<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934.

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

                          COMMISSION FILE NO.000-24969



                            mPhase Technologies, Inc.

             (Exact name of registrant as specified in its charter)

         NEW JERSEY                                     22-2287503
(State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization                       Identification Number)

   587 CONNECTICUT AVE., NORWALK, CT                       06854-1711
(Address of principal executive offices)                   (Zip Code)

                    ISSUER'S TELEPHONE NUMBER, (203) 838-2741



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 SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORT), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /

THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON
STOCK AS OF NOVEMBER 9, 2001 IS 44,406,129 SHARES, ALL OF ONE CLASS OF $.01
STATED VALUE COMMON STOCK.

<PAGE>


                            mPHASE TECHNOLOGIES, INC.

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                               PAGE
                                                                                                               ----

PART I   FINANCIAL INFORMATION

ITEM 1   FINANCIAL STATEMENTS
<S>                                                                                                              <C>
         Consolidated Balance Sheets-June 30, 2001
           and September 30, 2001 (Unaudited) ....................................................................1

         Unaudited Consolidated Statements of Operations-Three Months Ended
           September 30, 2000 and 2001 and from October 2, 1996
           (Date of Inception) to September 30, 2001 .............................................................2

         Unaudited Consolidated Statement of Changes in Shareholders' Equity .....................................3
           Three months ended September 30, 2001

         Unaudited Consolidated Statements of Cash Flows-Three Months Ended
           September, 2000 and 2001 and from October 2, 1996
           (Date of Inception) to September 30, 2001 .............................................................4

         Notes to Unaudited Consolidated Financial Statements ................................................5 - 9

ITEM 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations ...............................................................10 - 14

ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .............................................15

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings ......................................................................................15

Item 2.  Changes in Securities ..................................................................................15

Item 3.  Defaults Upon Senior Securities ........................................................................15

Item 4.  Submission of Matters to a Vote of Security Holders ....................................................15

Item 5.  Other Information ......................................................................................15

Item 6.  Exhibits on Reports on Form 8-K ........................................................................15

Signature Page ..................................................................................................16
</TABLE>



<PAGE>


                            mPHASE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                           Consolidated Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                          June 30,        September 30,
                                                                           2001               2001
                                                                        ----------         ----------
                                                                                           (Unaudited)
<S>                                                                    <C>                   <C>
      ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                            $ 31,005              $   30,904
  Accounts receivable, net                                              292,434                 414,212
  Common Stock Subscription-Officers
   and Directors                                                              -                 550,000
  Inventory                                                           4,303,895               4,235,644
  Due from Officer                                                      100,000                 100,000
  Prepaid expenses and other current assets                             856,979                 422,196
                                                                     ----------              ----------


      Total Current Assets                                           $5,584,313              $5,752,956
                                                                     ----------              ----------
Property and equipment, net                                           2,198,845               1,973,848
Patents and licensing rights, net                                     1,026,524                 917,247
Other assets                                                            187,500                 150,000
                                                                     ----------              ----------

      TOTAL ASSETS                                                   $8,997,182              $8,794,051
                                                                     ==========              ==========


      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                    5,116,029               5,121,045
  Accrued expenses                                                    1,742,138               1,873,071
  Due to officers                                                             -                 156,252
  Due to related parties                                                184,373               1,012,793
  Deferred revenue                                                            -                 156,180
                                                                     ----------              ----------

      TOTAL CURRENT LIABILITIES                                       7,042,540               8,319,341
                                                                     ----------              ----------


Other Liabilities                                                        90,000                  60,000
                                                                     ----------              ----------

STOCKHOLDERS' EQUITY

Common stock, stated value $.01, 150,000,000 shares authorized;
  41,344,467 and 44,396,429 shares issued and outstanding at
  June 30, 2001, and September 30, 2001, respectively                   413,445                 443,964
Additional paid in capital                                           92,293,370              94,658,752
Deferred compensation                                                  (713,275)               (495,775)
Deficit accumulated during development stage                        (90,120,925)            (94,184,258)
Treasury stock, 13,750 shares at cost                                    (7,973)                 (7,973)
                                                                     ----------              ----------

    TOTAL STOCKHOLDERS' EQUITY                                        1,864,642                 414,710
                                                                     ----------              ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $8,997,182              $8,794,051
                                                                     ==========              ==========
</TABLE>

See notes to consolidated financial statements.

