Exhibits


Exhibit No.        Description                                            Page
  3(i)             Articles of Incorporation                                *
  3(ii)            Amendments to Articles of Incorporation                  *
  4                Designation of Series "B" Convertible Preferred Stock    *
  31.1             Rule 13a-14(a)/15d-14(a) Certification                   *
  32.1             Section 1350 Certification                               *


*    Incorporation by reference from previous reports and filings.













































                                       10
<PAGE>
Item 7.  Signatures

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  registrant  has duly caused this report to be signed in its behalf
by the undersigned thereunto duly authorized.


Pacel Corp.


BY:      /s/ GARY MUSSELMAN
         -----------------------------------------
         Gary Musselman, President, Chief Executive Officer, and Chief Financial
         Officer

DATED:   August 19, 2005