<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, 2001

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

      For the transition period            to              .
                                -----------   -------------

           Commission File Number             333-40738

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

   NEVADA                                      91-2037081
   ------------------------------             --------------------------
  (State or other jurisdiction of             (IRS Employer
  incorporation or organization)              Identification 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 [  ] Yes
[ X ] No

State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
6,847,100 shares of common stock, $0.001 par value outstanding as
of May 10, 2001.

<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, 2001 are not necessarily indicative of the results
that can be expected for the year ending December 31, 2001.

                                2
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                                               MegaPro Tools, Inc.
                               Consolidated Interim Balance Sheets
                                            (Stated in U.S. Funds)
                                          March 31     December 31
                                              2001            2000
-------------------------------------------------------------------
                                        (Unaudited)       (Audited)
Assets

Current
Cash                                     $   19,734    $    40,559
Accounts receivable                         239,470        339,850
Income taxes refundable                      17,996         17,996
Inventories                                 316,177        315,825
Prepaid expenses                              3,454          5,220
                                         -----------     ---------
                                            596,831        719,450
Fixed assets                                227,155        234,542
Deferred income taxes                        58,146         67,622
                                         -----------     ---------
                                          $ 882,132    $ 1,021,614
                                         ==========    ============

Liabilities and Stockholders' Equity
 Current
 Bank indebtedness                        $       -    $    20,109
 Accounts payable                           159,960        241,224
Accrued liabilities                          35,171         56,952
Current portion of loans and notes payable   35,469         39,993
                                         ----------     ----------
                                            230,600        358,278
Long-term debt
 Loans and notes payable                     63,440         66,689
                                         -----------     ---------
                                            294,040        424,967

Stockholders' equity
Common stock                                  6,847          6,847
Additional paid-in capital                  361,111        364,528
Deferred compensation                             -         (3,417)
Accumulated other comprehensive loss
 Foreign currency translation adjustment    (25,404)       (14,611)
Retained earnings                           245,538        243,300
                                         -----------      ---------
                                            588,092        596,647
                                         -----------      ---------
                                          $ 882,132    $ 1,021,614
                                         ===========   ============

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

                                3
<PAGE>

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                                               MegaPro Tools, Inc.
                               Consolidated Interim Balance Sheets
                                            (Stated in U.S. Funds)
                                             Three Months Ended
                                          March 31        March 31
                                              2001            2000
-------------------------------------------------------------------

Sales                                     $ 401,760    $   382,095
Cost of goods sold                          265,777        240,605
                                         ----------    -----------
Gross profit                                135,983        141,490
                                         ----------    -----------
Expenses
Accounting and legal                         14,720         46,296
Automotive                                    1,575          1,661
Bad debts                                       675            567
Commissions                                   5,223          6,326
Depreciation                                  6,254          5,808
Insurance                                     2,259          2,381
Office and miscellaneous                      6,686          4,380
Property taxes                                  746            860
Repairs and maintenance                         566            449
Utilities                                     2,204          3,074
Travel and promotion                          7,769         14,671
Wages and benefits                           82,609         75,267
                                         ----------    -----------
                                            131,286        161,740
                                         ----------    -----------
Operating income (loss)                       4,697        (20,250)
                                         ----------    -----------
Other income (expense)
  Royalties (net)                             6,559          5,954
  Rentals                                     1,550              -
  Interest and bank charges                  (2,916)        (3,800)
                                         ----------    -----------
                                              5,193          2,154
                                         ----------    -----------
Income (loss) before income taxes             9,890        (18,096)
                                         ----------    -----------
Income tax expense (benefit)
  Current                                         -         25,875
  Deferred                                    7,652        (30,776)
                                         ----------    -----------
                                              7,652         (4,901)
                                         ----------    -----------
Net income (loss) for the period         $    2,238    $   (13,195)
                                         ==========    ============
Basic and diluted income (loss) per share$        -    $    (0.002)
                                         ==========    ============
Weighted average shares outstanding       6,847,100      6,297,125
                                         ==========    ============

