---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 September 30, 2005

Commission file Number: 0-32355

CYOP SYSTEMS INTERNATIONAL
INCORPORATED(Exact name of small business issuer as specified
in its charter)

Nevada(State or other jurisdiction of
incorporation or organization)

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

Unit A149 South Reeves DriveBeverly
Hills, California90212(Address of principal executive
offices)(310) 691-2585(Issuer's telephone number)

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date: 333,498,160 common
  shares as at September 30, 2005

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act).   Yes  ̈   No x

Transitional Small Business Disclosure Format (check one):   Yes  ̈   No x

---

CYOP SYSTEMS INTERNATIONAL INCORORATED

INDEX

|PART 1.  | FINANCIAL INFORMATION | 1                                                                                                                           
|-------- | --------------------- | ----------------------------------------------------------------------------------------------------------------------------
|         |                       |                                                                                                                             
|         | Item 1.               | Financial
        Statements                                                                                                
|         |                       |                                                                                                                             
|         |                       | Consolidated
        Balance Sheets as of September 30, 2005 and December 31, 2004                                          
|         |                       |                                                                                                                             
|         |                       | Consolidated
        Statements of Changes in Stockholders' Equity for the nine months ended
        September 30, 2005     
|         |                       |                                                                                                                             
|         |                       | Consolidated
        Statements of Operations for the nine and three months ended September
        30, 2005 and 2004       
|         |                       |                                                                                                                             
|         |                       | Consolidated
        Statements of Cash Flows for the nine months and three months ended September
        30, 2005 and 2004
|         |                       |                                                                                                                             
|         |                       | Notes
        to the Consolidated Financial Statements                                                                      
|         |                       |                                                                                                                             
|         | Item 2                | Management
        Discussion and Analysis                                                                                  
|         |                       |                                                                                                                             
|         | Item 3                | Controls
        and Procedures                                                                                             
|         |                       |                                                                                                                             
|PART II. | OTHER INFORMATION     | 28                                                                                                                          
|         |                       |                                                                                                                             
|         | Item 1                | Legal
        Proceedings                                                                                                   
|         |                       |                                                                                                                             
|         | Item 2                | Changes
        in Securities                                                                                               
|         |                       |                                                                                                                             
|         | Item 3                | Defaults
        Upon Senior Securities                                                                                     
|         |                       |                                                                                                                             
|         | Item 4                | Submission
        of Matters to a Vote of Security Holders                                                                 
|         |                       |                                                                                                                             
|         | Item 5                | Other
        Information                                                                                                   
|         |                       |                                                                                                                             
|         | Item 6                | Exhibits
        and Reports on Form 8K                                                                                     
|         |                       |                                                                                                                             
|         | SIGNATURES            | 29                                                                                                                          

---

CYOP SYSTEMS
INTERNATIONALINCORPORATED

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

September 30, 2005

Index

Consolidated Balance Sheets as of
September 30, 2005 and December 31, 2004

Consolidated Statements of Operations
for the nine and three months ended September 30, 2005 and 2004

Consolidated Statements of Cash Flows
for the nine months and three months ended September 30, 2005 and 2004

Consolidated Statement of Changes in
Stockholders' Equity for the nine months ended September 30, 2005

Notes to the Consolidated Financial
  Statements

1

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED
|---------------------------------------------
|                                             
|Consolidated Balance Sheets                  
|Unaudited                                    
|(Expressed in U.S. Dollars)                  
|                                             

|                                                                                 |   | September 30, 2005 |   |   | December 31, 2004 |  
|-------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|
|ASSETS                                                                           |   |                    |   |   |                   |  
|Current                                                                          |   |                    |   |   |                   |  
|Cash and cash equivalents                                                        | $ | 257,045            |   | $ | 7,337             |  
|Accounts receivable                                                              |   | 711                |   |   | 50,058            |  
|Prepaid expenses and deposit                                                     |   | 143,459            |   |   | 2,440             |  
|Total current assets                                                             |   | 401,215            |   |   | 59,835            |  
|Fixed assets, net                                                                |   | 80,125             |   |   | 54,568            |  
|Investment in equity  method investee                                           |   | 1,627,157          |   |   | 1,668,285         |  
|Intangible assets, net                                                           |   | 36,146             |   |   | 57,833            |  
|Total
      assets                                                               | $ | 2,144,643          |   | $ | 1,840,521         |  
|LIABILITIES                                                                      |   |                    |   |   |                   |  
|Current                                                                          |   |                    |   |   |                   |  
|Demand loans related party                                                       | $ | 1,334,030          |   | $ | 1,289,620         |  
|Accounts payable and accrued liabilities                                         |   | 250,756            |   |   | 288,785           |  
|Convertible debenture                                                            |   | 650,000            |   |   | 70,000            |  
|Player funds on deposit                                                          |   | 45,342             |   |   | 44,158            |  
|Short-term loan                                                                  |   | 212,725            |   |   | 212,725           |  
|Promissory
      note                                                            |   | -                  |   |   | 100,000           |  
|Total current liabilities                                                        |   | 2,492,853          |   |   | 2,005,288         |  
|Deferred
      revenue                                                           |   | 2,173,507          |   |   | 2,173,822         |  
|Total Liabilities                                                                |   | 4,666,360          |   |   | 4,179,110         |  
|                                                                                 |   |                    |   |   |                   |  
|Nature and continuance of operations                                             |   |                    |   |   |                   |  
|                                                                                 |   |                    |   |   |                   |  
|STOCKHOLDERS' DEFICIENCY                                                         |   |                    |   |   |                   |  
|Share capital                                                                    |   |                    |   |   |                   |  
|Authorized:                                                                      |   |                    |   |   |                   |  
|500,000,000 shares of common stock with a par value                              |   |                    |   |   |                   |  
|of $0.00002
      per share                                                      |   |                    |   |   |                   |  
|Issued, allotted and outstanding:                                                |   |                    |   |   |                   |  
|333,429,702 shares of common stock (2004 -
      181,103,355)                    |   | 6,669              |   |   | 3,623             |  
|Additional paid-in capital                                                       |   | 2,605,103          |   |   | 1,062,970         |  
|Deficit accumulated                                                              |   | (5,133,489         | ) |   | (3,405,182        | )
|Total
      stockholders' deficiency                                             |   | (2,521,717         | ) |   | (2,338,589        | )
|Total liabilities and stockholders' deficiency                                   | $ | 2,144,643          |   | $ | 1,840,521         |  
|The accompanying notes are an integral part of these
      financial statements. |   |                    |   |   |                   |  

