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

                                       FORM 10-QSB

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
______________

                         COMMISSION FILE NUMBER: 33-68570


                                      eConnect
               (Exact name of registrant as specified in its charter)

            Nevada                                   43-1239043
(State or jurisdiction of incorporation          I.R.S. Employer
             or organization)                   Identification No.)

  2500 Via Cabrillo Marina, Suite 112, San Pedro, California     90731
           (Address of principal executive offices)           (Zip Code)

              Registrant's telephone number:  (310) 514-9482

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.001 Par Value; Class A Warrants

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) been
subject to such filing requirements for the past 90 days.  Yes   X      No.

As of March 31, 2001, the Registrant had 253,566,707 shares of common
stock issued and outstanding (1).

Transitional Small Business Disclosure Format (check one): Yes    No X.

(1)  See Other Information

                                 TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION                                        PAGE

ITEM 1.  FINANCIAL STATEMENTS

         CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2001                 3

         CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE MONTHS ENDED
         MARCH 31, 2001 AND MARCH 31, 2000                               5

         CONSOLIDATED STATEMENT OF
         STOCKHOLDERS' DEFICIT FOR THE
         THREE MONTHS ENDED MARCH 31, 2001                               6

         CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED
         MARCH 31, 2001 AND MARCH 31, 2000                               8

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     10

ITEM 2.  PLAN OF OPERATION                                              12

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                              23

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                      28

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                29

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            29

ITEM 5.  OTHER INFORMATION                                              29

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                               30

SIGNATURE                                                               30

PART I.

ITEM 1.   FINANCIAL STATEMENTS.

                                  eCONNECT
                        CONSOLIDATED BALANCE SHEET
                             March 31, 2001
                               (Unaudited)

                                  ASSETS

Current assets
Cash                                                          $    64,650
Receivable from equity funding line                               243,900
Accounts receivable                                                48,881
Total current assets                                              357,431

Fixed assets, net                                                 427,948

Other assets
Investment in equity-method investee                               48,040
Intangible asset, net                                             334,363
Purchased software, net                                         1,334,839
Deposit                                                            38,820
Other assets                                                      272,024
                                                                2,028,086

Total assets                                                    2,813,465

                 LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable                                                2,319,286
Accrued liabilities                                             3,614,993
Due to consultants                                                 22,000
Due to related parties                                          3,698,816
Notes payable                                                   2,302,906
Total current liabilities                                      11,958,001

Total liabilities                                              11,958,001

Commitments and contingencies                                           -

Stockholders' deficit
Common stock; $.001 par value; 300,000,000
shares authorized, 253,566,707 shares
issued and outstanding                                            253,567

Additional paid-in capital                                    144,006,010

Due from related party - secured by
Company's common stock                                                  -
Common stock issued for prepaid consulting
Services                                                       (4,082,726)
Minority interest in consolidated subsidiary                     (122,154)
Accumulated deficit                                          (149,199,233)
Total stockholders' deficit                                    (9,144,536)
Total liabilities and stockholders' deficit                     2,813,465

                See Accompanying Notes to Financial Statements

                                 eCONNECT
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                                       For the three months ended March 31
                                       2001                          2000
                                                                (RESTATED)

Revenue
Sports books loss                      $     (4,170)             $      -
E-Commerce sales                              1,179                     -
Gross loss                                   (2,991)                    -

Operating expenses
Stock based compensation                  1,966,051            36,897,970
Consulting                                  231,293               804,842
Public relations                             74,730               570,926
Professional fees                           117,858               126,148
Research and development                     54,300             1,218,764
Wages                                       466,356                     -
Amortization and depreciation               258,343               223,183
General and administrative                  236,926             1,393,429
Total operating expenses                  3,405,857            41,235,262

Net loss from operations                 (3,408,848)          (41,235,262)

Other income (expense)
Interest income                                   -                87,350
Interest expense                           (167,602)                    -
Loss on investments                               -              (280,366)
Cancellation fee                           (526,212)                    -
Total other income (expense)               (693,814)             (193,016)

Net loss before provision for
income taxes                             (4,102,662)          (41,428,278)
Provision for income taxes                        -                     -
Net loss                                 (4,102,662)          (41,428,278)

Basic and diluted loss per common
Share                                         (0.02)                (0.31)

Basic and diluted weighted average
common shares outstanding               229,955,475           132,187,512

               See Accompanying Notes to Financial Statements

                                  eCONNECT
             CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                (Unaudited)


                 Common Shares           Common Shares
           Number           Add'l        Issued   Minority   Accumu   Total
           Of               Paid         for      Interest   lated    Share
           Shares           in           pre      in         Deficit  Holders'
                   Amount   capital      paid     Consoli             Deficit
                                         Consol   dated
                                         sult     subsi
                                         ing       diaries
                                         serv
                                         ices

Balance
December
31, 2000
214,074,197 214,074 131,758,828 (1,271,655) (92,308) (145,126,417) $(14,517,478)

Issuance
of common
shares for
prepaid
consulting
services

11,800,000  11,800   4,135,130 (4,146,930)        -             -             -

Amortiza
tion of
prepaid
consulting
services

         -       -           -  1,335,859         -             -     1,335,859

Issuance
of common
shares in
satis
faction of
due to
related
parties

 8,000,000   8,000   3,688,243          -         -             -    3,696,243

Issuance
of common
shares in
satisfac
tion of due
to
consultants

 2,400,000   2,400   2,018,047          -         -             -    2,020,447

Common shares
issued for cash
related to
exercise of
Warrants

   702,313     702      64,161          -         -             -       64,863

Common shares
issued for cash

 8,614,150   8,614   1,208,886          -         -             -    1,217,500

Common shares
issued for
services
related to
exercise of
warrants with
a strike price of
$0.26

    74,113      74      19,102          -         -             -       19,176

Issuance of
common shares
in satisfaction
of advance
on equity
funding line

 2,118,975   2,119     204,481          -         -             -      206,600

Issuance of
common shares
for
receivable from
equity funding
line

 2,501,538   2,502     241,398          -         -             -      243,900

Common shares
issued for
services

 2,246,806   2,247     224,273          -         -             -      226,520

Common shares
issued for
interest

 1,034,615   1,035     108,739          -         -             -      109,774

Warrants
granted for
interest

         -       -       9,275          -         -             -        9,275

Warrants
granted in
satisfaction
of promissory
note payable,
including
interest of
$265,447

         -       -     325,447          -         -             -      325,447

Net loss

         -       -           -          -   (29,846)    (4,072,816) (4,102,662)

Balance
March 31 2001

253,566,707 253,567   144,006,010 (4,082,726) (122,154)(149,199,233)(9,144,536)

                 See Accompanying Notes to Financial Statements

                                  eCONNECT
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)

                                           For the three months ended March 31
                                            2001                       2000
                                                                     (RESTATED)

Cash flows from operating activities:
Net loss                                   $   (4,102,662)       $(41,428,278)

Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization and depreciation                     258,343             223,183
Stock based compensation                        1,966,051          36,897,970
Loss on investments                                     -             280,366

Changes in operating assets and liabilities:
Change in stock subscription
receivable                                              -             220,176
Change in due from related party                        -              50,000
Change in accounts receivable                     (32,123)                  -
Change in other assets                           (166,412)            (11,012)
Change in due from related party -
secured by Company's common stock                       -          (1,112,647)
Change in accounts payable                        208,613             139,234
Change in accrued liabilities                     581,620             (32,885)
Change in due to consultants                       22,000                   -
Change in due to related parties                  351,650             966,740
Change in stockholder loan payable                      -            (350,000)
Net cash used by operating activities            (912,920)         (4,157,153)

Cash flows from investing activities:
Purchase of fixed assets                           (7,800)           (109,653)
Purchase of purchased software                          -                   -
Cost of investments                                     -            (706,200)
Net cash used by investing
activities                                         (7,800)           (815,853)

Cash flows from financing activities:
Proceeds from issuance of notes payable           150,000                   -
Principal payments on notes payable              (460,000)                  -
Proceeds from issuance of common stock          1,282,363           6,094,096
Net cash provided by financing
activities                                        972,363           6,094,096