                                       1

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                             October 2,
                                                                                                1996
                                                                                             (Date of
                                                                     For the                 Inception)
                                                                Three Months Ended               to
                                                                   September 30,            September 30,
                                                                2000            2001            2001
                                                             ----------      ---------      --------------
<S>                                                          <C>             <C>             <C>
REVENUES                                                     $1,865,610      $ 537,008       $11,340,618
                                                             ----------      ---------       -----------

COSTS AND EXPENSES
  Cost of Sales                                                 871,852        456,699         6,393,128
  Research and development                                    3,162,361      1,111,416        28,100,607
  (including non-cash stock
   related charges of $0,
   $167,770, and $1,560,606,
   respectively
  General and Administrative                                  3,125,162      2,644,088        43,282,145
  (including non-cash stock
   related charges of $1,155,122,
   $942,355, and $18,783,128,
   respectively)
  Depreciation and amortization                                 123,458        193,079         1,774,508
  Non-cash charges for stock based
   compensation                                                 361,934        217,500        24,734,122
                                                             ----------      ---------       -----------

      TOTAL COSTS AND EXPENSES                                7,644,767      4,622,782       104,284,510
                                                             ----------      ---------       -----------

      LOSS FROM OPERATIONS                                   (5,779,157)    (4,085,774)      (92,943,892)

OTHER INCOME (EXPENSE):
  MINORITY INTEREST LOSS IN
    CONSOLIDATED SUBSIDIARY                                           -              -            20,000
  LOSS FROM UNCONSOLIDATED SUBSIDIARY                                 -              -        (1,466,467)
  INTEREST INCOME (EXPENSE), NET                                 28,479        (10,087)          173,573
                                                             ----------      ---------       -----------
      TOTAL OTHER INCOME (EXPENSE)                               28,479        (10,087)       (1,272,894)
                                                             ----------      ---------       -----------
LOSS BEFORE EXTRAORDINARY ITEM                                        -     (4,095,861)      (94,216,786)

  GAIN ON DEBT EXTINGUISHMENTS,
    net of tax of $0                                                  -         32,528            32,528
                                                            -----------    -----------      ------------
NET LOSS                                                    $(5,750,678)   $(4,063,333)     $(94,184,258)
                                                            ===========    ===========      ============

LOSS PER COMMON SHARE:
  Basic and diluted
  Loss from continuing operations
    before extraordinary gains                                    $(.18)         $(.10)
                                                                  -----          -----
  Extraordinary gains on debt extinguishment                      $   -          $   -
                                                                  -----          -----

  Net loss per common share                                       $(.18)         $(.10)
                                                                  =====          =====

WEIGHTED AVERAGE COMMON SHARES;
  OUTSTANDING, basic and
   diluted                                                   31,562,727     42,037,506
                                                             ==========     ==========
</TABLE>


See notes to consolidated financial statements

                                       2

<PAGE>

                            mPHASE TECHNOLOGIES, INC
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              STOCKHOLDERS' EQUITY
            For the three months ended September 30, 2001 (unaudited)
<TABLE>
<CAPTION>
----------------- ------------ ----------- ----------- ------------- -------------- -------------- -------------------
                    Shares        $.01       Treasury     Additional    Deferred      Accumulated         TOTAL
                                 Stated       Stock       Paid-in     Compensation      Deficit        STOCKHOLDERS
                                 Value                    Stock                                          EQUITY
----------------- ------------ ----------- ----------- ------------- -------------- -------------- -------------------
<S>               <C>           <C>         <C>        <C>            <C>           <C>                <C>
Balance June      41,344,467    $413,445     $(7,973)    $92,293,370    $(713,275)    $(90,120,925)     $ 1,864,642
30, 2001

Issuance of           75,000         750          -           74,250          -               -              75,000
Common stock
with warrants
in private
placement

Issuance of          717,000       7,170          -          394,470          -               -             401,640
Common stock
for services

  Issuance of          -             -            -          625,860          -               -             625,860
  options and
  warrants for
    services

Amortization of        -             -            -             -         217,500             -             217,500
    deferred
 employee stock
     option
  compensation

  Issuance of        259,962       2,599          -          290,802          -               -             293,401
common stock in
 settlement of
      debt

  Issuance of      2,000,000      20,000          -          980,000          -               -           1,000,000
Common stock to
    certain
  Officers and
   Directors

    Net Loss           -           -              -             -             -         (4,063,333)      (4,063,333)
                  ----------   ---------     -------     -----------    ---------     ------------      -----------
    Balance,      44,396,429    $443,964     $(7,973)    $94,658,752    $(495,775)    $(94,184,258)     $   414,710
                  ==========   =========     =======     ===========    =========     ============      ===========
   September
    30,2001

</TABLE>


                See notes to consolidated financial statements.

