<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

[X]  Quarterly  Report pursuant to Section 13 or 15(d) of the Securities
     Exchange  Act  of  1934

     For  the  quarterly  period  ended  March  31,  2002

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

     For  the  transition  period      to


          Commission  File  Number     000-32013
                                       ---------

                               MEGAPRO TOOLS INC.
          -----------------------------------------------------------------
          (Exact name of small Business Issuer as specified in its charter)

     NEVADA                                       91-2037081
---------------------------------                 ----------------------------
(State or other jurisdiction of                   (IRS Employer Identification
incorporation or organization)                    No.)


#5-5492 PRODUCTION BOULEVARD
SURREY, BRITISH COLUMBIA, CANADA                  V3S 8P5
---------------------------------------           -----------
(Address of principal executive offices)          (Zip Code)

Issuer's telephone number, including area code:   (604) 533-1777
                                                  --------------

                                 NOT APPLICABLE
          --------------------------------------------------------------------
          (Former  name,  former  address  and  former  fiscal  three  months,
                          if changed since last report)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d)  of  the  Securities  Exchange Act of 1934 during the preceding 12
months  (or  for  such  shorter period that the issuer was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days  [X]  Yes    [  ]  No

State the number of shares outstanding of each of the issuer's classes of common
stock,  as  of  the  latest practicable date:  7,180,100 shares of common stock,
$0.001  par  value  outstanding  as  of  May  10,  2002.


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

Item  1.          Financial  Statements

The accompanying unaudited financial statements have been prepared in accordance
with  the  instructions  to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation  of  financial  position,  results  of  operations, cash flows, and
stockholders'  equity  in  conformity  with  generally  accepted  accounting
principles.  In  the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been  included  and  all  such  adjustments  are  of  a normal recurring nature.
Operating  results for the three months ended March 31, 2002 are not necessarily
indicative  of the results that can be expected for the year ending December 31,
2002.


                                       2


<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                           MegaPro  Tools,  Inc.
                                                     Consolidated Balance Sheets

                                                    March 31,       December 31,
                                                         2002               2001
--------------------------------------------------------------------------------
                                                   (Unaudited)       (Audited)
<S>                                                 <C>            <C>

Assets

Current
  Cash                                              $    10,662    $    8,241
  Accounts receivable                                    79,759       197,335
  Income taxes refundable                                17,996        17,996
  Inventories                                           349,292       375,250
  Prepaid expenses                                        9,692         7,305
                                                    ----------------------------
Total Current Assets                                    467,401       606,127

Fixed assets                                            206,616       209,112

Deferred compensation (Note 6)                          403,229             -

Deferred income taxes                                    92,256        60,012
                                                    ----------------------------

Total Assets                                        $ 1,169,502    $  875,251
================================================================================

Liabilities and Stockholders' Equity

Current
  Bank indebtedness                                 $    24,366    $   23,839
  Accounts payable                                      174,256       241,721
  Accrued liabilities                                     9,451        27,869
  Director's loan payable                                20,000        20,000
  Loans and notes payable (Note 4)                       86,250        88,680
                                                    ----------------------------
Total Liabilities                                       314,323       402,109
                                                    ----------------------------

Stockholders'  equity
  Common stock                                            7,178         6,847
  Additional paid-in capital                            838,180       361,111
  Accumulated other comprehensive loss
    Foreign currency translation adjustment             (29,912)      (28,448)
  Retained earnings                                      39,733       133,632
                                                    ----------------------------
Total Stockholders' Equity                              855,179       473,142
                                                    ----------------------------

Total Liabilities and Stockholders' Equity          $ 1,169,502    $  875,251
================================================================================
</TABLE>



    The accompanying notes are an integral part of these financial statements.


