14

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB




[X]     QUARTERLY  REPORT  UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT  OF  1934  for  the  quarterly  period  ended  June  30,  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  000-29865
-----------------------------------

                                 CATHAYONE, INC.
                                 ---------------
        (Exact name of small business issuer as specified in its charter)


          Delaware                                   13-4140336
          --------                                   ----------
(State or other jurisdiction of                     (IRS Employer identification
No.)
incorporation  or  organization)


   c/o Fisher & Fisher - One Whitehall Street, 21st Floor - New York, NY 10004
   ---------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (917) 699-4352
                                 --------------
                           (Issuer's telephone number)



Check whether the issuer (1) filed all reports required to be filed by Section13
or  15(d)  of  the  Exchange  Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past 90 days. Yes [x] No [  ]

Check  whether  the  registrant  filed  all documents and reports required to be
filed  by  Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities  under  a  plan  confirmed  by  the  court.  Yes  [   ]  No  [X]

Number  of  shares  of  common  stock  outstanding  as  of
August  15,  2001:  29,689,158







                        CATHAYONE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)

PART  I  -  FINANCIAL  INFORMATION  (Post  Re-Capitalization  -  See  Notes)
----------------------------------------------------------------------------
PAGE  NO.
---------
Item  1.     Financial  Statements
          Consolidated  Balance Sheets as of June 30, 2001(unaudited)          3
          Consolidated  Statements  of  Operations  for  the
           Three  and  six  months  ended June 30, 2001 and 2000               4
          Consolidated  Statements  of  Cash  Flows  for  the
           six  months  ended June 30, 2001 and 2000                         5-6
          Notes to Consolidated Financial Statements                         7-8

Item  2.     Management's  Discussion  and  Analysis
                                                                            9-12


PART  II  -  OTHER  INFORMATION
-------------------------------
Item  1.     Legal  Proceedings  (including  Chapter  11  bankruptcy  filing
information)                                                                  13

Item  2.     Changes  in  Securities  and  Use  of  Proceeds
13

Item 3.     Defaults Upon Senior Securities                                   13

Item  4.     Submission  of  Matters  to  a  Vote  of  Security  Holders
13

Item  5.     Other  Information                                               13

Item  6.     Exhibits  and  Reports  on  Form  8-K
                                                                              13

SIGNATURES                                                                    14
















ITEM  1.     FINANCIAL  STATEMENTS
<TABLE>
<CAPTION>


                                  CATHAYONE, INC. & SUBSIDIARIES
                                  (A DEVELOPMENT STAGE COMPANY)
                                   CONSOLIDATED BALANCE SHEETS
                        AT JUNE 30, 2001 (UNAUDITED) AND DECEMBER 31, 2000

                                              ASSETS
                                              ------
<S>                                                                <C>             <C>
                                                                    (Unaudited)
CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . .  Jun 30, 2001    Dec 31, 2000
-----------------------------------------------------------------
  Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . .  $           8   $      37,187
  Loan Receivable, net. . . . . . . . . . . . . . . . . . . . . .             -0-            -0-
  Prepaid Expenses. . . . . . . . . . . . . . . . . . . . . . . .             -0-            500
    TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . .              8          37,687

FIXED ASSETS
-----------------------------------------------------------------
  Furniture and Office Equipment. . . . . . . . . . . . . . . . .          5,946           5,946
  Accumulated Depreciation. . . . . . . . . . . . . . . . . . . .         (1,050)           (850)
     Net Fixed Assets . . . . . . . . . . . . . . . . . . . . . .          4,896           5,096
                                                                   --------------  --------------

    TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . .  $       4,904   $      42,783
                                                                   =============   ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-----------------------------------------------------------------

CURRENT LIABILITIES
-----------------------------------------------------------------
  Accounts Payable and Accrued Expenses . . . . . . . . . . . . .      1,166,767       1,044,701
  Due to Related Parties. . . . . . . . . . . . . . . . . . . . .        822,377         776,177
    TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . .      1,989,144       1,820,878

