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 December 31, 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 December 31, 2001, there were 51,337,824 shares of Common Stock,
par value $.0001 per share, issued and outstanding.


<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                    CONTENTS



                                                                         Page
                                                                        number

Consolidated balance sheet at December 31, 2001  (unaudited)
and September 31, 2001 (audited)                                            3

Consolidated statements of operations for the three months
ended December 31, 2001 (unaudited) and for the period
December 11, 2000 (date of inception) to December 31, 2000 (unaudited)      5

Consolidated statements of cash flows for the three months ended
March 31, 2001 (unaudited) and for the period
December 11, 2000 (date of inception) to December 31, 2000 (unaudited)      6

Consolidated statement of stockholders' equity for
the three months ended December 31, 2001 (unaudited)                        7


Notes to consolidated financial statements                                  8

                                       2
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                     ASSETS

                                                                                 DECEMBER 31,     SEPTEMBER 30,
                                                                                    2001             2001
                                                                                    ----             ----
<S>                                                                              <C>              <C>
CURRENT ASSETS

   Cash                                                                          $     7,285      $        91
   Accounts receivable                                                                 2,369           27,684
   Prepaid expense and other current assets                                           68,046           57,573
                                                                                 -----------      -----------
     TOTAL CURRENT ASSETS                                                             77,700           85,348
                                                                                 -----------      -----------

PLANT AND EQUIPMENT - NET                                                            609,303          544,233
                                                                                 -----------      -----------

OTHER ASSETS

   Lease acquisition costs, net of accumulated amortization
      of $15,000 and $5,000, respectively                                            185,000          195,000
   Security deposits                                                                  15,262           15,262
                                                                                 -----------      -----------
     TOTAL OTHER ASSETS                                                              200,262          210,262
                                                                                 -----------      -----------




                                                                                 $   887,265      $   839,843
                                                                                 ===========      ===========
</TABLE>

The accompanying notes are an integral part of these financial statements


                                       3
<PAGE>

<TABLE>
<CAPTION>
                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                       LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                 DECEMBER 31,     SEPTEMBER 30,
                                                                                    2001             2001
                                                                                    ----             ----
<S>                                                                              <C>              <C>
CURRENT LIABILITIES

   Accounts payable                                                              $   212,234      $   126,817
   Accrued expenses                                                                   18,933           36,192
   Taxes payable - other than on income                                                5,830            6,076
   Current maturities of equipment loan payable and capital
      lease obligation                                                               150,078          144,845
   Notes and loans payable                                                            10,000           70,000
                                                                                 -----------      -----------
     TOTAL CURRENT LIABILITIES                                                       397,075          383,930
                                                                                 -----------      -----------
NONCURRENT LIABILITY

   Equipment loan payable and capital lease obligation - noncurrent                   27,333           38,538
                                                                                 -----------      -----------
STOCKHOLDERS' EQUITY
   Preferred Stock - $0.0001 par value, 5,000,000 shares authorized:

      Series A Convertible Preferred Stock, 1,000 shares authorized,
         1,000 shares issued and outstanding at December 31, 2001,
         liquidation preference $1,000,000
         990 shares issued and outstanding at September 30, 2001,
         liquidation preference $990,000

      Series B Convertible Preferred Stock, 1,000 shares authorized,
         395 shares issued and outstanding at December 31, 2001
         liquidation preference $395,000

   Common stock - $0.0001 par value:
      Authorized 100,000,000 shares
      Issued and outstanding 51,337,824 shares
      and 51,037,824, respectively                                                     5,134            5,104
   Additional paid-in capital                                                      2,230,838        1,564,868
   Accumulated deficit                                                            (1,662,865)      (1,152,597)
                                                                                 -----------      -----------
                                                                                     573,107          417,375
   Less: Unamortized portion of consulting fee
                paid by issuance of common stock                                    (110,250)            --
                                                                                 -----------      -----------
     TOTAL STOCKHOLDERS' EQUITY                                                      462,857          417,375
                                                                                 -----------      -----------
                                                                                 $   887,265      $   839,843
                                                                                 ===========      ===========
</TABLE>

The accompanying notes are an integral part of these financial statements

                                        4
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>



                                                                                  DECEMBER 11,
                                                              THREE MONTHS       2000 (DATE OF
                                                                 ENDED           INCEPTION TO
                                                              DECEMBER 31,       DECEMBER 31,
                                                                  2001               2000