Net increase in cash                               51,643           1,121,090
Cash, beginning of period                          13,007             126,172
Cash, end of period                                64,650           1,247,262

Supplemental disclosure of cash flow:
Cash paid for interest                                  -                   -
Cash paid for taxes                                     -                   -

Schedule of non-cash investing and
financing activities:
2,501,538 common shares issued for
receivable
from equity funding line                          243,900                   -

11,800,000 common shares issued for
prepaid consulting services                     4,146,930                   -

8,000,000 common shares issued in
satisfaction of due to related parties          3,696,243                   -

2,400,000 common shares issued in
satisfaction of due to consultants              2,020,447                   -

2,118,975 common shares issued in
satisfaction of advance on equity
funding line                                      206,600                   -

Warrants granted in satisfaction of
promissory note payable, not
including interest of $265,447                     60,000  $                -

Remaining consideration of the
acquisition of PowerClick, Inc.
recorded as due to affiliate                            -           1,725,000

2,000,000 common shares issued related
to the acquisition of PowerClick,
Inc.                                                    -             325,000

666,667 common shares issued for
accounts payable                                        -             550,000

6,000,000 common shares issued for
officer bonus payable                                   -           4,800,000

203,865 common shares issued for Stock
subscription payable                                    -              81,546

200,000 common shares issued related
to the acquisition of Top Sports,
S.A.                                                    -              47,032

                 See Accompanying Notes to Financial Statements

                                  eCONNECT
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

1.  BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in
accordance with Securities and Exchange Commission requirements for interim
financial statements.  Therefore, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  The financial statements
should be read in conjunction with the Form 10-KSB for the year ended
December 31, 2000 of eConnect ("the Company").

The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the full year.  In
the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operation.  All such adjustments are of a
normal recurring nature.

2.  ADVANCE FROM EQUITY FUNDING LINE

As of March 31, 2001, a receivable from equity funding line totaling
$243,900 relates to shares of the Company's common stock issued to Alpha
Venture Capital, Inc. related to the Regulation D Common Stock Private
Equity Line Subscription Agreement.  This balance has been received prior
to the filing of this Form 10-QSB.

3.  CANCELLATION FEE

During October 2000, the Company entered into an agreement to acquire all
the assets of Broadband Video, Inc. in exchange for 10,000,000 shares of
common stock, 3,000,000 warrants to purchase common stock for $1.00 per
share which expire on December 31, 2001.  The Company did not complete, and
does not intend to complete, this transaction and has agreed to issue
3,600,000 shares of common stock as a cancellation fee.  For the three
months ended March 31, 2001, the Company has recorded an expense related to
this fee totaling $526,212 which is reflected in the consolidated
statements of operations.  As of March 31, 2001, the Company has not issued
such shares related to this fee and has reflected this amount as accrued
liabilities in the accompanying consolidated balance sheet.

4.  STOCK BASED COMPENSATION

As of March 31, 2001 and 2000, the Company incurred expenses resulting from
stock warrants and common stock issued totaling $1,966,051 and $36,897,970,
respectively.  The following table summarizes the Company's stock based
compensation activities based on the accounts shown on the consolidated
statements of operations:

                                               March 31      March 31
                                                 2001          2000

Consulting                                     $1,581,555    $33,065,494
Public relations                                        -      2,355,023
Research and development                                -      1,169,529
Interest                                          384,496              -
Investor relations                                      -        307,924
Total stock based compensation                  1,966,051     36,897,970

5.  GOING CONCERN

The Company incurred a net loss of approximately $4,103,000 for the three
months ended March 31, 2001.  The Company's current liabilities exceed its
current assets by approximately $11,601,000 as of March 31, 2001.  These
factors create an uncertainty about the Company's ability to continue as a
going concern.  The Company's management has developed a plan to complete
the development of technology products to generate future revenues and
elect new directors to the board.  The Company will also seek additional
sources of capital through the issuance of debt equity financing, but there
can be no assurance that the Company will be successful in accomplishing
its objectives.

The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan.  The
financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.

ITEM 2.  PLAN OF OPERATION.

Twelve Month Plan of Operation.

The Registrant has completed all development but has not fully
implemented the eCashPad consumer and bank network support services.  In
anticipation of this implementation, the Registrant is currently offering
the eCashPad for sale at $59.95.  The Registrant initially ordered 1,200
eCashPads to be produced and which have been delivered to the Registrant to
effect "Bank Eyes Only" transactions.

"Bank Eyes Only" refers to a direct Internet connection between the
consumer's terminal and the Registrant's bank card authorization system by
which the consumer will order an item from an Internet merchant, but the
credit card data or ATM data will go directly to the Registrant's server
and then to the bank, bypassing the merchant.  Thus, this service will
enable customers to pay for Internet purchases, bill payments and other
types of transactions from home by physically swiping either credit cards
or ATM cards with PIN entry. These "Bank Eyes Only" transactions can be
processed over the Internet without the cardholder account information
being stored at the merchant's web site, nor does the merchant have ready
access to the consumer's bank card information.  The Registrant believes
that "Bank Eyes Only" transaction processing system will effectively
address Internet consumers' concerns regarding personal and financial
information security.

The Registrant is now developing an interface between the eCashPad and
the host processor that will enable a quick and easy install by web
merchants of the "Bank Eyes Only" solution. This install connects the home
consumers eCashPad with the web merchant and enables the eCashPad to effect
either credit card or ATM card with PIN or chip card payments.

The Registrant plans to publish the "Bank Eyes Only" web merchant
install download documentation during the next quarter and is confident
that based on present web merchant responses to adding on the alternative
payment solution of "Bank Eyes Only", that substantial numbers of web
merchants will be accessible to payment by an eCashPad.

The Registrant plans to distribute a substantial number of promotional
eCashPads during the second, third and fourth quarters.  The Registrant has
reasonable expectations that the average eCashPad will transact 2 monthly
transactions per 1,000 "Bank Eyes Only" web merchant base. Presently, the
eCashPad effects credit card transactions only.  By mid 2001, the
Registrant is confident that ATM card with PIN regional pilots with the
eCashPad will begin which will enable the Registrant to offer instant
electronic cash payments by on debit POS to the web merchants.

The Registrant also has reason to believe that a substantial number of
additional web merchants will become accessible to the service of ATM card
with PIN immediate payments.  Industries such as Mortgage, Insurance,
Telecommunications, Collections, Charity, Entertainment, Finance and others
will begin to place upward pressure on their client base to pay by ATM card
with PIN entry cash transactions. This will add more "Bank Eyes Only"
accessible web merchants and will increase the monthly usage of the
eCashPad.

Registration of "Bank Eyes Only" web merchants will be pursued by a
team specialists to be hired who understand their specific industry such as
phone or cable or collections and who will fully develop the pertinent
"Bank Eyes Only" applications for that industry and who will develop
strategic alliances within their specific industry. In addition, the
Registrant has structured a networking approach for mass market consumer
participation in finding "Bank Eyes Only" merchants along with sales teams
to sign on local web merchants.

Using a revenue sharing plan from the flat fee, the Registrant will
incentivize private labels of eCashPads with expected advertising and
marketing of these private label eCashPads by the vendors to their consumer
base.  The Registrant is projecting an average transaction revenue of 50
cents per usage which is charged to the web merchant.

The Registrant has entered into an agreement with National Data
Funding Corporation in April 2000 to provide eCashPad distribution,
encryption, and maintenance, and to collect merchant fees generated by
eCashPad usage.  National Data Funding Corporation will have the
responsibility for collecting these fees by debiting the merchant's
checking account.

The Registrant is presently selling the eCashPad for $59.95 and
expects to substantially lower the price by the following year.  The
Registrant estimates a web merchant base of 10,000 merchants to be
developed over the next three quarters with a minimum universe of 50,000
eCashPads generating 20 monthly transactions per month.

The Registrant also plans to activate the EzyShop service in the third
quarter in which the eCashPad will be placed in public walk in locations
such as national chains of high traffic coffee shops.  Working with a
strategic partner who will provide the monitor and PC to enable Internet
access, the Registrant is confident that consumers will use the eCashPad to
shop at "Bank Eyes Only" web merchant sites.

