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


(Mark One)

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

     For the quarterly period ended June 30, 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 0-27215

                              PAWNBROKER.COM, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                    33-0794473
   (State or Other Jurisdiction             (I.R.S. Employer Identification No.)
 of Incorporation or Organization)

                              85 Keystone, Suite A
                                  Reno, Nevada
                                      89503
                    (Address of principal executive offices)

                                 (775) 332-5048
              (Registrant's Telephone Number, Including Area Code)

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

  The number of outstanding common shares, no par value, of the Registrant at:
                          September 4, 2001: 5,027,870


<PAGE>

                              PAWNBROKER.COM, INC.

                             INDEX TO THE FORM 10-Q
                  For the quarterly period ended June 30, 2001

                                                                            Page
                                                                            ----

PART I -  FINANCIAL INFORMATION................................................1

  ITEM 1. FINANCIAL STATEMENTS.................................................1

          CONSOLIDATED BALANCE SHEETS .........................................1
          CONSOLIDATED STATEMENTS OF OPERATIONS ...............................2
          CONSOLIDATED STATEMENTS OF CASH FLOWS ...............................3
          CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ......................4
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................5

  ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS...............................17

  ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK...........28

Part II   OTHER INFORMATION...................................................28

  ITEM 1. LEGAL PROCEEDINGS...................................................28

  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...................................................30

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

SIGNATURES....................................................................35






<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)

<TABLE>
===============================================================================================================
                                                                                     June 30,      December 31,
                                                                                         2001              2000
---------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>               <C>
ASSETS
Current
    Cash and cash equivalents                                                    $          -      $   231,763
    Due from related parties (Note 12)                                                 43,633                -
    Prepaid expenses                                                                        -              754
                                                                                 -------------     ------------
    Total current assets                                                               43,633          232,517
Deposits                                                                                    -            1,695
Capital assets (Note 4)                                                               198,104          615,350
Domain name (Note 5)                                                                   38,195           59,029
                                                                                 -------------     ------------
Total assets                                                                     $    279,932     $    908,591
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Bank indebtedness                                                            $     37,102     $          -
    Accounts payable and accrued liabilities                                          557,025          815,727
    Notes payable (Note 6)                                                            120,000        1,500,000
                                                                                 -------------     ------------
    Total current liabilities                                                         714,127        2,315,727
Notes payable (Note 6)                                                                 85,000                -
                                                                                 -------------     ------------
                                                                                      799,127        2,315,727
Stockholders' equity
    Capital stock (Note 7)
       Authorized
              10,000,000  preferred shares with a par value of $0.0001
              50,000,000  common shares with a par value of $0.0001
       Issued and outstanding
          June 30, 2001 - 5,080,357 common shares
          December 31, 2000 - 2,070,357 common shares                                     508              207
    Additional paid-in capital                                                      9,297,400        7,634,597
    Deficit accumulated during the development stage                               (9,817,103)      (9,041,940)
                                                                                 -------------     ------------
    Total stockholders' equity                                                       (519,195)      (1,407,136)
                                                                                 -------------     ------------
Total liabilities and stockholders' equity                                       $    279,932     $    908,591
===============================================================================================================
</TABLE>
History and organization of the Company (Note 1)
Commitments (Note 11)
Subsequent event (Note 14)


                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       1
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)



<TABLE>
==============================================================================================================================
                                            Cumulative
                                          Amounts From
                                           February 5,       Three Month       Three Month        Six Month         Six Month
                                               1999 to      Period Ended      Period Ended     Period Ended      Period Ended
                                              June 30,          June 30,          June 30,         June 30,          June 30,
                                                  2001              2001              2000             2001              2000
------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                <C>               <C>               <C>              <C>
OPERATING EXPENSES
  Amortization                           $     572,268      $    47,031       $   104,505       $   109,676      $    59,463
  Contract services                            787,066                -            65,810                 -          383,841
  Consulting                                   555,096           11,748            52,773            14,105          420,505
  Finders fee                                   65,000                -            65,000                 -           65,000
  General and administrative                 2,374,115           19,953           348,492            31,804        1,435,420
  Marketing and related expenses               773,158          (12,554)          467,681           (12,554)         554,752
  Professional fees                            710,207           74,024           206,807           102,193          478,748
  Recovery of operating expenses              (158,993)          59,436                 -          (158,993)               -
  Rent                                         573,272          130,218            78,052           165,262          146,190
  Salary and wages                           2,123,384          114,093           494,282           160,440        1,064,382
  Stock-based compensation                     378,685                -                 -                 -           93,617
  Telephone                                    354,089              576           183,374            23,202          200,641
  Travel and related                           339,457           30,149           215,835            39,770          238,245
                                         --------------     ------------      ------------      ------------     ------------
                                            (9,446,804)        (474,674)       (2,282,611)         (474,905)      (5,140,804)
                                         --------------     ------------      ------------      ------------     ------------
OTHER ITEMS
  Interest expense                            (202,585)         (12,149)                -           (55,649)               -
  Interest income                               79,943              417             5,452             3,048           18,170
  Loss on disposal of
     capital assets                           (176,983)           3,163                 -          (176,983)               -
  Write-off of capital assets                  (70,674)              -                  -           (70,674)               -
                                         --------------     ------------      ------------      ------------     ------------
                                              (370,299)          (8,569)            5,452          (300,258)          18,170
                                         --------------     ------------      ------------      ------------     ------------
Loss for the period                      $  (9,817,103)     $  (483,243)      $(2,277,159)      $  (775,163)     $(5,122,634)
==============================================================================================================================
Basic and diluted loss per
  common share (Note 3)                                     $     (0.11)      $     (1.32)      $     (0.23)     $     (2.94)
==============================================================================================================================
Weighted average number of
  shares of common stock
  outstanding                                                 4,547,257         1,724,697         3,312,291        1,740,674
==============================================================================================================================
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       2
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


<TABLE>
==============================================================================================================================
                                                                                Cumulative
                                                                              Amounts From
                                                                               February 5,        Six Month         Six Month
                                                                                   1999 to     Period Ended      Period Ended
                                                                                  June 30,         June 30,          June 30,
                                                                                      2001             2001              2000
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Loss for the period                                                      $ (9,817,103)     $   (775,163)     $ (5,122,634)
    Items not affecting cash:
       Amortization                                                               572,268           109,676            59,463
       Stock-based compensation                                                   378,685                 -            93,617
       Loss on disposal of assets                                                 176,983           176,983                 -
       Recovery of operating expenses                                            (158,993)         (158,993)                -
       Interest accrued on notes payable                                          102,500                 -                 -
       Write-off of capital assets                                                 70,674            70,674                 -

    Net change in non-cash working capital items:
       Increase in receivable                                                      80,500                 -                 -
       Increase in due from related parties                                       (34,633)          (34,633)                -
       (Increase) decrease in prepaid expenses                                          -               754            (2,912)
       Increase in accounts payable and accrued liabilities                       875,733            54,394         1,387,838
                                                                             -------------     -------------     -------------
    Net cash used in operating activities                                      (7,753,386)         (556,308)       (3,584,628)
                                                                             -------------     -------------     -------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of capital assets                                                 (1,011,971)                -          (133,420)
    Purchase of domain name                                                      (125,000)                -                 -
    Acquisition of cash on purchase of subsidiary                                   8,007                 -                 -
    Proceeds from disposal of capital assets                                       80,748            80,748                 -
    Increase (decrease) in deposits                                                     -             1,695          (224,699)
                                                                             -------------     -------------     -------------
    Net cash provided by (used in) investing activities                        (1,048,216)           82,443          (358,119)
                                                                             -------------     -------------     -------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from convertible debenture                                           500,000                 -           500,000
    Capital lease obligations                                                           -                 -           (55,776)
    Proceeds from notes payable                                                 1,705,000           205,000         1,000,000
    Proceeds from issuance of common stock                                      6,559,500                 -         1,501,500
                                                                             -------------     -------------     -------------
    Net cash provided by financing activities                                   8,764,500           205,000         2,945,724
                                                                             -------------     -------------     -------------
Change in cash position for the period                                            (37,102)         (268,865)         (997,023)

Cash and cash equivalents, beginning of period                                          -           231,763           917,367
                                                                             -------------     -------------     -------------
Cash and cash equivalents, end of period                                     $    (37,102)     $    (37,102)     $    (79,656)
==============================================================================================================================
</TABLE>

Supplemental disclosure with respect to cash flows (Note 10)


                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       3
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)



<TABLE>
=============================================================================================================================
                                                                                                    Deficit
                                                                                                Accumulated
                                                            Common Stock         Additional      During the            Total
                                                    --------------------------      Paid-in     Development     Stockholders'
                                                     Shares          Amount         Capital           Stage           Equity
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>           <C>             <C>              <C>
Balance, February 5, 1999                                  -       $      -     $         -     $         -      $         -

  Common stock issued for cash                       850,000             85          80,415               -           80,500
                                                    ---------      ----------   ------------    -------------    -----------

Balance, March 31, 1999                              850,000             85          80,415               -           80,500

  Capital stock of Pawnbroker.com, Inc.
    at April 6, 1999                                 112,475             11          26,257               -           26,268
  Deficit of  Pawnbroker.com, Inc. at
    April 6, 1999                                          -              -         (23,261)              -          (23,261)
  Common stock issued pursuant to the
    acquisition of Pawnbroker.com, Inc.
    (Nevada)                                         624,000             62               -               -               62
  Common stock issued for cash                       130,000             13       3,002,987               -        3,003,000
  Share cancellation                                 (25,000)            (3)           (247)              -             (250)
  Common stock issued on exercise of
    share purchase warrants                           65,000              7       1,501,493               -        1,501,500
  Stock-based compensation for options
    issued to consultants and non-employees                -              -          93,617               -           93,617
  Loss for the year                                        -              -               -      (4,706,109)      (4,706,109)
                                                    ---------      ----------   ------------    -------------    -----------
Balance, March 31, 2000                            1,756,475            175       4,681,261      (4,706,109)         (24,673)

  Common stock issued for conversion of
    convertible debenture                             26,882              3         499,997               -          500,000
  Common stock issued for cash                       100,000             10       1,999,990               -        2,000,000
  Common stock issued on exercise of
    stock options                                    187,000             19         168,281               -         168,300
  Stock-based compensation for options
    issued to consultants and non-employees                -              -         285,068               -         285,068
  Loss for the period                                      -              -               -      (4,335,831)     (4,335,831)
                                                    ---------      ----------   ------------    -------------    -----------
Balance, December 31, 2000                         2,070,357            207       7,634,597      (9,041,940)     (1,407,136)

  Common stock issued on exercise of
    stock options                                     10,000              1           8,999               -           9,000
  Common stock issued to settle debt               3,000,000            300       1,653,804               -       1,654,104
  Loss for the period                                      -              -               -        (775,163)       (775,163)
                                                    ---------      ----------   ------------    -------------    -----------

Balance, June 30, 2001                             5,080,357       $    508     $ 9,297,400     $(9,817,103)     $ (519,195)
============================================================================================================================
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


                                       4
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================

1.   HISTORY AND ORGANIZATION OF THE COMPANY

     Digital  Sign  Corporation  ("the  Company),  a Delaware  corporation,  was
     incorporated on February 13, 1998. On February 14, 1998, the Company issued
     2,500  common  shares at par value for all of the  issued  and  outstanding
     shares of Digital Signs, Inc. On April 6, 1999, the Company acquired all of
     the issued and  outstanding  shares of Eriko  Internet Inc. in exchange for
     850,000 common shares of the Company.  Effective June 14, 1999, the Company
     acquired all of the issued and outstanding shares of  Pawnbroker.com,  Inc.
     (a Nevada  corporation),  in  exchange  for  624,000  common  shares of the
     Company.  On June 10, 1999, the Company changed its name to Pawnbroker.com,
     Inc.