2

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED       |           
|--------------------------------------------------- | ----------
|                                                    |           
|Consolidated Statements of Stockholders' Deficiency |           
|Nine Months ended September 30, 2005                | Page 1of 1
|(Unaudited)                                         |           
|(Expressed in U.S. Dollars)                         |           
|                                                    |           

TotalAdditional
    
    
      
    
    
      Stock-Common stock
    
    
      paid-in
    
    
      Deficit
    
    
      Holders'Shares
    
    
      Amount
    
    
      Capital
    
    
      accumulated
    
    
      (deficiency)Balance, December 31, 2004
    
      181,103,355
    
    
      3,623
    
    
      1,062,970
    
    
      (3,405,182
    )
    
      (2,338,589
    )Common Stock issued for cash
    
      107,326,347
    
    
      2,146
    
    
      760,033
    
    
      
    
    
      762,179Common Stock issued for services
    
      45,000,000
    
    
      900
    
    
      782,100
    
    
      
    
    
      783,000Net loss for the period
    
      
    
    
      
    
    
      
    
    
      (1,728,307
    )
    
      (1,728,307
    )Balance,
      September 30, 2005
    
      333,429,702
    
    $
      6,669
    
    $
      2,605,103
    
    $
      (5,133,489
    )
    $
      (2,521,717
    )The accompanying notes are an
      integral part of these financial statements. 3


---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED
|---------------------------------------
|                                       
|Consolidated Statements of Operations  
|(Unaudited)                            
|(Expressed in U.S. Dollars)            
|                                       

|                                                                                 |  | For the Three Months Ended |   |  | For the Nine Months |  
|-------------------------------------------------------------------------------- |  | -------------------------- | - |  | ------------------- | -
|                                                                                 |  | September 30,              |   |  | Ended September 30, |  
|                                                                                 |  | 2005                       |   |  | 2004                |  
|Revenues                                                                         |  |                            |   |  |                     |  
|Service fees                                                                     |  | 1,386                      |   |  | 2,608               |  
|Sale  Crediplay  related party (Note 6)                                        |  | (58                        | ) |  | 1,444               |  
|Banking fees                                                                     |  | 43                         |   |  | 68                  |  
|                                                                                 |  |                            |   |  |                     |  
|Total Revenues                                                                   |  | 1,371                      |   |  | 4,120               |  
|Cost of
      sales                                                              |  | (11,505                    | ) |  | (16,322             | )
|                                                                                 |  |                            |   |  |                     |  
|Gross profit (loss)                                                              |  | (10,134                    | ) |  | (12,202             | )
|                                                                                 |  |                            |   |  |                     |  
|                                                                                 |  |                            |   |  |                     |  
|Sales and Marketing expenses                                                     |  | (38,000                    | ) |  | -                   |  
|Consultants fees                                                                 |  | (128,000                   | ) |  | (99,428             | )
|Corporate finance fees                                                           |  | (31,000                    | ) |  | -                   |  
|General and admin
      fees                                                     |  | (62,731                    | ) |  | (36,488             | )
|                                                                                 |  |                            |   |  |                     |  
|                                                                                 |  |                            |   |  |                     |  
|Operating Loss                                                                   |  | (269,865                   | ) |  | (148,118            | )
|                                                                                 |  |                            |   |  |                     |  
|Other income (loss)                                                              |  |                            |   |  |                     |  
|Interest income related party                                                    |  | -                          |   |  | 28,354              |  
|Interest expense                                                                 |  | (18,075                    | ) |  | (24,816             | )
|Equity in losses of equity-method investee                                       |  | (10,289                    | ) |  | -                   |  
|                                                                                 |  |                            |   |  |                     |  
|Net loss for
      the period                                                    |  | (298,229                   | ) |  | (144,580            | )
|                                                                                 |  |                            |   |  |                     |  
|Loss per share basic and diluted                                                |  |                            |   |  |                     |  
|                                                                                 |  |                            |   |  |                     |  
|Loss from operations                                                             |  | (0.000                     | ) |  | (0.00               | )
|                                                                                 |  |                            |   |  |                     |  
|Net loss                                                                         |  | (0.000                     | ) |  | (0.00               | )
|Weighted average number of                                                       |  |                            |   |  |                     |  
|common shares
      outstanding                                                  |  | 333,429,702                |   |  | 151,711,475         |  
|                                                                                 |  |                            |   |  |                     |  
|The
      accompanying notes are an integral part of these financial statements. |  |                            |   |  |                     |  

