UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               AMENDMENT NO. 2 TO
                                  FORM 10-QSB/A

(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 61,401,824 shares of Common Stock, par value
$.0001 per share, issued and outstanding.

<PAGE>

                                     PART I
                                     ------

                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         This Item is amended by replacing the Consolidated Balance Sheets at
June 30, 2001 and the related Consolidated Statements of Operations and
Comprehensive Income (Loss), Consolidated Statement of Cash Flows and
Consolidated Statement of Stockholders' Equity (Deficiency) for the three months
ended June 30, 2001 and for the period from December 11, 2000 (Date of
Inception) to June 30, 2001 and the Notes to Consolidated Financial Statements
with the following:

                                    CONTENTS


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

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

Consolidated statement of stockholders' equity for the
period from December 11, 2000 (date of inception)
to June 30, 2001 (unaudited)(restated)                                    5 - 6

Consolidated statements of cash flows for the three months
ended June 30, 2001 (unaudited) (restated)and for the period
December 11, 2000(date of inception) to June 30, 2001
(unaudited)(restated)                                                     7 - 8

Notes to Consolidated Financial Statements                                9 - 24


                                       2
<PAGE>



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

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>

                                                                                  June 30, 2001
                                                                                    (unaudited)        December 31, 2000
                                                                                     (restated)             (audited)
                                                                                    -----------            -----------
<S>                                                                                 <C>                    <C>
Current assets:
    Cash                                                                            $   155,935            $        --
    Accounts receivable - net                                                           149,583                     --
    Prepaid expenses                                                                    414,208                     --
                                                                                    -----------            -----------
         Total current assets                                                           719,726                     --
                                                                                    -----------            -----------

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

Other assets                                                                             41,400                     --
                                                                                    -----------            -----------
         Total assets                                                               $ 1,061,733            $        --
                                                                                    ===========            ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current liabilities:
    Accounts payable and accrued expenses                                           $    64,920            $        --
    Due to stockholder                                                                       --                 15,712
    Capital lease payable                                                               116,119                     --
                                                                                    -----------            -----------
         Total current liabilities                                                      181,039                 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;
     at June 30, 2001 liquidation preference $925,000                                        --                     --
    Common stock - $0.0001 and $ .001 par value, respectively,
    100,000,000 shares authorized, 61,401,824 and 4,000
    shares issued and outstanding, respectively                                           6,140                      4
Additional paid-in capital                                                            1,685,394                     96
    Stock subscription receivable                                                            --                   (100)
    Accumulated deficit                                                                (810,586)               (15,712)
    Accumulated other comprehensive loss                                                   (254)                    --
                                                                                    -----------            -----------

         Total stockholders' equity (deficiency)                                        880,694                (15,712)
                                                                                    -----------            -----------

Total liabilities and stockholders' equity                                          $ 1,061,733            $        --
                                                                                    ===========            ===========
</TABLE>


           See accompanying notes to consolidated financial statements



                                       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
                                                                      (restated)                 (restated)
                                                                     ------------               ------------
<S>                                                                  <C>                        <C>
Income:
    Sales - related party                                            $    151,120               $    151,120
    Sales                                                                 216,501                    216,501
                                                                     ------------               ------------
         Total income                                                     367,621                    367,621
                                                                     ------------               ------------
Cost of sales:
    Cost of sales - related party                                         214,457                    214,457
    Cost of sales                                                          68,960                     68,960
                                                                     ------------               ------------
         Total cost of sales                                              283,417                    283,417
                                                                     ------------               ------------

Gross profit                                                               84,204                     84,204

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

Income (loss) before other income
    and provision for income taxes                                          6,355                   (497,873)

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                             5,891                   (494,564)

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

Net income (loss)                                                           5,891                   (494,564)

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

Comprehensive net income (loss)                                      $      5,827                   (494,818)
                                                                     ============               ============

Net income (loss)                                                    $      5,891               $   (494,564)

Dividends accreted on convertible
  preferred stock                                                         (32,688)                  (316,022)
                                                                     ------------               ------------

Net loss attributable to common stockholders                         $    (26,797)              $   (810,586)
                                                                     ============               ============

Income (loss) per share:
    Basic                                                            $        NIL               $       (.02)
                                                                     ============               ============