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

                                4
<PAGE>

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                                               MegaPro Tools, Inc.
 Consolidated Interim Statements of Changes in Stockholders' Equity
                                              (Stated in U.S. Funds)
                                                         (Unaudited)
-------------------------------------------------------------------
                                              Additional
                               Common Stock    Paid-in    Deferred
                            Shares   Amount    Capital  Compensation
                           --------- ------ ----------- ------------
Balance, December 31, 2000 6,847,100 $6,847 $  364,528  $  (3,417)
Deferred Compensation
  Unvested Stock Options Expired   -      -     (3,417)     3,417
                           --------- ------ ----------- ------------
                           6,847,100  6,847    361,111          -
                           --------- ------ ----------- ------------
Foreign Currency Adjustment        -      -          -          -
Net income for the period          -      -          -          -
                           --------- ------ ----------- ------------
Comprehensive loss for the period  -      -          -          -
                           --------- ------ ----------- ------------
Balance, March 31, 2001    6,847,100 $6,847 $  361,111  $       -
                           ========= ====== =========== ============

                           (CONTINUED)

-------------------------------------------------------------------
                                               MegaPro Tools, Inc.
 Consolidated Interim Statements of Changes in Stockholders' Equity
                                              (Stated in U.S. Funds)
                                                         (Unaudited)
                                                         (CONTINUED)
-------------------------------------------------------------------
                               Accumulated
                                  Other                     Total
                               Comprehensive   Retained Stockholders
                                  Loss         Earnings Compensation
                              --------------- ----------- ------------
Balance, December 31, 2000    $   (14,611)    $ 243,300   $ 596,647
Deferred Compensation
  Unvested Stock Options Expired        -             -           -
                               --------------- ----------- ------------
                                  (14,611)      243,300     596,647
                               --------------- ----------- ------------
Foreign Currency Adjustment       (10,793)            -     (10,793)
Net income for the period               -         2,238       2,238
                              --------------- ----------- ------------
Comprehensive loss for the period (10,793)        2,238      (8,555)
                              --------------- ----------- ------------
Balance, March 31, 2001           (25,404)    $ 245,538   $ 588,092
                              =============== =========== ============


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

                                5
<PAGE>

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                                               MegaPro Tools, Inc.
                     Consolidated Interim Statements of Cash Flows
                                            (Stated in U.S. Funds)
                                                       (Unaudited)
                                             Three Months Ended
                                          March 31        March 31
                                              2001            2000
-------------------------------------------------------------------


Cash provided by (used in)

Operating activities
--------------------
Net income (loss) for the period          $   2,238    $   (13,195)
Items not involving cash
 Depreciation                                 6,254          5,808
 Deferred income taxes                        7,652        (30,776)
(Increase) decrease in assets
 Accounts receivable                         95,351         73,903
 Income taxes refundable                          -         25,808
 Inventory                                   (4,156)        27,565
 Prepaid expenses                             1,624        (24,796)
Increase (decrease) in liabilities
 Accounts payable                           (79,015)       (83,029)
 Accrued liabilities                        (20,416)        56,389
                                          ----------    -----------
                                              9,532         37,677
                                          ----------    -----------

Investing activities
--------------------
 Purchase of fixed assets                    (7,572)       (38,371)
 Advances to stockholders                         -         (7,843)
                                          ----------    -----------
                                             (7,572)       (46,214)
Financing activities
--------------------
 Decrease in bank indebtedness              (20,187)             -
 Repayment of loans                          (2,734)        (3,681)
 Stock subscriptions                              -         45,000
                                          ----------    -----------
                                            (22,921)        41,319
                                          ----------    -----------

(Decrease) increase in cash
during the period                           (20,961)        32,782
Effect of foreign currency on cash              136           (291)
Cash, beginning of period                    40,559         23,907
                                          ----------    -----------
Cash, end of period                       $  19,734     $   56,398

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

                                6
<PAGE>


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                                               MegaPro Tools, Inc.
                Notes to Consolidated Interim Financial Statements
                                            (Stated in U.S. Funds)
                                                       (Unaudited)
March 31, 2001
-------------------------------------------------------------------
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, 2000
and notes thereto included in the Company's registration
statement filed on Form SB-2 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 license
agreement with the patent holder of a retracting cartridge type
screwdriver.  This license 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>

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" brand 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. 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 operating expenses include sales and marketing expenses and
general and administrative costs.  Sales and marketing expenses
include commissions paid on sales of our screwdriver products.
Our general and administrative expenses consist primarily of salary
and employee benefits, accounting and legal expenses, and
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.

