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

                                    FORM 10-Q

                                   (Mark One)
              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2001
                                ----------------

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                                  EXCHANGE ACT

                        For the transition period from to

                        COMMISSION FILE NUMBER 000-28705
                                    ---------

                               CATHAYONLINE, INC.
        (Exact name of small business issuer as specified in its charter)


                           NEVADA                  88-0346952
 -------------------------------------------------------------------------------
                   (State or other jurisdiction (IRS Employer
                of incorporation or organization) Identification
                                      No.)

             575 MADISON AVENUE, 9th FLOOR, NEW YORK NEW YORK, 10022
           ----------------------------------------------------------
                    (Address of principal executive offices)

                                 (212) 605-0512
                            Issuer's telephone number

(Former address:
 437 Madison Avenue, 33rd Floor, New York, New York, 10022 Tel: (212) 888-6822)

     Indicate  by check mark  whether the  registrant  (1) has 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
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

YES X....NO___

<PAGE>

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practical date: MARCH 31, 2001

                                   34,297,942
                           --------------------------

Transitional Small Business Disclosure Format (check one).
YES___   NO   X

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS



                         INDEPENDENT ACCOUNTANT'S REPORT



CathayOnline, Inc.
(a development stage company)

     We  have   reviewed  the   accompanying   consolidated   balance  sheet  of
CathayOnline,  Inc. (a development  stage company) as of March 31, 2001 and June
30, 2000,  and the related  consolidated  statements of operations for the three
and nine months  ended March 31, 2001 and 2000,  the  consolidated  statement of
stockholders'  equity since inception to March 31, 2001, and  consolidated  cash
flows for the nine month periods ended March 31, 2001 and 2000.  These financial
statements are the responsibility of the Company's management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.

     Based on our review,  we are not aware of any material  modifications  that
should be made to the accompanying consolidated financial statements for them to
be in conformity with generally accepted accounting principles.

                                                  Respectfully submitted

                                                  /S/ ROBISON, HILL & CO.
                                                  Certified Public Accountants

Salt Lake City, Utah
May 14, 2001









<PAGE>


                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                       INTERIM CONSOLIDATED BALANCE SHEETS




                                                Unaudited
                                              March 31, 2001      June 30, 2000
                                                ------------       ------------
ASSETS
Current Assets:
   Cash & Cash Equivalents ...............      $       --         $    786,290
   Restricted Cash .......................            75,577             82,497
   Accounts receivable ...................           396,381               --
   Advances ..............................           512,136             22,122
   Prepaid expenses & Deposits ...........            86,701            325,387
                                                ------------       ------------

     Total Current Assets ................         1,070,795          1,216,296
                                                ------------       ------------

Fixed Assets:
   Office Equipment ......................           170,815            133,753
   Computer Equipment ....................         1,424,973          1,381,304
   Furniture & Fixtures ..................           143,956            168,563
   Leasehold Improvements ................           268,923            229,925
                                                ------------       ------------
                                                   2,008,667          1,913,545
Less Accumulated Depreciation ............          (621,915)          (321,126)
                                                ------------       ------------

     Net Fixed Assets ....................         1,386,752          1,592,419
                                                ------------       ------------
Other Assets:
   Intangible Assets .....................           144,943             84,962
   Condominium ...........................              --              230,476
   Available-for-sale Investments ........         1,968,750          7,000,000
                                                ------------       ------------

     Total Other Assets ..................         2,113,693          7,315,438
                                                ------------       ------------

Total Assets: ............................      $  4,571,240       $ 10,124,153
                                                ============       ============
<PAGE>


                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                       INTERIM CONSOLIDATED BALANCE SHEETS
                                   (Continued)

                                                   Unaudited
                                                March 31, 2001     June 30, 2000
                                                  ------------     ------------
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
   Bank Overdraft ............................    $     19,522     $       --
   Accounts Payable & Accrued Expenses .......       2,113,130        1,156,390
   Loans Payable .............................         204,945             --
                                                  ------------     ------------
                                                     2,337,597        1,156,390
   Convertible Notes payable .................         453,671             --
                                                  ------------     ------------
     Total Liabilities .......................       2,791,268        1,156,390
                                                  ------------     ------------

Stockholders' Equity:
   Common Stock, Par value $.001
      Authorized 100,000,000 shares,
      Issued and outstanding 34,297,942
      and 28,979,201 shares
      at March 31, 2001 and June 30, 2000 ....          34,298           28,979
  Paid-In Capital ............................      12,298,044       11,337,437
  Stock Subscribed Receivable ................            --           (408,750)
  Accumulated Unrealized Gains/Losses
  On Available for Sale Investments ..........      (5,031,250)            --
  Deficit Accumulated During the
  Development Stage ..........................      (5,521,120)      (1,989,903)
                                                  ------------     ------------

     Total Stockholders' Equity ..............       1,779,972        8,967,763
                                                  ------------     ------------

     Total Liabilities and
       Stockholders' Equity ..................    $  4,571,240     $ 10,124,153
                                                  ============     ============






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

<PAGE>

                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
            INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                       Cumulative
                                                                                                         since
                                                                                                       inception
                                                                                                           of
                                           Three Months Ended              Nine Months Ended
                                                March 31,                      March 31,              development
                                     ------------------------------- ------------------------------
                                          2001           2000            2001            2000            stage
                                                      (Restated -                    (Restated -
                                                       Note 11)                        Note 11)
                                     ------------------------------- -------------- ---------------  ---------------

<S>                                 <C>            <C>            <C>            <C>            <C>
Revenues: .......................   $   106,274    $      --      $   438,836    $      --      $   438,836
Cost of revenues ................        41,425           --          102,669           --          102,669
                                    -----------    -----------    -----------    -----------    -----------
Gross margin ....................        64,849           --          336,167           --          336,167
Expenses:
   General & Administrative .....       800,254      1,262,293      3,774,925      3,256,094      8,939,839
                                    -----------    -----------    -----------    -----------    -----------

     Net Operating Loss .........      (735,405)    (1,262,293)    (3,438,758)    (3,256,094)    (8,603,672)
                                    -----------    -----------    -----------    -----------    -----------

Other Income (Expense)
   Interest, Net ................       (18,531)       (17,820)       (21,141)       (16,263)       (60,461)
   Gain (Loss) on Sale of Assets        (33,068)          --          (33,068)          --        5,205,326
   Loss on Abandonment of Assets           --          (94,063)          --          (94,063)       (94,063)
   Loss on Write Down of Goodwill       (38,250)      (595,000)       (38,250)    (1,930,000)    (1,968,250)
                                    -----------    -----------    -----------    -----------    -----------

     Net Other Income (Expense) .       (89,849)      (706,883)       (92,459)    (2,040,326)     3,082,552
                                    -----------    -----------    -----------    -----------    -----------

     Net Loss Before Taxes ......      (825,254)    (1,969,176)    (3,531,217)    (5,296,420)    (5,521,120)

Income Taxes ....................          --             --             --             --
                                    -----------    -----------    -----------    -----------    -----------

     Net Loss ...................   $  (825,254)   $(1,969,176)   $(3,531,217)   $(5,296,420)   $(5,521,120)
                                    ===========    ===========    ===========    ===========    ===========

Basic & Diluted loss per share      $     (0.02)   $     (0.10)   $     (0.11)   $     (0.31)
                                    ===========    ===========    ===========    ===========
</TABLE>

    The accompanying notes are an integral part of these financial statements


<PAGE>


                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
             SINCE SEPTEMBER 20, 1995 (INCEPTION) TO MARCH 31, 2001
<TABLE>
<CAPTION>