     These  financial  statements  contain  the  financial  statements  of Eriko
     Internet Inc.  ("Eriko"),  Pawnbroker.com,  Inc.,  Digital Signs,  Inc. and
     Pawnbroker.com,  Inc. (a Nevada  Corporation)  presented on a  consolidated
     basis. On April 6, 1999,  Pawnbroker.com,  Inc.  acquired all of the issued
     and outstanding share capital of Eriko by issuing 850,000 common shares. As
     a result of the share exchange, control of the combined companies passed to
     the former  shareholders  of Eriko.  This type of share  exchange  has been
     accounted for as a capital transaction accompanied by a recapitalization of
     Eriko.   Recapitalization  accounting  results  in  consolidated  financial
     statements  being issued under the name of  Pawnbroker.com,  Inc.,  but are
     considered a continuation of Eriko. As a result,  the financial  statements
     present the consolidated financial position of the companies as at June 30,
     2001 and December 31, 2000 and the results of  operations  of Eriko for the
     period ended June 30, 2001 and the results of operations of Pawnbroker.com,
     Inc.,  (Nevada)  and  Digital  Signs Inc.  from their  respective  dates of
     acquisition. The number of shares outstanding at June 30, 2001 and December
     31, 2000 as presented are those of Pawnbroker.com, Inc.

     The  accompanying  financial  statements  have been prepared by the Company
     without audit. In the opinion of management, all adjustments (which include
     only  normal  recurring   adjustments)  necessary  to  present  fairly  the
     financial position, results of operations,  changes in stockholders' equity
     and cash  flows at June 30,  2001 and for the  period  then ended have been
     made.  These financial  statements  should be read in conjunction  with the
     audited financial statements of the Company for the year ended December 31,
     2000.  The results of operations for the period ended June 30, 2001 are not
     necessarily  indicative  of the results to be expected  for the year ending
     December 31, 2001.

     The Company is in the process of restructuring  its business and developing
     a new  business  plan and  strategy  under  which  it  intends  to  provide
     financial  services by offering secured loans to pawnbrokers and to operate
     a web site that provides pawnbroker industry specific  business-to-business
     services.  The Company is in the process of  finalizing a business plan and
     attempting to restructure its liabilities to allow it to raise financing to
     fund the  development  of its  planned  business  and its  working  capital
     requirements.  The  Company  currently  does  not have  sufficient  working
     capital to  finance  its  planned  business  strategy  and may be unable to
     continue as a going concern.


2.   GOING CONCERN

     The Company's  consolidated  financial  statements  are prepared  using the
     generally  accepted  accounting  principles  applicable to a going concern,
     which contemplates the realization of assets and liquidation of liabilities
     in the normal  course of business.  However,  as shown in the  accompanying
     consolidated  financial  statements,  the Company has sustained substantial
     losses  from  operations  since  inception  and has no  current  source  of
     revenue. In addition,  the Company has used, rather than provided,  cash in
     its  operations.  The Company has  utilized all of its  available  funding.
     Without  realization  of additional  capital,  it would be unlikely for the
     Company to continue as a going  concern.  It is  management's  plan in this
     regard to obtain additional working capital through equity financings.



                                       5
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================

2.   GOING CONCERN (cont'd...)

     The  consolidated  financial  statements  do not  include  any  adjustments
     relating to the recoverability and classification of recorded asset amounts
     and  classification  of  liabilities  that  might be  necessary  should the
     Company be unable to continue in existence.

     On March 1, 2001, the Company terminated facilitating transactions on their
     website and suspended operations.

<TABLE>
     ============================================================================================
                                                                    June 30,        December 31,
                                                                        2001                2000
     --------------------------------------------------------------------------------------------
     <S>                                                        <C>              <C>
     Deficit accumulated during the development stage           $ (9,817,103)    $   (9,041,940)
     Working capital (deficiency)                                   (670,494)        (2,083,210)
     ============================================================================================
</TABLE>


3.   SIGNIFICANT ACCOUNTING POLICIES

     Principles of consolidation

     These  consolidated  financial  statements  include  Pawnbroker.com,   Inc.
     (formerly  Digital Sign  Corporation)  and its  wholly-owned  subsidiaries,
     Digital Signs, Inc., Eriko Internet Inc. and Pawnbroker.com, Inc. (a Nevada
     corporation).  All significant inter-company balances and transactions have
     been eliminated upon consolidation.

     Revenue recognition

     The Company  recognizes revenue from transaction fees charged to pawn shops
     when  completion  of the  sale of the  related  item has  occurred  and the
     Company  has  received  its  portion of the sales  proceeds  released  from
     escrow.

     Use of estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that  affect the  reported  amount of assets and  liabilities,
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amount of revenues  and  expenses
     during the year. Actual results could differ from these estimates.

     Cash and cash equivalents

     The Company  considers all  investments  with a maturity of three months or
     less to be cash equivalents.



                                       6
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


3.   SIGNIFICANT ACCOUNTING POLICIES (cont'd...)

     Loss per share

     Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share"
     requires  basic  and  diluted  earnings  per share to be  presented.  Basic
     earnings  per share is  computed  by dividing  income  available  to common
     shareholders  by the  weighted  average  number of  shares of common  stock
     outstanding  during  the  period.  Diluted  earnings  per share  takes into
     consideration  shares of common  stock  outstanding  (computed  under basic
     earnings per share) and potentially dilutive shares of common stock.

     Income taxes

     Income  taxes are  provided  in  accordance  with  Statement  of  Financial
     Accounting Standards No. 109, "Accounting for Income Taxes". A deferred tax
     asset or  liability  is  recorded  for all  temporary  differences  between
     financial and tax reporting and net operating loss carryforwards.  Deferred
     tax  expenses  (benefit)  results  from the net  change  during the year of
     deferred tax assets and liabilities.

     Deferred  tax assets are  reduced by a  valuation  allowance  when,  in the
     opinion of management,  it is more likely than not that some portion or all
     of the deferred  tax assets will not be  realized.  Deferred tax assets and
     liabilities  are  adjusted for the effects of changes in tax laws and rates
     on the date of enactment.

     Accounting for derivative instruments and hedging activities

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
     Statement  of  Financial   Accounting   Standards  No.  133  ("SFAS  133"),
     "Accounting  for  Derivative  Instruments  and  Hedging  Activities"  which
     establishes  accounting and reporting standards for derivative  instruments
     and for hedging  activities.  SFAS 133 is effective for all fiscal quarters
     of fiscal  years  beginning  after June 15,  1999.  In June 1999,  the FASB
     issued SFAS 137 to defer the effective date of SFAS 133 to fiscal  quarters
     of fiscal  years  beginning  after June 15,  2000.  In June 2000,  the FASB
     issued SFAS No. 138,  which is a  significant  amendment  to SFAS 133.  The
     Company does not anticipate  that the adoption of the statement will have a
     significant impact on its financial statements.

     Stock-based compensation

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
     Stock-Based  Compensation,"  encourages, but does not require, companies to
     record  compensation cost for stock-based  employee  compensation  plans at
     fair value. The Company has chosen to account for stock-based  compensation
     using  Accounting  Principles  Board Opinion No. 25,  "Accounting for Stock
     Issued to Employees."  Accordingly  compensation  cost for stock options is
     measured as the excess, if any, of the quoted market price of the Company's
     stock at the date of the grant over the amount an  employee  is required to
     pay for the stock.

     The Company accounts for stock-based  compensation  issued to non-employees
     in accordance  with the provisions of SFAS 123 and the Emerging Issues Task
     Force consensus in Issue No. 96-18 ("EITF  96-18"),  "Accounting for Equity
     Instruments  that are Issued to Other Than  Employees  for  Acquiring or in
     Conjunction with Selling, Goods or Services".



                                       7
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


3.   SIGNIFICANT ACCOUNTING POLICIES (cont'd...)

     Comprehensive income

     The Company has adopted Statement of Financial Accounting Standards No. 130
     ("SFAS 130"), "Reporting  Comprehensive Income". This statement establishes
     rules for the reporting of  comprehensive  income and its  components.  The
     adoption  of SFAS 130 had no impact on total  stockholders'  deficit  as of
     June 30, 2001.

     Software development

     The  Company  has  adopted   Statement  of  Position   98-1  ("SOP  98-1"),
     "Accounting  for the Costs of Computer  Software  Developed or Obtained for
     Internal Use", as its accounting policy for internally  developed  computer
     software  costs.  Under SOP 98-1,  computer  software costs incurred in the
     preliminary  development stage are expensed as incurred.  Computer software
     costs incurred during the application development stage are capitalized and
     amortized over the software's estimated useful life.

     Capital assets

     Capital assets will be recorded at cost less accumulated amortization.  The
     cost of capital assets is amortized using the straight-line method over the
     following estimated useful lives of the related assets:

          Furniture and fixtures                               5 years
          Computer equipment                                   3 years
          Computer software                                    1.5 years
          Leasehold improvements                               2 years

     Domain name

     The cost of domain name rights will be amortized over 3 years from the date
     of commencement of operations.

