UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

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


                        Commission file Number: 000-32355

                     CYOP SYSTEMS INTERNATIONAL INCORPORATED
                 (Name of small business issuer in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   98-0222927
                     (I.R.S. Employer Identification Number)

                                    Suite 406
                              1040 Hamilton Street
                           Vancouver, British Columbia
                                     V6V 2R9
                    (Address of principal executive offices)

                                 (604) 681-9588
                           (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:   None

Securities registered under Section 12(g) of the Exchange Act:   Common Shares

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. [X] Yes [_] No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant was $0.00 as the Registrant's shares are not
yet listed or quoted on an exchange.

On December 31, 2001, the number of shares outstanding of the registrant's
Common Stock was 28,439,975.

Transitional Small Business Disclosure Format (Check one):  Yes |_|; No |X|

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                                              <C>
PART I............................................................................................................1
Item 1.  Business.................................................................................................1
Item 2.  Properties...............................................................................................7
Item 3.  Legal Proceedings........................................................................................7
Item 4.  Submission of Matters to a Vote of Security Holders......................................................7
PART II...........................................................................................................7
Item 5.  Market for Common Equity and Related Stockholder Matters.................................................7
Item 6.  Selected Financial Data..................................................................................7
Item 7.  Management's discussion and analysis.....................................................................8
Item 7A. Quantitative and Qualitative Disclosures about market risk..............................................11
PART III.........................................................................................................11
Item 8.  Financial Statements....................................................................................11
Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure....................21
Item 10.  Directors and Executive Officers of the Registrant.....................................................21
Item 11. Executive Compensation..................................................................................22
Item 12. Security Ownership of certain Beneficial owners and management..........................................24
Item 13.  Certain Relationships and Related Transactions.........................................................24
Part IV..........................................................................................................25
Item 14.  Exhibits, List and Reports on Form 8-K.................................................................25
</TABLE>
<PAGE>
PART I

Item 1.  Business

INTRODUCTION

Our business model is built on an e-commerce transaction system applied to
innovative market niches and existing strong markets in the entertainment
industry. Our CYOP transaction network is the backbone to all existing and
future ventures and is critical to providing seamless revenue streams and
integrated business practices. The key to our products and services is the
transactional engine that powers our e-commerce infrastructure. This
transactional engine consists of in-house developed proprietary software.

Our in-house developed software creates our unique pay for play platform, which
allows real time on line competitions and all of the commercial processing that
they involve. This intricate co-ordination of the receipt of fees, processing of
game credits and revenue sharing makes our company unique.

Play-For-Pay Tournaments

The concept of professional video gaming is a widely anticipated expansion in
the video game industry. Local area network game tournaments are sponsored which
generate hundreds of thousands of dollars in top prizes for contestants. We have
an infrastructure which we refer to Crediplay to develop the trend of playing
video games for money through the establishment of financial gaming accounts for
members which allow contestants to compete in multi-player tournaments 24 hours
a day, against people from around the world.

We are unaware of any existing or probable government regulations, which would
have an adverse affect on the implementation of our current business plan. We
are relying on American and Canadian legal opinions to ensure that our business
falls within current government regulations in those jurisdictions.

Our network is a transactional platform that links game players to a network of
Internet servers that are hosting play-for-pay tournaments. Our network allows
Crediplay members to convert money in their financial account into game credits
and compete in these tournaments. Successful competitors receive a percentage of
tournament entry fees automatically deposited into their accounts.

Our network is organized to generate three core revenue streams: membership
fees, play-for-pay network maintenance fees, and credit card processing fees.
The crediplay network is operational. To date, a minimal amount of money has
been spent marketing our products and services. Accordingly, traffic to our site
has been limited. A breakdown of our revenue to date by core revenue stream is
provided below.

Network Maintenance Fees

CrediPlay is a new online experience that is based on charging a Network
Maintenance Fee (NMF) for each game played over the Internet, including
puzzle/Board/Trivia/Learning games, Action Games, Strategy, Driving/Racing and
Adventure/Role Play games. The player pays said fee so that he or she may
register with, and gain access to any pay for play tournament of skill. After
registering, the individual player may then deposits money into a tournament
pool, out of which the winner(s) are paid. All of the deposits are paid out to
the winners. By structuring the software in this way, CrediPlay has
differentiated itself from the I-Gaming industry, as its software is neither
based on chance nor accepts third party betting and therefore is in compliance
with the existing laws of most Internet rich jurisdictions in the United States
and Canada. And with the ability to integrate with popular online games like
Quake, the company has the opportunity to gain acceptance by licensing its
software to the mainstream I-Games Industry as a viable on going alternative to
advertising revenues.

CrediPlay is a platform, which essentially combines online games to a database
and allows players to compete against each other for money. It also houses a
transaction platform not unlike a virtual bank, which allows players to deposit
money using their credit cards, pay for the games and withdraw any winnings.

CrediPlay's software is based on the individual player's skill and knowledge,
while most games of chance on the Internet are based on algorithms. Several sets
of criteria are introduced that make Skill-Bingo, for example, a competitive
game played in tournaments or head to head, where skill, knowledge or a
combination of both determines the winning outcome. The following are used to
allow for competition between players:

1.       Hand-eye coordination
2.       Reaction time
3.       Dexterity
4.       Spatial memory
5.       Long-term memory
6.       Pattern recognition
7.       Organizational skills
8.       Strategic planning
9.       Game play knowledge, general knowledge and intelligence

Game developers will set a network maintenance fee for their game with higher
profile games having a higher network maintenance fee. Our company will
advertise the new games. We will enter into agreements with game developers and
server operators to share in their network maintenance fees that are all
transaction based. Our company earns up to 40% of network maintenance fees
splitting the remainder with game developers and game server operators.

Server operators have full control over their tournaments including establishing
the entry fee. Our company, game developers and game server operators do not
take a percentage of the total accumulated by the entry fee. This total gets
disbursed to winners of the tournaments based on set distribution percentages.

Credit Card Processing Fees

Our transaction network receives credit card processing fees for every deposit
of cash into a member's financial account. This e-commerce transactional network
is also the backbone for additional ventures, which stem from the crediplay
network.

Non-Competitive Strategy

We are committed to the Linux open source movement, which allows our members to
share and contribute to the development of games. Our members will have access
to all information surrounding game development and game hosting. All resources
are available to members except the technology behind our processing network.

We allow members to use our technology to become play-for-pay game developers
and game server operators. This open source strategy creates new business and
integrates and binds members to our transaction network.

We developed the crediplay network as a new playing field for the growing number
of people playing games on-line.

Distribution Methods of our Products and Services.

Our product of providing on-line access to pay-for-play video gaming is not
distributed in the conventional sense. Rather, video gamers log on to our
Internet site and register at one of the membership levels to enter play. We
expect that news of our unique site and pay-for-play concept will spread quickly
through the on-line gaming community. We also propose to advertise at venues
such as the computer game developers conference, electronic entertainment
exposition and various on-line traditional video game sites. Word of mouth and
our targeted marketing plan will effectively be the way our product is
distributed.

Video games have often been dismissed as a rudimentary form of entertainment -
lacking the glitz and glamour of Hollywood and prime time television. But, over
the past few years, the games industry has been growing faster than any other
part of the entertainment business. In terms of revenues, it is now running
neck-and-neck with the movie box office. Movies still make much more money once
television sales, videos and licensing deals are included.

The video game industry can be segregated into three main technology areas: game
developers, platform developers, and game server operators. Game developers
create games to be played on different platforms such as those developed by
Sony, Sega and Nintendo, on personal computers or on arcade machines. With the
introduction of the Internet, games are now hosted on servers where players from
around the world log in and play.

In a recent report by Forrester Research, "Pervasive Gaming Goes Mainstream",
August 2000, it was found that 80% of game companies expect broadband-connected
consoles to be the dominant home game platform by 2003. The Forrester Report
suggests that next generation consoles are on route to become "an entire home
entertainment system, encompassing games to Web browsing to eCommerce."

Internet-enabled consoles are ushering in a new generation of interactive gaming
with technology that utilizes the Internet to create new dimensions in
interactive gaming and which will transform the entertainment industry. The
report outlines three evolutionary changes in technology that will create
pervasive gaming:

         1.   Platforms will connect to the Internet and control TVs.
         2.   Pipes will deliver content at the speed of Broadband.
         3.   People will seamlessly segue from playing games to watching TV.

These changes will force new business models within the industry such as
subscription and pay-per-use revenue streams. Advertising revenue will also
increase substantially as interactive media advances technologically. Estimates
of retail, hardware, subscription/pay-per-use, advertising and product placement
sales put total games revenue at near 30 billion dollars by 2005.

Target Market

The myth that most gamers are children also seems to defy the changing gaming
demographics. In reality, nearly 75% of PC gamers are adults, with only 30%
being under the age of 18. The Forrester Report indicates that 25% of the
on-line population plays games on-line, 49% are women and 51% are men, and they
have a median age of 39. On-line gamers generate an average yearly income of
$49,000 US/year and play an average of 13 hours/week.

Industry Players

Console Developers

The video game industry has some giants that are a dominant force in the
marketplace. Sega, Sony, and Nintendo dominate the game platform market with a
projected 80% by 2003. Microsoft has recently entered the console market with
its Xbox and may become a dominant player in the next few years.




Publishers/Game Developers

Electronic Arts, headquartered in Redwood City, California, is the world's
leading interactive entertainment software company. Founded in 1982, Electronic
Arts posted revenues of more than $1.2 billion for fiscal 1999. The company
develops, publishes and distributes software worldwide for personal computers
and video game systems such as the PlayStation(R) and Nintendo(R) 64.

Blizzard Entertainment(R) is a premier publisher of entertainment software.
Since establishing the Blizzard label in 1994, the company has quickly become
one of the most popular and well-respected makers of computer games. With
blockbuster hits including the Warcraft (R) series, the Diablo series, and
StarCraft., the company has enjoyed back-to-back number-one selling games, as
well as consecutive Game of the Year awards. Blizzard Entertainment operates a
free online game service, Battle.net(R), the largest in the world with millions
of active users.

