SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

(X)  Quarterly  Report  pursuant  to  Section  13 or l5 (d)  of  the  Securities
     Exchange Act of 1934


                  For the quarterly period ended March 31, 2002

                                       OR

(  )Transition  Report  pursuant  to  Section  13 or 15 (d) of the  Securities
     Exchange Act of 1934

                         Commission File Number: 0-28514
                                                 -------


                      YAPALOT COMMUNICATIONS HOLDINGS INC.
         ----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

           DELAWARE                                             98-0160284
------------------------------                           -----------------------
(State or Other Jurisdiction                                (I.R.S. Employer
Incorporation or Organization)                            Identification Number)


             4884 Dufferin Street, Unit 1, Toronto, Ontario M3H 5S8
             ------------------------------------------------------
                    (Address of Principal Executive Offices)

Issuer's Telephone Number, Including Area Code:  416-736-8882
                                                 ------------

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


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                                     Yes X No

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date:  20,000,000 shares of Common Stock,
par value $0.001 per share were outstanding as of May 20, 2002.


<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                      YAPALOT COMMUNICATIONS HOLDINGS INC.
                       INTERIM CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
                            (Stated in U.S. Dollars)


                                                     March 31       December 31
                                                       2002             2001
                                                    -----------     ------------
      A S S E T S

 CURRENT
    Cash                                              $  6,112        $  5,607
    Accounts receivable                                  4,441           6,157
    Prepaid and sundry                                $  9,292        $  9,733
                                                       --------        --------
                                                       775,742         820,100
 CAPITAL ASSETS (Note 3)                               --------        --------
                                                      $795,587        $841,597
                                                       --------        --------
      L I A B I L I T I E S

 CURRENT
    Accounts payable and accrued liabilities          $630,215        $677,690
    Current portion of bank term loan (Note 4)          34,479          34,479
                                                       --------        --------
                                                      $664,694        $712,169

 BANK TERM LOAN, Less current portion (Note 4)          61,405          71,214
 SHAREHOLDERS' ADVANCES (Note 5)                       301,111         301,111
                                                       --------        --------
                                                    $1,027,210      $1,084,494

                   SHAREHOLDERS' DEFICIT

 SHARE CAPITAL ISSUED AND PAID UP (Note 6)           $  20,000       $  20,000
 CAPITAL IN EXCESS OF PAR VALUE                      1,044,346       1,039,076
 CUMULATIVE TRANSLATION ADJUSTMENT                     (28,105)        (35,472)
 DEFICIT                                            (1,267,864)     (1,266,501)
                                                     ----------     -----------
                                                     $(231,623)      $(242,897)
                                                     ----------     -----------
                                                     $ 795,587       $ 841,597
                                                     ==========     ===========



<PAGE>


                      YAPALOT COMMUNICATIONS HOLDINGS INC.
        INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                            (Stated in U.S. Dollars)
<TABLE>

                                                 Common Shares
                                                                                                         Accumulated
                                                                        Capital in                          Other
                                                            Paid Up     Excess of        Accumulated    Comprehensive
                                              Number        Amount      Par Value          Deficit          Loss            Total
                                            -----------    ----------  -------------    --------------  ---------------   ---------
<S>                                          <C>            <C>           <C>            <C>            <C>              <C>

FROM INCEPTION TO DECEMBER 31,2001          20,000,000     $ 20,000     $ 1,039,076     $ (1,266,501)       $ (35,472)  $ (242,897)

FROM JANUARY 1, 2001 TO March 31, 2002
   Net Loss                                                                                   (1,363)                     $ (1,363)
   Foreign currency translation adjustments                                                                      7,367       7,367
   Imputed interest on shareholder loans                                      5,270                                          5,270
                                           ------------ ------------   ------------- -----------------  ---------------  ----------

BALANCE - March 31, 2002                    20,000,000     $ 20,000     $ 1,044,346     $ (1,267,864)       $ (28,105)  $ (231,623)
                                           ============ ============   ============= =================  ===============  ==========

</TABLE>


                             See accompanying notes.