     Advertising costs

     The Company recognizes advertising expenses in accordance with Statement of
     Position  98-7,  "Reporting on  Advertising  Costs".  As such,  the Company
     expenses  the cost of  advertising  in the period in which the  advertising
     space or airtime is used.

     Financial instruments

     The Company's financial  instruments consists of cash and cash equivalents,
     due from related parties, deposits, bank indebtedness, accounts payable and
     accrued  liabilities  and notes  payable.  Unless  otherwise  noted,  it is
     management's  opinion  that  the  Company  is not  exposed  to  significant
     interest,   currency  or  credit  risks   arising   from  these   financial
     instruments.  The fair  value of these  financial  instruments  approximate
     their carry values, unless otherwise noted.



                                       8
<PAGE>

 PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


4.   CAPITAL ASSETS

<TABLE>
     =================================================================================================
                                                                                  Net Book Value
                                                                         -----------------------------
                                                          Accumulated        June 30,     December 31,
                                                Cost     Amortization            2001             2000
     -------------------------------------------------------------------------------------------------
     <S>                                 <C>            <C>               <C>              <C>
     Furniture and fixtures              $    64,970    $     (24,037)    $     40,933     $    47,432
     Computer equipment                      224,994          (81,357)         143,637         502,986
     Computer software                       275,381         (264,714)          10,667          61,066
     Leasehold improvements                    4,990           (2,123)           2,867           3,866
                                         ----- ------   --------------    ------------     -----------
                                         $   570,335    $    (372,231)    $    198,104     $   615,350
     =================================================================================================
</TABLE>


5.   DOMAIN NAME

     ==========================================================================
                                                      June 30,     December 31,
                                                          2001             2000
     --------------------------------------------------------------------------
     Domain name                                  $   125,000      $   125,000
     Less:  Accumulated amortization                  (86,805)         (65,971)
                                                  ------------     ------------
     Net book value                               $    38,195      $    59,029
     ==========================================================================


6.   NOTES PAYABLE

<TABLE>
     ==================================================================================================================
                                                                                            June 30,     December 31,
                                                                                                2001             2000
     ------------------------------------------------------------------------------------------------------------------
     <S>                                                                                  <C>            <C>
     Line of credit from BWI Avionics  Ltd., bearing interest at 12% per annum,
       due and payable on May 1, 2001.  The note is personally guaranteed by
       two directors of the Company up to $500,000 each.  During the period
       ended June 30, 2001, the Company converted the debt into 2,000,000
       common shares of the Company.                                                     $        -      $   1,000,000

     Promissory note from Granite Communications Inc., bearing interest at 10%
       per annum, payable on July 15, 2001.  During the period ended June 30,
       2001, the Company converted the debt into 600,000 common shares of the
       Company.
                                                                                                  -            300,000
</TABLE>

                                  - continued -


                                       9
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


6.   NOTES PAYABLE (cont'd.....)


<TABLE>
     ==================================================================================================================
                                                                                            June 30,     December 31,
                                                                                                2001             2000
     ------------------------------------------------------------------------------------------------------------------
     <S>                                                                                  <C>            <C>
Continued.....

     Loan payable from Eurogrowth Investments Ltd., bearing interest at 12% per
       annum, payable on July 15, 2001.  During the period ended June 30, 2001,
       the Company converted the debt into 400,000 common shares of the Company.
                                                                                                  -            200,000

     Promissory note from Pacific Pawnbroker, non-interest bearing, unsecured
       and payable on demand.                                                                20,000                  -

     Promissory note, bearing interest at 18% per annum, unsecured, and payable
       on December 31, 2003.                                                                 50,000                  -

     Promissory note, bearing interest at 18% per annum, unsecured, and payable
       on October 19, 2001.                                                                 100,000                  -

     Convertible debentures from various parties, bearing interest at 18% per
       annum, unsecured, and payable on December 31, 2003.                                   35,000                  -
                                                                                        ------------     -------------
                                                                                            205,000      $   1,500,000
     Less:  current portion                                                                (120,000)        (1,500,000)
                                                                                        ------------     -------------
                                                                                         $   85,000      $           -
==================================================================================== ================ ================
</TABLE>


7.   CAPITAL STOCK

     On April 6, 1999,  Pawnbroker acquired all the issued and outstanding share
     capital of Eriko Internet Inc. As consideration,  Pawnbroker issued 850,000
     common shares for cash proceeds of $80,500.

     On May 19, 1999, a shareholder of Pawnbroker  surrendered  25,000 shares of
     common  stock  which were  initially  issued as a part of the total  shares
     issued  for the  acquisition  of Eriko  Internet  Inc.  Capital  stock  and
     contributed  surplus  have  been  reduced  by $1 and $249  respectively  to
     eliminate the values initially recorded on issuance.

     On June 14, 1999,  Pawnbroker  acquired  all of the issued and  outstanding
     share  capital  of   Pawnbroker.com,   Inc.,  a  Nevada   Corporation.   As
     consideration, Pawnbroker issued 624,000 common shares at a deemed value of
     $62, equal to the par value of the shares issued.



                                       10
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


7.   CAPITAL STOCK (cont'd.....)

     On June 23,  1999,  the  Company  issued  130,000  units  through a private
     placement at a price of $23.10 per unit,  for total proceeds of $3,003,000.
     Each unit  consisted of one common  share and one-half of a share  purchase
     warrant. One full share purchase warrant entitled the holder to acquire one
     additional  common share at a price of $23.10 per share until September 23,
     2000 and at a price of $29.00 per share until  September  23,  2001.  These
     share purchase warrants were exercised during the year ended March 31, 2000
     for total proceeds of $1,501,500.

     On August 17, 2000,  the Company  issued  100,000  units  through a private
     placement at a price of $20.00 per unit,  for total proceeds of $2,000,000.
     Each unit  consisted  of one common  share and one  non-transferable  share
     purchase  warrant.  One purchase warrant entitles the holder to acquire one
     additional  common  share at a price of $30.00 per share  until  August 10,
     2001.

     On September 7, 2000, the Company converted the 9% convertible debenture in
     the aggregate principal amount of $500,000 into 26,882 common shares of the
     Company at a price of $18.60 per share.

     In December,  2000,  the Company issued 187,060 common shares upon exercise
     of stock option at a price of $0.90 per share.

     On January 30, 2001,  the Company issued 10,000 common shares upon exercise
     of stock option at a price of $0.90 per share.

     On April 17,  2001,  the  company  issued  3,000,000  common  shares of the
     Company to settle notes  payable in the amount of  $1,500,000  plus accrued
     interest of $154,104.

     On August 1, 2001,  the Company  consolidated  its capital  stock on a 10:1
     basis.  All  capital  stock  numbers  have been  restated  to reflect  this
     consolidation.


8.   STOCK OPTIONS AND WARRANTS

     At June 30, 2001,  incentive  stock options were  outstanding  enabling the
     optionee to acquire the following number of common shares:

<TABLE>
     =====================================================================================================================
             Number           Exercise
          of Shares              Price         Expiry Date
     ---------------------------------------------------------------------------------------------------------------------
          <S>            <C>                   <C>
             25,000           $  67.50         November 1, 2002
             15,000              67.50         3 years from the date when the Company  receives a specified amount of
                                               financing in private or public offerings after November 1, 1999.
              8,200              67.50         September 1, 2002
             93,009      45.00 - 81.30         3 years from the  initial  vesting  dates of the stock  options,  over
                                               periods ranging from September 13, 2002 to March 15, 2003.
              5,000              15.30         September 25, 2003
     =====================================================================================================================
</TABLE>



                                       11
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


8.   STOCK OPTIONS AND WARRANTS (cont'd.....)

     The following warrants were outstanding at June 30, 2001:

     ===========================================================================
          Number       Exercise
       of Shares          Price          Expiry Date
     ---------------------------------------------------------------------------
         100,000       $  30.00          August 10, 2001 (subsequently expired)
           7,200          67.50          May 10, 2003
           5,882          48.90          June 7, 2003
          33,426          35.90          July 7, 2003
         150,000          20.00          October 11, 2005
     ===========================================================================


9.   STOCK BASED COMPENSATION EXPENSE

     SFAS 123,  "Accounting for Stock-Based  Compensation",  encourages but does
     not require companies to record compensation cost for stock-based  employee
     compensation  plans at fair  value.  The  Company has chosen to account for
     stock-based  compensation using Accounting Principles Board Opinion No. 25,
     "Accounting for Stock Issued to Employees". Accordingly,  compensation cost
     for stock options is measured as the excess, if any, of quoted market price
     of the Company's stock at the date of grant over the option price.

     The Company  accounts for stock issued to  non-employees in accordance with
     the provisions of SFAS 123 and the Emerging  Issues Task Force consensus in
     Issue No.  96-18,  "Accounting  for Equity  Instruments  that are Issued to
     Other Than Employees for Acquiring or in Conjunction with Selling, Goods or
     Services".

     Following is a summary of the stock option activity:

     ======================================================================
                                                                  Weighted
                                                                   Average
                                                    Number        Exercise
                                                 of Shares           Price
     ----------------------------------------------------------------------
     Outstanding at March 31, 1999                       -       $        -
         Granted                                    40,000            67.50
         Forfeited                                       -                -
         Exercised                                       -                -
                                                 ---------
     Outstanding at March 31, 2000                  40,000            67.50
         Granted                                   489,667            40.90
         Forfeited                                (193,557)           71.00
         Exercised                                (187,000)            0.90
                                                 ---------

                              - continued -



                                       12
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


9.   STOCK BASED COMPENSATION EXPENSE (cont'd.....)

     ======================================================================
                                                                  Weighted
                                                                   Average
                                                    Number        Exercise
                                                 of Shares           Price
     ----------------------------------------------------------------------

     Continued.....