As a known leader in the industry and one of the world's leading developers of
best selling software, id Software has forged frenetic titles such as
Wolfenstein 3-D, DOOM, DOOM II, QUAKE, and QUAKE II. With intense graphics and
mind-blowing adventure, id creates frenzied demands worldwide and continues to
break retail and shareware sales records. id has proven itself to be genius at
more than just software development. Using non-traditional means of product
distribution, shareware channels, online services, and the Internet. id has
helped to create a new way to market computer games. id's titles have become
cultural phenomenon inspiring other developers while spawning mainstream
licensing agreements for movie and book series. id games have been featured on
prime time TV shows such as Friends and ER and in the movies The Net, Congo and
Gross Point Blank.

Game Server Operators

On-line, multi-player games allow for the game player to link to game servers
hosting the game. These game servers constitute any corporation or anyone with a
server that wishes to host a game. Game server operators have not had a revenue
generating model beyond providing a web portal where game players can log on and
search for different games being hosted. The best estimate for the number of
game servers today is the Championship League or CLQ, which now monitors 218,000
servers and 10,000,000 players on-line.

Professional (for money) Video Game Leagues

Professional video gaming is a new concept that is gaining momentum within the
video game industry. Two organizations have evolved to cultivate this new trend.

The Cyberathlete Professional League (CPL) was founded on June 26, 1997. The CPL
is a computer gamer's league attempting to transform computer game competitions
into a professional sport. The CPL attracts thousands of gamers to its live
events and hundreds of thousands of spectators, both live and online. The CPL
sets up physical local area network tournaments and receives sponsorship
financing. Through its various sponsors, the CPL awards tournament winners as
much as $150,000 in cash prizes. The CPL events feature: professional computer
game tournaments, large spectator arenas, amateur local area network
competitions, hardware and software exhibitions and occasionally a variety of
workshops.

Online Athletes (OLA) is member-based professional game league. Members are
charged a $25/year membership fee, which gives them a registered server. The
league monitors play and distributes cheques to top players each week based on
performance.

CYOP Systems and the Video Game Industry

CYOP Systems is positioning itself as an asset to all industry players through
its integrated transaction technology. The Bloodmoney Universe is a complete
entertainment network where game players can access and play their favorite
games for real money distributed to them via their electronic accounts.

Game console developers are creating web browser capabilities within their next
generation systems that will enable players to connect to the crediplay network.

Transaction technology within the crediplay network creates a means by which
game developers can create play-for-pay versions of their games. Developers can
utilize the crediplay network to market and promote their games.

CYOP Systems has created a new business model for game server operators. By
simply utilizing the crediplay network, games from their server, can host
play-for-pay video games, generating a significant additional source of revenue.

Professional game leagues are limited to physical tournament settings or
reliance on sponsorships for financing. The crediplay network creates a 24-hour
market of interactive video gaming where players enter tournaments through their
own financial accounts and accumulate credits that can be converted back into
cash.

As of the date of this annual report, management is unaware of any other
company, which offers pay for play video gaming with the capacity to credit
players in real time. Assuming that our pending patents are granted, other
companies will be restricted from competing against the pay for play games
offered through the crediplay network. It is likely we will receive competition
from other companies offering online pay for play video gaming, which falls
outside of our pending patent protection. These competitors may utilize future
off the shelf software systems or custom designed pay for play video software.
Our business model is designed to provide financial incentives for game
developers and server operators who may otherwise compete against our Company.
However, the relative ease with which potential competitors may set up other pay
for play Internet sites will likely result in online competition.

How We Plan to Expand Our Business Model

The Company is capitalizing on its experience in the On-Line Gaming Industry by
leveraging its experience and contacts in this, the most profitable sector of
the Global Digital Economy. And with the ability to integrate with popular
online games like Bingo, the company has the opportunity to gain acceptance by
licensing its software to the mainstream Internet Portals and Games Sites as a
viable on going alternative to advertising and subscription-based revenues

Portals such as Bingo.com have been depending on the Internet Advertising model
as their sole source of revenues with moderate success. The addition of the
[Pay-for-Play] model allows these portals to further capitalize on their
existing database; a demographic of repeat game players. The ease of integration
allows companies to add to their core business without any software development
costs or expensive downtime. One hundred percent automated, the system registers
players in tournaments, runs the tournaments and pays the winners instantly.

The key to the success of our business plan is the development of a sense of
community where members can interact, learn and be entertained. Our network is
not just a portal to play games for money, although this service alone should
generate members. We are a complete, self-evolving virtual world with a story
line, interactive chat features and clubs, comic strips, knowledge exchange,
shopping network, and music and game downloads and distribution that are all
interconnected through member's accounts.

Sources and Availability of Raw Materials

The raw material for the development of our products comes from the imagination
and intellect of our in-house software developers. These are the same
individuals Moshpit has relied on in the development of its first play-for-pay
online video game Urban Mercenary and for the development of our e-commerce
transaction network. None of our product development is sourced to outside
contractors or sub-contractors nor are we dependent on any other person or
company for the supply of goods and services to continue the development of our
products.

Risk factors

You should carefully consider the risks described below and the other
information in this disclosure and any other filings we make with the SEC in the
future before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed.

Operations

Our operating subsidiary is a software development company with a history of
losses. We have no revenues from operations since our incorporation. If we are
unable to generate revenue and become profitable, our company will fail.

Management

Our management is under no contractual obligation to remain with us and their
departure could cause our business to fail. Our director and our officers have
varied business interests and are working for other companies. No member of
management has signed a written employment agreement with us and we cannot
afford to pay management members. In the event Mr. White resigns as a director
or an officer of our company we may be unable to attract other qualified
officers and directors, which would result in the failure of our company.

Competition

Our competitive position in the on-line pay for play video gaming industry is
dependent on the success of our pending patent application. We have filed a
patent application in the United States to obtain patent protection for our
unique in-house developed software and unique pay for play platform. In the
event our patent application is not granted, we could be put at a significant
competitive disadvantage to other better financed companies who could copy our
software and achieve rapid market penetration. Even if we obtain patent
protection for our system of offering pay for play games online, it is possible
we could receive intense competition from better financed companies with
in-house software development capabilities who are able to offer online pay for
play video games without infringing on our patent protection.

Financing

We are highly dependent upon our management for financing our software
development and ongoing operations. We are a private company and have just begun
earning revenues through the licensing of our pay for play software. We have
been and continue to be dependent upon management for loans to our company to
finance our operations and software development. In the event management is
unable to continue to advance funds to our company before we achieve positive
cash flow, our company could fail. Online pay for play video gaming is
attracting the interest of large well financed potential competitors. Our common
shares are not quoted on any exchange or listing service. Our common shares are
penny stock. Persons who acquire our common shares have limited liquidity or
opportunity to sell their shares and may not be able to recover any funds, which
have been invested in our common shares. Our common shares fall within the
definition of a penny stock. In the event our shares become quoted on an
exchange or listing service, all transactions involving our shares will be
subject to special rules established by the Securities and Exchange Commission
which require brokers and dealers to complete due diligence on penny stocks
being acquired on behalf of clients. These requirements are onerous and may make
an investment in penny stocks less appealing to certain investors, which could
affect your ability to sell our common shares.



Experience

We have no experience operating online pay for play video games or processing
online financial transactions. We have tested our operating system and believe
it will accommodate the expected commercial traffic at our website however, our
lack of experience operating our system could result in a breakdown of our
operations and a resulting lack of business.


Item 2.  Properties

We maintain an office at Suite 406, 1040 Hamilton Street, Vancouver, British
Columbia, Canada. This is leased office space of approximately 3,500 square
feet, which houses our current operations. Monthly lease payments on this office
space are $6,000. These facilities are fully utilized and are adequate for our
needs for the next 12 months.

Item 3.  Legal Proceedings

We are not a party to any legal proceedings. Management is not aware of any
legal proceedings proposed to be initiated against the Company. However, from
time to time, the Company may become subject to claims and litigation generally
associated with any business venture.

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

The Company's 2001 annual general meeting is scheduled to be held May 30, 2002
..at Suite 406, 1040 Hamilton Street, Vancouver, British Columbia at 10:00 a.m.
The Company's security holders will be requested to elect new directors, to
appoint the Company's auditors for the 2002/2003 fiscal years and to ratify all
actions taken by the officers and directors of the Company the preceding year.
No other business is expected to be brought before the Company's shareholders at
the 2001 annual general meeting. The Company's notice of annual general meeting,
Schedule 14A proxy statement and proxy are being filed separately and are
incorporated herein by reference.

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

The Company's shares are not currently listed on any exchange or quotation
system.

There are approximately 112 shareholders holding 28,439,975 of our issued common
shares. There are no options or warrants to purchase additional common shares of
the Company.

The Company does not expect to pay a dividend on its common stock in the
foreseeable future. Payment of dividends in the future will depend on the
Company's earnings and its cash requirements at that time.

Item 6.  Selected Financial Data

The following selected consolidated financial data should be read in conjunction
with the audited Consolidated Financial Statements and Notes thereto included in
Item 8, with "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with other financial data included
elsewhere in this Form 10-K. The consolidated statement of operations data for
the year ended December 31, 2001 and the year ended December 31, 2000 and the
consolidated balance sheet data as of December 31, 2001 and 2000 are derived
from our audited consolidated financial statements included in Item 8 of this
report, which have been audited by Ellis Foster, independent auditors

The independent auditors' report appearing elsewhere in this document contain
disclosures that the Company's losses and negative cash flows from operations
raise concern about our ability to continue as a going concern. The consolidated
financial statements and the selected financial data do not include any
adjustments that might result from the outcome of that uncertainty.