                                                                                             Accumulated                   Deficit
                                                                                             Unrealized                  Accumulated
                                                                                    Stock    Gains (Loss)                  During
                                              Common Stock           Paid-In      Subscribed      on      Comprehensive  Development
                                           Shares     Par Value      Capital      Receivable  Investments     Income        Stage
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
<S>                                       <C>         <C>           <C>           <C>          <C>          <C>          <C>
Issuance of Stock at formation to
  incorporators for services rendered         9,999   $      200    $     --      $     --     $     --     $     --     $     --
Sale of common stock .................       15,000        3,000          --            --           --           --           --
Effect of 44 for 1 stock split .......    1,074,957       (2,100)        2,100          --           --           --           --
Net Loss for the period ..............         --           --            --            --           --           --           (507)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------

Balances at June 30, 1996 ............    1,099,956        1,100         2,100          --           --           --           (507)

Net loss for the year ................         --           --            --            --           --           --           (640)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------

Balance at June 30, 1997 .............    1,099,956        1,100         2,100          --           --           --         (1,147)

January 5, 1998 Issuance of Stock
   for services and payment of
   accounts payable ..................    1,539,912        1,540        (1,240)         --           --           --           --

Net Loss for the year ................         --           --            --            --           --           --         (2,353)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------

Balance at June 30, 1998 .............    2,639,868        2,640           860          --           --           --         (3,500)
</TABLE>

<PAGE>


                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
             SINCE SEPTEMBER 20, 1995 (INCEPTION) TO MARCH 31, 2001
                                   (Continued)
<TABLE>
<CAPTION>

                                                                                             Accumulated                   Deficit
                                                                                             Unrealized                  Accumulated
                                                                                    Stock    Gains (Loss)                  During
                                              Common Stock           Paid-In      Subscribed      on      Comprehensive  Development
                                           Shares     Par Value      Capital      Receivable  Investments     Income        Stage
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
<S>                                       <C>         <C>           <C>           <C>          <C>          <C>          <C>

Cancellation of Officer Shares .......   (1,539,912)      (1,540)        1,540          --           --           --           --
Retroactive adjustment for 2.273
   to 1 stock split August 27, 1998 ..    1,400,244        1,400        (1,400)         --           --           --           --
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
Restated balance June 30, 1998 .......    2,500,200        2,500         1,000          --           --           --         (3,500)

Issuance of stock for cash ...........    5,785,000        5,785        52,065          --           --           --           --
Capital contributed by shareholder ...         --           --           2,526          --           --           --           --
Issuance of stock for payment of .....      202,500          203          (203)         --           --           --           --
accounts payable
Issuance of stock for payment of .....      475,000          475       118,275          --           --           --           --
accounts payable
Issuance of Stock for cash ...........      700,000          700       349,300          --           --           --           --
Issuance of Stock for cash ...........    2,090,000        2,090       520,410      (429,250)        --           --           --
Net Loss .............................         --           --            --            --           --           --       (322,038)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
Balance at June 30, 1999 .............   11,752,700       11,753     1,043,373      (429,250)        --           --       (325,538)
Issuance of Stock to acquire
Torchmail.com Ltd. ...................    2,500,000        2,500     1,322,500          --           --           --           --

</TABLE>
<PAGE>

                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
             SINCE SEPTEMBER 20, 1995 (INCEPTION) TO MARCH 31, 2001
                                   (Continued)
<TABLE>
<CAPTION>

                                                                                             Accumulated                   Deficit
                                                                                             Unrealized                  Accumulated
                                                                                    Stock    Gains (Loss)                  During
                                              Common Stock           Paid-In      Subscribed      on      Comprehensive  Development
                                           Shares     Par Value      Capital      Receivable  Investments     Income        Stage
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
<S>                                       <C>         <C>           <C>           <C>          <C>          <C>          <C>
Issuance  of Stock to acquire  Lazzara         --     $     --      $     --      $     --     $     --     $     --     $     --
Financial Asset Recovery Ltd. ........      250,000          250       344,750          --           --           --           --
 Issuance  of  Stock to  acquire  CMD
Capital Ltd. .........................      775,000          775     1,068,725          --           --           --           --
Issuance of Stock for cash ...........    2,500,000         2,500      935,000      (408,750)        --           --           --
  Issuance  of Stock for cash,  net of
issue costs $1,361,596 ...............    9,751,407        9,752     5,454,637          --           --           --           --
Issuance of Stock on cashless
   Exercise of warrant ...............      213,793          213        74,786          --           --           --           --
Issuance of Stock on exercise of
   warrants ..........................      100,000          100        34,900          --           --           --           --
Issuance of Stock for services .......    1,136,301        1,136     1,058,766          --           --           --
Collection of Stock subscribed
   Receivable ........................         --           --            --         429,250         --           --           --
Net Loss for the year ................         --           --            --            --           --           --     (1,664,365)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
Balance at June 30, 2000 .............   28,979,201       28,979    11,337,437      (408,750)        --           --     (1,989,903)
   Issue of stock for cash ...........    1,000,000        1,000        49,000          --           --           --           --
   Issue of stock for services .......    3,943,741        3,944       813,732          --           --           --           --
   Issue of Stock to acquire Torchnet       150,000          150        59,850          --           --           --           --
   Issue of stock for CMD ............      225,000          225        38,025          --           --           --           --
   Collection of stock subscribed
   receivable ........................         --           --            --         408,750         --           --           --
Unrealized loss on investments .......         --           --            --            --     $(5,301,250) (5,301,250)        --
Net income (loss) for the period .....         --           --            --            --           --     (3,351,217)  (3,351,217)
                                          ---------   ----------    ----------    ----------   ----------   ----------   -----------
Balance at March 31, 2001 (Unaudited)    34,297,942   $   34,298    $12,298,044   $     --     $(5,301,250)$(8,652,467) $(5,521,120)
                                         ==========   ==========    ===========   ==========   ===========  ==========  ============
</TABLE>

    The accompanying notes are an integral part of these financial statements

<PAGE>


                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
             INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
<TABLE>
<CAPTION>

                                                                               Cumulative
                                                                                Since
                                                                               Inception
                                                                                  of
                                               Nine months ended March 31,     Development
                                                   2001            2000          Stage
                                                             (Restated - Note
                                                                    11)
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss ....................................   $(3,531,217)   $(5,296,420)   $(5,521,120)
Adjustments to reconcile net loss to net cash
 used in operating activities:
   Depreciation and amortization ............       300,789            714        628,115

   Issuance of common stock for expenses ....       817,676      1,486,735      2,072,665
   Gain (Loss) on Sale of Assets ............        33,068           --       (5,205,326)
   Loss on Abandonment of Assets ............          --           94,063         94,063
   Loss on Write Down of Goodwill ...........        38,250      1,930,000      1,978,250
Change in operating assets and liabilities:
   Restricted cash ..........................         6,920           --          (75,577)
   Accounts receivable ......................      (396,381)        (8,978)      (396,381)
   Advances .................................      (490,014)          --         (512,136)
   Prepaid Expenses & Deposits ..............       238,686       (116,075)       (86,701)
   Accounts Payable & Accrued Expense .......       976,281      1,281,292      2,115,851
                                                -----------    -----------    -----------
Net Cash Used in Operating Activities .......    (2,005,942)      (628,669)    (4,908,297)
                                                -----------    -----------    -----------

CASH FLOWS FROM INVESTING
ACTIVITIES:
   Purchase of Fixed Assets .................      (128,190)    (1,852,943)    (2,366,454)
   Purchase of Intangible Assets ............          --          (38,843)       (60,400)
   Proceeds on Sale of Condo ................       230,476           --          230,476
   Cash Payments for CMD ....................          --             --         (692,106)
   Cash Payment for Goodwill ................          --          (10,000)      (260,000)
   Investment in Subsidiaries ...............          --         (989,927)          --
                                                -----------    -----------    -----------
</TABLE>