It is the plan of the Registrant to establish a full service host
center by the third quarter that certifies and processes other types of
competitive hardware.  The Registrant will generate fees from these
hardware vendors to process incoming transactions, and the Registrant will
generate fees from web merchants when the eCashPad is used by a consumer to
effect a "Bank Eyes Only" transaction.

Additionally, the Registrant will generate additional revenues with
the full service host processing local ATM machines, behind the counter
terminals and other conventional services that are not eCashPad originated.

Outside of the United States, the Registrant intends to develop full
service host centers and business model that emulates the United States
business model.  The Registrant has established the first full service
capable host center, eConnect Caribbean, in the Dominican Republic.

eConnect Caribbean has contracted with Banco Nacional de Credito to
launch the usage of the eCashPad in the Dominican Republic. eCashPad orders
from Banco Nacional de Credito are projected at 30,000 units over the next
quarter.

It is the intention of the Registrant to establish the following full
service Registrant host centers, eConnect Ireland, eConnect China, eConnect
Australia, eConnect Mexico and eConnect Brazil. Using the Internet as the
medium, these full service centers will enable consumers using an eCashPad
to effect country to country "Bank Eyes Only" transactions.  The Registrant
envisions the usage of the eCashPad to effect Internet cash wagers by
either ATM card with PIN or by chip card payments.

Global Internet Cash Games will be a service of the Registrant which
will provide support services for Internet companies offering games of
skill and games of chance whereby players are using their eCashPad with ATM
card and PIN entry to effect on line cash transactions.  One projected
gaming service will be the "International", which will be a four country
real time "Bank Eyes Only" with ATM card and PIN entry game between the
countries of the Dominican Republic, Ireland, Australia, and China, whereby
consumers within those countries will be able to use the eCashPad to effect
same day gaming with ATM card and PIN entry.

In February 2000, the Registrant consummated an acquisition agreement
with PowerClick, Inc., a Nevada corporation, whereby the Registrant
acquired 50% of the outstanding capital stock of this Registrant.
PowerClick, Inc. owns and operates a website that provides a wide range of
products and services to the public, and is intended to be used as a
vehicle to promote the use of the "Bank Eyes Only" system.

Artaste.com, a second business unit of the Registrant, has taken the
first quarter to develop the site and in the second quarter will begin to
offer special one day auctions with respected artists selling their works.
In the Gallery, juried exhibitions of nationally recognized artists who
bring their own following will begin.  Special exhibits from collectors
will also be presented.  This is expected to begin in the third quarter of
2001.

To this date, artaste.com has served as a vehicle to offer the
eCashPad for sale and to generate a growing list of registered members that
can be contacted for both eCashPad sales and the install of "Bank Eyes
Only" at their web site.

It is the plan of the Registrant to use 10% discounts for purchases
from artaste.com as an incentive for consumers to buy an eCashPad.  The
Registrant is confident that revenues will be steadily generated by
artaste.com in second quarter.

Current Developments.

(a)  PowerClick, Inc.

In the Form 10-KSB for the year ended December 31, 2001, it was
reported that on October 21, 2000, the Registrant and PowerClick, Inc.
agreed to a settlement of the actions between the parties and a mutual
release and that the Registrant would purchase an additional 30% of
PowerClick (giving a total ownership to the Registrant of 80%) in exchange
for:

conversion of the 6,000,000 restricted shares of Registrant's common
stock currently held by PowerClick into freely trading shares of the
Registrant (under Rule 144);

the issuance to PowerClick of warrants for the purchase of 4,000,000
shares of freely trading common stock of the Registrant (exercisable
at $1.00 per share until October 21, 2003;

capping the cash portion of the original acquisition as $750,000; and

decreasing the value of the transaction to $2,050,000.

The Registrant has now made the determination not to acquire the
additional 30% of PowerClick.  Therefore, the Registrant has cancelled the
warrants for the 4,000,000 shares of common stock; the remaining portions
of the settlement have already been completed.

(b)  Broadband Video, Inc.

In the Form 10-KSB for the year ended December 31, 2001, it was
reported that on October 4, 2000, the Registrant entered into an agreement
to acquire all the assets of Broadband Video, Inc. in exchange for
10,000,000 shares of common stock, 3,000,000 warrants to purchase common
stock for $1.00 per share which expire on December 31, 2001.  After
conducting a due diligence review, the Registrant did not complete, and
does not intend to complete, this transaction and has agreed to issue
3,600,000 shares of common stock as a cancellation fee (see Exhibit 10.2 to
this Form 10-QSB).  For the three months ended March 31, 2001, the
Registrant has recorded an expense related to this fee totaling $526,212
which is reflected in the consolidated statements of operations.  As of
March 31, 2001, the Registrant has not issued such shares related to this
fee and has reflected this amount as accrued liabilities in the
accompanying consolidated balance sheet.

Risk Factors in Connection with Plan of Operation.

An investment in the Registrant is subject to a number of risks.
Among these risks are the following:

(a)  Development Stage of Products.

The Registrant is currently selling the eCashPad.  The Registrant's
PocketPay will require significant additional investment in research and
development and will require substantial additional resources.  The
eCashPad has met all necessary regulatory approvals (Federal Communicatons
Commission and Underwriters Laboratories) and is now ready for mass market
consumer sales. The Registrant is confident that, based on the approvals of
the eCashPad, that the new product line such as the PocketPay will also
meet similar approvals for market usage.

There can be no assurance that the Registrant will generate
significant revenues in the future; and there can be no assurance that the
Registrant will operate at a profitable level.  If the Registrant is unable
to obtain customers and generate sufficient revenues so that it can
profitably operate, the Registrant's business will not succeed.  In such
event, investors in the shares may lose their entire cash investment.  Also
the Registrant and its management do not have significant experience in the
internet business, and in particular the on-line gaming business.

As a result of the fixed nature of many of the Registrant's expenses,
the Registrant may be unable to adjust spending in a timely manner to
compensate for any unexpected delays in the development and marketing of
the Registrant's products or any capital raising or revenue shortfall.  Any
such delays or shortfalls will have an immediate adverse impact on the
Registrant's business, operations and financial condition.

(b)  No Positive Revenues, History of Operating Loss and Accumulated Deficit.

The Registrant has had almost no positive revenue to date.
Although the Registrant has been involved with e-commerce since 1999, it
has been primarily engaged in research and development.  The Registrant has
incurred significant losses from operations: Net loss from operations of
$19,068,529 for the fiscal year ended December 31, 1999, $107,809,363 for
the fiscal year ended December 31, 2000, and $3,408,848 for the three
months ended March 31, 2001.  At March 31, 2001, the Registrant had an
accumulated deficit of $149,199,233 (the majority of which resulted from
stock issued for services).  The future growth and profitability of the
Registrant will be principally dependent upon its ability to successfully
complete development and testing of, obtain regulatory approvals for, and
market or license its primary products.  Accordingly, the Registrant's
prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in connection with the establishment of
a new business in a highly competitive industry, characterized by new
product introductions.

The Registrant anticipates that it will incur substantial operating
expenses in connection with the research, development, testing and approval
of its proposed products and expects these expenses to result in continuing
and significant losses until such time as the Registrant is able to achieve
adequate revenue levels.  There can be no assurance that the Registrant
will be able to significantly increase revenues or achieve profitable
operations.  Failure to obtain additional capital, if needed, would have a
material adverse effect on the Registrant's operations.

(c)  Additional Financing Will Be Required.

The Registrant will be required to raise significant equity capital to
fund its plan of operation; this is estimated to be $20,000,000 over the
next 12 months. Currently, the Registrant is meeting its funding
requirements through financing provided by Alpha Venture Capital, Inc.
through a common stock purchase agreement between the Registrant and this
firm, dated December 8, 2000, in the commitment amount of $15,000,000.  In
addition, the Registrant has been meeting its funding requirements through
financing provided by Alliance Equities under a $7,000,000 line of credit.
However, there is no guarantee that these funding sources will continue to
be available in the future.

