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


                          FORM 10-QSB - Amendment No. 1



[xx]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001


                         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)

                                    Suite 300
                                1286 Homer Street
                           Vancouver, British Columbia
                                     V6B 2Y5
                    (Address of principal executive offices)

                                  (604)647-6400
                           (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:        28,439,975 common shares as at
June 30, 2001

Transitional Small Business Disclosure Format (check one):  Yes [  ]    No [ X ]



<PAGE>


                     CYOP SYSTEMS INTERNATIONAL INCORORATED


                                      INDEX

PART 1.  FINANCIAL INFORMATION

         Item 1.    Financial Statements

                    Balance Sheet as of December 31, 2000 and June 30, 2001

                    Statement of Operations for the period ended
                    June 30, 2001

                    Consolidated Statements of Cash Flows for the period ended
                    June 30, 2001

                    Consolidated Statements of Changes in Stockholders' Equity

                    Notes to Consolidated Financial Statements

         Item 2     Plan of Operation

PART II. OTHER INFORMATION

         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


<PAGE>


                           CYOP SYSTEMS INTERNATIONAL
                           INCORPORATED & SUBSIDIARIES
                            (A development stage company)

                           Consolidated Financial Statements
                           (EXPRESSED IN U.S. DOLLARS)
                           June 30, 2001
                           (Unaudited)





                           INDEX
                           -----

                           Report of Independent Accountants

                           Consolidated Balance Sheets

                           Consolidated Statements of Stockholders' Deficiency

                           Consolidated Statements of Operations

                           Consolidated Statements of Cash Flows

                           Notes to Consolidated Financial Statements



<PAGE>


MOORE STEPHENS
ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS

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

--------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS

CYOP SYSTEMS INTERNATIONAL INCORPORATED
(A development stage company)


We have reviewed the accompanying consolidated balance sheet of CYOP Systems
International Incorporated ("the Company") and subsidiaries as of June 30, 2001,
the related consolidated statements of stockholders' equity for the six-month
period then ended, and the consolidated statements of operations and cash flows
for the three-month and the six-month periods then ended and the cumulative
period from October 1, 1999 (commencement) to June 30, 2001. These consolidated
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles in the United States.

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

We have previously audited, in accordance with generally accepted auditing
standards in the United States, the consolidated balance sheet as at December
31, 2000 and the related consolidated statements of operations, shareholders'
equity and its cash flows for the cumulative period and the year then ended (not
presented herein) and in our report dated June 4, 2001, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as at
December 31, 2000 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.


Vancouver, Canada                             "MOORE STEPHENS ELLIS FOSTER LTD."
September 18, 2001                                   Chartered Accountants


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Consolidated Balance Sheets
(Unaudited)
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>


----------------------------------------------------------------------------------------------------------------------
                                                                                       June 30            December 31
                                                                                          2001                   2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                     <C>

ASSETS

CURRENT
  Cash and cash equivalents                                                $             4,751     $           29,480
  Deposits (Note 4)                                                                     27,006                  1,333
  Other receivable                                                                      20,035                      -
  Refundable tax credits                                                                11,785                 16,808
  Demand loans, interest at 12% per annum and unsecured                                115,704                      -
  Prepaid expenses                                                                      39,506                 49,659
----------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                                   218,787                 97,280

FIXED ASSETS (Note 5)                                                                  166,745                236,246

SOFTWARE DEVELOPMENT COSTS (Note 6)                                                        100                    100
----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                  $        385,632     $          333,626
======================================================================================================================

LIABILITIES

CURRENT
  Bank overdraft                                                              $         16,816     $                -
  Demand loans (Note 7a and 8e)                                                      1,474,217              1,177,805
  Accounts payable and accrued liabilities (Note 8a)                                   751,401                433,062
  Short-term loan (Note 7b)                                                            226,388                      -
----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                            2,468,822              1,610,867
----------------------------------------------------------------------------------------------------------------------

NATURE AND CONTINUANCE OF OPERATIONS  (Note 1)

COMMITMENTS (Note 9)

STOCKHOLDERS' (DEFICIENCY)

SHARE CAPITAL
  Authorized:
     100,000,000 shares of common stock with a par value
                  of $0.0001 per share
  Issued, allotted and outstanding:
     28,439,975 shares of common stock (2000 - 28,382,975)                               2,844                  2,838

ADDITIONAL PAID-IN CAPITAL                                                             211,431                149,237

ACCUMULATED OTHER COMPREHENSIVE INCOME                                                  16,649                 14,801

DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                                   (2,314,114)            (1,444,117)
----------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' (DEFICIENCY)                                                   (2,083,190)            (1,277,241)
----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)                              $        385,632     $          333,626
======================================================================================================================


</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

On behalf of the Board:

/s/Mitch White, Director
------------------------
Mitch White, Director

MOORE STEPHENS ELLIS FOSTER LTD.