                                                      Year Ended December 31
                                                      2001              2000
CONSOLIDATED STATEMENT OF OPERATIONS DATA:

Revenue                                          $    512,930      $       --
Cost of revenue                                       300,647              --
                                                 ------------      ------------
Gross profit                                          212,283              --
Operating expenses                                    786,131          1,326839
Interest expense                                      177,288            50,813
                                                 ------------      ------------
Net loss                                         $   (751,136)     $ (1,377,652)
                                                 ============      ============
Basic and diluted loss per share                 $      (0.03)     $      (0.07)
                                                 ------------      ------------
Weighted average common shares outstanding.        28,433,430        20,682,124
                                                 ============      ============
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents                        $      1,852      $     29,480
Working capital (deficit)                          (1,357,792)       (1,513,587)
Total assets                                        2,138,261           333,626
Total liabilities                                   3,978,349         1,610,867
Total stockholders' equity                         (1,840,088)       (1,277,241)
                                                 ------------      ------------
Item 7.  Management's discussion and analysis

The information contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operation contains "forward looking
statements." Actual results may materially differ from those projected in the
forward-looking statements as a result of certain risks and uncertainties set
forth in this report. Although management believes that the assumptions made and
expectations reflected in the forward looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual future results will not be materially different from the
expectations expressed in this Annual Report. The following discussion should be
read in conjunction with the audited Consolidated Financial Statements and
related Notes thereto included in Item 8, with "Item 6. Selected Financial
Data," with the Risk Factors section of Item 1, and with the Special Note
regarding forward-looking statements included elsewhere in this report.

Overview

We have been primarily focused on developing our product for market launch.
Management has financed our operations to date. Management will continue to fund
our operations through shareholders loans for the next 12 months or until such
time as we are able to raise equity or debt financing privately, through a
public listing, or until we have positive cash flow. We will satisfy cash
requirements solely from funds loaned by management or family and friends for
approximately 12 months. However, management is not under any contractual
obligation to provide continued funding. We will spend approximately $2 million
in additional capital in the next 12 months to maintain current operations at
our current expenditure rate. Additional funds in the amount of $500,000 will be
required for a complete launch of the Crediplay system including a full
marketing budget.

We anticipate maintaining a staff of 15 persons during the next 12 months. We do
not expect to acquire any material physical assets or significant equipment in
the next 12 months. We will not be performing any significant research and
development in the next 12 months as our pay for play software is complete and
tested.

We launched our first pay-for-play online video game, Urban Mercenary in
February 2001. In March 2001, the Company secured the Canadian Imperial Bank of
Commerce as the Company's merchant account processor. Also in March 2001, the
Company hosted a trade booth at the Computer Gamers and Developers Conference
(CDGC) in California. The Company signed seven letters of intent with game
developers as a result of its exposure at the CDGC conference.

In September 2001, we signed a licensing contract with Bingo.com. This contract
calls for our company to provide front end game development and site management.
It is also a licensing agreement under which Bingo.com will use our pay for play
transaction software. Bingo.com has approximately 700,000 members playing bingo
online. Bingo.com has devised a new format for bingo which is a skill based game
and not a game of chance. The Bingo.com site began using CYOP's pay for play
transaction software in October 2001.

The Company's agreement with Bingo.com generated revenue of US$509,225 for the
year ended December 31, 2001. This revenue was primarily from development, which
will be a sporadic source of revenue for the Company. The Company's online video
game Urban Mercenary is completely developed as is our pay for play transaction
software. Our agreement with Bingo.com is the first, which will demonstrate the
effectiveness of our e-commerce pay for play platform with third party
licensees.

Management will continue to fund the Company through shareholders' loans until
such time as the Company is financially self-supporting. Management of the
Company will be aggressively seeking private financing to launch an aggressive
marketing campaign for our pay for play network and our flagship video game
Urban Mercenary.

In order for our Company to expand it's operations and realize profits from pay
for play online video gaming a number of additional steps must be taken. We must
continue to maintain and upgrade our software programs and our website. This is
an ongoing month-to-month responsibility, which is handled by our current staff
members. Funds for this ongoing software maintenance have been budgeted and are
covered by funds, which are being loaned to our Company by management. In the
future, the funds required for ongoing software maintenance will come from
revenue from licensing fees or system maintenance fees from pay for play video
gaming. Secondly, to increase our Company's exposure and attract players to our
website we will be required to complete a full marketing launch of the Crediplay
system. We anticipate that this marketing launch will cost approximately
$500,000. Until we complete a marketing launch we cannot expect large volumes of
players for our online pay for play video game. Revenues will be derived from
licensing fees from third parties. We will also continue to pursue our pending
patent applications in the United States. Patent protection will improve our
competitive position in the online pay for play video gaming industry. We
anticipate spending up to an additional $25,000 for costs associated with our
patent applications. We anticipate it may take up to one year for our current
patent applications to be granted.

Results of Operations

Revenue

Revenue increased to $512,225 for the year ended December 31, 2001, from no
revenue in the same period in the prior year. This increase is a result of the
move away from a primarily a development company with the first proof of concept
contract with Bingo.com in September 2001.

Cost of Revenue

The Company recorded cost of revenue of $300,647 during the year ended December
31, 2001, as the direct costs associated with the development work for
Bingo.com. As the company was development stage in the prior period with no
revenues there was no cost of sales for the prior period.

Sales and Marketing expenses

Sales and marketing expenses increased to $101,217 for the year ended December
31, 2001, an increase of $16,074 over 2000 expenses of $85,143. Sales and
marketing expenses include principally costs for marketing, co-brand advertising
and keyword buys for our site and participation in trade shows. The balance of
marketing and advertising expenses consists of payroll, consultant, and travel
costs.

We expect to continue to incur sales and marketing expenses to further our
efforts to increase traffic to our Web portal and develop licensee opportunities
with gaming portals. These costs will include commissions, salaries,
advertising, and other promotional expenses intended to increase traffic to
licensees and improve revenue. There can be no assurances that these
expenditures will result in increased traffic or significant new revenue
sources.

General and Administrative expenses

General and administrative expenses consist primarily of payroll costs for the
Company's executive staff, accounting and administrative personnel, premises
costs for the Company's office, legal and professional fees, insurance and other
general corporate and office expenses. General and administrative expenses
increased to $606,596 for the year ended December 31, 2001, an increase of 23%
over costs of $492,876 for the previous year. General and administrative
expenses increased from the prior year as a result of changes to the business,
including increased rent and professional fees and a larger than expected
foreign exchange loss.

We expect to continue to incur general and administrative expenses to support
the business, and there can be no assurances that the Company will be able to
generate sufficient revenue to cover these expenses.

Interest expense

Interest expense consists of accrued interest on the demand loans and demand
loans to related parties. Interest expense increased to $177,288 for 2001, an
increase of $126,575 over the prior year's expense of $50,813. The increase is
attributable to interest on a full calendar year of 2001 and an increase in a
short-term loan @ 10% per annum, due on June 1, 2002. Additionally a significant
interest expense has been accrued related to a Canada Customs and Revenue Agency
("CCRA") assessment of payroll taxes due on the Canadian subsidiary.

Loss per share and net loss

The Company ended the year with a net loss of $751,136, a loss per share of
$0.03, an improvement over the prior year's net loss and loss per share of
$1,377,652 and $0.07, respectively. The reduction in the net loss and loss per
share in 2001 is a result of the Company's movement from development stage to
proof of concept with the contract for Bingo.com executed in September 2001.

Liquidity and capital resources

The Company does not yet have an adequate source of reliable, long-term revenue
to fund operations. As a result, the Company is reliant on outside sources of
capital funding. There can be no assurances that the Company will in the future
achieve a consistent and reliable revenue stream adequate to support continued
operations. In addition, there are no assurances that the Company will be able
to secure adequate sources of new capital funding, whether it is in the form of
share capital, debt, or other financing sources.

The Company had cash and cash equivalents of $1,852 and a working capital
deficiency of $1,357,792 at December 31, 2001. This compares to cash and cash
equivalents of $29,480 and working capital deficiency of $1,513,587 at December
31, 2000. The deficiency has increased its receivables as a result of the
September 2001 contract with Bingo.com

During the year ended December 31, 2001, the Company used cash of $635,000 in
operating activities compared to using $1,332,212 in the prior year. The
significant decrease in cash used for operations can be explained mainly by a
large reduction in our operating loss in 2001 as the Company began operations in
revenue with the Company's first contract in September 2001.

Net cash provided by financing activities was $675,119 in 2001, which compares
to $1,224,973 in 2000. During the year ended December 31, 2001, the Company
obtained a short-term loan for $228,421.The proceeds from the loan were used to
fund working capital requirement. Part of the short term loan, $212,725 bears
interest at a rate of 1o% per year, and is due on June 1, 2002, with the
remaining $15,696 bearing interest at 40%, due on January 25, 2002 or
convertible to 20,000 shares of common stock at the due date.

The Company used cash of $551,000 in investing activities in 2001, compared to
using cash of $267,000 in the prior year. Cash was invested in continued
development costs of the crediplay system. The Company also acquired fixed
assets valued at $103,000, which compares to $267,000 invested in fixed assets
in the prior year. The change is a result of the start-up of the business in
2000, which required a higher level of fixed asset additions.

Our future capital requirements will depend on a number of factors, including
costs associated with development of our Web portal, the success and acceptance
of our new games and the possible acquisition of complementary businesses,
products and technologies. We do not have sufficient cash and cash equivalents
on hand to conduct our operations through the first quarter of 2002, and are
substantially dependent on continued funding from our President and CEO to
continue operations. Although our cash flow is improving, we will need to obtain
additional financing to support our operations for the duration of 2002.

There can be no assurances that additional capital will be available when we
need it on terms that we consider acceptable. The auditors' report on the
Company's December 31, 2001 consolidated financial statements contains an
explanatory paragraph that states that the Company has suffered losses and
negative cash flows from operations that raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Audit Committee

The Company has not yet established an Audit Committee of the Board of
Directors.