The current funds available to the Registrant, and any revenue
generated by operations, will not be adequate for it to be competitive in
the areas in which it intends to operate, and may not be adequate for the
Registrant to survive. Therefore, the Registrant will need to raise
additional funds in order to fully implement its business plan. The
Registrant's continued operations therefore will depend upon its ability to
raise additional funds through bank borrowings, equity or debt financing.
There is no assurance that the Registrant will be able to obtain additional
funding when needed, or that such funding, if available, can be obtained on
terms acceptable to the Registrant.  If the Registrant cannot obtain needed
funds, it may be forced to curtail or cease its activities. If additional
shares were issued to obtain financing, current shareholders may suffer a
dilution on their percentage of stock ownership in the Registrant.

(d)  Risks Associated with eCashPad Production.

The agreement under which the eCashPad was originally manufactured for
the Registrant only calls for an initial production run of 5,000 units, at
a total cost of $80,000.  The Registrant has since concluded and paid for
an order for 100,000 eCashPads from Asia Pacific Micro, Inc. at a favorable
cost per unit.  Initial eCashPads are being delivered to the Registrant on
an as needed basis.

This agreement offers the Registrant substantial savings by
contracting with an Asian country for manufacturing. Currently, the
manufacturer is stable but there is no guarantee that the manufacturer may
not be impacted by future changes in government policies. The Registrant is
presently seeking additional suppliers.

(e)  Risks in Connection with Approval of Regional ATM Networks.

Within the United States market, the Registrant is closely working
with National Data Funding Corporation to secure the go ahead for regional
ATM card networks for an eCashPad ATM card with PIN entry "Bank Eyes Only"(tm)
Internet payment. Such network currently permit the usage of credit cards
on their systems.  Thus, a substantial part of the Registrant's strategy is
based on ATM card with PIN entry Internet payments, and the Registrant may
not receive bank approvals from the regional ATM card networks in the
United States for such transactions. In such case, this payment system
could not be used in the United States, which could substantially affect
the prospects of the Registrant in this country. Even though this type of
payment system has already been approved in the Dominican Republic and
Ireland, and may be approved elsewhere outside the United States, the
Registrant would expect that a substantial portion of its projected
revenues would come form United States based transactions.  The Registrant
has received verbal approval to begin an eCashPad ATM card with PIN pilot
in the second quarter over a small ATM card network.

(f)  Acceptance and Effectiveness of Internet Electronic Commerce.

The Registrant's success in e-commerce will be dependent on consumer
acceptance of e-retailing and an increase in the use of the Internet for e-
commerce.  If the markets for e-commerce do not develop or develop more
slowly than the Registrant expects, its e-commerce business may be harmed.
If Internet usage does not grow, the Registrant may not be able to increase
revenues from Internet advertising and sponsorships which also may harm
both our retail and e-commerce business. Internet use by consumers is in an
early stage of development, and market acceptance of the Internet as a
medium for content, advertising and e-commerce is uncertain.  A number of
factors may inhibit the growth of Internet usage, including inadequate
network infrastructure, security concerns, inconsistent quality of service,
and limited availability of cost-effective, high-speed access.  If these or
any other factors cause use of the Internet to slow or decline, our results
of operations could be adversely affected.

(g)  Competition in Internet Commerce.

The Registrant anticipates substantial competition in the development
of the PERFECT industry and the "Bank Eyes Only"(tm) internet application in
particular. The Registrant believes that the marketplace is large enough to
absorb many competitor companies who may focus on ancillary aspects of the
PERFECT industry such as the development of hardware or of merchant sign
ups, rather than on the core business of the Registrant which is the
processing of transactions.

Increased competition from e-commerce could result in reduced margins
or loss of market share, any of which could harm both our retail and e-
commerce businesses.  Competition is likely to increase significantly as
new companies enter the market and current competitors expand their
services.  Many of the Registrant's present and potential competitors are
likely to enjoy substantial competitive advantages, including larger
numbers of users, more fully-developed e-commerce opportunities, larger
technical, production and editorial staffs, and substantially greater
financial, marketing, technical and other resources.  If the Registrant
does not compete effectively or if it experiences any pricing pressures,
reduced margins or loss of market share resulting from increased
competition, the Registrant's business could be adversely affected.

(h)  Unreliability of Internet Infrastructure.

If the Internet continues to experience increased numbers of users,
frequency of use or increased bandwidth requirements, the Internet
infrastructure may not be able to support these increased demands or
perform reliably. The Internet has experienced a variety of outages and
other delays as a result of damage to portions of its infrastructure, and
could face additional outages and delays in the future.  These outages and
delays could reduce the level of Internet usage and traffic.  In addition,
the Internet could lose its viability due to delays in the development or
adoption of new standards and protocols to handle increased levels of
activity.  If the Internet infrastructure is not adequately developed or
maintained, use of the Registrant website may be reduced.  Even if the
Internet infrastructure is adequately developed, and maintained, the
Registrant may incur substantial expenditures in order to adapt its
services and products to changing Internet technologies.  Such additional
expenses could severely harm the Registrant's financial results.

(i)  Transactional Security Concerns.

A significant barrier to Internet e-commerce is the secure
transmission of confidential information over public networks.  Any breach
in security could cause interruptions and have an adverse effect on the
Registrant's business.

(j)  Governmental Regulation of the Internet.

There are currently few laws that specifically regulate communications
or commerce on the Internet.  Laws and regulations may be adopted in the
future, however, that address issues including user privacy, pricing,
taxation and the characteristics and quality of products and services sold
over the Internet.  Possible future consumer legislation, regulations and
actions could cause additional expense, capital expenditures, restrictions
and delays in the activities undertaken in connection with the party
planning business, the extent of which cannot be predicted.  The exact
affect of such legislation cannot be predicted until it is in final form.

(k)  Influence of Other External Factors on Prospects for Registrant.

The industry of the Registrant in general is a speculative venture
necessarily involving some substantial risk. There is no certainty that the
expenditures to be made by the Registrant will result in a commercially
profitable business.  The marketability of its products will be affected by
numerous factors beyond the control of the Registrant.  These factors
include market fluctuations, and the general state of the economy (including
the rate of inflation, and local economic conditions), which can  affect
companies' spending.  Factors which leave less money in the hands of
potential customers of the Registrant will likely have an adverse effect on
the Registrant.  The exact effect of these factors cannot be accurately
predicted, but  the combination of these factors may result in the
Registrant not receiving an adequate return on invested capital.

(l)  Success of Registrant Dependent on Management.

The Registrant's success is dependent upon the hiring of key
administrative personnel.  None of the Registrant's officers, directors,
and key employees have an employment agreement with the Registrant (the
accounting manager does have an employment agreement with the Registrant);
therefore, there can be no assurance that these personnel will remain
employed by the Registrant after the termination of such agreements.
Should any of these individuals cease to be affiliated with the Registrant
for any reason before qualified replacements could be found, there could be
material adverse effects on the Registrant's business and prospects.  In
addition, management has no experience is managing companies in the same
business as the Registrant.

In addition, all decisions with respect to the management of the
Registrant will be made exclusively by the officers and directors of the
Registrant.  Investors will only have rights associated with minority
ownership interest rights to make decision which effect the Registrant.
The success of the Registrant, to a large extent, will depend on the
quality of the directors and officers of the Registrant.  Accordingly, no
person should invest in the shares unless he is willing to entrust all
aspects of the management of the Registrant to the officers and directors.

(m)  Control of the Registrant by Officers and Directors.

The Registrant's officers and directors beneficially own approximately
7% of the outstanding shares of the Registrant's common stock.  As a
result, such persons, acting together, have the ability to exercise
influence over all matters requiring stockholder approval.  Accordingly, it
may be difficult for the investors hereunder to effectuate control over the
affairs of the Registrant.  Therefore, it should be assumed that the
officers, directors, and principal common shareholders who control the
majority of voting rights will be able, by virtue of their stock holdings,
to control the affairs and policies of the Registrant.

(n)  Limitations on Liability, and Indemnification, of Directors and Officers.

The bylaws of the Registrant provide for indemnification of officer or
directors of the Registrant.  In addition, the Nevada Revised Statutes
provide for permissive indemnification of officers and directors and the
Registrant may provide indemnification under such provisions.  Any
limitation on the liability of any director, or indemnification of
directors, officer, or employees, could result in substantial expenditures
being made by the Registrant in covering any liability of such persons or
in indemnifying them.

