<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  September  30,  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 Identification No.)
incorporation or organization)


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

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

                                 NOT APPLICABLE
          -------------------------------------------------------------------
          (Former  name,  former  address  and  former  fiscal  nine  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:  6,847,100 shares of common stock,
$0.001  par  value  outstanding  as  of  November  5,  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  nine  months  ended  September  30,  2001  are not
necessarily  indicative  of the results that can be expected for the year ending
December  31,  2001.


<PAGE>
=============================================================================
<TABLE>
<CAPTION>
                                                      Megapro  Tools,  Inc.
                                        Consolidated Interim Balance Sheets
                                                     (Stated in U.S. Funds)

                                                September 30,    December 31,
                                                        2001            2000
-----------------------------------------------------------------------------
                                                 (Unaudited)       (Audited)
-----------------------------------------------------------------------------
<S>                                             <C>             <C>

Assets

Current
  Cash                                          $    16,759     $    40,559
  Accounts receivable                               151,384         339,850
  Income taxes refundable                            17,996          17,996
  Inventories                                       382,356         315,825
  Prepaid expenses                                   29,622           5,220
                                                -----------------------------
                                                    598,117         719,450

Fixed Assets                                        215,586         234,542

Deferred Income Taxes                                65,618          67,622
                                                -----------------------------
                                                $   879,321     $ 1,021,614
=============================================================================

Liabilities And Stockholders' Equity

Current
  Bank indebtedness                             $    16,556     $    20,109
  Accounts payable                                  207,926         241,224
  Accrued liabilities                                20,275          56,952
  Current portion of loans and notes
    payable (Note 4)                                 31,676          39,993
                                                -----------------------------
                                                    276,433         358,278
Long-Term Debt
  Loans and notes payable (Note 4)                   60,184          66,689
                                                -----------------------------
                                                    336,617         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         (26,339)        (14,611)
  Retained earnings                                 201,085         243,300
                                                -----------------------------
                                                    542,704         596,647
                                                -----------------------------
                                                $   879,321     $ 1,021,614
</TABLE>
=============================================================================


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


<PAGE>

=============================================================================
<TABLE>
<CAPTION>
                                                      Megapro  Tools,  Inc.
                                Consolidated Interim Statements of Operations
                                                       (Stated in U.S. Funds)
                                                                  (Unaudited)

                                 Three Months Ended        Nine Months Ended
                                Septem-      Septem-      Septem-      Septem-
                                ber  30,     ber  30,     ber  30,     ber  30,
                                   2001         2000         2001         2000
-------------------------------------------------------------------------------
<S>                           <C>          <C>          <C>          <C>
Sales                         $  252,686   $  365,175   $  958,620   $1,038,773

Cost of Goods Sold               157,126      238,457      651,357      665,537
                              -------------------------------------------------

Gross Profit                      95,560      126,718      307,263      373,236
                              -------------------------------------------------

Expenses
  Accounting and legal            17,260       36,601       48,934      129,161
  Automotive                         939        1,868        4,739        5,301
  Bad debts (recovery)              (168)        (166)         306          696
  Commissions                      4,100        4,278       14,848       17,414
  Depreciation                     6,503        4,449       19,219       19,468
  Insurance                        2,413        3,401        7,137        7,767
  Office and miscellaneous         1,544        3,566       11,331       11,243
  Property taxes                     766          767        2,458        2,480
  Repairs and maintenance            483           26        1,462        1,497
  Travel and promotion            11,422       39,925       37,636       75,341
  Utilities                        1,852        1,839        5,593        7,467
  Wages and benefits              68,993       82,142      218,541      278,888
                              -------------------------------------------------
                                 116,107      178,696      372,204      556,723
                              -------------------------------------------------
Operating Loss                   (20,547)     (51,978)     (64,941)    (183,487)
                              -------------------------------------------------
Other Income (Expense)
  Royalties (net)                 11,769       16,981       21,548       27,417
  Rental                           1,457            -        4,472            -
  Gain (loss) on sale
    of fixed assets                5,713       (2,783)       5,713       (2,783)
  Interest and bank charges       (3,106)      (4,241)      (9,262)     (11,751)
                              -------------------------------------------------
                                  15,833        9,957       22,471       12,883
                              -------------------------------------------------
Loss Before Income Taxes          (4,714)     (42,021)     (42,470)    (170,604)
                              -------------------------------------------------

Income Tax Expense (Benefit)
  Current                              -      (10,973)           -            -
  Deferred                         9,723      (14,076)        (255)     (69,616)
                              -------------------------------------------------
                                   9,723      (25,049)        (255)     (69,616)
                              -------------------------------------------------
Net Loss For The Period       $  (14,437)  $  (16,972)  $  (42,215)  $ (100,988)
===============================================================================

