U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

(Mark One)


[X]  Quarterly report under Section 13 or 15(d) of he Securities Exchange Act of
     1934


For the quarterly period ended March 31, 2002
                               --------------


[ ]  Transition report under Section 13 or 15(d) of the Exchange Act


For the transition period from ___________ to _________

         Commission file number             000-31148
                                ------------------------------------------------

                               PENNEXX FOODS, INC.
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

          Pennsylvania                                     23-3008972
-----------------------------------                   ----------------------
 (State or Other Jurisdiction of                        (I.R.S. Employer
 Incorporation or Organization)                       Identification No.)

                     980 Glasgow Street, Pottstown, PA 19464
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)
                                  610-705-3620
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

--------------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
         -----       ------

                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

Yes            No
         -----       ------

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 25,324,822
                                                    ---------------------

         Transitional  Small Business Disclosure Format (check one):

Yes            No      X
         -----       ------





                                      INDEX



  PART I
  FINANCIAL INFORMATION

  Item 1.  Financial Statements.............................................3

  Item 2.  Management's Discussion and Analysis or Plan of Operation........9



  PART II
  OTHER INFORMATION

  Item 1.  Legal Proceedings...............................................12

  Item 6.  Exhibits and Reports on Form 8-K................................12













                                       2



                                                         PART I
                                                  FINANCIAL INFORMATION

Item 1.   Financial Statements

                                                   PENNEXX FOODS, INC.
                                                     Balance Sheets


                                                         ASSETS
                                                                              March 31, 2002        December 31, 2001
                                                                        ---------------------- -----------------------
                                                                                 (Unaudited)
Current Assets:
                                                                                                    
     Cash                                                                       $  2,586,371              $2,415,785
     Trade Receivables, less allowance of $25,595                                  2,530,305               2,595,495
     Inventory                                                                     1,574,702               1,142,223
     Prepaid Expenses                                                                241,100                 201,843
                                                                        ---------------------- -----------------------
         Total Current Assets                                                      6,932,478               6,355,346
                                                                        ---------------------- -----------------------

Fixed Assets:
     Property and Equipment                                                        4,974,548               4,186,944
     Less Accumulated Depreciation                                                 1,112,976                 947,232
                                                                        ---------------------- -----------------------
         Total Fixed Assets                                                        3,861,572               3,239,712
                                                                        ---------------------- -----------------------

Other Assets:                                                                         60,245                  61,772
                                                                        ---------------------- -----------------------

Total Assets:                                                                   $ 10,854,295              $9,656,830
                                                                        ====================== =======================

                                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
     Current Installments of Capital Lease Obligations                            $   242,807            $    233,000
     Accounts Payable                                                               3,111,198               2,100,254
     Accrued Expenses                                                                 468,665                 266,784
                                                                      ------------------------- ----------------------
         Total Current Liabilities                                                  3,822,670               2,600,038
                                                                      ------------------------- ----------------------

Long Term Liabilities:
     Capital Lease Obligations Less Current Installments                              619,007                 677,790
     Note Payable                                                                   2,500,000               2,500,000
                                                                      ------------------------- ----------------------
         Total Long Term Liabilities                                                3,119,007               3,177,790
                                                                      ------------------------- ----------------------

Shareholders' Equity:
     Common Stock                                                                     264,249                 264,249
     Additional Paid-In Capital                                                    12,097,881              12,097,881
     Deficit                                                                      (8,161,690)              (8,169,140)
     Deferred Compensation                                                          (287,822)                (313,988)
                                                                      ------------------------- ----------------------
         Total Shareholders' Equity                                                 3,912,618               3,879,002
                                                                      ------------------------- ----------------------

Total Liabilities and Shareholders' Equity                                       $ 10,854,295          $    9,656,830
                                                                      ========================= ======================


See accompanying notes to financial statements.