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



           See accompanying notes to consolidated financial statements



                                       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>

                                                                                             Additional
                                              Preferred Stock          Common Stock           Paid - in
                                             Shares    Amount      Shares         Amount       Capital
                                             ------  --------    ----------    -----------    -----------
<S>                                            <C>   <C>          <C>          <C>            <C>
Balance at December 11, 2000                    --   $     --         4,000    $         4    $        96

Contribution of common shares
  by founders in connection
  with recapitalization                         --         --        (4,000)            (4)           (96)

Recapitalization in connection
  with reverse acquisition of
  Cirus Telecom, Inc.                           --         --    20,701,824          2,070        (68,752)

Issuance of common stock
  in connection with the reverse
  acquisition of Cirus Telecom, Inc.
  net of related costs                          --         --    40,000,000          4,000        (62,306)

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

Issuance of common stock in
  connection with service
  contract                                      --         --       250,000             25        124,975

Issuance of common stock in
  connection with service
  contract                                      --         --       450,000             45        450,455

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

Imputed preferred stock
  dividend attributable
  to a beneficial conversion
  feature                                       --         --            --             --        316,022

[RESTUBBED]
<CAPTION>

                                                                             Accumulated        Total
                                                  Stock                         Other        Stockholders'
                                               Subscription   Accumulated    Comprehensive     Equity
                                                 Receivable      Deficit      Income (loss)  (Deficiency)
                                                ------------   -----------    ------------   ------------
<S>                                             <C>            <C>            <C>            <C>
Balance at December 11, 2000                    $      (100)   $        --    $        --    $        --

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

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

Issuance of common stock
  in connection with the reverse
  acquisition of Cirus Telecom, Inc.
  net of related costs                                   --             --             --        (58,306)

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

Issuance of common stock in
  connection with service
  contract                                               --             --             --        125,000

Issuance of common stock in
  connection with service
  contract                                               --             --             --        450,500

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

Imputed preferred stock
  dividend attributable
  to a beneficial conversion
  feature                                                --       (316,022)            --             --

</TABLE>

           See accompanying notes to consolidated financial statements


                                       5
<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>

                                                                                   Additional
                                  Preferred Stock           Common Stock            Paid - in
                                 Shares    Amount        Shares         Amount       Capital
                                 ------  --------      ----------    -----------   -----------
<S>                              <C>       <C>         <C>           <C>          <C>
Net (loss) for the period
 December 11, 2000 (date of
 inception) to June 30, 2001           --          --           --           --           --
                               ----------   ---------   ----------   ----------   ----------

Balance at June 30,
 2001 (restated)                      925   $      --   61,401,824   $    6,140   $1,685,394
                               ==========   =========   ==========   ==========   ==========

[RESTUBBED]
<CAPTION>


                                                              Accumulated        Total
                                  Stock                          Other        Stockholders'
                               Subscription    Accumulated    Comprehensive     Equity
                                 Receivable      Deficit      Income (loss)  (Deficiency)
                                ------------   -----------    ------------   ------------
                                 <C>            <C>           <C>            <C>
Net (loss) for the period
 December 11, 2000 (date of
 inception) to June 30, 2001           --       (494,564)            --        (494,564)
                                ---------     ----------     ----------      ----------

Balance at June 30,
 2001 (restated)                $      --     $ (810,586)    $     (254)     $  880,694
                                =========     ==========     ==========      ==========
</TABLE>




           See accompanying notes to consolidated financial statements


                                       6
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                  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
                                                                  (restated)                (restated)
                                                                --------------          -------------------
<S>                                                                <C>                       <C>
Cash flows from operating activities:
Net income (loss)                                                  $   5,891                 $(494,564)
Adjustments to reconcile net income (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                                                 (149,583)                 (149,583)
Prepaid expenses                                                     (48,097)                  (68,097)
                                                                                               (68,097)
Other assets                                                         (41,400)                  (41,400)
Increase in:
Accounts payable and accrued expenses                                 37,196                    64,920
                                                                   ---------                 ---------

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


                                       7
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                  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
                                                                              (restated)                (restated)
                                                                            --------------          ------------------
<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:
  Issuance of 700,000 shares of common stock
  for consulting services being amortized                                   $      325,500             $ 575,500
                                                                            ==============             =========