STOCKHOLDERS' DEFICIT
-----------------------------------------------------------------
  Common Stock ($.001 par value, 100,000,000 shares authorized:
   29,689,158 and 29,489,158 issued and outstanding at
   June 30, 2000 and December 31, 2000, respectively) . . . . . .         29,689          29,489
  Preferred Stock ($.001 par value, 5,000,000 shares authorized:
   none issued and outstanding) . . . . . . . . . . . . . . . . .            -0-             -0-
  Additional Paid-in-Capital. . . . . . . . . . . . . . . . . . .      3,129,149       2,667,349
  Deficit Accumulated During Development Stage. . . . . . . . . .     (5,143,078)     (4,474,933)
    TOTAL STOCKHOLDERS' DEFICIT . . . . . . . . . . . . . . . . .     (1,984,240)     (1,778,095)

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT . . . . . . . . .  $       4,904   $      42,783
                                                                   =============   ==============
</TABLE>





<TABLE>
<CAPTION>


                                                  CATHAYONE, INC. & SUBSIDIARIES
                                                  (A DEVELOPMENT STAGE COMPANY)
                                        CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                    FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000*


<S>                                         <C>          <C>                   <C>           <C>
                                             Three Months Ended June 30,    Six Months Ended June 30,
                                                2001           2000              2001         2000*
OPERATING EXPENSES:
------------------------------------------
  General and administrative . . . . . . .  $    8,665   $     96,829          $   206,041   $   98,129
    TOTAL EXPENSES . . . . . . . . . . . .       8,665         96,829              206,041       98,129

    OPERATING LOSS . . . . . . . . . . . .      (8,665)       (96,829)            (206,041)     (98,129)

OTHER EXPENSE:
------------------------------------------
  Interest Expense - Note 3. . . . . . . .          -0-            -0-            (462,104)          -0-
    TOTAL OTHER EXPENSE. . . . . . . . . .          -0-            -0-            (462,104)          -0-

    LOSS BEFORE TAXES. . . . . . . . . . .      (8,665)       (96,829)            (668,145)      (98,129)

    INCOME TAX (PROVISION) BENEFIT . . . .          -0-            -0-                  -0-           -0-

    NET LOSS . . . . . . . . . . . . . . .  $   (8,665)  $    (96,829)         $  (668,145)    $  (98,129)

  Net Loss Per Common Share
  Basic & Fully Diluted. . . . . . . . . .  $       **   $      (0.01)         $     (0.02)    $    (0.02)

  Weighted Average Common
  Shares Outstanding . . . . . . . . . . .  29,689,158       8,032,495          29,655,825      6,120,407

* Date of reorganization was March 1, 2000
** Less than $.01
</TABLE>














<TABLE>
<CAPTION>


                                    CATHAYONE, INC. & SUBSIDIARIES
                                     (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                           FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000*

<S>                                                                  <C>              <C>
                                                                      June 30, 2001    June 30, 2000*
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------------------------------------
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     (668,145)  $       (98,129)
  Adjustments to reconcile net loss to net
  cash provided by (used in) operating activities:
    Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . .             200               -0-
    Common stock issued in connection with legal services - Note 3.         462,000               -0-
    Common stock issued in reorganization . . . . . . . . . . . . .             -0-            29,258
    Write-down of note receivable and prepaid asset . . . . . . . .           8,000
    Increase in operating liabilities:
      Amounts due related party for
      services rendered . . . . . . . . . . . . . . . . . . . . . .          46,200               -0-
      Accounts payable and accrued expenses . . . . . . . . . . . .         122,066            87,798

      NET CASH PROVIDED BY (USED IN)
      OPERATING ACTIVITIES. . . . . . . . . . . . . . . . . . . . .         (29,679)           18,927
                                                                    ----------------   ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
-------------------------------------------------------------------
  Investment in distribution company. . . . . . . . . . . . . . . .             -0-           (16,139)

      NET CASH USED IN INVESTING ACTIVITIES . . . . . . . . . . . .             -0-           (16,139)
                                                                    ---------------  -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------------------------------------
  Issuance of note receivable . . . . . . . . . . . . . . . . . . .          (7,500)              -0-
  Common stock issuances. . . . . . . . . . . . . . . . . . . . . .             -0-             1,299

      NET CASH PROVIDED BY (USED IN)
      FINANCING ACTIVITIES. . . . . . . . . . . . . . . . . . . . .          (7,500)            1,299
                                                                   -----------------   ---------------
      NET INCREASE (DECREASE) IN
      CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . .         (37,179)            4,087

CASH AND CASH EQUIVALENTS:
-------------------------------------------------------------------
      Beginning of period . . . . . . . . . . . . . . . . . . . . .          37,187               -0-