We are planning on spending approximately $500,000 over the next
twelve months on implementing our business plan to expand sales of
our screwdriver products to the retail market. 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 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

                                8
<PAGE>

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 increased slightly to $401,760 for the three months
ended March 31, 2001 from $382,095 for the three months ended March
31, 2000.   We experienced in increase an revenues due in part to an
increase in sales of our products in the United States.  Revenues
from sales in the United States increased to $273,599 from $227,151
during this period, while revenues from sales in Canada decreased to
$128,161 from $154,944.  The increase in sales in the United States
was primarily attributable to increased orders from established
customers.  We also experienced revenues from new customers in the
United States.  The decrease in sales in Canada was primarily
attributable to a decrease in sales to Home Depot Canada.  We
withdrew sales of our screwdriver products to Home Depot Canada in
the first quarter of 2001.  We anticipate that Jore Corporation will
commence sales of screwdriver products incorporating our licensed
patented designs to Home Depot Canada during the second quarter of
2001.  Sales by Jore Corporation would be pursuant to a sub-license
agreement between ourselves and Jore Corporation.  We will earn
royalties from Jore Corporation from sales made to Home Depot
Canada, rather than earning sales revenue directly, if Jore
Corporation commences sales to Home Depot Canada.

Costs of Goods Sold
-------------------
Cost of goods sold increased to $265,777 for the three months ended
March 31, 2001 from $240,605 for the three months ended March 31,
2000.  The increase in cost of goods sold is attributable in part to
an increase in sales during the first quarter of 2001.  The increase
in our revenues did not exceed the increase in cost of goods sold
with the result that our gross profit decreased to $135,983 for the
three months ended March 31, 2001 from $141,490 for the three months
ended March 31, 2000, representing a decrease of $5,507.  Cost of
goods sold as a percentage of sales increased to 66.1% in the first
quarter of 2001 from 63.0% in the first quarter of 2000.  This
increase is attributable primarily due to an increase in assembling
and packaging costs.

General and Administrative Expenses
-----------------------------------
General and administrative expenses decreased to $131,286 for the
three months ended March 31, 2001 from $161,740 for the three
months ended March 31, 2000.  The decrease of $30,454 is the
primarily the result of a decrease in accounting and legal costs to
$14,720 for the three months ended March 31, 2001 from $46,296 for
the three months ended March 31, 2000.  We incurred higher
accounting and legal costs in the first quarter of 2000 due to
completion of our audited financial statements and the preparation
for our filing of a registration statement with the United States
Securities and Exchange Commission.  These audited financial
statements have been completed and our registration statement is
effective.  However, we will continue to incur accounting and legal
costs in connection with our being a reporting company under the
Securities Exchange Act of 1934.  Wages and benefits increased to
$82,609 for the three months ended March 31, 2001 from $75,267 for
the three months ended March 31, 2000.  We anticipate that wages
will be lower for the second quarter of 2001 as we reduced our
Surrey, British Columbia staff by two full time employees in the
first quarter of 2001.  This reduction will be offset in part by
increased staff costs attributable to the hiring of a new office
manager in the first quarter of 2001.

                                9
<PAGE>

Income Before Income Taxes
--------------------------
We earned income before income taxes in the amount of $9,890 for
the three months ended March 31, 2001, compared to a loss before
income taxes of $18,096 for the three months ended March 31, 2000.
The increase in earnings before income taxes in the amount of
$27,986 is primarily attributable to the decrease in our general
and administrative expenses in the amount of $30,544.