                                       3

<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                                           Consolidated Statements of Operations
                                                                     (Unaudited)

                                              Three  Months  Ended
                                            March 31,     March 31,
                                               2002          2001
--------------------------------------------------------------------------------
<S>                                         <C>          <C>

Sales                                       $  217,943   $  401,760

Cost of goods sold                             143,523      265,777
                                            ------------------------
Gross profit                                    74,420      135,983
                                            ------------------------

Expenses
  Accounting and legal                          24,457       14,720
  Automotive                                       432        1,575
  Bad debts (recovery)                            (564)         675
  Consultant's fees (Note 6a)                   46,171            -
  Commissions                                    4,152        5,223
  Depreciation                                   5,279        6,254
  Director's fees (Note 6b)                     28,000            -
  Insurance                                      2,183        2,259
  Office and miscellaneous                       4,446        6,686
  Property taxes                                   744          746
  Repairs and maintenance                          420          566
  Utilities                                      2,453        2,204
  Travel and promotion                          18,326        7,769
  Wages and benefits                            70,200       82,609
                                            ------------------------
                                               206,699      131,286
                                            ------------------------
Operating (loss) income                       (132,279)       4,697
                                            ------------------------

Other income (expense)
  Royalties (net)                                7,198        6,559
  Rentals                                        1,412        1,550
  Interest and bank charges                     (2,531)      (2,916)
                                            ------------------------
                                                 6,079        5,193
                                            ------------------------
(Loss) income before income taxes             (126,200)       9,890
Income tax (benefit) expense
  Deferred                                     (32,301)       7,652
                                            ------------------------

Net (loss) income for the period            $  (93,899)  $    2,238
====================================================================

Basic and diluted (loss) income per share   $    (0.01)  $        -
                                            ========================

Weighted average shares outstanding          7,171,433    6,847,100
                                            ========================

</TABLE>


    The accompanying notes are an integral part of these financial statements.


                                       4

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                       MegaPro Tools, Inc.
                                                Consolidated Statements of Changes in Stockholders' Equity
                                                                                               (Unaudited)
----------------------------------------------------------------------------------------------------------
                                                                       Accumulated
                                                                             Other                  Total
                                                               Additional  Compre-                 Stock-
                                                Common Stock     Paid-in   hensive    Retained   holders'
                                              Shares    Amount   Capital      Loss    Earnings     Equity
----------------------------------------------------------------------------------------------------------
<S>                                        <C>        <C>      <C>       <C>        <C>         <C>

Balance, December 31, 2001                 6,847,100  $ 6,847  $361,111  $(28,448)  $ 133,632   $473,142
Share capital issued on:
  January 15, 2002 $1.40 per share
   (Note 6a)                                 321,000      321   449,079         -           -    449,400
  February 27, 2002 $2.80 per share
   (Note 6b)                                  10,000       10    27,990         -           -     28,000
                                           ---------------------------------------------------------------
                                           7,178,100    7,178   838,180   (28,448)    133,632    950,542
                                           ---------------------------------------------------------------

Foreign currency adjustment                        -        -         -    (1,464)          -     (1,464)
Net loss for the period                            -        -         -         -     (93,899)   (93,899)
                                           ---------------------------------------------------------------
Comprehensive loss for the period                  -        -         -    (1,464)    (93,899)   (95,363)
                                           ---------------------------------------------------------------

Balance, March 31, 2002 (Unaudited)        7,178,100  $ 7,178  $838,180  $(29,912)  $  39,733   $855,179
==========================================================================================================

</TABLE>


    The accompanying notes are an integral part of these financial statements.


                                       5


<PAGE>


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                                           Consolidated Statements of Cash Flows
                                                                     (Unaudited)

                                                       Three  Months  Ended
                                                       March 31,   March 31,
                                                           2002       2001
--------------------------------------------------------------------------------
<S>                                                   <C>        <C>
Cash provided by (used in)