     Outstanding at December 31, 2000              149,110            77.40
         Granted                                    10,000             0.90
         Forfeited                                  (2,900)           52.30
         Exercised                                 (10,000)            0.90
                                                 ---------
     Outstanding at June 30, 2001                  146,210            67.40
     ====================================================== ===============


     Following  is a summary of the status of  options  outstanding  at June 30,
     2001:

<TABLE>
     ==============================================================================================
                                      Outstanding Options                      Exercisable Options
                              ----------------------------------             ----------------------
                                             Weighted
                                               Average      Weighted                       Weighted
                                             Remaining       Average                        Average
                                           Contractual      Exercise                       Exercise
     Exercise Price              Number           Life         Price         Number           Price
     -----------------------------------------------------------------------------------------------
     <S>                        <C>              <C>         <C>            <C>             <C>
     $ 67.50                     40,000           2.42        $67.50         25,000          $67.50
       45.00 - 81.30             93,009           1.80         67.10         17,467           63.10
       67.50                      8,200           1.92         67.50         15,233           67.50
       15.30                      5,000           2.73         15.30           -              15.30
     ==============================================================================================
</TABLE>

     Compensation

     The Company has granted  53,200 options to  consultants  and  non-employees
     which are accounted for under SFAS 123 and EITF 96-18.  Accordingly,  using
     the  Black-Scholes  option  pricing  model,  the options are marked to fair
     value  through   charges  to  operations   as   stock-based   compensation.
     Stock-based  compensation  recognized during the period ended June 30, 2001
     was $Nil (2000 - $93,617).

     The Company has 95,909 options granted to employees outstanding at June 30,
     2001.  These options are accounted for using  Accounting  Principles  Board
     Opinion  No.  25,   "Accounting   for  Stock  Issued  to  Employees".   Had
     compensation expense relating these options been recognized on the basis of
     fair value pursuant to Statement of Financial  Accounting Standard No. 123,
     net loss and loss per share would have been adjusted as follows:


                                       13
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


9.   STOCK BASED COMPENSATION EXPENSE (cont'd.....)

<TABLE>
     ====================================================================================
                                                             Six Month         Six Month
                                                          Period Ended      Period Ended
                                                              June 30,          June 30,
                                                                  2001              2000
     ------------------------------------------------------------------------------------
     <S>                                                <C>              <C>
     Loss for the period
       As reported                                      $     (775,163)  $    (5,122,634)
                                                        ===============  ================
       Pro-forma                                        $   (1,089,903)  $   (10,142,027)
                                                        ===============  ================
     Basic and diluted loss per share
       As reported                                      $        (0.23)  $        (2.94)
                                                        ===============  ================
       Pro-forma                                        $        (0.33)  $        (5.83)
     ====================================================================================
</TABLE>

     The fair value of each option granted is estimated using the  Black-Scholes
     Model. The assumptions used in calculating fair values are as follows:

<TABLE>
     ====================================================================================
                                                             Six Month         Six Month
                                                          Period Ended      Period Ended
                                                              June 30,          June 30,
                                                                  2001              2000
     ------------------------------------------------------------------------------------
     <S>                                                   <C>              <C>
     Risk-free interest rate                                        -              5.94%
     Expected life of the options                                   -            1 year
     Expected volatility                                            -                32%
     Expected dividend yield                                        -                  -
     ====================================================================================
</TABLE>


10.  SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

<TABLE>
     ===================================================================================
                                                              Six Month       Six Month
                                                           Period Ended    Period Ended
                                                               June 30,        June 30,
                                                                   2001            2000
     -----------------------------------------------------------------------------------
     <S>                                                 <C>             <C>
     Cash paid for income taxes                          $           -   $           -
     Cash paid for interest                                          -               -
     ===================================================================================
</TABLE>



                                       14
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


10.  SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (cont'd.....)

     Non-cash  investing  and  financing  transactions  during the  period  from
     January 1, 2001 to June 30, 2001 were as follows:

     a)   During the period,  employee  stock options were  exercised to acquire
          10,000  shares  of  common  stock  at a price of  $0.90  per  share in
          exchange for a receivable of $9,000.

     b)   During the period,  the Company  converted notes payable in the amount
          of $1,500,000 plus accrued  interest of $154,104 into 3,000,000 common
          shares of the Company.


11.  COMMITMENTS

     a)   The Company leases office and  production  premises and certain office
          equipment pursuant to operating leases which expire in 2003 and 2004:

          Future annual lease payments are as follows:

                2001                                   $     86,583
                2002                                        108,417
                2003                                         18,565
                2004                                          2,038

     b)   The Company has formed a Stock Option Plan ("Plan") under which it may
          grant stock options to employees and officers to acquire up to a total
          of 800,000  shares of the  Company's  common  stock,  at a price to be
          determined by the Plan administrator.


12.  DUE FROM RELATED PARTIES

     Amounts  due from an officer  and an  employee  are  non-interest  bearing,
     unsecured and have no fixed terms of repayment.

     The fair value of amounts due from related  parties is not  determinable as
     they have no specific repayment terms and are non-interest bearing.


13.  INCOME TAXES

     Subject to certain  restrictions,  the Company has certain operating losses
     available to reduce  taxable  income of future  years.  Future tax benefits
     which may arise as a result of these  losses and resource  deductions  have
     not been recognized in these financial statements.

     The  Company  has not  recorded  potential  future  income tax  benefits of
     $3,337,815 in operating losses which, if unutilized, expire as follows:

         2020                                       $    9,817,103
                                                    ==============



                                       15
<PAGE>

PAWNBROKER.COM, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 2001
================================================================================


13.  INCOME TAXES (cont'd.....)

     A  reconciliation  of the U.S.  statutory  federal  income  tax rate to the
     effective rate is as follows:

<TABLE>
     ============================================================================================================
                                                                                   Six Month           Six Month
                                                                                Period Ended        Period Ended
                                                                                     June 30,           June 30,
                                                                                        2001                2000
     ------------------------------------------------------------------------------------------------------------
    <S>                                                                         <C>                  <C>
     U.S. federal statutory graduated rate                                           15.00%               15.00%
     State income tax rate, net of federal benefit                                    7.00%                7.00%
     Net operating loss for which no tax benefit is currently available             (22.00)%             (22.00)%
                                                                                 ------------        ------------
                                                                                      0.00%                0.00%
     =============================================================================================================
</TABLE>

     At June 30, 2001, deferred taxes consisted of a net tax asset of $3,337,815
     due to operating loss  carryforwards  of $9,817,103 which was fully allowed
     for in the  valuation  allowance of  $3,337,815.  The  valuation  allowance
     offsets the net deferred asset for which there is no assurance of recovery.
     The change in the  valuation  allowance for the six month period ended June
     30, 2001 was $263,555.

     The  valuation  allowance  will be  evaluated  at the  end of each  period,
     considering  positive and negative evidence about whether the asset will be
     realized.  At that time, the allowance will either be increased or reduced;
     reduction  could result in the  complete  elimination  of the  allowance if
     positive evidence  indicates that the value of the deferred tax asset is no
     longer impaired and the allowance is no longer required.


14.  SUBSEQUENT EVENT

     The following events occurred subsequent to period end:

     a)   The Company carried out a 10:1 share  consolidation on August 1, 2001.
          All share and per share  amounts in these  financial  statements  have
          been retroactively  restated to reflect the  consolidation.  The total
          number  of  authorized  shares of  capital  stock of the  Company  was
          reduced to 60,000,000 shares, consisting of 50,000,000 of common stock
          with par value of $0.0001 per share, and 10,000,000 of preferred stock
          with par value of $0.0001 per share.

     b)   The Company  obtained a bridge  loan in the amount of $100,000  from a
          party,  evidenced by a promissory  note,  bearing  interest at 18% per
          annum, unsecured, and payable on February 20, 2002.

     c)   The  Company  obtained  bridge  loans in the  amount of  $20,000  from
          various parties, evidenced by convertible debentures, bearing interest
          at 18% per annum, and payable on December 31, 2003.

     d)   The  Company  obtained  a bridge  loan in the  amount of  $5,000  from
          Pacific  Pawnbroker,  evidenced by a non-interest  bearing  promissory
          note, unsecured and payable on demand.



                                       16
<PAGE>

              NOTE REGARDING FORWARD LOOKING STATEMENTS

     Except for statements of historical  fact,  certain  information  contained
herein constitutes  "forward-looking  statements,"  including without limitation
statements containing the words "believes,"  "anticipates," "intends," "expects"
and words of similar import, as well as all projections of future results.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other  factors  which  may  cause  our  actual  results  or  achievements  to be
materially different from any of our future results or achievements expressed or
implied by such  forward-looking  statements.  Such factors include, but are not
limited to the following:  our limited operating history; our history of losses;
our lack of adequate  working capital to fund its  operations;  risks related to
our ability to continue as a going concern;  need for additional capital;  risks
involving  new  product  development;  risk  related to  developing  a financial
services  business;  credit  risk  related  to  lending  money  to  pawnbrokers;
competition;  management  of  growth  and  integration;  risks of  technological
change; our dependence on key personnel,  marketing relationships with pawnshops
and third party  suppliers;  our ability to protect  its  intellectual  property
rights;  government regulation of the financial services,  Internet commerce and
the pawn  industry;  economic and  political  factors;  dependence  on continued
growth in use of Internet; liability for Internet content; uncertainty regarding
infringing  intellectual property rights of others; security risks and the other
risks and uncertainties described under "Description of Business - Risk Factors"
in this annual report.  Certain of the forward looking  statements  contained in
this registration statement are identified with cross-references to this section
and/or to  specific  risks  identified  under  "Description  of  Business - Risk
Factors".

     You should not place undue reliance on forward  looking  statements.  We do
not  intend to update  forward  looking  statements  contained  in this  report.
References  to  "Company,"   "Registrant,"  "our,"  "us,"  and  "we,"  refer  to
Pawnbroker.com, Inc. and its subsidiaries.


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

OVERVIEW

     We, Pawnbroker.com,  Inc., are a development stage company with no revenues
from our operations.  We have never generated any profits.  We were incorporated
in Delaware in February  1998.  On June 14, 1999,  we acquired all of the issued
and outstanding shares of Pawnbroker.com,  Inc., a Nevada  corporation,  and for
the purposes of  implementing  a business  strategy of  developing a web site to
list and offer for sale the  merchandise  of  independent  pawnshops  throughout
North  America.  Prior to our  acquisition  of the Nevada  corporation we had no
assets,   liabilities,   revenues  or  expenses.   We  are  in  the  process  of
incorporating  Pawnbroker Financial Services Inc., a Delaware  corporation,  for
the  purposes of  operating  our planned  business  of  offering  financial  and
business-to-business services to pawnbrokers.