Income taxes (recoveries) were $7,652 (77.4% of earnings before
income taxes) in the first quarter of 2001 as compared to $(4,901)
(27.1% of loss before income taxes) in the first quarter of 2000.
Differences between the effective rate and the statutory rate
resulted from a valuation allowance provided for Canadian discounted
tax assets and permanent differences between accounting and taxable
income as a result of non-deductible expenses.

Net Income
----------
We earned income after income taxes in the amount of $2,238 for the
three months ended March 31, 2001, compared to a loss after income
taxes of $13,195 for the three months ended March 31, 2000.  The
increase in our net income in the amount of $15,433 is primarily
attributable to our decreased general and administrative expenses.


FINANCIAL CONDITION
----------------------------------------
Liquidity and Capital Resources
-------------------------------
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, to
fund business operations.

Our cash position was $19,734 on March 31, 2001, compared to
$40,559 on December 31, 2000.  Our working capital position was
$366,231 on March 31, 2001, compared to $361,172 on December 31,
2000.

Net cash provided by operating activities was $9,532 for the three
months ended March 31, 2001, compared to $37,677 for the three
months ended March 31, 2000.  The decrease in cash provided by
operating activities was primarily the result of a decrease in net
working capital assets during the three months ended March 31,
2001.  We incurred a decrease in our accounts receivable of $95,351
during the first three months of 2001 that was offset by a
reduction in our liabilities in the amount of $99,431, resulting in
a net decrease in cash of $4,080.  Our inventories increased
marginally during the first three months of 2001, resulting in a
further decrease in cash in the amount of $4,156.

Net cash used for investment activities was $7,572 for the three
months ended March 31, 2001 and $46,214 for the three months ended
March 31, 2000.  Net cash used in investment activities consists
primarily of property and equipment purchases.

Net cash used in financing activities was $22,921 for the three
months ended March 31, 2001, compared to net cash provided by
financing activities of $41,319 for the three months ended March
31, 2000. The increase in cash used in financing activities was
primarily attributable to the repayment of our bank indebtedness in
the amount of $20,187 during the three months ended March 31, 2001.
Cash used in financing activities for the three months ended March
31, 2000 was primarily attributable to sales of our common stock.

                                10
<PAGE>

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 $834 per month, plus interest at the bank's
funding rates, plus 1.5% per annum.  The principal amount of the
outstanding loan was $24,583 as at March 31, 2001, compared to
$27,509 as at December 31, 2000.  We also have a further loan with
the Bank of Montreal that is secured by the Company's vehicle.  The
principal amount of this outstanding loan was $10,886 as of March
31, 2000, compared to $12,484 as at December 31, 2000.  This loan
is payable on demand with an agreed upon repayment schedule
requiring payments of $347 per month, plus interest at the bank's
prime lending rates, plus 1.5% per annum.

Mr. Robert Jeffery, one of our shareholders, has advanced us
unsecured loans 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 $63,440 as at March 31, 2001,
compared to $66,689 as at December 31, 2000.

We did not complete any sales of our common stock during the first
three months of 2001.

Plan of Operations
------------------
We anticipate that we will require additional funding in the amount
of approximately $500,000 over the next twelve-month period in
connection with our planned expansion into the retail market.
These expenses will be comprised primarily of increased marketing
expenses and inventory acquisition costs.  If we are successful in
securing increased orders for the retail market, then we will be
required to substantially increase our inventory prior to
realization of sales.  This increase in inventory will require
additional funding in excess of cash provided from our current
operations.

We plan to finance our expansion into the retail market using both
revenues from existing operations and equity financings.  We
anticipate that funds from equity financings would be raised from
private placement sales of our common stock.

We believe that we have sufficient capital resources and liquidity
over both the short and long term to sustain our business
operations.  Our revenues from existing operations are sufficient
to cover our current costs of goods sold and general and
administrative expenses.  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 expansion, we will not proceed with the planned expansion.
 If we are only successful in raising a portion of the required
funds, then we will scale back our expenditures on the expansion to
stay within the funds available from the financing and our current
business operations.