<PAGE>




CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES

(A development stage company)

Consolidated Statements of Stockholders' Deficiency
Six-Month Period Ended June 30, 2001
(Unaudited)
(Expressed in U.S. Dollars)


<TABLE>
<CAPTION>


                                                                                                                  Page 1 of 2



------------------------------------------------------------------------------------------------------------------------------------


                                                                                                       Compre-
                                                     Common stock               Additional             hensive
                                            ----------------------------           paid-in              income            Deficit
                                                Shares         Amount              capital              (loss)        accumulated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>             <C>             <C>                 <C>

Recapitalization as a result of reverse
  acquisition (Note 3)                                  --    $       --      $         69    $       (67,863)    $      (66,465)
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss)                                                                           (67,863)
                                                                                                 ===============

BALANCE, December 31, 1999                              --              --              69                               (66,465)

Shares issued for cash on
  February 29, 2000                             10,020,500           1,002           1,448                                     --

Shares issued for services on
  February 29, 2000                              9,202,500             920           1,330                                     --

Deficit accumulated as at November 3, 2000              --              --              --                               (14,401)

Recapitalization adjustment (Note 3)                    --                         (2,968)                                 14,401
------------------------------------------------------------------------------------------------------------------------------------

BALANCE AFTER RECAPITALIZATION ADJUSTMENT       19,223,000           1,922           (121)                               (66,465)

Shares allotted for equity of shell
  in stock acquisition (Note 3)                  9,000,000             900        (10,601)                  --                 --

Shares allotted for cash on December 13, 2000      159,975              16         159,959                  --                 --

Other comprehensive income
- foreign currency translation adjustment               --              --              --              16,199                 --

Comprehensive income
  - net (loss) for the period                           --              --              --         (1,377,652)        (1,377,652)
------------------------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss)                                                                   $    (1,361,453)
                                                                                           ====================

BALANCE, December 31, 2000                      28,382,975           2,838         149,237                            (1,444,117)
------------------------------------------------------------------------------------------------------------------------------------






--------------------------------------------------------------------------------------
                                                     Accumulated
                                                           other              Total
                                                         compre-             Stock-
                                                         hensive           holders'
                                                          income       (deficiency)
--------------------------------------------------------------------------------------
Recapitalization as a result of reverse
acquisition (Note 3)                                $      (1,398)    $      (67,794)
--------------------------------------------------------------------------------------

Comprehensive income (loss)


BALANCE, December 31, 1999                                 (1,398)           (67,794)

Shares issued for cash on
  February 29, 2000                                             --              2,450

Shares issued for services on
  February 29, 2000                                             --              2,250

Deficit accumulated as at November 3, 2000                      --           (14,401)

Recapitalization adjustment (Note 3)                            --             11,433
--------------------------------------------       -----------------------------------

BALANCE AFTER RECAPITALIZATION ADJUSTMENT                  (1,398)           (66,062)

Shares allotted for equity of shell
  in stock acquisition (Note 3)                                 --            (9,701)

Shares allotted for cash on December 13, 200                    --            159,975

Other comprehensive income
- foreign currency translation adjustment                   16,199             16,199

Comprehensive income
  - net (loss) for the period                                   --        (1,377,652)
--------------------------------------------       -----------------------------------

Comprehensive income (loss)


BALANCE, December 31, 2000                          $       14,801    $   (1,277,241)





</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Consolidated Statements of Stockholders' Deficiency
Six-month Period Ended June 30, 2001
(Unaudited)
(Expressed in U.S. Dollars)


<TABLE>
<CAPTION>

                                                                                                                     Page 2 of 2
--------------------------------------------------------------------------------------------------------------------------------


                                                                                                                 Compre-
                                                               Common stock               Additional             hensive
                                                       ------------------------------        paid-in              income
                                                          Shares         Amount              capital              (loss)
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                  <C>           <C>        <C>

(continued from page 1)

BALANCE, December 31, 2000                                28,382,975           2,838         149,237