<PAGE>

                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
             INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
                                    Continued
<TABLE>
<CAPTION>

                                                                               Cumulative
                                                                                Since
                                                                               Inception
                                                                                  of
                                               Nine months ended March 31,     Development
                                                   2001            2000          Stage
                                                             (Restated - Note
                                                                    11)
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
Net Cash Used in Investing Activities .......       102,286     (2,891,713)    (3,148,484)
                                                -----------    -----------    -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Convertible Notes ...........................       453,671           --          453,671
Proceeds from issuance of common stock ......        50,000      5,005,066      6,987,189
Stock subscribed receivable .................       408,750        (39,500)       408,450
Capital contributed by shareholder ..........          --             --            2,526
Loans payable ...............................       204,945           --          204,945
                                                -----------    -----------    -----------
Net Cash Provided by Financing Activities ...     1,117,366      4,965,566      8,056,781
                                                -----------    -----------    -----------

Net (Decrease) Increase in
  Cash and Cash Equivalents .................      (786,290)     1,445,184           --
Cash and Cash Equivalents
  at Beginning of Period ....................       786,290        164,982           --
                                                -----------    -----------    -----------
Cash and Cash Equivalents
  at End of Period ..........................   $      --      $ 1,610,166    $      --
                                                ===========    ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIOM Cash paid during the period
for:
Interest ....................................   $    21,141    $    16,263    $    47,489
Income taxes ................................   $      --      $      --      $      --
                                                -----------    -----------    -----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING ACTIVITIES
Common Stock issued for Intangible Assets ...   $    60,000    $      --      $    80,562
Common Stock issued for Subsidiaries ........   $    38,250    $ 2,015,000    $ 2,777,750
</TABLE>

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


<PAGE>

                       CATHAYONLINE, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
          FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND 2000


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     This summary of accounting  policies for  CathayOnline  Inc is presented to
assist in  understanding  the Company's  financial  statements.  The  accounting
policies  conform to  generally  accepted  accounting  principles  and have been
consistently applied in the preparation of the financial statements.

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and pursuant to the rules and regulations of the
Securities  and Exchange  Commission.  Accordingly,  they do not include all the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.  It is  recommended  that these  financial
statements be read in conjunction with the consolidated financial statements and
related notes of CathayOnline  Inc as reported on the Company's Annual Report on
form 10-K for the year ended June 30, 2000.

     In  the  opinion  for  management,  the  unaudited  condensed  consolidated
financial statements contain all adjustments consisting only of normal recurring
accruals  considered  necessary  to  present  fairly  CathayOnline  Inc.'s  (the
"Company")  financial  position at March 31, 2001 the results of operations  and
cash flows for the nine months ended March 31, 2001.  The results for the period
ended  March  31,  2001 are not  necessarily  indicative  of the  results  to be
expected for the entire fiscal year ending June 30, 2001.

Organization and Basis of Presentation

     The  Company  was  incorporated  under  the laws of the  State of Nevada on
September  20,  1995 using the name of  Kyocera  Management,  Ltd.  The name was
changed  to  CathayOnline,  Inc.  on April 14,  1999.  The  Company  ceased  all
operating activities during the period from September 20, 1995 to January 6,1998
and was  considered  dormant.  On  January  6,  1998,  the  Company  obtained  a
Certificate of renewal from the State of Nevada. The Company as of June 30, 2000
and March 31, 2001 is in the development  stage,  and has not commenced  planned
principal operations.

Principles of Consolidation

     The consolidated financial statements for June 30, 2000 and the nine months
ended  March 31,  2001  include  the  accounts  of  CathayOnline,  Inc.  and the
following wholly owned subsidiaries:

*    CathayOnline Technologies (Hong Kong) Ltd, a Hong Kong corporation
*    CathayOnline (BVI) Ltd, a British Virgin Islands corporation
*    Torchmail.com Inc, a Turks & Caicos, BWI corporation
*    Sichuan   CathayOnline   Technologies  Co.  Ltd,  a  wholly  owned  foreign
     enterprise corporation, PRC
*    CathayOnline, Inc, a Canadian Corporation
*    China Lottery (Hong Kong) Limited, a Hong Kong corporation
*    Beijing   CathayOnline   Technologies  Co.  Ltd,  a  wholly  owned  foreign
     enterprise, PRC

Nature of Business

     Through  its  subsidiary  companies  and  exclusive  partnership  and joint
venture  arrangements  with  certain  Chinese  entities,  the Company will be an
Internet  Service  Provider and provides web based email and advanced  messaging
services for the Chinese speaking  markets,  principally in the areas of Sichuan
province,  Beijing  and  Guangdong.  During the year the  Company  has  incurred
expenditures  to build  its  required  infrastructure  and to  complete  various
strategic  cooperation  agreements for access to operating licenses and customer
base.

     During the year ended June 30, 2000,  through its wholly  owned  subsidiary
CathayOnline Technologies (Hong Kong) Ltd, the company acquired and operated ten
online lottery kiosks in


<PAGE>


NOTE 1-ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------------------------------

Guangzhou,  China.  The kiosk and lottery  operations  were to be transferred to
China Lottery (Hong Kong)  Limited  (China  Lottery) and the Company had entered
into an  agreement  to sell  China  Lottery  to an  unrelated  third  party  for
$150,000.  The sale was not  completed  and the  Company  abandoned  the lottery
operations  and during the year ended June 30,  2000,  wrote off the cost of the
kiosks.

Cash and Cash Equivalents

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid debt  instruments  purchased with a maturity of six months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Marketable Securities

     The Company's  securities  investments that are bought and held principally
for the  purpose  of  selling  them in the near term are  classified  as trading
securities.  Trading  securities are recorded at fair value on the balance sheet
in current  assets,  with the change in fair value during the period included in
earnings.  Securities  investment  that the Company has the positive  intent and
ability to hold to maturity are  classified as  held-to-maturity  securities and
recorded  at  amortized  cost  in  investment   and  other  assets.   Securities
investments not classified as either  held-to-maturity or trading securities are
classified as available-for-sale securities.  Available-for-sale-securities  are
recorded at fair value as  investments  and other  assets on the balance  sheet,
with the change in fair  value  during the period  excluded  from  earnings  and
recorded net of tax as a component of other comprehensive income.

Pervasiveness of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Translation of Foreign Currency

     The Companies functional currencies include U.S. Dollars,  Canadian Dollars
and Chinese  Renminbi.  All balance  sheet  accounts of foreign  operations  are
translated into U.S. dollars at the period-end rate of exchange and statement of
operations  items are translated at the weighted  average exchange rates for the
period.  The resulting  translation  adjustments are made directly to a separate
component of the stockholders' equity. Certain foreign activities are considered
to be an extension of the U.S.  operations,  and the gain or loss resulting from
re-measuring these  transactions into U.S. dollars is included in income.  Gains
or losses from other foreign currency transactions, such as those resulting from
the  settlement  of  foreign  receivables  or  payables,  are  included  in  the
Statements of Operations.

Property and Equipment

     Property and equipment are stated at cost. Depreciation and amortization is
provided for in amounts  sufficient to relate the cost of depreciable  assets to
operations  over their estimated  service lives,  principally on a straight-line
basis as follows:

         Office Equipment             3-5 years
         Computer Equipment           3-5 years
         Furniture & Fixtures         5-7 years
         Leasehold Improvements      7-10 years

     Upon sale or other  disposition  of property  and  equipment,  the cost and
related  accumulated  depreciation or amortization are removed from the accounts
and any gain or loss is included in the determination of income or loss.