Operating activities

  Net (loss) income for the period                    $(93,899)  $  2,238
  Adjustments to reconcile net loss for
    the period to cash used in operating
    activities
  Depreciation                                           5,279      6,254
  Stock compensation                                    74,171          -
  Deferred income taxes                                (32,301)     7,652
  (Increase) decrease in assets
  Accounts receivable                                  117,515     95,351
  Inventories                                           25,889     (4,156)
  Prepaid expenses                                      (2,390)     1,624
  Increase (decrease) in liabilities
  Accounts payable                                     (65,804)   (79,015)
  Accrued liabilities                                  (19,540)   (20,416)
                                                      --------------------
                                                         8,920      9,532
                                                      --------------------
Investing activities
  Purchase of fixed assets                              (2,923)    (7,572)
                                                      --------------------
Financing activities
  Increase (decrease) in bank indebtedness                 549    (20,187)
  Repayment of loans                                    (2,352)    (2,734)
                                                      --------------------
                                                        (1,803)   (22,921)
                                                      --------------------
Foreign currency translation adjustment
  effect on cash balances                               (1,773)       136
                                                      --------------------

Increase (decrease) in cash during the period            2,421    (20,825)
Cash, beginning of period                                8,241     40,559
                                                      --------------------
Cash, end of period                                   $ 10,662   $ 19,734
==========================================================================

Supplemental Information

  Interest paid                                       $  2,552   $  4,292
  Income taxes paid                                          -        504
  Non-cash financing activities
    - Stock compensation                               477,400          -

</TABLE>


    The accompanying notes are an integral part of these financial statements.


                                       6

<PAGE>
--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                                      Notes to Consolidated Financial Statements
                                                                     (Unaudited)

March  31,  2002
--------------------------------------------------------------------------------

1.     Basis  of  Presentation

The  consolidated  interim  financial  statements  included herein, presented in
accordance  with  United  States  generally  accepted  accounting principles and
stated in US dollars, have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
information  and  footnote disclosures normally included in financial statements
prepared  in  accordance with generally accepted accounting principles have been
condensed  or  omitted  pursuant  to  such  rules  and regulations, although the
company  believes  that  the  disclosures  are  adequate to make the information
presented  not  misleading.

These  statements  reflect  all  adjustments,  consisting  of  normal  recurring
adjustments  which,  in  the  opinion  of  management,  are  necessary  for fair
presentation  of  the information contained therein.  It is suggested that these
consolidated  interim  financial  statements  be  read  in  conjunction with the
financial  statements  of  the  Company for the year ended December 31, 2001 and
notes  thereto included in the Company's annual report filed on Form 10-KSB with
the Securities and Exchange Commission.  The Company follows the same accounting
policies  in  the  preparation  of  interim  reports.

Results  of  operations  for  the  interim  periods are not indicative of annual
results.

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

2.     Nature  of  Business

The Company was incorporated in the State of Nevada on December 17, 1998 and was
inactive  until  the acquisition of Mega Tools Ltd. and Mega Tools USA, Inc. via
reverse  acquisition  on  September  30,  1999.  The  Company  is engaged in the
manufacture  and  sale  of  a  patented  multi-bit  screwdriver.

The Company has entered into an exclusive North American licence agreement  with
the  patent  holder  of  a  retracting cartridge type screwdriver.  This licence
agreement  gives  the  Company  unrestricted use of the patent in Canada and the
United  States until November 8, 2005.  The Company's wholly owned subsidiaries,
Mega  Tools  USA, Inc. and Mega Tools Ltd. manufacture and market the drivers to
customers  in  the  United  States  and  Canada.


                                       7


<PAGE>

--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                                     (Unaudited)

March  31,  2002
--------------------------------------------------------------------------------

3.     Segmented  Information

The  Company has determined that it operates in one industry, in the manufacture
and  sale  of  tools.  Based upon the Company's internal reporting structure the
Company  has  business  segments located in Canada and the United States.  Sales
are  attributed  to  Canada  and  the  United States based upon the subsidiary's
location.  Following  is  information  about  the Company's geographic segments:

<TABLE>
<CAPTION>
                                     Three  Months  Ended
                                   March  31,      March  31,
                                        2002             2001
                                   -------------------------
<S>                                <C>             <C>