Shares allotted for cash at $1.00 per share                   44,000               5          43,995

Shares allotted for cash at $1.40 per share                   13,000               1          18,199

Other comprehensive income
  - foreign currency translation adjustment                       --              --              --    $          1,848

Comprehensive income
  - net (loss) for the period                                     --                                           (869,997)
--------------------------------------------------------------------------------------------------------------------------------

Comprehensive income (loss)                                                                             $      (868,149)
                                                                                                     ====================

BALANCE, June 30, 2001                                    28,439,975    $      2,844    $    211,431
=====================================================================================================



-------------------------------------------------------------------------------------------------------------
                                                                              Accumulated
                                                                                    other              Total
                                                                                  compre-             Stock-
                                                               Deficit            hensive           holders'
                                                           accumulated             income       (deficiency)
-------------------------------------------------------------------------------------------------------------


(continued from page 1)

BALANCE, December 31, 2000                                 (1,444,117)             14,801        (1,277,241)

Shares allotted for cash at $1.00 per share                          -                  -             44,000

Shares allotted for cash at $1.40 per share                          -                  -             18,200

Other comprehensive income
  - foreign currency translation adjustment                          -              1,848              1,848

Comprehensive income
  - net (loss) for the period                                (869,997)                  -          (869,997)
-------------------------------------------------------    --------------------------------------------------

Comprehensive income (loss)


BALANCE, June 30, 2001                                     $(2,314,114)    $       16,649    $   (2,083,190)
=======================================================    ==================================================



</TABLE>




THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Consolidated Statements of Operations
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------
                                           Three Months    Six Months      Cumulative from
                                                  Ended         Ended      October 1, 1999
                                                June 30       June 30           to June 30
                                                   2001          2001                 2001
------------------------------------------------------------------------------------------

<S>                                        <C>             <C>             <C>

EXPENSES
  Accounting and audit                     $     10,938    $     25,084    $     89,482
  Advertising and promotion                      11,457         100,615         176,402
  Automobile                                     15,735          29,656          63,260
  Bank charges and interest (Note 8c)            41,785          67,696         121,997
  Depreciation of fixed assets                    2,036           3,690          11,095
  Legal and other professional fees              43,287          73,852         193,572
  Office and miscellaneous                       20,363          46,459         110,099
  Rent                                           17,873          34,659          63,127
  Salaries and benefits                          42,935          74,711         249,749
  Software development costs (Note 6)            71,621         358,859       1,137,107
  Telephone and bandwidth                         4,159           6,544          22,780
  Travel                                          5,133           6,903          21,241
  Foreign exchange (gain) loss                  (40,983)          9,216          22,150
----------------------------------------------------------------------------------------

OPERATING LOSS                                 (246,339)       (837,944)     (2,282,061)

Leasehold improvements write off                 31,725          31,725          31,725
Loss on disposal of fixed assets                    328             328             328
----------------------------------------------------------------------------------------

NET LOSS FOR THE PERIOD                    $   (278,392)   $   (869,997)   $ (2,314,114)
========================================================================================

LOSS PER SHARE
    Basic and diluted                      $      (0.01)   $      (0.03)
========================================================================================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
    Basic and diluted                        28,437,213      28,426,776
========================================================================================

</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.





<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Consolidated Statements of Cash Flows
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)

<TABLE>
<CAPTION>


-------------------------------------------------------------------------------------------------------
                                                          Three Months   Six Months     Cumulative from
                                                                 Ended        Ended     October 1, 1999
                                                               June 30      June 30          to June 30
                                                                  2001         2001                2001
-------------------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
  Net (loss) for the period                               $  (278,392)   $  (869,997)      $(2,314,114)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    - depreciation of fixed assets                             17,200         33,739            76,471
    - fixed assets write off                                   31,725         31,725            31,725
    - loss on disposal of fixed assets                            328            328               328
    - exchange (gain) loss on fixed assets                     (8,149)         3,089             3,089
-------------------------------------------------------------------------------------------------------

                                                             (237,288)      (801,116)       (2,202,501)
  CHANGES IN ASSETS AND LIABILITIES:
    - deposits                                                 (1,085)       (25,673)          (25,673)
    - other receivable                                        (20,035)       (20,035)          (20,035)
    - refundable tax credits                                   10,579          5,023           (11,785)
    - demand loans                                           (115,704)      (115,704)         (115,704)
    - prepaid expenses                                         (6,565)        10,153           (40,839)
    - accounts payable and accrued liabilities                158,961        318,339           743,432
-------------------------------------------------------------------------------------------------------