Cancellation of 2,758,778 shares of common
  stock related to the cancellation of a
  consulting contract                                                       $    1,362,120             $ 362,194
                                                                            ==============             =========

Schedule of non-cash investing activities:
  Acquisition of computer equipment and software in
  connection with capital lease obligations                                 $           --             $ 215,022
                                                                            ==============             =========

Schedule of non-cash financing activities:
  Issuance of 40,000,000 shares of common
  stock in connection with the Comm merger                                  $      (58,306)            $ (58,306)
                                                                            ==============             =========
Imputed preferred stock dividend attributable to a
  beneficial conversion feature                                             $       32,688             $ 316,022
                                                                            ==============             =========
</TABLE>



           See accompanying notes to consolidated financial statements


                                       8
<PAGE>



                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND
      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 wholly owned subsidiaries of Talk and have been 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 40,000,000 shares (retroactively restated
         for 4 for 1 stock split) 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.


                                       9
<PAGE>


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



NOTE 1 - ORGANIZATION (cont'd)

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

         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.

         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 accounting principles generally accepted in
         the United States of America for interim financial information and with
         the instructions to Form 10-QSB and items 303 and 310(B)of 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 consolidated financial position of Cirus Telecom, Inc. and
         subsidiaries as of June 30, 2001 and the results of our operations and
         our 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 periods 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.




                                       10
<PAGE>


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



NOTE 2 - INTERIM RESULTS AND BASIS OF PRESENTATION (cont'd)

         These unaudited financial statements should be read in conjunction with
         the Company's December 31, 2000 audited financial statements and notes
         thereto.

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. (see note 8 for
         stock split)

     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 respective assets, 3 to 7 years.
         Expenditures for maintenance and repairs are expensed as incurred.


                                       11
<PAGE>


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



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

     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. 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 upon use of telephone
         services at Cirus owned telecom centers.

     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 rates 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.

     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" ("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. F-10


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

     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 June 30, 2001
         ------------------------------------------

         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.

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
                                                     ========





                                       13
<PAGE>


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



NOTE 4 - PROPERTY AND EQUIPMENT (cont'd)

         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.





                                       14
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND
      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. 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
         -----------------

         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.

         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:


                                       15
<PAGE>

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



NOTE 7 - COMMITMENTS AND CONTINGENCIES (cont'd)

         Lease Commitments (cont'd)
         -------------------------

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

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

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

         The Company has derived 41% of its revenues from a related party (see
         note 9) and 59% of its 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 40,000,000 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.




                                       16
<PAGE>

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


NOTE 8 - STOCKHOLDERS' EQUITY (cont'd)

         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.

         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.



                                       17
<PAGE>

                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND
      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 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
         $316,022, 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 June 30, 2001 and the
         period from December 11, 2000 (date of inception) to June 30, 2001 the
         Company recorded a preferred dividend of $32,688 and $316,022,
         respectively.

         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 unfulfilled performance-based
         representations and other issues, this agreement was terminated as of
         June 21, 2001. In settlement of this agreement the consultant agreed to
         a total of 250,000 shares of common stock, which was valued at
         $125,000and 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.



                                       18
<PAGE>


                      CIRUS TELECOM, INC. AND SUBSIDIARIES
                         (FORMERLY CAPITAL ONE VENTURES)
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND
      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
         effect a four for one forward split of the Company's outstanding common
         stock to all shareholders of record as of April 6, 2001. The number of
         shares of common stock increased from 15,237,956 to 60,951,824. A total
         of $4,571 was reclassified from the Company's additional paid in
         capital account to the Company's common stock account. All share and
         per share amounts have been restated to retroactively reflect the stock
         split.



                                       19
<PAGE>

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


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.

         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 distribution
         agreement provides the distributor the right 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 Cirus common stock.




                                       20
<PAGE>

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



NOTE 9 - RELATED PARTY TRANSACTIONS (cont'd)

         Distribution Agreement (cont'd)
         ------------------------------


                           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 Cirus 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 Cirus common stock.

         The Company has derived revenues of approximately $151,000 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.

NOTE 10 -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.