4

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED
|---------------------------------------------
|                                             
|Consolidated Statements of Cash Flows        
|(Unaudited)                                  
|(Expressed in U.S. Dollars)                  
|                                             

|                                                                                 |   | For the Three Months |   |   | For the Nine Months |  
|-------------------------------------------------------------------------------- | - | -------------------- | - | - | ------------------- | -
|                                                                                 |   | Ended September 30,  |   |   | Ended September 30, |  
|                                                                                 |   |                      |   |   |                     |  
|                                                                                 |   | 2005                 |   |   | 2004                |  
|                                                                                 |   |                      |   |   |                     |  
|Cash flows from (used in) operating activities                                   |   |                      |   |   |                     |  
|Net loss for the period                                                          |   | (298,229             | ) |   | (144,580            | )
|Adjustments to reconcile net loss to net cash                                    |   |                      |   |   |                     |  
|Used in operating
      activities:                                              |   |                      |   |   |                     |  
|- amortization of intangible assets                                              |   | 7,229                |   |   | 7,229               |  
|- depreciation of fixed assets                                                   |   | 4,711                |   |   | 4,813               |  
|- imputed interest on related party loan                                         |   | -                    |   |   | 24,816              |  
|- share issuance for services                                                    |   | -                    |   |   | -                   |  
|- investment in equity interest                                                  |   | 10,289               |   |   | -                   |  
|- accredited to convertible
      debenture                                      |   | -                    |   |   | 1,195               |  
|Changes in assets and liabilities:                                               |   |                      |   |   |                     |  
|- accounts receivable                                                            |   | 139,796              |   |   | 98                  |  
|- interest receivable                                                            |   | -                    |   |   | (20,110             | )
|- note receivable related
      party                                            |   | -                    |   |   | (5,635              | )
|- prepaid expenses                                                               |   | (124,505             | ) |   | (629                | )
|- accounts payable and accrued
      liabilities                                 |   | (11,547              | ) |   | (21,295             | )
|Increase in due from a director                                                  |   | (3,918               | ) |   | 138,424             |  
|- player funds on deposit                                                        |   | 319                  |   |   | 757                 |  
|-
      deferred revenue                                                         |   | 58                   |   |   | (1,444              | )
|                                                                                 |   | (275,797             | ) |   | (16,361             | )
|Cash flows from (used in) investing activities                                   |   |                      |   |   |                     |  
|Purchase of fixed assets                                                         |   | -                    |   |   | -                   |  
|                                                                                 |   | -                    |   |   | -                   |  
|Cash flows from financing activities                                             |   |                      |   |   |                     |  
|Shares issued                                                                    |   |                      |   |   | -                   |  
|Proceeds from promissory note                                                    |   | (140,000             | ) |   | -                   |  
|Proceeds
      from convertible debenture                                        |   | 650,000              |   |   | -                   |  
|                                                                                 |   | 510,000              |   |   | -                   |  
|                                                                                 |   |                      |   |   |                     |  
|Increase (decrease) in cash and cash equivalents                                 |   | 234,203              |   |   | (16,361             | )
|                                                                                 |   |                      |   |   |                     |  
|Foreign exchange gain (loss) on cash
      held in                               |   | -                    |   |   | -                   |  
|foreign
      currency                                                           |   |                      |   |   |                     |  
|Cash (deficiency), beginning of period                                           |   | 22,842               |   |   | 21,188              |  
|Cash
      (deficiency), end of period                                           | $ | 257,045              |   | $ | 4,827               |  
|                                                                                 |   |                      |   |   |                     |  
|Cash represented by:                                                             |   |                      |   |   |                     |  
|Cash on hand                                                                     | $ | 253,173              |   | $ | 1,698               |  
|Cash with
      processors                                                       |   | 3,872                |   |   | 3,129               |  
|                                                                                 | $ | 257,045              |   | $ | 4,827               |  
|                                                                                 |   |                      |   |   |                     |  
|The accompanying notes are an integral part of these
      financial statements. |   |                      |   |   |                     |  

SUPPLEMENTAL CASH FLOW
INFORMATION

On December 1, 2004 the Company assigned a discounted promissory
  note valued at $1,605,986 to a related party company in consideration of 25
  million common shares of that company. The common shares acquired are held as
  an equity interest investment.

5

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|1. | Nature and Continuance of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company was incorporated on October 29, 1999 in as
      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 and a
  recapitalization.                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | CYOP Barbados was incorporated under the laws of Barbados
      on June 20, 2000. On April 29, 2005 the Company incorporated Red Felt
      Software under the laws of the United Kingdom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company, and its subsidiaries, is a 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | 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 consolidated financial
      statements do not include any adjustments that might result from this
      uncertainty.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

6

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (b)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (c)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (d)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (e)                                       
|   |                                           
|   |                                           

| | Audio and visual equipment     | 20% declining-balance basis
| | ------------------------------ | ---------------------------
| | Computer hardware              | 30% declining-balance basis
| | Computer software              | 50% declining-balance basis
| | Office furniture and equipment | 20% declining-balance basis
| | Leasehold improvements         | 20% straight-line basis    

7

---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED              
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (f)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (g)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (h)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (i)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (j)                                       
|   |                                           
|   |                                           

8

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (k)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (l)                                       
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | (m)                                       
|   |                                           
|   |                                           

9

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   |                                           
|
|
|
|   |                                           
|   | (n)                                       
|   |                                           
|   |                                           
|
|
|
|   |                                           
|   | (o)                                       
|   |                                           
|   |                                           
|
|
|
|
|
|
|   |                                           
|   | (p)                                       
|   |                                           
|   |                                           
|
|
|
|
|
|
|
|
|
|
|
|

10

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (q)                                       
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           