                                                             (211,137)      (629,013)       (1,673,105)
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
  Capitalized software development costs                         --             --                (100)
  Disposal of fixed assets                                      6,806          6,806             6,806
  Purchase of fixed assets                                       --           (6,186)         (285,164)
-------------------------------------------------------------------------------------------------------
                                                                6,806            620          (278,458)
-------------------------------------------------------------------------------------------------------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
  Shares allotted for cash                                     11,300         82,200           242,244
  Cancellation of shares allotted                             (20,000)       (20,000)          (20,000)
  Proceeds from demand loans                                   68,880        296,412         1,474,217
  Proceeds from short-term loans                              226,388        226,388           226,388
-------------------------------------------------------------------------------------------------------
                                                              286,568        585,000         1,922,849
-------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE ON FOREIGN CURRENCY TRANSLATION       (85,487)         1,848            16,649
-------------------------------------------------------------------------------------------------------
DECREASE IN CASH AND CASH EQUIVALENTS                          (3,250)       (41,545)          (12,065)

CASH AND CASH EQUIVALENTS (DEFICIENCY),
  beginning of period                                          (8,815)        29,480              --
-------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS (DEFICIENCY), end of period     $   (12,065)   $   (12,065)      $   (12,065)
=======================================================================================================

CASH AND CASH EQUIVALENTS (DEFICIENCY)
  REPRESENTED BY:
  Cash                                                    $     4,751    $     4,751       $     4,751
  Bank overdraft                                              (16,816)       (16,816)          (16,816)
-------------------------------------------------------------------------------------------------------
                                                          $   (12,065)   $   (12,065)      $   (12,065)
=======================================================================================================


</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

1.       NATURE AND CONTINUANCE OF OPERATIONS

         The Company was incorporated on October 29, 1999 in the name of Triple
         8 Development Corporation under the laws of the State of Nevada to
         engage in any lawful business or activity for which corporations may be
         organized under the laws of the State of Nevada. The Company changed
         its name to CYOP Systems International Incorporated on October 30,
         2000. On November 3, 2000, the Company acquired 100% of the issued and
         outstanding shares of CYOP Systems Inc., Barbados ("CYOP Barbados").
         This transaction was accounted for as a reverse acquisition
         recapitalization (see Note 3). The efforts of the Company have been
         devoted to sales and marketing of multimedia transactional technology
         solutions and services on internet for the entertainment industry. In
         accordance with Statement of Financial Accounting Standards ("SFAS")
         No. 7 "Accounting and Reporting by Development Stage Companies", the
         Company is deemed to be in the Development Stage.

         CYOP Barbados was incorporated under the laws of Barbados on June 20,
         2000. CYOP Barbados is in the business of developing personal computer
         and console entertainment software designed to provide interactive
         online games, and development of multimedia transactional technology
         solutions and services on internet for the entertainment industry. On
         August 31, 2000, CYOP Barbados acquired 100% of the issued and
         outstanding shares of Moshpit Entertainment Inc., Canada ("Moshpit"), a
         company in the business of developing software for interactive online
         games incorporated under the laws of British Columbia, Canada. Both
         CYOP Barbados and Moshpit are considered to be in the development
         stage.

         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 are to raise equity financing as required and keep
         abreast of the multimedia technology. These financial statements do not
         include any adjustments that might result from this uncertainty.

2.       SIGNIFICANT ACCOUNTING POLICIES

         (a)      Basis of Consolidation

                  These interim consolidated financial statements, prepared in
                  accordance with accounting principles generally accepted in
                  the United States of America, include the accounts of the
                  Company and its subsidiaries CYOP Barbados and Moshpit.



<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------



2.       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         (a)      Basis of Consolidation (continued)

                  The consolidated balance sheets, as at June 30, 2001 and
                  December 31, 2000 include the assets and liabilities of the
                  Company, CYOP Barbados and Moshpit. The consolidated
                  statements of operations for the three-month and the six-month
                  periods ended June 30, 2001 and the cumulative period from
                  October 1, 1999 (commencement) to June 30, 2001 include the
                  operating results of the Company, CYOP Barbados and Moshpit
                  for the periods and cumulative period then ended. Significant
                  inter-company accounts and transactions have been eliminated.

