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

                                   FORM 10-QSB

(Mark One)
[x]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 for the quarterly period ended JUNE 30, 2001

[  ]  TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 for the Transition Period from _____________ TO _____________.

                                     0-28163
                            (Commission File Numbers)

                               Cirus Telecom, Inc.
             (Exact name of registrant as specified in its charter)

               Delaware                                      7379
     (State or other jurisdiction of               (Primary Standard Industrial
     incorporation or organization)                 Classification Code Number)


                   43-06 Main Street, Flushing, New York 11355
                    (Address of principal executive offices)

                                 (718) 762-3115
              (Registrants' telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES [ X ] NO[ ]

         As of June 30, 2001, there were 61,960,890 shares of Common Stock, par
value $.0001 per share, issued and outstanding.


<PAGE>

                                     PART I
                                     ------

                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                    CONTENTS



Consolidated balance sheet (unaudited) at June 30, 2001
and December 31, 2000                                                   3

Consolidated statements of operations and comprehensive
income (loss) (unaudited) for the three months ended June 30,
2001 and for the period December 11, 2000 (date of inception)
to June 30, 2001                                                        4

Consolidated statement of stockholders' equity (unaudited) for
the period from December 11, 2000 (date of inception)
to June 30, 2001                                                        5

Consolidated statements of cash flows (unaudited) for the three
months ended June 30, 2001 and for the period December 11, 2000
(date of inception) to June 30, 2001                                    6 - 7

Notes to consolidated financial statements                              8 - 14



                                       2
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                      (FORMERLY CAPITAL ONE VENTURES CORP.)
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                     ASSETS
                                     ------


                                                                      June 30, 2001        December 31, 2000
                                                                      -------------        ------------------
<S>                                                                    <C>                    <C>
Current assets:
    Cash                                                               $   155,935            $        --
    Accounts receivable - net                                            1,188,083                     --
    Prepaid expenses                                                       414,208                     --
                                                                       -----------            -----------
         Total current assets                                            1,758,226                     --
                                                                       -----------            -----------

Property and equipment - net                                               300,607                     --
                                                                       -----------            -----------

Other assets                                                                41,400                     --
                                                                       -----------            -----------
         Total assets                                                  $ 2,100,233            $        --
                                                                       ===========            ===========


               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
               -------------------------------------------------

Current liabilities:
    Accounts payable and accrued expenses                              $ 1,087,920            $        --
    Due to stockholder                                                          --                 15,712
    Capital lease payable                                                  116,119                     --
                                                                       -----------            -----------
         Total current liabilities                                       1,204,039                 15,712
                                                                       -----------            -----------

Commitments and contingencies (Note 7)                                          --                     --
                                                                       -----------            -----------
Stockholders' equity (deficiency):
    Preferred stock  - $0.0001 par value 5,000,000 authorized,
         925 shares issued and outstanding                                      --                     --
    Common stock - $0.0001 and $ .001 par value, respectively,
    100,000,000 shares authorized, 61,401,824 and 1,000
    shares issued and outstanding, respectively                              6,140                      1
    Additional paid-in capital                                           1,483,645                     99
    Stock subscription receivable                                               --                   (100)
    Accumulated deficit                                                   (593,337)
                                                                                                  (15,712)
    Accumulated other comprehensive loss                                      (254)                    --
                                                                       -----------            -----------

         Total stockholders' equity (deficiency)                           896,194                (15,712)
                                                                       -----------            -----------

Total liabilities and stockholders' equity (deficiency)                $ 2,100,233            $        --
                                                                       ===========            ===========
</TABLE>




     See accompanying notes to consolidated financial statements (unaudited)


                                       3
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                      (FORMERLY CAPITAL ONE VENTURES CORP.)
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                  FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             For the period
                                                   For the three            December 11, 2000
                                                   months ended            (date of inception)
                                                   June 30, 2001            to June 30, 2001
                                                   -------------            ------------------
<S>                                                <C>                       <C>
Income:
    Sales - related party                          $  1,189,620              $  1,189,620
    Sales                                               216,501                   216,501
                                                   ------------              ------------
         Total income                                 1,406,121                 1,406,121
                                                   ------------              ------------

Cost of sales:
    Cost of sales                                     1,237,457                 1,237,457
    Cost of sales - related party                        68,960                    68,960
                                                   ------------              ------------
         Total cost of sales                          1,306,417                 1,306,417
                                                   ------------              ------------

Gross profit                                             99,704                    99,704

Expenses:
    General and administrative                           77,849                   582,077
                                                   ------------              ------------

Income (loss) before other income
    and provision for income taxes                       21,855                  (482,373)
                                                   ------------              ------------
Other income (expenses):
    Interest income                                       2,141                     5,914
    Interest expense                                     (2,605)                   (2,605)
                                                   ------------              ------------

         Total other income (expense)                      (464)                    3,309
                                                   ------------              ------------


Income (loss) before provision for income taxes          21,391                  (479,064)

Provision for income taxes                                   --                        --
                                                   ------------              ------------

Net income (loss)                                        21,391                  (479,064)

Unrealized loss on foreign currency translation             (64)                     (254)
                                                   ------------              ------------

Comprehensive net income (loss)                          21,327                  (479,318)

Dividends accreted on redeemable convertible
  preferred stock                                       (71,123)                 (114,273)
                                                   ------------              ------------

Net loss attributable to common stockholders       $    (49,796)             $   (593,591)
                                                   ============              ============

Income (loss) per share:
    Basic                                          $         --              $       (.01)
                                                   ============              ============

    Diluted                                        $         --              $       (.01)
                                                   ============              ============

Weighted average number of
 common shares outstanding
    Basic                                            61,096,879                49,217,418
                                                   ============              ============
    Diluted                                          61,960,890                49,825,463
                                                   ============              ============
</TABLE>



     See accompanying notes to consolidated financial statements (unaudited)


                                       4
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                      (FORMERLY CAPITAL ONE VENTURES CORP.)
           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
            FOR THE PERIOD FROM DECEMBER 11, 2000 (DATE OF INCEPTION)
                          TO JUNE 30, 2001 (UNAUDITED)

<TABLE>
<CAPTION>





                                                  Preferred Stock             Common Stock
                                                 ----------------             ------------
                                                Shares       Amount         Shares         Amount
                                              -----------   -----------   -----------    -----------

<S>                                                   <C>   <C>                   <C>            <C>
Balances at December 11, 2000                          --   $        --         1,000    $         1

Net (loss) for the period December
  11, 2000 (date of inception) to
  December 31, 2000                                    --            --            --             --
                                              -----------   -----------   -----------    -----------

Balances at December 31, 2000                          --            --         1,000              1

Issuance of common stock
  in connection with the merger
  of Cirus TeleCommunications, Inc. net
  of related costs                                     --            --    10,000,000          1,000

Contribution of common shares by founders
  in connection with recapitalization                  --            --        (1,000)            (1)

Recapitalization in connection with
  reverse acquisition - Cirus Telecom, Inc.
  equity                                               --            --     5,175,456            518

Sale of preferred shares                              925            --            --             --

Issuance of common stock in
   connection with service contract
- pre-split                                            --            --        62,500              6

4 for 1 common stock split                             --            --    45,713,868          4,571

Issuance of common stock in connection
   with service contracts - post-split                 --            --       450,000             45

Unrealized foreign currency translation
  adjustment                                           --            --            --             --

Imputed preferred stock dividend
  attributable to the beneficial
  conversion feature                                   --            --            --             --