<PAGE>

NOTE 1-ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------------------------------

     Expenditures  for  maintenance  and  repairs  are  charged  to  expense  as
incurred.  Major overhauls and betterments are capitalized and depreciated  over
their useful lives.

     Intangible assets are amortized over useful life of 5 to 10 years.

     The Company has adopted the Financial  Accounting Standards Board SFAS No.,
121,  "Accounting  for the  Impairment  of  Long-lived  Assets."  SFAS  No.  121
addresses  the  accounting  for (i)  impairment of  long-lived  assets,  certain
identified  intangibles and goodwill  related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable  intangibles to be disposed
of.  SFAS No. 121  requires  that  long-lived  assets and  certain  identifiable
intangibles  be held and used by an entity be reviewed for  impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be  recoverable.  If the sum of the expected  future cash flows from the
used of the  asset  and its  eventual  disposition  (un-discounted  and  without
interest  charges) is less than the carrying  amount of the asset, an impairment
loss is recognized.


Loss per Share


     The  reconciliation's  of the numerators and denominators of the basic loss
per share computations are as follows:
<TABLE>
<CAPTION>

                                     Three months Ended             Nine Months Ended
                                   March 31,      March 31,       March 31,       March 31,
                                     2001           2000            2001            2000
<S>                             <C>             <C>             <C>             <C>
Loss ........................   $   (825,254)   $ (1,969,176)   $ (3,531,217)   $ (5,296,420)

Weighted average common share     33,703,786      20,550,491      31,765,473      17,323,064
                                ------------    ------------    ------------    ------------

Loss per common share .......   $      (0.02)   $      (0.10)   $      (0.11)   $      (0.31)
                                ============    ============    ============    ============
</TABLE>


     The effect of outstanding  common stock  equivalents would be anti-dilutive
for March 31, 2001 and 2000, and are thus not considered.

Concentration of Credit Risk

     The Company has no significant  off-balance-sheet  concentrations of credit
risk such as foreign  exchange  contracts,  options  contracts or other  foreign
hedging arrangements.

NOTE 2 - INVESTMENT IN MARKETABLE EQUITY SECURITIES

     The Company's  investments in marketable  equity securities are held for an
indefinite     period     of    time    and    are    thus     classified     as
available-for-sale-securities.  Unrealized  holding gains on such securities are
added to stockholders'  equity. The Company's acquired  $7,000,000 in marketable
equity  securities  on June 30, 2000 as a result of the sale of a subsidiary  as
disclosed in Note 3. These securities are restricted from resale for a period of
one year from their receipt. As of March 31, 2001, based on the closing price of
these securities, there was an unrealized loss of $5,031,250.


<PAGE>

NOTE 3 - ACQUISITION OF SUBSIDIARIES

     On July 2, 1999 the Company completed an Acquisition (the "Acquisition") in
which  it  acquired  100%  of  the  issued  and  outstanding  capital  stock  of
TorchMail.com  Inc., a Turks & Caicos,  BWI  corporation in exchange for $10,000
and 2,500,000  shares of the Company's  $.001 par value common stock,  valued at
$0.53  per  share  comprising  approximately  15% of the  Company's  issued  and
outstanding common stock after giving effect to the Acquisition.  Further,  upon
the resale of 360,000  Seats  (defined  as a mailbox  created  within a Customer
Account for use of the Services by a User) the Company will issue an  additional
2,500,000  shares,  upon the  resale of  500,000  Seats the  Company  will issue
1,250,000  shares and upon the resale of 750,000  Seats the  Company  will issue
1,250,000  shares.  The transaction has been accounted for as a purchase.  As at
the date of acquisition,  Torchmail had not yet commenced  operations and had no
assets  or  liabilities  except  for an email  reseller  agreement.  The  excess
purchase  price paid of  $1,335,000  over the net tangible  assets  acquired was
recorded as goodwill and has been  written  off.  Ownership of Torchmail is held
through the Company's wholly owned subsidiary CathayOnline (BVI) Ltd.

     On January 18, 2000 the Company  acquired all of the issued and outstanding
shares of Lazzara Financial Asset Recovery Inc.  (Lazzara) and executed a merger
agreement with Lazzara. Lazzara was registered under the Securities Exchange Act
of 1934 (the  "Exchange  Act")  and was  required  to file  reports  under  said
Exchange Act. The Company is the surviving entity under the merger agreement and
elected to  succeed  Lazzara's  reporting  requirements.  Consideration  for the
acquisition was the issue of 25,000 shares of Company valued at $1.38 per share,
paid to the existing  shareholders  of Lazzara,  plus 225,000  shares  valued at
$1.38 per share and $250,000 cash paid for services  rendered in connection with
the merger. The transaction has been accounted for as a purchase. As at the date
of the  acquisition  and  merger,  Lazzara  had no  operations  and no assets or
liabilities.  The excess of total  consideration  paid of $595,000  over the net
tangible assets acquired was recorded as goodwill and has been written off.

     On  April  1,  2000 the  Company,  through  its  wholly  owned  subsidiary,
CathayOnline  Technologies  (Hong  Kong) Ltd,  acquired  62.5% of the issued and
outstanding shares of CMD Capital Ltd (CMD), a Hong Kong company.  Consideration
is  $1,000,000  plus the issue of 2,000,000  shares of the Company to be paid as
follows:

     -    $500,000  and  1,000,000  shares  within  30  days  of  executing  the
          agreement
     -    $500,000 and  1,000,000  shares  within six months upon  completion of
          certain transactions pursuant to underlying agreements of CMD.

The  transaction  has  been  accounted  for as a  purchase.  As at the  date  of
acquisition,  CMD's only assets  included  70% of the common  stock of a Chinese
company,  whose  assets  included  100%  ownership  of a  website.  Pursuant  to
underlying agreements,  CMD is required to provide funding of $3,000,000 for the
Chinese  company for continued  development of the website.  Pursuant to another
underlying agreement CMD is required to provide $2,000,000 to be used to develop
a Hong Kong  version of the website.  As of June 30, 2000,  the Company had paid
$558,600 and had issued 775,000  shares valued at $1,069,500.  On June 30, 2000,
the Company sold all of its CMD shares to Cathay  Bancorp.com  Limited, a wholly
owned  subsidiary of CathayOne,  Inc.  (formerly  Premier Brands,  Inc.), for an
agreed  upon value of  $10,500,000  which was paid by the  receipt of  1,750,000
shares of CathayOne,  Inc. which was valued for accounting  purposes at the June
30, 2000 market value of $4.00 per share. During the nine months ended March 31,
2001, the Company issued an additional  225,000 shares  pursuant to the original
April 1, 2000 purchase agreement. These shares were valued at their market value
when issued, and the amount ($38,250) has been written off.

NOTE 4 - INCOME TAXES

     As of June 30, 2000, the Company had a net operating loss  carryforward for
income tax reporting  purposes of  approximately  $1,990,000  that may be offset
against future taxable income through 2020. Current tax laws limit the amount of
loss  available to be offset  against  future  taxable income when a substantial
change in ownership  occurs.  Therefore,  the amount  available to offset future
taxable  income may be limited.  Accordingly,  the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.


NOTE 5 - DEVELOPMENT STAGE COMPANY

     The Company is in the development  stage.  The activities of the Company as
of  June  30,  2000  have  consisted  primarily  of  identifying  opportunities,
negotiating  letters of  understanding  with  potential  partners,  planning and
developing the operations, recruiting personnel, raising capital, and purchasing
assets.  As is common  with a  development  stage  company,  the Company has not
generated  revenues  from planned  principal  operations  and has had  recurring
losses during its development stage.

<PAGE>

NOTE 6 - COMMITMENTS

     During the year ended June 30, 2000 the Company  entered  into an agreement
to lease its  Vancouver  office for a period  ending April 30, 2005 at a monthly
rent cost of $6,818.