Item 7A. Quantitative and Qualitative Disclosures about market risk

The Company has no financial instruments for trading purposes, or derivative or
other financial instruments with off balance sheet risk. The fair value of all
financial instruments at December 31,2001 is not materially different from their
carrying value.

To December 31, 2001, substantially all revenues are incurred In United States
dollars and the majority of cash costs have been realized or incurred in
Canadian dollars and as such, are subject to material foreign currency exchange
rate risk. To date, the Company has not entered into foreign currency contracts
to hedge against foreign currency risks between the Canadian dollar or other
foreign currencies and our reporting currency, the United States dollar.

PART III

Item 8.  Financial Statements

The financial statements of the Company and related schedules described under
"Item 14. Financial Statements and Financial Statement Schedules" are included
following this page.

         CYOP SYSTEMS INTERNATIONAL
         INCORPORATED & SUBSIDIARIES

              Consolidated Financial Statements
              (Expressed in U.S. Dollars)

              December 31, 2001 and 2000


              Index

              Report of Independent Accountants

              Consolidated Balance Sheets

              Consolidated Statement of Stockholders' Deficiency

              Consolidated Statements of Operations

              Consolidated Statements of Cash Flows

              Notes to Consolidated Financial Statements
<PAGE>
--------------------------------------------------------------------------------
MOORE STEPHENS
ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS

1650 West 1st Avenue
Vancouver, BC Canada   V6J 1G1
Telephone:  (604) 737-8117  Facsimile: (604) 714-5916
E-Mail: generaldelivery@ellisfoster.bc.ca
--------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders

CYOP SYSTEMS INTERNATIONAL INCORPORATED

We have audited the consolidated balance sheets of CYOP Systems International
Incorporated and subsidiaries ("the Company") as at December 31, 2001 and 2000,
the related consolidated statements of stockholders' deficiency and the
consolidated statements of operations and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2001 and 2000
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles in the United
States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. These consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

Vancouver, Canada                           "MOORE STEPHENS ELLIS FOSTER LTD."
March 28, 2002                                     Chartered Accountants

MS
An independently owned and operated member of Moore Stephens North America Inc.
Member in principal cities throughout North America. Moore Stephens North
America Inc. is a member of Moore Stephens International Limited,,members in
principal cities throughout the world
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2001 and 2000
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
                                                                                                2001                     2000
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                         <C>
ASSETS
Current
  Cash and cash equivalents                                                     $              1,852        $          29,480
  Accounts receivable                                                                        178,910                   16,808
  Demand loan, interest at 12% per annum and unsecured                                        14,472                        -
  Due from director, non interest bearing and unsecured                                      105,738                        -
  Prepaid expenses and deposit                                                                49,191                   50,992
------------------------------------------------------------------------------------------------------------------------------
Total current assets                                                                         350,163                   97,280
Note receivable related party (Note 8)                                                     1,565,452                        -
Fixed assets (Note 4)                                                                        222,646                  236,246
Software development costs (Note 5)                                                                -                      100
------------------------------------------------------------------------------------------------------------------------------
Total assets                                                                       $       2,138,261        $         333,626
==============================================================================================================================
LIABILITIES
Current
  Bank overdraft                                                                   $          18,604        $               -
  Demand loans (Note 6a)                                                                     452,676                  452,676
  Demand loans related party (Note 6b)                                                        50,000                  725,129
  Accounts payable and accrued liabilities                                                   586,139                  205,373
  Payroll deductions payable (Note 7)                                                        362,115                  227,689
  Short-term loan (Note 6c)                                                                  228,421                        -
  Investor deposit                                                                            10,000                        -
------------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                  1,707,955                1,610,867
Deferred revenue (Note 8)                                                                  2,270,394                        -
------------------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                          3,978,349                1,610,867
------------------------------------------------------------------------------------------------------------------------------
Nature and continuance of operations  (Note 1)
Commitments (Note 11)

STOCKHOLDERS' (DEFICIENCY)
Share capital
  Authorized:
           100,000,000 shares of common stock with a par value
             of $0.0001 per share
  Issued, allotted and outstanding:
            28,439,975 shares of common stock (2000 - 28,382,975)                              2,844                    2,838
Additional paid-in capital                                                                   219,127                  149,237
Accumulated other comprehensive income                                                       133,194                   14,801
Deficit accumulated                                                                      (2,195,253)              (1,444,117)
------------------------------------------------------------------------------------------------------------------------------
Total stockholders' (deficiency)                                                         (1,840,088)              (1,277,241)
------------------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' (deficiency)                                   $       2,138,261        $         333,626
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

Consolidated Statement of Stockholders' Deficiency
Years ended December 31, 2001 and 2000                               Page 1 of 2
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Accumulated
                                                                           Compre-                        other          Total
                                     Common stock        Additional        hensive                      compre-         Stock-
                                 ---------------------      paid-in         income        Deficit       hensive       holders'
                                 Shares         Amount      capital         (loss)    accumulated        income   (deficiency)
--------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>        <C>          <C>      <C>                         <C>                <C>        <C>
Recapitalization (Note 3)         9,000,000    $   900  $      (831)                $     (66,465)     $  (1,398) $    (67,794)
Shares issued for cash on
  February 29, 2000              10,020,500      1,002         1,448                             -              -         2,450
Shares issued for services
  on February 29, 2000            9,202,500        920         1,330                             -              -         2,250
Deficit accumulated as at
  November 3, 2000                        -          -             -                      (14,401)              -      (14,401)
Recapitalization adjustment
  (Note 3)                                -                  (2,968)                        14,401              -        11,433
--------------------------------------------------------------------------------------------------------------------------------
Balance after recapitalization
  adjustment                     28,223,000      2,822       (1,021)                      (66,465)        (1,398)      (66,062)
Shares issued for equity
  of shell in stock
  acquisition (Note 3)                    -          -       (9,701)              -              -              -       (9,701)
Shares issued for cash on
  December 13, 2000                 159,975         16       159,959              -              -              -       159,975
Other comprehensive income
- foreign currency
  translation adjustment                  -          -             -         16,199              -         16,199        16,199
Comprehensive income
  - net (loss) for
  the period                              -          -             -    (1,377,652)    (1,377,652)              -   (1,377,652)
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss)                                           $ (1,361,453)
                                                                     ==============
Balance, December 31, 2000       28,382,975      2,838       149,237                   (1,444,117)     $   14,801 $ (1,277,241)
---------------------------------------------------------------------              ---------------------------------------------
</TABLE>
<PAGE>
Consolidated Statement of Stockholders' Deficiency
Years ended December 31, 2001 and 2000                               Page 2 of 2
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Accumulated
                                                                           Compre-                        other          Total
                                     Common stock        Additional        hensive                      compre-         Stock-
                                 ---------------------      paid-in         income        Deficit       hensive       holders'
                                 Shares         Amount      capital         (loss)    accumulated        income   (deficiency)
--------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>        <C>          <C>      <C>                         <C>                <C>        <C>
(continued from page 1)
Balance, December 31, 2000       28,382,975      2,838       149,237                   (1,444,117)         14,801   (1,277,241)
Shares issued for cash at
  $1.00 per share                    17,500          2        17,498                             -              -        17,500
   on January 8, 2001
Shares issued for cash at
  $1.00 per share                    12,200          1        12,199                             -              -        12,200
  on January 19, 2001
Shares issued for cash at
  $1.40 per share                    13,000          1        18,199                             -              -        18,200
  on February 14, 2001
Shares issued for cash at
  $1.00 per share                     3,000          1         2,999                             -              -         3,000
  on March 8, 2001
Shares issued for cash
  at $1.00 per share                 11,300          1        11,299                             -              -        11,300
  on April 24, 2001
Imputed interest on loan
  due to a related party                  -          -         1,900                             -              -         1,900
Other comprehensive income
  - foreign currency
  translation adjustment                  -          -             -  $     118,393              -        118,393       118,393
Comprehensive income
  - net (loss) for the year               -                               (751,136)      (751,136)              -     (751,136)
Stock-based compensation                                       5,796                                                      5,796
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss)                                           $   (632,743)
                                                                     ==============
Balance, December 31, 2001       28,439,975   $  2,844  $    219,127                $  (2,195,253)     $  133,194 $ (1,840,088)
=====================================================================              =============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

Consolidated Statements of Operations
Years ended December 31, 2001 and 2000
(Expressed in U.S. Dollars)
------------------------------------------------------------------------
                                              2001                 2000
------------------------------------------------------------------------
Revenue
  Sales related party               $      509,225        $           -
  Sales                                      3,705                    -
------------------------------------------------------------------------
                                           512,930                    -
  Cost of sales                            300,647                    -
------------------------------------------------------------------------
Gross profit                               212,283                    -
Advertising and promotion expenses       (101,217)             (85,143)
Software development costs                       -            (748,820)
Loan interest expenses                   (177,288)             (50,813)
Write off of demand loan                  (46,500)                    -
General and administrative expenses
  Accounting and audit                    (38,221)             (64,398)
  Automobile                              (64,192)             (33,604)
  Depreciation of fixed assets             (5,058)              (7,380)
  Foreign exchange loss                   (64,032)             (12,934)
  Legal and other professional fees      (149,017)            (119,720)
  Office and miscellaneous                (70,641)             (63,640)
  Rent                                    (52,807)             (28,468)
  Salaries and benefits                  (131,605)            (147,217)
  Stock-based compensation                 (5,796)                    -
  Telephone and bandwidth                 (25,227)             (15,515)
------------------------------------------------------------------------
Operating loss                           (719,318)          (1,377,652)
Write off of Leasehold improvements       (31,434)                    -
Loss on disposal of fixed assets             (384)                    -
------------------------------------------------------------------------
Net loss for the year               $    (751,136)        $ (1,377,652)
========================================================================
Loss per share
    Basic and diluted               $       (0.03)               (0.07)
========================================================================
Weighted average number of
  Common shares outstanding
    Basic and diluted                   28,433,430           20,682,124
========================================================================
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