Net (loss) for the six months
  ended June 30, 2001                                  --            --            --             --
                                              -----------   -----------   -----------    -----------

Balances at June 30, 2001                             925   $        --    61,401,824    $     6,140

[RESTUBBED]
<CAPTION>
                                                                                            Accumulated         Total
                                               Additional         Stock                         Other        Stockholders'
                                                 Paid-In      Subscription    Accumulated   Comprehensive      Equity
                                                 Capital        Receivable      Deficit       Income (loss)   (Deficiency)
                                                -----------    -----------    -----------    -----------    --------------


<S>                                           <C>            <C>            <C>            <C>            <C>
Balances at December 11, 2000                 $        99    $      (100)   $        --    $        --    $        --

Net (loss) for the period December
  11, 2000 (date of inception) to
  December 31, 2000                                    --             --        (15,712)            --        (15,712)
                                              -----------    -----------    -----------    -----------    -----------

Balances at December 31, 2000                          99           (100)       (15,712)            --        (15,712)

Issuance of common stock
  in connection with the merger
  of Cirus TeleCommunications, Inc. net
  of related costs                                (59,306)            --             --             --        (58,306)

Contribution of common shares by founders
  in connection with recapitalization                 (99)           100             --             --             --

Recapitalization in connection with
  reverse acquisition - Cirus Telecom, Inc.
  equity                                          (67,200)            --             --             --        (66,682)

Sale of preferred shares                          925,000             --             --             --        925,000

Issuance of common stock in
   connection with service contract
   - pre-split                                    124,994             --             --             --        125,000

4 for 1 common stock split                         (4,571)            --             --             --             --

Issuance of common stock in connection
   with service contracts - post-split            450,455             --             --             --        450,500

Unrealized foreign currency translation
  adjustment                                           --             --             --           (254)          (254)

Imputed preferred stock dividend
  attributable to the beneficial
  conversion feature                              114,273             --       (114,273)            --             --

Net (loss) for the six months
  ended June 30, 2001                                  --             --       (463,352)            --       (463,352)
                                              -----------    -----------    -----------    -----------    -----------

Balances at June 30, 2001                     $ 1,483,645    $        --    $  (593,337)   $      (254)   $   896,194
</TABLE>




     See accompanying notes to consolidated financial statements (unaudited)

                                       5
<PAGE>



                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                      For the period
                                                                           For the three           December 11, 2000
                                                                           months ended           (date of inception)
                                                                           June 30, 2001            to June 30, 2001
                                                                            -----------             -------------------
<S>                                                                         <C>                      <C>
Cash flows from operating activities:
   Net income (loss)                                                        $    21,391              $  (479,064)
Adjustments to reconcile net loss to net cash used in
    operating activities:
       Depreciation                                                               2,316                    2,316
     Amortization of consulting expense arising
         from stock issuance                                                   (142,410)                 229,389
  Increase in:
    Accounts receivable                                                      (1,188,083)              (1,188,083)
    Prepaid expenses                                                            (48,097)                 (68,097)
    Other assets                                                                (41,400)                 (41,400)
  Increase in:
    Accounts payable and accrued expenses                                     1,060,196                1,087,920
                                                                            -----------              -----------
Net cash used in operating activities                                          (336,087)                (457,019)
                                                                            -----------              -----------

Cash flows from investing activities:
    Purchase of property and equipment                                          (85,053)                (149,401)
    Costs in connection with merger                                                  --                  (53,564)
                                                                            -----------              -----------

Net cash used in investing activities                                           (85,053)                (202,965)
                                                                            -----------              -----------

Cash flows from financing activities:
    Advances from stockholders                                                       --
                                                                                                          15,712
    Repayment to stockholder                                                         --                  (15,712)
    Sale of preferred stock                                                      75,000                  925,000
    Repayment of related party debt
        in connection with recapitalization                                          --                  (71,857)
    Repayment of capital lease                                                  (37,403)                 (37,403)
                                                                            -----------              -----------

Net cash provided by financing activities                                        37,597                  815,740
                                                                            -----------              -----------

Effect of exchange rate changes on cash                                             (64)                    (254)

(Decrease) increase in cash                                                    (383,607)                 155,502

Cash at beginning of period                                                     539,542                      433
                                                                            -----------              -----------

Cash at end of period                                                       $   155,935              $   155,935
                                                                           ===========              ===========
</TABLE>



     See accompanying notes to consolidated financial statements (unaudited)


                                       6
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                                 For the period
                                                                                                                December 11, 2000
                                                                                              months ended     (date of inception)
                                                                                             June 30, 2001       to June 30, 2001
                                                                                             -------------     -------------------
<S>                                                                                          <C>                   <C>
Supplemental disclosure of non-cash flow information: Cash paid during the year
    for:
         Interest                                                                            $       2,605         $    2,605
                                                                                             =============         ==========
         Income taxes                                                                        $          --         $       --
                                                                                             =============         ==========

Schedule of non-cash operating activities:
    In connection with the issuance of 700,000(post-split)
    shares of common stock for consulting services being
    amoritized                                                                               $     325,500         $  575,500
                                                                                             =============         ==========
    In connection with the cancellation of 2,758,778
    (post-split) shares of common stock related to the
    cancellation of the consulting contract                                                  $   1,362,194          1,362,194
                                                                                             =============         ==========
Schedule of non-cash investing activities:
    Acquisition of computer equipment and software in
    connection with capital lease obligations                                                $          --         $  153,522
                                                                                             =============         ==========

Schedule of non-cash financing activities:
    Issuance of 40,000,000 shares (post - split) of common stock in
    connection with the Comm merger                                                          $          --         $    4,000
                                                                                             =============         ==========

    Imputed preferred stock dividend attributable to the
    beneficial conversion feature                                                            $      71,123         $  114,273
                                                                                             =============         ==========
</TABLE>




     See accompanying notes to consolidated financial statements (unaudited)



                                       7
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 1 -      ORGANIZATION

              History
              -------

              Cirus Telecom, Inc. ("Cirus") was incorporated in the state of
              Delaware on August 25, 1997 under the name Sierra Madre Gold
              Corporation. On October 4, 1999, the name was changed to
              Capital One Ventures Corp. On February 9, 2001, the name was
              changed to Cirus Telecom, Inc. in connection with the merger
              discussed below. Prior to the quarter ended June 30, 2001,
              Cirus was a development stage company with no operations
              seeking a merger or acquisition of a private entity. Cirus'
              year end is September 30.

              Cirus Communications, Inc. ("Comm") was incorporated in the state
              of Delaware on December 11, 2000 to operate as a wholesale
              provider of long distance and telecommunication services under the
              name DMS Acquisition Corp. ("DMS") On July 26, 2001, DMS changed
              its name to Cirus Communications, Inc. Comm's year end is
              September 30.

              Capital One Acquisition Corp. ("Capital One") was incorporated
              in the state of Delaware on February 1, 2001 in order to
              facilitate the merger between Cirus and Cirus Comm. Capital
              One was wholly owned by Cirus.

              Cirus Talk, Inc. ("Talk") was incorporated on January 24, 2001
              under the name Telcorp Holdings LTD. On May 23, 2001 the name
              was changed to Cirus Talk, Inc. Talk is to operate as the
              holding and management company for companies to be wholly
              owned by Talk which will operate as call centers providing
              long distance and telecommunication services. Talk is wholly
              owned by Cirus. The following limited liability companies are
              the wholly owned subsidiaries of Talk formed on the following
              dates: CT Copiague LLC ("Copiague") and CT Huntington LLC
              ("Huntington") were formed on May 24, 2001 and CT Freeport LLC
              ("Freeport") was formed on June 18, 2001. At June 30, 2001 the
              telephone call centers had not commenced operations.

