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Amendment to a previously filed 10QSB

10QSB/A

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  Form 10-QSB/A


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

      For the quarterly period ended March 31, 2002


[_]   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 001-15673


                      FRONTLINE COMMUNICATIONS CORPORATION
        (Exact name of Small Business issuer as specified in its Charter)


         Delaware                                              13-3950283
  (State or other jurisdiction                               (I.R.S Employer
Of incorporation or organization)                         Identification number)


One Blue Hill Plaza, P.O. Box 1548, Pearl River, New York               10965
      (Address of principal executive offices)                        (Zip Code)

                                 (845) 623-8553
                (Issuer's Telephone Number, including Area Code)

Indicate by a check mark whether the issuer: (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 twelve 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 last 90 days.

Yes X   No___


As of April 26, 2002 there were outstanding 8,944,551 shares of the issuer's
Common Stock, $ .01 par value.






                                      INDEX

                                                                            Page


Part I   Financial Information


Item 1   Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets                               1

         Condensed Consolidated Statements of Operations                     2

         Condensed Consolidated Statements of Cash Flows                     3

         Notes to Condensed Consolidated Financial Statements                4


Item 2   Management's Discussion and Analysis of Financial Condition And
         Results Of Operations                                               5


Part II  Other information                                                   8

         Signatures                                                          9






Frontline Communications Corporation
Condensed Consolidated Balance Sheets





                                                                                  March 31,      December 31,
                                                                                    2002             2001
                                                                                ------------     ------------
                                                                                 (Unaudited)      (Audited)
                                                                                           
ASSETS
Current:
   Cash and cash equivalents                                                    $    413,490     $    602,534
   Accounts receivable, net of allowance for doubtful accounts                       230,523          264,257
   Prepaid expenses and other                                                         44,985           33,023
                                                                                ------------     ------------
                                Total current assets                                 688,998          899,814

Property and equipment, net                                                        1,112,193        1,267,625
Intangibles, net                                                                     100,034          140,738
Other                                                                                103,134          105,493

                                                                                ------------     ------------
                                                                                $  2,004,359     $  2,413,670
                                                                                ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accruals                                                $  1,649,692     $  1,761,947
   Deferred revenue                                                                  682,016          615,350
   Current portion of  long-term debt                                                231,541          247,840
                                                                                ------------     ------------
                             Total current liabilities                             2,563,249        2,625,137

Long-term Debt, less current portion                                                 804,655          858,829

                                                                                ------------     ------------
                                 Total liabilities                                 3,367,904        3,483,966
                                                                                ------------     ------------

Stockholders' equity:
   Preferred stock, $.01 par value, 2,000,000 shares authorized,  issued and
      outstanding 527,100  shares (liquidation preference $7,906,500)                  5,271            5,271
   Common Stock, $.01 par value, 25,000,000 shares authorized,                     9,561,197
      shares issued and 8,944,551 shares outstanding                                  95,612           95,612
   Additional paid-in capital                                                     36,074,277       36,074,277
   Accumulated deficit                                                           (36,674,053)     (36,380,804)
   Treasury stock, at cost, 616,646 shares                                          (864,652)        (864,652)
                                                                                ------------     ------------
                           Total stockholders' deficiency                         (1,363,545)      (1,070,296)

                                                                                ------------     ------------
                                                                                $  2,004,359     $  2,413,670
                                                                                ============     ============




      See notes to condensed consolidated financial statements.




                                      -1-




FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

                                                    For the three months ended
                                                    March 31,        March 31,
                                                      2002             2001
                                                   -----------      -----------

Revenues                                            $1,352,269       $1,689,385

Costs and expenses:
      Cost of revenues                                 681,854        1,047,674
      Selling, general and administrative              667,322        1,255,059
      Depreciation and amortization                    194,262          730,831
                                                   -----------      -----------
                                                     1,543,438        3,033,564
                                                   -----------      -----------
Loss from operations                                  (191,169)      (1,344,179)

Other income (expense):
   Interest income                                       1,742           30,381
   Interest expense                                    (21,543)         (39,481)
   Loss on disposal of property and equipment           (3,214)         (38,919)
                                                   -----------      -----------
Net loss                                              (214,184)      (1,392,198)
                                                   -----------      -----------


Preferred dividends                                     79,065           83,805

                                                   -----------      -----------
Net loss available to common shareholders             (293,249)      (1,476,003)
                                                   ===========      ===========

Loss per common share-basic and diluted                 ($0.03)          ($0.22)
                                                   ===========      ===========

Weighted average number of  common shares
   outstanding- basic and diluted                    8,944,551        6,629,985
                                                   ===========      ===========


See notes to condensed consolidated financial statements.