We can provide no assurance that adequate funds from public or
private financings will be available when needed, or that, if
available, it will be offered on acceptable terms.  If we issue
additional shares of our common stock to raise funds, then our
existing shareholders will suffer dilution.  If we are unable to
sell additional shares of our common stock to raise additional
funds, our plan is to scale back our expansion into the retail
market.  If we are able to raise funds in excess of the budgeted
$500,000 expansion, then we may decide to increase our expenses in
completing our expansion to the retail market.

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.

New Accounting Pronouncements
-----------------------------
In June 1998, SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, was issued.  SFAS No. 133 requires
companies to recognize all derivative contracts as either assets or
liabilities on 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: (a) the changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk; or (b)
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.

Historically, we have not entered into derivative contracts either
to hedge existing risks or for speculative purposes.  Accordingly,
we do not expect adoption of the new standards on January 1, 2001
to affect our financial statements.

In 1999, the SEC issued Staff Accounting Bulletin No. 101 dealing
with revenue recognition which is effective in the fourth quarter
of 2000.  We adopted Staff Accounting Bulletin No. 101 in the
fourth quarter of 2000 with no material impact on our financial
statements.

RISK FACTORS
--------------------------------
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the
other information in this Form 10-QSB and any other filings we may
make with the United States Securities and Exchange Commission in
the future before investing in our common stock. If any of the
following risks occur, or if others occur, our business, operating
results and financial condition could be seriously harmed. The
trading price of our common stock could decline due to any of these
risks, and you may lose all or part of your investment.

If We Are Not Successful In Increasing Sales Of Our Screwdriver
Products To The Retail Market, Then We May Not Earn Sufficient
Revenues To Cover The Cost Of Our Expansion And Our Business And
Financial Condition May Be Harmed.
----------------------------------------------------------------
Currently, we earn approximately 80% of our revenues from sales of
our screwdriver products to the industrial and commercial tools
market.  We are planning significant growth in the sales of our
screwdriver products and the number of screwdriver products we
offer for sale.  Our planned business expansion contemplates
increasing sales of our screwdriver products to the retail tools
market as we estimate that the retail tools market is approximately
ten times the size of the industrial and commercial tools market.
This planned growth will require us to hire additional personnel,
increase our production capacity, and generally expand our business
operations.  This expansion will result in our operating costs
increasing.  If we are not successful in increasing our sales to
the retail tool market in an amount that exceeds our increased
operating costs, then our business will be harmed.  In addition,
continued growth could strain our management, production,
engineering, financial and other resources.  Any failure to manage
this expansion could have a materially adverse effect on our
business financial condition and results of operations, such as an
increase in expenses or a decrease in profit margins and net
income.

If We Lose Any Of Our Large Customers, Our Revenues Could
Substantially Decrease.
-----------------------------------------------------------------
                                12
<PAGE>

Most of our sales of screwdriver products are derived from a small
number of customers.  Sales to Cully Enterprises, our largest
customer, accounted for 16.3% of our net revenues in 2000, 18.3% of
our net revenues in 1999 and 23.0% of our net revenues in 1998.  A
significant decrease in sales to, or the loss of, any of our major
customers would have a material adverse effect on our business
prospects, operating results and financial condition, such as a
substantial decline in revenues.

If We Fail To Develop New Distribution Channels, Then Our Revenue
Growth May Be Diminished And Our Business And Financial Condition
May Be Harmed.
-----------------------------------------------------------------
We cannot ensure that we will be able to develop new distribution
channels that will be required to penetrate the retail market or
that this growth strategy will be implemented successfully. Our
growth depends on our ability to develop new distribution channels
in order to sell our product in the retail market.  The challenges
that we face in developing new distribution channels will include:

- Establishing retail consumer recognition of our products;

- Establishing new distribution arrangements with experienced
distributors in the retail market;

- Managing existing relationships with our current distributors;

- Displacing relationships that potential new distributors have
with current product vendors.

Our failure to develop new distribution channels and our inability
to penetrate the retail market and generate future revenues will
have a material adverse effect on our business prospects, operating
results and financial condition.