         (b)      Basis of Presentation

                  These interim consolidated financial statements have been
                  prepared using the same accounting policies and methods of
                  their application as the most recent annual consolidated
                  financial statements of the Company. These interim
                  consolidated financial statements do not include all
                  disclosures normally provided in the annual consolidated
                  financial statements and should be read in conjunction with
                  the Company's audited consolidated financial statements for
                  the year ended December 31, 2000. In management's opinion, all
                  adjustments necessary for fair presentation have been included
                  in these interim consolidated financial statements. Interim
                  results are not necessary indicative of the results expected
                  for the fiscal year. Certain comparative figures have been
                  reclassified to conform to the current period's presentation.

         (c)      Accounting Estimates

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

         (d)      Cash Equivalents

                  Cash equivalents usually consist of highly liquid investments
                  which are readily convertible into cash with maturities of
                  three months or less when purchased. As at June 30, 2001 and
                  December 31, 2000, cash and cash equivalents consist of cash
                  only.




<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------


2.       SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         (e)      Fixed Assets

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

<TABLE>
<CAPTION>


                      <S>                              <C>

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

</TABLE>

         (f)      Software Development Costs

                  Software development costs are charged to expenses as
                  incurred.

         (g)      Advertising and Promotion

                  The Company expenses advertising and promotion costs as
                  incurred. Total advertising and promotion costs charged to
                  expenses for the six months ended June 30, 2001 amounted to
                  $100,615.

         (h)      Foreign Currency Transactions

                  The Company and CYOP Barbados maintain their accounting
                  records in their functional currency (i.e., US dollars).
                  Foreign currency transactions are translated into their
                  functional currency in the following manner.

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

         (i)      Foreign Currency Translations

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



<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         (j)      Income Taxes

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

         (k)      Impairment

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

         (l)      Comprehensive Income

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

         (m)      Financial Instruments and Concentration of Risks

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



<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         (m)      Financial Instruments and Concentration of Risks (continued)


                  The carrying value of cash and cash equivalents, deposits,
                  other receivable, refundable tax credits, demand loans
                  receivable, bank overdraft, demand loans payable, accounts
                  payable and accrued liabilities and short-term loans
                  approximate their fair values because of the short-term
                  maturity of these instruments.

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

                  Financial instruments that potentially subject the Company to
                  concentration of credit risk consist principally of cash, the
                  balances of which are stated on the balance sheet. The Company
                  places its cash in high credit quality financial institutions.
                  The Company does not require collateral or other security to
                  support financial instruments subject to credit risk.

         (n)      Reporting on Costs of Start-Up Activities

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

                  The Company charged all start-up costs to expenses as
                  incurred.

         (o)      Accounting for Derivative Instruments and Hedging Activities

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



<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

        (p)      Net Income (Loss) Per Share

                  Basic net income (loss) per share are computed using the
                  weighted-average number of shares of common stock outstanding
                  during the period. Diluted net income (loss) per share
                  incorporate the incremental shares issuable upon the assumed
                  exercise of stock options and other dilutive securities.
                  Convertible loan and option to purchase 45,000 shares of
                  common stock outstanding during the three-month and six-month
                  period ended June 30, 2001 were not included in the net income
                  (loss) per share computation, as the effect of including them
                  would be anti-dilutive.

         (q)      Stock-based Compensation

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

3.       ACQUISITION OF CYOP SYSTEMS INC., BARBADOS

         On November 3, 2000, the Company acquired 100% of the issued and
         outstanding common shares of CYOP Barbados. As the Company was a
         non-operating shell company, the transaction resulted in the management
         of CYOP Barbados having effective operating control of the combined
         company, with the shareholders of the Company continuing only as
         passive investors. Accounting principles applicable to reverse
         acquisition recapitalization have been applied to record this
         transaction. Under this basis of accounting, CYOP Barbados has been
         identified as the acquirer and, accordingly, the combined company is
         considered to be a continuation of the operations of CYOP Barbados with
         the net liabilities of the Company deemed to have been assumed by CYOP
         Barbados.

         The net liabilities of the Company assumed by CYOP Barbados are
summarized as follows:

         ----------------------------------------------------------------------

         Current assets                                            $     2,399
         Current liabilities                                           (12,100)
         ----------------------------------------------------------------------
         Net liabilities assumed                                   $    (9,701)
         =======================================================================

4.       DEPOSITS

         The deposits are interest bearing at 4.2% per annum, and are
hypothecated for merchant visa accounts.