Revenues
  United States                    $     126,319   $273,599
  Canada                                  91,624    128,161
                                   -------------------------
                                   $     217,943   $401,760
                                   =========================
Income (Loss) From Operations
  United States                    $    (100,670)  $ 28,299
  Canada                                 (31,609)   (23,602)
                                   -------------------------
                                        (132,279)     4,697
  Royalties and other income               8,610      8,109
  Interest and bank charges               (2,531)    (2,916)
  Income taxes benefit (expense)          32,301     (7,652)
                                   -------------------------
Net (loss) income for the period   $     (93,899)  $  2,238
                                   =========================
Capital Expenditures
  United States                    $           -   $      -
  Canada                                   2,923      7,572
                                   -------------------------
                                   $       2,923   $  7,572
                                   =========================

                                     March 31,  December 31,
                                         2002          2001
                                   -------------------------
Long-term Identifiable Assets
  United States                    $      48,394   $ 50,142
  Canada                                 158,222    158,970
                                   -------------------------
                                   $     206,616   $209,112
                                   =========================

</TABLE>


                                       8


<PAGE>
--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                                     (Unaudited)

March 31, 2002
--------------------------------------------------------------------------------

4.     Loans  and  Notes  Payable

                                                      March 31,     December 31,
                                                           2002             2001
                                                      --------------------------
Payable to a stockholder of the Company,
  unsecured, with quarterly payments of interest
  only at 10.25% per annum, matures October 1, 2002   $    59,591   $     59,643

Bank of Montreal, collaterialized by a first
  mortgage on the Company's real estate, repayable
  $784 monthly plus interest at bank prime lending
  rates plus 1.5% per annum, due on demand with an
  agreed upon repayment schedule                           26,659         29,037
                                                      --------------------------
                                                      $    86,250   $     88,680
                                                      ==========================

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

5.     Stock  Options

A  summary  of the status of the Company's stock options outstanding as of March
31,  2002  is  presented  below:

                                          Vesting      Expiry     Exercise
                               Number        Date        Date        Price
                               -------------------------------------------

Granted January 20, 2000       130,000    20-Jan-00    20-Jan-05    $ 0.85
Granted October 16, 2001        12,500    16-Oct-01    16-Oct-03      1.50
Granted October 16, 2001        12,500    16-Apr-02    16-Oct-03      1.50
Granted October 16, 2001        12,500    16-Oct-02    16-Oct-03      1.50
Granted October 16, 2001        12,500    16-Apr-03    16-Oct-03      1.50
                               -------
                               180,000
                               =======

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

6.     Stock  Compensation

(a)     On January 15, 2002 the Company entered into a two year agreement with a
business  combination  consultant  to  provide  services  with  the objective of
increasing  the  Company's revenues and earnings and expanding its business.  In
consideration  for  these  services  the  Company  issued  321,000 shares of the
Company's  common  stock.  The Company recorded compensation expense of $449,400
for  this  contract  based upon the fair market value of the common stock on the
date  of  issue.  The  compensation expense is being amortized over the two year
term  of  the  contract  with $46,171 expensed during the current period and the
balance  of  $403,229 being deferred and amortized to expense in future periods.

(b)     On  February  27, 2002 the Company issued 10,000 shares of the Company's
common  stock  as  consideration  for director's services.  The Company recorded
compensation expense of $28,000 in the current period based upon the fair market
value  of  the  common  stock  on  the  date  of  issue.


                                       9


<PAGE>

--------------------------------------------------------------------------------
                                                             MegaPro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                                     (Unaudited)

March 31, 2002
--------------------------------------------------------------------------------

7.     Related  Party  Transaction
                                                      Three  Months  Ended
                                                    March  31,    March  31,
                                                         2002         2001
                                                    ------------------------
Interest on the promissory note payable to a
  significant stockholder of the Company            $  1,145     $  1,654

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

8.     Sales  Concentration
                                                        Three Months Ended
                                                      March 31,     March 31,
                                                           2002         2001
                                                      -----------------------
Sales to one U.S. segment customer                    $  25,896    $  45,539
Sales to another U.S. segment customer                   28,043       36,362
Sales to a third U.S. segment customer                        -       80,208
                                                      -----------------------
                                                      $  53,939    $ 162,109
                                                      =======================