11

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|2. | Significant Accounting Policies(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3. | Investment in equity method investee                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | At December 31, 2004, The Companys equity-method
      investee approximate ownership interest consisted of a 19.99% interest
      based on the outstanding shares of Gaming Transactions, Inc. (OTC:GGTS).
      The Company does not have the ability to significantly influence GGTS.
      Summarized Balance Sheet and Operations information is as follows:                                                                                                                                      
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company acquired the investment in December 2004 and
      valued the investment at $1,674,973. During the month of December 2004 the
      Company recorded a $6,688 loss based on the proportionate share of the
      investees loss which resulted in a reduction in the carrying amount to
      $1,668,285 at December 31, 2004. During the period January 1, 2005 to
      September 30, 2005 the Company recorded a further loss of $41,128 reducing
      the carrying value to $1,627,157.
|
|
|
|
|

12

---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED              
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|4. | Fixed assets                         |   |                    |  |   |              |  |   |          | 
|-- | ------------------------------------ | - | ------------------ |  | - | ------------ |  | - | -------- | 
|   |                                      |   | September 30, 2005 | 
|   |                                      |   |                    |  |   | Accumulated  |  |   | Net book | 
|   |                                      |   | Cost               |  |   | depreciation |  |   | Value    | 
|   |                                      |   |                    |  |   |              |  |   |          | 
|   | Audio and visual equipment           | $ | 21,558             |  | $ | 14,607       |  | $ | 6,951    | 
|   | Computer hardware                    |   | 135,979            |  |   | 64,962       |  |   | 71,017   | 
|   | Computer software                    |   | 3,088              |  |   | 3,088        |  |   | -        | 
|   | Office furniture and
      equipment |   | 9,227              |  |   | 7,070        |  |   | 2,157    | 
|   | Total                                | $ | 169,852            |  | $ | 89,728       |  | $ | 80,125   | 
|   |                                      |   |                    |  |   |              |  |   |          | 
|   |                                      |   |                    |  |   |              |  |   |          | 
|   |                                      |   | December 31, 2004  | 
|   |                                      |   |                    |  |   | Accumulated  |  |   | Net book | 
|   |                                      |   | Cost               |  |   | depreciation |  |   | Value    | 
|   |                                      |   |                    |  |   |              |  |   |          | 
|   | Audio and visual equipment           | $ | 21,558             |  | $ | 13,450       |  | $ | 8,108    | 
|   | Computer hardware                    |   | 96,864             |  |   | 52,920       |  |   | 43,944   | 
|   | Computer software                    |   | 3,088              |  |   | 3,088        |  |   | -        | 
|   | Office furniture and equipment       |   | 9,227              |  |   | 6,711        |  |   | 2,516    | 
|   | Total                                | $ | 130,737            |  | $ | 76,169       |  | $ | 54,568   | 

|   | For the nine months ended September 30, 2005,
      depreciation expenses charged to cost of service, software development
      costs and general and administrative expenses were $13,558 (2004 -
      $14,812).                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|5. | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | On May 21, 2002, the Company terminated the software
      development agreement and a software licensing, technical support and
      operation of customer service and data centre agreement with a related
      company (related by a common director) was terminated. As at that date
      $240,000 license fees were billed with $200,000 remaining unpaid at May
      21, 2002.
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | In satisfaction of this unpaid amount and in
      consideration of terminating the agreement the related company assigned
      all right, title and interest in:                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | the Skill-Bingo Patents and the Skill-Bingo Inventions
      purchased from FYRC Inc. The above has been collectively recorded as
      intellectual property with an expected useful life of 5
  years.                                                                                                                                                                                

13

---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED              
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|5. | Intangible Assets (continued)                                                
|-- | -----------------------------------------------------------------------------
|   | the Skill-Bingo game software                                                
|   | the website located at
      http://www.bigrbingo.com                        
|   | the trademark BiGrBingo                                                   
|   | the BiGrBingo customer deposits                                             
|   |                                                                              
|   | The changes in the carrying amount of
      intellectual property as follows:

| |                                |   | 2005           |   |   | 2004    |  
| | ------------------------------ | - | -------------- | - | - | ------- | -
| | Balance, beginning of year     | $ | 57,833         |   | $ | 86,749  |  
| | Accumulated
      amortization |   | (
      21,687 | ) |   | (28,916 | )
| | Balance, end of period         | $ | 36,146         |   | $ | 57,833  |  

|6. | Loans                         
|-- | ------------------------------
|   |                               
|   | (a) Demand Loans Related
Party

September 30
      
    
    December
      312005
      
    
    2004i. Interest bearing and unsecured at 5% per
      annum:- Andrea Carley  an
      officer
    $
    44,098
      
    $
    25,156- Mitch White  a director and
      stockholder
    
    1,067,812
      
    
    1,054,726- Gordon Samson  a
      director
    
    83,904
      
    
    104,457- Patrick Smyth  a director
    
    93,590
      
    
    60,656Total
    $
    1,289,404
      
    $
    1,244,995(b)    Short term LoanSeptember 30
      
    
    December 31i. Non-Interest bearing and unsecured
      
      2005
      
      
      2004- Jack Carley  related to
        a director and stockholder
      $
      44,625
      
      $
      44,625Total
      $
      44,625
      
      $
      44,625(c)   Short-term Loan Related PartySeptember 30,
      
    
    December 312005
      
      
      2003i. Interest at 10% per annum:- RedRuth Ventures
      
      212,725
      
      
      212,725Total
    $
    212,725
      
    $
    212,725 14


---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED              
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|6. | Loans(continued)
|-- | ----------------
|   |                 
|   | (d)             
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   |                 
|   | (e)             
|   |                 
|   |                 
|   |                 
|   |                 