                                                           3



                                                  PENNEXX FOODS, INC.
                                               Statements of Operations
                                                      (Unaudited)




                                                                           For the Three Month Period Ended
                                                                                       March 31
                                                                   --------------------------------------------------

                                                                            2002                        2001
                                                                   ------------------------     ---------------------
                                                                                                 
Sales                                                                          $10,924,971             $   8,017,624

Cost of Goods Sold

         Meat                                                                    7,031,091                 5,193,044
         Labor                                                                   1,200,807                 1,285,095
         Supplies                                                                1,218,199                   786,125
                                                                   ------------------------     ---------------------

Total Cost of Goods Sold                                                         9,450,097                 7,264,264
                                                                   ------------------------     ---------------------

Gross Profit                                                                     1,474,874                   753,360

Operating Expenses                                                               1,417,171                 1,089,962
                                                                   ------------------------     ---------------------

Income (Loss) from Operations                                                       57,703                 (336,602)

Interest (Net of Interest Income)                                                   50,253                    68,148
                                                                   ------------------------     ---------------------


Net Income (Loss)                                                                $   7,450             $   (404,750)
                                                                   ========================     =====================

Income (Loss) Per Share
     Basic                                                                       $    0.00                $   (0.03)
     Diluted                                                                     $    0.00                $   (0.03)

Weighted Average Shares Outstanding
     Basic                                                                      25,825,655                11,745,333
     Diluted                                                                    27,208,342                11,745,333




See accompanying notes to financial statements.

                                                          4



                                                     PENNEXX FOODS, INC.
                                                   Statements of Cash Flows
                                                         (Unaudited)



                                                                               For the Three Month Period Ended
                                                                                           March 31
                                                                   ---------------------------------------------------------

                                                                              2002                          2001
                                                                   ---------------------------    --------------------------
Cash Flows From Operating Activities
                                                                                                          
     Net Income (Loss)                                                              $   7,450                   $ (404,750)
     Adjustments
         Depreciation and Amortization                                                165,744                       143,482
         Deferred Compensation                                                         26,166                        26,166
         Common Stock Issued for:
              Interest                                                                                               23,818
              Consulting                                                                                            128,000
         Changes in Assets and Liabilities
              Trade Receivables                                                        65,190                     (157,771)
              Other Receivables                                                                                      95,410
              Inventory                                                             (432,479)                     (293,885)
              Prepaid Expenses                                                       (39,257)                      (17,908)
              Accounts Payable                                                      1,010,944                       599,723
              Accrued Expenses                                                        201,881                        14,213
                                                                   ---------------------------    --------------------------

Net Cash Provided By Operating Activities                                           1,005,639                       156,498
                                                                   ---------------------------    --------------------------

Cash Flows From Investing Activities
     Purchase of Property and Equipment                                             (787,604)                      (79,840)
     Other Assets                                                                       1,527                         6,500
                                                                   ---------------------------    --------------------------

Net Cash Used for Investing Activities                                              (786,077)                      (73,340)
                                                                   ---------------------------    --------------------------

Cash Flows From Financing Activities
     Line of Credit Advances, Net                                                                                   100,000
     Repayments on Capital Lease Obligations                                         (48,976)                      (76,333)
                                                                   ---------------------------    --------------------------

Net Cash (Used In ) Provided by Financing Activities                                 (48,976)                        23,667
                                                                   ---------------------------    --------------------------

Net Increase in Cash                                                                  170,586                       106,825

Cash, Beginning of Period                                                           2,415,785                             -
                                                                   ---------------------------    --------------------------

Cash, End of Period                                                                $2,586,371                     $ 106,825
                                                                   ===========================    ==========================


Supplemental Disclosures of Cash Flow Information
     Interest Paid during the Period                                                  $25,622                       $44,121

     Non-cash Items
         Debt Converted into Common Stock                                                                          $100,000


See accompanying notes to financial statements.