Consolidated Statements of Cash Flows
Years Ended December 31, 2001 and 2000
(Expressed in U.S. Dollars)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                           2001                      2000
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                       <C>
Cash flows from (used in) operating activities
  Net loss for the year                                                      $        (751,136)        $      (1,377,652)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    - depreciation of fixed assets                                                       65,234                    41,002
    - fixed assets write off                                                             31,434                         -
    - capitalized software development costs                                                100                         -
    - loss on disposal of fixed assets                                                      384                         -
    - imputed interest on related party loan                                              1,900                         -
    - stock-based compensation                                                            5,796                         -
    - exchange loss                                                                      11,028                     4,438
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (635,260)               (1,332,212)
  Changes in assets and liabilities:
    - accounts receivable                                                             (162,102)                  (15,739)
    - prepaid expenses and deposit                                                        1,801                  (50,992)
    - accounts payable and accrued liabilities                                          502,728                   191,587
    - payroll deductions payable                                                        134,426                   227,689
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (158,407)                 (979,667)
--------------------------------------------------------------------------------------------------------------------------
Cash flows from (used in) investing activities
  Proceeds from disposal of fixed assets                                                  6,743                         -
  Increase in software development costs                                              (454,840)                         -
  Purchase of fixed assets                                                            (103,819)                 (267,153)
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (551,916)                 (267,153)
--------------------------------------------------------------------------------------------------------------------------
Cash flows from (used in) financing activities
  Shares issued for cash                                                                 62,200                   159,975
  Increase in due from director                                                         (6,498)                         -
  Proceeds from investor deposit                                                         10,000                         -
  Proceeds from demand loans                                                                  -                   452,676
  Proceeds from demand loan - related party                                             380,996                   612,322
  Proceeds from short-term loans                                                        228,421                         -
--------------------------------------------------------------------------------------------------------------------------
                                                                                        675,119                 1,224,973
--------------------------------------------------------------------------------------------------------------------------

Foreign exchange loss on cash held in foreign currency                                 (11,028)                   (4,438)
--------------------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents                                                  (46,232)                  (26,285)
Cash and cash equivalents, beginning of year                                             29,480                    55,765
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents (deficiency), end of year                          $         (16,752)        $           29,480
==========================================================================================================================
Cash and cash equivalents (deficiency) represented by:
  Cash                                                                       $            1,852        $           29,480
  Bank overdraft                                                                       (18,604)                         -
--------------------------------------------------------------------------------------------------------------------------
                                                                             $         (16,752)        $           29,480
==========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


1.       Nature and Continuance of Operations

         The Company was incorporated on October 29, 1999 in the name of Triple
         8 Development Corporation under the laws of the State of Nevada to
         engage in any lawful business or activity for which corporations may be
         organized under the laws of the State of Nevada. The Company changed
         its name to CYOP Systems International Incorporated on October 30,
         2000. On November 3, 2000, the Company acquired 100% of the issued and
         outstanding shares of CYOP Systems Inc., Barbados ("CYOP Barbados").
         This transaction was accounted for as a reverse acquisition
         recapitalization (see Note 3).

         CYOP Barbados was incorporated under the laws of Barbados on June 20,
         2000. On August 31, 2000, CYOP Barbados acquired 100% of the issued and
         outstanding shares of Moshpit Entertainment Inc., Canada ("Moshpit"), a
         company incorporated under the laws of British Columbia, Canada.

         The Company, and its subsidiaries, is a developer and provider of
         multimedia transactional technology solutions and services for the
         entertainment industry. The Company's range of products and services
         include financial transaction platforms for on-line video games and
         integrated e-commerce transaction technology for on-line merchants.
         These services are considered as one segment only based on internal
         organizational structure.

         The Company and its subsidiaries, CYOP Barbados and Moshpit were
         development stage companies in the fiscal year 2000.

         These consolidated financial statements have been prepared using the
         generally accepted accounting principles applicable to a going concern,
         which contemplates the realization of assets and the satisfaction of
         liabilities and commitments in the normal course of business. The
         Company has suffered recurring losses from operations and has a net
         capital deficiency. The ability of the Company to continue as a going
         concern is dependent upon many factors, including the ability of the
         Company to obtain financing to fund working capital requirements, the
         degree of competition encountered by the Company, technology risks,
         government regulation and general economic conditions. The Management's
         plan in this regard is to raise equity financing as required and keep
         abreast with the multimedia technology. These financial statements do
         not include any adjustments that might result from this uncertainty.

2.       Significant Accounting Policies

(a)      Basis of Consolidation

         These consolidated financial statements, prepared in accordance with
         accounting principles generally accepted in the United States of
         America, include the accounts of the Company and its subsidiaries CYOP
         Barbados and Moshpit. Significant inter-company accounts and
         transactions have been eliminated.
<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

Notes to Consolidated Financial Statements
December 31, 2001 and 2000
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------
2.       Significant Accounting Policies (continued)

(b)      Accounting Estimates

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

(c)      Cash Equivalents

         Cash equivalents usually consist of highly liquid investments which are
         readily convertible into cash with maturity of three months or less
         when purchased.

(d)      Fixed Assets

         Fixed assets are recorded at historical cost. Depreciation is charged
         to earnings in amounts sufficient to allocate the costs over their
         estimated useful lives, as follows:

              Audio and visual equipment           20% declining-balance basis
              Computer hardware                    30% declining-balance basis
              Computer software                   100% declining-balance basis
              Office furniture and equipment       20% declining-balance basis
              Leasehold improvements               20% straight-line basis

(e)      Revenue recognition

         The Company derives revenue from providing services on software
         development and online internet transaction platform maintenance.
         Service revenues are recognized when services have been performed and
         delivered in accordance with service agreements, the Company has no
         significant remaining performance requirements, there are no material
         uncertainties regarding customer acceptance and collection of the
         resulting receivable is deemed probable.

(f)      Software Development Costs

         Software development costs incurred prior to the establishment of
         technological feasibility are charged to expenses as incurred.

(g)      Advertising and Promotion

         The Company expenses advertising and promotion costs as incurred. Total
         advertising and promotion costs charged to expenses for the year ended
         December 31, 2001 amounted to $101,217 (2000 - $85,143).
<PAGE>
2.       Significant Accounting Policies (continued)

(h)      Foreign Currency Transactions

         The Company and CYOP Barbados maintain their accounting records in
         their functional currency. Foreign currency transactions are translated
         into their functional currency in the following manner.

         At the transaction date, each asset, liability, revenue and expense is
         translated into the functional currency by the use of the exchange rate
         in effect at that date. At the period end, monetary assets and
         liabilities are translated into the functional currency by using the
         exchange rate in effect at that date. The resulting foreign exchange
         gains and losses are included in operations.

(i)      Foreign Currency Translations

         Assets and liabilities of Moshpit, whose functional currency is
         Canadian dollars, are translated into U.S. dollars at exchange rates in
         effect at the balance sheet date. Revenues and expenses are translated
         at the average exchange rate. Gain and losses from such translations
         are included in stockholders' equity, as a component of other
         comprehensive income.

(j)      Income Taxes

         The Company has adopted Statement of Financial Accounting Standards
         ("SFAS") No. 109, "Accounting for Income Taxes", which requires the
         Company to recognize deferred tax liabilities and assets for the
         expected future tax consequences of events that have been recognized in
         the Company's financial statements or tax returns using the liability
         method. Under this method, deferred tax liabilities and assets are
         determined based on the temporary differences between the financial
         statement and tax bases of assets and liabilities using enacted tax
         rates in effect in the years in which the differences are expected to
         reverse. The effect on deferred income tax assets and liabilities of a
         change in income tax rates is included in the period that includes the
         enactment date.

(k)      Long-Lived Assets Impairment

         Certain long-term assets of the Company are reviewed when changes in
         circumstances require as to whether their carrying value has become
         impaired, pursuant to guidance established in Statement of Financial
         Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
         of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
         Management considers assets to be impaired if the carrying value
         exceeds the future projected cash flows from related operations. If
         impairment is deemed to exist, the assets will be written down to fair
         value.
<PAGE>
2.       Significant Accounting Policies (continued)

(l)      Comprehensive Income

         The Company has adopted SFAS No. 130, "Reporting Comprehensive Income",
         which establishes standards for reporting and display of comprehensive
         income, its components and accumulated balances. The Company is
         disclosing this information on its consolidated Statement of
         Stockholders' Equity. Comprehensive income comprises equity except
         those resulting from investments by owners and distributions to owners.
         SFAS No. 130 did not change the current accounting treatments for
         components of comprehensive income.

(m)      Financial Instruments and Concentration of Risks

         Fair value of financial instruments are made at a specific point in
         time, based on relevant information about financial markets and
         specific financial instruments. As these estimates are subjective in
         nature, involving uncertainties and matters of significant judgement,
         they cannot be determined with precision. Changes in assumptions can
         significantly affect estimated fair values.

         The carrying value of cash and cash equivalents, accounts receivable,
         demand loan receivable, due from director, deposit, note receivable,
         bank overdraft, demand loans payable, accounts payable and accrued
         liabilities and short-term loans approximate their fair values because
         of the short-term maturity of these instruments.

         Moshpit is operating in Canada, which may give rise to significant
         foreign currency risks from fluctuations and the degree of volatility
         of foreign exchange rates between U.S. dollars and the Canadian
         dollars.

         Financial instruments that potentially subject the Company to
         concentration of credit risk consist of accounts receivable, demand
         note receivable and note receivable, the balances of which are stated
         on the balance sheet. The Company performs ongoing credit evaluations
         of its customers and debtors and maintains allowances for possible
         losses with, when realized, have been within the range of management's
         expectations. The Company places its cash in high credit quality
         financial institutions. The Company does not require collateral or
         other security to support financial instruments subject to credit risk.