                                        3

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                   October 2,
                                                                                                      1996
                                                                                                    (Date of
                                                                        For the                     Inception)
                                                                  Three Months Ended                    to
                                                                      September 30,                September 30,
                                                                 2000              2001                2001
                                                               -------          ---------         --------------
<S>                                                         <C>                <C>                  <C>
Cash Flow From Operating Activities:
   Net Loss                                                 $(5,750,678)       $(4,063,333)         $(94,184,258)
   Adjustments to reconcile net loss
     to net cash used in operating
     activities:
     Depreciation and amortization                              239,383            427,132             2,941,974
     Book value of fixed assets disposed                         26,477                  -                74,272
     Provision for doubtful accounts                                  -                  -                29,218
     Extraordinary gain on debt extinguishment                        -             32,528                32,528
     Loss on unconsolidated subsidiary                                -                  -             1,466,467
     Impairment of note receivable                                    -                  -               212,500
     Non-cash charges relating to
       issuance of common stock,
       common stock options and
       warrants                                               1,517,086          1,327,625            45,075,938
   Changes in assets and liabilities:
     Accounts receivable                                     (1,411,682)          (121,778)             (443,430)
     Inventory                                                 (512,250)            68,251            (4,235,644)
     Prepaid expenses and other
       current assets                                          (227,907)           133,158              (607,288)
     Other assets                                                     -             37,500              (112,500)
     Accounts payable                                         1,613,830            (64,693)            4,257,820
     Accrued expenses                                           226,114            554,753             2,237,519
     Due to/from related parties                             (1,282,283)           860,028             3,028,765
     Due to officers                                                  -            156,252               156,252
     Receivables from Subsidiary                                      -                  -              (150,000)
     Due from officer                                                 -                  -              (100,000)
     Deferred revenue                                                 -            156,180               156,180
                                                            -----------         ----------           -----------
     Net cash used in operating
     activities                                              (5,561,910)          (496,397)          (40,163,687)
                                                            -----------         ----------           -----------
Cash Flow From Investing Activities:
  Payments related to patents and
    licensing rights                                                  -               (840)             (301,911)
  Purchases of fixed assets                                    (156,933)           (27,864)           (2,460,219)
                                                            -----------         ----------            ----------
      Net cash used in investing
        activities                                             (156,933)           (28,704)           (2,762,130)
                                                            -----------         ----------            ----------
Cash Flow From Financing Activities:
  Proceeds from issuance of common
   stock and exercises of options and
   warrants                                                   2,732,120            525,000            42,964,694
  Repurchase of treasury stock at cost                                -                  -                (7,973)
                                                            -----------         ----------            ----------
      Net cash provided by financing
        activities                                            2,732,120            525,000            42,956,721
                                                            -----------         ----------            ----------
Net (decrease)increase in cash                               (2,986,783)              (101)               30,904
Cash and cash equivalents,
  beginning of period                                         6,432,417             31,005                     -
                                                            -----------         ----------            ----------
Cash and Cash equivalents,
  end of period                                             $ 3,445,634         $   30,904            $   30,904
                                                            ===========         ==========            ==========
</TABLE>

See notes to the consolidated financial statements.

                                        4

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF OPERATIONS-mPhase Technologies, Inc. (the "Company") was
organized on October 2, 1996. On February 17, 1997, the Company acquired Tecma
Laboratories, Inc. ("Tecma") in a transaction accounted for as a reverse merger
whereby Tecma issued 6,600,000 shares of its common stock in exchange for all of
the issued and outstanding shares of the Company, and thereafter Tecma changed
its name to the Company's current name. On June 25, 1998, the Company acquired
Microphase Telecommunications, Inc. ("MicroTel"), through the issuance of
2,500,000 shares of its common stock in exchange for all the issued and
outstanding shares of MicroTel. The assets acquired in this acquisition were
patents and patent applications utilized in the Company's proprietary
Traverser-TM- Digital Video Data Delivery System ("Traverser"). The primary
business of the Company is to design, develop, manufacture and market
high-bandwidth telecommunications products incorporating direct subscriber line
("DSL") technology. The present activities of the Company are focused on the
deployment of its proprietary Traverser-TM- utilizing existing twisted pair
copper wire infrastructure in "Plain Old Telephone Systems" ("POTS"), and the
sale of component products. The Company continues to be a development stage
company, as defined by Statement of Financial Accounting Standards ("SFAS") No.
7, "ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES", as it continues
to devote substantially all of its efforts to establishing its core business,
and it has not yet commenced the significant deployment of its planned principal
operations.

         BASIS OF PRESENTATION-The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and pursuant to the regulations of
the Securities Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended September 30, 2001 are not necessarily indicative of the results that may
be expected for a full fiscal year. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 2001.

         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 amounts of assets and
liabilities at the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.

         RECLASSIFICATIONS-Certain reclassifications have been made in the prior
period consolidated financial statements to conform to the current period
presentation.

                                       5

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
         (Continued)

         EARNINGS PER SHARE-The Company computes earnings per share in
accordance with SFAS No. 128, "EARNINGS PER SHARE". Basic EPS excludes dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Common equivalent shares have been excluded from the computation of
diluted EPS for all periods presented since their affect is antidilutive.

         RESEARCH AND DEVELOPMENT-Research and development costs are charged to
operations as incurred.

         REVENUE RECOGNITION-All revenue included in the accompanying
consolidated statements of operations for all periods presented relates to sales
of mPhase's POTS Splitter Shelves and DSL Component products. As required, the
Company adopted the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletin ("SAB") No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS, which
provides guidance on applying generally accepted accounting principles to
revenue recognition based on the interpretations and practices of the SEC. The
Company recognizes revenue for its "POTS Splitter Shelf" and "Splitter Card"
products at the time of shipment, at which time, no other significant
obligations of the Company exist, other than normal warranty support. Deferred
revenue relates to prepayments by customers for which the Company's obligation
to deliver products has not been met.