                                                              5





                                                        PENNEXX FOODS, INC.
                                                 Statement of Shareholders' Equity
                                              Three Month Period Ended March 31, 2002
                                                            (Unaudited)

                                   Common stock
                                  $.01 par value
                           50,000,000 shares authorized
                           -----------------------------
                                Shares                        Additional
                              issued or                         paid-in                              Deferred
                               issuable       Amount            capital           Deficit          Compensation       Total
                          -------------------------------------------------------------------------------------------------------
                                                                                                  
Balance, January 1, 2002      26,424,822     $ 264,249       $ 12,097,881     $ (8,169,140)         $ (313,988)      $ 3,879,002

Net Income                                                                            7,450                                7,450
Amortization of
compensatory
options                                                                                                  26,166           26,166
                          -------------------------------------------------------------------------------------------------------


Balance, March 31, 2002       26,424,822     $ 264,249       $ 12,097,881      $(8,161,690)         $ (287,822)       $3,912,618
                          =======================================================================================================



See accompanying notes to financial statements.

                                                                6



                               PENNEXX FOODS, INC.
                     Notes to Condensed Financial Statements
                                 March 31, 2002

1.       Basis of Presentation.
         ---------------------

         The unaudited condensed financial statements have been prepared by
Pennexx Foods, Inc. (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to such SEC
rules and regulations; nevertheless, the Company believes that the disclosures
are adequate to make the information presented not misleading. These financial
statements and the notes hereto should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 2001. In the opinion of the Company, all
adjustments, including normal recurring adjustments, necessary to present fairly
the financial position of the Company as of March 31, 2002 and the results of
its operations and cash flows for the three month period then ended have been
included. The results of operations for the interim period are not necessarily
indicative of the results for the year.

2.       Accounting Policies.
         -------------------

         There have been no changes in accounting policies used by the Company
during the quarter ended March 31, 2002.

3.       Summary of Business.
         -------------------

         The Company, incorporated on July 20, 1999 in the Commonwealth of
Pennsylvania, prepares case-ready meats for distribution to retailers in the
Northeastern United States. It grants credit to its customers without requiring
collateral.

4.       Inventory.
         ---------

         The Company's inventories are valued at the lower of first-in,
first-out or market. Inventories at March 31, 2002 consist of the following:

           Unfinished Beef, pork, veal, lamb               $       516,284
           Packaging supplies                                      718,422
           Finished goods                                          339,996
                                                           ---------------

                                                           $     1,574,702
                                                           ===============




                                        7





5.       Note Payable.
         ------------

         The Company has established a $30,000,000 revolving line of credit with
its 50% shareholder, Smithfield Foods, Inc. ("Smithfield"). The Company's
outstanding balance under the line of credit bears interest at 1% above prime
and is secured by all of the Company's assets. The loan will mature in 2006. At
March 31, 2002, the Company's outstanding principal balance under the line of
credit was $2.5 million and the accrued and unpaid interest was $91,867.

6.       Net Income (Loss) Per Share.
         ---------------------------

         Basic income /(loss) per share ("EPS") is computed using the weighted
average number of common shares outstanding during the period. Diluted EPS is
computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of common stock issuable upon exercise of stock options. The
potential dilutive common shares for the period ending March 31, 2002 are
1,382,687. For the period ending March 31, 2001, there were no dilutive
potential common shares because the assumed exercise of the options would be
anti-dilutive.














                                        8



Item 2.    Management's Discussion and Analysis or Plan of Operation

         Certain information contained in this Quarterly Report on Form 10-QSB
represents "forward-looking" statements (as defined in Section 27A of the
Securities Act of 1933, as amended) that involve risks and uncertainties which
may cause actual results to differ materially from those predicted in the
forward-looking statements. If any of the Company's assumptions on which such
statements are based prove incorrect, or should unanticipated circumstances
arise, the Company's actual results could materially differ from those
anticipated by such forward-looking statements. The differences could be caused
by a number of factors or combination of factors, including, but not limited to,
those listed under Item 6, "Note Regarding Forward-Looking Statements" filed
with the Securities and Exchange Commission on Form 10-KSB for the year ended
December 31, 2001.