(n)      Reporting on Costs of Start-Up Activities

         The Company has adopted the Statement of Position 98-5 ("SOP 98-5")
         "Reporting on the Costs of Start-Up Activities" issued by the American
         Institute of Certified Public Accountants on the financial reporting of
         start-up costs and organization costs. It requires costs to be expensed
         as incurred.

         The Company charged all start-up costs to expenses as incurred.
<PAGE>
2.       Significant Accounting Policies (continued)

(o)      Accounting for Derivative Instruments and Hedging Activities

         The Company has adopted SFAS No. 133 "Accounting for Derivative
         Instruments and Hedging Activities" issued by the Financial Accounting
         Standards Board. SFAS No. 133 requires companies to recognize all
         derivatives contracts as either assets or liabilities in the balance
         sheet and to measure them at fair value. If certain conditions are met,
         a derivative may be specifically designated as a hedge, the objective
         of which is to match the timing of gain or loss recognition on the
         hedging derivative with the recognition of (i) the changes in the fair
         value of the hedged asset or liability that are attributable to the
         hedged risk or (ii) the earnings effect of the hedged forecasted
         transaction. For a derivative not designated as a hedging instrument,
         the gain or loss is recognized in income in the period of change. SFAS
         No. 133 is effective for all fiscal quarters of fiscal years beginning
         after June 15, 2000.

(p)      Net Income (Loss) Per Share

         Basic net income (loss) per share are computed using the
         weighted-average number of shares of common stock outstanding during
         the period. Diluted net income (loss) per share incorporate the
         incremental shares issuable upon the assumed exercise of stock options
         and other dilutive securities. Convertible loan and option to purchase
         45,000 shares of common stock outstanding as at December 31, 2001 are
         not included in the net income (loss) per share computation, as the
         effect of including them would be anti-dilutive.

(q)      Stock-based Compensation

         The Company has adopted the disclosure-only provisions of SFAS No. 123,
         "Accounting for Stock-based Compensation". SFAS 123 encourages, but
         does not require, companies to adopt a fair value based method for
         determining expense related to stock-based compensation. The Company
         accounts for stock-based compensation issued to employees and directors
         using the intrinsic value method as prescribed under Accounting
         Principles Board Opinion No. 25, "Accounting for Stock Issued to
         Employees" and related interpretations.
<PAGE>
2.       Significant Accounting Policies (continued)

(r)      New Accounting Pronouncements

         In June 2001, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards No. 141 (SFAS 141), Business
         Combinations. SFAS 141 applies to all business combinations initiated
         after June 30, 2001. The SFAS 141 applies to all business combinations
         accounted for using the purchase method for which the date of
         acquisition is July 1, 2001, or later. The adoption of SFAS 141 will
         not have an impact on the Company's financial statements.

         In June 2001, the Financial Accounting Standards Board issued Statement
         of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and
         Other Intangible Assets. The provisions of SFAS 142 are required to be
         applied starting with fiscal years beginning after December 15, 2001
         with earlier application permitted for entities with fiscal years
         beginning after March 15, 2001 provided that the first interim
         financial statements have not been previously issued. The Statement is
         required to be applied at the beginning of the entity's fiscal year and
         to be applied to all goodwill and other intangible assets recognized in
         its financial statements to that date. The adoption of SFAS 142 will
         not have an impact on the Company's financial statements.

         In August 2001, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 143 (SFAS 143), Asset
         Retirement Obligations. SFAS 143 establishes accounting standards for
         recognition and measurement of a liability for the costs of assets
         retirement obligations. Under SFAS 143, the costs of retiring an asset
         will be recorded as a liability when the retirement obligation arises
         and will be amortized to expense over the life of the asset. The
         adoption of SFAS 143 will not have an impact on the Company's financial
         statements.

         In October, 2001, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 144 (SFAS 144),
         Accounting for the Impairment or Disposal of Long-lived Assets. SFAS
         144 supersedes SFAS 121, Accounting for the Impairment of Long-lived
         Assets and Long-lived Assets to be Disposed Of, and APB Opinion 30,
         Reporting the Results of Operations - Reporting the Effects of Disposal
         of a Segment of a Business, and Extraordinary, Unusual and Infrequently
         Occurring Events and Transactions, for segments of a business to be
         disposed of. SFAS 144 is effective for fiscal years beginning after
         December 15, 2001. The adoption of SFAS 144 will not have an impact on
         the Company's financial statements.
<PAGE>
3.       Acquisition of CYOP Systems Inc., Barbados

         On November 3, 2000, the Company acquired 100% of the issued and
         outstanding common shares of CYOP Barbados by issuing 9,000,000 shares
         which are presented as outstanding for all periods presented. As the
         Company was a non-operating shell company, the transaction resulted in
         the management of CYOP Barbados having effective operating control of
         the combined company, with the shareholders of the Company continuing
         only as passive investors. Accounting principles applicable to reverse
         acquisition recapitalization have been applied to record this
         transaction. Under this basis of accounting, CYOP Barbados has been
         identified as the acquirer and, accordingly, the combined company is
         considered to be a continuation of the operations of CYOP Barbados with
         the net liabilities of the Company deemed to have been assumed by CYOP
         Barbados. Statements of operations present primarily the operations of
         Barbados. Pro-forma information is not presented as the transaction is
         not considered a business combination.

         The net liabilities of the Company assumed by CYOP Barbados are
         summarized as follows:
         -----------------------------------------------------
         Current assets                          $     2,399
         Current liabilities                         (12,100)
         -----------------------------------------------------
         Net liabilities assumed                 $    (9,701)
         =====================================================

4.       Fixed assets
         ---------------------------------------------------------------------
                                                     December 31, 2001
         ----------------------------------------------------------------------
                                              Cost   Accumulated      Net book
                                                    depreciation         Value
         ----------------------------------------------------------------------
         Audio and visual equipment      $  21,578   $     5,957  $     15,621
         Computer hardware                 284,526        84,237       200,289
         Computer software                   3,090         3,090             -
         Office furniture and equipment      9,402         2,666         6,736
         ----------------------------------------------------------------------
         Total                           $ 318,596   $    95,950  $    222,646
         ======================================================================
<PAGE>
4.       Fixed Assets   (continued)
         -----------------------------------------------------------------------
                                                        December 31, 2000
         -----------------------------------------------------------------------
                                                 Cost   Accumulated     Net book
                                                       depreciation        Value
         -----------------------------------------------------------------------
         Audio and visual equipment       $    22,411     $    2,241    $ 20,170
         Computer hardware                    204,682         33,549     171,133
         Computer software                      3,280          1,640       1,640
         Office furniture and equipment         9,982          1,043       8,939
         Leasehold improvements                38,182          3,818      34,364
         -----------------------------------------------------------------------
         Total                            $   278,537     $   42,291    $236,246
         =======================================================================

         For the year ended December 31, 2001, depreciation expenses charged to
         cost of service, software development costs and general and
         administrative expenses were $20,057 (2000 - $nil), $40,118 (2000 -
         $33,622) and $5,058 (2000 - $7,380) respectively.

5.       Software Development Costs
         ----------------------------------------------------------------------
                                                             2001         2000
         ----------------------------------------------------------------------
         Balance, beginning of year                   $       100    $     100
         Salaries and benefits                            454,840      715,198
         Depreciation on fixed assets                      40,118       33,622
         ----------------------------------------------------------------------
                                                          495,058      748,920
         Costs charged to expenses                              -     (748,820)
         Costs charged to sale of software (Note 7)      (495,058)           -
         ----------------------------------------------------------------------
         Balance, end of year                         $         -    $     100
         ======================================================================
<PAGE>
6.       Loans

(a)      Demand Loans
<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------
                                                                                    2001        2000
         --------------------------------------------------------------------------------------------
<S>                                                                            <C>         <C>
         i.       Interest at the Bank of Montreal's prime lending rate of
              6.0% plus 1.5% per annum and unsecured:
                - Cyber Roads Inc.                                             $ 178,519   $ 178,519
                - Tapijkabouter BV                                                99,157      99,157
         --------------------------------------------------------------------------------------------
                                                                                 277,676     277,676

         ii.      Interest at the Hongkong Bank of Canada's prime lending
              rate of 6.0% plus 1% per annum and unsecured:
                - Ameera Group Inc.                                               75,000      75,000

         iii.     Non-interest bearing and unsecured:
                - Tapijkabouter BV                                               100,000     100,000
         --------------------------------------------------------------------------------------------
         Total                                                               $   452,676  $  452,676
         ============================================================================================
(b)      Demand Loans Related Party
         --------------------------------------------------------------------------------------------
                                                                                    2001        2000
         --------------------------------------------------------------------------------------------
         i.   Interest at the Bank of Montreal's prime lending rate of 6.0%
              plus 1.5% per annum and unsecured:
                - Mitchell White - director (2000 - Cdn$643,048)             $         -  $  428,642
                - Greenday Inc. - shareholder                                          -     296,487
         --------------------------------------------------------------------------------------------
                                                                                       -     725,129
         ii.  Non-interest bearing and unsecured:
                - Jack Carley - related to a director                             50,000           -
         --------------------------------------------------------------------------------------------
         Total                                                               $    50,000  $  725,129
         ============================================================================================
(c)      Short-term Loan
         --------------------------------------------------------------------------------------------
                                                                                    2001        2000
         --------------------------------------------------------------------------------------------
         i.       Interest at 40% per annum, due on January 25, 2002,
              convertible to 20,000 shares of common stock of the Company
              at due date:
                - Kornfeld MacOff (Cdn$25,000)                               $    15,696  $      -

         ii.      Interest at 10% per annum, due on June 1, 2002:
                - RedRuth Ventures                                               212,725         -
         --------------------------------------------------------------------------------------------
         Total                                                               $   228,421  $      -
         ============================================================================================
</TABLE>
<PAGE>
7.       Payroll Deductions Payable

         Payroll deductions payable of $362,115 (2000 - $227,689) represents
         personal income taxes and other payroll related deductions withheld
         from employees. They are owed to Canada Customs and Revenue Agency by
         the Company's subsidiary in Canada.