         BUSINESS CONCENTRATIONS-Sales to one customer represented approximately
60% of revenues for the three month period ended September 30, 2001.

         RECENT ACCOUNTING PRONOUNCEMENTS-In July 2001, the Financial Accounting
Standards Board, ("FASB") issued No. 141, "Business Combinations" and SFAS No.
142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible assets with
indefinite lives are no longer amortized but are reviewed annually (or more
frequently if impairment indicators arise) for impairment. Separable intangible
assets that are not deemed to have indefinite lives will continue to be
amortized over their useful lives (but with no maximum life). The amortization
provisions of SFAS No. 142 apply to goodwill and intangible assets acquired
after June 30, 2001. With respect to goodwill and intangible assets acquired
prior to July 1, 2001, the Company is required to adopt SFAS No. 142 effective
January 1, 2002. Adoption of SFAS No. 141 will have no effect on the Company's
results of operations or financial position. Management does not expect that
adoption of SFAS No. 142 will have a material effect on the Company's results of
operations or financial position.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. SFAS No. 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of", and provides guidance on
classification and accounting for such assets when held for sale or abandonment.
SFAS No. 144 is effective for fiscal years beginning after December 15, 2001.
Management does not expect that adoption of SFAS No. 144 will have a material
effect on the Company's results of operations or financial position.

                                        6

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

2.       RELATED PARTY TRANSACTIONS

         Certain members of the management of the Company are also employees of
Microphase Corp. ("Microphase"). On May 1, 1997, the Company entered into a
month to month agreement with Microphase, pursuant to which the Company uses
office space as well as the administrative services of Microphase including the
use of accounting personnel. The Company initially paid Microphase $10,000 per
month until January 2000, at which time the office space agreement was revised
to provide a fee of $11,050 and again on July 2001 this agreement was revised to
provide of fee of $11,340 per month. Additionally, in July 1998, the Company
entered into an agreement with Microphase, whereby the Company pays Microphase
$40,000 per month for technical research and development assistance. Microphase
also charges fees for specific projects on a project by project basis. During
the three months ended September 30, 2000 and 2001 and for the period from
inception (October 2, 1996) to September 30, 2001, $731,088, $258,287 and
$5,622,117 respectively, have been charged to expense or inventory under these
agreements.

         The Company is obligated to pay a 3% royalty to Microphase on revenues
from the Company's proprietary Traverser Digital Video Data Delivery System and
related component products. During the three months ended September 30, 2001 the
Company recorded royalties to Microphase totaling $16,409.

         As a result of the foregoing transactions as of September 30, 2001, the
Company had a $555,222 payable to Microphase which included in amounts due to
related parties in the accompanying consolidated balance sheet.

         During the year ended June 30, 2001 the Company advanced funds to
Janifast Limited, which is owned by U.S. Janifast Holdings, Ltd., a company in
which three directors of mPhase are significant shareholders, in connection with
manufacturing the inventory of POTS Splitter shelves and component products
including cards and filters sold by the Company. During the three month ended,
the Company had ordered various component parts from Janifast and as of
September 30, 2001 the amount due to Janifast was $400,705 which is included in
due to related parties in the accompanying balance sheet. During the three month
period ended September 30, 2001 Janifast charged the Company $422,363 for
product costs and research and development expenses which are included in
inventory on the consolidated balance sheet or cost of sales in the statement of
operations as of September 30, 2001.

         Included in due to related parties in the accompanying balance sheet as
of September 30, 2001 is $52,499 due to affiliates of the Company's joint
venture partner, Alpha Star International Inc.

         As consideration for a letter of settlement with a former consultant of
mPhase, the Company had loaned the former consultant $250,000 in the form of a
Note (the "Note") secured by 75,000 shares of the former consultants common
stock of mPhase. The Note was due April 7, 2001. Accordingly, during the year
ended June 30, 2001, the Company charged $212,500 to administrative expense as a
result of impairment of the Note. The Company has included the balance of
$37,500, representing the estimated fair value of the underlying stock, in
long-term assets in the accompanying consolidated balance sheet at September 30,
2001.

         During the year ended June 30, 2001, the Company converted $2,420,039
of liabilities due to directors and related parties into 4,840,077 shares of the
Company's common stock pursuant to debt conversion agreements.

         During the three months ended September 30, 2001, the Company converted
$31,608 of liabilities due to related parties into 63,216 shares of the
Company's common stock pursuant to debt conversion agreements.

                                        7

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

3.       INVENTORY

         Inventory is stated at the lower of cost, determined on a first-in,
first-out basis, or market. Inventory consists mainly of the Company's POTS
Splitter Shelf and Splitter card. At September 30, 2001 inventory is comprised
of the following:

     Raw materials                                                $750,494
     Finished goods                                              3,933,856
                                                                 ---------

     Total                                                       4,684,350
     Less:  Reserve for Obsolescence                              (448,706)
                                                               ------------

     Net Inventory                                              $4,235,644
                                                               ============

4.       INCOME TAXES

         The Company accounts for income taxes using the asset and liability
method in accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES". Under this
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Because of the
uncertainty as to their future realizability, net deferred tax assets,
consisting primarily of net operating loss carryforwards, have been fully
reserved for. Accordingly, no income tax benefit for the net operating loss has
been recorded in the accompanying consolidated financial statements.