<PAGE>

                      YAPALOT COMMUNICATIONS HOLDINGS INC.
            INTERIM CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
                                   (UNAUDITED)
                            (Stated in U.S. Dollars)
<TABLE>

                                                       For the three       For the three
                                                       month period        month period
                                                       ended March 31,     ended March 31,
                                                       2001                2000
                                                       ---------------     ----------------
<S>                                                    <C>                 <C>

 REVENUE                                                $  153,173            $  222,384
                                                       -------------         -------------
 EXPENSES
    Selling, general and administrative
    expenses                                            $  108,865            $  319,309
    Bank charges and interest                                1,313                11,618
    Amortization                                            44,358                79,816
                                                        ------------         -------------
                                                        $  154,536            $  410,743
 NET LOSS                                               $   (1,363)           $ (188,359)
                                                        ------------         -------------

 OTHER COMPREHENSIVE INCOME
    Foreign currency translation adjustment             $    7,367            $  (26,934)

 DEFICIT - Beginning year                              $(1,266,501)           $ (799,215)
 NET LOSS                                                   (1,363)             (188,359)
                                                        ------------         -------------
 DEFICIT                                               $(1,267,864)           $ (971,122)
                                                        ============         =============
 LOSS PER COMMON SHARE (Note 7)                        $     (0.01)           $    (0.94)
                                                        ============         =============
 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   20,000,000            20,000,000
                                                        ============         =============
</TABLE>


                             See accompanying notes.

<PAGE>

                      YAPALOT COMMUNICATIONS HOLDINGS INC.
                  INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                            (Stated in U.S. Dollars)
<TABLE>

                                                For the Three Month            For the Three Month
                                                Period ended March 31,         Period ended March 31,
                                                2001                           2000
                                                ----------------------         ----------------------
<S>                                             <C>                             <C>

CASH FROM (USED IN) OPERATIONS

    Net loss                                         $  (1,363)                     $(191,088)
    Adjustments  to  reconcile  net  loss
    to net  cash  provided  by  operating
        activities:
    Amortization                                        44,358                         79,816
    Prior year interest adjustment                           -                          2,729
    Non-cash imputed interest                            5,270                              -
    Deferred revenue                                         -                         88,296
    Changes in assets and liabilities
      relating to operations
    Accounts receivable                                  1,716                        (78,071)
    Accounts payable and accrued liabilities           (47,475)                       (97,545)
    Prepaid and sundry assets                              441                         (7,661)
                                                      ---------                     ----------
    NET CASH FROM (USED IN) OPERATIONS              $    2,947                     $ (203,524)
                                                      ---------                     ----------
 CASH USED IN INVESTING ACTIVITIES

    Purchase of capital assets                      $        -                     $  (24,093)

 CASH FROM FINANCING ACTIVITIES

    Loan                                                (9,809)                             -

    NET CASH FROM FINANCING ACTIVITIES              $   (9,809)                    $        -
                                                      ---------                     ----------
 EFFECT OF EXCHANGE RATE CHANGES ON CASH            $    7,367                     $  (26,934)
                                                      ---------                     ----------
 NET INCREASE (DECREASE) IN CASH DURING THE PERIOD  $      505                     $ (254,551)
                                                      ---------                     ----------
 CASH - Beginning of period                         $    5,607                     $  151,835
                                                      ---------                     ----------
 CASH (INDEBTEDNESS) - End of period                $    6,112                     $ (102,716)
                                                      =========                     ==========
</TABLE>

<PAGE>


                      YAPALOT COMMUNICATIONS HOLDINGS INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                   (UNAUDITED)
                            (Stated in U.S. Dollars)


The financial  information for the period ended March 31, 2002 presented in this
Form 10-QSB has been prepared from accounting records of Yapalot  Communications
Holdings  Inc.  (the  "Company").   The  information   furnished   reflects  all
adjustments  which are,  in the  opinion  of  management,  necessary  for a fair
statement of the results of this period.


1.  NATURE OF OPERATIONS

    Yapalot Communications  Holdings Inc. was incorporated under the laws of the
    State of  Delaware  on April 6, 2000 and has  adopted  a fiscal  year end of
    December  31.  The  Company's  activities  consist  of the  development  and
    deployment of Voice Over Internet  Protocol  (VoIP) network  services around
    the world as well as developing different communications solutions utilizing
    VoIP technology.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    a)  Basis of Consolidation
        These consolidated  financial  statements present the combination of the
        financial statements of Yapalot  Communications  Holdings Inc., a United
        States company, and its wholly-owned subsidiary,  Yapalot Communications
        Inc., a company  incorporated under the laws of the Province of Ontario,
        Canada on March 8, 2000.

    b)  Basis of Financial Statements
        These interim  consolidated  financial  statements  are stated in United
        States dollars, the "reporting currency". The consolidated  transactions
        of Yapalot  Communications  Holdings Inc. have been recorded in Canadian
        dollars, the "functional  currency",  and have been restated into United
        States  dollars at the period end exchange rates for balance sheet items
        and the average  exchange  rate for the period for  revenues,  expenses,
        gains and losses.  Translation adjustments to the reporting currency are
        included in equity.