<S>                                                          <C>                <C>
SALES                                                        $    109,843       $         --

COST OF SALES                                                      83,638
                                                             ------------

GROSS PROFIT                                                       26,205
                                                             ------------
OPERATING EXPENSES
   General and administrative expenses                            357,781
   Depreciation and amortization                                   42,405
                                                             ------------
TOTAL OPERATING EXPENSES                                          400,186
                                                             ------------
LOSS BEFORE OTHER INCOME (EXPENSE)                               (373,981)

OTHER INCOME (EXPENSE) - INTEREST EXPENSE                          (1,287)
                                                             ------------
NET LOSS                                                         (375,268)

DIVIDENDS ACCRETED ON CONVERTIBLE
   PREFERRED STOCK                                               (135,000)
                                                             ------------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                 $   (510,268)      $         --
                                                             ============       ============


LOSS PER SHARE: BASIC                                        $      (0.01)      $         --
                                                             ============       ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING: BASIC                                          51,137,824
                                                             ============
</TABLE>


The accompanying notes are an integral part of these financial statements

                                        5
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>



                                                                                  DECEMBER 11,
                                                               THREE MONTHS      2000 (DATE OF
                                                                   ENDED         INCEPTION TO
                                                                DECEMBER 31,     DECEMBER 31,
                                                                   2001              2000
<S>                                                             <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                     $(375,268)        $      --
   Adjustments to reconcile net loss to net cash
      used in operating activities:
         Noncash items:
            Depreciation                                           32,404
            Amortization                                           10,000
            Value of common stock issued and amortized for
               services received by the Company                    15,750
         (Increase) decrease in assets:
             Accounts receivable                                   25,315
             Prepaid expenses                                     (10,473)
          Increase (decrease) in liabilities:
            Accounts payable                                       85,417
            Accrued expenses                                      (17,259)
            Taxes payable - other than on income                     (246)
                                                                ---------
NET CASH USED IN OPERATING ACTIVITIES                            (234,360)
                                                                ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
   Purchase of plant and equipment                                (92,493)
                                                                ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Sale of preferred stock                                        405,000
   Repayment of equipment loan and capital lease obligation       (10,953)
   Repayment of notes and loans payable                           (60,000)
                                                                ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                         334,047

INCREASE IN CASH                                                    7,194

CASH AT BEGINNING OF PERIOD                                            91
                                                                ---------
CASH AT END OF PERIOD                                           $   7,285         $      --
                                                                =========         =========
</TABLE>


                                   (CONTINUED)

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

                                        6
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                      DECEMBER 11,
                                                                    THREE MONTHS     2000 (DATE OF
                                                                        ENDED        INCEPTION TO
                                                                    DECEMBER 31,     DECEMBER 31,
                                                                        2001             2000
<S>                                                                  <C>              <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for:
      Interest                                                       $   1,287        $      --
                                                                     =========        =========
      Income taxes                                                   $   2,336        $      --
                                                                     =========        =========


SCHEDULE OF NON-CASH OPERATING ACTIVITIES:
   Issuance of 300,000 shares of common stock for
      consulting services                                            $ 126,000        $      --
                                                                     =========        =========


SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
   Computer equipment acquired under equipment loan
      obligation                                                     $   4,981        $      --
                                                                     =========        =========


SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
   Imputed preferred stock dividend attributable to a beneficial
      conversion feature                                             $(135,000)       $      --
                                                                     =========        =========
</TABLE>



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


                                        7
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                      THREE MONTHS ENDED DECEMBER 31, 2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                PREFERRED STOCK                  COMMON STOCK            ADDITIONAL
                                                                --------------                   ------------              PAID-IN
                                                             SHARES        AMOUNT          SHARES           AMOUNT         CAPITAL
                                                             ------        ------          ------           ------         -------
<S>                                                       <C>            <C>              <C>            <C>             <C>
BALANCE AT OCTOBER 1, 2001                                       990     $                51,037,824     $     5,104     $ 1,564,868

SALE OF PREFERRED SHARES
   Series A                                                       10                                                          10,000
   Series B                                                      395                                                         395,000

ISSUANCE OF COMMON STOCK FOR
   CONSULTING SERVICES                                                                       300,000              30         125,970