                                       17
<PAGE>

     During 1999 and 2000,  we developed  and launched a web site that  provided
online customers a method to search for and buy merchandise from the inventories
of  pawnshops.  We  completed  the  initial  development  of  the  software  and
technology  related  to the  business  and  began the beta test of a web site in
December  1999.  During  the  course of  developing  our web site and  marketing
strategy,  we presented our concept to several hundred  pawnshops at conventions
and  tradeshows  and  received  oral  expressions  of interest  or requests  for
additional  information  from  several  pawnshops  about our plan to  facilitate
transactions  between  pawnshops  and consumers  through our web site.  Based on
information  provided to us by pawnshops,  our goal was to have a total of up to
2,000  participating  member pawnshops  offering an average of 475 items each by
December   2000.   In  June  2000,  we  launched  the   commercial   version  of
Pawnbroker.com.

     Pawnbroker.com  featured  items  of  merchandise  from the  inventories  of
pawnshops,  including merchandise such as jewelry, consumer electronics,  tools,
collectibles,  coins, cameras and musical instruments.  Although several hundred
pawnshops initially expressed an interest in posting merchandise for sale on our
web site,  we  experienced  difficulties  in  offering  sufficient  supplies  of
inventory as several  pawnbrokers failed to post the merchandise on our web site
as they had initially indicated. During the second half of 2000, we entered into
a  strategic  relationship  with a major  chain of  pawnshops  in an  effort  to
increase our  inventory,  but were unable to post such inventory on our web site
in a timely  manner.  We failed  to  generate  any  material  revenues  from our
operations.

     Based in part on the  condition of the capital  markets,  we were unable to
obtain  additional  financing on acceptable terms to fund our marketing  efforts
and our working  capital  requirements.  We began to consolidate and restructure
our operations to conserve working capital by closing our technical  development
and support facility in Philadelphia and our business office in California,  and
by laying off all of our technical  development  and support  staff.  During the
fourth  quarter 2000 and the first  quarter of 2001,  we  experienced  technical
difficulties  maintaining  our web site and were  unable to  continue to provide
technical  support to our  customers  because of lack of working  capital.  As a
result,  we further  consolidated our operations and we terminated  facilitating
transactions  on our web site and suspended our business  operations on March 1,
2001,   to   concentrate   our  efforts  on   developing   our   financial   and
business-to-business services.

     We anticipate that we may re-launch our  pawnbroker-to-consumer web site in
an  alternative  format  in the  future,  assuming  that we are  able  to  raise
sufficient  financing  to do so and  that  there  is  sufficient  interest  from
pawnbrokers and end users for such service offering. We have no current plans to
do so during 2001.

     We are in the process of  restructuring  our business and  developing a new
business plan and strategy under which we intend to provide  financial  services
by offering secured loans to pawnbrokers and to operate a web site that provides
pawnbroker  industry  specific  business-to-business  services.  We  are  in the
process  of  finalizing  a  business  plan and  attempting  to  restructure  our
liabilities  to allow  us to raise  financing  to fund  the  development  of our
planned business and our working capital requirements.  We currently do not have
sufficient  working capital to finance our planned business  strategy and may be
unable to continue as a going concern.



                                       18
<PAGE>

     In their  independent  auditor's  report  dated May 10, 2001 related to our
audited  financial  statements  for  December  31,  2000,  Davidson  &  Company,
Chartered Accountants,  expressed doubt about our ability to continue as a going
concern due to our lack of working capital for our planned business  activities.
We had a working  capital  deficiency of $2,083,210 at December 31, 2000,  and a
working  capital  deficiency  of $670,494 at June 30, 2001.  The decrease in our
working  capital deficit was a result of our conversion of certain notes payable
into common shares during the quarter ended June 30, 2001.  See  "Liquidity  and
Capital  Resources."  We intend to address this going  concern  issue by raising
capital  through  equity,  debt  or  convertible  securities  financing.  We are
currently  seeking  financing  by  presenting  our  business  plan to  potential
investors. If we are unable to raise additional financing, we anticipate we will
not be able to continue as a going concern.

     Effective  August 1, 2001,  we completed a 10  (old)-for-  1 (new)  reverse
split of our issued and  outstanding  common  stock and reduced  our  authorized
share  capital to consist of  50,000,000  shares of common stock and  10,000,000
shares of preferred  stock,  each with a par value of $0.0001 per share. At July
31, 2001, we had 50,803,567  shares of common stock issued and outstanding,  and
after giving effect to the reverse split, we had approximately  5,080,357 shares
of common stock issued and outstanding.  All share information contained in this
quarterly report gives effect to the reverse split.

     Neither  we nor  any of  our  subsidiaries  are  currently  subject  to any
bankruptcy, receivership or similar proceedings at the date of this report.

     Our headquarters are located at 85 Keystone,  Suite A, Reno, Nevada, 89503,
and our telephone number is (775) 332-5048.

     Our web site address is www.pawnbroker.com. The information on our web site
is not a part of this quarterly report.


Results of Operations

Three Months Ended June 30, 2001 Compared to June 30, 2000

     Revenues. We had no material revenues from operations.

     Salaries  and Payroll.  Salaries  and wage  expenses for three months ended
June 30, 2001 decreased to $114,093  compared to $494,282 for the same period in
2000. During the second quarter 2000, we incurred  significant salaries and wage
expense  as a result of hiring  personal  to meet our needs as we  attempted  to
execute  our  business  plan,  including  our  hiring  in the  areas of  product
development,  sales and  marketing  and general and  administrative.  During the
quarters  ended  December 31, 2000,  we began  consolidating  our  operations to
conserve working capital by closing our  Philadelphia  development and technical
support  facilities  and  our  California  business  office  and by  laying  off
personnel in those  offices.  During the first  quarter 2001, we laid off all of
our   personnel,   with  the   exception  of  four   employees,   including  one
administrative employee and three management,  marketing and sales employees. We
intend to hire  additional  employees  and  management  with  experience  in the
financial service industry to assist us with



                                       19
<PAGE>

implementing  our financial  service  business  strategy,  assuming we can raise
adequate funding to finance our plan of operation.

     Contract Services.  Outside service expense for three months ended June 30,
2001 were nil  compared to $65,810 in the same  quarter of 2000,  which  consist
primarily of contract  services for investor  relations,  public  relations  and
market  research.  Subsequent  to December 31, 2000,  we suspended  our business
operations and terminated all our arrangements with contract service  providers.
We may incur  contract  service  expenses  related to regulatory  compliance and
research to develop our  financial  services  business  during the  remainder of
2001.

     Consulting.  Consulting  expense for three  months ended June 30, 2001 were
$11,748 compared to $52,773 during the same period in 2000.  Consulting expenses
during  the three  month  period  ended June 30,  2000  consisted  primarily  of
assistance  related to the evaluation and  development of our Internet  business
strategies,  development  of a  Internet  business  plan and  interim  executive
personnel.  These costs were  associated  with the  development  of our business
strategy to offer the merchandise of pawnshops over the Internet.  Subsequent to
December 31, 2000, we suspended our business  operations  and terminated all our
arrangements with our consultants.  As a result, we anticipate that we may incur
nominal  expenses  related to  consulting  expenses  during the third and fourth
quarters of 2001, but that consulting expenses will increase in 2002 as we begin
the process of implementing our business strategy of offering financial services
to pawnbrokers.  We intend to engage outside  consultants with experience in the
financial  service  industry  to  assist  us with  developing  and  implementing
policies and procedures  for our financial  service  offerings,  assuming we can
raise adequate funding to finance our plan of operation.

     Professional  Fees.  Professional fees for three months ended June 30, 2001
were $74,024 compared to $206,807 for the same period in 2000. Professional fees
consist primarily of legal and accounting expenses. The decrease in professional
expense  resulted from our lack of working  capital and our reduction in the use
of our legal  counsel  and  accounting  professionals  during  2001.  During the
quarter ended June 30, 2000, we incurred substantial  professional fees expenses
related to legal and accounting  support during the  development of our Internet
business and expenses related to preparing filings to comply with our Securities
and Exchange  Commission  reporting  obligations.  We  anticipate  that expenses
related to professional fees may decline during 2001, as we have been relatively
inactive during the first two quarters of 2001.  However,  professional fees may
increase if we obtain additional  financing to undertake research related to our
financial  services  business  and  the  development  of  documents,  forms  and
procedures related to such business.

     Marketing and Related  Expense.  Marketing  and related  expenses for three
months  ended June 30, 2001 were  $(12,554)  compared  to $467,681  for the same
period in 2000.  During the quarter ended June 30, 2001, we had an adjustment to
marketing and related expenses  related to a discount  received from a provider.
Marketing and related expenses in 2000 consisted  primarily of creative printing
and  advertising.  Marketing  expenses  are expected to be  substantially  lower
during  2001  than in  2000,  as we have  suspended  our  operations  and do not
anticipate  that we will begin to market our financial and  business-to-business
services until at least the fourth quarter of 2001 or first quarter of 2002.



                                       20
<PAGE>

     General and Administrative. General and administrative related expenses for
three months ended June 30, 2001 were $19,953, compared to $348,492 during 2000.
General and administrative  related expense for three months ended June 30, 2000
consisted primarily of general office, printing, purchased software,  recruiting
and facility costs associated with the development of our Internet  business and
maintaining   offices  in  Reno,   Philadelphia  and  California.   General  and
administrative expenses are expected to remain lower than the levels experienced
in 2000, as we have consolidated our operations into one office in Reno, Nevada.

     Travel and Related. Travel and related expenses for three months ended June
30,  2001 were  $30,149  compared  to  $215,835  during the same period in 2000.
Travel and related expenses related  primarily to travel for raising capital and
business development activities.  Travel and related expenses are expected to be
consistent  with the levels in the first and  second  quarters  2001  during the
remaining quarters of 2001.

     Recovery of  Operating  Expenses.  During the three month period ended June
30,  2001,  we had a  $59,436  adjustment  in  recovery  of  operating  expenses
resulting  primarily  from our  write-off of a loan  receivable  from one of our
former officers in consideration of accrued salaries for his services.

     Loss. Our loss for three months ended June 30, 2001 was $483,243 ($0.11 per
share) compared to $2,277,159  ($1.32 per share) during the same period in 2000,
a decrease of $1,793,916.  The decrease  resulted from the suspension of our web
site operations during the first half of 2001 and our restructuring.  During the
three month period ended June 30, 2000, we incurred substantial costs associated
with the  development  and launch of the  Pawnbroker.com  web site and business,
including corporate acquisition expenses,  developing our business plan, product
development expenses,  sales and marketing expenses and administrative expenses.
We  anticipate  that we will  continue to incur losses  during the third quarter
2001 at a level  approximately  as that recorded during the second quarter 2001,
and that losses will increase during the fourth quarter of 2001 as we anticipate
that we will begin  implementing our new business  strategy,  assuming  adequate
financing is available. See "Plan of Operation."


Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

     Revenues. We had no material revenues from operations.

     Salaries and Payroll.  Salaries and wage expenses for six months ended June
30, 2001  decreased to $160,440  compared to  $1,064,382  for the same period in
2000.  During the six months ended 2000,  we incurred  significant  salaries and
wage  expense as a result of hiring  personnel to meet our needs as we attempted
to execute our  Internet  business  plan,  including  our hiring in the areas of
product  development,  sales and  marketing and general and  administrative.  We
consolidated   our  operations  to  conserve  working  capital  by  closing  our
Philadelphia  development  and technical  support  facilities and our California
business  office and by laying off  personnel in those  offices.  During the six
months ended 2001, we laid off all of our personnel,  with the exception of four
employees, including one administrative employee and three management, marketing
and sales employees. During the six month period ended June 30, 2000,



                                       21
<PAGE>

we  had  stock  based  compensation  of  $93,617,  compared  to no  stock  based
compensation during the same period in 2001.

     Contract  Services.  Outside  service expense for six months ended June 30,
2001 were nil  compared to $383,841 in the same quarter of 2000,  which  consist
primarily of contract  services for investor  relations,  public  relations  and
market research.

     Consulting.  Consulting  expense  for six months  ended June 30,  2001 were
$14,105 compared to $420,505 during the same period in 2000. Consulting expenses
during  the six  month  period  ended  June  30,  2000  consisted  primarily  of
assistance  related to the evaluation and  development of our Internet  business
strategies,  development  of a  Internet  business  plan and  interim  executive
personnel.  We  anticipate  that  we  may  incur  nominal  expenses  related  to
consulting  expenses  during  the third and  fourth  quarter  of 2001,  but that
consulting  expenses  will  increase in the 2002 as we intend to engage  outside
consultants with experience in the financial  service industry to assist us with
developing and  implementing  policies and procedures for our financial  service
offerings, assuming adequate financing is available.

     Professional  Fees.  Professional  fees for six months  ended June 30, 2001
were  $102,193  compared to $478,748  for the same period in 2000.  Professional
fees  consist  primarily  of legal and  accounting  expenses.  The  decrease  in
professional expense resulted from our lack of working capital and our reduction
in the use of our legal counsel and accounting professionals during 2001. During
the six months ended June 30, 2000, we incurred  substantial  professional  fees
expenses  related to legal and accounting  support during the development of our
Internet  business and expenses related to preparing  filings to comply with our
Securities and Exchange Commission reporting obligations.

     Marketing  and Related  Expense.  Marketing  and related  expenses  for six
months  ended June 30, 2001 were  $(12,554)  compared  to $554,752  for the same
period  in 2000.  During  the  quarter  ended  June 30,  2001,  we  received  an
adjustment  from a service  provider.  Marketing  and  related  expenses in 2000
consisted primarily of creative printing and advertising. Marketing expenses are
expected  to be  substantially  lower  during  2001  than  in  2000,  as we have
suspended our operations.

     General and Administrative. General and administrative related expenses for
six months ended June 30, 2001 were $31,804, compared to $1,435,420 during 2000.
General and administrative expenses are expected to remain lower than the levels
experienced in 2000, as we have  consolidated  our operations into one office in
Reno, Nevada.

     Travel and Related.  Travel and related  expenses for six months ended June
30,  2001 were  $39,770  compared  to  $238,245  during the same period in 2000.
Travel and related expenses related  primarily to travel for raising capital and
business development activities.  Travel and related expenses are expected to be
consistent  with the levels in the first half of 2001  during the  remainder  of
2001.

     Recovery of Operating Expenses.  During the six month period ended June 30,
2001, we had  $(158,993) in recovery of operating  expenses  resulting  from our
negotiation and



                                       22
<PAGE>

settlement of debt owed to creditors, offset by a write-off of a loan receivable
from one of our former  officers in  consideration  of accrued  salaries for his
services,  and an  adjustment  related to accrued  liabilities  for an equipment
lease which was  terminated.  This  reduction in obligations to our creditors is
expected to continue as our  management  has determined  such  restructuring  is
required to allow us to raise  additional  financing to be able to continue as a
going  concern  and to fund  our plan of  operation.  Future  restructuring  and
settlement  of  creditor  obligations  may  result  in  additional  recovery  of
operating  expenses  during  2001,  but there can be no  assurance  that we will
successfully restructure or settle such obligations.

     Loss.  Our loss for six months ended June 30, 2001 was $775,163  ($0.23 per
share) compared to $5,122,634  ($2.94 per share) during the same period in 2000,
a decrease of  $4,347,471.  Our loss during the six month  period ended June 30,
2001 included interest  expenses of $55,649,  loss on disposal of capital assets
of $176,983  and  write-off  of capital  assets of $70,674.  The decrease in our
losses in 2001  compared to 2000  resulted  from the  suspension of our web site
operations and our restructuring.


Liquidity and Capital Resources

     In their  independent  auditor's  report  dated May 10, 2001 related to our
audited financial statement for December 31, 2000, Davidson & Co., our auditors,
expressed substantial doubt about our ability to continue as a going concern due
to our lack of working capital for our planned business activities. We currently
do not have sufficient working capital to meet our on-going  obligations.  As of
June  30,  2001,  we had cash and cash  equivalents  of nil and  receivables  of
$43,633,  due from employees who exercised stock options,  and a working capital
deficit of $670,494, which includes current liabilities of $799,125.

     During the three months ended June 30, 2001,  we received no revenues  from
our  operations  and we used net cash of $556,308 in  operating  activities.  We
received $80,748 from the disposal of capital assets and $205,000 from financing
activities  (the  issuance  of  promissory  notes).  We had a net change in cash
position of negative $268,865.  Our use of cash during such period was primarily
as a result  of  expenses  related  to  sustaining  our  operations  for  salary
expenses,  professional  fees and  expenses  related to  general  administrative
expenses and overhead.

     Our use of cash during the first six months of 2001 in operating activities
declined from levels of cash used in operating activities for the same period in
2000 ($3,584,628), as we have consolidated our operations in our Reno office and
have  suspended our business  operations  related to  facilitating  transactions
between  pawnshops  and customers  through our web site. We anticipate  that our
working  capital needs will increase during the remainder of 2001, as we attempt
to raise  additional  financing and to implement our new business  plan. We will
continue to incur losses  until we can generate  revenues  from  financings  and
membership fees and from business to business revenue  opportunities.  We do not
anticipate  we will  begin to  generate  any  revenues  until we can  offer  our
financial  services,  which is not anticipated to occur until the fourth quarter
of 2001 or first quarter of 2002, assuming sufficient financing is available.

     We estimate  that our minimum cash  requirements  to implement  our plan of
operation  is between  approximately  $3 million to $9 million  during  2001 and
2002, primarily for capital to



                                       23
<PAGE>

provide loans to qualified  pawnbrokers;  expenses  related to general over head
and  administration,  regulatory  research and licensing;  preparing  documents,
forms and procedures to offer our planned financial  services;  costs associated
with developing our business-to-business web site and costs related to marketing
our financial and business-to-business services. See "Plan of Operation." We are
currently  in the  process of seeking  sufficient  financing  to  implement  our
business strategy.

     As part of our  plan to  raise  additional  financing  to fund  our Plan of
Operation, we began to implement a capital restructuring plan under which (i) we
proposed a reverse  split of our issued and  outstanding  common  stock and (ii)
negotiated the conversion of certain  outstanding debt into shares of our common
stock.

     On May 11,  2001,  we entered  into  agreements  with three note holders to
convert  $1,500,000  owed to them into  shares of our common  stock at $0.50 per
share (post  reverse-split).  The market  price of our common stock as quoted on
the NASD Over-the-Counter Bulletin Board was $0.15 on May 11, 2001 (after giving
effect to the  reverse-split).  Under the terms of these  agreements,  we issued
30,000,000  shares of our common stock to the following note holders:  2,000,000
shares to BWI Avionics Ltd., 600,000 shares to Granite  Communications Inc., and
400,000  shares to  Eurogrowth  Investments  Ltd.  BWI  Avionics  Ltd.,  Granite
Communications  Inc., and Eurogrowth  Investments Ltd. are non-U.S.  persons and
the shares were issued  outside the United  States in reliance upon an exemption
from registration available under Regulation S of the Securities Act of 1933, as
amended.

     On July 5, 2001,  we held our annual  general  meeting of  shareholders  at
which our shareholders:

     (i)  elected three members to our board of directors;
     (ii) approved an amendment to our Certificate of  Incorporation to effect a
          stock  combination  (reverse stock split)  pursuant to which every ten
          (10) shares of outstanding common stock would be reclassified into one
          (1) share of common stock;
     (iii)approved an amendment to our Certificate of  Incorporation to decrease
          our authorized  share capital from 150,000,000  shares  (consisting of
          100,000,000  shares of common stock and 50,000,000 shares of preferred
          stock) to 60,000,000 shares (consisting of 50,000,000 shares of common
          stock and 10,000,000 shares of preferred stock); and
     (iv) ratify  the  selection  of  Davidson  &  Company  as  our  independent
          auditors.

     We filed an amendment to our  certificate  of  incorporation  to effect the
reverse-split  of our issued and  outstanding  common  stock and to decrease our
authorized capital, effective August 1, 2001. Our trading symbol on the National
Association of Securities Dealers Over-the-Counter Bulletin Board was changed to
"PBOK."

     During the past six months,  we have been  attempting  to raise the capital
required  to fund  our  Plan  of  Operation,  but our  efforts  have  only  been
marginally  successful.  Since January 1, 2001, we have raised only $205,000, in
the form of short-term bridge financing as follows:



                                       24
<PAGE>

<TABLE>
    Lender                    Instrument/Terms                               Principal Amount
    ------                    ----------------                               ----------------
    <S>                       <C>                                            <C>
    Pacific Pawnbroker        Demand promissory note, unsecured, without           $20,000
                                interest
    Lew Mirviss               Promissory note, unsecured, bearing interest         $50,000
                                at 18% per annum, due December 31, 2003
    Edward Romano             Promissory note, unsecured, bearing interest        $100,000
                                at 18% per annum, due October 19, 2001
    Others                    Convertible debentures, unsecured, bearing           $35,000
                                interest at 18% per annum, due December 31,
                                2003                                            --------------
                                           Total                                   $205,000
</TABLE>

     Joseph  Schlader,  our  President  and a director,  is the  President and a
controlling  shareholder  of  Pacific  Pawnbroker.   William  Galine,  our  Vice
President  and a  director,  is a former  officer  and  shareholder  of  Pacific
Pawnbroker.