15

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|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|6. | Loans(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7. | 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
      stockholder 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. The promissory note is
      secured through a first priority lien and security interest in the
      Crediplay System and amount due to Mr. Mitch White (the Purchaser)
      totalling $517,613 (2001  nil). As at December 31, 2002 the present value
      of the promissory note is $1,585,034 after calculating at the discount of
      7% and accruing interest at 5%. Interest receivable was calculated at
      1,800,000 X 5% or $90,000. As at December 31, 2003, the present value of
      the promissory note is $1,605,986 after calculating at the discount of 7%
      and accruing interest at 5%. Interest receivable was calculated at
      $1,800,000 X 5% or $90,000.
|
|
|
|
|
|
|
|
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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%

| | As there have been only minor revenues since inception
      due to the lack of capitalization of the Company, the Promissory Note for
      $1.8 million (the note) was assigned to an affiliated company, Gaming
      Transactions Inc., after releasing the guarantee provided by the
      shareholder loan of Mitch White in consideration of twenty five (25)
      million shares of restricted stock of Gaming Transactions Inc., (GGTS) a
      pink sheet issuer. As at December (Form 8-K filed December 13, 2004) this
      company was thinly traded and a
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|
|

16

---

|CYOP SYSTEMS INTERNATIONAL INCORPORATED              
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|**7.** | Sale and License-back of Computer Software(continued)                                                                                                                                                                                                                                                                                                             
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                   
|       | deemed price of $0.075 per share was used. As no
      reductions have been made as contemplated in the agreements executed
      December 31, 2001 and filed on Edgar by Form 8-K on April 15, 2002 a
      market asset was exchanged to ensure value to the Company.                                                                                           
|
|
|
|       |                                                                                                                                                                                                                                                                                                                                                                   
|       | The development costs of the Crediplay 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 2001                                | $ | 2,270,394 |  
| | Recognized gain                                   |   | (71,842   | )
| | Deferred gain 2002                                | $ | 2,198,552 |  
| | Recognized gain in 2003                           |   | (16,040   | )
| | Deferred gain in 2003                             | $ | 2,182,512 |  
| | Recognized gain in 2004                           |   | (8,690    | )
| | Deferred gain 2004                                |   | 2,173,822 |  
| | Recognized gain in 2005                           |   | (315      | )
| | Deferred gain 2005                                |   | 2,173,507 |  

The deferred gain will continue to be
  amortized in proportion to the licensing fees payable over the term of the agreement.

17

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|8. | Stockholders Equity (Deficit)                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                         
|   | (a)                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                         
|
|
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                         
|   | (b)                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                         
|
|
|
|
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                         
|
|   |                                                                                                                                                                                                                                                                                                                                                         
|   | (c)                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                         
|9. | Income Taxes                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                         
|   | As at September 30, 2005 the Company has non-capital
      losses and undepreciated capital cost of approximately $3,400,000 and
      $80,000, 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
    2010.
|
|
|
|   |                                                                                                                                                                                                                                                                                                                                                         
|   | (a)                                                                                                                                                                                                                                                                                                                                                     
|

| |                                                                                       |   | 2005       |   |   | 2004     |  
| | ------------------------------------------------------------------------------------- | - | ---------- | - | - | -------- | -
| | Undepreciated capital cost of
      capital assets over their net book value          | $ | 30,000     |   | $ | 19,000   |  
|
| | Estimated tax loss carryforward                                                       |   | 1,000,000  |   |   | 715,000  |  
| | Less: valuation allowance                                                             |   | (1,030,000 | ) |   | (734,000 | )
| |                                                                                       |   | -          |   |   | -        |  
| | The valuation allowance reflects the
      realization of the tax assets is unlikely. |   |            |   |   |          |  

18

---

|CYOP SYSTEMS INTERNATIONAL
      INCORPORATED        
|-----------------------------------------------------
|                                                     
|Notes to Consolidated Financial Statements           
|For the nine months ended September 30, 2005 and 2004
|(Expressed in
      U.S. dollars)                    

|10. | Related Party Transactions                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                  
|    | Related party transactions not disclosed elsewhere in the
      consolidated financial statements are as follows:
|    |                                                                                                                  
|    | (a)                                                                                                              
|    |                                                                                                                  
|    | (b)                                                                                                              
|    |                                                                                                                  
|    |                                                                                                                  
|    |                                                                                                                  
|11. | Geographic Information                                                                                           
|    |                                                                                                                  
|    | All the Companys operations and fixed assets are located
      in the United States.                            

19

---

|Item 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|------- | ------------------------------------

The following management's discussion and analysis of the
Company should be read in conjunction with the financial statements and the
related notes thereto included elsewhere in this quarterly report for the three
and nine months ended September 30, 2005. This quarterly report contains certain
forward-looking statements and the Company's future operation results could
differ materially from those discussed herein.

We were incorporated on October 29, 1999 under the laws of the
  State of Nevada as Triple 8 Development Corporation to engage in any lawful
  corporate purpose. We changed our name to CYOP Systems International Incorporated
  on October 30, 2000.

We have not been involved in any bankruptcy, receivership or
similar proceedings.

The Company, and its subsidiaries, is a 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, licensed online gaming software and
integrated e-commerce transaction technology for on-line merchants.

In 2005 the Company embarked on an aggressive strategy to build
up its services and productions capabilities by embarking on a number of new
ventures. These business centres are all subsidiaries of the Company and join
the existing divisions of the Company. They are as follows:

CrediPlay Transaction Software

The company has licensed a proprietary technology called
CrediPlay, which essentially combines online games of skill to a database
platform that 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 ask to withdraw
any winnings instantly in real time. This software is utilized as the ecommerce
backend for the Companys games and websites.