              Merger
              ------

              Pursuant to an agreement and plan of merger dated February 8,
              2001, Capital One acquired all of the issued and outstanding
              common stock of Comm in exchange for 10,000,000 shares of Cirus
              common stock which represented 65.9% of the outstanding shares of
              Cirus common stock after the issuance. Concurrent with the above
              acquisition, Comm merged with and into Capital One. Capital One
              then changed its name to Cirus Communications, Inc. and continues
              to be wholly owned by Cirus. Cirus and all of its subsidiaries are
              collectively referred to as the "Company".

              The merger of Cirus and Comm has been treated as a
              recapitalization and purchase by Comm as the acquirer (reverse
              acquisition) of Cirus as control rests with the former Comm
              shareholders, although prior to the acquisition, Cirus had been
              the registrant.


                                       8
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 1 -      ORGANIZATION (cont'd)

              Merger (cont'd)
              ---------------

              Therefore, the historical financial statements prior to February
              8, 2001 are those of Comm. The transaction is considered a capital
              transaction whereby Comm contributed its stock for the net assets
              of the Company. Simultaneously with the merger, Comm's former
              President was elected as the Company's President.

NOTE 2 -      INTERIM RESULTS AND BASIS OF PRESENTATION

              The accompanying unaudited consolidated financial statements have
              been prepared in accordance with generally accepted accounting
              principles for interim financial information and with the
              instructions to Form 10-QSB and items 303 and 301(B) Regulation
              S-B.

              In the opinion of management, the unaudited consolidated financial
              statements have been prepared on the same basis as the annual
              consolidated financial statements and reflect all adjustments,
              which include only normal recurring adjustments, necessary to
              present fairly the financial position as of June 30, 2001 and the
              results of our operations and cash flows for the three month
              period ended June 30, 2001 and for the period from December 11,
              2000 (date of inception) to June 30, 2001. The results for the
              period are not necessarily indicative of the results to be
              expected for any subsequent quarter or the entire fiscal year
              ending September 30, 2001. The balance sheet at December 31, 2000
              has been derived from the audited consolidated financial
              statements at that date.

              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 the Securities and Exchange Commission's rules and
              regulations. These unaudited financial statements should be read
              in conjunction with the Company's audited financial statements and
              notes thereto for the period ended December 11, 2000 (date of
              inception) to December 31, 2000 as included in Form 8-K/A filed on
              March 16, 2001 and the audited financial statements and notes of
              Cirus for the years ended September 30, 2000 and 1999 included in
              Form 10-KSB.

NOTE 3 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)            Principles of Consolidation
              ---------------------------

              The accompanying consolidated financial statements include the
              accounts of the Company and its wholly owned subsidiaries, after
              elimination of all significant intercompany transactions and
              accounts.



                                       9
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 3     -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

b)            Cash and Cash Equivalents
              -------------------------

              The Company considers highly liquid investments with
              maturities of three months or less at the time of purchase to
              be cash and cash equivalents. The Company at June 30, 2001,
              maintained its cash deposits in an account which was in excess
              of Federal Deposit Insurance Corporation (FDIC) limits by
              approximately $56,000. The Company believes that such risk is
              minimal based on the reputation of the financial institution.

c)            Accounts Receivable
              -------------------

              The Company utilizes the allowance method for recognizing the
              collectibility of its accounts receivables. The allowance method
              recognizes bad debt expense based on review of the individual
              accounts outstanding based on the surrounding facts. As of June
              30, 2001, no allowance was deemed necessary by management.

d)            Property and Equipment
              ----------------------

              Property and equipment are recorded at cost less accumulated
              depreciation which is provided on the straight line basis over the
              estimated useful lives of the asset, 3 to 7 years. Expenditures
              for maintenance and repairs are expensed as incurred.

e)            Revenue Recognition
              -------------------

              Revenue consists of the sales of personal identification numbers
              ("PINS") to wholesale distributors for use in their calling cards
              and fees charged for retail telephone usage including local
              exchange, local access, domestic and international long distance,
              and sales of telephonic services from Cirus owned telecom centers.
              Revenue is recognized upon delivery of the PINS to the wholesale
              distributor or upon use of the telephone service at the telecom
              center.

f)            Income Taxes
              ------------

              The Company accounts for income taxes in accordance with the
              "liability method" of accounting for income taxes. Accordingly,
              deferred tax assets and liabilities are determined based on the
              difference between the financial statement and tax bases of assets
              and liabilities, using enacted tax rated in effect for the year in
              which the differences are expected to reverse. Current income
              taxes are based on the respective periods' taxable income for
              federal, state and city income tax reporting purposes.


                                       10
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 3     -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

g)            Comprehensive Loss
              ------------------

              Comprehensive loss includes net losses and foreign currency
              translation adjustments. Accumulated other comprehensive loss
              consists of foreign currency translation adjustments.

h)            Loss per Common Share
              ---------------------

              Loss per common share is computed pursuant to Financial
              Accounting Standards Board, Statement of Financial Accounting
              Standards ("SFAS") No. 128, "Earnings Per Share". Basic loss
              per share is computed as net income (loss) available to common
              shareholders divided by the weighted average number of common
              shares outstanding for the period. Diluted loss per share
              reflects the potential dilution that could occur from common
              shares issuable through stock options, warrants and
              convertible preferred stock.

i)            Use of estimates
              ----------------

              In preparing the consolidated financial statements in conformity
              with accounting principles generally accepted in the United States
              of America, management is required to make estimates and
              assumptions which affect the reported amounts of assets and
              liabilities and the disclosure of contingent assets and
              liabilities at the date of the financial statements and revenues
              and expenses during the reporting period. Actual results could
              differ from those estimates.

j)            Fair value disclosure at December 31, 2000
              ------------------------------------------

              The carrying value of cash, accounts receivable, accounts payable
              and accrued expenses are a reasonable estimate of their fair value
              because of the short-term maturity of these instruments. The
              carrying value of short-term debt closely approximates its fair
              value based on the instruments' interest rate terms, maturity
              date, and collateral, if any in comparison to the Company's
              incremental borrowing rates of similar financial instruments.





                                       11
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 4 -      PROPERTY AND EQUIPMENT

              Property and equipment consists of the following at:

                                                  June 30, 2001
                                                  -------------
                   Computer software and equipment   $257,385
                   Office equipment                    27,883
                   Leasehold improvements               7,307
                   Furniture and fixtures               5,348
                   Auto                                 5,000
                                                     --------
                                                      302,923

                   Less: accumulated depreciation       2,316
                                                     --------
                                                     $300,607
                                                     ========

              At June 30, 2001 the computer software and equipment has not yet
              been put into operation. Therefore, the Company has not started
              depreciating such equipment. The Company is also responsible for
              the preparation and installation of the equipment related to the
              capital lease obligation described below. The Company has taken
              title to the equipment as of June 30, 2001, however, it has not
              been placed into operation.

NOTE 5 -      CAPITAL LEASE OBLIGATION

              On March 23, 2001 the Company entered into an agreement to acquire
              $215,022 of computer equipment and software. The terms of the
              agreement call for the following payment terms and conditions: an
              initial down payment of $61,500 and twelve monthly payments of
              $13,336 commencing April 2001. The Company has imputed interest
              related to this agreement at 8% per annum since no interest is
              stated in the agreement. The lease is secured by the related
              computer equipment and software.