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

5.       FIXED ASSETS


<TABLE>
<CAPTION>

         -----------------------------------------------------------------------------------------------------------------
                                                                                        June 30, 2001
         -----------------------------------------------------------------------------------------------------------------
                                                                            Cost          Accumulated            Net book
                                                                                         depreciation               Value
         -----------------------------------------------------------------------------------------------------------------
         <S>                                                        <C>                   <C>                 <C>

         Audio and visual equipment                                 $     22,207          $     4,222         $    17,985
         Computer hardware                                               199,861               60,371             139,490
         Computer software                                                 3,251                2,240               1,011
         Office furniture and equipment                                    9,891                1,632               8,259
         -----------------------------------------------------------------------------------------------------------------
         Total                                                      $   235,210           $    68,465         $   166,745
         =================================================================================================================


         -----------------------------------------------------------------------------------------------------------------
                                                                                   December 31, 2000
         -----------------------------------------------------------------------------------------------------------------
                                                                            Cost          Accumulated            Net book
                                                                                         depreciation               Value
         -----------------------------------------------------------------------------------------------------------------

         Audio and visual equipment                                  $    22,411            $    2,241         $   20,170
         Computer hardware                                               204,682                33,549            171,133
         Computer software                                                 3,280                 1,640              1,640
         Office furniture and equipment                                    9,982                 1,043              8,939
         Leasehold improvements                                           38,182                 3,818             34,364
         -----------------------------------------------------------------------------------------------------------------
         Total                                                       $   278,537            $   42,291         $  236,246
         =================================================================================================================

</TABLE>

         For the six months ended June 30, 2001, depreciation expenses of
         $33,739 were charged to expenses.

6.       SOFTWARE DEVELOPMENT COSTS

<TABLE>
<CAPTION>


         -----------------------------------------------------------------------------------------------------------------
                                                                                             June 30           December 31
                                                                                                2001                  2000
         -----------------------------------------------------------------------------------------------------------------
         <S>                                                                           <C>                  <C>

         Balance, beginning of period                                                  $         100        $          100
         Salaries and benefits                                                               387,453               715,198
         Depreciation on fixed assets                                                         30,049                33,622
         Expense recoveries                                                                  (58,643)                    -
         -----------------------------------------------------------------------------------------------------------------

                                                                                             358,959               748,920
         Software development costs charged to expenses                                     (358,859)             (748,820)
         -----------------------------------------------------------------------------------------------------------------

         Balance, end of period                                                        $         100        $          100
         ==================================================================================================================

</TABLE>


<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------


7.       LOANS

         (a)      Demand loans



<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------------
                                                                                              June 30          December 31
                                                                                                 2001                 2000
         -----------------------------------------------------------------------------------------------------------------
                  <S>                                                                    <C>                <C>

                  i.     Interest at the Bank of Montreal's prime
                         lending rate of 6.0% plus 1.5% per annum and unsecured:
                         - Mitchell White - director: Cdn$1,122,493                      $    725,054       $      428,642
                           (2000:Cdn$643,048)
                         - Greenday Inc. - shareholder                                        296,487              296,487
                         - Cyber Roads Inc.                                                   178,519              178,519
                         - Tapijkabouter BV                                                    99,157               99,157
         -----------------------------------------------------------------------------------------------------------------
                                                                                            1,299,217            1,002,805

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

                  iii.     Non-interest bearing and unsecured:                                                     100,000
                         - Tapijkabouter BV                                                   100,000
         -----------------------------------------------------------------------------------------------------------------
                                                                                         $  1,474,217       $    1,177,805
         =================================================================================================================

</TABLE>

(b)      Short-term loan

<TABLE>
<CAPTION>


         -----------------------------------------------------------------------------------------------------------------
                                                                                              June 30          December 31
                                                                                                 2001                 2000
         -----------------------------------------------------------------------------------------------------------------
                  <S>                                                                    <C>                <C>


                  i.     Interest at 40% per annum, due on July 25, 2001,
                         convertible to 20,000 shares of common stock of the
                         Company at due date:
                         - Kornfeld MacOff (Cdn$25,000)                                  $     16,513       $         --

                  ii.      Interest at 10% per annum, due on June 1, 2002:
                         - RedRuth Ventures                                                   209,875                 --
         -----------------------------------------------------------------------------------------------------------------

                                                                                         $    226,388       $         --
         =================================================================================================================

</TABLE>


<PAGE>

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------

8.       RELATED PARTY TRANSACTIONS

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

         (a)      Accounts payable and accrued  liabilities  include $73,342
                  interest accrued to a director and a shareholder of the
                  Company.