Basic and Diluted Loss
  per share                   $   (0.002)  $   (0.003)  $   (0.006)  $   (0.015)
                              =================================================
Weighted Average Shares
  Outstanding                  6,847,100    6,761,111    6,847,100    6,761,111
                              =================================================
</TABLE>


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


<PAGE>


================================================================================
<TABLE>
<CAPTION>
                                                           Megapro  Tools,  Inc.
              Consolidated Interim Statements of Changes in Stockholders' Equity
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
--------------------------------------------------------------------------------

                                                  Accumulated
                                     Addi-            Other               Total
                                    tional Deferred   Compre-             Stock-
                  Common Stock     Paid-In  Compen-  hensive  Retained  holders'
                Shares    Amount   Capital  sation    Loss    Earnings   Equity
              ------------------------------------------------------------------
<S>           <C>        <C>      <C>      <C>       <C>       <C>      <C>
Balance,
January 1,
 2001         6,847,100  $ 6,847  $364,528 $ (3,417) $(14,611) $243,300 $596,647
Deferred
 compensation
 Unvested Stock
 Options Expired      -        -   (3,417)    3,417         -         -        -
              ------------------------------------------------------------------

              6,847,100    6,847   361,111        -   (14,611)  243,300  596,647
              ------------------------------------------------------------------

Foreign currency
 adjustment           -        -         -        -   (11,728)       -  (11,728)
Net loss for
 the period           -        -         -        -         -  (42,215) (42,215)
              ------------------------------------------------------------------

Comprehensive loss
 for the period       -        -         -        -   (11,728) (42,215) (53,943)
              ------------------------------------------------------------------

Balance,
 September
 30, 2001     6,847,100  $ 6,847  $361,111   $    -  $(26,339) $201,085 $542,704
================================================================================

</TABLE>


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


<PAGE>

================================================================================
<TABLE>
<CAPTION>
                                                           Megapro  Tools,  Inc.
                     Consolidated Interim Statements of Statements of Cash Flows
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
--------------------------------------------------------------------------------

                                 Three Months Ended        Nine Months Ended
                                Septem-      Septem-      Septem-      Septem-
                                ber  30,     ber  30,     ber  30,     ber  30,
                                   2001         2000         2001         2000
-------------------------------------------------------------------------------
<S>                          <C>          <C>          <C>          <C>
Cash provided by (used in)
Operating Activities
  Net loss for the period    $  (14,437)  $  (16,972)  $  (42,215)  $ (100,988)
  Items not involving cash
    Depreciation                  6,503        4,449       19,219       19,468
  (Gain) loss on sale of
    fixed assets                 (5,713)       2,783       (5,713)       2,783
  Amortization of deferred
    compensation cost                 -        8,333            -       32,833
  Deferred income taxes           9,723      (14,076)        (255)     (69,616)
  (Increase) decrease in assets
  Accounts receivable           (10,775)     (29,615)     182,674      155,521
  Income taxes refundable             -         (110)           -        5,564
  Inventory                    (114,690)      31,023      (70,894)     (70,089)
  Prepaid expenses               13,182       13,391      (24,567)      (3,089)
  Increase (decrease) in
    liabilities
  Accounts payable               64,662      (61,398)     (31,262)     (81,906)
  Accrued liabilities             5,128        2,498      (35,415)         143
  Income taxes payable                -      (10,883)           -            -
                             --------------------------------------------------
                                (46,417)     (70,577)      (8,428)    (109,376)
                             --------------------------------------------------

Investing Activity
  Proceeds on sale of fixed
    assets                       18,526            -       18,526            -
  Purchase of fixed assets         (148)     (12,948)     (21,799)     (68,312)
                             --------------------------------------------------
                                 18,378      (12,948)      (3,273)     (68,312)
                             --------------------------------------------------

Financing Activities
  Increase (decrease) in
    bank indebtedness               983       31,125       (2,919)      31,125
  Repayment of loans                445       (3,557)      (6,481)     (18,595)
  Repayment of notes payable         11           69       (3,250)     (20,382)
  Share capital issued                -            -            -      181,600
                             --------------------------------------------------
                                  1,439       27,637      (12,650)     173,748
                             --------------------------------------------------

Decrease In Cash During
  the period                    (26,600)     (55,888)     (24,351)      (3,940)
Effect of Foreign Currency
  on cash                          (737)      (2,236)         551       (8,490)
Cash, beginning of period        44,096       69,601       40,559       23,907
                             --------------------------------------------------
Cash, end of period          $   16,759   $   11,477   $   16,759   $   11,477
===============================================================================