Accounts receivable from one U.S.segment customer     $  10,618    $       -
Accounts receivable from anorther U.S. segment
  customer                                                    -       45,539
Accounts receivable from a third U.S. segment
  customer                                                    -       79,713
                                                      -----------------------
                                                      $  10,618    $ 125,252
                                                      =======================


                                       10

<PAGE>


Item  2.     Management's  Discussion  and  Analysis  or  Plan  of  Operations

FORWARD  LOOKING  STATEMENTS

The  information  in  this discussion contains forward-looking statements within
the  meaning  of  Section  27A  of  the  Securities Act of 1933, as amended, and
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  These
forward-looking statements involve risks and uncertainties, including statements
regarding  the  Company's capital needs, business strategy and expectations. Any
statements  contained  herein that are not statements of historical facts may be
deemed  to  be  forward-looking  statements.  In  some  cases,  you can identify
forward-looking  statements  by  terminology  such  as  "may", "will", "should",
"expect",  "plan",  "intend",  "anticipate",  "believe",  "estimate", "predict",
"potential"  or  "continue",  the  negative  of  such  terms or other comparable
terminology. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors, including the risks outlined in
the  Risk  Factors  section  below, and, from time to time, in other reports the
Company files with the SEC. These factors may cause the Company's actual results
to  differ  materially from any forward-looking statement. The Company disclaims
any  obligation  to publicly update these statements, or disclose any difference
between  its  actual  results  and  those  reflected  in  these  statements. The
information  constitutes  forward-looking  statements  within the meaning of the
Private  Securities  Litigation  Reform  Act  of  1995.

OVERVIEW

We  were  founded  to  design,  market  and  manufacture  innovative  multi-bit
screwdriver  products  under  the Megapro name and incorporating the retractable
cartridge  design  patented  by  Winsire  Enterprises Corporation.  Our business
commenced  in  1994 when we began selling our Megapro 15 in 1 Screwdriver to the
industrial  and  commercial tools market.  Our revenues have grown since 1994 as
we have expanded our product sales in the industrial and commercial tools market
and  have  expanded our line of screwdriver products.  We commenced sales of our
screwdriver  products  to  the retail market in late 1996.  We were able to make
sales  of  our  screwdriver  products  under  the Tim Allen Signature Tool brand
during  1997,  1998  and 1999.  Our business plan is to increase our revenues by
increasing  sales  to  the  retail  market,  while preserving and increasing our
existing sales in the industrial and commercial tools markets.  Our objective is
to  increase  sales  to  the  retail  market  by  pursuing direct sales to major
retailers  and  by  pursuing  private  label  branding  relationships with major
retailers.

Our  expenses  include  salaries  and  employee  benefits, travel and promotion,
commissions  paid  on  the  sales of our screwdriver products and administrative
costs  including  accounting and legal expenses, depreciation and other expenses
associated  with  our  office in Surrey, British Columbia, Canada.  Our costs of
goods  sold  consist  primarily  of patent royalty payments, payments to outside
manufacturers,  raw  materials, labor, shipping and other manufacturing expenses
associated  with  production  and  packaging of our screwdriver products.  Other
expenses  consist  primarily  of  interest  on  our  long-term  debt.

Our  business  plan is to expand sales of our screwdriver products to the retail
market.  We need approximately $500,000 of capital in order to fund the expenses
associated  with  this  expansion.  These expenses will be focused on generating
sales  of  our  new Megapro Multi Q-C screwdrivers our Megapro electric cordless
screwdrivers and our Power2Bits screwdriver and drill bits.  These expenses will
have  a material impact on our results of operations and financial condition for
future  periods.  We  anticipate  that  our operating expenses will increase and
earnings  will  decrease  initially  as we incur these additional expenses.  Our
objective  is  to increase our revenues as a result of


                                       11

<PAGE>

increases  in  sales  to  the  retail market. We anticipate that any increase in
revenues  will  be  realized  in  financial  periods subsequent to the financial
period  in  which  we  incur  our  increased  operating  expenses. If we are not
successful in increasing sales to the retail market, then our increased revenues
will  not  offset  our  increased  operating expenses and our profitability will
suffer.  In  this  event, we may be required to raise additional capital through
debt  or  equity  financing  to  pay  for  our  increased  operating  costs.