SkillArcade.com

www.skillarcade.com is CYOPs central games portal; an
online games destination where people play popular skill games against other
players and compete in tournaments to win real money prizes. Games on the site
include over the Internet, including Puzzle, Board, Trivia, Learning games,
Action Games, Strategy, & Role Play games. Online skill games are games that
have been formatted so that the rules of the game eliminate elements of luck,
without changing the fundamental nature of what makes the game enjoyable and
appealing. Players win cash and/or prizes based on one or more skills including;
hand-eye coordination, reaction time, dexterity, spatial memory, long-term
memory, pattern recognition, organizational skills, strategic planning, game
play knowledge, general knowledge and intelligence.

Each contestant pays an entry fee to enter a tournament and the
winner collects all the entry fees paid minus a tournament maintenance fee to
CYOP Systems for providing the games, online tournament software and ecommerce
banking.

The fees collected by CYOP range between $0.25 cents to
  $2.00 per game per player. This system of micro-payments is based on users playing
  multiple games over a user-session online. Tournaments generally run no longer
  than five minutes and involve five people on average. CYOPs current

20

---

hardware configuration can currently operate 10,000 tournaments consecutively at any given time, and the Company has the ability to increase that to 100,000 tournaments consecutively.

The Company also allows players to play on SkillArcade.com for free, and is planning to monetize these customers by placement of advertising on the website and by converting the free-player database into cash-players through aggressive interactive
marketing strategies. SkillArcade.com currently has about 250,000 members.

CrediPlay.com Network

The games found on SkillArcade.com are available to third party operators whereby the third party operator pays a set up fee, and an ongoing percentage of the net revenues to CYOP. The third party operator is responsible for marketing the licensed
website and for driving traffic that may be converted into cash play.  Licensing in this manner builds brand awareness quickly and is commonplace throughout the online gaming industry.

CrediPlay.cn

The Company reached an agreement to feature CYOP's licensed pool and poker games on an exclusive basis with SINA.com Online, the North American subsidiary of SINA Corporation; a leading online media company and value-added information service
provider for China and for global Chinese communities.

The executed joint marketing agreement provides exclusivity to CYOP to be the provider of online poker and online billiards type games on Game Channel pages throughout the SINAs network sites, including mainland China, United States, Hong Kong
and Taiwan. The expected launch date was targeted for the this quarter, however, with unexpected integration delays the fourth quarter of 2005 it is expected to be live on SINAs network.

SINA Corporation is the leading online media company and value-added information service provider for China and for Chinese communities worldwide and has more than 100 million registered users. With the most recognized Internet brand in China, SINA
has established a network of localized Web sites that target Greater China and overseas Chinese communities. SINA is a publicly traded company on the NASDAQ has close to 2,000 employees in its offices in six cities throughout Asia and the U.S. and
maintains a network of four localized Web sites. At December 31, 2004 SINA generated annual net revenue of $200.0 million.

The games on the site are Play-for-Free meaning that customers may play the games and enter tournament for free after joining the site and providing personal data about themselves.

The Company intends to monetize the site by selling advertising on the site and within the games, by selling sponsorship opportunities and by renting out the player database to third party advertisers.

Red Felt Software

The Company launched www.redfeltsoftware.comthrough a newly formed United Kingdom Company, Red Felt Software Ltd., which has been organized as a wholly owned subsidiary of CYOP Systems International Inc.

With Red Felt Software Ltd. the Company will pursue in the
  iGaming market place turnkey licensing opportunities for enterprises wishing
  to enter and capitalize in this market space. The United Kingdom

21

---

is being recognized as a jurisdiction embracing and regulating this sector. The first products are online Poker and online Bingo.

Online gaming will continue to be an explosive cash generator. Gaming consultants Christian Capital forecast that gaming revenue will rise to $22.7 billion (US) by 2009, from $8.2 billion in 2004, a growth of 22 percent. Online gaming is
also expected grab an 8.1% share of the worldwide global gaming market.

Red Felt Software is a simple non-download gaming system that can be easily deployed by any webmaster or administrator. The Company also provides the necessary management experience and support to its licensees and their customers.

Red Felt Software Inc. provides the following to licensees who pay an upfront set up fee, a percentage of the net and a monthly hosting fee for:

- Fully built gaming site
- Non-Download gaming software
- Real Time live reporting
- Hosting & Server monitoring
- Credit Card Processing

TenseatPoker.com

The TenSeatPoker.com site will be the flagship play-for-cash poker site featuring the Companys licensed poker games, and will be marketed with the goal of establishing brand recognition and driving revenues from targeted audience areas.
Operated through its subsidiary, Red Felt Software, the Company has launched in Beta and expects to launch the full cash site in Q4.

The Company has negotiated with a number of payment processors to ensure global payments including the ability to leverage Check 21, laws regulating paper drafts, and new technologies to provide the optimal online payment processing. This also
includes direct debit from banking institutions, major credit cards and multiple currencies.

More than 200 online poker sites collectively are generating about $3 billion a year in revenues, equal to 60% of last year's $5 billion in gambling revenues from all of the Las Vegas Strip. An estimated 1.7 million players are
active online; meaning they've played Internet poker in the past six months. And about 150,000 people play on an average day, according to PokerPulse.com.

The Company plans to derive revenues from a percentage of the rake and through processing fees. Rake is the percentage of the pot that the house collects as compensation for hosting the game. The maximum rake in ring games is $3, with a minimum
pot size needed for any rake. Tournament style games do not have a rake, but have an entry fee.

TenSeatPoker.com Chinese

The Company will be localizing the Companys TenSeatPoker.com cash play site into Traditional and Simplified Chinese.

The TensSeatPoker.com site will be translated, leveraging
  our tournament sponsorship and advertising model with the design to convert
  players from third-party portals in Asia to a cash play gaming site.

22

---

The Company is continuing to seek out new partners in Asia who have large vertical portals and who are looking to add content and functionality to their web properties.