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

         (c)      Interest  expenses of $33,059  were  accrued to a director
                  and a  shareholder  of the Company and were charged to
                  expenses.

         (d)      Professional  fees of $5,000 were paid to an  individual
                  related to a director of the Company and were charged to
                  expenses.

         (e)      Demand loans include $1,021,541 due to a director and a
                  shareholder of the Company. These demand loans bear interests
                  at the Bank of Montreal's prime lending rate of 6.0% plus 1.5%
                  per annum and are unsecured (see Note 7ai).

9.       COMMITMENTS

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

                           -----------------------------------------------
                           2001                            $       35,135
                           2002                                    92,938
                           2003                                    81,759
                           2004                                    20,351
                           -----------------------------------------------

                           Total                           $      230,183
                           ===============================================


(b)               The Company has entered into contracts with service providers
                  to pay for the services received partly by cash and partly by
                  issuance of common stock of the Company when the common stock
                  are freely trading in the equity market. As at June 30, 2001,
                  33,705 shares of common stock of the Company are to be issued
                  for services received.



<PAGE>
CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------


10.      INCOME TAXES

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



                  -------------------------------------------------------------
                  Statutory income tax rate                                15%
                  Tax losses not benefited                                (15%)
                  -------------------------------------------------------------

                  Effective income tax rate                                 --
                  =============================================================

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

                  --------------------------------------------------------------
                  Undepreciated capital cost of capital assets over their net
                  book value                                        $    20,000

                  Estimated tax loss carryforwards                      969,000

                  Less: valuation allowance                            (989,000)
                  --------------------------------------------------------------
                                                                    $     --
                  ==============================================================

                  The valuation allowance reflects the Company's estimate that
                  the tax assets, more likely than not, will not be realized.

                  As at June 30, 2001, the Company has non-capital losses of
                  approximately $2,176,000 which can be carried forward for tax
                  purposes and are available to reduce taxable income of future
                  years. The non-capital losses expire commencing in 2006
                  through 2008.



11.      STOCK OPTION

         On May 8, 2001, the Company granted a stock option to a service
         provider to acquire 25,000 shares of common stock at a price of US$1
         per share. The stock option expires on May 9, 2004.


<PAGE>


CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
(A development stage company)

Notes to Consolidated Financial Statements
June 30, 2001
(Unaudited)
(EXPRESSED IN U.S. DOLLARS)
--------------------------------------------------------------------------------



12.      SEGMENTED INFORMATION

         (a)      Industry Information

                  The Company operates in one reportable operating segment,
                  being in the developing and providing multimedia transactional
                  technology solutions and services on internet for the
                  entertainment industry.

         (b)      Geographic Information

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

13.      SUBSEQUENT EVENTS

         The short-term loan of $16,513 (Cdn$25,000) due on July 25, 2001 was
         extended to January 25, 2002 with interest rate at 40% per annum,
         convertible to 20,000 shares of common stock of the Company at due date
         (Note 7bi).

14.      COMPARATIVE FIGURES

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





<PAGE>



                               PLAN OF OPERATIONS

The following discussion of the plan of operations 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 six months ended June 30,
2001. This quarterly report contains certain forward-looking statements and the
Company's future operation results could differ materially from those discussed
herein.


In the three months ended June 30, 2001, we earned revenue of US$58,643 from
website development. This is not our core business. We have been primarily
focused on developing our product for market launch. Management has financed our
operations to date. Management will continue to fund our operations through
shareholders loans for the next 12 months or until such time as we are able to
raise equity or debt financing privately, through a public listing, or until we
have positive cash flow. We can satisfy our cash requirements solely from funds
loaned by management for approximately 12 months. However, management is not
under any contractual obligation to provide continued funding. We will spend
approximately $2 million in additional capital in the next 12 months to maintain
current operations at our current expenditure rate. In the event management is
unable to continue to provide funding to our company, we would be unable to meet
payroll obligations, lease payments or obligations to third party contractors
and our business would fail. Management advances money to our company on a month
to month basis as required. Without cash advances in the form of loans from
management, our company would be able to satisfy its current cash requirements
for only 30 days. Additional funds in the amount of $500,000 will be required
for a complete launch of the Bloodmoney Universe including a full marketing
budget. We may be unable to secure these additional funds for up to 12 months.