RESULTS  OF  OPERATIONS

Revenue

Net  revenues  decreased  significantly  to  $217,943 for the three months ended
March  31,  2002  from  $401,760 for the three months ended March 31, 2001.   We
experienced  a decrease in revenues in both the United States and in Canada, our
two  principal  markets.  Revenues  from sales in the United States decreased to
$126,319  from $273,599, representing a decrease of 53.8%.   Revenues from sales
in  Canada decreased to $91,624 from $128,161, representing a decrease of 28.5%.
The  decrease  in  revenues  was  generally attributable to the slow-down in the
North  American  economy during the fourth quarter of 2001 and the first quarter
of 2002.  The decrease in sales reduced our cash flow and reduced our ability to
complete  sales  in  the  first quarter of 2002.  We expect that revenues of our
current  products for the second quarter will be comparable to revenues achieved
during  2001  on  a  per  month basis based on sales orders in April and May (to
date).  The  decrease  in sales in Canada was also attributable to a decrease in
sales  to  Home  Depot Canada caused by a withdrawal of sales of our screwdriver
products  to  Home  Depot  Canada  in  the  third  quarter  of  2001.

We  are  attempting  to  increase  revenue  by  launching  additional  products,
including  our  Megapro  Multi  Q-C  screwdriver,  our Megapro cordless electric
screwdriver  and  our  Power2Bits double ended screwdriver bits with grooves for
power  tools.   Any  increased  revenue  from  these  new  products  will not be
realized  until  the  second  quarter of 2002.  There is no assurance that these
additional  products  will  enable  us  to  increase  our  revenues.

Costs  of  Goods  Sold  and  Gross  Profit

Cost  of  goods  sold decreased to $143,523 for the three months ended March 31,
2002  from  $265,777 for the three months ended March 31, 2001.  The decrease in
cost  of  goods  sold  is attributable in part to a decrease in sales during the
first  quarter  of  2002.  Cost of goods sold as a percentage of sales decreased
marginally  to  65.8% during the first quarter of 2002, compared to 66.1% during
the  first  quarter  of  2002.

We  continue  to evaluate means of reducing cost of goods sold by having certain
components  of  our screwdriver products manufactured by non-U.S. manufacturers.
However,  we  have  not  implemented  non-U.S.  manufacturing  as  of this date.

Our  gross profit decreased to $74,420 for the three months ended March 31, 2002
from $135,983 for the three months ended March 31, 2001, representing a decrease
of  $61,563  or  45%.  The  decrease  in  gross  profits was attributable to our
decreased  revenues  and  a  proportionate  decrease in our costs of goods sold.

We  anticipate  that  costs  of  goods  sold will increase as we launch sales of
additional  products,  including  our Megapro Multi Q-C screwdriver, our Megapro
cordless  electric screwdriver and our Power2Bits double ended screwdriver bits.
We will attempt to maintain or increase our gross profit margin for sales of new
products.


                                       12

<PAGE>

Expenses

Our  expenses  increased  to  $206,699 for the three months ended March 31, 2002
from  $131,286  for  the  three  months  ended  March 31, 2001.  The increase of
$75,413  was  primarily  attributable  to  stock compensation expense during the
first quarter of 2002 in the amount of $74,171.  This stock compensation expense
was  comprised  of  an expense in the amount of $46,171 attributable to services
rendered  under  a  consultant  contract and an expense in the amount of $28,000
attributable to director's fees paid to Mr. Joseph Piscitelli, our new director.

The  largest  component  of  our  expenses  was  wages  and benefits.  Wages and
benefits  were  $70,200  for  the  three months ended March 31, 2002 compared to
$82,609  for  the  three months ended March 31, 2001, representing a decrease in
wages in benefits of $12,409. The reduction in wages and benefits was the result
of  a reduction to our Surrey, British Columbia staff by two full time employees
at the beginning of 2001.  We have delayed the hiring of an office manager until
such  time  as we achieve additional financing and pursue our plan of operations
to  expand  our  current  business.