Supplemental Information
  Interest paid              $    2,452   $    3,179   $    9,045   $    9,476
  Income taxes received               -          (96)           -       (5,674)
  Stock options issued                -            -            -       39,000
===============================================================================
</TABLE>

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


<PAGE>

===============================================================================

                                                             Megapro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
September  30,  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  United  States  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 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. The Company believes the accompanying
unaudited  consolidated  interim  financial  statements  contain all adjustments
(consisting of only those which are normal and recurring in nature) necessary to
present  fairly,  the financial position of the company as of September 30, 2001
and  the  results  of operations and cash flows for the periods ending September
30,  2001  and  2000,  respectively.



<PAGE>

===============================================================================
<TABLE>
<CAPTION>
                                                             Megapro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
September  30,  2001
-------------------------------------------------------------------------------

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 segments
and a  reconciliation  of  segment  profit  to  net  income:


                                 Three Months Ended        Nine Months Ended
                                Septem-      Septem-      Septem-      Septem-
                                ber  30,     ber  30,     ber  30,     ber  30,
                                   2001         2000         2001         2000
                             --------------------------------------------------
<S>                          <C>          <C>          <C>          <C>
United States:
  Assets                     $   584,982  $   540,104  $   584,982  $   540,104
  Sales                          176,451      223,856      632,839      624,477
  Capital expenditures              (343)      10,295         (343)      48,620
  Depreciation                     1,898        1,669        5,700        3,420
                             ==================================================

  Gross profit               $    68,054  $    83,076  $   227,440  $   233,912
  Corporate expense               38,384      108,966      225,716      346,897
  Other income                   (16,296)     (14,975)     (20,974)     (21,895)
                             --------------------------------------------------

  Segment income (loss)
    before income taxes           45,966      (10,915)      22,698      (91,090)
  Income taxes (recovery)         11,734       (2,296)       2,005      (36,632)
                             --------------------------------------------------

Segment net income (loss)    $    34,232  $    (8,619) $    20,693  $   (54,458)
                             ==================================================


Canada:
  Assets                     $   294,339  $   454,386  $   294,339  $   454,386
  Sales                           76,235      141,319      325,781      414,296
  Capital expenditures               195        2,653       22,142       19,692
  Depreciation                     4,605        2,780       13,519       16,048
                             ==================================================

  Gross profit               $    27,506  $    43,642  $    79,823  $   139,324
  Corporate expenses (net)        77,723       69,730      146,488      209,826
  Other (income) expense             463        5,018       (1,497)       9,012
                             --------------------------------------------------

  Segment income (loss) before
    income taxes             $   (50,680) $   (31,106)     (65,168)     (79,514)
  Income tax recovery             (2,011)     (22,753)      (2,260)     (32,984)
                             --------------------------------------------------

Segment net loss             $   (48,669) $    (8,353) $   (62,908) $   (46,530)
                             ==================================================
</TABLE>



<PAGE>


===============================================================================
<TABLE>
<CAPTION>
                                                             Megapro Tools, Inc.
                              Notes to Consolidated Interim Financial Statements
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
September  30,  2001
-------------------------------------------------------------------------------

3.     Segmented  Information  (continued)


                                 Three Months Ended        Nine Months Ended
                                Septem-      Septem-      Septem-      Septem-
                                ber  30,     ber  30,     ber  30,     ber  30,
                                   2001         2000         2001         2000
-------------------------------------------------------------------------------
Total:
<S>                          <C>          <C>          <C>          <C>
  Assets                     $   879,321  $   994,490  $   879,321  $   994,490
  Sales                          252,686      365,175      958,620    1,038,773
  Capital expenditures              (148)      12,948       21,799       68,312
  Depreciation                     6,503        4,449       19,219       19,468
                             ==================================================

  Gross profit               $    95,560  $   126,718  $   307,263  $   373,236
  Corporate expenses             116,107      178,696      372,204      556,723
  Other income                   (15,833)      (9,957)     (22,471)     (12,883)
                             --------------------------------------------------

  Loss before income taxes        (4,714)     (42,021)     (42,470)    (170,604)
  Income taxes (recovery)          9,723      (25,049)        (255)     (69,616)
                             --------------------------------------------------

  Net loss                   $   (14,437) $   (16,972) $   (42,215) $  (100,988)
                             ==================================================