IMPUTED PREFERRED STOCK DIVIDEND ATTRIBUTABLE
   TO A BENEFICIAL CONVERSION FEATURE                                                                                        135,000

NET LOSS FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
                                                         -----------     -----------     -----------     -----------     -----------

BALANCE AT DECEMBER 31, 2001                                   1,395     $                51,337,824     $     5,134     $ 2,230,838
                                                         ===========     ===========     ===========     ===========     ===========

[restubbed table]
<CAPTION>
                                                                          UNAMORTIZED
                                                                           PORTION OF          TOTAL
                                                          ACCUMULATED      CONSULTING      STOCKHOLDERS'
                                                            DEFICIT           FEE              EQUITY
                                                            -------           ---              ------
<S>                                                      <C>              <C>              <C>
BALANCE AT OCTOBER 1, 2001                               $(1,152,597)     $                $   417,375

SALE OF PREFERRED SHARES
   Series A                                                                                     10,000
   Series B                                                                                    395,000

ISSUANCE OF COMMON STOCK FOR
   CONSULTING SERVICES                                                       (110,250)          15,750

IMPUTED PREFERRED STOCK DIVIDEND ATTRIBUTABLE
   TO A BENEFICIAL CONVERSION FEATURE                       (135,000)

NET LOSS FOR THE THREE MONTHS ENDED DECEMBER 31, 2001       (375,268)                         (375,268)
                                                         -----------      -----------      -----------

BALANCE AT DECEMBER 31, 2001                             $(1,662,865)     $  (110,250)     $   462,857
                                                         ===========      ===========      ===========
</TABLE>

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

                                        8

<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION
------------------------------


The accompanying unaudited consolidated financial statements of Cirus Telecom
Inc. and subsidiaries (collectively, the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission ("SEC")
for quarterly reports on Form 10-QSB and do not include all of the information
and footnote disclosures required by accounting principles generally accepted in
the United States and should be read in conjunction with our consolidated
financial statements and notes thereto for the fiscal year ended September 30,
2001, included in the Company's Form 10-KSB as filed with the SEC. The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and reflect
all adjustments (consisting of normal recurring accruals) which are, in the
opinion of the management, considered necessary for a fair presentation of
results for the interim period. Operating results for the three month period
ended December 31, 2001 are not necessarily indicative of the results that may
be expected for the fiscal year ending September 30, 2002.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Nature of business
------------------

The Company sells telecommunications products and services, including domestic
and international long distance telephone, prepaid phonecards, dedicated access,
and other enhanced and value added telecommunication services.

The Company also operates a retail chain of telecom centers, which provide
distribution of telecom products to the retail market. Services and products
include prepaid phonecards, prepaid wireless products, and prepaid home services
and direct international dialing.

Principles of consolidation
---------------------------

The accompanying consolidated financial statements as of December 31, 2001
includes the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany transactions and balances have been eliminated.

Revenue recognition
-------------------

Revenue consists of sales of branded prepaid phonecards of other distributors,
sales of personal identification numbers ("PINS") to wholesale distributors for
use in their calling cards and fees charged for retail telephone usage including
domestic and international long distance, and sales of telephonic services from
Cirus owned telecom centers. Sales of PINs may be subject to a right of return
and revenue from such sales is recognized when the return privilege has
substantially expired or when all conditions have been met to terminate the
buyers right of return, whichever occurs first. Revenue is recognized on sale of
prepaid phonecards at the time of sale and at Cirus owned telecom centers upon
use of telephone services.

                                       9
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------

Use of estimates
----------------

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

Accounts receivable
-------------------

The Company utilizes the allowance method for recognizing the collectibility of
its accounts receivable. The allowance method recognizes bad debt expense based
on reviews of the individual accounts outstanding based on the surrounding
facts. As of December 31, 2001, no allowance was deemed necessary by management.

Plant and equipment
-------------------

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

A long-term lease transaction relating to certain equipment acquired by the
Company has been accounted for as a capital lease in accordance with Financial
Accounting Standards Board Statement No. 13. The lease obligation has been
capitalized as at the beginning of the lease term, reflecting the present value
of future rental payments. A corresponding amount has been capitalized as the
cost of the equipment and depreciation is charged over the five year estimated
economic life of the asset.