      End of period . . . . . . . . . . . . . . . . . . . . . . . .  $            8   $         4,087
                                                                     ==============   ================
* Date of reorganization was March 1, 2000
</TABLE>



<TABLE>
<CAPTION>


                           CATHAYONE, INC. & SUBSIDIARIES
                           (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                  FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000*

<S>                                                 <C>             <C>

                                                    June 30, 2001   June 30, 2000*
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
--------------------------------------------------
  Cash paid for interest . . . . . . . . . . . . .  $          104  $           -0-
                                                    ==============  ===============
NON-CASH FINANCING ACTIVITIES:
--------------------------------------------------
  Common stock issued in connection
  with legal services - Note 3 . . . . . . . . . .  $      462,000  $           -0-
                                                    ==============  ===============
</TABLE>



































                         CATHAYONE, INC. & SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                                  June 30, 2001


NOTE  1  -  BASIS  OF  PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  pursuant  to  the  rules  and  regulations  of  the
Securities  and Exchange Commission. Accordingly, they do not include all of the
information  and  footnotes required by generally accepted accounting principles
for  complete  financial  statements.

In  the  opinion  of  management, the unaudited condensed consolidated financial
statements  contain all adjustments consisting only of normal recurring accruals
considered  necessary to present fairly the Company's financial position at June
30,  2001,  the  results of operations for the three and six month periods ended
June  30,  2001  and 2000, and cash flows for the six months ended June 30, 2001
and  2000.  The  results for the period ended June 30, 2001, are not necessarily
indicative  of  the  results  to  be  expected for the entire fiscal year ending
December  31,  2001.

NOTE  2  -  EARNINGS  (LOSS)  PER  SHARE

The  following  represents  the  calculation  of  earnings  per  share:
<TABLE>
<CAPTION>




<S>                                      <C>           <C>          <C>                     <C>
                                      For  the  three  months  ended  For  the  six  months  ended
                                                   June  30,                     June  30,
BASIC & DILUTED*                                2001         2000               2001       2000
----------------------------------       ------------  -----------  -----------------  ---------

Net loss                                 $    (8,665)  $  (96,829)  $       (668,145)  $(98,129)

Less- preferred stock dividends                   --           --              --            --
                                         ------------  -----------  ---------------- -----------

Net loss                                 $    (8,665)  $  (96,829)  $       (668,145)  $(98,129)
Weighted average number
of common shares                          29,689,158    8,032,495          29,655,825   6,120,407
                                         ------------  -----------  -----------------  ----------

Basic & diluted earnings per share       $        **   $     (.01)  $           (.02)  $   (.02)
                                        ============  ===========  ==================  ===========

</TABLE>



*There  were  no  common  stock  equivalents  for  either  period  presented.
**  Less  than  $.01




NOTE  3  -  OTHER  EXPENSE

During  the six months ended June 30, 2001, the Company issued 200,000 shares of
its  common stock in connection with legal services performed rendered on behalf
of  the  Company.  The  Company  is  disputing  a  significant  portion  of  the
approximately  $593,000  in  accumulated  invoices  claimed by the law firm. The
Company  has  accrued  these  invoices  in  its  financial  statements pending a
settlement  with  the  law firm. The shares were issued pursuant to an agreement
whereby  the  law  firm will provide the Company until April 30, 2001 to pay the
outstanding invoices. The Company is currently in default of this agreement. The
value  of  the  shares  was  determined  using  the  fair  market on the date of
issuance,  or  $2.31  per share, yielding an aggregate market value of $462,000.

NOTE  4  -  BANKRUPTCY  FILING

On  June 15, 2001, The registrant filed a voluntarily Chapter 11 petition in the
United  States  Bankruptcy Court for the Southern District of New York, Case No.
01-41726(cb).  The  registrant  is continuing as a debtor in possession with its
prior  management,  except as noted in Item 6, pursuant to Section 1107 of Title
11  of  the  United  States  Code.  The  Company  intends  to  file  a  plan  of
reorganization as provided by Chapter 11 of the United States Bankruptcy Code as
soon  as  practicable.

A  meeting  of creditors pursuant to section 341 of the United States Bankruptcy
Code  was  held  in  August  2001.