     Effective  July 1, 2000 the Company  entered into an agreement to lease its
New York  office for a period  ending  June 30,  2005 at a monthly  rent cost of
$13,260.  Subsequent to March 31, 2001 the Company vacated these  premises.  The
current premises are leased on a month-to-month basis.

     During the year ended June 30, 2000 the Company  entered  into an agreement
to lease its Chengdu,  Sichuan  office for a period  ending August 30, 2004 at a
monthly rent cost of $7,300.

     During the year ended June 30, 2000 the Company  entered  into an agreement
to lease its Beijing office for a period ending April 30, 2002 at a monthly rent
cost of $6,311.  The agreement  contains a right for an annual  renewal up to an
additional five years.

     Subsequent to June 30, 2000 the Company  subleased  additional  premises in
New York for a period ending December 31, 2001 at a monthly rent cost of $4,750.
The sublease was terminated effective December 31, 2000.

     It is expected  that in the normal  course of business,  leases that expire
will be renewed or replaced by leases on other properties.

     The minimum  future  lease  payments  under these  leases for the next five
years are:

                Year Ended June 30,
         ----------------------------------
                  2001                                                 $461,268
                  2002                                                  420,146
                  2003                                                  328,536
                  2004                                                  328,536
                  2005                                                  248,324
                                                             ------------------
                  Total minimum future lease payments                $1,786,810
                                                             ==================


NOTE 7 - CONVERTIBLE NOTES PAYABLE

     By an  agreement  dated  November 22, 2000 the Company  issued  convertible
notes for an aggregate of $250,000  payable on November 30, 2001. The notes bear
interest at 10% per annum  commencing  from  December 12, 2000  payable  monthly
commencing  January 2, 2001. The notes and interest is  convertible  into common
shares at the lower of 70% of the average  closing price for the five days prior
to the date of conversion or $0.06566 per share. The notes will automatically be
extended  for an  additional  eighteen  months  unless the holder  notifies  the
Company ten days before expiry that they will not be extended.

     By an  agreement  dated  December  12,  2000 the  Company  agreed  to issue
convertible  notes for up to an  aggregate  of $500,000  payable on November 30,
2001. The notes bear interest at 10% per annum  commencing  from dates funds are
advanced  payable  monthly  commencing  April 2, 2001. The notes and interest is
convertible into common shares at the lower of the average closing price for the
five days prior to the date of  conversion  or the closing  price per share when
funds  advanced.  The notes will  automatically  be extended  for an  additional
eighteen  months  unless the holder  notifies the Company ten days before expiry
that they will not be extended. As at March 31, 2001 the Company had received an
aggregate of $203,671 and subsequent to March 31, 2001 received another $74,889.


<PAGE>

NOTE 8 - COMMON STOCK TRANSACTIONS

     The Company was initially  incorporated  to allow for the issuance of up to
25,000  shares of no par value  common  stock.  On January 5, 1998,  the Company
approved  the  amendment  of its  Articles  of  Incorporation  to allow  for the
issuance  of up to  50,000,000  shares of $0.001  par value  common  stock.  The
Amended Articles of  Incorporation  were filed with the State of Nevada on April
20, 1998. All amounts presented in the accompanying financial statements reflect
the  effect of this  change in the par  value of the  Company's  stock as of the
first day of the first period presented.

     On January 5, 1998,  the Company's  Board of Directors  approved a 44 for 1
forward stock split on its issued and outstanding  common stock.  All issued and
outstanding share and per share amounts in the accompanying financial statements
reflect the effect of this stock  split as of the first day of the first  period
presented.

     At inception, the Company issued approximately 9,999 shares of common stock
(439,956 post split shares) to its officers and directors for services performed
and payments made on the Company's behalf during its formation. This transaction
was valued at approximately $0.02 per share or an aggregate approximate $200.

     During 1996, to provide initial working  capital,  the Company  completed a
private placement sale of an aggregate of approximately  15,000 shares of common
stock (660,000 post split shares) at approximately  $0.20 per share. These sales
generated  approximately $3,000 in proceeds to the Company, which were primarily
used to pay organizational expenses.

     On  January  5,  1998,  prior  to  the  stock  split,  the  Company  issued
approximately  34,998  shares of common stock  (1,539,912  post split shares) to
officers and directors of the Company for  management  services  rendered to the
Company.  This transaction was valued at approximately  $300, which approximated
the fair value of the services  rendered to the Company.  On August 26, 1998 the
Officers surrendered these shares to the Company for cancellation.

     On August 27,  1998 the Board of  Directors  authorized  2.273 to 1 forward
stock split on its issued and  outstanding  common stock.  All references in the
accompanying  financial  statements to the number of common shares and per-share
amounts for 1998 and 1997 have been restated to reflect the stock split.

     During the year ended June 30, 1999 the  Company  issued  5,785,000  shares
pursuant to Rule 504 of Regulation D promulgated by the United States Securities
and  Exchange  Commission.  3,625,000  shares  were issued for cash at $0.01 per
share and 2,160,000 shares were issued for cash.

     During  the year  ended  June 30,  1999 the  Company  completed  a  private
placement  sale of an  aggregate  of  202,500  common  shares  being  issued for
payments made on the Company's behalf.

     During  the year  ended  June 30,  1999 the  Company  completed  a  private
placement  sale of an aggregate  of 475,000  shares of common stock for payments
made on the Company's behalf.

     During the year ended June 30, 1999 the Company  issued  700,000  shares at
$0.50 per share and 2,090,000 shares at $0.25 per share pursuant to Regulation S
promulgated by the United States Securities and Exchange Commission.  The shares
were issued for cash.

     During the year ended June 30, 2000 the  Company  issued  2,500,000  shares
pursuant  to  Regulation  S  promulgated  by the United  States  Securities  and
Exchange Commission. The shares were issued for the acquisition of Torchmail.com
Ltd at $0.53 per share.

     During the year ended June 30, 2000 the  Company  issued  2,500,000  shares
pursuant  to  Regulation  S  promulgated  by the United  States  Securities  and
Exchange Commission. The shares were issued for cash and at $0.375 per share.

     During the year ended  June 30,  2000 the  Company  issued  213,793  shares
pursuant  to  Regulation  S  promulgated  by the United  States  Securities  and
Exchange Commission.  The shares were issued for a cashless exercise of warrants
at $0.35 per share.

     During the year ended  June 30,  2000 the  Company  issued  100,000  shares
pursuant  to  Regulation  S  promulgated  by the United  States  Securities  and
Exchange Commission. The shares were issued for cash on the exercise of warrants
at $0.35 per share.

<PAGE>


NOTE 8 - COMMON STOCK TRANSACTIONS CONTINUED

     During the year ended  June 30,  2000 the  Company  issued  250,000  shares
pursuant to Rule 701  promulgated  by the United States  Securities and Exchange
Commission.  The shares  were issued for the  acquisition  and merger of Lazzara
Financial Asset Recovery Inc. at $1.38 per share.

     During the year ended  June 30,  2000 the  Company  issued  775,000  shares
pursuant to Rule 701  promulgated  by the United States  Securities and Exchange
Commission.  The shares were issued for the  acquisition  of CMD Capital Ltd. at
$1.38 per share.

     During the year ended June 30, 2000 the  Company  issued  9,751,407  shares
pursuant  to  Regulation  S  promulgated  by the United  States  Securities  and
Exchange Commission. The shares were issued for cash and at $0.70 per share.

     During the year ended June 30, 2000 the  Company  issued  1,136,301  shares
pursuant  to  Regulation  S, and  Rule  701  promulgated  by the  United  States
Securities and Exchange  Commission.  The shares were issued for services at the
market value of the shares at prices from $0.38 to $1.75 per shares.