Our  accounting  and legal costs increased to $24,457 for the three months ended
March  31,  2002  from  $14,720  for  the  three  months  ended  March 31, 2001,
representing  an  increase  of  $9,737.  We incurred higher accounting and legal
costs due to completion of our Form 10-KSB annual report in the first quarter of
2002.  We will continue to incur accounting and legal costs during 2002 compared
to  2001  as  a  result  of  our  being a reporting company under the Securities
Exchange  Act  of  1934.

Our  travel  and  promotion  expenses  increased to $18,326 for the three months
ended  March  31,  2002  from  $7,769 for the three months ended March 31, 2001.
This  increase resulted from a management decision to reduce the number of trade
shows  attended by us during 2001.  Management has determined to increase travel
and  promotion  expenses  in 2002 in connection with our launch of new products.
We  anticipate that these expenses will continue to increase in 2002 compared to
2001  as  we  undertake  marketing  efforts  for  our  new  products.

We  anticipate that our expenses will increase during the second quarter of 2002
as  we  undertake  the  product  launch  of  our new Multi Q-C screwdrivers, our
cordless  electric  screwdrivers and our Power2Bits screwdriver bits.   Expenses
will  include  marketing  expenses  and  expenses  associated  with  increasing
inventory  of  new  products  for  anticipated  sales.  These  expenses  will be
incurred  in  the second and third quarters of 2002 in anticipation of sales for
the  2002  Christmas  season.  Accordingly, we may not realize revenues to cover
these  expenses  until  the  fourth quarter of 2002 and 2003.  The extent of the
expenses  we incur in launching these new products will depend on the markets we
target  and  the  extent  of  the  marketing campaign that we undertake.  We are
currently evaluating our target market options.  These target market options for
our  new products include targeting the retail market and targeting the consumer
directly.

Loss  Before  Income  Taxes

We  incurred  a  loss before income taxes of $126,200 for the three months ended
March  31,  2002  compared to income before income taxes of $9,890 for the three
months  ended  March  31, 2001.   The decrease to our income before income taxes
and  our  resulting  loss  before income taxes was primarily attributable to our
increased  expenses  and  our  decrease  in  revenues.

Net  Loss


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<PAGE>

We  incurred  a  loss  after  income taxes of $93,899 for the three months ended
March 31, 2002 compared to net income of $2,238 for the three months ended March
31,  2001.  Our  net  loss  during  the  first  quarter  of  2002  was primarily
attributable  to  the  non-cash  stock  compensation  expense  component  of our
increased  expenses.

FINANCIAL  CONDITION

Liquidity  and  Capital  Resources

Our  cash position was $10,662 on March 31, 2002, compared to $8,241 on December
31, 2001.  Our working capital position was $153,078 on March 31, 2002, compared
to  $204,018  on  December  31,  2001.

Net  cash provided by operating activities was $8,920 for the three months ended
March  31, 2002, compared to net cash provided by operating activities of $9,532
for  the  three  months  ended  March  31,  2001.  Cash  provided  by  operating
activities included $117,515 attributable to a reduction in accounts receivable.
This  reduction  to  accounts  receivable  is  a  seasonal trend attributable to
payment  by  our  customers of orders of products for the 2001 Christmas season.
We  had  a  corresponding reduction in accounts payable in the amount of $65,804
attributable  to  payments made by us in respect of costs incurred in completing
production  for  the  2001  Christmas  season.

Net  cash  used  for investment activities was $2,923 for the three months ended
March  31,  2002  compared  to $7,572 for the three months ended March 31, 2001.
Net  cash  used  in  investment activities consisted exclusively of property and
equipment  purchases,  net  of  property  and  equipment  sales.