The  Company  intends  to  proceed  as  expeditiously  as  possible  to  resolve
outstanding  liabilities.  The  Company  presently  is  in  negotiation  with
prospective merger partners in order to inject new capital into the Company, and
therefore  maximize  value  for  its  constituents.

NOTE  5  -  CHANGE  IN  DIRECTORS

Subsequent  to  the  Special  Meeting,  Phillip  Lee  Flaherty  announced  his
resignation  as  Chairman, Treasurer and Director of CathayOne, Inc., as well as
his  position as Chief Executive Officer of its subsidiary, Cathay Entertainment
Ltd.

Mr  Flaherty  was  replaced by the addition of Charles A Nelson to the Company's
Board  of  Directors.  Mr  Nelson  is  a  Senior Vice President for New Business
Development  at  Auerbach,  Pollack  &  Richardson.








              --The rest of this page is left intentionally blank--

ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION
--------

With  the  exception of historical facts stated herein, the matters discussed in
this  report  are  "forward  looking"  statements  that  involve  risks  and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
projected  results.  Such  "forward  looking"  statements  include,  but are not
necessarily  limited  to,  statements  regarding  anticipated  levels  of future
revenues and earnings from operations of the Company. Readers of this report are
cautioned not to put undue reliance on "forward looking" statements that are, by
their  nature,  uncertain  as  reliable  indicators  of  future performance. The
Company  disclaims  any  intent  or obligation to publicly update these "forward
looking"  statements,  whether as a result of new information, future events, or
otherwise.

DESCRIPTION  OF  BUSINESS

Business  Development  History
------------------------------

CathayOne,  Inc.  (the "Company") is a publicly traded Delaware corporation that
was  originally  incorporated  in the State of Utah on August 6, 1984, under the
name  North  American  Clothing  Company,  Inc.

As  of June 30, 2000, a majority of the shareholders of the Company authorized a
change  in  the  Company's state of incorporation from Utah to Delaware, and the
merger  of  the  Company  into its wholly owned subsidiary, Cathay Bancorp Inc.,
CathayOne Inc. being the surviving company.  The re-domiciling of the Company to
the  State  of  Delaware  and  the  concurrent  change  of the Company's name to
CathayOne  Inc.  occurred  on  August  9,  2000.

The  Company  has  vacated  their  former  executive  offices  and  is receiving
correspondence  at  their  attorneys  office  at:  c/o  Fisher  and Fisher - One
Whitehall  Street,  21st  Floor  -  New  York,  NY  10004

Business  of  the  Issuer.
-------------------------

     Principal  Products  and  Services

The Company's stated business purpose is to manage, take a majority position in,
and/or  make strategic investments in technological and service companies in the
entertainment  industry.  While  located  in  the United States, the Company has
attempted to take advantage of the appetite for foreign content entertainment as
well  as  foreign  entertainment in China, the fast-growing broadband multimedia
information dissemination opportunities, and Internet content services market in
China.  Management  believes  that  the best returns for investments in the next
decade  will  be  in the People's Republic of China, Hong Kong, Macao and Taiwan
(collectively,  "Greater  China").

The  Greater  China  market  is increasingly looking outward in its appetite for
foreign  content  entertainment.  The  Company believes it can capitalize on the
growth  in  information  technology,  and  will  initially  focus  on developing
companies  in  the entertainment markets, including: music, theater and sporting
events.

The  Company will attempt to provide its North American expertise in management,
new  technologies,  and financial acumen to companies in China. As the companies
mature,  the  Company  will  seek  to  enhance  value  and  liquidity  for  its
shareholders  by bringing these companies to the public market, arranging merger
and  acquisition opportunities, or negotiating private transactions for them. In
the  alternative,  the  Company  may take an equity position or enter into joint
ventures  with  such  companies.

     Distribution

The  Company  is  still  in  the  developmental phase and has not, to this date,
embarked  on any consistent attempts to market or distribute its products in the
Greater  China  region or elsewhere.  The Company has performed no formal market
studies  related  to  its  proposed  products  and services in the Greater China
region.  However,  the Company has been involved in limited in-house research to
determine  the  types  of  music  and  entertainment  that  might  be  marketed
successfully  in  the  Greater  China  region.

     Competition

The  Company  will  be  involved  in  intense  competition  with  other business
entities,  many of which will have a competitive edge over the Company by virtue
of  their  stronger financial resources and prior experience in business.  There
is  no  assurance  that  the  Company will be successful in obtaining additional
suitable business opportunities, or that it will be able to successfully operate
its  current  proposed  businesses.