Long-lived assets
-----------------

The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

                                       10
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------

Lease acquisition costs
-----------------------

Lease acquisition costs are capitalized and are amortized on a straight-line
basis over the five year life of the leases.

Income taxes
------------

The Company accounts for income taxes under the Financial Accounting Standards
Board Statement of Financial Accounting Standards ("SFAS") No. 109 "Accounting
for Income Taxes" (SFAS 109). Under SFAS 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

NOTE  3 - 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" ("EPS"). Basic income (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 EPS reflects the potential
dilution that could occur from common stock issuable through stock based
compensation including stock options, restrictive stock awards, warrants and
other convertible securities. Diluted EPS is not presented since the effect
would be antidilitive.

NOTE  4- GOING CONCERN
----------------------

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred
substantial losses from operations and has deficiencies in working capital and
stockholders' equity at December 31, 2001, which raise substantial doubt about
its ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

                                       11
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - EQUIPMENT LOAN PAYABLE AND CAPITAL LEASE OBLIGATION
------------------------------------------------------------

In the fiscal year ended September 30, 2001, the Company had entered into an
agreement to acquire $215,022 of computer equipment and software. The terms of
the agreement called for the following payment terms and conditions: an initial
down payment of $61,500 and twelve monthly payments of $13,336 commencing April
2001. In the quarter ended December 31, 2001, the Company renegotiated this
equipment loan with the supplier, wherein the outstanding balance of $99,188,
plus the cost of a service contract of $17,053 through June 2002, for an
aggregate amount of $116,241, became payable in 15 monthly installments of
$8,100, including interest. The first payment was payable on December 1,
2001.The equipment loan is secured by the related computer equipment and
software.

The Company entered into an agreement during the fiscal year ended September 30,
2001 to acquire $84,500 of computer equipment under a capital lease for 24
monthly payments of $3,825 commencing July 1, 2001.

Interest expense on equipment loans and capital lease obligations for the three
months ended December 31, 2001 was $1,031.

NOTE  6 - STOCKHOLDERS' EQUITY
------------------------------

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

     A - Series A Convertible 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 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.

     During the fiscal year ended September 30, 2001, the Company sold 990
     shares of the Preferred Stock for total proceeds of $990,000. During the
     quarter ended December 31, 2001, the Company has sold an additional 10
     shares of Preferred Stock for total proceeds of $10,000.

                                       12
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE  6 - STOCKHOLDERS' EQUITY (Continued)
------------------------------------------

Preferred Stock (Continued)
---------------------------

     B - Series B Convertible Preferred Stock
     ----------------------------------------

     On October 2, 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 B Convertible Preferred Stock ("Preferred B"). Each share of
     Preferred B has a liquidation preference of $1,000. The Preferred B 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 B may be repurchased by the Company from holders of
     shares of Preferred B 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 B and has issued the
     Preferred B to a particular holder of Preferred B (the "Issuance Date");
     and (ii) by the payment to such holders of the sum of $1,250 per share of
     Preferred B so repurchased within three (3) business days of such notice by
     way of wire transfer, certified check or bank draft. The Company has agreed
     to allow the preferred B shareholders "Piggy-back Registration Rights" for
     the shares converted to common stock. This allows the shareholder the right
     to "Piggy-back" on any registration offering by the Company without cost to
     them.

     During the quarter ended December 31, 2001, the Company issued 395
     Preferred B shares and received $395,000.

                               * * * * * * * * * *

The holders of preferred shares are not entitled to receive any dividends. In
accordance with Financial Accounting Standards Board 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 $3,333 for
Series A Convertible Preferred Stock and $131,667 for Series B Convertible
Preferred Stock, for the three months ended December 31, 2001, 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
has been treated as a preferred dividend. For the three months ended December
31, 2001 the Company recorded a preferred dividend of $135,000.

                                       13
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  6 - STOCKHOLDERS' EQUITY (Continued)
------------------------------------------

Common Stock
------------

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

     On November 15, 2001, the Company entered into a one year agreement for
     services in connection with the development of its website and maintenance.
     In exchange for services rendered the consultant received 300,000 shares of
     restricted common stock, which has been valued at $126,000.