              At June 30, 2001 the aggregate future value of the payments due
              pursuant to the above terms and conditions are as follows:

                                                     Year ended
                                                     September 30,
                                                  ------------------
                 2001                                 $ 40,008
                 2002                                   80,016
                                                      --------
                 Total minimal lease payments          120,024

                 Less: Amount representing interest      3,905
                                                      --------

                 Present value of net
                   minimum lease payments             $116,119
                                                      ========

              At June 30, 2001 the computer equipment and software is
              carried at a book value of $215,022.


                                       12
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 6 -      PROVISION FOR INCOME TAX

              Income taxes are provided for the tax effects of transactions
              reported in the financial statements and consist of taxes
              currently due plus deferred taxes related to differences between
              the financial statement and tax bases of assets and liabilities
              for financial statement and income tax reporting purposes.
              Deferred tax assets and liabilities represent the future tax
              return consequences of these temporary differences, which will
              either be taxable or deductible in the year when the assets or
              liabilities are recovered or settled. Accordingly, measurement of
              the deferred tax assets and liabilities attributable to the
              book-tax basis differentials are computed at a rate of 34%
              federal, 9% state, and 9% city pursuant to SFAS No. 109. Cirus and
              its subsidiaries file consolidated tax returns for federal, state
              and city tax purposes.

              The only material tax effect of significant items comprising the
              Company's current deferred tax assets as of June 30, 2001, is the
              Company's net operating losses "NOL"s" which amounted to
              approximately $250,000 as of June 30, 2001. The deferred tax asset
              associated with the Company's NOL's amounted to approximately
              $113,000 as of June 30, 2001.

              In accordance with SFAS 109, the Company has recorded a 100%
              valuation allowance for such deferred tax asset since management
              could not determine that it was "more likely than not" that the
              deferred tax asset would be realized in the future. The Company's
              NOL's will expire in 2016 if not utilized prior.

NOTE 7 -      COMMITMENTS AND CONTINGENCIES

              Lease Commitments
              -----------------

              In June 2001 the Company entered into three separate lease
              agreements for retail space to be used for its telephone call
              centers. The three leases are for 3 and 5 year terms expiring May
              31, 2004, May 31, 2006 and June 30, 2006, respectively. The
              Company's approximate future minimum rentals under non-cancelable
              operating leases in effect on June 30, 2001 are as follows:

                                                   Year ended
                                                  September 30,
                                                  -------------

                      2001                         $ 14,850
                      2002                           66,490
                      2003                           69,815
                      2004                           65,433
                      2005                           52,961
                Thereafter                           36,465
                                                   --------
                                                   $306,014
                                                   ========

                                       13
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 7 -      COMMITMENTS AND CONTINGENCIES (cont'd)

              The Company leases its administrative offices on a month to month
              basis with annual payments approximating $15,500. The Company
              leases space to store equipment on a month to month basis with
              annual payments approximating $7,200.

              Rent expense for the three months ended June 30, 2001 amounted to
              approximately $5,700 and approximately $12,100 for the period from
              December 11, 2000 (date of inception) to June 30, 2001.

              Significant Customers
              ---------------------

              The Company has derived 85% of it's revenues from a contract with
              a related party (see note 9) and 15% of it's revenues from an
              unrelated party for both the three months ended June 30, 2001 and
              for the period from December 11, 2000 (date of inception) to June
              30, 2001.

NOTE 8 -      STOCKHOLDERS' EQUITY

              Acquisition of Subsidiary
              -------------------------

              Pursuant to the agreement and plan of merger, dated February 8,
              2001, Cirus issued 10,000,000 shares of its common stock to enable
              its subsidiary, Capital One, to acquire and merge with Comm. In
              addition, to the merger agreement, Cirus and the four stockholders
              of Comm signed a lock-up agreement in which the stockholders
              agreed not to sell, assign, transfer, pledge hypothecate or
              otherwise dispose of the Cirus shares they received in the merger
              until one year after the date of merger.

              Preferred Stock
              ---------------

              On February 6, 2001 the Board of Directors of the Company adopted
              and created a series of preferred stock consisting of 1,000 shares
              designated as the Series A Convertible Preferred Stock ("Preferred
              Stock"). Each share of Preferred Stock has a liquidation
              preference of $1,000. The Preferred Stock is convertible into
              common stock at any time after the 30th calendar day the Company
              receives payment in full. The conversion rate is equal to $1,000
              per share of preferred stock divided by 75% of the average market
              price of the common stock for ten days prior to the date of
              conversion. The conversion rate is subject to adjustment under
              certain circumstances. Outstanding Preferred Stock may be
              repurchased by the Company from holders of shares of Preferred
              Stock by: (i) delivering notice in writing thereof to such holders
              prior to the date which is one year following the date on which
              the Company received payment in full for the Preferred Stock from
              and issued the Preferred Stock to a particular holder of Preferred
              Stock (the Issuance Date"); and (ii) by the payment to such
              holders of the sum of $1,250 per share of Preferred Stock so
              repurchased within three (3) business days of such notice by way
              of wire transfer, certified check or bank draft.


                                       14
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)


NOTE 8 -      STOCKHOLDERS' EQUITY (cont'd)

              Preferred Stock (cont'd)
              ------------------------

              The Company may not repurchase any shares of Preferred Stock for
              which it has received a Conversion Notice. As a condition to the
              closing of the above agreement and plan of merger with Comm, Cirus
              sold 850 shares of the Preferred Stock for total proceeds of
              $850,000 to 4 entities. On June 14, 2001, an additional 75 shares
              of the Preferred Stock were sold for a total proceeds of $75,000
              to one entity. Each entity holding such shares shall only be
              allowed to convert preferred shares into common stock up to a
              maximum of 9.9% of the outstanding shares of common stock
              following the conversion. The calculation includes common stock
              beneficially owned by the entity and its affiliates.

              The holders of such shares are not entitled to receive any
              dividends. In accordance with, Financial Accounting Standards
              Boards Emerging Issues Task Force ("EITF") Issue No. 98-5,
              "Accounting for Convertible Securities with Beneficial Conversion
              Features or Contingently Adjustable Conversion Ratios" and EITF
              Issue No. 00-27, "Application of Issue No. 98-5 to Certain
              Convertible Investments", the Company has calculated the discount
              resulting from the beneficial conversion option available to the
              preferred holders (75% of market value) to be $316,021, based on
              market value of common stock at the date of preferred stock
              issuance. The discount is being amortized from the date of
              issuance to the earliest conversion date and will be treated as a
              preferred dividend over the amortization period which is one year.
              For the three months ended June 30, 2001 the Company has recorded
              a preferred dividend of $71,123 and the unamortized discount
              remaining at June 30, 2001 is $201,748.

              Issuance of Common Stock for Consulting Services
              ------------------------------------------------

              In February 2001, the Company entered into a consulting agreement
              for investor relations services for a six month period. In
              exchange for the services to be rendered, the consultant was to
              receive 4.9% of the total issued and outstanding common stock of
              the Company which was valued at $1,487,120. Due to several
              unfavorable situations and unfulfilled performance-based
              representations, this agreement was terminated as of June 21,
              2001. In settlement of this agreement the consultant agreed to a
              total of 250,000 shares (post split) of common stock, which was
              valued at $125,000 and the remaining previously issued shares were
              returned to the Company. At March 31, 2001, the Company had
              recorded a total of $371,799 of consulting expense related to this
              agreement. As a result of the termination and settlement, the
              previously recorded consulting expense had be adjusted to the
              settlement expense of $125,000, resulting in a reduction (credit)
              of $246,799 of consulting expense recorded in general and
              administrative expenses for the three months ended June 30, 2001.