The  market  for  the  provision  of  entertainment  products and/or services to
individuals and businesses is extremely competitive and highly fragmented. There
may  be  substantial  barriers  to  entry  in  Mainland  China and other foreign
countries  where  the  Company  seeks  to  operate, and the Company expects that
competition  will  intensify.  The Company believes that the primary competitive
factors  determining success in this market are a reputation for reliability and
service, effective customer support, pricing, creative marketing, and geographic
coverage.  Other  important  factors  include the timing of introductions of new
products  and services and industry and general economic trends. There can be no
assurance  that the Company will be able to compete successfully against current
or  future  competitors  or that competitive pressures faced by the Company will
not materially adversely affect its business, financial condition and results of
operations.

In  order  to  respond  to  expected changes in the competitive environment, the
Company  may,  from  time to time, make price, service or marketing decisions or
make  acquisitions  that  could  possibly  harm  its  business.  Developing  new
technologies  may also increase competitive pressures on the Company by enabling
its  competitors  to  offer  a  lower  cost  service.

     Dependence  on  Major  Customers

The  Company's  business plan does not envision dependence on one or a few major
customers




     Governmental  Regulation

The  Company  is  subject  to  the  same  federal, state and local laws as other
companies  providing  entertainment  and Internet products and services.  Today,
there  are  relatively few laws specifically directed toward online products and
services.  However, due to the increasing popularity and use of the Internet and
online  services,  it  is possible that laws and regulations may be adopted with
respect  to  the  Internet  or  online  products  and  services.  These laws and
regulations  could  cover issues such as online contracts, user privacy, freedom
of  expression,  pricing,  fraud,  content and quality of products and services,
taxation,  advertising,  intellectual  property rights and information security.
Applicability to the Internet of existing laws governing issues such as property
ownership,  copyrights  and other intellectual property issues, taxation, libel,
obscenity  and  personal  privacy  are  uncertain.  Several  jurisdictions  have
proposed  legislation  that  would  limit  the uses of personal user information
gathered  online  or  require  online  services  to  establish privacy policies.

While  located  in  the United States, the Company has positioned itself to take
advantage  of  foreign  content  entertainment,  the  fast-growing  broadband
multimedia  information  dissemination  opportunities,  and  Internet  content
services  market in foreign markets. Management intends to build its business in
the  People's  Republic  of  China,  Hong  Kong, Macao and Taiwan (collectively,
"Greater  China"). In all of these countries, businesses face varying degrees of
government  regulation.  Mainland  China  is  heavily  regulated.  Because  the
Company  is  in  a  start-up  mode,  it  is  presently impossible to predict the
government  regulation, if any, to which the Company may be subject.  The use of
assets  and/or  conduct of businesses that the Company may acquire could subject
it  to  environmental,  public  health  and  safety,  land  use, trade, or other
governmental regulations and state or local taxation.   The Company is presently
attempting  to  ascertain  the  effects  of  such  government  regulation on the
prospective  business  of  the  Company.  Under  the  present circumstances, the
Company  is  in the development stage.  Therefore, it is not feasible to predict
with any degree of accuracy the impact of government regulation on the Company's
operations.  The  inability  to ascertain the effect of government regulation on
the  Company's  prospective  business  activity  creates  a high degree of risk.

     Regulatory  Overview

It  is possible that additional laws and regulations may be adopted with respect
to  the  entertainment  industry.  Such new laws or regulations may cover issues
such  as  content,  pricing, consumer protection, electronic commerce, taxation,
copyright  infringement  and  other  intellectual  property  issues. The Company
cannot  predict  the  impact,  if  any,  that  any  future regulatory changes or
development  may  have  on  its  business,  financial  condition  and results of
operations.  Changes  in  the regulatory environment that directly or indirectly
affect the ability to market products or services, or increase the likelihood or
scope  of  competition,  could  have  a material adverse effect on the Company's
business,  financial  condition  and  results  of  operations.

     Employees

The  two  remaining  officers  continue  to  manage  the  Company  as  a
debtor-in-possession. This arrangement will continue into the foreseeable future
pursuant  to  their  Chapter  11  plan  of  reorganization.