    c)  Capital Assets and Amortization
        Capital  assets  are  carried  at  acquisition   cost  less  accumulated
        amortization.  Amortization is provided annually by the Company at rates
        intended to amortize  the assets over their  estimated  useful  lives as
        follows:

             Computer equipment                -   30%  Declining balance basis
             Computer software                 -  100% Declining balance basis
             Furniture and fixtures            -   20%  Declining balance basis
             Leasehold improvements            -   20%  of cost
             Network communications equipment  -   20%  Declining balance basis

        Where  the  Company  determines  that  circumstances  indicate  that the
        carrying  value of certain  capital assets may not be  recoverable,  the
        Company's policy is to write the asset down to an estimate of the future
        cash flows expected to result from the use of the asset and its eventual
        disposition.  Such an  impairment  loss will be charged to operations in
        the current period.

    d)  Revenue Recognition
        The Company records its revenue from customer  contracts as services are
provided.


<PAGE>
    e)  Estimates
        The  preparation  of financial  statements in conformity  with generally
        accepted accounting principles requires management to make estimates and
        assumptions  that affect the reported  amounts of assets and liabilities
        and revenues and expenses  during the reporting  period.  Actual results
        could differ from those estimates.

    f)  Start-up and Other Pre-operating Expenses
        Start-up and pre-operating expenses incurred by the Company are expensed
        as incurred.

    g)  Comprehensive Income
        In June 1997, the Financial  Accounting  Standards Board ("FASB") issued
        SFAS No. 130, "Reporting Comprehensive Income", which was adopted by the
        Company. SFAS No. 130 establishes standards for reporting and display of
        comprehensive  income  and  its  components  in  an  entity's  financial
        statements.  Comprehensive  income as defined  includes  all  changes in
        equity (net assets) during a period from non-owner sources.

    h)  Earnings (Loss) Per Share
        Earnings (loss) per common share is based on the weighted average number
        of common shares outstanding during the period.

    i)  General
        These financial  statements have been prepared in accordance with Unites
        States generally accepted  accounting  principles (GAAP), as they relate
        to these financial statements.


3.  CAPITAL ASSETS
                                            Accumulated        Net         Net
                                Cost        Amortization       2002        2001
                               -------     --------------    ------      ------
Computer equipment           $  152,561     $ 62,018        $ 90,543    $ 97,884
Computer Software                72,867       72,867               -           -
Furniture and fixtures           67,152       18,955          48,197      50,734
Leasehold improvements           71,000       21,662          49,338      52,888
Network communication equipment 852,893      265,229         587,664     618,594
                               ---------    ---------       ---------   --------
                             $1,216,473     $440,731        $775,742    $820,100
                              ==========    =========       =========   ========

4.  BANK TERM LOAN

    The loan is repayable in monthly  payments of CDN$4,165 plus interest at the
    Royal Bank prime rate plus 1.5  percent.  The loan matures in March 2005 and
    is personally guaranteed by Mr. Barzakay,  one of the founding shareholders.
    Mr. Barzakay has agreed to reimburse the Company  annually for all principal
    and interest payments.

<PAGE>

5.  SHAREHOLDERS' ADVANCES

    The  balance  due to  shareholders  are  non-interest  bearing,  however  in
    accordance with generally accepted accounting policies,  an interest rate of
    7% was imputed in this non arms length arrangement.  The imputed interest is
    charged to operations and credited to stockholders'  equity.  The individual
    shareholder advance amount is as follows:

                  Marilyn Benlolo                                   $  301,111
                                                                    ==========


6.  SHARE CAPITAL

    Authorized
          50,000,000   Common shares at $.001 par value
    Issued
          20,000,000   Common shares at $.001 par value             $   20,000
                                                                    ==========
7.       LOSS PER COMMON SHARE

    Loss per common share is  calculated  as the loss for the period  divided by
    the weighted  average  number of the  Company's  common  stock  outstanding.
    Diluted loss per share does not differ from basic loss per share.