(o)  Potential Conflicts of Interest Involving Management.

Some of the officers and directors have other interests to which they
devote time, either individually or through partnerships and corporations
in which they have an interest, hold an office, or serve on boards of
directors, and each will continue to do so notwithstanding the fact that
management time may be necessary to the business of the Registrant. As a
result, certain conflicts of interest may exist between the Registrant and
its officers and/or directors which may not be susceptible to resolution.

In addition, conflicts of interest may arise in the area of corporate
opportunities which cannot be resolved through arm's length negotiations.
All of the potential conflicts of interest will be resolved only through
exercise by the directors of such judgment as is consistent with their
fiduciary duties to the Registrant.  It is the intention of management, so
as to minimize any potential conflicts of interest, to present first to the
board of directors of the Registrant any proposed investments for its
valuation.

(p)  Non-Cumulative Voting

Holders of the shares are not entitled to accumulate their votes for
the election of directors or otherwise. Accordingly, the holders of a
majority of the shares present at a meeting of shareholders will be able to
elect all of the directors of the Registrant, and the minority shareholders
will not be able to elect a representative to the Registrant's board of
directors.

(q)  Absence of Cash Dividends

The board of directors does not anticipate paying cash dividends on
the shares for the foreseeable future and intends to retain any future
earnings to finance the growth of the Registrant's business. Payment of
dividends, if any, will depend, among other factors, on earnings, capital
requirements, and the general operating and financial condition of the
Registrant, and will be subject to legal limitations on the payment of
dividends out of paid-in capital.

(r)  No Assurance of Continued Public Trading Market; Risk of Low Priced
Securities.

The common stock of the Registrant is currently quoted on the Over the
Counter Bulletin Board; it was relisted on October 30, 2000 after trading
on the National Quotation Bureau's Pink Sheets since being delisted from
the Over the Counter Bulletin Board after the SEC trading suspension on
March 13, 2000.  In addition, the common stock is subject to the low-priced
security or so called "penny stock" rules that impose additional sales
practice requirements on broker-dealers who sell such securities.  The
Securities Enforcement and Penny Stock Reform Act of 1990 ("Reform Act")
requires additional disclosure in connection with any trades involving a
stock defined as a penny stock (generally, according to recent regulations
adopted by the U.S. Securities and Exchange Commission, any equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions), including the delivery, prior to any penny stock transaction,
of a disclosure schedule explaining the penny stock market and the risks
associated therewith.   The regulations governing low-priced or penny
stocks sometimes limit the ability of broker-dealers to sell the
Registrant's common stock and thus, ultimately, the ability of the
investors to sell their securities in the secondary market.

(s)  Effects of Failure to Maintain Market Makers.

If the Registrant is unable to maintain a National Association of
Securities Dealers, Inc. member broker/dealers as market makers after
relisting on the Bulletin Board, the liquidity of the common stock could
be impaired, not only in the number of shares of common stock which could
be bought and sold, but also through possible delays in the timing of
transactions, and lower prices for the common stock than might otherwise
prevail.  Furthermore, the lack of  market makers could result in persons
being unable to buy or sell shares of the common stock on any secondary
market.  There can be no assurance the Registrant will be able to maintain
such market makers.

(t)  Shares Eligible For Future Sale

All of the approximate 17,500,000 shares of common stock which are
currently held, directly or indirectly, by management have been issued in
reliance on the private placement exemption under the Securities Act of
1933.  Such shares will not be available for sale in the open market
without separate registration except in reliance upon Rule 144 under the
Securities Act of 1933.  In general, under Rule 144 a person (or persons
whose shares are aggregated) who has beneficially owned shares acquired in
a non-public transaction for at least one year, including persons who may
be deemed affiliates of the Registrant (as that term is defined under that
rule) would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding
shares of common stock, or the average weekly reported trading volume
during the four calendar weeks preceding such sale, provided that certain
current public information is then available.  If a substantial number of
the shares owned by these shareholders were sold pursuant to Rule 144 or a
registered offering, the market price of the common stock could be
adversely affected.

(u)  Potential Status as a Pseudo California Corporation.

Section 2115 of the California General Corporation Law subjects
certain foreign corporations doing business in California to various
substantive provisions of the California General Corporation Law in the
event that the average of its property, payroll and sales is more than 50%
in California and more than one-half of its outstanding voting securities
are held of record by persons residing in the State of California.
Currently, all of the sales by the Registrant come from sources outside the
State of California; however, this may change in the future.

Some of the substantive provisions include laws relating to annual
election of directors, removal of directors without cause, removal of
directors by court proceedings, indemnification of officers and directors,
directors standard of care and liability of directors for unlawful
distributions.  Section 2115 does not apply to any corporation which, among
other things, has outstanding securities designated as qualified for
trading as a national market security on NASDAQ if such corporation has at
least eight hundred holders of its equity securities as of the record date
of its most recent annual meeting of shareholders.  It is currently
anticipated that the Registrant will not be subject  to Section 2115 which,
in addition to other areas of the law, will subject the Registrant to
Section 708 of the California General Corporation Law which mandates that
shareholders have the right of cumulative voting at the election of directors.

Forward Looking Statements.

The foregoing Plan of Operation contains "forward looking statements"
within the meaning of Rule 175 under the Securities Act of 1933, as
amended, and Rule 3b-6 under the Securities Act of 1934, as amended,
including statements regarding, among other items, the Registrant's
business strategies, continued growth in the Registrant's markets,
projections, and anticipated trends in the Registrant's business and the
industry in which it operates.  The words "believe," "expect,"
"anticipate," "intends," "forecast," "project," and similar expressions
identify forward-looking statements.  These forward-looking statements are
based largely on the Registrant's expectations and are subject to a number
of risks and uncertainties, certain of which are beyond the Registrant's
control.  The Registrant cautions that these statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements, including, among
others, the following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in the market
price of ingredients used in the Registrant's products and the level of
expenses incurred in the Registrant's operations.  In light of these risks
and uncertainties, there can be no assurance that the forward-looking
information contained herein will in fact transpire or prove to be
accurate.  The Registrant disclaims any intent or obligation to update
"forward looking statements."

PART II.

ITEM 1.  LEGAL PROCEEDINGS.

Other than as stated below, the Registrant is not a party to any
material pending legal proceedings and, to the best of its knowledge, no
such action by or against the Registrant has been threatened.

Securities and Exchange Commission Action (March 12, 1999).

On March 12, 1999, the Securities and Exchange Commission ("SEC")
filed a complaint alleging the Registrant had failed to make available to
the investing public current and accurate information about its financial
condition and results of operations through the filing of periodic reports
as required by the Securities Exchange Act of 1934 (specifically, the Form
10-KSB for the 1997 and 1998 fiscal years, the Form 10-QSB for each of the
first three quarters of fiscal 1998, and the corresponding Notifications of
Late Filings (Form 12b-25)).  The SEC sought in this action to compel the
Registrant to file delinquent reports and enjoin the Registrant from
further violations of the reporting requirements.  The Registrant consented
to the entry of a final judgment granting the relief sought by the SEC.

Although this action has been concluded, since the permanent
injunction was entered the Registrant has been late with the following
reports:

Form 10-QSB for the quarter ended February 28, 1999 (due by April 29,
1999 because of the filing of a Form 12b-25) - filed with the SEC on
May 28, 1999.

Form 10-QSB for the quarter ended June 30, 1999 (due by August 14,
1999) - filed with the SEC on August 23, 1999 (due to an error in the
CIK code for the Registrant entered on the EDGAR electronic filing
system).

Form 10-QSB for the transition period ended December 31, 1998 (due by
July 5, 1999) - filed with the SEC on September 3, 1999.

Form 8-K to reflect a certain acquisition by the Registrant (due by
May 21, 1999) - filed with the SEC on November 15, 1999.

Form 8-K to reflect two acquisitions by the Registrant (due by
September 15, 1999) - filed with the SEC on November 16, 1999.

Form 10-KSB for the fiscal year ended December 31, 1999 (due by April
14, 2000) - filed with the SEC on May 9, 2000.