         Utilization of net operating losses generated through September 30,
2001 may be limited due to changes in ownership that have occurred.

5.       JOINT VENTURE

         In March 2000, the Company acquired a 50% interest in mPhase
Television.Net, Inc. (formerly Telco Television Network, Inc.) for $20,000
pursuant to a Joint Venture Agreement (the "Agreement"). In addition, the
Company loaned the joint venture $1,000,000 at 8% interest per annum in March
2000. The loan is repayable to the Company from equity infusions to the
subsidiary, but in no event later than such time that mPhase Television
qualifies for a NASDAQ Small Cap Market Listing. During April 2000, the Company
acquired an additional 6.5% in interest in mPhase Television for $1,500,000. The
Agreement stipulates for mPhase's joint venture partner, AlphaStar
International, Inc., to provide mPhase Television.Net right of first
transmission for its transmissions including MPEG-2 digital satellite
television.

         During the three months ended September 30, 2000 and 2001, the joint
venture was charged $197,865 and $35,608, respectively, in certain allocable
fees and costs by the joint venture partner and its affiliates. Through
September 30, 2001 100% of the losses incurred of the subsidiary have been
consolidated into the results of operations of the Company.

         Effective October 1, 2001 the Company and the joint venture partner
agreed to reduced monthly allocable amounts discussed in Note 8.

                                       8

<PAGE>

                            mPHASE TECHNOLOGIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

6.       EQUITY TRANSACTIONS

         During the three month period ended September 30, 2001, the Company
sold 75,000 shares of its common stock and a like amount of warrants to purchase
one share each of the Company's common stock at an exercise price of $3.00
generating gross proceeds of $75,000 in a private transaction with accredited
investors.

In September 2001, certain Board members subscribed to purchase up to 2,000,000
restricted shares of the Company's common stock for $1,000,000. As of September
30, 2001 $450,000 has been collected on this subscription, the balance of which
$550,000 has been collected in full as of November 13, 2001.

The Company granted 410,000 options to employees and 1,710,000 options to
consultants for services performed during the three month period ended September
30, 2001. Also, during the three months ended September 30, 2001, the Company
granted 717,000 shares of its common stock to consultants for services
performed. Certain strategic vendors converted $293,401 of accounts payable and
accrued expenses into 259,962 shares of the Company's common stock.

7.       DEBT EXTINGUISHMENTS

         During the three months ended September 30, 2001, pursuant to debt
conversion agreements, the Company converted $59,501 of liabilities due to
certain vendors into 79,334 shares of the Company's common stock, which resulted
in extraordinary gain on extinguishment of $32,528.

8.       COMMITMENTS AND CONTINGENCIES

         The Company has entered into various agreements with Georgia Tech
Research Corporation ("GTRC"), pursuant to which the Company receives technical
assistance in developing the commercialization of its digital video and data
delivery system (DVDDS). The amounts incurred by the Company for GTRC technical
assistance with respect to its research and development activities and included
in the accompanying consolidated statement of operations for the three months
ended September 30, 2000 and 2001 and for the period from inception through
September 30, 2001 totaled approximately $1,135,000, $250,000 and $13,224,300,
respectively. If and when sales commence utilizing this particular technology,
the Company will be obligated to pay to GTRC a royalty to 5% of product sales,
as defined.

The Company and the joint venture partner of mPhase Television.Net, Inc. agreed
to revised expense allocations consisting of $20,000 per month and $120,000 per
month, respectively, from October 1, 2001 through June 30, 2002 in connection
with agreement to retain its rights to retransmission and is based upon the
magnitude of transmission capability and actual utilization, which is at the
Company's discretion.

         From time to time, the Company may be involved in various legal
proceedings and other matters arising in the normal course of business.

                                       9

<PAGE>

ITEM 2  MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITIONS AND RESULTS OF
        OPERATIONS--MPHASE TECHNOLOGIES, INC.

The following is management's discussion and analysis of certain significant
factors, which have affected mPhase's financial position and should be read in
conjunction with the accompanying financial statements and the related notes.

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
LITIGATION REFORM ACT OF 1995:

         Some of the statements contained in or incorporated by reference in
this Form 10-Q discuss the Company's plans and strategies for its business or
state other forward-looking statements, as this term is defined in the Private
Securities Litigation Reform Act of 1995. The words "anticipate," "believe,"
"estimate," "expect," "plan," "intend," "should," "seek," "will," and similar
expressions are intended to identify these forward-looking statements, but are
not the exclusive means of identifying them. These forward-looking statements
include, among others, statements concerning the Company's expectations
regarding its working capital requirements, gross margin, results of operations,
business, growth prospects, competition and other statements of expectations,
beliefs, future plans and strategies, anticipated events or trends, and similar
expressions concerning matters that are not historical facts. Any
forward-looking statements contained in this Quarterly Report on Form 10-Q are
subject to risks and uncertainties that could cause actual results to differ
materially from those results expressed in or implied by the statements
contained herein.