NOTE 7 - RELATED PARTY TRANSACTIONS
-----------------------------------

On February 8, 2001, the Company 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. On December 19, 2001, the chief technology
officer resigned from the Company. As of December 31, 2001, the Company has
accrued $15,186 in unpaid salary to this officer. The chief executive officer
has agreed to forego unpaid salary of $30,000 through September 30, 2001 and
waive salary for the quarter ended December 31, 2001.

NOTE 8 - SUBSEQUENT EVENT
-------------------------

On January 22, 2002, the Company entered into an Agreement and Plan of Merger
with THC Merger Corp., a wholly-owned Delaware corporation formed on January 9,
2002 by the Company ("Subsidiary"), THC Internet Solutions, Inc., a Delaware
corporation ("THC"), Jeffrey L. Cook ("Cook"), Fanny Lewandowski
("Lewandowski"), Kevin Moran ("Moran"), and Angel Arias ("Arias")(Cook,
Lewandowski, Moran and Arias are collectively referred to as the "THC
Stockholders"). Pursuant to the terms of the Agreement and Plan of Merger which
closed on January 22, 2002, the Subsidiary acquired all of the issued and
outstanding shares of capital stock of THC from the THC Stockholders in exchange
for an aggregate of 71,025,145 newly issued shares ("Initial Acquisition
Shares") of the Company's common stock (the "Acquisition"). Concurrently with
the Acquisition, THC was merged with and into Subsidiary. As a condition to the
Acquisition, the Company's sole director prior to the transaction is required to
appoint Kevin Moran and Angel Arias as members of the Company's Board of
Directors. The Company's current member of the Board of Directors, Amar
Bahadoorsingh, will remain a director.

                                       14
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8 - SUBSEQUENT EVENT (Continued)
-------------------------------------

Concurrently with the Acquisition, and as a condition thereof, certain of the
Company's principal stockholders returned shares of the Company's common stock
to the Company, without compensation. Amar Bahadoorsingh and Hansa Capital Corp.
each returned 8,500,000 shares, and Universal Network Solutions, Inc. returned
8,200,000 shares.

In the event the Company does not raise $1,000,000 of gross proceeds from the
sale or sales of equity securities of the Company on or before the 90th day
following the filing of a Form 8-K report containing all of the audited
financial statements of THC and proforma financial information required under
Regulation S-B (the "Measurement Date"), the Company will issue the number of
additional Company common shares to the THC stockholders, in the proportion that
each THC stockholder received Initial Acquisition Shares, determined by
subtracting the amount of gross proceeds raised from $1,000,000 and dividing the
resulting sum by average closing bid prices for such shares for the ten trading
days preceding the Measurement Date. Such Additional Acquisition Shares will be
issued and delivered to the THC Stockholders within five business days of the
Measurement Date, fully paid and free of any liens and shall be deemed to be
part of the initial consideration for the Merger.

                                       15
<PAGE>

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



         The following discussion and analysis should be read in conjunction
with the consolidated financial statements and related footnotes appearing
elsewhere in this Quarterly Report on Form 10-Q. In addition to historical
information, this discussion and analysis contains forward-looking statements
that involve risks, uncertainties and assumptions, which could cause actual
results to differ materially from Management's expectations. Factors that could
cause differences include, but are not limited to, expected market demand for
the Company's products, fluctuations in pricing for products distributed by the
Company and products offered by competitors, as well as general conditions of
the telecommunications marketplace.

OVERVIEW

         Cirus Telecom, Inc. ("Cirus") is a full-service telecommunications
company whose focus is on distributing integrated telephone services 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 quality of service.

         In August 2001, Cirus Telecom, Inc. added its "Cirus Talk"
multi-service telecom center subsidiary. This division owns and operates a
retail chain of "Internet and Calling Cafes" catering to ethnic customers. These
centers allow the distribution of telecom products to the underserved retail
niche that Cirus has identified in the telecom marketplace. Services and
products include prepaid phonecards, prepaid wireless products, prepaid home
services and direct international dialing.

         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.

         The Company began operations in the third quarter of the fiscal year
ended September 30, 2001 and 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.

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<PAGE>

         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 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 October 2001. This increased the telecom capacity of Cirus by
20,000,000 minutes per month. Cirus will utilize this switch to run prepaid
phonecard programs for various distributors of such cards, wholesaling
long-distance minutes and providing call-termination into the United States.