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

This report contains statements that are not historical facts which are "forward
looking  statements"  within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the  Securities and Exchange Act of 1934, as
amended. The Company's results involve risks and uncertainties that could cause
actual  results  to differ  from  projected  results.  Such  statements  address
activities;  events or developments that we expect, believe,  project, intend or
anticipate will or may occur, including such matters as future capital, business
strategies,  expansion and growth of our  operations  and future net cash flows.
Factors  that could cause  actual  results to differ  materially  are  described
throughout this statement. Cautionary disclosures include, among others: general
economic  conditions,  the markets  for and market  price of our  services,  the
strength and  financial  resources of our  competitors,  our ability to find and
retain  skilled  personnel,  the results of  financing  efforts  and  regulatory
developments and compliance.  We disclaim any obligation to update or revise any
forward-looking statement to reflect events or circumstances occurring hereafter
or to reflect the occurrence of anticipated or unanticipated  events, other than
as required by law.


Overview

We are a Voice Over IP  telecommunications  company whose objective is to create
shareholder value by developing  operations and proprietary assets that generate
sustainable revenues and which yield long-term growth potential.  Our operations
are located primarily in North America.

During  the next few  years,  we expect to  continue  to  implement  our  growth
strategy.  Our growth  strategy  includes  a global  deployment  of the  Yapalot
Network  through  the  following:  (i) allow us to gain  strategic  position  by
deploying  Network Gateways in different parts of the world,  (ii) improve asset
productivity,  and (iii) improve growth potential in both emerging  technologies
and key targeted vertical market sectors.  To increase market share, we may also
attempt to acquire key  competitors,  as well as  companies  and assets that may
have important products and synergies with our existing operations and products.
<PAGE>

Significant Developments

For the period ended March  31,2002 we continued to slowly grow our client base.
Management  continues to drive creative ideas to significantly build the current
monthly customer acquisition base from 50 to approximately 700 new customers per
month.  This  latter  growth is expected  to be  accomplished  through a planned
telemarketing  initiative out of the United States and a newly formed  corporate
sales team in Canada.

To achieve our  business  plan to date,  we have on staff a total of 9 full time
employees comprised of customer service,  administration,  marketing and network
operations  employees.  We expect 2-5 new Corporate Account  Executives to be on
staff by June 2002.

RESULTS OF OPERATIONS

For the three months ended March 31, 2002 our revenue decreased to $153,173 from
$222,384  from the period  ending March 31,  2001.  The Company  attributes  the
decrease to market conditions and a decrease in marketing expenditures. Expenses
decreased  $256,207 or 62% from  $410,743  for the three  months ended March 31,
2001 to $154,536  for the three  months  ended March 31,  2002.  The decrease in
expenses  is  principally  due to the  decrease  in general  and  administrative
expenses  from  $319,309  and $168,865 for the three months ended March 31, 2001
and 2002,  respectively.  Our  resulting  Net Loss of  $1,363  is a  significant
improvement from the loss of same quarter 2001 of $188,359. The decrease in loss
is due to managements cost control initiatives.  Loss per common share decreased
from  $(.94) for the three  months  ended March 31, 2001 to $(.01) for the three
months ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

Our primary  sources of liquidity are funds generated by loans from the founding
shareholders. Additional information on the loan agreement is described in note
4 to the Company's Consolidated Financial Statements.  Yuval Barzakay, our chief
executive  officer,  loans the Company  money from time to time which is usually
repaid by the end of the month for which it was loaned.

Current  assets  totaled  $19,845 at March 31,2002 compared to $21,497 at
December 31, 2001.  The decrease is an  insignificant  change.  Mr.  Barzakay is
still  responsible  for the  principal  and  interest  repayments  of the  small
business loan. During the three months ended March 31, 2002,  additional $50,000
of accrued  salary owed to Mr.  Barzakay was applied  against the  principal and
interest  repayments  owed by Mr. Barzakay in connection with the Small Business
Loan.  At March  31,2002 we had cash of $6,112 and no  short-term  deposits.  As
customers pay for the service by automatic  credit card payments,  we anticipate
an orderly collection of the balance of Accounts Receivable.

As of March 31, 2002,  current  liabilities  totaled  $664,694  compared to
$712,169 at December 31, 2001.  The  decrease is largely  attributable  to small
payments  made by the  Company  against  outstanding  accounts  payable  and the
Company's reduced expenditures.

Our operations are carried out in Canadian dollars. Our reporting currency is in
United States dollars. As indicated in the notes to this financial  information,
any  translation  adjustment  to the  reporting  currency  would be  included in
equity.
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     Exhibits

            None.

            Reports on Form 8-K

            There were no reports on Form 8-K filed during the period.

                                   SIGNATURES

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

                           YAPALOT COMMUNICATIONS HOLDINGS INC.
Dated: May 20, 2002

                              By /s/ Yuval Barzakay
                           ---------------------------------------------------
                           Yuval Barzakay, Chairman and Chief Executive Officer