8.       Sale and License-back of Computer Software

         On December 14, 2001, the Company sold computer software identified as
         Crediplay System to the sole director and a major shareholder and
         creditor of the Company for $3,000,000. The purchase price was settled
         by retiring $1,200,000 of debt owed to the purchaser and a promissory
         note for $1,800,000. The promissory note bears interest at 5% per annum
         with maturity on December 14, 2010. As at December 31, 2001, the
         present value of the promissory note is $1,565,452, with discount rate
         at 7% per annum.

         Pursuant to a Marketing, Development and Distribution Agreement entered
         into on the same date, the Crediplay System was licensed back to the
         Company for a term of 15 years. A licensing fee payable will be
         calculated on Gross Earnings derived from the Crediplay System as
         follows:

                         2002                         Gross Earnings x 20%
                         2003                         Gross Earnings x 17%
                         2004                         Gross Earnings x 15%
                         2005 to 2017                 Gross Earnings x 10%

         The development costs of the Creditplay System expended by the Company
         amounted to approximately $1,273,406 of which $778,348 was expensed
         previously. Management of the Company has estimated the $3,000,000
         value based on the discounted future cash flow projection and the
         estimate provided by knowledgeable parties of the software.

         The gain on the sale of the Crediplay System is calculated as follows:
           ------------------------------------------------------------
           Sales price
             Retirement of loan due to the purchaser    $   1,200,000
              Present value of $1,800,000
              promissory note discounted at
              7% per annum                                  1,565,452
           ------------------------------------------------------------
                                                            2,765,452
           Software development costs incurred in 2001        (495,058)
           ------------------------------------------------------------
           Deferred gain                                $   2,270,394
           ============================================================
         The deferred gain of $2,270,394 will be amortized in proportion to the
licensing fees payable over the term of the agreement.
<PAGE>
9.       Economic Dependence

         In fiscal year 2001, the Company entered into a software development
         agreement and a software licensing, technical support and operation of
         customer service and data centre agreement with a company with a common
         director.

         The Company received fees of $193,685 in completion of the software
         development agreement. Pursuant to the software licensing, technical
         support and operation of customer service and data centre agreement,
         the Company is to receive a monthly license fee equal to 25% of the
         network maintenance fees collected (minimum at $60,000 per month), and
         a monthly service fee equal to 5% of the network maintenance fees
         collected (minimum at $18,000).

         During the fiscal year 2001, total revenue of $509,224 were accrued
         from the serviced company.

         As at December 31, 2001, $167,886 related to these services was still
         unpaid and included in accounts receivable.

10.      Related Party Transactions

         Related party transactions not disclosed elsewhere in the consolidated
         financial statements are as follows:

         (a)      During the fiscal year 2001, the Company accrued imputed
                  interest of $1,900 at an interest rate of 10% per annum on
                  interest free loan of $50,000 from an individual related to a
                  director of the Company.

         (b)      Accounting fees of $10,338 (2000 - $33,946) were paid to a
                  company controlled by individuals related to a director of the
                  Company and were charged to expenses.

         (c)      Interest expenses of $76,234 (2000 - $40,398) were paid to a
                  director and a shareholder of the Company and were charged to
                  expenses.

         (d)      Professional fees of $17,800 (2000 - $nil) were paid to an
                  officer of the Company and were charged to expenses.

         (e)      In fiscal year 2000, demand loans include $725,129 due to a
                  director and a shareholder of the Company. These demand loans
                  bear interests at the Bank of Montreal's prime lending rate of
                  6.0% plus 1.5% per annum and are unsecured (see Note 7ai).
<PAGE>
10.      Related Party Transactions   (continued)

         (f)      In fiscal year 2000, accounts payable and accrued liabilities
                  include $41,816 interest accrued to a director and a
                  shareholder of the Company.

         (g)      In fiscal year 2000, the Company issued 9,202,500 common
                  shares at a deemed value of $2,250 to a director of the
                  Company for services rendered.

11.      Commitments

         (a)      The Company has entered into lease contracts for automobiles
                  and computer equipment with minimum lease payments for the
                  year ending December 31st, as follows:

                     ---------------------------------------------
                     2002                              $   45,837
                     2003                                  45,837
                     2004                                  19,345
                     ---------------------------------------------
                     Total                             $  111,019
                     =============================================

         (b)      The Company has entered into contracts with service providers
                  to pay for the services partly by cash and partly by issuance
                  of common stock of the Company when the common stock are
                  freely trading in the equity market. As at December 31, 2001,
                  156,343 shares of common stock of the Company are to be issued
                  for services received.

12.      Non-cash financing Activities

         See Note 9(g).

13.      Stock Split

         On October 23, 2000, the Company increased its number of issued and
         outstanding common shares to 19,233,000 shares by a forward split on a
         4.09 for one (1) basis on its 4,700,000 common shares issued and
         outstanding on that day. The par value of the common shares after the
         forward split is $0.0001 per share. The forward split is deemed to have
         taken effect on November 1, 1999. All share data have been restated to
         reflect retroactively the effects of the split.
<PAGE>
14.      Income Taxes

         (e)      A reconciliation of the statutory income tax to the Company's
                  effective income tax rate is as follows:

                  -----------------------------------------------------
                                                     2001         2000
                  -----------------------------------------------------
                  Statutory income tax rate       (15%)         (15%)
                  Tax losses not benefited         15%           15%
                  -----------------------------------------------------
                  Effective income tax rate         -              -
                  =====================================================

         (a)      The tax effect of temporary differences that give rise to the
                  Company's deferred tax assets are as follows:

                  -------------------------------------------------------------
                                                            2001         2000
                  -------------------------------------------------------------
                  Undepreciated capital cost of
                  capital assets over their
                  net book value                      $  44,000  $      19,000

                  Estimated tax loss carryforwards      624,000        627,700

                  Less: valuation allowance            (668,000)      (646,700)
                  -------------------------------------------------------------
                                                      $       -  $           -
                  =============================================================
                  The valuation allowance reflects the realization of the tax
                  assets is uncertain.

                  As at December 31, 2001, the Company has non-capital losses
                  and undepreciated capital cost of approximately $1,545,000 and
                  $98,000, respectively, which can be carried forward for tax
                  purposes and are available to reduce taxable income of future
                  years. The non-capital losses expire commencing in 2006
                  through 2008.
<PAGE>
15.      Stock Option

         On May 8, 2001, 25,000 options were granted to a service provider for
         the deferral of the payment obligation permitting the purchase of
         common shares at $1.00 per share effectively immediately and expiring
         on May 9, 2004. Under the SAFS 123, accounting for Stock-Based
         Compensation, fair value of the options at the date of grant was
         determined to be $5,796 based on the imputed interest expenses forgiven
         by the service provider.

         The following is a summary of the stock option outstanding as at
         December 31, 2001:
         -----------------------------------------------------------------------
                                                                Weighted Average
                                                       Shares     Exercise Price
         -----------------------------------------------------------------------
         Options outstanding at December 31, 2000           -      $      -
         Granted                                       25,000      $   1.00
         -----------------------------------------------------------------------
         Options outstanding at December 31, 2001      25,000      $   1.00
         =======================================================================
                       Options Outstanding and Exercisable
         -----------------------------------------------------------------------
                                              Weighted Average
            Range of      Number Outstanding    Remaining       Weighted Average
         Exercise Prices   and Exercisable   Contractual Life    Exercise Price
         -----------------------------------------------------------------------
            $1.00            25,000              2.42               $1.00
         -----------------------------------------------------------------------
         The weighted average fair value of the options granted during the year
         ended December 31, 2001 was $0.23.

16.      Geographic Information

         All the Company's operations and fixed assets are located in Canada.

17.      Subsequent Events

         The Company issued an irrevocable letter of credit of $200,000,
         guaranteed and secured by assets of a director, to a computer hardware
         provider as collateral for an operating lease of certain computer
         hardware. Subsequent to December 31, 2001, the Company purchased the
         computer hardware by drawing down the irrevocable letter of credit
         using the security provided by a director. This security provided by a
         director has been booked as a shareholder loan to the Company with no
         terms of repayment.

18.      Comparative Figures

         Certain 2000 comparative figures have been reclassified to conform with
         the financial statement presentation adopted for 2001.

Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure

There have been no changes in or disagreements with our accountants on any
accounting and financial disclosure for the fiscal year ended December 31, 2001.

Item 10.  Directors and Executive Officers of the Registrant.

Biographical Information on our Officers and Directors:

MITCH WHITE was appointed to his positions on February 14, 2001. Mr. White
devotes his time on an as needed basis, which he expects to be approximately 120
hours per month. During the calendar year ended December 31, 2001, Mr. White
dedicated approximately 75% of his time to the business of operating our
company. Mr. White is a director and officer of Cyop Systems International Inc.

From March, 1995 to June, 1998, Mr. Mitch White held the position of Chairman of
the Board of Directors of Starnet Systems International which is a publicly
traded reporting company quoted on the NASD OTC Bulletin Board under the symbol
"WGMGY" and on the AIM market in London, England. Starnet Systems developed and
implemented computer software designed to process online casino transactions in
those jurisdictions in which online gaming is permitted. From June 1998 until
the present, Mr. White has been principally engaged in the founding, funding and
development of Moshpit Entertainment and its pay for play electronic
transactional platform. Mr. White is also President of Caribbean Way.com, a
Montreal; Canada based online travel and booking agency. Mr. White possesses 15
years of experience in sales, marketing and management in the high technology
and entertainment industries.

There are no family relationships among the directors or executive officers of
the Company.

No director or executive officer of ours has been a director or executive
officer of any business, which has filed a bankruptcy petition, or had a
bankruptcy petition filed against it. No director or executive officer of ours
has been convicted of a criminal offence or is the subject of a pending criminal
proceeding. No director or executive officer of ours has been the subject of any
order, judgment or decree of any court permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities.