We anticipate maintaining our staff of 19 persons during the next 12 months. We
do not expect to acquire any material physical assets or significant equipment
in the next 12 months. We will not be performing any significant research and
development in the next 12 months as our pay for play software is complete and
tested.

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


We will license our transaction network software to third party users who have
developed pay per use internet games or products which are not associated with
or linked to games and products developed and managed by our company. This is
not our core business but is a possible immediate source of revenue. Our first
licensing agreement has been signed with Bingo.com (Canada) Enterprises Inc.
Bingo.com has approximately 700,000 members playing bingo online. Bingo.com has
devised a new format for bingo which is a skill based game and not a game of
chance. The Bingo.com site began using CYOP's pay for play transaction


<PAGE>



software in October, 2001. Our agreement with Bingo.com is a software license,
technical support and operation of customer service and data centre agreement.
Under this agreement, Bingo.com has been granted a worldwide license to use our
company's transaction network software to host internet skill based bingo
tournaments. Our company is required to provide software support to Bingo.com 24
hours per day, seven days per week, 365 days per year. Our company has also been
engaged to operate Bingo.com's customer service centre and data centre which
involves receiving and replying to customer information and service requests as
well as processing the receipt of fees from and payment of funds to customers of
Bingo.com's tournament bingo game. Customers who register to play bingo
tournaments pay a network maintenance fee to Bingo.com. Customers also pay
tournament entrance fees for each tournament which they sign on to play. All
tournament entrance fees are paid out to the customers competing in each
tournament based on the rules of participation. Our company receives 25% of
network maintenance fees in the form of a license fee from Bingo.com. Our
license agreement with Bingo.com requires Bingo.com to pay us a minimum monthly
license fee of $60,000. Additionally, Bingo.com is required to pay our company a
minimum monthly service fee of $18,000. All network maintenance fees and
tournament entrance fees are held in trust on behalf of Bingo.com and/or
Bingo.com's customers until their withdrawal or payment out is authorized under
the terms of our agreement with Bingo.com and Bingo.com's agreement with each of
its customers. Our agreement with Bingo.com may be cancelled by either party on
three months' written notice.


The Company's agreement with Bingo.com generated revenue of US$58,643 for the
fiscal quarter ended June 30, 2001. This revenue was from web site development
which will be a sporadic source of revenue for the Company. This revenue has
been treated as a software development cost expense recovery in the Company's
June 30, 2001 financial statements. This treatment has been applied because the
revenue received by the Company in the quarter ended June 30, 2001 was not
considered revenue from the Company's core business. The Company's online video
game Urban Mercenary is completely developed as is our pay for play transaction
software. Our agreement with Bingo.com is the first which will demonstrate the
effectiveness of our e-commerce pay for play platform with third party
licensees.

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


In order for our Company to expand it's operations and realize profits from pay
for play online video gaming a number of additional steps must be taken. We must
continue to maintain and upgrade our software programs and our website. This is
an ongoing month to month responsibility which is handled by our current staff
members. Funds for this ongoing software maintenance have been budgeted and are
covered by funds which are being loaned to our Company by management. In the
future, the funds required for ongoing software maintenance will come from
revenue from licensing fees or system maintenance fees from pay for play video
gaming. Secondly, to increase our Company's exposure and attract players to our
website we will be required to complete a full marketing launch of our
Bloodmoney Universe. We anticipate that this marketing launch will cost
approximately $500,000. Until we complete a marketing launch we cannot expect
large volumes of players for our online pay for play video game. Management will
attempt a marketing launch of the Company's Bloodmoney Universe as soon as
possible but we may be unable to secure the additional funds for a marketing
launch for up to 12 months. Revenues will be derived from licensing fees from
third parties. We will also continue to pursue our pending patent applications
in the United States. Patent protection will improve our competitive position in
the online pay for play video gaming industry. We anticipate


<PAGE>


spending up to an additional $25,000 for costs associated with our patent
applications. We anticipate it may take up to one year for our current patent
applications to be granted.

"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 no additional
financing.

                                     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)      Exhibits

                           None

                  (b)      Reports on Form 8-K

                           We filed a Form 8-K on June 13, 2001 changing our
                           fiscal year end from October 31 to December 31.


<PAGE>



                                   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



Dated:  November 1, 2001     Per:    /s/Mitch White
                                     -------------------------------
                                     Mitch White, President, C.F.O. and Director