NOTE 9  - STOCK OPTIONS AND WARRANTS

     Employee and Consultants Warrants:  The Company has issued to employees and
consultants (or their designees) in consideration for services rendered warrants
to purchase  shares of the Company's  common stock.  These warrants  provide for
cashless exercise by the holders. These warrants are not redeemable.  Details of
these warrants are as follows:
<TABLE>
<CAPTION>

       Granted                   Expiry                  Amount             Price       Exercised       Canceled
       -------                   ------                  ------             -----       ---------       --------
<S>                      <C>                             <C>                <C>         <C>             <C>
March 9, 1999            March 9, 2002                           300,000       $0.25        213,793          86,207
March 31, 1999           March 31, 2002                        1,000,000       $0.25        475,000         525,006
May 27, 1999             May 27, 2002                            415,000       $0.25              -               -
October 26, 1999         October 26, 2001                     21,700,000       $0.33              -               -
February 1, 2000         January 31, 2001               10,000 per month       $1.00              -               -
February 3, 2000         February 3, 2005                      2,389,100       $0.70              -               -
March 1, 2000            March 1, 2002               25,000 per quarter*       $1.50              -               -
March 15, 2000           March 15, 2002                10,000 per month*       $1.50              -               -
April 1, 2000            April 1, 2002                 25,000 per month*       $1.50              -               -
May 1, 2000              May 1, 2002                              20,000       $1.30              -               -
June 1, 2000             June 1, 2003                             50,000       $1.00              -               -
June 1, 2000             June 1, 2003                             85,714       $0.70              -               -
June 1, 2000             June 1, 2002                          2,000,000       $1.00              -               -
June 1, 2000             June 1, 2002                          1,000,000       $1.10              -               -
June 1, 2000             June 1, 2002                          1,000,000       $1.60              -               -
June 1, 2000             June 1, 2002                            800,000       $3.00              -               -
September 1, 2000        May 1, 2003                             150,000       $1.00              -               -
September 1, 2000        September 1, 2002                     2,500,000       $0.40              -               -
September 1, 2000        September 1, 2003                       500,000       $0.25              -               -
December 12, 2000        December 13, 2005                     1,500,000       $0.09              -               -
December 13, 2000        December 13, 2005                   1,800,000**       $0.25              -               -
</TABLE>

*Related consulting contracts were cancelled as of December 31, 2000.

**Related  consulting  contract  cancelled as of April 1, 2001.  Total  warrants
vested were 750,000.

     During April 1999,  the Company issued an aggregate of 700,000 common stock
purchase  warrants to seven investors,  including 50,000 warrants to a director.
These  warrants  are  exercisable  for a period  of two  years  from the date of
issuance at an exercise price of $.60, if exercised  during the first year after
issuance,  and $.70 if  exercised  in the  second  year after  issuance.  Theses
warrants are not redeemable.  As of the date hereof, none of these warrants have
been  exercised.  During June 1999, the Company issued an aggregate of 2,090,000
common  stock  purchase  warrants  to thirteen  investors.  These  warrants  are
exercisable  for a period of two years from the date of  issuance at an exercise
price of $0.35 per share.  These  warrants  are not  redeemable.  As of the date
hereof, 100,000 warrants have been exercised.

     During  February,  March and April of 2000,  the  Company  sold and  issued
9,751,407 redeemable Common Stock purchase warrants to purchase a like number of
shares of Common Stock. Each such warrant entitles the holder to purchase

<PAGE>

NOTE 9 - STOCK OPTIONS AND WARRANTS (continued)

one share of  Common  Stock,  subject  to  adjustment  in the event of any stock
dividend,  stock split,  subdivision or combination,  or any reclassification of
the outstanding shares of Common Stock at any time after issuance until the NOTE
expiration  of these  warrants,  a date two years  after the date upon which the
underlying shares of Common Stock are registered for resale under the Securities
Act of 1933,  at a price of $0.77  per  share.  The  Company  may  redeem  these
warrants  at a price of US $0.10  per  warrant  commencing  one year  after  the
effective date of the  registration  statement  under the Securities Act of 1933
covering the underlying Common Stock provided that (i) a registration  statement
covering  the  underlying  common stock is then  effective  and (ii) the average
closing  bid  price per share of Common  Stock for the  thirty  (30) day  period
ending five (5) days prior to the date of the redemption  notice of the Warrants
is at least $1.05 per share.


     The Company  also  granted an  additional  250,000  common  stock  purchase
warrants,  having the same terms as noted  above,  in  consideration  for bridge
financing provided prior to the completion of a private placement.

     All options and warrants have been granted at exercise  prices greater than
the market value on the date of granting. Except as noted, all options vest 100%
at date of grant.

                                                          2000           1999
                                                     -----------    -----------
Options outstanding, beginning of year ...........     3,893,793           --
  Granted ........................................    38,537,428      4,505,000
  Canceled .......................................          --         (611,207)
  Exercised ......................................      (100,000)          --
                                                     -----------    -----------

Options and warrants outstanding, end of year ....    42,331,221      3,893,793
                                                     ===========    ===========

Price for options and warrants outstanding, end of year
                                                   $0.25 - $3.00   $0.25 - 0.70

Options and warrants granted during the nine months ended
March 31, 2001*                                       13,275,000           --

Option and warrant price granted subsequent to year end
                                                   $0.09 - $1.00   $0.33 - .847

*Includes 1,800,000 vested in monthly amounts of 150,000 commencing December 13,
2000  and on the  first  of each  month  thereafter.  As at  April  1,  2001 the
underlying  consulting contract was cancelled and a total of 750,000 were vested
and the remaining cancelled.

NOTE 10 - RELATED PARTY TRANSACTIONS

     During the year ended June 30,  2000 a  director  of the  company  was paid
$60,000  pursuant to an employment  agreement and was issued  175,000  shares at
$1.38 per share for services rendered.

     During the year ended June 30,  2000 a  director  of the  Company  was paid
$36,000 and issued  27,000  shares  valued at $31,500  pursuant to a  consulting
agreement. An additional 125,000 shares were issued at $1.38 per share for other
services rendered.

     During the year ended June 30,  2000 a  director  of the  Company  was paid
$78,000 and issued 32,284 shares pursuant for a management  services  agreement.
An additional  120,000 shares at $0.50 and 50,000 shares at $1.38 per share were
issued for other services rendered.

     As discussed in note 3, the Company  sold a  subsidiary  to another  public
company having directors in common.

     During the year ended June 30,  2000,  a private  company  controlled  by a
relative of a director,  was paid $156,750 for consulting  services.  During the
year this private  company  loaned the Company  $790,000  which was repaid.  The
repayment  included  interest  of  $13,857.  Subsequent  to  June  30,  2000  as
additional  consideration  for the loan, the Company granted the private company
warrants to acquire up to 500,000  shares at $0.25 per share  exercisable  up to
September 1, 2003.  This relative of a director also  occupies  premises,  which
were leased by the Company subsequent to June 30, 2000 at a monthly rent cost of
$4,750.

<PAGE>

     During the nine months ended March 31, 2001,  transactions  with  directors
and officers were as follows:

     -    Salaries  of $90,000  pursuant  to an  employment  agreement  of which
          $60,000 is included in accounts payable

     -    Salaries  of  $44,710  plus  50,000  shares  issued   pursuant  to  an
          employment agreement.

     -    Salaries of $90,000 pursuant to a management  agreement.  An amount of
          $21,000  included  in  accounts  payable is to be paid by the issue of
          shares. During the period 190,872 shares were issued to pay $34,090 of
          the salary.

     -    Consulting  fees of $12,000 plus 12,000 shares  valued at $3,141.  The
          shares have not yet been issued.