                                       21
<PAGE>


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



NOTE 10 -SUBSEQUENT EVENTS (cont'd)

         Capital lease obligation (cont'd)
         ------------------------

         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.

NOTE 11 -RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
                                                              -

         The consolidated financial statements for the three-month period ended
         June 30, 2001 and for the period December 11, 2000 (date of inception)
         to June 30, 2001 have been restated to reflect the subsequent
         developments which effect the previously filed Amendment 1 to Form
         10-QSB filed on August 1, 2001 to be in accordance with SFAS No. 48,
         Revenue Recognition When Right of Return Exists ("SFAS 48"). The
         consolidated financial statements have been restated to reflect the
         correction. The previously issued consolidated financial statements
         included the recognition of $1,038,500 of revenue from a sale of
         telecom PINs to a related party wholesaler and cost of sales
         attributable to the transaction of $1,023,000 resulting in $15,500
         gross profit from this sale. It was discovered subsequent to the sale
         that the telecom pins were not useable by the Company's customer due to
         the Company's underlying telecom provider being unable to provide the
         necessary services to support the telecom PINs due to the telecom
         provider's network issues. The effect of the correction on net income
         for the three-month period ended June 30, 2001 and for the period
         December 11, 2000 (date of inception) to June 30, 2001 was an increase
         in net loss of $15,500 or $Nil per share.

         The consolidated financial statements for the three-month period ended
         June 30, 2001 and for the period December 11, 2000 (date of inception)
         to June 30, 2001 have also been restated to reflect a change in the
         amortization period of dividends accreted on convertible preferred
         stock to be in accordance with EITF issue No. 98-5 and No. 00-27 which
         requires such amortization through the date of earliest conversion. The
         preferred stock permits conversion any time after the 30th calendar day
         the Company receives payment in full. The amortization period was
         changed from one year to thirty calendar days from the date the Company
         received payment in full.





                                       22
<PAGE>


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


NOTE 11 -RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (cont'd)

         The effect of this change is a decrease in dividends accreted on
         redeemable convertible preferred stock previously stated of $71,123 to
         a restated $32,688 in the quarter ended June 30, 2001 and for the
         period December 11, 2000 to June 30, 2001 an increase in the previously
         stated amount from $114,273 to 316,022. The effect of this change upon
         net loss attributable to common stockholders is a decrease of $38,435
         for the quarter ended June 30, 2001 and an increase of $201,749 for the
         period December 11, 2000 (date of inception) to June 30, 2001.

         The effect of the corrections on net loss were as follows:

         For the period December 11, 2000 (date of inception) to June 30, 2001:
<TABLE>
<CAPTION>
                                                                  Net Loss
                                                                Attributable
                                             Net Income          to Common           Net Income
                                               (Loss)           Stockholders        (Loss)Per Share
                                           -----------           -----------            -------
<S>                                        <C>                   <C>                    <C>
           As previously stated on
            Amendment #1 to
            Form 10-QSB/A                  $  (479,064)          $  (608,837)           $  (.01)

            Change in amortization
            period of dividends
            accreted to common
            stockholders                            --              (201,749)              (.01)

            Correction in
            recognizing revenue
            at June 30, 2001                (1,038,500)                   --               (.02)

            Correction in recording
            cost of revenue at
            June 30, 2001                    1,023,000                    --                .02
                                           -----------           -----------            -------

            As reflected on the
            restated consolidated
            statement of operations        $  (494,564)          $  (810,586)           $  (.02)
                                           ===========           ===========            =======
</TABLE>

                                       23
<PAGE>


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



NOTE 11 -     RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (cont'd)

            The effect of the corrections on net loss were as follows:

           For the three month period ended June 30, 2001
<TABLE>
<CAPTION>

                                                                    Net Loss
                                                                  Attributable
                                              Net Income            to Common          Net Income
                                                (Loss)             Stockholders      (Loss)Per Share
                                              -----------        ---------------     ----------------
<S>                                          <C>                   <C>                      <C>
            As previously stated on
            Amendment #1 to
            Form 10-QSB/A                    $    21,391           $   (65,232)             $ NIL

            Change in amortization
            period of dividends
            accreted to common
            stockholders                              --                38,435
NIL

            Correction in
            recognizing revenue at
            June 30, 2001                     (1,038,500)                   --              (.02)

            Correction in recording
            cost of revenue at
            June 30, 2001                      1,023,000                    --               .02
                                             -----------           -----------              ----


            As reflected
            on the restated
            consolidated statement
            of operations                    $     5,891           $   (26,797)             $ NIL
                                             ===========           ===========              ====
</TABLE>




                                       24
<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.