         The margins on switched telecom products vary on several factors, but
most importantly based on 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. As the NACT
switch is operational, Cirus is endeavoring 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 will need to seek additional financing to provide us with
sufficient liquidity to grow our business and carry out many of our expansion
plans. 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.

Cirus Talk Multi-Service Communications Centers:

         As reported above, Cirus added its "Cirus Talk" multi-service telecom
center subsidiary in August of 2001. This division owns and operates a retail
chain of "Internet and Calling Cafes" catering 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.

                                       17
<PAGE>

         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 per month. 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 completed its first five locations in Miami, Florida and
Huntington, Freeport and Copiague, New York. The primary demographic focus for
these 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.

Cirus "Multi-NET Independent Representative Marketing Program":

         Multi-NET is the marketing arm for the Cirus Retail Telecom Services
Division, through the use of outside sales agents. Cirus' intention is to
develop a grass-roots marketing program whose goal is attracting individuals to
sell voice and data products and services, to ethnic businesses and residential
customers. A marketing kit will be sold for $99, which includes a one-year
enrolment. Agents will earn a minimum of 2% residual commissions on their direct
sales.

         The Multi-NET program will provide exposure within the ethnic
communities allowing Cirus to become a dominant player in business and
residential telecom services. It is Cirus' goal to have over 1,000 Master Agents
throughout the US within the next year. This division is being run by Angel
Arias, VP Marketing.

"Cirus Talk Pro" Call Center Management Software:

         On November 27th, 2001 Cirus launched its "Cirus Talk Pro" call center
software management suite. The software will be bundled with Cirus'
long-distance services and sold to owners and operators of calling centers.
Cirus based the platform on its existing calling center operations and utilized
them for its beta test.

         The "Cirus Talk Pro" is call management software that will allow a user
in real-time to ascertain the call distribution on every line of outbound
service. This element is tied to the billing function, which will manage the
rates charged, as well as the wholesale cost of the minutes sold. This enables
the user to verify payables to the carrier. The software can be used to manage
just one location or utilized to oversee multiple venues. The software provides
a web-based interface and is therefore accessible from any Internet enabled
browser. There is also an inventory control module, which keeps track of the
inventories of phone cards, and other telecom products sold at the stores.

         By providing additional components to its telecom services and thereby
giving customers the ability to manage their financial transactions effectively,
Cirus believes that it will be successful in switching customers over to its
wholesale long-distance products from its competition. There are over 300
calling centers in the New York metropolitan area that Cirus will be actively
pursuing as customers.

Merger with THC Internet Solutions, Inc.:

         Cirus management anticipates that the merger with THC Internet
Solutions, Inc. will benefit the company by vertically integrating the company,
through THC's multiple retail and wholesale sales locations and the addition of
its highly trained telecom sales team. Cirus anticipates that its general and
administration costs will double with the addition of the new locations and
employees.

                                       18
<PAGE>

         THC and Cirus combined have eight wholesale and retail locations that
service populations in New York and Florida. THC also has multiple distribution
channels in 38 states across the US, including California, Nevada and Colorado.
The main switching facilities for Cirus will be in Miami FL and New York, NY.


Results of Operations

Gross Profit

         For the quarter ended December 31, 2001, Cirus generated $ 109,843 in
sales. Of this figure $103,697 was generated from Cirus operated call centers
one of which is located in Huntington, NY and two in Miami, FL. The Company
generated $6,146 of sales of phones cards to various other customers. Cost of
sales includes purchase of branded prepaid phonecards for resale and domestic
and international long distance carrier services expense for the call centers.
The gross profit generated from these operating activities was $26,205 for the
three months ended December 31, 2001.

         With the acquisition of THC Internet Solutions Inc. by the Company in
January 2002, we expect to do more sales at higher gross margins.

General and Administrative

         General and administrative expenses for the three months ended December
31, 2001 were $357,781. The general and administrative expenses were primarily
due to the Company incurring costs associated with marketing and investor
relations, consulting, employee salaries, officers' salaries, professional fees
and travel. The Company incurred $34,691 in professional fees, which includes
legal and accounting fees. Office and call center salaries amounted to $78,288.
Telephone and Internet connection expenses amounted to $86,822. This includes
telephone lines for the call centers; leased lines for the Switch and other
office telephone expenses. Rent expense amounted to $46,718, which includes rent
for five call centers, the Company office and rent paid for co-location of its
Switch. Other general and administrative expenses amounted to $111,262.