Net  cash  used  in  financing  activities was $1,803 for the three months ended
March 31, 2002, compared to net cash used in financing activities of $22,921 for
the three months ended March 31, 2001. The cash used in financing activities was
attributable  to  the  repayment  of  current  portions of our current long term
indebtedness, including our bank indebtedness.  We did not complete any sales of
our  common  stock  during  the  three  months  ended  March  31,  2002.

Historically,  we  have  funded  our  business  operations  primarily  from  net
operating  income.  We  have  also relied on loans from the Bank of Montreal and
Mr.  Robert  Jeffery,  one of our shareholders, and sales of our common stock to
fund  business  operations.

We  obtained  a  fixed  loan  from  the  Bank of Montreal in 1998.  This loan is
payable  on  demand with an agreed upon repayment schedule requiring payments of
$784  per month, plus interest at the bank's funding rates, plus 1.5% per annum.
The  principal  amount of the outstanding loan was $26,659 as at March 31, 2002,
compared  to  $29,037  as  at  December  31,  2001.

Mr.  Robert  Jeffery, one of our shareholders, has advanced us an unsecured loan
at  an  interest  rate  of 10.25% per annum.  The loans are repayable in full on
October  1, 2002.  Until maturity, we are required to make quarterly payments of
interest  to  Mr.  Jeffery.  The principal amount of this loan was $59,591 as at
March  31,  2002,  compared  to  $59,643  as  at  December  31,  2001.

We  will  require  additional  financing  of  $500,000  in order to complete our
planned  expansion  into  the  retail  market and to launch our new products, as
discussed  above  under  the section entitled plan of operations.  We anticipate
our  revenues  from  existing operations will be sufficient to cover our current
costs  of goods sold and expenses.  We anticipate that the new funds required to
enable  us  to  pursue  our  business  expansion  will be raised through private
placement  sales  of our common


                                       14

<PAGE>

stock. We have no arrangements in place for any private placement financings and
there  is  no  assurance  that we will be able to complete any private placement
financings.

We believe that we have sufficient capital resources and liquidity over both the
short  and  long  term  to  sustain  our  business operations.  While we require
additional financing in order to pursue our planned expansion, we do not require
additional financing in order to sustain our present business operations.  If we
are  not  successful  in obtaining additional financing for our planned business
expansion,  then  we  will  scale back our expenditures on the expansion to stay
within  the  funds  available from our current business operations and financing
arrangements.

Our  actual  expenditures  and business plan may differ from this stated plan of
operations.  Our  Board  of  Directors  may  decide not to pursue this plan.  In
addition,  we may modify the plan based on the available amounts of financing in
the  event  that we cannot obtain the required equity financings to complete the
plan.  We  do not have any arrangement in place for any debt or equity financing
that  would  enable  us  to  meet  our  stated  plan  of  operations.


                                       15

<PAGE>

                           PART II - OTHER INFORMATION

Item  1.  Legal  Proceedings

We  are  not  a party to any material legal proceedings and to our knowledge, no
such  proceedings  are  threatened  or  contemplated.


Item  2.  Changes  in  Securities

We  issued  10,000  shares  of  common  stock  on  March  13, 2002 to Mr. Joseph
Piscitelli,  one of our directors, upon the appointment of Mr. Piscitelli to our
board  of  directors.  These  shares were issued pursuant to Section 4(2) of the
Securities Act of 1933 (the "Securities Act") in consideration of Mr. Piscitelli
agreeing  to  act as one of our directors. The 10,000 shares of common stock are
restricted  shares  as  defined  in  the  Securities  Act.


Item  3.  Defaults  upon  Senior  Securities

None.


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

No  matters  were submitted to our security holders for a vote during the fiscal
quarter  ending  March  31,  2002.


Item  5.  Other  Information

None.


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


EXHIBITS

Exhibit  99.1     Risk  Factors


REPORTS  ON  FORM  8-K

None.


                                       16

<PAGE>

                                   SIGNATURES

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


Date:  May 13, 2002


MEGAPRO TOOLS INC.


By:  /s/ Neil Morgan
    -----------------------------------
     NEIL MORGAN,
     President, Secretary and Treasurer