     We are continuing to seek additional  financing.  We cannot assure you that
we will be able to obtain sufficient financing to fund our working capital needs
on acceptable terms, if at all. If adequate funds are not available,  we will be
required to sell or liquidate our business or file bankruptcy.

     We cannot  assure  you that our  actual  expenditures  will not  exceed our
estimated  operating  budget.  Actual  expenditures  will  depend on a number of
factors, some of which are beyond our control, including, among other things:

     (i)  the costs to complete the regulatory  research and obtain  licenses to
          operate our financial services business,

     (ii) our  ability to  successfully  complete  financing  transactions  with
          pawnbrokers,

     (iii) the availability of financing on acceptable terms,

     (iv) reliability of the  assumptions  of management in estimating  cost and
          timing,

     (v)  competition; and

     (vi) other factors that may be beyond our control.

     We cannot  assure you that we will  generate  sufficient  revenues from our
operations  to earn a  profit  or that our  planned  service  offerings  will be
commercially successful. Our inability to successful implement our business plan
or generate revenues from financial services will have a material adverse affect
on our business and results of operations.



                                       25
<PAGE>

Plan of Operation

     Our plan of operation is based on information  provided in discussions with
our consultants,  discussions  with pawnshop owners,  our results of operations,
our  negotiations  and  discussions  with third  party  vendors,  experience  of
management  and the decisions of our  management.  Our plan of operation for the
fiscal year ending  December  31, 2001 and during the first two  quarters  ended
June 30, 2002, is as follows:

     o    Restructure our outstanding  liability and capital  structure to allow
          us to obtain financing;
     o    Raise additional financing of between $3 million to $9 million to fund
          our operations and to implement our business strategy;
     o    Complete  research related to regulatory  compliance issues related to
          lending rates, licensing  requirements,  perfecting security interests
          in assets  and other  regulatory  issues  in states  targeted  for our
          financial services roll out;
     o    Develop or license  the  technology  required to  facilitate  loans to
          member pawnbrokers and to offer our business-to-business services;
     o    Develop the documentation, forms and required procedures to facilitate
          loans to member pawnbrokers;
     o    Market and  promote  our  financial  services  to  pawnbrokers  in the
          targeted  states and our  business-to-business  network to pawnbrokers
          throughout North America;
     o    Generate revenues through the offering of loans to member  pawnbrokers
          in the  target  market  (based on credit  ratings  and  rankings)  and
          membership fees; and
     o    Identify  viable  target  markets  for  additional  roll  outs  of our
          financial services.

     In order to reduce our cash  requirements,  we intend to outsource  certain
development,   marketing,  human  resources,  legal  and  accounting  functions.
Similarly,  in order to reduce  capital  expenditures,  we intend to enter  into
leasing agreements for hardware and other equipment requirements.


     Capital Obligations and Commitments

     As of  September  5,  2001,  we  have  commitments  related  to a  $100,000
promissory  note,  bearing  interest at the annual rate of 18%,  due October 19,
2001;  a  promissory  note,  bearing  interest  at the annual  rate of 18%,  due
February 21, 2002; and two demand  promissory  notes in the aggregate  amount of
$25,000.  In  addition,  we estimate  that our  initial  cash  requirements  are
approximately $90,000 a month, principally for salaries,  professional services,
marketing and office  expenses.  We anticipate that our cash  requirements  will
increase to  approximately  $126,000 to $150,000 per month in the fourth quarter
2001 and first  quarter  2002 as a result of costs  related to raising  capital;
professional  services  associated  with  the  research  related  to  regulatory
requirements  of our financial  services;  development  of documents,  forms and
procedures  to  offer  loans  to  pawnbrokers  in  targeted  states;  hiring  of
management with experience in the financial  services  industry;  development of
our website to enable the  application  loan  process  related to our  financial
services;  web site and technology  development  costs related to development of
the services for our business-to-business web site; increased



                                       26
<PAGE>

salary and related expenses  associated with the  implementation of our business
strategy; and costs associated with marketing our web site.

     We estimate  that the cost to develop the  technology to launch and operate
our  business-to-business  web site will be approximately  $50,000. We intend to
engage a third  party  developer  to develop our  business-to-business  web site
based in part,  if  feasible,  on the  technology  which  we  developed  for our
pawnbroker.com  web site. We have not made any arrangements for such development
and  currently  do  not  have  sufficient   working  capital  to  commence  such
development efforts.  Actual costs to development our  business-to-business  web
site may be significantly higher than our estimates, in which case, we intend to
scale-down  the  services  proposed to be offered  until  appropriate  levels of
financing are available.

     We intend to compete in the highly competitive financial services industry.
We will compete against  companies that have  substantially  greater  financial,
technical  and  other  resources  than  us.  Several  competitors  already  have
established web sites, brand names, strategic  relationships and other web sites
and user loyalty,  all of which create a competitive  advantage over us. We have
not yet begun  the  process  of  determining  the  regulatory  requirements  for
conducting our proposed financial services business and we do not currently have
sufficient  working capital to implement our planned business  strategy.  During
2000 and the first half of 2001,  several Internet related companies have failed
or been acquired by larger competitors.  Competitive pressures, lack of adequate
financing  and failure to gain market  acceptance  are some of the factors  that
have caused such companies to fail. We face these same challenges, and we cannot
guarantee  that we will be able to compete  effectively  or that we will  obtain
sufficient financing to develop a commercially viable business.

     Our ability to implement our proposed business plan is subject to obtaining
adequate financing. We currently do not have sufficient financing to continue as
a going concern;  however, based on our discussions with potential investors, we
believe that we can raise additional financing if we are able to restructure our
liabilities.  We may arrange to convert a  significant  portion of our debt into
equity,  which  based on the current  market  price of our common  stock,  would
result in  significant  dilution  to  existing  shareholders.  In  addition,  to
implement  our business  plan we  anticipate  that we will enter into  financing
arrangements  in  which we  issue  equity,  debt,  convertible  securities  or a
combination of these.  Such financing  arrangements are anticipated to result in
additional dilution to our existing  shareholders.  We cannot assure you that we
will be able to restructure our liabilities or that we will successfully  obtain
additional financing.  If we are unsuccessful at either of these, we will not be
able to continue as a going  concern  and we may be  required to  liquidate  our
company or declare bankruptcy.


Subsequent Events

     On July 5, 2001,  we  obtained a bridge  loan in the amount of $5,000  from
Pacific Pawnbroker,  evidenced by an unsecured demand promissory note bearing no
interest.  On July 26, 2001, we received $10,000 from an investor related to the
issuance  of an  unsecured  convertible  debenture  bearing  interest at 18% per
annum,  due December 31, 2003.  On August 21, 2001, we obtained a bridge loan in
the  amount of  $10,000,  evidenced  by an  unsecured  promissory  note  bearing
interest at the annual rate of 18%, due February 21, 2002. On August



                                       27
<PAGE>

22, 2001,  we received  $10,000  from an investor  related to the issuance of an
unsecured convertible debenture, bearing interest at 18% per annum, due December
31, 2003.

     Subsequent to June 30, 2001, 52,630 shares of common stock were returned to
treasury in  consideration  of the cancellation of a loan receivable from one of
our officers and directors.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The  Company  believes  that it does  not  have any  material  exposure  to
interest or commodity  risks.  The Company is exposed to economic and  political
changes in international  markets where the Company competes,  such as inflation
rates,  recession,   foreign  ownership   restrictions,   domestic  and  foreign
government  spending,  budgetary and trade policies and other  external  factors
over which the Company has no control.


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     As of the date hereof,  there is no material litigation pending against the
Company.  From time to time,  the  Company is a party to  litigation  and claims
incident to the ordinary course of business. While the results of litigation and
claims cannot be predicted with certainty,  the Company  believes that the final
outcome of such matters will not have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     On May 11,  2001,  we entered  into  agreements  with three note holders to
convert  $1,500,000  owed to them into  shares of our common  stock at $0.50 per
share (post  reverse-split).  The market  price of our common stock as quoted on
the NASD Over-the-Counter Bulletin Board was $0.15 on May 11, 2001 (after giving
effect to the  reverse-split).  Under the terms of these  agreements,  we issued
30,000,000  shares of our common stock to the following note holders:  2,000,000
shares to BWI Avionics Ltd., 600,000 shares to Granite  Communications Inc., and
400,000  shares to  Eurogrowth  Investments  Ltd.  BWI  Avionics  Ltd.,  Granite
Communications  Inc., and Eurogrowth  Investments Ltd. are non-U.S.  persons and
the shares were issued  outside the United  States in reliance upon an exemption
from registration available under Regulation S of the Securities Act of 1933, as
amended.

     Effective  August 1, 2001,  we completed a 10  (old)-for-  1 (new)  reverse
split of our issued and  outstanding  common  stock and reduced  our  authorized
share  capital to consist of  50,000,000  shares of common stock and  10,000,000
shares of preferred  stock,  each with a par value of $0.0001 per share.  At the
July 31, 2001, we had 50,803,567  shares of common stock issued and outstanding,
and after giving effect to the reverse  split,  we had  approximately  5,080,357
shares of common stock issued and outstanding.  All share information  contained
in this quarterly report gives effect to the reverse split.



                                       28
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.


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

     During the quarter  ended June 30,  2001,  we did not submit any matters to
shareholders.