RESULTS OF OPERATIONS

OVERVIEW

mPhase is a development-stage company that has designed, patented and is
currently engaged in a "controlled roll-out" of the Company's primary product,
the Traverser(TM). The Company believes that the Traverser(TM) provides a unique
"turnkey" broadband equipment solution that enables telephone companies to
deliver real time digital video programming, high-speed Internet and voice
telephony service over existing copper telephone lines. The Company believes
that the Traverser(TM) will, in many instances, provide the most cost effective,
reliable and scaleable solution for many telephone companies to provide a
comprehensive suite of bundled or unbundled services, utilizing Asymmetric
Digital Subscriber Line, or ADSL technology. mPhase also manufactures and sells
POTS Splitter Shelves and other DSL component products, which are currently
being deployed by telephone companies both in the United States and abroad.

mPhase was organized on October 2, 1996. On February 17, 1997, the Company
acquired Tecma Laboratories, Inc., a public corporation in a reverse merger
transaction. This resulted in the Company's stock becoming publicly traded on
the NASDAQ Over-the-Counter Bulletin Board. On June 25, 1998, the Company
acquired Microphase Telecommunications, Inc. in a stock for stock exchange,
whose principal assets included patents and patent applications utilized in the
Company's Traverser(TM) product. On August 21, 1998, mPhaseTV.net, Inc. was
organized as a wholly-owned subsidiary to act as the Company's marketing vehicle
for video services and voice-routing over the Internet. On March 2, 2000, mPhase
acquired an interest in mPhaseTelevision.Net, Inc., a joint venture organized to
provide digital television programming content over the Traverser(TM) product.

From mPhase's inception, the operating activities related primarily to research
and development, establishing third-party manufacturing relationships and
developing product brand recognition among telecommunications service providers.
These activities included establishing trials and field tests of the
Traverser(TM) product with Hart Telephone Company in Georgia and establishing a
core administrative and sales organization.

                                       10

<PAGE>

Revenues. To date, all revenues have been generated from sales of POTS Splitter
Shelves and other DSL component products to a small number of telecommunications
companies. mPhase believes that future revenues are difficult to predict because
of the length and variability of the controlled

roll-out of the Traverser(TM) to various telecommunications service providers.
Since the Company believes that there may be a significant international market
for the Traverser(TM), involving many different countries with different
regulations, certifications and commercial practices than the United States,
future revenues are highly subject to changing variables and uncertainties.

Cost of revenues. The costs necessary to generate revenues from the sale of POTS
Splitter Shelves and other DSL component products include direct material, labor
and manufacturing. mPhase paid these costs to Janifast Corporation, which has
facilities in the People's Republic of China and is owned by and managed by
certain senior executives of the Company. The cost of revenues also includes
certain royalties paid to Microphase Corporation, a privately-held corporation
organized in 1955, which shares certain common management with the Company.
Costs for future production of the Traverser(TM) product will consist primarily
of payments to manufacturers to acquire the necessary components and assemble
the products and future patent royalties payable to Georgia Tech Research
Corporation, or GTRC.

Research and development. Research and development expenses consist principally
of payments made to GTRC and Microphase Corporation for development of the
Traverser(TM) product. All research and development costs are expensed as
incurred.

General and administrative. Selling, general and administrative expenses consist
primarily of salaries and related expenses for personnel engaged in direct
marketing of the Traverser(TM), the POTS Splitter Shelves and other DSL
component products, as well as support functions including executive, legal and
accounting personnel. Certain administrative activities are outsourced on a
monthly fee basis to Microphase Corporation. Finally, mPhase leases the
principal office from Microphase Corporation.

Non-cash compensation charge. The Company makes extensive use of stock options
and warrants as a form of compensation to employees, directors and outside
consultants.

THREE MONTHS ENDED SEPTEMBER 30, 2001 VS. SEPTEMBER 30, 2000

REVENUE:

         Total revenues were $537,008 for the three months ended September 30,
2001 compared to $1,865,610 for the three months ended September 30, 2000. The
decrease in revenue for the current quarter ended September 30, 2001 as compared
to the quarter ended September 30, 2000 was due to slowing sales of the
Company's POTS Splitter Shelf products, caused by the general downturn in the
DSL equipment market, including customers that order component products from the
Company. The Company continues to believe that this product is positioned to be
competitively priced with high reliability and connectivity, and as such will be
an essential part of DSL deployment worldwide. The Company cannot say when the
current contraction of DSL deployments will subside.