Form 10-QSB for the quarter ended March 31, 2000 (due by May 22,
2000).  The Form 10-QSB's for the quarters ended June 30, 2000 and
September 30, 2000 were timely filed.

Form 10-KSB for the fiscal year ended December 31, 2000 (due by April
16, 2001) - filed on April 25, 2001.

Form 10-QSB for the quarter ended March 31, 2001 (due by May 21, 2001)
- filed on May 22, 2001.

Securities and Exchange Commission Action (March 23, 2000).

In a complaint filed on March 23, 2000 (Securities and Exchange
Commission v. eConnect and Thomas S. Hughes, Civil Action No. CV 00 02959
AHM (C.D. Cal.)), the SEC alleged that since February 28, 2000, the
Registrant issued false and misleading press releases claiming: (1) the
Registrant and its joint venture partner had a unique licensing arrangement
with PalmPilot; and (2) a subsidiary of the Registrant had a strategic
alliance with a brokerage firm concerning a system that would permit cash
transactions over the Internet.  The complaint further alleges that the
press releases, which were disseminated through a wire service as well as
by postings on internet bulletin boards, caused a dramatic rise in the
price of the Registrant's stock from $1.39 on February 28 to a high of
$21.88 on March 9, 2000, on heavy trading volume.  The SEC suspended
trading in the Registrant's common stock on the Over the Counter Bulletin
Board on March 13 for a period of 10 trading days (trading resumed on the
Pink Sheets LLC on March 27, 2000).  The complaint alleges that despite the
trading suspension and the SEC's related investigation, the Registrant and
Mr. Hughes continued to issue false and misleading statements concerning
the Registrant's business opportunities.  In addition to the interim relief
granted, the Commission seeks a final judgment against the Registrant and
Mr. Hughes enjoining them from future violations of Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder (the anti-fraud provisions of that
act) and assessing civil penalties against them.

On March 24, 2000, a temporary restraining order was issued in the
above-entitled action prohibiting the Registrant and Mr. Hughes, from
committing violations of the antifraud provisions of the federal securities
laws.  The Registrant and Mr. Hughes consented to the temporary restraining
order.

On April 6, 2000, without admitting or denying the allegations
contained in said complaint, the Registrant and Mr. Hughes entered into a
settlement by consent that has resulted in the entry of permanent
injunctive relief.  The settlement agreement with the SEC was accepted and
a judgment of permanent injunction was entered by the Court on April 7,
2000.  The judgment that the Registrant and Mr. Hughes consented to
prohibits the Registrant and Mr. Hughes from taking any action or making
any statement, or failing to make any statement that would violate Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The court has yet to determine whether disgorgement, civil penalties or
other relief should be assessed against the Registrant and/or Mr. Hughes.

Shareholder Class Action Lawsuits.

Einhorn, et al. v. eConnect, Thomas S. Hughes, Jack M. Hall, Dianne Hewitt,
Anthony L. Hall, and Kevin J. Lewis, Case No. 00-02674 MMM (JWJx);

Eckstein, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-02700 DDP (CWx);

Bernstein, et al. v. eConnect, Inc., et al., Case No. 00-02703 FMC (BQRx);

Colangelo, et al. v. eConnect, Inc., et al., Case No. 00-02743 SVW (SHx);

Baron, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-02757 WJR (CTx);

Warstler, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-02758 R (SHx);

Prager, et al. v.  eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-02759 GHK (RCx);

Weisblum, et al. v. eConnect and Thomas S. Hughes, Case No. 00-02770 MRP
(CTx);
Mazda, et al. v. eConnect, et al., Case No. 00-02776 LGB (Mcx);

Pirraglia, et al. v. eConnect, et al., Case No. 00-02875 SVW (CWx);

Hershkop and Hershkop, et al. v. eConnect and Thomas S. Hughes, Case No.
00-03095 MRP (RNRx);

Bacun, et al. v. eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-03161 FMC (JWJx);

Fine, et al. v. eConnect, Inc. and Thomas Hughes, Case No. 00-03290 SVW
(BQRx);

Smith, et al. v. eConnect, Thomas Hughes, Case No. 00-03301 DT (Mcx);

Reimer, et al. v. eConnect, Thomas Hughes, Case No. 00-03405 JSL;

Tepper, et al. v. eConnect and Thomas S. Hughes, Case No. 00-03444 WJR
(CTx);

Bury, et al. v. eConnect, Thomas Hughes, Case No. 00-03446 ABC;

Villari, et al. v. eConnect, Thomas Hughes, Case No. 00-03447 LGB (SHx);

Ringel, et al. v.  eConnect, Inc. , Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-03591 RSWL (RNBx);

Massaro, et al. v. eConnect, Inc., Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-03671 DDP (MANx);

Gardner, et al. v. eConnect, Inc., Thomas S. Hughes, Jack M. Hall, Dianne
Hewitt, Anthony L. Hall, and Kevin J. Lewis, Case No. 00-03897 MMM (RZx);

Schneyer, et al. v. eConnect, Case No. CV-00-03783 MMM (JWJx);

Ginocchi, et al. v. eConnect, Case No. 00-04003 MMM (JWJx);

Matrisciani, et al. v. eConnect, Case No. 00-04181 MMM (JWJx);

Dutton, et al. v. eConnect, Case No. 00-04505 LGB (Ex);

Shaw, et al. v. eConnect, Case No. 00-04637 LGB (Ex);

Gowrie, et al. v. eConnect, Case No. 00-04686 LGB (Ex);

Belcher, et al. v. eConnect, Case No.00-04792 LGB (Ex);

Lively, et al. v. eConnect, Case No. 00-03112 MMM (JWJx);

Levine, et al. v. eConnect, Case No. 00-03649 MMM (JWJx); and

Berkowitz, et al. v. eConnect, Case No. 00-04152 MMM (JWJx).

The foregoing thirty-one actions were filed on various dates between
March 14, 2000 and early May 2000, inclusive, and are all pending in the
United States District Court for the Central District of California.  These
actions are brought by various putative classes of the purchasers of the
Registrant's common stock.  The putative classes alleged, none of which
have been certified, range from no earlier than November 18, 1999 through
March 13, 2000.  Plaintiffs in the various actions assert that the
Registrant and Thomas S. Hughes, as well as (in certain of the actions)
Jack M. Hall, Diane Hewitt, Anthony L. Hall, and Kevin J. Lewis, have
violated Section 10(b) of the Exchange Act (false or misleading statements
and omissions which deceived stock purchasers) and also Section 20(a) of
the Exchange Act (liability as a "controlling person" with respect to a
primary violation of securities laws).  The principal allegations concern
various alleged material misrepresentations and omissions which supposedly
made the Registrant's public statements on and after November 18, 1999
(and/or on and after November 23, 1999) false and misleading, thereby
artificially inflating the market in and for the Registrant's common stock.

No class was certified in connection with any of these actions.  All
cases have been combined into one case before the Honorable Margaret M.
Morrow, entitled In Re eConnect, Inc. Securities Litigation, Master File
No. 00-02674 MMM (JWJx).  Negotiations are underway regarding the
settlement of these actions.

Additionally, a shareholder of the Registrant named John P. Maloney,
filed an individual action for "securities fraud and misrepresentation"
against the Registrant and Mr. Hughes on May 12, 2000 in small claims court
in Torrance, California.  The Registrant subsequently removed the action to
the United States District Court for the Central District of California,
and requested that it be consolidated with In Re eConnect, Inc. Securities
Litigation.  However, on September 11, 2000, the Honorable Margaret M.
Morrow ruled that Mr. Maloney's action should be remanded to the state
small claims court.  Subsequently, Mr. Maloney's action was settled
amicably and dismissed.

The Registrant has reached a settlement in principle with the
plaintiffs, pursuant to which $350,000 was paid to plaintiffs' counsel.  A
warrants component of the settlement is still being finalized with
plaintiffs' counsel.  The Registrant anticipates that the settlement will
be negotiated in full by May 2001, and that the Court will approve the
settlement by or before June 2001.