                                      -2-




FRONTLINE COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Revised





                                                                  For the three months ended
                                                                   March 31,       March 31,
                                                                     2002            2001
                                                                 ----------------------------

                                                                            
Cash flow from operating activities:
   Net loss                                                        ($214,184)     ($1,392,198)
   Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
      Depreciation and amortization                                  194,262          730,831
      Loss on disposal of property and equipment                       3,214           38,919
      Changes in operating assets and liabilities
         Marketable securities                                     1,808,210
         Accounts receivable                                          33,734           67,801
         Prepaid expenses and other                                  (11,962)         (36,569)
         Other assets                                                  2,359              480
         Accounts payable and accruals                              (191,317)        (552,263)
         Deferred revenue                                             66,666           32,756
                                                                 -----------      -----------
Net cash  (used in) provided  by operating activities               (117,228)         697,967
                                                                 -----------      -----------


Cash flows from investing activities:
   Acquisition of property and equipment                              (6,343)         (25,864)
   Proceeds from disposal of property and equipment                    5,000           51,886
                                                                 -----------      -----------
Net cash (used in) provided by investing activities                   (1,343)          26,022
                                                                 -----------      -----------


Cash flows from financing activities:
   Principal payments on long-term debt                              (70,473)        (171,761)
                                                                 -----------      -----------
Net cash used in  financing activities                               (70,473)        (171,761)
                                                                 -----------      -----------

Net (decrease) increase in cash and cash equivalents                (189,044)         552,228

Cash and cash equivalents, beginning of period                       602,534          781,082

                                                                 -----------      -----------
Cash and cash equivalents, end of period                            $413,490       $1,333,310
                                                                 ===========      ===========

Supplemental information:
Approximate interest paid during the period                          $14,000          $32,000
                                                                 ===========      ===========




See notes to condensed consolidated financial statements.


                                      -3-




FRONTLINE COMMUNICATIONS CORPORATION

Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE A- BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B. 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 fair presentation have
been included. The results for the interim periods are not necessarily
indicative of the results that may be attained for an entire year or any future
periods. For further information, refer to the Financial Statements and
footnotes thereto in the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 2001. There have been no significant changes in
accounting policies since December 31, 2001.

      The condensed consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

NOTE B- LOSS PER SHARE

      The Company follows SFAS No. 128, "Earning per Share", which provides for
the calculation of "basic" and "diluted" earning per share ("EPS"). Basic EPS
includes no dilution and is computed by dividing income or loss available to
common shareholders by the weighted - average number of common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution that could occur through the effect of common shares issuable upon
exercise of stock options and warrants and convertible securities. Potential
common shares have not been included in the computation of diluted loss since
the effect would be antidilutive.

NOTE C- ADOPTION OF NEW ACCOUNTING LITERATURE

      The Company adopted the provisions of Statement of Financial Accounting
Standards No. 141 and No. 142 as of January 2, 2002. The adoption of these
standards had no effect on the Company's financial position, results of
operations or cash flows.


                                      -4-




M
ANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:

      The statements contained herein which are not historical facts are
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934.
These "forward looking statements" are subject to risks and uncertainties,
including but not limited to, risks associated with the Company's future growth
and operating results, the ability of the Company to successfully integrate
newly acquired subscribers, business entities and personnel into its operations,
changes in consumer preference and demographics, technological change,
competitive factors, unfavorable general economic conditions, and other factors
described herein and in the Company's other Securities and Exchange Commission
filings. The words "believe", "expect", "anticipate", "intend" and "plan" and
similar expressions identify forward-looking statements, which speak only as of
the date the statements were made. The Company assumes no obligation to update
the forward-looking information. Actual results may vary significantly from the
results expressed or implied by such forward looking statements.

Overview

      During the three months ended March 31, 2002 and 2001 a significant part
of the Company's revenues were derived from providing Internet access services
to individuals and businesses. These revenues were comprised principally of
recurring revenues from the Company's customer base, leased line connections and
from various ancillary services. The Company charges subscription fees, which
are billed monthly, quarterly or annually, in advance, typically pursuant to
pre-authorized credit card accounts. The balance of the Company's revenues were
derived from website development and hosting services.

      Monthly subscription service revenue for Internet access is recognized
over the period in which services are provided. Fee revenue for website
development and Internet website presence services are recognized as services
are performed. Deferred revenue represents prepaid access fees by customers.

Restructuring Program.

In October 2000, the Company initiated a restructuring program designed to,
among other things, reduce its operating losses. The program consists of
reductions of personnel, reduction in marketing and promotional expenses,
consolidation of certain operations, exit from certain marginal product lines
not related to the Company's core business, and closure of regional offices.

      The Company believes that the restructuring program and related cost
reductions, will permit the Company to maintain service quality to its
customers, while a more focused product offering portfolio should enhance the
Company's ability to grow its revenue base. The Company has realized significant
cost reductions from its restructuring program and the Company hopes to reduce
additional costs during the remainder of 2002. However, there can be no
assurance that the restructuring program will achieve the desired results and
that there will not be any disruption or curtailment of any services or
resulting loss of revenues.