                                       11

<PAGE>

COST OF REVENUES:

         Cost of sales were $456,699 for the three months ending September 30,
2001 as compared to $871,852 in the prior period, representing 85% and 46.7%,
for the quarters ended September 30, 2001 and 2000 respectively, of gross
revenues. These margins have varied dramatically as telecommunication companies
worldwide have experienced volatility in demand and DSL Deployments which
utilize our component products have been significantly reduced this year when
compared to last year. Additionally, the Company has offered discounts to
certain customers in the period ended September 30, 2001 causing the margin to
decrease.


RESEARCH AND DEVELOPMENT:

         Research and development expenses were $1,111,416 for the three months
ending September 30, 2001 as compared to $3,162,361 during the comparable period
in 2000 this includes $250,000 incurred with GTRC for the three months ended
September 30, 2001 as compared to $1,135,000 during the comparable period in
2000 in addition to $861,416 incurred primarily with Microphase and other
strategic vendors for the three months ending September 30, 2001 as compared to
$2,027,361 during the comparable period in 2000. The decrease in research
expenditures are due to the Company's nearing completion of the design and
manufacture of prototypes of the set top box and the central office equipment
associated with its Traverser product.

         Research expenditures incurred with Microphase were related to the
continuing development of the Company's DSL component products, including the
Company's POTS Splitters and Micro Filters and the Company's newest product
iPOTS(TM). The mPhase iPOTS(TM), Intelligent POTS Splitter, offers a needed
solution for the DSL industry; it allows telcos to correctly perform necessary
line testing, qualification, troubleshooting and loop maintenance. Previously,
loops could not be remotely tested through a conventional POTS Splitter without
the use of expensive cross connects or relay banks because of the mandatory DC
blocking capacitors in the CO splitter (required by the ITU, ANSI and ETSI). The
unique (patent pending) iPOTS(TM) circuit allows most test heads to perform both
narrow and wideband testing of the local loop through the central office POTS
Splitter. As such, the Company believes that those telcos which need to
strengthen their existing DSL capabilities before they can expand their DSL
services will utilize this product.

GENERAL AND ADMINISTRATIVE EXPENSES:

         Selling, general and administrative expenses were $2,644,088 for the
three months ending September 30, 2001 down from $3,125,162 for the comparable
period in 2000. The decrease in the selling, general and administrative costs
are a result of the decrease of non-cash charges relating to the issuance of
common stock and options to consultants which totaled $942,355 for the three
months ended September 30, 2001 as compared to $1,155,122 during the comparable
period in 2000 and certain reduction in workforce under the Company's present
austerity program in response to the current contraction in the
telecommunications equipment market.

NET LOSS:

         The Company recorded a net loss of $4,063,333 for the three months
ended September 30, 2001 as compared to a loss of $5,750,678 for the three
months ended September 30, 2000. This represents a loss per common share of
$(.10) for the three month period ended September 30, 2001 as compared to a loss
per common share of $(.18) for the three month period ended September 30, 2000.

                                       12

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         At September 30, 2001 mPhase had a working capital deficit of
$2,566,385 as compared to a working capital deficit of $1,458,227 on June 30,
2001.

         Historically, the Company has funded its operations and capital
expenditures primarily through private placements of common stock. However, the
Company believes that the sales of its POTS Splitter Shelves and other component
products will provide some offset to cash flows used in operations, although
there can be no assurance as to the level and growth rate of such sales in
future periods as seen with quarter to quarter fluctuations in components sales
due to an overall volatile telephone equipment market. At September 30, 2001,
the Company had cash and cash equivalents of $30,904, compared to $31,005 at
June 30, 2001, accounts receivable and inventory of approximately $.4 million
and $4.2 million, respectively. This compared to approximately $.3 million of
accounts receivable and inventory of $4.3 million at June 30, 2001.

Cash used in operating activities was $496,397. The cash used by operating
activities principally consists of the net loss, the net increase in inventory
and accounts receivable offset by the cash generated from related party
payables, a net increase in depreciation and amortization, and offset by non
cash charges for common stock options and warrants issued for services and
increased accounts payable and accrued expenses.

         The Company has entered into various agreements with GTRC, pursuant to
which the Company receives technical assistance in developing the
commercialization of its Digital Video and Data Delivery System(TM). The Company
has incurred expenses in connection with technical assistance from GTRC totaling
approximately $1,135,000 and $250,000 for the three months ended September 30,
2000 and 2001 respectively and $13.2 million from the period from inception
through September 30, 2001. If and when sales commence utilizing this
technology, the Company will be obligated to pay GTRC a royalty of 5% of product
sales.

         The Company plans to continue to invest in technology and
telecommunications hardware and software in connection with the full commercial
production of the Traverser(TM) and the joint venture in mPhaseTelevision.Net,
Inc. The timing and nature of such continued investment is dependent upon the
Company's ability to raise sufficient capital.

         During the three month period ended September 30, 2001, the Company
issued 75,000 shares if its common stock, together with a like amount of
warrants with an exercise price of $3.00 for $75,000 as part of a private
placement which commenced prior to June 30, 2001. Additionally, certain Officers
and Directors subscribed to purchase 2,000,000 shares of common stock, for
$1,000,000. In addition, certain strategic vendors converted $293,401 of
accounts payable and accrued expenses into 259,962 shares of the Company's
common stock.