                                       15
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 8 -      STOCKHOLDERS' EQUITY (cont'd)

              Issuance of Common Stock for Consulting Services (cont'd)
              ---------------------------------------------------------

              On March 30, 2001, the Company entered into a consulting agreement
              for promotion and investor relations. In exchange for services
              rendered the consultant received a non-refundable commitment fee
              equal to 100,000 shares of the Company's common stock which has
              been valued at $125,000. The commitment fee will be expensed over
              the term of the contract which is one year. The Company has
              recorded to date $31,250 of consulting fees and has a prepaid
              expense of $93,750 at June 30, 2001. The Company has agreed to
              allow the consultant "Piggy-back Registration Rights" for the
              shares issued to the consultant. This allows the consultant the
              right to "Piggy-back" on any registration offering by the Company
              without cost to the consultant. In addition to the commitment fee
              the Company has agreed to pay $5,000 per month under this
              agreement. The Company has recorded to date $15,000 of consulting
              fees and has an accrued expense of $10,000 at June 30, 2001.

              On May 4, 2001, the Company entered into a consulting agreement
              for a one month term for marketing to new investors. In exchange
              for services rendered the consultant received 50,000 shares of
              restricted common stock, which has been valued at $67,500 and
              expensed as consulting fees.

              On June 27, 2001, the Company entered into a new consulting
              agreement for marketing to new investors. In exchange for services
              rendered the consultant received 300,000 shares of restricted
              common stock which has been valued at $258,000. For the period
              from December 11, 2001 (date of inception) to June 30, 2001, the
              Company recorded $5,639 of consulting fees and has a prepaid
              expense of $252,361 at June 30, 2001. The consulting agreement is
              in effect until December 2001.

              Common Stock Split
              ------------------

              On March 30, 2001, the stockholders voted to increase the
              authorized number of shares of common stock from 30,000,000 to
              100,000,000 and to affect a four for one forward split of the
              Company's outstanding common stock to all shareholders of record
              as of April 6, 2001.

NOTE 9 -      RELATED PARTY TRANSACTIONS

              Employment Agreements
              ---------------------

              On February 8, 2001, Comm entered into employment agreements with
              two key officers/shareholders, the chief executive officer and
              president and the chief technology officer. The employment
              agreements are for a term of two years with annual salaries of
              $90,000 and $108,000, respectively, for the first year and
              $120,000 each for the second year. The chief executive officer
              owned 25% of Comm prior to its merger with Capital One. In
              addition, the chief technology officer owned 100% of a company
              that was a 23% shareholder of Comm.


                                       16
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 9 -      RELATED PARTY TRANSACTIONS (cont'd)

              Employment Agreements (cont'd)
              ------------------------------

              As a result of the agreement and plan of merger, the chief
              executive officer now owns 16.5% of Cirus and the company owned by
              the chief technology officer now owns 15.2% of Cirus. For the
              period from December 11, 2000 (date of inception) to June 30,
              2001, the Company has recorded $70,414 of officers salaries under
              these agreements.

              Distribution Agreement
              ----------------------

              On February 6, 2001, Comm entered into a distribution agreement
              with a company (the "distributor") that owned 27% of Comm prior to
              the merger. The agreement is for two years with an option to renew
              for an additional year at the end of the initial term. As a result
              of the merger, the distributor now owns 17.8% of Cirus. The
              distributor is to purchase long distance and telecommunications
              services from Comm for the purpose of distributing prepaid calling
              cards and is subject to the following conditions:

                      1)     If Comm, after three months from the date of the
                             agreement, averages $2,000,000 per month in
                             revenues, for the following nine month period, the
                             distributor shall be entitled to dispose of 100% of
                             its common stock.

                      2)     If Comm, after three months from the date of the
                             agreement, fails to maintain an average of
                             $2,000,000 in revenue for said nine month period,
                             the distributor shall be entitled to dispose of up
                             to 75% of its common stock after the first year of
                             the agreement and 100% after the second year of the
                             agreement.

                      3)     Comm warrants that if they are unable to maintain
                             sufficient network capacity, or if they do not have
                             their network operating within the specified
                             timeframe, that will not enable the distributor to
                             reach the target set in (1), the distributor will
                             be subject to the following rule. As long as the
                             distributor averages $2,000,000 per month in
                             revenues for the remainder of the first year
                             anniversary date of signing of the contract, after
                             a 90-day ramp-up period, the distributor shall be
                             entitled to dispose of 100% of its common stock.

              The Company has derived revenues of approximately $1,190,000 from
              this contract for both the three months ended June 30, 2001 and
              for the period from December 11, 2000 (date of inception) to June
              30, 2001.





                                       17
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED JUNE 30, 2001AND
      FOR THE PERIOD DECEMBER 11, 2000 (DATE OF INCEPTION) TO JUNE 30, 2001
                                   (UNAUDITED)



NOTE 10 -     PRO FORMA FINANCIAL STATEMENTS

              The following pro forma information is a condensed format of the
              Company's statement of operations for the period December 11, 2000
              (date of inception) to June 30, 2001 as if the acquisition was
              consummated and considered in effect as of December 11, 2000:

                                                Pro forma
                                         Statement of operations
                                             for the period
                                            December 11, 2000
                                         (date of inception) to
                                              June 30, 2001
                                              -------------

                      Total income            $ 1,406,121
                                              ===========
                      Total expenses          $ 1,886,974
                                              ===========
                      Net loss                $  (480,853)
                                              ===========

              This pro forma information regarding the Company's statement of
              operations has been presented for disclosure purposes only and
              does not purport to be indicative of the Company's financial
              position and results of operations which have actually resulted
              had the acquisition occurred as of December 11, 2000.

NOTE 11 -     SUBSEQUENT EVENTS

              Capital lease obligation
              ------------------------

              On July 6, 2001, the Company entered into an agreement to acquire
              $57,000 of equipment. The terms of the agreement call for the
              following payment terms and conditions: an initial payment of
              $4,859 which represents a first and last payment plus a fee of
              $400 and thirty-four monthly payments of $2,229 commencing thirty
              days from the day the equipment is received including interest at
              25.3% per annum. The lease is secured by the related equipment.

              On July 6, 2001, the Company entered into an agreement to acquire
              $ 25,000 of equipment. The terms of the agreement call for the
              following payment terms and conditions: an initial payment of
              $2,337 which represents a first and last payment plus a fee of
              $400 and thirty-four monthly payments of $969 commencing thirty
              days from the day the equipment is received including interest at
              24.6% per annum. The lease is secured by the related equipment.




                                       18
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with the financial
statements, related notes, and other detailed information included elsewhere in
this Quarterly Report on Form 10-QSB. This report contains certain
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. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by the use of such terms as "believes," "anticipates,"
"intends," or "expects." These forward-looking statements relate to our plans,
objectives and expectations for future operations and growth. Other
forward-looking statements in this Quarterly Report on Form 10-QSB include
statements regarding synergies and growth expected as a result of our
in-progress and future acquisitions, expected growth in earnings, revenue and
gross margin, our expectation regarding our ability to consummate future
acquisitions and the necessity for and expected availability of additional
financing. In light of the risks and uncertainties inherent in all such
projected operational matters, the inclusion of forward-looking statements in
this report should not be regarded as a representation by us or any other person
that our objectives or plans will be achieved or that any of our operating
expectations will be realized. Our revenues and results of operations are
difficult to forecast and could differ materially from those projected in the
forward-looking statements contained in this report as a result of certain risks
and uncertainties including, but not limited to, our ability to integrate and
manage acquired companies, assets and personnel, changes in market conditions,
the volatile and competitive environment for Internet telephony, the
availability of transmission facilities, management of our rapid growth, entry
into new and developing markets, competition, the international
telecommunications industry, dependence on operating agreements with foreign
partners, reliance on third parties to provide us with technology,
infrastructure and content, significant foreign and U.S.-based customers and
suppliers, availability of transmission facilities, U.S. and foreign
regulations, international economic and political instability, dependence on
effective billing and information systems, customer concentration and attrition,
rapid technological change, and the expansion of the global network. These
factors should not be considered exhaustive; we undertake no obligation to
release publicly the results of any future revisions we may make to
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.