If We Lose Our President, Mr. Neil Morgan, Our Ability To Manage
Our Business Could Be Adversely Impacted And Our Business And
Financial Condition May Be Harmed.
------------------------------------------------------------------
Our performance and future success depends to a significant extent
on our senior management and technical personnel; in particular the
experience and continued efforts of Mr. Neil Morgan, the Company's
founder, President and Chief Executive Officer.  The loss of Mr.
Morgan could have a material adverse effect on our business
prospects.  To reduce our risk from this potential loss of Mr.
Morgan, we maintain key-man type life insurance for him in the
amount of CDN$1,500,000.  We presently do not have an employment
agreement with Mr. Morgan.

As We Do Not Have Any Long Term Agreements With Our Manufacturers,
Our Business May Be Interrupted And Revenues Lost In The Event That
We Are Not Able To Use Our Current Manufacturers To Manufacture Our
Screwdriver Products.
-------------------------------------------------------------------
We do not manufacture the components used to make our screwdriver
products.  We rely on outside manufacturers for the manufacture of
each component of our screwdriver products and the assembly of our
screwdriver products.  We do not have long term manufacturing
agreements with any of our manufacturers.  In addition, our license
agreement with Winsire Enterprises Corporation requires that we use
one of two designated manufacturers for the manufacture of the
patented cartridge designs.  If we are not able to maintain our
relationships with our current manufacturers, or if our current
manufacturers increase their cost of manufacturing the components
comprising our screwdriver products, then our business prospects,
operating results and financial condition may be harmed as a result
of any increased costs or business disruption which we incur as a
result of establishing new manufacturing relationships.

Our Inability To Obtain Acceptance Of Our New Products In The
Marketplace Could

                                13
<PAGE>

Adversely Affect Our Ability To Generate New Revenues And New
Customers.
------------------------------------------------------------------
We are in the process of developing new products that are
variations of our current line of screwdriver products.  Our future
success will depend in part on our continuous and timely
development and introduction of these new products into the market.
We can provide no assurance that our distributors will accept our
new products or that they will obtain market acceptance by the
ultimate purchasers.  Acceptance of our new products will depend
on:

- products introduced by our competitors;
- the success of our marketing efforts;
- our success in establishing distributors for our new products;
and
- the functionality, quality and pricing of our new products.

If we are not successful in achieving market acceptance of our new
products, then our business prospects, financial condition and
operating results will be harmed as a result of the increased costs
we will incur in developing these products and our inability to
generate increased revenues from their sale.

We Face Competition In The Screwdriver Product Market That Could
Adversely Affect Our Sales.
----------------------------------------------------------------
The screwdriver product market in which we compete is a mature and
highly competitive market.  Our competition includes many companies
that have significantly greater financial, technical,
manufacturing, sales and marketing resources than we do.  These
competitors offer products that are similar to our screwdriver
products, or are different products with similar functionalities.
We have designed our screwdriver products to offer functionality,
ease of use and performance that exceeds the functionality, ease of
use and performance of products offered by our competitors.
However, we can provide investors with no assurance that we will be
able to compete with our competitors, particularly in view of the
fact that many of our competitors own well-known brands, enjoy a
large end-user base, have established distribution relationships
and long-standing customer relationships. Our failure to compete
successfully against our current or future competitors would have a
material adverse effect on our business, operating results and
financial condition, including loss of customers, decline in
revenues and loss of market share.

If We Are Unable To Obtain Raw Materials Or Components Of Our
Products At Our Current Prices, Then Our Manufacturing Capability
And results Of Operation Will Be Adversely Affected.
-----------------------------------------------------------------
We purchase raw materials and key components of our screwdriver
products from third party vendors.  Although there are alternative
sources for many of the raw materials and components, we could
experience manufacturing and shipping delays if it became necessary
to replace current suppliers or manufacturers.  In addition, the
prices of raw materials supplied by certain vendors are subject to
a number of factors including general economic conditions,
competition, labor costs and general supply levels.  Our inability
to obtain reliable and timely supplies of raw materials and
components on a cost-effective basis, or an unanticipated change in
suppliers or manufacturers could have a material adverse effect on
our ability to manufacture our screwdriver products and our
revenues and profitability.