No director or officer of ours has been found by a court to have violated a
federal or state securities or commodities law.

Composition of our board of Directors

We currently have one director. All directors currently hold office until the
next annual meeting of stockholders or until their successors have been elected
and qualified. Our officers are elected annually by the Board of Directors and
hold office until their successors are elected and qualified. Pursuant to the
Company's by-laws, the number of directors shall be increased or decreased from
time to time by resolution of the Board of Directors or the shareholders. There
are no family relationships between any of the officers and directors of the
Company.

Committees of our Board of Directors

We currently do not have any committees of our Board of Directors.


Board of Directors Meetings

The Company's Board of Directors did not meet in person during the last fiscal
year, but approved all actions required by unanimous consent.

Director Compensation

Directors currently do not receive cash compensation for their services as
members of the Board of Directors, although members are reimbursed for expenses
in connection with attendance at Board of Directors meetings and specific Bingo
business meetings. Directors are eligible to participate in our stock option
plans. Option grants to directors are at the discretion of the Board of
Directors. Compensation received by officers, directors, and management
personnel will be determined from time to time by our Board of Directors.
Officers, directors, and management personnel will be reimbursed for any
out-of-pocket expenses incurred on our behalf.

Other than as described above, none of our directors or officers receives any
other compensation for their services. The salaries shown in the following table
are for the year ending December 31, 2001.

Section 16(a) Beneficial ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.

To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and representations that no other reports were required
during the year ended December 31, 2001, and except as disclosed elsewhere in
this document, the Company's officers, directors and greater than ten percent
beneficial owners have complied with all Section 16(a) filing requirements in a
timely manner.

Item 11. Executive Compensation

The following table describes the compensation the Company paid to our Chief
Executive Officer (the "Named Executive Officers").
                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                              Long Term Compensation
                                                                       --------------------------------------
                                         Annual Compensation                    Awards            Payouts
                                 ------------------------------------- -------------------------- -----------
          (a)             (b)        (c)         (d)          (e)          (f)          (g)          (h)         (i)
------------------------ ------- ------------ ----------- ------------ ------------ ------------- ----------- ----------
                                                             Other                                               All
                                                            Annual     Restricted    Securities                 Other
  Name and Principle                                         Comp-        Stock      Underlying      LTIP       Comp-
       Position                    Salary       Bonus      ensation     Award(s)    Option/SARs    Payouts    ensation
                          Year       ($)         ($)          ($)          ($)          (#)          ($)         ($)
------------------------ ------- ------------ ----------- ------------ ------------ ------------- ----------- ----------
<S>                      <C>        <C>          <C>         <C>          <C>            <C>         <C>        <C>
Mitch White,             2001       0.00         0.00        0.00         0.00           0           0.00       0.00
President, C.E.O.,
C.F.O. and Director
------------------------ ------- ------------ ----------- ------------ ------------ ------------- ----------- ----------
</TABLE>
The following table provides information regarding the beneficial ownership of
our common stock as of December 31, 2001 by:

*        each person or entity known by us to be the beneficial owner of more
         than 5% of the outstanding shares of common stock,

*        each of our directors and named executive officers, and

*        all of our directors and executive officers as a group.

                  Name and Address          Amount and Nature            Percent
Title of Class    of Beneficial Owner       of Beneficial Owner         of Class
--------------    -------------------       -------------------         --------

$.0001 Par Value  Keith Ebert               10,225,000 common shares      35.95%
Common Stock      Suite 2901                Direct Ownership
                  1201 Marinaside Cres.
                  Vancouver, B.C.
                  V6Z 2V2

$.0001 Par Value  Greenday Inc.             4,000,000 common shares       14.06%
Common Stock      Suite 29 - 1st Floor      Direct Ownership
                  Beckwith Mall             (Potential beneficial Owner
                  Lower Broad Street        is Mitch White)
                  Bridgetown, Barbados

$.0001 Par Value  Andrea Carley             500,000 common shares          1.76%
Common Stock      406-1040                  Direct Ownership
                  Hamilton Street
                  Vancouver, B.C.
                  V6V 2R9

$0.001 Par Value  Mitch White               500,000 common shares          1.76%
Common Stock      406-1040 Hamilton Street  Direct Ownership
                  Vancouver, B.C.
                  V6V 2R9

$0.001 Par Value  Caska Trust               1,250,000 common shares        4.39%
Common Stock      Suite 29 - 1st Floor      Direct Ownership
                  Beckwith Mall             (Potential beneficial owner
                  Lower Broad Street        is Mr. Stephen White)
                  Bridgetown, Barbados

$0.001 Par Value  Jazzco Trust              1,250,000 common shares        4.39%
Common Stock      Suite 29 - 1st Floor      Direct Ownership
                  Beckwith Mall             (Potential beneficial owner
                  Lower Broad Street        is Mr. A.J. Morand)
                  Bridgetown, Barbados

$0.001 Par Value  Lancaster Estate Trust    1,500,000 common shares        5.27%
Common Stock      Suite 29 - 1st Floor      Direct Ownership
                  Beckwith Mall             (Potential beneficial owner
                  Lower Broad Street        is Mr. Richard Gallo)
                  Bridgetown, Barbados

$.0001 Par Value  Management as a group     5,000,000 common shares       17.58%
Common Stock      including executive
                  officers and directors

Item 12. Security Ownership of certain Beneficial owners and management

The Company's president, Mr. Mitch White, is the potential beneficiary of shares
held by Greenday Inc. in the event of a distribution of property by that Trust.
Moshpit's Vice-President, Mr. Stephen White, is the potential beneficiary of the
1,250,000 shares held by Caska Trust in the event of a distribution of property
by that Trust. Mr. A.J. Morand, a former Vice-President of Moshpit Entertainment
is the potential beneficiary of 1,250,000 shares held by Jazzco Trust in the
event of a distribution by that Trust. Mr. Richard Gallo, who is an investor in
our company, is the potential recipient of 1,500,000 shares held by Lancaster
Estate Trust in the event of a distribution of property by that Trust. There is
no affiliation between the trusts which hold shares in our company.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of our common stock which may be
acquired upon exercise of stock options or warrants which are currently
exercisable or which become exercisable within 60 days of the date of the table
are deemed beneficially owned by the optionees. Subject to community property
laws, the persons or entities named in the table above have sole voting and
investment power with respect to all shares indicated as beneficially owned by
them.

Changes in Control. We are not aware of any arrangements, which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.

Item 13.  Certain Relationships and Related Transactions

On November 1, 1999, our former Chief Executive Officer and director, Mr. Keith
Ebert, received 2,250,000 of our common shares valued at $0.001 per share
($2,250.00) in consideration for his services in helping to set up our company
and for managing our operations.

On November 3, 2000 we acquired 100% of the issued and outstanding common shares
of CYOP Systems Inc. The former shareholders of CYOP Systems Inc. now
collectively own 9,000,000 of our 28,439,975 issued common shares or 31.6% of
our company. Certain of the former shareholders of CYOP Systems Inc. are
independently managed trusts. The following individuals are potential
beneficiaries of the trusts in the event of a distribution of property:
<TABLE>
<CAPTION>
Name of Former CYOP       Number of CYOP               Number of CYOP               Name of Potential
Systems Inc. Shareholder  Systems Inc.                 Systems International        Beneficial Owner
                          Shares Formerly Held         Incorporated Shares
                                                       Received

<S>                           <C>                          <C>                  <C>
Greenday Inc.                 8,000,000                    4,000,000            Mitch White
Andrea Carley                 1,000,000                      500,000            Andrea Carley
Mitch White                   1,000,000                      500,000            Mitch White
Caska Trust                   2,500,000                    1,250,000            Stephen White
Jazzco Trust                  2,500,000                    1,250,000            A.J. Morand
Lancaster Estate Trust        3,000,000                    1,500,000            Richard Gallo
</TABLE>
Our President and Chief Executive Officer, Mr. Mitch White, has been the primary
source of funding for the development of our wholly owned subsidiary, Moshpit
Entertainment Inc. As of the date of this registration statement, Mr. White has
advanced total proceeds of US$936,812 to Moshpit Entertainment Inc. a Canadian
subsidiary as demand loans at 8.5% per annum. These loans are not secured by any
of the assets of our company or its subsidiaries.

We have no policy with respect to entering into transactions with members of
management or affiliated companies. Any non arm's length transaction we consider
will be reviewed and voted on by disinterested members of our board of
directors.

Part IV

Item 14.  Exhibits, List and Reports on Form 8-K.
                                                -

(A)      Exhibits

Exhibit
Number          Description

3.1      Articles of Incorporation filed October 31, 2000, as filed with the
         Issuer's Form 10-SB (file no. 000-32355) filed on February 14, 2001
         incorporated herein by reference.

3.3      Bylaws as filed with the Issuer's Form 10-SB (file no. 000-32355) on
         February 14, 2001 incorporated herein by reference.

13.1     Form 10QSB for the period ended June 30, 2001, filed on October 17,
         2001, incorporated herein by reference.

13.2     Form 10QSB for the period ended September 30, 2001, filed on November
         16, 2001, incorporated herein by reference.

(B)      Reports on Form 8-K

         (1)      The Company did not file any Form 8-K's during the three
                  months ending December 31, 2001.

         (2)      On April 15, 2002 the Company did file a Form 8-K relating to
                  the sale of crediplay and appointment of the Registrant as the
                  exclusive agent.

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              CYOP SYSTEMS INTERNATIONAL INCORPORATED

Dated:  April 15, 2002        Per: /s/ Mitch White
                                   ------------------------------------
                                   Mitch White, President, C.F.O. and Director

In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the Registrant and in the capacities and on the
dates indicated.

                                   /s/ Mitch White
                                   -------------------------------------
                                   Mitch White, President, C.F.O. and Director

                                   April 15, 2002
                                   -------------------------------------
                                   Date