                                           September 30,          December 31,
                                                   2001                  2000
                                           ------------------------------------
Fixed Assets And Other Assets:
  Canada                                  $     163,546          $     176,460
  U.S                                            52,040                 58,082
                                           ------------------------------------

                                          $     215,586          $     234,542
                                           ====================================
</TABLE>




<PAGE>

===============================================================================
<TABLE>
<CAPTION>
                                                             Megapro Tools, Inc.
                                      Notes to Consolidated Financial Statements
                                                          (Stated in U.S. Funds)
                                                                     (Unaudited)
September  30,  2001
-------------------------------------------------------------------------------

4.     Loans  And  Notes  Payable

                                                    September 30,   December 31,
                                                            2001           2000
                                                    ----------------------------
<S>                                                <C>            <C>
Payable to a stockholder of the Company, unsecured,
  with quarterly payments of interest only at
  10.25% per annum, matures October 1, 2002        $     60,184   $     66,689

Bank of Montreal, collaterialized by a collateral
  first mortgage on the Company's real estate,
  repayable $792 monthly plus interest at bank
  prime lending rates plus 1.5% per annum, due on
  demand with an agreed upon repayment schedule          31,676         27,509

Bank of Montreal, repaid during 2001                          -         12,484
                                                    ----------------------------

                                                          91,860        106,682
Less current portion                                      31,676         39,993
                                                    ----------------------------
                                                    $     60,184   $     66,689
                                                    ============================
</Table>

<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,
labour, 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. This expansion will include the launch of our new "Multi Q-C"
quick-connect  screwdriver  and  our "Power2Bits" double ended screwdriver 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.


                                      10

<Page>

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 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 slightly to $958,620 for the nine months ended September
30,  2001  from  $1,038,773  for  the nine months ended September 30, 2000.   We
experienced  a  decrease in revenues primarily due to a decrease in sales of our
products  in  Canada.  Revenues  from  sales  in  the United States increased to
$632,839  from  $624,477 during this period, while revenues from sales in Canada
decreased  to  $325,781  from  $414,296.  While  we  experienced  an increase in
customers  in the United States, we experienced an off-setting decrease in sales
to  established  customers  that  we  consider  is  attributable  to the general
economic  slow-down.  The  decrease  in  sales  in  Canada was attributable to a
decrease  in  sales  to Home Depot Canada and to a general economic slow-down in
Canada.  We  withdrew  sales of our screwdriver products to Home Depot Canada in
the  third  quarter  of  2001.  We  are  attempting  to  increase  revenue in by
launching  additional  products,  including  our  "Multi  Q-C"  screwdriver
incorporating  a  quick-connect  coupler  and  our  "Power2Bits"  double  ended
screwdriver  bits  with  grooves  for  power tools.   Any increased revenue from
these new products would not be realized until the first quarter of 2002.  There
is  no  assurance  that these additional products will enable us to increase our
revenues.  We  anticipate  that  we will not earn any revenues during the fourth
quarter  from  sales  by  Jore Corporation due to the fact that Jore Corporation
remains  in  Chapter  11  bankruptcy  proceedings  at  present.

Costs  of  Goods  Sold

Cost  of  goods  sold decreased marginally to $651,357 for the nine months ended
September  30,  2001 from $665,537 for the nine months ended September 30, 2000.
The  decrease  in  cost  of  goods sold is attributable in part to a decrease in
sales  during  the third quarter of 2001.  The decrease in our revenues exceeded
the  decrease  in  our costs of goods sold with the result that our gross profit
decreased to $307,263 for the nine months ended September 30, 2001 from $373,238
for  the  nine  months  ended  September  30,  2000,  representing a decrease of
$65,975.  Cost of goods sold as a percentage of sales increased to 67.9% for the
nine  months  ended  September  30,  2001  from  64.1% for the nine months ended
September  30, 2000.  This increase is attributable primarily due to an increase
in  assembling  and packaging costs.  This increase has resulted as we have been
imprinting  drivers  for  more  of our customers and we have been absorbing this
cost.  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.