         Results of Operations

         Sales for the three-month period ended March 31, 2002 were $10.9
million, representing an increase of approximately $2.9 million or 36% over
sales of $8.0 million from the corresponding period of 2001. This increase was
primarily the result of the increase in the volume of products handled (due in
part to increasing sales to existing customers as well as sales to new
customers) but was also partially due to a change in the mix of products sold in
favor of higher priced items. As the diversity of services that the Company
offers continues to grow, customers are increasing both the range of products as
well as the quantity ordered.

         Cost of goods sold for the three-month period ended March 31, 2002 was
$9.4 million which resulted in a gross profit of approximately $1.5 million or
14% of sales. By comparison, cost of goods sold for the three-month period ended
March 31, 2001 was $7.2 million, which resulted in a gross profit of $0.8
million or 9% of sales. The Company's cost of goods sold is comprised of three
main components: meat, direct payroll, and supplies. These items accounted for
approximately 64%, 11% and 11% of sales, respectively, in the three months ended
March 31, 2002 as compared to 65%, 16% and 10% of sales for the corresponding
period of the prior year. Direct payroll declined as a percentage of sales in
2002 compared to 2001 due to increasing labor efficiencies.

         Operating expenses for the three months ended March 31, 2002 were $1.4
million (13% of sales) as compared to $1.1 million (14% of sales) for the
corresponding period of 2001. This increase of $0.3 million resulted from
increased non-productive payroll expenses, increased depreciation expenses,
increased maintenance expenses, increased insurance expenses, and increased
freight and commissions expenses due to sales volume and continued growth.

         Interest expense (net of interest income) for the three-month period
ended March 31, 2002 was approximately $0.05 million compared to approximately
$0.07 million for the comparable period of 2001. This decrease in interest
expense (net of interest income) is principally due to the increase in interest
earned on investments. The net income for the three-month period of 2002 was
approximately $0.008 million as compared to a net loss of $0.4 million for the
first three months of 2001.



                                       9


         On April 2, 2002, the Company purchased and will be renovating a new
facility located on Tabor Avenue in Philadelphia, PA (the "Tabor Avenue
Facility"). The Company intends to consolidate all operations in the new plant
when it is refurnished and equipped. The purchase price for the property was
$2.0 million. The Company's estimate to renovate and equip the new facility is
as follows:


            Renovation Cost           $2.5 million   to        $4.0 million

            Equipment Costs           $9.0 million   to       $12.0 million
                                -------------------       ------------------

            Total                    $11.5 million   to       $16.0 million
                                ===================       ==================

         In addition to these expenses, the Company will also incur moving
expenses and other costs associated with the proposed move to the new plant.
Although employment will be offered to the existing work force, the Company
believes that it will have to replace at least a portion of the work force which
chooses not to relocate from Pottstown. As a result, the Company will probably
experience, at least temporarily, certain lost efficiencies among workers, and
will incur additional costs to train new employees.

         The Company expects to capitalize the acquisition and renovation costs
of the Tabor Avenue Facility as well as the transactional expenses incurred in
connection with the purchase. These amounts will be amortized over the estimated
39 year life of the building. The costs of moving and installing equipment in
the new plant will be capitalized and depreciated over three years.

         When the Company vacates the Pottstown plant, it will write-off all
remaining unamortized leasehold improvements located there. At March 31, 2002
the amount of such unamortized leasehold improvements was $185,000.

         Liquidity and Capital Resources

         At March 31, 2002, the Company had $2.6 million of cash (and cash
equivalents). The Company's current ratio at March 31, 2002 was 1.8 to 1.0.

         Generally, the Company maintains an unfinished inventory of meat
supplies equal to approximately 60-75% of estimated weekly sales volume.
Purchases are made using the trade credit programs of suppliers, which allow the
Company to purchase meat supplies with payment due within seven days. Inventory
is purchased generally on a daily basis and in advance (i.e., in anticipation)
of customer orders.