If The Patent Protection Of Our Screwdriver Design Is Lost, Our
Business And Financial Condition May Be Harmed.
---------------------------------------------------------------
Our ability to generate revenues and to maintain our competitive
position depends in part on the

                                14
<PAGE>

ability of Winsire Enterprises Corporation to maintain patent
protection for the cartridge design of our screwdriver products.
These patents expire in the Year 2012 in the United States and in
the Year 2012 in Canada.  We can provide no assurance to investors
that the patent we licensed will not be challenged, invalidated, or
circumvented by other manufacturers in the future.

If We Are Found Liable In A Product Liability Lawsuit Arising From
The Use Of Our Screwdriver Products, Our Business And Financial
Condition May Be Harmed.
------------------------------------------------------------------
We face potential risk of product liability claims because our
screwdriver products are used in activities where injury may occur,
including in the building and construction industries.  Although we
do have product liability insurance coverage, we cannot be certain
that this insurance will adequately cover all product liability
claims or that we will be able to maintain this insurance at a
reasonable cost and on reasonable terms.  If we are found liable
for damages with respect to a product liability claim and our
insurance coverage is inadequate to satisfy the claim, then our
business, operating results and financial condition could be
materially and adversely affected.

If We Issue Additional Shares Of Our Common Stock In Order To Raise
Additional Capital, Shareholder's Interests In The Company Will Be
Diluted.
------------------------------------------------------------------
We anticipate that we will be required to raise additional equity
and debt capital in order to continue our current level of
operations and to expand our business operations.  We have no
additional equity or debt financing currently in place.  Financings
may not be available to us when needed for our expansion or, if
available, may be on unfavorable terms.  We anticipate that any
additional equity financing will result in dilution to existing
shareholders.  If we are unable to obtain additional financing,
then we anticipate that we will not be able to complete our
business expansion as projected.  This inability to expand will
most likely have a material adverse effect on our business,
operating results and financial condition.

Because There Is No Market For Our Common Stock, Our Stock Will Be
Difficult To Sell, And If A Market For Our Common Stock Develops,
Then Our Stock Price May Be Volatile.
------------------------------------------------------------------
There is no market for our common stock and we can provide
investors with no assurance that a market will develop.  If a
market develops, we anticipate that the market price of our common
stock will be subject to wide fluctuations in response to several
factors, including:

1.    actual or anticipated variations in our results of operations;
2.    our ability or inability to generate new revenues;
3.    increased competition; and
4.    conditions and trends in the general economy and the
      industrial tools markets.

Further, we anticipate that our common stock may be traded in the
future on the NASD over the counter bulletin board.  Companies
traded on the bulletin board have traditionally experienced extreme
price and volume fluctuations.  We can provide no assurance that
our common stock will be traded on the over the counter bulletin
board.  If our common stock is traded on the bulletin board, our
stock price may be adversely impacted by factors that are unrelated
or disproportionate to our operating performance.

Because A Portion Of Our Operating Expenses And Revenues Are In
Canadian Dollars, Our Financial Results And Operating Condition May
Be Impacted By Currency Fluctuations In The Canadian Dollar In
Comparison To The U.S. Dollar.
-------------------------------------------------------------------
Our reporting currency is the U.S. dollar.  Approximately 81.6% of
our operating expenses are

                                15
<PAGE>

incurred in Canadian dollars, as our principal executive office is
located in Surrey, British Columbia, Canada.  In addition,
approximately 45.9 % of our revenues are earned from sales of our
screwdriver products in Canada in Canadian dollars.  Accordingly, our
financial results and operating condition will be affected by currency
fluctuations in the Canadian dollar in comparison to the U.S. dollars.


PART II - OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings

    None

Item 2. Changes in Securities

    None

Item 3. Defaults upon Senior Securities

    None

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

    None

Item 5. Other Information

    None

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

EXHIBITS

    None

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
authorized.

MEGAPRO TOOLS INC.

Date:    May 14, 2001


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