         We anticipate the amount of general and administrative expenses to rise
over the next two quarters as Cirus acquired THC Internet Solutions and its
operations. We expect to start utilizing our NACT switch by the end of February
2002, which will require additional staff and other expenses.

         The Company believes that it may be possible to generate enough income
for it to break even in the second fiscal quarter of 2002. It will require
additional funding in order to expand any segment of the business.

Depreciation and Amortization

         The Company put its Switch into operation in October 2001. For the
three months ended December 31, 2001, depreciation expense for the Switch and
related hardware and software amounted to $27,422. Depreciation on office
furniture and equipment, leasehold improvements and security systems for the
call centers amounted to $4,983.

         On July 13, 2001, the Company purchased certain assets from a telecom
services provider in an asset purchase transaction, wherein the Company acquired
the lease and leaseholds of two call centers run by the company. The Company
paid $100,000 for each the leases. The lease acquisition costs are being
amortized over the five-year life of the leases. For the three months ended
December 31, 2001, the amortization expense on these leases amounted to $10,000.

                                       19
<PAGE>

Net Loss

         The Company had a net loss of $375,268 for the three months ended
December 31, 2001. In addition the Company reported a net loss attributable to
common stockholders of $510,268 for the three months ended December 31, 2001.
This amount equates to a loss of $0.01 per share. Within this net loss figure,
there is a non-cash dividend attributed to the convertible preferred stock
issued of $135,000 for the three months ended December 31, 2001.

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
other activities in its first quarter ended December 31, 2001. The Company has
relied on funds from the sale of preferred shares of stock in this period.
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 December 31, 2001, the Company's current assets were $ 77,700,
which included $2,369 in accounts receivables and $68,046 in prepaid expenses.
Its current liabilities were $397,095, which included accounts payable and
accrued expenses of $ 231,167 mainly due to vendors, payroll taxes payable of
$5,830 current portion of balance due on equipment loan and capital lease of
$150,078 and short-term working capital loans of $10,000.

         For the three months ended December 31, 2001, the net cash used in
operating activities was $234,360. Operating activities uses were primarily due
to a net loss of $375,268 offset by an increase in accounts payable and accrued
expenses of $68,158.

         The Company used cash in investing activates of $92,493 for the three
months ended December 31, 2001, which were primarily due to purchases of
property and equipment and fix up of call centers.

         The Company increased its net cash from financing activities for the
three months ended December 31, 2001 by $334,047. The major component primarily
consisted of proceeds from issuance of convertible Preferred Stocks of $405,000
offset by repayment of short-term financing received of $60,000 from other
parties.

         In the second fiscal 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 and operations that Cirus
is undertaking.

         The Company will not be able to substantially expand its switching
facility to increase the capacity without additional capital being raised by the
company, or negotiating preferential leasing terms 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.

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<PAGE>

EQUITY AND DEBT FINANCING

Preferred Stock

         On October 2, 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 B Convertible Preferred Stock ("Preferred B"). Each share of Preferred B
has a liquidation preference of $1,000. The Preferred B 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 B may be
repurchased by the Company from holders of shares of Preferred B 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 B and has issued the Preferred B to a particular holder of
Preferred B (the "Issuance Date"); and (ii) by the payment to such holders of
the sum of $1,250 per share of Preferred B so repurchased within three (3)
business days of such notice by way of wire transfer, certified check or bank
draft. The Company has agreed to allow the Preferred B shareholders "Piggy-back
Registration Rights" for the shares converted to common stock. This allows the
shareholder the right to "Piggy-back" on any registration offering by the
Company without cost to them.

         During the quarter ended December 31, 2001, the Company issued 395
Preferred B shares and received $395,000. The Company may not repurchase any
shares of Preferred B for which it has received a Conversion Notice.

         Additionally, the Company issued 10 shares of Series A Convertible
Preferred Stock in the quarter ended December 31, 2001 and received $10,000.

                                       21
<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

         None.

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.

             None.

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                                   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.


February 20, 2002                             By: /s/AMAR BAHADOORSINGH
                                                  ----------------------------
                                                     Amar Bahadoorsingh,
                                                       Chief Executive Officer