General  and  Administrative  Expenses

General  and  administrative  expenses decreased to $372,204 for the nine months
ended  September  30, 2001 from $556,723 for the nine months ended September 30,
2000,  representing  a  decrease  of  $184,519.  The  largest  component  of the
decrease  in  general  and administrative expenses is the decrease in accounting
and  legal  costs  to  $48,934 for the nine months ended September 30, 2001 from
$129,161  for  the nine months ended September 30, 2000, representing a decrease
of  $80,227.  We  incurred  higher  accounting and legal costs in the first nine
months  of  2000  due  to

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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  continue  to  incur
accounting  and  legal  costs  in  connection with our being a reporting company
under  the  Securities Exchange Act of 1934. The second largest component of the
decrease  in  general  and  administrative  expenses was a decrease in wages and
benefits  paid.  Wages  and  benefits  were  $218,541  for the nine months ended
September  30, 2001 compared to $278,888 for the nine months ended September 30,
2000,  representing a decrease in wages in benefits of $60,347. The reduction in
wages and benefits was the result of a reduction to our Surrey, British Columbia
staff  by two full time employees in the second quarter 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. We
anticipate that our expenses will increase during the fourth quarter of 2001 and
the  first  quarter of 2002 as we undertake the product launch of our new "Multi
Q-C"  screwdriver  and  "Power2Bits"  screwdriver  bits.

Income  Before  Income  Taxes

We  incurred  a  loss  before income taxes in the amount of $42,470 for the nine
months  ended  September  30,  2001,  compared  to a loss before income taxes of
$170,604  for the nine months ended September 30, 2000. The decrease in our loss
before  income  taxes in the amount of $128,134 is primarily attributable to the
decrease  in  our general and administrative expenses in the amount of $184,519,
net  of  the  decrease  in  our  gross  profit  of  $65,973.

Income  Tax  Recoveries

Income  taxes  recoveries  were  $255  (0.6% of loss before income taxes) in the
third quarter of 2001 as compared to $69,616 (40.8% of loss before income taxes)
in  the  third  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  incurred  a  loss  after  income taxes in the amount of $42,215 for the nine
months  ended  September  30,  2001,  compared  to  a loss after income taxes of
$100,988  for the nine months ended September 30, 2000.  The decrease in our net
loss in the amount of $58,773 is primarily attributable to our decreased general
and  administrative  expenses,  net  of  the  decrease  to  our  gross  profit.

FINANCIAL  CONDITION

Liquidity  and  Capital  Resources

Our  cash  position  was  $16,759  on September 30, 2001, compared to $40,559 on
December  31,  2000.  Our working capital position was $321,684 on September 30,
2001,  compared  to  $361,172  on  December  31,  2000.

Net  cash  used  in  operating  activities  was $8,428 for the nine months ended
September  30,  2001,  compared  to  net  cash  used  in operating activities of
$109,376  for  the  nine  months ended September 30, 2000.  The decrease in cash
used  by operating activities was primarily the result of a decrease in net loss
to  $42,215 for the nine months ended September 30, 2001, compared to a net loss
of  $100,988  for  the  nine  months  ended  September  30,  2000.

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Net  cash  used  for  investment activities was $3,273 for the nine months ended
September  30,  2001 compared to $68,312 for the nine months ended September 30,
2000.  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 $12,650 for the nine months ended
September  30,  2001,  compared  to net cash provided by financing activities of
$173,748  for  the  nine  months  ended  September  30,  2000.  The cash used in
financing  activities  was  attributable to the repayment of current portions of
our  current long term indebtedness, including our bank indebtedness, during the
nine months ended September 30, 2001.  Cash provided by financing activities for
the  nine months ended September 30, 2000 was primarily attributable to sales of
our  common  stock.

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
$792  per month, plus interest at the bank's funding rates, plus 1.5% per annum.
The  principal  amount  of  the outstanding loan was $31,676 as at September 30,
2001,  compared  to  $27,509  as at December 31, 2000.  We repaid a further loan
with  the  Bank of Montreal that was secured by the Company's vehicle during the
third  quarter.  The principal amount of this outstanding loan was $12,484 as at
December  31,  2000  and  has  been  repaid  in  full.

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 $60,184 as at
September  30,  2001,  compared  to  $66,689  as  at  December  31,  2000.

We  did  not complete any sales of our common stock during the first nine 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 and our new product launches.  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 and our new product
launches 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

                                      13
<Page>

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.


                                      14

<Page>

PART  II  -  OTHER  INFORMATION

Item  1.  Legal  Proceedings

     None

Item  2.  Changes  in  Securities

We granted options to purchase an aggregate of 50,000 shares of our common stock
to  two  of  our employees on October 16, 2003.  Each option is exercisable at a
price  of $1.50 US per share for a two year term expiring October 16, 2003.  The
options  vest  as follows: (i) 25% upon grant; (ii) 25% on April 16, 2002; (iii)
25%  on  October  16,  2002;  and  (iv) 25% on April 16, 2003.  All options were
granted  under  our  2001  stock  option  plan.


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

Exhibit  99.1     Risk  Factors


REPORTS  ON  FORM  8-K

     None



<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:     November  9  ,  2001


MEGAPRO  TOOLS  INC.


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