     Subsequent to June 30, 2001,  on July 5, 2001,  we held our annual  general
meeting   of   shareholders.    Shareholders    representing   3,721,577   (post
reverse-split) of the 5,080,357 (post  reverse-split)  outstanding shares of the
Company as of the record date,  May 24,  2001,  were  represented  at the Annual
Meeting in person or by proxy.  The  shares  represented  at the Annual  Meeting
constituted  73.25%  of  the  outstanding  shares.  Our  shareholders  took  the
following actions:

     Election of Board of Directors

     Our shareholders  elected the following  persons to serve as members to our
board of directors:

     A.   Steven Fowler is elected to serve as a Class A director for an initial
          term of one (1) year;

     B.   Joseph  Schlader  is  elected  to serve as a Class B  director  for an
          initial term of two (2) years; and

     C.   William  Galine  is  elected  to  serve as a Class C  director  for an
          initial term of three (3) years.

     Director                        For               Against           Abstain
     --------                        ---               -------           -------

     Steven Fowler                3,718,952             1,440             1,185

     Joseph Schlader              3,718,952             1,440             1,185

     William Galine               3,718,952             1,440             1,185

     Reverse Stock Split

     Our shareholders  approved an amendment to our Certificate of Incorporation
to effect a stock combination  (reverse stock split) pursuant to which every ten
(10) shares of  outstanding of our common stock would be  reclassified  into one
(1) share of common stock.


         For                    Against               Abstain
         ---                    -------               -------
     3,718,062                   2,520                  995



                                       29
<PAGE>

     Share Capital Reduction

     Our shareholders  approved an amendment to our Certificate of Incorporation
to decrease the authorized share capital of the Company from 150,000,000  shares
(consisting  of  100,000,000  shares of common  stock and  50,000,000  shares of
preferred stock) to 60,000,000 shares (consisting of 50,000,000 shares of common
stock and 10,000,000 shares of preferred stock).

         For                    Against               Abstain
         ---                    -------               -------
     3,719,197                   1,185                 1,195


     Appointment of Auditors

     Our   shareholders   ratified  the  selection  of  Davidson  &  Company  as
independent auditors.

         For                    Against               Abstain
         ---                    -------               -------
     3,721,127                    450                    0


ITEM 5. OTHER INFORMATION

     Our Chief  Financial  Officer,  Greigory Park,  resigned during the quarter
ended June 30, 2001. During the quarter ended June 30, 2001, we wrote off a loan
receivable  from Mr. Park in the amount of $47,741 in  consideration  of accrued
salaries  payable  to Mr.  Park for his  services  during  the first and  second
quarters of 2001.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a)   Exhibits

        Exhibit
        Number      Description
        ------      -----------
         2.1(1)     Agreement  of  Reorganization  by and between  Digital  Sign
                    Corporation,  Edward F. Meyers III and Digital  Signs,  Inc.
                    dated February 14, 1998.

         2.2(1)     Agreement and Plan of Share Exchange by and between  Digital
                    Sign  Corporation  and Eriko  Internet,  Inc. dated April 4,
                    1999.

         2.3(1)     Agreement   and  Plan  of   Reorganization   by  and   among
                    Pawnbroker.com,  Inc. and Joseph  Schlader,  Cheryl Schlader
                    and William Galine dated May 14, 1999.



                                       30
<PAGE>

        Exhibit
        Number      Description
        ------      -----------
         2.4(1)     Addendum  to  Agreement  and Plan of  Reorganization  by and
                    among  Pawnbroker.com,  Inc.  and  Joseph  Schlader,  Cheryl
                    Schlader and William Galine dated June 11, 1999.

         3.1(1)     Certificate  of  Incorporation  of Digital Sign  Corporation
                    filed February 13, 1998.

         3.2(1)     Certificate of Amendment of Digital Sign  Corporation  filed
                    June 10, 1999.

         3.3(3)     Certificate of Amendment of Pawnbroker.com,  Inc. filed June
                    1, 2000.

         3.5(1)     Bylaws of Digital  Sign  Corporation.  (Previously  filed as
                    Exhibit 3.3 to Form 10)

         3.6(3)     Amended and Restated Bylaws of Pawnbroker.com, Inc.

         5.1        Opinion of Dorsey & Whitney LLP

        10.1(1)     Form  of  Private  Placement  Subscription  Agreement  dated
                    February 1998.

        10.2(1)     Contribution   Agreement   by  and  between   Digital   Sign
                    Corporation and Cameron Woodbridge dated May 19, 1999.

        10.3(1)     Subscription Agreement by and between  Pawnbroker.com,  Inc.
                    and Packard Financial Group Inc. dated June 14, 1999

        10.4(1)     Form of Share Purchase  Warrant issued to Packard  Financial
                    Group Inc. on June 14, 1999

        10.5(1)     85 Keystone Lease  Agreement by and between  Pawnbroker.com,
                    Inc. and The Kowalski Family Trust dated April 1, 1999

        10.6(1)     Design   and   Development    Agreement   by   and   between
                    Pawnbroker.com, Inc. and Banshee, Inc. dated April 26, 1999

        10.7(1)     Consulting Agreement by and between Pawnbroker.com, Inc. and
                    IRG Investor Relations dated June 25, 1999

        10.8(2)     Lease Agreement by and between Pawnbroker.com,  Inc. and Don
                    Pearlman Joint Venture Six dated December 2, 1999



                                       31
<PAGE>

        Exhibit
        Number      Description
        ------      -----------
        10.9(2)     Employment Agreement by and between Pawnbroker.com, Inc. and
                    Neil McElwee effective September 13, 1999

        10.10(2)    Employment Agreement by and between Pawnbroker.com, Inc. and
                    Joseph Schlader effective June 13, 1999

        10.11(2)    Employment Agreement by and between Pawnbroker.com, Inc. and
                    William Galine effective June 13, 1999

        10.12(2)    Employment Agreement by and between Pawnbroker.com, Inc. and
                    Vahid Rafizadeh

        10.13(2)    Severance    and   Release    Agreement   by   and   between
                    Pawnbroker.com,  Inc. and Daniel  McElwee  effective May 18,
                    2000

        10.14(2)    Letter  Agreement  by and between  Pawnbroker.com,  Inc. and
                    Jefferies & Co., Inc. dated December 1, 1999

        10.15(2)    12%  Promissory  Note in the Principal  Amount of $1,000,000
                    dated April 26, 2000 issued to BWI Avionics, Ltd.

        10.16(2)    Agreement   by  and   between   Pawnbroker.com,   Inc.   and
                    RedTagOutlet.com, Inc. dated May 10, 2000

        10.17(4)    Letter  Agreement  by and between  Pawnbroker.com,  Inc. and
                    Ladenburg Thalmann & Co. Inc. dated June 7, 2000

        10.18(4)    Letter  Agreement  by and between  Pawnbroker.com,  Inc. and
                    Ladenburg Thalmann & Co. Inc. dated June 7, 2000

        10.19(4)    Loan  Agreement  by and  between  Pawnbroker.com,  Inc.  and
                    Lamothe Investing Corp. dated June 7, 2000

        10.20(4)    Registration Rights Agreement by and between Pawnbroker.com,
                    Inc. and Lamothe Investing Corp. dated June 7, 2000

        10.21(4)    Escrow Agreement related to the Loan Agreement dated June 7,
                    2000

        10.22(4)    Form of 9% Convertible Debenture issued to Lamothe Investing
                    Corp.



                                       32
<PAGE>

        Exhibit
        Number      Description
        ------      -----------
        10.23(4)    Form of Warrant issued to Lamothe Investing Corp.

        10.29(3)    Amended and Restated Stock Option Plan, filed June 1, 2000.

        10.30(5)    Common   Stock    Purchase    Agreement   by   and   between
                    Pawnbroker.com,  Inc. and Gestrow  Investments Limited dated
                    July 6, 2000

        10.31(5)    Registration Rights Agreement by and between Pawnbroker.com,
                    Inc. and Gestrow Investments Limited dated July 6, 2000

        10.32(5)    Escrow  Agreement  related  to  the  Common  Stock  Purchase
                    Agreement dated July 6, 2000

        10.33(5)    Form of Warrant issued to Gestrow Investments Limited

        10.34(5)    Form of Warrant issued to Ladenburg Thalmann & Co.  Inc.

        10.35(5)    Letter Agreement dated July 7, 2000

        10.36(5)    Promissory Note issued to Ladenburg Thalmamm & Co. Inc.

        10.37(5)    Letter Agreement with Gestrow  Investment Limited dated July
                    19, 2000

        10.38(6)    Sales and Fulfillment Agreement dated September 2000, by and
                    between  Jewelry  Edge and  Pawnbroker.com,  Inc.  (filed as
                    Exhibit 10.1)

        10.39(6)    Subscription  Agreement  related  to  August  11,  2000 unit
                    private placement. (filed as Exhibit 10.2)

        10.40(6)    Strategic  Alliance  Agreement,   dated  October  18,  2000,
                    between   First   Cash   Financial   Services,    Inc.   and
                    Pawnbroker.com, Inc. (filed as Exhibit 10.3)

        10.41(6)    Form of  Warrant  issued to First Cash  Financial  Services,
                    Inc. (filed as Exhibit 10.4)

        10.42(6)    Strategic  Alliance  Agreement,   dated  October  18,  2000,
                    between   First   Cash   Financial   Services,    Inc.   and
                    Pawnbroker.com, Inc. (filed as Exhibit 10.3)

        10.43(6)    Form of  Warrant  issued to First Cash  Financial  Services,
                    Inc. (filed as Exhibit 10.4)



                                       33
<PAGE>

        Exhibit
        Number      Description
        ------      -----------
        10.44(7)    18%  Promissory  Note in the  Principal  Amount of  $100,000
                    dated July 19, 2001 issued to Edward Romano.

        10.45(7)    Form of  Subscription  Agreement  dated May 11,  2001 - Note
                    Conversion
-------------------

     (1)  Previously filed September 1, 1999 on Form 10.

     (2)  Previously filed October 13, 1999 on Form 10/A.

     (3)  Previously filed on June 1, 2000 on Form 8-K.

     (4)  Previously filed on June 30, 2000 on Form 10-K.

     (5)  Previously filed on July 31, 2000 on Form S-1.

     (6)  Previously filed on November 14, 2000 on Form 10-Q.

     (7)  Previously filed on May 15, 2001 on Form 10-K.


     b)   Reports on Form 8-K

          Form 8-K filed on July 19, 2001.







                                       34
<PAGE>



                                   SIGNATURES


     Pursuant to the  requirements  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.



Date: September 6, 2001

                                       PAWNBROKER.COM, INC.



                                       By:  /s/ Joseph Schlader
                                            ------------------------------------
                                            Name:  Joseph Schlader
                                            Title: President
                                                   (Principal Executive Officer
                                                    and Principal Financial
                                                    Officer)






                                       35