Quantum Leap Litigation

On September 16, 1999, Quantum Leap Media, Inc. filed a complaint in
United States District Court, Central District of California against Greg
Maxwell (Case No. CZ 00-10279 HM).  This action alleged claims of fraud,
conversion and breach of contract against Maxwell in connection with
Maxwell's alleged misappropriation of intellectual property owned by
plaintiffs.  Subsequently, on October 20, 2000, Maxwell filed counterclaims
against plaintiffs and their directors, officers and shareholders for
breach of contract and fraud, among other things.  Among the parties named
as a counterclaim defendant was the Registrant, solely on account of its
alleged ownership of common stock of plaintiff PowerClick, Inc.
Subsequently, Maxwell amended his counterclaims on two consecutive
occasions, before the Registrant had an opportunity to test the legal
sufficiency of Maxwell's counterclaims by motion.  Then, on March 6, 2001,
the parties reached a binding settlement, with the Registrant paying
nothing to any party.

Employment Agreement - President/Chief Operating Officer.

On March 21, 2000, the Registrant consummated an amended employment
agreement with Steven Pazian for the position of President and Chief
Operating Officer for the Registrant (see Exhibit 10.41 to this Form 10-
KSB).  On April 17, 2000, the Registrant terminated this individual as
President and Chief Operating Officer of the Registrant.  Based upon the
amended employment agreement, the remaining salary for the term of this
agreement, will be due within 30 days upon the termination of this
individual if terminated for reasons other than good cause.  In addition,
through the date of termination, all of the granted stock options and
warrants will vest and be exercisable for their entire term.  Accordingly,
the termination of this individual, for reasons other than good cause, may
potentially expose the Registrant to incur a liability of approximately
$1,260,000 for the remaining portion of unpaid salary for the first,
second, third, and fourth years of this agreement.  Furthermore, the
termination may have accelerated the vesting of the granted stock options
and warrants consisting of 1,000,000 warrants exercisable at $1.00 per
share, 6,000,000 stock options exercisable at $0.40 per share, and
1,500,000 stock options exercisable at the lowest average daily trading
price of the Registrant's common stock within the first 90 days of the
executive's employment.

On March 21, 2001, Mr. Pazian filed a complaint for breach of contract
and specific performance in the Superior Court of the State of California,
County of Los Angeles seeking $1,260,000 in cash, as well as one million
Registrant warrants (at a basis of $0.40) and six million vested stock
options (at a strike price of $0.40) (Stephen Pazian v. eConnect, Inc.,
Case No. BC 247186).  The Registrant's management denies all liability
whatsoever to Mr. Pazian and intends to defend itself in this matter
vigorously.  Management of the Registrant cannot take any position at this
time as to the likely outcome of the matter.

Breach of Contract Action.

On September 5, 2000, Geoffrey N. Cornish filed a complaint Superior
Court of the State of California, County of Los Angeles for breach of an
oral contract, money owed, and fraud against the Registrant, Mr. Hughes and
Electronic Transactions & Technologies, alleging that plaintiff and the
Registrant entered into an oral contract whereby plaintiff was to perform
marketing and product development services for the Registrant (Geoffrey N.
Cornish v. eConnect, Inc., Thomas S. Hughes, and ET&T, Case No. NC028475).
Plaintiff claims that he is owed $128,589.90 plus interest by the
Registrant.  The Registrant, Mr. Hughes and ET&T deny all liability
whatsoever to plaintiff and will contest this matter vigorously.
Management of the Registrant cannot take any position at this time as to
the likely outcome of the matter.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Sales of Unregistered Securities.

The Registrant made the following sales of unregistered securities
during the three month period ended on March 31, 2001:

(1)  On January 5, 2001, the Registrant issued a warrant covering the
purchase of 1,000,000 shares of common stock, exercisable upon issuance at
$1.00 per share through June 30, 2002, to an individual in connection with
the repayment of a $60,000 loan (plus accrued interest) made to the
Registrant.

(2)  On January 17, 2001, the Registrant issued 3,000,000 shares of
common stock to Paul Egan in connection with completing the acquisition of
Top Sports, S.A. by the Registrant.

(3)  On January 16, 2001, the Registrant issued 1,800,000 shares of
common stock to Richard Epstein; on February 28, 2001, the Registrant
issued an additional 15,000,000 shares of common stock to Mr. Epstein.  A
total of 5,000,000 shares relate to satisfaction of a Registrant obligation
to Mr. Epstein totaling $983,475 at December 31, 2000.  The remaining
11,800,000 shares were issued in advance and has been recorded by the
Registrant as prepaid consulting services during this period approximating
$4,147,000.

(4)  On February 2, 2001, the Registrant issued 50,000 shares of
common stock and a warrant for the purchase of 50,000 shares of common
stock, exercisable upon issuance through June 30, 2002.  These shares and
warrant were issued in connection with a penalty in connection with the
non-payment of a loan to the Registrant.

(5)  On March 1, 2001, the Registrant issued 12,307,625 shares of
common stock purchased for cash under a common stock purchase agreement
with Alpha Venture Capital, Inc. at a price equal to 82% of the average
closing bid price for the five business days immediately following a  put
notice to the Registrant.

(6)  Between March 15, 2001 and March 23, 2001, the Registrant issued
a total of 1,225,000 shares of common stock to four individuals in exchange
for consulting services to be rendered to the Registrant (1,000,000 of
these shares were issued in error to two individuals and are in the
processing of being cancelled).

No commissions or fees were paid in connection with these sales.
These transactions were exempt from the registration requirements under the
Securities Act of 1933 based on Rule 506 of Regulation D, and similar
provisions under state securities laws and regulations.

Use Proceeds.

Not Applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

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

None.

ITEM 5.  OTHER INFORMATION.

(a)  In connection with a Regulation D Common Stock Private Equity Line
Subscription Agreement with Alpha Venture Capital, Inc., dated September
28, 1999, 6,600,882 of the shares sold under this agreement are being held
by Alpha for future advances on the Subscription Agreement.  Accordingly,
the 6,600,882 shares of the Registrant's common stock held by Alpha is
deemed unissued since no consideration has been given for such shares and
are not reflected as part of the outstanding shares of the Registrant's
common stock at March 31, 2001.

(b)  The number of issued and outstanding shares of common stock as of
March 31, 2001 as shown on the Form 10-KSB for the year ended December 31,
2000, and a recently filed Form SB-2/A, is 256,566,707.  This number is not
correct through a typographical error; the correct number is 253,566,707.

ITEM 6.  EXHBITS AND REPORTS ON FORM 8-K.

Exhibits.

Exhibits included or incorporated by reference herein are set forth in
the attached Exhibit Index.

Reports on Form 8-K.

There were no reports on Form 8-K filed during the first quarter of
the fiscal year covered by this Form 10-QSB

                                 SIGNATURE

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


                                                  eConnect


Dated: May 21, 2001                              By: /s/ Thomas S. Hughes
                                                 Thomas S. Hughes, President

                                    EXHIBIT INDEX

Exhibit                       Description
No.

2      Agreement and Plan of Merger, dated June 1, 1999 (incorporated by
       reference to Exhibit 2 of the Form 10-KSB filed on May 9, 2000).

3.1    Articles of Incorporation, March 8, 1999 (incorporated by
       reference to Exhibit 3.1 of the Form SB-2/A filed on July 22, 1999).

3.2    Certificate of Amendment of Articles of Incorporation, dated May
       25, 1999 (incorporated by reference to Exhibit 3.2 of the Form
       SB-2/A filed on July 22, 1999).

3.3    Certificate of Amendment of Articles of Incorporation, dated
       August 20, 1999 (incorporated by reference to Exhibit 3.3 of the
       Form SB-2/A filed on September 3, 1999).

3.4    Certificate of Amendment of Articles of Incorporation, dated
       November 20, 2000 (incorporated by reference to Exhibit 3.4 of
       the Form SB-2/A filed on March 8, 2001).

3.5    Bylaws, dated May 14, 1999 (incorporated by reference to Exhibit
       3.3 of the Form SB-2/A filed on July 22, 1999).

3.6    Amended and Restated Bylaws, dated September 15, 2000
      (incorporated by reference to Exhibit 3.5 of the Form 10-QSB
       filed on November 14, 2000).