                                       19
<PAGE>


OVERVIEW

         Cirus Telecom, Inc. ("Cirus") is a full-service telecommunications
company that focuses on developing integrated telephone service in the emerging
competitive carrier industry. We offer an integrated set of telecommunications
products and services, including local exchange, local access, domestic and
international long distance telephone, calling cards, dedicated access, and
other enhanced and value-added telecommunications services tailored to meet the
needs of our customers and the growing marketplace demand from small and
medium-sized businesses for reliability and speed.

In the third quarter Cirus Telecom, Inc. added its "Cirus Talk" multi-service
telecom center subsidiary. This division will own and operate a retail chain of
"Internet and Calling Cafes" catered to ethnic customers. These centers will
allow the distribution of telecom products to the underserved retail niche that
Cirus has identified in the telecom marketplace. Services and products include
phonecards, prepaid wireless products, prepaid home services and direct
international dialing.

HISTORY

         Cirus Telecom, Inc. was incorporated in the state of Delaware on August
25, 1997 under the name Sierra Madre Gold Corporation. On October 4, 1999, the
name was changed to Capital One Ventures Corp. On February 9, 2001, the name was
changed to Cirus Telecom, Inc. in connection with the merger discussed below.
Since March 31, 1998, Cirus had been a development stage company seeking a
merger or acquisition of a private entity. DMS Acquisitions Corp. ("DMS") was
incorporated in the state of Delaware on December 11, 2000 to operate as a
wholesale provider of long distance and telecommunication services.

DMS Acquisitions Corp. subsequently changed it name to "Cirus Communications,
Inc." on July 26, 2001. Cirus also incorporated a wholly owned subsidiary called
Cirus Talk, Inc. on May 23, 2001. This corporation is the parent for the Cirus
Talk multi-service communications centers. CT Huntington LLC and CT Copaigue LLC
were formed on May 24, 2001 and CT Freeport LLC was formed on June 18, 2001. All
are subsidiaries of Cirus Talk, Inc. These LLCs each hold a lease for an
individual retail location in the appropriate municipality.

MERGER

         Pursuant to an agreement and plan of merger dated February 8, 2001,
Cirus, through a wholly owned subsidiary, acquired all of the issued and
outstanding common stock of DMS in exchange for 10,000,000 shares of Cirus
common stock which represented 65.9% of the outstanding shares of Cirus's common
stock after the issuance. Concurrent with the above acquisition, DMS merged with


                                       20
<PAGE>


and into the wholly owned subsidiary, which then changed its name to DMS and
continues to be wholly owned by Cirus. Cirus and DMS are collectively referred
to as the "Company".

         We offer long distance services to customers through agreements we have
with several international long distance carriers. The long distance services
include domestic service, such as interLATA, which are calls that pass from one
"Local Access and Transport Area" or "LATA" to another LATA, and intraLATA,
which are calls that stay within the LATA in which they originated, but are
beyond the distance limits of the local calling plan. Our services also include
international calling, toll-free services (800, 888, 877, 866), calling card,
and other enhanced services. We offer individual customers consultation services
with regard to the design and implementation of complete telecommunications
systems to meet their specific needs, including the selection of equipment,
interconnection of local area networks and wide area networks, and
implementation of virtual private networks.

         The nature of our telecommunications business is rapidly evolving but
has a limited operating history. During the quarter ended June 30, 2001 the
Company began operations as such; we believe period-to-period comparisons of
operations are not meaningful and should not be relied upon as indicators of
future performance. We also believe our historical growth rates are not
indicative of future growth rates.

         We continue to deploy our telecom-switching network, expand our
customer base and we are beginning to penetrate the business segment. We
anticipate future growth from providing a comprehensive product suite of
communications services. These services are expected to include wholesale
telecom sales, international long-distance services, domestic call termination,
phone-card PIN activation and debit-card billing software deployment.

         There is a great demand in the United States for telecom carriers to
provide a host of services at competitive prices. Due to the deregulation of the
telecom industry, any corporation with the appropriate state and federal
licenses may provide any number of those services. As the incumbent Baby Bell's
navigate the telecom waters, we believe they may be hampered by their size and
legislative limitations as to what they can and are able to do. This creates
opportunities for smaller and more nimble organizations to react to changing
technologies and market demands.

         Cirus' service offering allows us to lease from the incumbent local
exchange carriers ("ILECs"), on an as-needed basis, multiple unbundled network
elements and combine them into our own full service platform. We lease a
combination of network elements, including the local loop, a network interface
device, where the local loop terminates at the customer's premises, a switch
port that connects the local loop to the ILEC's switch, the switching
functionality of the ILEC's switch, and the transport of telephone calls between
ILEC switches for local calls, or to a long distance telephone company's
point-of-presence for a long distance call. We have chosen this platform to grow
our customer base because it allows us to rapidly enter new markets with minimal


                                       21
<PAGE>


capital expenditures. For example, we can build a customer base without
deploying either a local switch in every location that we decide to grow into,
or create the last-mile infrastructure. Generally, instead of buying and
maintaining our own equipment in the field, we utilize the reliable equipment
owned by the ILECs and focus our resources on building a customer base. Cirus
believes in creating a centralized switching facility with interconnections and
gateways at the partner's facility.

         In March of 2001 Cirus purchased a switch from NACT Telecommunications,
Inc. a leading telecom hardware producer. This switch was operational at the
beginning of July 2001 This increased the telecom capacity of Cirus by
20,000,000 minutes per month. Cirus will utilize this switch to run prepaid card
programs for companies such as 9278 Communications, Inc. and THC Internet
Solutions, Inc., the wholesaling of long-distance minutes and providing
call-termination into the United States. With the full functionality of this
switch, Cirus will be able to fulfill the terms of its carrier services contract
with 9278 Communications, Inc.

         The margins on switched telecom products vary on several factors, but
most importantly the relationships with direct providers both domestically and
internationally. Cirus deals with both the incumbent PTTs and Secondary Network
Operators (SNOs) in international locations. The logic behind choosing a
provider is based upon costs and service reliability. Once the NACT switch is
operational, Cirus will endeavor to place direct lines into as many
international locations as possible, thereby creating the most direct route to
the country in question.

         Building and expanding our business has required and will continue to
require us to make significant expenditures in excess of the amounts of cash
that our business is generating. We believe our strategy of leasing excess
capacity on existing circuit-switched networks and building our own
packet-switched network will help our operations to generate positive cash flow
much sooner than the strategy used by CLECs of building a circuit-switched
network before a customer base has been established. We have experienced
operating losses and generated negative cash flow since we began operating and
we expect to continue to generate negative cash flow for a period of time while
we continue to expand our network and develop product offerings and our customer
base. We cannot assure you that our revenue or customer base will increase or
that we will be able to achieve or sustain positive cash flow.