As of September 30, 2001, mPhase had no material commitments for capital
expenditures.

LOSSES DURING THE DEVELOPMENT STAGE AND MANAGEMENT'S PLANS

Through September 30, 2001, the Company had incurred development stage losses
totaling approximately $94,184,218, was in a working capital deficit position of
$2,566,385. At September 30, 2001, the Company had approximately $30,904 of
cash, cash equivalents and approximately $414,200 of trade receivables to fund
short-term working capital requirements. The Company's ability to continue as a
going concern and its future success is dependent upon its ability to raise
capital in the near term to: (1) satisfy its current

                                       13

<PAGE>

obligations, (2) continue its research and development efforts, and (3) the
successful wide scale development, deployment and marketing of its products.

The Company believes that it will be able to complete the necessary steps in
order to meet its cash flow requirements throughout fiscal 2002 and continue its
development and commercialization efforts. Management's plans in this regard
include, but are not limited to, the following:

                  Subsequent to year end, the Company has secured $1,000,000 of
                  subscriptions to purchase common stock from certain officers
                  and directors. To date, all of such subscriptions have been
                  collected. The Company presently has ongoing discussions and
                  negotiations with a number of additional financing
                  alternatives, one or more of which it believes will be able to
                  successfully close to provide necessary working capital, while
                  maintaining sensitivity to shareholder dilution issues.

In addition to the above financing activities, the following business
initiatives are also ongoing and are expected to provide additional working
capital to the Company:

                  The Company is in negotiation with certain strategic vendors
                  to convert outstanding current liabilities into equity. The
                  Company is currently negotiating with several organizations
                  for the commencement of commercial sales of its Traverser
                  products, including deployment at existing test sites. The
                  Company is seeking to increase sales in the present market by
                  providing component products which can make the ongoing
                  realignment in the industry of transferring DSL accounts from
                  struggling or failed CLEC's to RBOC;s a more stabilized
                  exercise.

Management believes that actions presently being taken to complete the Company's
development stage through the introductory roll-out of its Traverser (TM)
Digital Video and Data Delivery System (TM) will be successful. However, there
can be no assurance that mPhase will generate sufficient revenues to provide
positive cash flows from operations or that sufficient capital will be
available, when required, to permit the Company to realize its plans. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

The Company's current planned cash requirements for fiscal 2002 are based upon
certain assumptions, including its ability to raise additional financing and
increased sales of its POTS Splitter Shelf. mPhase has made significant
reductions in expenses including marketing and research and development
expenses. Should these cash flows not be available, mPhase believes it would
have the ability to revise its operating plan and make further reductions in
expenses.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not exposed to changes in interest rates as the Company has no
debt arrangements and no investments in certain held-to-maturity securities
Under our current policies, we do not use interest rate derivative instruments
to manage exposure to interest rate changes. A hypothetical 100 basis point
adverse move in interest rates along the entire interest rate yield curve would
not materially affect the fair value of any financial instruments at September
30, 2001.

                                       14

<PAGE>


PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On or about September 30, 2000, mPhase received notice that on
         September 22, 2000, a former employee commenced a lawsuit in the United
         States District Court for the Middle District of Tennessee against the
         Company, two of the Company's officers, and one of the Company's
         outside attorneys. The action alleges that the Company failed to timely
         remove restrictions from plaintiff's restricted stock, and failed to
         provide plaintiff with an employment contract. The plaintiff alleged
         violations of federal securities law, Tennessee securities law, and
         common law and seeks damages of $1,679,000 plus punitive damages. The
         plaintiff seeks damages of $2,000,000 plus punitive damages for the
         employment claim. On July 25, 2001, the court rendered its decision
         regarding all defendants' motion to dismiss the plaintiff's complaint.
         Of the thirteen causes of action alleged in the complaint, seven were
         dismissed in their entirety and three were dismissed in part. mPhase
         believes it has meritorious defenses to plaintiff's claims and plans to
         vigorously defend the action.

         From time to time mPhase may be involved in various legal proceedings
         and other matters arising in the normal course of business.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) EXHIBITS.

         None.

         (b) Reports on Form 8-K.

         None.


                                       15

<PAGE>


                                   SIGNATURES

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

                                                     mPHASE TECHNOLOGIES, INC.


Dated: November 13, 2001                             By: /s/ RONALD A. DURANDO
                                                     --------------------------
                                                     Ronald A. Durando
                                                     President, CEO


Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

Necdet F. Ergul Chairman of the Board                         November 13, 2001
Ronald A. Durando Chief Executive Officer, Director           November 13, 2001
Gustave T. Dotoli Chief Operating Officer, Director           November 13, 2001
Martin S. Smiley Chief Financial Officer                      November 13, 2001
Anthony Guerino Director                                      November 13, 2001
Abraham Biderman Director                                     November 13, 2001

                                       16