4.1    Addendum to Common Stock Purchase Agreement between the
       Registrant and Alpha Venture Capital, Inc., dated February 13,
       2001 (incorporated by reference to Exhibit 4.78 of the Form SB-
       2/A filed on May 2, 2001).

4.2    Line of Credit Agreement between the Registrant and Alliance
       Equities, dated March 5, 2001 (incorporated by reference to
       Exhibit 4.79 of the Form SB-2/A filed on May 2, 2001).

4.3    Debenture issued by the Registrant to Richard Epstein, dated
       March 20, 2001 (incorporated by reference to Exhibit 4.80 of the
       Form SB-2/A filed on May 2, 2001).

4.4    Amended and Restated Non-Employee Directors and Consultants
       Retainer Stock Plan (Amendment No. 4), dated April 27, 2001
      (incorporated by reference to Exhibit 4.1 of the Form S-8 filed
       on May 2, 2001).

4.5    Consulting Services Agreement between the Registrant and Francis
       Mecoli, dated March 19, 2001 (incorporated by reference to
       Exhibit 4.2 of the Form S-8 filed on May 2, 2001).

4.6    Consulting Services Agreement between the Registrant and William
       West, dated March 20, 2001 (incorporated by reference to Exhibit
       4.3 of the Form S-8 filed on May 2, 2001).

4.7    Consulting Services Agreement between the Registrant and Marc
       Tow, dated March 20, 2001 (incorporated by reference to Exhibit
       4.4 of the Form S-8 filed on May 2, 2001).

4.8    Consulting Services Agreement between the Registrant and Felix
       Campos, dated March 20, 2001 (incorporated by reference to
       Exhibit 4.5 of the Form S-8 filed on May 2, 2001).

4.9    Consulting Services Agreement between the Registrant and Mark
       Christ, dated March 20, 2001 (incorporated by reference to
       Exhibit 4.6 of the Form S-8 filed on May 2, 2001).

4.10   Consulting Services Agreement between the Registrant and Thomas
       A. Sandelier, dated March 20, 2001 (incorporated by reference to
       Exhibit 4.7 of the Form S-8 filed on May 2, 2001).

4.11   Consulting Services Agreement between the Registrant and Prince
       Saud Al-Faisal, dated March 20, 2001 (incorporated by reference
       to Exhibit 4.8 of the Form S-8 filed on May 2, 2001).

4.12   Consulting Services Agreement between the Registrant and Ralph
       DiFelice, dated March 20, 2001 (incorporated by reference to
       Exhibit 4.9 of the Form S-8 filed on May 2, 2001).

10.1   Letter of Intent between the Registrant and eConnect Caribbean.
       S.A., dated March 12, 2001 (incorporated by reference to Exhibit
       10.54 of the Form SB-2/A filed on May 2, 2001).

10.2   Loan Agreement between the Registrant and Perro Corp., dated
       March 26, 2001  (see below).

16.1   Letter on change in certifying accountant (incorporated by
       reference to Exhibit 16 of the Form 8-K filed on July 23, 1999).

16.2   Letter on change in certifying accountant (incorporated by
       reference to Exhibit 16 of the Form 8-K filed on March 15, 2000).

21     Subsidiaries of the Registrant (incorporated by reference to
       Exhibit 21 of the Form SB-2 POS filed on September 12, 2000).

                                   EX-10.2

                                LOAN AGREEMENT


This Agreement is made and entered into this 26th day is March 2001 by
and between PERRO CORP, a Nevada Corporation, whose address is 4413
Matilija Avenue, Sherman Oaks, CA 91423 (hereinafter referred to as
"PERRO") and ECONNECT, Inc., a publicly held corporation organized under
and pursuant to the laws of the State of Nevada with principal offices
located at 2500 Via Cabrillo Marina, Suite 112, San Pedro, CA 90731
(hereinafter referred to as "ECNC").

WHEREAS, PERRO is in the business of assisting funding of real estate-based
business loans directly and through associated brokers, and

WHEREAS, ECNC has a Seven Million Dollar credit line that becomes
effective when its SB-2 is approved by the SEC (estimated to be approved
within 10 days of this Agreement), and

WHEREAS, ECNC is in need of a bridge loan to file an SEC required SB-2
and an annual 10K, and

WHEREAS, ECNC needs additional consulting services and funds to
complete the development of its CASH-PAD technology and its introduction
into the Internet merchants market.

NOW, THEREFORE, for and in consideration of the mutual promises and
considerations herein contained, the Parties agree as follows:

1.  PERRO will lend ECNC the sum of ONE HUNDRED THOUSAND DOLLARS
($100,000.00) for a period not to exceed 90 days from the date of this
Agreement.  Said funds are to be personally guaranteed by Tom Hughes
and ECNC.  The interest rate on the loan is 12% APR.  This loan can be
repaid before the due date without penalty at the option of ECNC.

2.  ECNC agrees to set aside 2,000,000 shares of free trading Company
stock that can be purchased directly from PERRO or designee from the
date of the SB-2 closing and up to 120 days thereafter at 15% discount
on the preceding 5-day trading stock closing average.

3.  ECNC will also secure the loan with 500,000 shares of free trading
Company stock within 5 days of the SB-2 closing and place said shares
into an escrow account in favor of PERRO.

4.  At the end of the 90-day period or sooner, the loan may be repaid with
the stock in the escrow account or by cash in the amount of
$100,000.00 plus interest at the option of ECNC.  If payment is made
in cash, the stock is released back to ECNC Treasury.  An additional
payment of $22,000.00 for consultant services will be made to PERRO by
ECNC at the same time the loan is repaid.

5.  ECNC will provide a Board of Directors resolution to complete the
Acquisition of the assets of Broadband Video in accordance with the
signed Asset Purchase Agreement under the following conditions:

(a)  Zoom-TV technology must be proven and tested by tech officers of ECNC.

(b)  Zoom-TV technology must be compared to competition as still good product.

(c)  Zoom-TV technology business model is determined to be viable and
profitable.

6.  ECNC will provide a Board of Directors resolution and a letter to its
stock transfer agent to issue upon the approval of the SB-2, 3,600,000
free trading stock shares to the shareholders of Broadband Video,
based on ECNC's cancellation fee if not purchasing Broadband Video.

7.  In the event that ECNC elects to purchase Broadband Video then the
full terms of the Assets Purchase Agreement will be honored.

8.  PERRO will arrange for the consulting services to be provided at the
Cost to ECNC via the purchase of 500,000 shares from the date of the
SB-2 closing and up to 120 days thereafter at 15% discount on the
Closing 5 day trading average.  NGN, a provider computer software and
integration support, and Throne Partners, a provider of multitude
contact access to Internet merchants, will provide these consulting services.

9.  The provisions of this Agreement insure to the benefit of and be
binding upon the Parties hereto, and their respective heirs, legatees,
personal representatives, successor and assigns.

10.  The Parties agree to execute and deliver forthwith such additional
documents and instruments as shall be reasonably necessary or
desirable to carry out or more effectively implement the provisions of
this Agreement.

11.  This Agreement contains the entire understanding of the Parties and
supersedes any prior or written agreement between them with respect to
the subject matter contained herein.  There are no representations,
agreements, arrangements or understandings, oral or written, which are
not fully expressed herein.

12.  This Agreement is subject to amendment or modification only in writing
and only with the consent of both parties.

13.  The laws of the State of California hereto shall govern all questions
with respect to the construction of this Agreement and the rights and
liabilities of the parties.

14.  If any legal action is necessary to enforce the terms of this
Agreement, such action shall be brought within the county of Los
Angeles, State of California, and the prevailing party shall be
entitled to reasonable attorney's fee's and costs, in addition to any
other relief to which he may be entitled

15.  In the event any of the provisions of this Agreement are determined to
be invalid, or unenforceable, the same shall be deemed servable from
the remainder of this Agreement, and shall not cause the invalidity or
unenforceability of this Agreement.

IN WITNESS WHEREFORE, the Parties hereto executed this Agreement as of the
day and year first above written.

ECONNECT                                       PERRO CORP.


By: /s/  Thomas Hughes                         By: /s/  Jerome J. Perrone
Thomas Hughes                                  Jerome J. Perrone
CEO                                            President