Even with its minimal penetration rate, China already ranks second in the world in total Internet users. According to eMarketer, during the 2004-2008 period, the US Internet population will grow at a 2.6% annual rate. In contrast, China's Internet
population will grow during the 2004-2008 period by over 14.3% on an annual basis.

The Company plans to derive revenues from a percentage of the rake and through processing fees. Rake is the percentage of the pot that the house collects as compensation for hosting the game. The maximum rake in ring games is $3, with a minimum
pot size needed for any rake. Tournament style games do not have a rake, but have an entry fee.

BingoBurst.com

The BingoBurst.com site will be the flagship play-for-cash Bingo site featuring the Companys licensed multiplayer bingo games, and will be marketed with the goal of establishing brand recognition and driving revenues from targeted audience
areas. Operated through its subsidiary, Red Felt Software, as the Company has been delayed on contractual launches due to partner delays the Company expects to launch the full cash site in Q1, 2006.

Bingo is the largest and most socially accepted method of gambling throughout the world, and the current Internet bingo market is estimated to be more than $800 million with a 400% annual growth rate. Currently, between $70 and $90
billion USD is wagered at land based bingo halls each year around the world and there are approximately 60 million bingo players worldwide.

An estimated $10 billion is wagered each year at nearly 50,000 bingo halls in North America alone. This represents per capital spending of approximately $30 on bingo games.

The Company plans to derive revenues from a percentage of the Net Loss from customers who sign up, deposit and wager on the site and through processing fees. Net Loss is defined as the amount wagered by players minus payouts.

Red Felt Studios

On September 14, 2005 the Company announced that instead of opening a game studio in Central Europe, the Company contracted Interkod Technologies Inc. in Slovakia to build online versions of multiplayer craps, blackjack, roulette and baccarat. The
Company decided to contract a third party for the development work after further review of the costs and liabilities of operating another foreign subsidiary.

CYOP intends to develop Next Generation 3D casino games, which will be made for cross platform integration. These games will be available for mobile gaming, console gaming and Internet PC applications. Variations of popular games such as
Blackjack, Roulette, Pai Gow, Slots, Video Poker will be constructed for license to third-party operators, and game hardware suppliers.

After weighing the pros and cons of a number of countries,
  it was decided that Slovakias business-friendly government policies that
  have helped facilitate a foreign investment boom made it an excellent choice.
  Slovakia's economic growth exceeded expectations in 2001-04, despite the general
  European slowdown.

23

---

The Slovak Republic joined the OECD, a group of 30 of the most developed countries in the world, in the year 2000 and is also a member of the European Union and NATO.

US video game sales totalled almost $10 billion in 2004, and will rise to $16 billion by 2007, an increase of 61%. Software sales totalled $6.3 billion in 2004, and will rise to $8.0 billion in 2008.

CYOP is looking to increase its presence in Europe, and build a global infrastructure. The Company feels that the growth opportunities in Europe are better given that the locals have not reached the saturation points of the North American
marketplaces. The Company also believes that the capital and labour market opportunities are better, and that attitudes towards online gaming are friendlier.

The Company intends to derive revenues from third party game licensors and also intends to market the games on its proprietary websites.

CrediPlay M Games

The Company has begun preliminary talks with mobile developers into launching mobile games. The Company has long realized the potential for wireless gaming and in now doing due diligence on and meeting with mobile platform developers. While games
have been provided as a value added service so far, there is a move towards gearing up both subscription and pay for play skill based wireless apps. CYOP intends to be the leader in pay for play skill wireless gaming, and is actively working with
strategic partners to exploit this niche over the next 12 months.

Carriers are rolling out packages that place emphasis on games, and value added services such as SMS, stock quotes and email. The growth of wireless gaming is the next step in the evolution of the video game industry. While Japan was the leader in
wireless gaming technology, Europe has been getting a good reputation in developing SMS, MMS and Java games for a variety of Wireless ASPs looking to develop their content. Now the US market is heating up, and both carriers and developers are
determining how they may profit by the explosion of SMS and MMS technology in the North American marketplace. While games have been provided, as a value added service so far, there is a move towards gearing up both subscription and casino based
wireless apps.

Gaming on mobile phones and wireless devices is set to generate revenues of US$19.3bn by 2009, according to a new report from Juniper Research, and in the short term the report said 2005 would see total mobile gambling revenues pass the
US$2bn mark. The Asia-Pacific region is expected to contribute the largest share of total gross revenues with 39% of the market and Europe follows closely behind with a 37% market share, with the US making up the majority of the remainder.

The Yankee Group says there are already 27 million U.S. users playing games on their handsets, and CYOP intends to introduce its skill gaming model to this growing segment.

The Company intends to monetize it M-games through licensing to third parties and from marketing to mobile players through its proprietary gaming portals.

In order for our Company to expand it's operations and realize
  profits from pay for play online video gaming we are actively signing up affiliate
  companys and pursuing strategic acquisitions and partnerships that bring
  internet traffic and more games to be integrated into our existing suite of
  games. Until we increase our Company's exposure and attract players to our website
  and/or complete strategic acquisitions and partnerships 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 that already have an established
  community and significant traffic to their web sites and from ad-serving.

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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. The Company has exhausted a source of capital funding, as an equity funding with regulatory clearance of the SB-2 registration statement granted with the August 12,
2004 filing of the SB-2/A. We have started the process of authoring a further SB-2 registration statement.

The Company had cash and cash equivalents of $257,045 at September 30, 2005 and a working capital deficit of $(2,091,638) with the deficiency arising primarily from $1,334,030 in loans from directors and a $650,000 convertible
debenture with Cornell Capital, LLP., compared to a working capital deficit of ($1,680,368) at September 30, 2004 to satisfy requirements for operations for the same period ending September 30, 2004.