RESULTS  OF  OPERATIONS
-----------------------

The  following  are  the  results  of  operation as of and for the three and six
months  ended June 30, 2001 and 2000. As indicated in the accompanying financial
statements,  the  Company  did  not  have  any material operations for the three
months  ended  March  31,  2000.

Net  Income

The  Company  had  a net loss of $8,665 for the three months ended June 30, 2001
versus  a  net loss of $96,829 for the same period in 2000. The net loss for the
first  half  of  the  year  was primarily attributable to non-cash expense on an
accounts  payable  and accrued consulting fees that were, $462,000 and $120,000,
respectively.

Sales

The  Company  did  not  have  any  revenues  during  the  periods  presented.

Expenses

Total  expenses  were  $8,665  for  the  three months ended June 30, 2001 versus
$96,829  in  during  the  same  period in 2000. Total expenses for the six month
period  ended  June  30,  2000  were  $668,145 versus $98,129 in during the same
period  in  2000.

Total  expenses  included  $462,000  in  connection  with  the  payable  due the
Company's  legal  counsel.  The  payment  was  made  with  200,000 shares of the
Company's  common  stock valued at $2.31 per share, the fair market value at the
time  of  issuance.  Expenses also included $120,000 in accruals for consultants
and  officers  pursuant  to their respective employment agreements. Rent expense
was  $16,200.


Liquidity  and  Capital  Resources

On  June  30,  2001, the Company had cash of $8 and a working capital deficit of
$1,989,136.  The  working  capital deficit represents primarily obligations from
operations  and  amounts  due  related  parties  for  advances  and  services.

Net  cash used in operating activities was $29,679 for the six months ended June
30,  2001 versus net cash provided by operating activities of $18,927 during the
same  period  in 2000. The difference in cash used was primarily attributable to
an  increase  in  loss from operations in the amount of $659,480, an increase in
accounts  payable  of $87,798 during 2000 and $462,000 in common stock issuances
for  services.

Cash  used  in financing activities totaled $7,500 for the six months ended June
30,  2001  as  a  result of the incurrence of a loan receivable in the amount of
$7,500  to  an  unrelated  party. The Company now believes collection of this is
unlikely  and,  accordingly,  has  reserved this amount to bad debt. The Company
will  need  to raise funds during the next twelve months for its operations. The
Company does not currently have enough liquid assets to remain in operations. In
addition,  the Company's auditors expressed doubt as to the Company's ability to
continue as a going concern. Failure to raise additional capital during the next
twelve  months  will  have a material adverse effect on the Company. The Company
estimates  it  will  need  $3  to  5 million over the next twelve months and $14
million  over  the  long-term  in  order  to  develop  its  business  plan.

PART  II.  OTHER  INFORMATION
-----------------------------

Item  1.  Legal  Proceedings

Capital  Lake  S.A.  v.  CathayOne, Inc., Case No. 01-CV-1266 (SAS) filed in the
----------------------------------------
United  States  District  Court for the Southern District of New York.  The case
---
involves a claim to entitlement to a $300,000 finder's fee/brokerage commission.
--
The  Company  denies  liability and is defending the action.  The case is in its
early  stages.  No  discovery has occurred.  The Company is unable to express an
opinion  on  the  outcome  at this time, although the Company does feel it has a
meritorious  defense  to  the  claim.
As  a  result  of  the  bankruptcy  filing,  this  case  has  been  stayed.

The  Company  is aware of a claim being asserted by its former legal counsel for
fees  in  the  approximate  amount of $593,000, which amount is contested by the
Company.  The  Company is attempting to settle this claim. Collection efforts on
this  claim  has  also  been  stayed

Item  2.  Changes  in  Securities

None.

Item  3.  Defaults  Upon  Senior  Securities

None.

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

None

Item  5.  Other  Information

None.

Item  6.  Exhibits  and  Reports  on  Form  8-K

a)  Exhibits
------------

None.



b)  Reports  on  Form  8-K
--------------------------

     1.  A  Form  8-K  was  filed  on  June  20,  2001 announcing the bankruptcy
proceeding  filed  under Chapter 11 of the United Stated Bankruptcy Code and the
resignation  of  a  director  of  the  Company.


                                   SIGNATURES
                                   ----------

In  accordance with the requirements of the Securities Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned,  thereunto  duly  authorized.


                              /s/  David Cooperberg, President
                              -------------------------------------------
Date:  August  15,  2001           David Cooberberg, President