         Our plan for the growth of our telecommunications division includes an
aggressive strategy to obtain as many new local and international access lines
as our cash resources allow. We will need to expend cash and incur additional
losses before we are able to grow our telecommunications business to a
profitable level. We believe our cash will provide us with sufficient liquidity
to grow our business and carry out many of our expansion plans. We may seek
additional financing, however, there can be no assurance that we will be able to
obtain such funding when needed, or that such funding, if available, will be
obtainable on terms acceptable to us.


                                       22
<PAGE>


Cirus Talk Multi-Service Communications Centers

         Cirus added its "Cirus Talk" multi-service telecom center subsidiary in
May of 2001. This division will own and operate a retail chain of "Internet and
Calling Cafes" catered to ethnic customers. These centers will allow the
distribution of telecom products to the underserved retail niche that Cirus has
identified in the telecom marketplace. Services and products include phone
cards, prepaid wireless products, prepaid home services and direct international
dialing.

         Within each center there are a series of phone booths where individuals
may make calls to any global destination, via the Cirus switching platform.
Cirus estimates that on a 20-booth configuration it will run approximately
175,000 minutes per location. On average the minute charges range from 20 cents
to 35 cents, depending on the country. As Cirus manages its own calls, the gross
margins are expected to be 25-50% higher than competitors who do not have their
own facilities to route their call traffic.

         Cirus is presently completing its first three locations in Huntington,
Freeport and Copiague, New York. The estimated launch date for the Huntington
center is August 1, 2001. The primary demographic focus for these two locations
is for calling services to Central and South American destinations. Cirus has
negotiated with its international carriers and will be able to offer its
customers highly competitive rates to several select countries. Cirus intends on
expanding these retail locations throughout the New York, New Jersey,
Connecticut, Florida and Rhode Island markets.

Competition in the Telecommunications Industry

 Local Telecommunications Market

         The local telecommunications market is a highly competitive environment
and is dominated by ILECs. Based upon the geographical locations in which we
currently sell services, Verizon and BellSouth are our largest competitors. Most
of our actual and potential competitors, including most of the facilities-first
CLECs, have substantially greater financial, technical, marketing and other
resources (including brand name recognition) than we do. Furthermore, the
continuing trend toward business alliances in the telecommunications industry
and the lack of substantial barriers to entry in the data and Internet services
markets could help to generate substantial new competition. We anticipate that
we will be able to compete based upon our pricing, reliability, customer service
and rapid ability to provision accounts and respond to customer requests. Our
established competitors, such as the ILECs, are able to compete effectively
because they have long-term existing relationships with their customers, strong
name recognition, abundant financial resources, and the ability to cut prices of
certain services by subsidizing such services with revenues generated from other
products. Although the Telecommunications Act reduced barriers to entry into the
local market, future regulatory decisions could provide ILECs with more pricing
flexibility, which would result in increased price competition.


                                       23
<PAGE>


         In addition to competition from ILECs, other CLECs and wireless
entities, several other entities currently offer or are capable of offering
local service, such as long distance carriers, cable television companies,
electric utilities and microwave carriers. These entities, upon entering into
appropriate interconnection agreements or resale agreements with ILECs, can
offer single source local and long distance services like those we offer. For
example, long distance carriers, such as AT&T Corp., MCI WorldCom and Sprint
Corporation, among other carriers, have each begun to offer local
telecommunications services in major U.S. markets using the unbundled network
elements platform or by reselling the ILECs' services.

 Long Distance Telecommunications Market

         The long distance market, in comparison to the local market, has
relatively insignificant barriers to entry and has been populated by numerous
entities that compete for the same customers by frequently offering promotional
incentives and lower rates. We compete with many such companies that do not
offer any service other than long distance, and we compete with established
major carriers such as AT&T and MCI WorldCom. We will also have to maintain high
quality and low cost services to compete effectively. In many instances, we must
be in a position to reduce our rates to remain competitive.

Government Regulation

         Local and long distance telecommunications services are subject to
regulation by the Federal Communications Commission ("FCC") and by state
regulatory authorities. Among other things, these regulatory authorities impose
regulations governing the rates, terms and conditions for interstate and
intrastate telecommunications services and require us to file tariffs for
interstate and international service with the FCC and obtain approval for
intrastate service provided in the states in which we currently market our
services. We must obtain and maintain certificates of public convenience and
necessity from regulatory authorities in the states in which we operate. We are
also required to file and obtain prior regulatory approval for tariffs and
intrastate services. In addition, we must update or amend the tariffs and, in
some cases, the certificates of public convenience and necessity, when rates are
adjusted or new products are added to the local and long distance services we
offer. Changes in existing laws and regulations, particularly regulations
resulting in increased price competition, may have a significant impact on our
business activities and on our future operating results. We are also subject to
Federal Trade Commission regulation and other federal and state laws relating to
the promotion, advertising and direct marketing of our products and services.
Certain marketing practices, including the means to convert a customer's local
or long distance telephone service from one carrier to another, have recently
been subject to increased regulatory review of both federal and state


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<PAGE>


authorities. Even though we have implemented procedures to comply with
applicable regulations, increased regulatory scrutiny could adversely affect the
transitioning of customers and the acquisition of new customer bases. Amendments
to existing statutes and regulations, adoption of new statutes and regulations
and expansion of our operations into new geographic areas and new services could
require us to alter our methods of operation or obtain additional approvals, at
costs which could be substantial. There can be no assurance that we will be able
to comply with applicable laws, regulations and licensing requirements. Failure
to comply with applicable laws, regulations and licensing requirements could
result in civil penalties, including substantial fines, as well as possible
criminal sanctions.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

Gross Profit

         Cirus generated revenues in the third quarter through the sale of third
party phonecards as well as telecom PINs. Telecom PINS are the unique
identifiers at the back of every phonecard. Cirus produces these PINS off its
switching network or resells third party PINS.


General and Administrative

         General and administrative expenses for the period from inception to
June 30, 2001 was $582,077 and for the three month period ended June 30, 2001
was $77,849. The general and administrative expenses were primarily due to the
Company incurring costs associated with officers' salaries, consulting,
professional fees, and travel, which amounted to approximately $502,000
cumulative and $19,000 for the three-month period, respectively. Included in
general and administrative expenses are corporate overhead, salaries, consulting
costs, and professional fees. The expenses for the three month period include a
one time reduction of consulting expense resulting from a termination and
settlement with Rapid Release amounting to $246,799, therefore adjusting for the
one time credit general and administrative expenses for the period would have
been $325,648.


                                       25
<PAGE>


         We anticipate the amount of general and administrative expenses to rise
over the next two quarters as Cirus anticipates the addition of further
technical, support and managerial staff. Cirus estimates that it will have to
double its staffing requirements to meet the upcoming demands. As the number of
staff increases, Cirus will have to relocate to larger office premises. Causing
the monthly rental expense to increase by an estimated 100%.

         Cirus anticipates that the company will generate enough income to allow
it to break even in the fourth quarter. It will require additional funding in
order to expand any segment of the business.

Depreciation and Amortization

         At June 30, 2001 the computer software and equipment was put into
operation, therefore, the Company incurred a depreciation expense of $2,316 on
equipment.

Interest Income

         Interest income of $2,141 was derived from cash deposits at Cirus'
banking institutions.

Net Loss

         We reported a net loss of $49,796 for the quarter, down from $593,591
in the previous quarter. The net loss for the period December 11, 2000 to June
30, 2001 is $479,064. This amount equates to less than $0.0008 per share versus
$0.04 per common share in the second quarter. Within this net loss figure, there
is a non-cash dividend attributed to the convertible preferred stock issued of
$71,123.