     During the nine months ended March 31, 2001, a private  company  controlled
by a relative of a director incurred consulting fees of $64,000 of which $25,000
was paid by the issue of 185,185 shares.  During the nine months ended March 31,
2001,  this private company loaned the Company  $204,945 net of repayments.  The
amount bears  interest at 12% per annum.  During the nine months ended March 31,
2001,  the Company also paid  $20,900 in rent for an  apartment  occupied by the
relative.

     During the nine months  ended  March 31,  2001 the Company had  revenues of
$295,856 from another public company having  directors in common and revenues of
$108,525 from a private company controlled by a director.  As at March 31, 2001,
$295,856  in accounts  receivable  and  $512,136  in advances  were due from the
public  company and $93,525  included in accounts  receivable  were due from the
private company.

NOTE 11 - COMPARATATIVE FIGURES RESTATED

     Comparative  figures  for the three  months  ended  March 31, 2000 and nine
months  ended March 31,  2000 have been  restated  to correct  items  previously
reported.  As a result of the  restatement  revenues  of $232,044  and  $241,996
previously  shown for the three and nine month  periods  respectively  have been
restated  to $nil.  General  and  administrative  expenses  previously  shown as
$2,272,599  and  $3,292,575  have been restated to $1,262,293 and $3,256,094 for
the three-month and nine month periods  respectively.  Other expenses previously
shown as $9,632 and $14,558 have been  restated to $706,883 and  $2,040,326  for
the  three-month  and  nine  month  periods  respectively.  As a  result  of the
restatements the loss for the periods, which were previously shown as $2,050,187
and  $3,065,137,  have been restated to $1,969,176  and $5,296,420 for the three
month and nine month  periods  respectively.  The loss per share for the periods
which were  previously  shown as $0.12 and $0.21 have been restated to $0.10 and
$0.31 for the three month and nine month periods respectively.

     Cash flows used in operating activities for the nine months ended March 31,
2000  previously  shown as $3,201,095 has been restated to $628,669.  Cash flows
used in investing activities for the nine months ended March 31, 2000 previously
shown as $4,641,959  has been  restated to  $2,891,713.  Cash flows  provided by
financing  activities for the nine months ended March 31, 2000 previously  shown
as $9,183,405 has been restated to $4,965,566.  Supplemental  disclosure of cash
flow paid for  interest has been  restated to $16,263  from  $14,558  previously
shown and  supplemental  disclosure of non cash  investing  activities  has been
restated to disclose $2,015,000 used to purchase subsidiaries.

NOTE 12 - SUBSEQUENT EVENTS

     Subsequent to March 31, 2001 the Company agreed to issue 250,000 shares for
legal  services  and to grant an options to  purchase  an  additional  5,000,000
shares at $0.023 per share.

     Subsequent  to  March  31,  2001  the  Company  filed  an S-8  Registration
statement with the U.S.  Securities  and Exchange  Commission to register a 2001
Benefit  plan which  would allow the  Company to issue up to  10,000,000  common
shares  pursuant  to the  terms of the  plan.  Subsequent  to the  registration,
9,550,000 shares were issued pursuant to the plan.

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------

FORWARD LOOKING STATEMENTS

This  Quarterly  Report  on  Form  10-Q  contains  forward-looking   statements,
particularly  with respect to the  Liquidity  and Capital  Resources  section of
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations. Additional written or oral forward-looking statements may be made by
the  Company  from time to time,  in  filings  with the SEC or  otherwise.  Such
forward-looking statements are within the meaning of that term in Section 27A of
the  Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of
1934.  Such  statements  may  include,  but not be limited  to,  projections  of
revenue,  income,  losses, cash flows,  capital  expenditures,  plans for future
operations,  financing needs or plans, plans relating to products or services of
operations,  financing needs or plans, plans relating to products or services of
the Company, estimates concerning the effects of litigation or other disputes or
other  disputes,  as well as assumptions  to any of the foregoing.  In addition,
when used in this  discussion  the words  "anticipate",  "estimates",  "expects,
"intends",  "plans", and variations thereof and similar expressions are intended
to identify forward looking statements.

Forward -looking  statements are inherently  subject to risks and uncertainties,
some of which cannot be predicted. Future events and actual results could differ
materially from those set forth in or underlying the forward-looking statements.
Readers  are  cautioned  not to  place  undue  reliance  on any  forward-looking
statements  contained  in this  report,  which speak only as of the date of this
report.  The Company undertakes no obligation to publicly publish the results of
any adjustments to these forward-looking  statements that may be made to reflect
events  on or after the date of this  report or to  reflect  the  occurrence  of
unexpected events.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED March 31, 2001 AND 2000

Revenues  were  $106,274 for the three  months ended March 31, 2001  compared to
none for the three  months  ended March 31,  2000.  Revenues of $78,962 were the
results of providing web  development  services to another public company having
directors in common and to a private company  controlled by a director.  Cost of
revenues  represents the direct labour costs of our technical staff utilized for
this  project.  Also  included in revenues  was $27,312 from our  operations  in
Chengdu.  The  majority  of these  revenues  are not a result  of the  Company's
planned  principle  operations  nor are they  significant  compared  to existing
operating costs and accordingly the Company still considers  itself to be in the
development stage.

General and administrative costs were $ 800,254 for the three months ended March
31, 2001 compared to $1,262,293 for the three months ended March 31, 2001.

Other  expenses  were $89,849 for the three months ended March 31, 2001 compared
to $706,883 for the three months ended March 31, 2000. The other expense for the
three  months ended March 31, 2001  includes a write down of the costs  incurred
with respect to the acquisition and merger with Lazzara Financial Asset Recovery
Inc. and the write down of the lottery kiosks.


RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000

Revenues were $438,836 for the nine months ended March 31, 2001 compared to none
for the nine months ended March 31, 2000.  Revenues of $411,524 were the results
of providing web development services to another public company having directors
in common and to a private  company  controlled by a director.  Cost of revenues
represents  the direct  labour costs of our  technical  staff  utilized for this
project.  Also included in revenues was $27,312 from our  operations in Chengdu.
The  majority  of these  revenues  are not a  result  of the  Company's  planned
principle  operations nor are they  significant  compared to existing  operating
costs  and  accordingly  the  Company  still  considers  itself  to  be  in  the
development stage.

General and  administrative  costs  increased to $3,774,925  for the nine months
ended March 31, 2001 compared to $3,256,094  for the nine months ended March 31,
2000. The increase includes  depreciation and amortization  expenses of $300,789
for the nine months  ended  March 31, 2001  compared to $714 for the nine months
ended March 31, 2000. The increase in depreciation  and amortization is a result
of the increase in fixed assets on hand,  most of which were acquired during the
third and fourth  quarter of the year ended June 30,  2000.  Other  general  and
administrative  costs have  increased  due to the  increase in office  space and

<PAGE>

staffing  which occurred  primarily  during the fourth quarter of the year ended
June 30, 2000,  increased  legal fees incurred in connection  with the Company's
first 10-K filing, and increased consulting fees.

Other expenses were $92,459 for the nine months ended March 31, 2001 compared to
$2,040,326  for the nine months ended March 31, 2000.  The previous  expense was
due to write down of the excess purchase price over net tangible assets acquired
in connection with the Company's  purchase of Torchmail.com  Inc on July 2, 1999
and a write  down of the costs  incurred  with  respect to the  acquisition  and
merger with  Lazzara  Financial  Asset  Recovery  Inc. and the write down of the
lottery  kiosks.  The current  expense  includes the cost of  additional  shares
issued in connection with a previous  acquisition  agreement for the purchase of
CMD Capital Ltd

LIQUIDITY AND CAPITAL RESOURCES

We have sustained net losses and negative cash flows from  operations  since our
inception.  As of March 31, 2001 we have negative working capital of $1,266,802.
Our  ability to meet our  obligations  in the  ordinary  course of  business  is
dependent  upon our  ability to  establish  profitable  operations  or to obtain
additional funding through public or private equity financing,  collaborative or
other sources.  We are seeking to increase revenues through continued  marketing
of our services; nonetheless additional funding will be required within the next
quarter.  Should the Company be unable to obtain additional financing it may not
be able to continue as a going concern.