                                      -5-




Results of Operations
Comparison of the three months ended March 31, 2002 and 2001

Revenues: Revenues decreased for the three months ended March 31, 2002 by
$337,116 or 20% over the same period of the prior year. The decrease in revenues
were in part due to the Company's closure of unprofitable satellite offices and
due to a lesser amount of website development work performed in 2002.

Cost of Revenues: For the three months ended March 31, 2002, cost of revenues
decreased by $365,820 to $681,854 compared to the same period of the prior year.
As a percentage of revenues, cost of revenues decreased to 50% from 62%. The
decrease in cost of revenues as a percentage of revenues was due to cost
reductions realized through the Company's restructuring program.

Selling, General and Administrative: For the three months ended March 31, 2002,
selling general and administrative expenses decreased by $587,737 compared to
the same period of the prior year. As a percentage of revenues, selling, general
and administrative expenses decreased from 74.3% in 2001 to 49.3% in 2002. The
decrease in selling, general and administrative expenses was due to cost
reductions realized through the restructuring program. The principal component
of the decrease was in payroll and related costs due to workforce reduction.

Depreciation and Amortization: For the three months ended March 31, 2002,
depreciation and amortization decreased by $536,569 to $194,262 compared to the
same period of the prior year. The decrease was due to reduced amortization
resulting from the Company's intangible assets written off as impaired in the
fourth fiscal quarter of 2001.

Interest Income: Interest expense net of interest income for the three months
ended March 31, 2002 was $19,801 compared to a net interest expense of $9,100
for the three months ended March 31,2001. As the proceeds of the Company's
public offering of Series B Convertible Redeemable preferred stock has been used
to fund operations, interest income decreased during the three months ended
March 31, 2002 compared to the same period of the prior year. Additionally,
interest expense for the three months ended March 31, 2002 decreased compared to
the same period of the prior year due to decreased debt level.

Net loss: For the three months ended March 31, 2002, net loss decreased by 84.6%
to $214,184 compared to a net loss of $1,392,198 in the comparable period of
2001. The Company has incurred significant losses as revenues generated were not
sufficient to offset the substantial up-front expenditures and operating costs
associated with attracting and retaining additional customers.

Liquidity and Capital Resources.

      The Company's working capital deficiency at March 31, 2002 was $1,874,251
compared with a working capital deficiency of $1,725,323 at December 31, 2001.
The increase in working capital deficiency was mainly due to operating losses.

      The Company's primary capital requirements are to fund acquisitions of
customer bases and related Internet businesses, install network equipment and
working capital. To date, the Company has financed its capital requirements
primarily through issuance of debt and equity securities. The Company currently
does not have any bank lines of credit. The availability of capital resources is
dependent upon prevailing market conditions, interest rates, and the financial
condition of the Company.


                                      -6-




      In March and April of 2002, the Company obtained executed subscriptions
from investors representing $250,000 of gross proceeds, in a private offering of
8% convertible notes and common stock purchase warrants. The Company will issue
to the investors an aggregate principal amount of $250,000 of convertible notes,
which will mature three years from the date of issuance, and warrants to
purchase an aggregate of 1,250,000 shares of its common stock. The value of the
warrants will be recorded as additional interest expense over the life of the
convertible notes. The Company anticipates that the offering will be consummated
in May of 2002.

      The Company's capital expenditures for 2002 are expected to range between
$36, 000 and $50,000. Based on the current plans, management anticipates that
cash on hand, the proceeds from the Company's private offering of convertible
notes and common stock purchase warrants which are expected to be consummated in
May of 2002 and expected recurring revenues will satisfy the Company's capital
requirements through at least the end of 2002. However, the Company's need for
additional capital may be affected by the outcome of its ongoing efforts to
reduce operating expenses and its ability to maintain its existing revenue base.
The Company's ability to maintain its existing revenue base is dependent upon
many factors such as the continued viability of the Digital Subscriber Line
("DSL") providers through whom the Company offers DSL services and increased
competition in the markets the Company serves for our Internet access products
from cable and other Internet service providers. If the Company is not
successful in maintaining its existing revenue base and implementing certain
cost cutting measures, the Company may need additional financing in 2002 to
continue operations as currently conducted. The Company has no available standby
sources of financing and there can be no assurance that any additional
financing, if required, will be available to the Company on acceptable terms, or
at all.


                                      -7-




 
                                    PART II
                                OTHER INFORMATION



Item 6. Exhibits and Reports on Form 8-K

            None


                                      -8-





                                   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.


June 7, 2002


                             By:  /s/ Stephen J. Cole-Hatchard
                                  ----------------------------
                                  Stephen J. Cole-Hatchard
                                  Chief Executive Officer and President



                             By:  /s/ Vasan Thatham
                                  -----------------
                                  Vasan Thatham
                                  Principal Financial Officer and Vice President


                                      -9-