                                       25
<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
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".



                                       26
<PAGE>


         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
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.



                                       27
<PAGE>


         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.

         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.



                                       28
<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.



                                       29
<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
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.



                                       30
<PAGE>

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

RESULTS OF OPERATIONS
-----------------------

         Restatement of Consolidated Financial Statements
         ------------------------------------------------
                                                           -

         The consolidated financial statements for the three-month period ended
         June 30, 2001 and for the period December 11, 2000 (date of inception)
         to June 30, 2001 have been restated to reflect the subsequent
         developments which effect the previously filed Amendment 1 to Form
         10-QSB filed on August 1, 2001 to be in accordance with SFAS No. 48,
         Revenue Recognition When Right of Return Exists ("SFAS 48"). The
         consolidated financial statements have been restated to reflect the
         correction. The previously issued consolidated financial statements
         included the recognition of $1,038,500 of revenue from a sale of
         telecom PINs to a related party wholesaler and cost of sales
         attributable to the transaction of $1,023,000 resulting in $15,500
         gross profit from this sale. It was discovered subsequent to the sale
         that the telecom pins were not useable by the Company's customer due to
         the Company's underlying telecom provider being unable to provide the
         necessary services to support the telecom PINs due to the telecom
         provider's network issues. The effect of the correction on net income
         for the three-month period ended June 30, 2001 and for the period
         December 11, 2000 (date of inception) to June 30, 2001 was an increase
         in net loss of $15,500 or $Nil per share.

         The consolidated financial statements for the three-month period ended
         June 30, 2001 and for the period December 11, 2000 (date of inception)
         to June 30, 2001 have also been restated to reflect a change in the
         amortization period of dividends accreted on convertible preferred
         stock to be in accordance with EITF issue No. 98-5 and No. 00-27 which
         requires such amortization through the date of earliest conversion. The
         preferred stock permits conversion any time after the 30th calendar day
         the Company receives payment in full. The amortization period was
         changed from one year to thirty calendar days from the date the Company
         received payment in full.

         The effect of this change is a decrease in dividends accreted on
         redeemable convertible preferred stock previously stated of $71,123 to
         a restated $32,688 in the quarter ended June 30, 2001 and for the
         period December 11, 2000 to June 30, 2001 an increase in the previously
         stated amount from $114,273 to 316,022. The effect of this change upon
         net loss attributable to common stockholders is a decrease of $38,435
         for the quarter ended June 30, 2001 and an increase of $201,749 for the
         period December 11, 2000 (date of inception) to June 30, 2001.




                                       31
<PAGE>

         The effect of the corrections on net loss were as follows:
<TABLE>
<CAPTION>

     For the period December 11, 2000 (date of inception) to June 30, 2001:

                                                                                Net Loss
                                                                               Attributable
                                                      Net Income                to Common               Net Income
                                                        (Loss)                  Stockholders           (Loss)Per Share
                                                      -----------               ------------            -------------
<S>                                                   <C>                        <C>                        <C>
             As previously stated on
              Amendment #1 to
              Form 10-QSB/A                           $  (479,064)               $  (608,837)               $  (.01)

              Change in amortization
              period of dividends
              accreted to common
              stockholders                                     --                   (201,749)                  (.01)

              Correction in
              recognizing revenue
              at June 30, 2001                         (1,038,500)                        --                   (.02)

              Correction in recording
              cost of revenue at
              June 30, 2001                             1,023,000                         --                    .02
                                                      -----------                -----------                   ----

              As reflected on the
              restated consolidated
              statement of operations                 $  (494,564)               $  (810,586)               $  (.02)
                                                      ===========                ===========                =======
</TABLE>

         The effect of the corrections on net loss were as follows:

<TABLE>
<CAPTION>

                 For the three month period ended June 30, 2001

                                                                                Net Loss
                                                                               Attributable
                                                      Net Income                to Common               Net Income
                                                        (Loss)                  Stockholders           (Loss)Per Share
                                                      -----------               ------------            -------------
<S>                                                   <C>                        <C>                        <C>
            As previously stated on
            Amendment #1 to
            Form 10-QSB/A                             $    21,391                $   (65,232)                $  NIL

            Change in amortization
            period of dividends
            accreted to common
            stockholders                                       --                     38,435                    NIL

            Correction in
            recognizing revenue at
            June 30, 2001                              (1,038,500)                        --                  (.02)

            Correction in recording
            cost of revenue at
            June 30, 2001                               1,023,000                         --                    .02
                                                      -----------                -----------                ------

            As reflected on the restated
            consolidated statement
            of operations                             $     5,891                $   (26,797)               $   NIL
                                                      ===========                ===========                =======
</TABLE>


                                       32
<PAGE>

Gross Profit

         Cirus generated no revenues in the three-month and cumulative period
preceding the quarter ended June 30, 2001. Cirus used the time and resources
from February 2001 to install and build its network. Cirus generated revenues in
the third quarter through the sale of third party phonecards to its existing
customer base.

         As of June 30th the end of our third quarter, Cirus generated $ 367,621
in sales. Of this figure $ 151,120 was generated through 9278 Communications,
Inc. 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
other customers including THC Internet Solutions, Inc. as part of a services
contract with Cirus. The gross profit generated from these operating activities
was $ 84,204 for the quarter ended June 30, 2001.

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.

         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%.



                                       33
<PAGE>



         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

         In the quarter ended June 30, 2001 certain computer software and
equipment were 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

         The Company had net income of $5,891 for the quarter ended June 30,
2001 and has a cumulative loss of $494,564 from inception to June 30, 2001. In
addition the Company reported a net loss attributable to common stockholders of
$26,797 for the quarter ended June 30, 2001, down from $768,077 in the previous
quarter. This amount equates to -$0.01 per share versus NIL per common share in
the second quarter. The net loss attributable to common stockholders for the
cumulative period to June 30, 2001 is $810,586. Within this net loss figure,
there is a non-cash dividend attributed to the convertible preferred stock
issued of $32,688 and $316,022, respectively for the quarter and cumulative
period ended June 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------

         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.

         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.



                                       34
<PAGE>



         As of June 30, 2001, the Company's current assets were $ 719,726 and
its current liabilities were $ 181,039, which resulted in working capital of $
538,687. Also, included in the current liabilities are accounts payable and
accrued expenses of $ 64,920 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, $149,583 in accounts receivable, $414,208 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 cumulative period December 11, 2001 through June 30, 2001 and
for the three months ended June 30, 2001, the net cash used for operating
activities was $457,019 and $336,087, respectively. Operating activities uses
were primarily due to a net loss of $494,564 for the cumulative period and net
income of $5,891 for the quarter ended June 30, 2001, an increase in account
receivable of $149,583 which used cash for the cumulative and quarter ended June
30, 2001, and an increase in accounts payable and accrued expenses of $64,920
for the cumulative period and $37,196 for the quarter ended June 30, 2001 which
provided cash.

         The Company used cash in investing activates of $202,965 for the
cumulative period and $85,053 for the quarter ended June 30, 2001 which were
primarily due to purchases of property and equipment and merger expenses.

         The Company increased its net cash from financing activities for the
cumulative period and quarter ended June 30, 2001 to $815,740 and $37,597,
respectively. The major component primarily consisted of proceeds from issuance
of convertible notes payable of $925,000 and $75,000 for the cumulative period
and quarter ended June 30, 2001.

         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 $181,039
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. raising $850,000. As part of a
financing transaction, the company 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.

         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.



                                       35
<PAGE>


         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.





                                       36
<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 61,401,824 as of June 30,2001.

Item 3.  Defaults Upon Senior Securities

     None.


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

     None.


                                       37
<PAGE>


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




                                       38
<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.


December 27, 2001                          By:/s/AMAR BAHADOORSINGH
                                          --------------------------
                                             Amar Bahadoorsingh,
                                             Chief Executive Officer





                                       39