         As of June 30th the end of our third quarter, Cirus generated
$1,406,121 in sales. Of this figure $1,189,620 was generated through 9278
Communications, Inc. as part of the fulfillment of a $24 million contract for
telecom services with 9278 Communications, Inc. The majority of these revenues
were PIN based, with the remainder being phone cards. 9278 is the largest single
customer of Cirus, and any material change or loss to of this customer would
result in substantial changes to Cirus' plan of business. The Company generated
$216,501 of sales of phones cards to various customers including THC Internet
Solutions, Inc. as part of a services contract with Cirus. The gross profit
generated from these operating activities was $99,704 for the quarter ended June
30, 2001. There is a cumulative loss for the period ended December 11, 2001 to
June 30, 2001 of $479,064.

         Cirus generated no revenues in the three and nine month preceding the
quarter ended June 30, 2001. Cirus used the time and resources from February
2001 to install and build its network.


                                       26
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         The Company is currently planning to raise additional capital. Further,
the Company has not generated sufficient cash flow to fund its operations and
activities. The Company has relied funds from the sale of preferred shares of
stock. Management is optimistic that the Company will be successful in its
capital raising efforts; however, there can be no assurance that the Company
will be successful in raising additional capital.

         As of June 30, 2001, the Company's current assets were $1,758,226 and
its current liabilities were $1,204,039, which resulted in working capital of
$554,187. Also, included in the current liabilities are accounts payable and
accrued expenses of $1,087,920 mainly due to vendors and a balance due on a
capital lease of $116,119. The Company's assets consisted assets consist
primarily of cash of $155,935, $1,118,083 in accounts receivable, $300,607 of
prepaid expenses related to a investor relations contract generated through the
issuance of stock being amortized over the contract and property and equipment
of $300,607.

         For the period December 11, 2000 through June 30, 2000, the net cash
used for operating activities was $479,064. There was also a (i) a net loss of
$593,591 for the period December 11, 2000 through June 30, 2000 (ii) issuance of
common stock to various consultants of $575,500 for the period ending June 30,
2000 and (iii) an increase of accounts payable and accrued expenses to
$1,087,920 for the period ending June 30, 2000.

         The Company increased its net cash from financing activities for the
period ended June 30, 2000 to $815,740. The major component primarily consisted
of proceeds from issuance of convertible notes payable of $925,000 for the
nine-month period ended June 30, 2000.

         At June 30, 2001, we had cash and cash equivalents of $155,935. The
Company has total prepaid expenses of $414,208, which were paid through the
issuance of common stock. The Company has current liabilities of $1,087,920
comprised of accounts payable and accrued expenses and $116,119 in a capital
lease payable. The working capital was generated as a direct result of the sale
of 850 shares of Series A convertible preferred stock, completed on the closing
of the merger with DMS Acquisitions Corp. As part of a financing issued 75
shares of Series A convertible preferred stock, raising cash proceeds of $75,000
for the company.

         In the fourth quarter the Company will possibly be seeking additional
capital investment through either the sale of equity or the structuring of debt
instruments to assist the growth that Cirus is undertaking. The existing capital
resources are adequate to maintain the current level of growth excluding any
extraordinary expenditure, such as the addition of staff or purchase of
equipment.


                                       27
<PAGE>


         The Company will not be able to substantially expand its switching
facility to increase the capacity without additional capital being raised for
the company, or preferential leasing terms are negotiated with hardware and
software suppliers. At that point, it is projected that the Company will be able
to grow its network through its internal cash flow. Cirus estimates that it will
have to triple the size of its switching facilities to meet the customer demand
for its telecom services. These new switches will be designed to work in tandem
with Cirus' existing NACT platform.


         In the third quarter Cirus generated revenues exclusively from
phone-card and card PIN sales from April through June 2001. Its switch was
tested and was fully functional as of the end of June 2001. The principal uses
of cash for operating activities in the fiscal period were to operate the
company, purchase software and hardware, and to lease telecom-switching
equipment.

EQUITY AND DEBT FINANCING

Preferred Stock

         On February 6, 2001 the Board of Directors of the Company adopted and
created a series of preferred stock consisting of 1,000 shares designed as the
Series A Convertible Preferred Stock ("Preferred Stock"). As a condition to the
closing of the above agreement and plan of merger with DMS, Cirus sold 850
shares of the Preferred Stock for total proceeds of $850,000 to four entities.
Each share of Preferred Stock has a liquidation preference of $1,000. The
Preferred Stock is convertible into common stock at any time, provided that each
entity holding such shares shall only be allowed to convert preferred shares
into common stock up to a maximum of 9.9% of the outstanding shares of common
stock following the conversion. The conversion rate is equal to $1,000 per share
of Preferred Stock divided by 75% of the average market price of the common
stock for ten days prior to the date of conversion. The conversion rate is
subject to adjustment under certain circumstances. Outstanding Preferred Stock
may be repurchased by the Company at a price of $1,250 per share for one year.

CASH FLOWS

        The Company's cash balances vary significantly from day-to-day due to
the volume of purchases, sales and deposits required in the telecom industry.
Due to the nature of the telecom industry and the financial risk and exposure of
the Company, all customers are required to prepay for services based upon their
carrier requirements. If the Company establishes credit terms with customers, it
is done on an individual basis, based upon payment history and the duration of
the customer relationship.

         In the third quarter the Company experienced a net loss relating to
operating activities of $49,796. The Company received an additional $75,000 from
the sale of 75 shares of preferred stock for the quarter ended June 30, 2001.



                                       28
<PAGE>



 PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         Neither the Company nor any of its property is a party to any pending
or threatened legal proceedings.

Item 2.  Changes in Securities and Use of Proceeds

         In February 2001, the Company entered into a consulting agreement with
Rapid Release Research LLP for investor relations' services over a six-month
period. In exchange for the services to be rendered, the consultant was to
receive 4.9% of the total issued and outstanding common stock of the Company
which was valued at $1,487, 120. Due to the several unfavorable situations and
unfulfilled performance-based representations, this agreement was terminated as
of June 21, 2001. In settlement of this agreement, the consultant agreed to a
total of 250,000 shares (post split) of common stock, which was valued at
$125,000 and the remaining previously issued shares were returned to the
Company. At March 31, 2001, the Company had recorded a total of $371,799 of
consulting expense related to this agreement. As a result of the termination and
settlement, the previously recorded consulting expense totaling 271,799 had to
be adjusted to the settlement expense of $125,000, resulting in a reduction
(credit) of consulting expense recorded in general and administrative expenses
for the three months ended June 30, 2001.

         A total of 2,758,778 shares were cancelled by the company bringing the
total shares issued and outstanding to 61,960,890 as of June 30,2001.


                                       29
<PAGE>


Item 3.  Defaults Upon Senior Securities

         None.


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

         None.


Item 5.  Other Events

         None.


Item 6.  Exhibits and Reports on Form 8-K

                (a) Exhibits

                         None

                (b) Reports on Form 8-K.

                        Form 8-K filed on February 23, 2001

                        Form 8-K/A filed on March 16, 2001





                                       30
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused the project to be signed on its behalf by the
undersigned thereto duly authorized.



                                               CIRUS TELECOM, INC.


July 30, 2001                                  By:/s/  AMAR BAHADOORSINGH
                                                  -----------------------------
                                                       Amar Bahadoorsingh,
                                                       Chief Executive Officer