Net cash provided by financing activities for the nine month period ending September 30, 2005 was $1,122,826 for the period originating from common shares purchased by Cornell Capital, LP, a further convertible debenture for $650,000 from
Cornell Capital, LP which compares to $175,000 in net cash provided to the Company for the same period in 2004.

During the nine month period ended September 30, 2005, the Company used cash of $837,049 in operating activities compared to using $179,230 in the prior period ended September 30, 2004. This is a reflection of primarily two things;
significant legal expenses and corporate finance fees incurred in connection with the equity financing and consulting fees issued with common stock.

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 partnerships and/or acquisition of complementary
businesses, products and technologies. We have sufficient cash and cash equivalents on hand to conduct our operations through the fourth quarter of 2005.

As disclosed herein the Company concluded an underwriting in the first quarter of 2004 with Cornell Capital LLP and the associated SB-2 was filed on March 1, 2004 and as amended on May 6, 2004, June 22, 2004, and August 5, 11, 12 and 16, 2004 on
Edgar.

The Companys consolidated financial statements have been prepared on a continuing operation basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

Results of operations for the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004.

Revenue

For the nine months ended September 30, 2005 the Company generated
  revenues of $6,404, from operations. The same nine month period ending September
  30, 2004 generated revenues of $20,116. The reduction in revenues for the
  comparable period primarily is a reflection of the delay on our launch with
  Sina.com.

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General and Administrative expenses

General and administrative expenses consist primarily of, legal and audit professional fees, insurance and other general corporate and office expenses, for the nine-month period ending September 30, 2005 of $175,688. General and administrative
expenses decreased by $14,575 for the nine-month period ended September 30, 2004 from $190,263. This decrease is primarily due to cost cutting measures related to overhead.

Consultants Fees

Consultant fees consist of the companys contract labour primarily hi-tech services and management. Of the total $1,131,232 expense, $783,000 is on account of stock issued as compensation. The balance $348,232 is actual cash
expenses that have been paid or accrued. For the same nine month period ended September 30, 2004 the expense was $300,500 in cash and accrued compensation.

Interest Expense

Interest expense remained almost the same from, $71,137 for the nine months ended September 30, 2005 and $72,257 for the nine months ended September 30, 2004 due to interest amounts on shareholder loans.

Equity Method Investment

During the nine months ended September 30, 2005 the Company recorded $41,128 of losses from its investment in equity securities accounted for by the equity method. The Company acquired the investment in December 2004.

Results of operations for the quarter ended September 30, 2005 as compared to the quarter ended September 30, 2004.

Revenue

For the quarter ended September 30, 2005 the Company generated revenue of $1,371, from operations. The same quarter period ending September 30, 2004 generated revenues of $4,120. Current revenues are from skill games and our lack of traffic
from the launch delay on the Sina.com network.

Cost of Sales

Cost of Sales for the three-month period ended September 30, 2005 was $11,505 and for the same three-month period ended September 30, 2004 $16,322. This cost of sales is primarily site development and game licensing.

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 and translation costs. There can be no assurances
  that these expenditures will result in increased traffic or significant new
  revenue sources.

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General and Administrative expenses

General and administrative expenses consist primarily of, legal
and audit professional fees, insurance and other general corporate and office
expenses, for the three-month period ending September 30, 2005 of $62,731.
General and administrative expenses increased by $26,243 for the three-month
period ended September 30, 2004 from $36,488. This increase is primarily due to
additional legal costs.

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. The
Company will be relying on the equity financing to support the business.

Consultants Fees

Consultant fees consist of the companys contract labour
primarily hi-tech services and management. Of the total $128,000 expense in the
period $67,000 was accrued compensation and $61,000 was an actual cash expense.

Interest Expenses

Interest expenses of $18,075 is a reflection of accrued
interest on shareholder and related party loans. The imputed amount for the same
quarter in 2004 was $24,816. This is a reflection of interest expense being
accrued on shareholder loans and related party loans at a market rate.

"CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Except for
historical matters, the matters discussed in this Form 10-QSB are
forward-looking statements based on current expectations and involve risks and
uncertainties. Forward-looking statements include, but are not limited to,
statements under the following heading: "Managements Discussion and Analysis or
Plan of Operations" the timing and expected profitable results of sales and the
need for additional financing.

|Item 3. | Controls and Procedures
|------- | -----------------------

The companys management, under the supervision and with the
participation of the Chief Executive Officer and the Chief Financial Officer,
evaluated the effectiveness of the companys disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as
amended) as of September 30, 2005. Based on this evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of September 30, 2005,
the companys disclosure controls and procedures were effective.

In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.

There were no changes in the companys internal controls
  over financial reporting that occurred during the quarter ended September 30,
  2005, that have materially affected, or are reasonably likely to materially
  affect, the companys internal controls over financial reporting.

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PART II OTHER
INFORMATION

|Item 1. | LEGAL PROCEEDINGS                                  
|------- | ---------------------------------------------------
|        |                                                    
|        | None                                               
|        |                                                    
|Item 2  | CHANGES IN SECURITIES AND USE OF PROCEEDS          
|        |                                                    
|        | 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)                                                
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|        |                                                    
|        |                                                    
|        |                                                    
|        |                                                    
|        |                                                    
|        |                                                    
|        |                                                    
|        | (b)                                                
|
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|        |                                                    
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|        |                                                    
|        |                                                    
|

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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.

|                        | CYOP SYSTEMS INTERNATIONAL INCORPORATED
|----------------------- | ---------------------------------------
|                        |                                        
|Date:  November 3, 2005 | By:                                    
|                        |                                        
|                        | Title:                                 
|                        |                                        

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