         The Company's working capital decreased from $3.8 million at December
31, 2001 to $3.1 million at March 31, 2002, principally as a result of the
purchase of property and equipment (including $0.2 million as a down payment on
the Tabor Avenue plant). Inventory at March 31, 2002 was unusually high due to
heavy purchases of supplies in anticipation of second quarter volume. Accounts
payable increased from $2.1 million at December 31, 2001 to $3.1 million at
March 31, 2002 as a result of the Company's efforts to take advantage of credit


                                       10


terms provided by suppliers. Finally, accrued expenses were unusually high at
March 31, 2002 as a result of the timing of payroll dates in relation to the
quarter ending March 31, 2002.

         Smithfield has agreed to allow the Company to use up to $18.3 million
of the $30 million credit line (see note 5 to financial statements) to allow the
Company to purchase, renovate and equip the Tabor Avenue Facility. If the actual
costs exceed this amount, the Company will have to get incremental funding
approval from Smithfield, use internally generated funds, or secure additional
commercial financing. The amount outstanding on the Smithfield line of credit
was as follows on the dates indicated:






                  Description            March 31, 2002        December 31, 2001

           Principal Advances                $ 2,500,000            $2,500,000

           Accrued Interest                     $ 91,867               $58,000
                                         ----------------     -----------------

           Total                             $ 2,591,867            $2,558,000
                                         ----------------     -----------------

         The Company has also applied for certain economic development related
financing for the new facility in an aggregate amount of $10 million. To the
extent received, these amounts would be used to repay advances made by
Smithfield on the line of credit. The economic development loans, if obtained,
would bear below market interest rates.




                                       11



                                     PART II

                                OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is involved in a lawsuit with the landlord at the Pottstown
facility. Proceedings began on November 11, 2000 in the Montgomery County Court
of Common Pleas. The landlord has alleged that the Company failed to make timely
rental payments and is seeking damages and ejectment. The Company's defense is
that the rent was withheld because of the landlord's prior failure to honor its
obligations to make certain improvements at the property. All rents due to date
have either been paid to the landlord or deposited into escrow. Since the
commencement of the litigation, the landlord has filed a voluntary petition for
protection from its creditors under Chapter 11 of the Bankruptcy Code. As a
result, the case has been transferred to the Federal bankruptcy court. If the
Company were to lose this suit, whether before the Montgomery County Court or
the Federal bankruptcy court, the landlord could eject the Company from the
property, and the Company could lose some or all of the benefit of certain
improvements made to the property in the aggregate approximate amount of
$185,000.

         The current lease at the Pottstown plant terminated in accordance with
its terms on April 30, 2002. However, the Company is nonetheless continuing to
use the plant for production because the Tabor Avenue Facility is not yet
operational. On April 25, 2002 the landlord filed a motion for partial summary
judgment with the United States Bankruptcy Court for the Eastern District of
Pennsylvania to evict, eject and dispossess the Company from the Pottstown
plant. Because management does not believe the Tabor Avenue Facility will be
operational until the end of the third quarter of 2002, if the Court forced the
Company to vacate the Pottstown facility before the Tabor Avenue Facility is
available, the Company would not have a plant in which to operate, which would,
in turn, have a material, adverse effect on the Company's operations.

Item 6.  Exhibits and Reports on Form 8-K

         The Company filed no Current Reports on Form 8-K during the three month
period ended March 31, 2002. However, the Company filed a Current Report on Form
8-K dated April 2, 2002 in connection with its purchase of the Tabor Avenue
Facility.


                                       12



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                         PENNEXX FOODS, INC.


Date:    May 15, 2002                    By:  /s/ Michael D. Queen
                                            --------------------------------
                                              Michael D. Queen
                                              President


                                         By:  /s/ George B. Pearcy
                                            --------------------------------
                                              George B. Pearcy
                                              Chief Financial Officer











                                       13