We are working to obtain  sufficient  working  capital from external  sources in
order  to  continue  operations.   There  is  however,  no  assurance  that  the
aforementioned  events,  including the receipt of additional funding, will occur
and be successful.

Net cash used in operating  activities  was $2,005,942 and $628,669 for the nine
months ending March 31, 2001 and 2000, respectively. Cash used in operations was
primarily the result of the net losses of $3,531,217 and $5,296,420 for the nine
months  ending March 31, 2001 and 2000  respectively,  adjusted for stock issued
for expenses of $817,676 and $1,486,735 respectively, and the loss on write down
of goodwill of $38,250 and $1,930,000 respectively.

Net cash provided in investing  activities was $102,286 compared to cash used of
$2,891,713 for the nine months ending March 31, 2001 and 2000,  respectively and
relates to purchase  of  equipment  and  advances  to  subsidiaries.  During the
current  period the Company sold the condo in Chengdu for proceeds  equal to its
original cost.

Net cash provided by financing  activities was $1,117,366 and $4,965,566 for the
six months  ending  March 31,  2001 and 2000,  respectively.  Cash  provided  by
financing  activities  for the nine months  ending  March 31,  2001  consists of
$204,945  in loans  from a related  party,  collection  of a stock  subscription
receivable  of  $408,750,  shares  issued for cash of  $50,000  and the issue of
convertible  notes  payable  totaling  $453,671.   Cash  provided  by  financing
activities  for the period ending March 31, 2000 is from the issuance of capital
stock of  $5,005,066  net of  share  issue  costs  and net  stock  subscriptions
receivable of $39,500.

INCOME TAXES

No provision  for federal and state  incomes  taxes has been recorded as we have
incurred net operating  losses from inception  through June 30, 2000. As of June
30, 2000,  we had  approximately  $1,990,000  of federal and state net operation
loss  carryforwards  available to offset future taxable income,  which expire in
varying amounts beginning in 2020. Under the Tax Reform Act of 1986, the amounts
of and benefits from net operating loss carryforwards may be impaired or limited
in certain  circumstances.  Because there is significant  doubt as to whether we
will realize any benefit from this  deferred tax asset,  we have  established  a
full valuation allowance as of March 31, 2001.


INFLATION AND REGULATION

Our  operations  have not  been,  and in the near term are not  expected  to be,
materially   affected  by  inflation  or  changing  prices.  We  will  encounter
competition  from a variety of firms  selling  Internet  services  in its market
area. Many of these firms have long-standing customer relationships and are well
staffed and well financed. The Company believes that competition in the Internet
industry is based on competitive pricing,  although the ability,  reputation and
support of a marketing network is also significant. The Company does not believe
that any recently enacted or presently pending proposed  legislation will have a
material adverse effect on its results of operations.

<PAGE>

FACTORS THAT MAY AFFECT FUTURE RESULTS

The markets  for many of our  product  offerings  are  characterized  by rapidly
changing  technology,  evolving  industry  standards,  and  frequent new product
introductions.  Our operating results will depend to a significant extent on our
ability to design,  develop,  or otherwise  obtain and  introduce  new products,
services, systems, and solutions and to reduce the costs of these offerings. The
success of these and other new offerings is dependent on many factors, including
proper   identification   of  customer  needs,   cost,   timely  completion  and
introduction,  differentiation  from  offerings of our  competitors,  and market
acceptance.  The ability to  successfully  introduce  new  products and services
could have an impact on future results of operations.

The Company has incurred losses to date and has a working capital  deficiency of
$1,266,802  and its ability to continue as a going concern is dependent upon its
ability  to  obtain  sufficient  additional  financing  or  commence  profitable
operations.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------------------------------------------------------------------

We are not  exposed  to a  material  level of  market  risks due to  changes  in
interest rates. Except for convertible notes payable of $453,671, we do not have
outstanding   debt   instruments   and  we  do  not   maintain  a  portfolio  of
interest-sensitive debt instruments.

We expect to derive a  significant  portion  of future  revenues  in the form of
Renminbi and, therefore, may be exposed to significant foreign currency risks in
the future. During the fiscal year ended June 30, 2000 and the nine months ended
March 31, 2001,  we did not engage in hedging  activities to mitigate the impact
of changes in foreign  exchange rates. We may in the future use foreign currency
forward exchange contracts as a vehicle for hedging purposes.


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
--------------------------

Pursuant to a claim  filed  November  24,  2000 in the Supreme  Court of British
Columbia,  Canada by Totalplan, Inc. a judgement was awarded against the Company
in the amount of $17,700 for an unpaid  amount owing which had  previously  been
included in accounts  payable.  Pursuant to the judgment  payment of in full has
been and the claim has been discontinued.

On  December  20,  2000 a claim  was filed in the  Supreme  Court of New York by
Schulte Roth & Zabel LLP against the Company for $ 281,543 in unpaid legal fees,
all of which are included in accounts payable at March 31, 2001. The Company has
filed a response and intends to dispute this claim.

On January 31, 2001 a claim was filed in the Supreme Court of New York by Walker
Group/CNI,  Inc.  against the Company  for $59,697 in unpaid  fees.  The Company
believes  the claim was  incorrectly  filed and should  have been filed  against
CathayOne Inc,  another public company having  directors in common.  Accordingly
the amount has not been included in accounts payable at March 31, 2001.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
--------------------------------------------------

In July 2000 the Company issued 125,000 common shares valued at $62,500 based on
their closing prices when issued for services rendered. These shares were issued
in reliance on the exemption  provided in Section 4(2) of the Securities Act and
Rule 701 promulgated thereunder.

In July 2000 the Company issued 1,050,000 common shares valued at $425,000 based
on their  closing  prices when issued for services  rendered.  These shares were
issued in reliance on the exemption  provided in Section 4(2) of the  Securities
Act and Regulation S promulgated thereunder.

In September 2000 the Company granted warrants to a consultant entitling them to
purchase  20,000  shares at $1.30  per  share  for a period  of one year.  These
warrants  were issued in reliance on the  exemption  provided in Section 4(2) of
the Securities Act and Rule 701 promulgated thereunder.

In September  2000 the Company  issued  280,000 common shares valued at $112,000
based on their closing  prices when issued for services  rendered.  These shares
were  issued in  reliance  on the  exemption  provided  in  Section  4(2) of the
Securities Act and Regulation S promulgated thereunder.
<PAGE>

In September  2000 the Company  issued  150,000  common shares valued at $60,000
based on their  closing  prices when  issued for the  purchase of an interest in
Beijing Zhongdi Torchnet Information  Technologies Ltd. These shares were issued
in reliance on the exemption  provided in Section 4(2) of the Securities Act and
Regulation S promulgated thereunder.

In  September  2000 the Company  granted  warrants to acquire  2,500,000  common
shares at an exercise price of $.40 per share expiring  September 1, 2002. These
warrants  were issued in reliance on the  exemption  provided in Section 4(2) of
the Securities Act, Rule 701 and Regulation S promulgated thereunder.

In September 2000 the Company granted  warrants to acquire 500,000 common shares
at an  exercise  price of $.25 per  share  expiring  September  1,  2003.  These
warrants  were issued in reliance on the  exemption  provided in Section 4(2) of
the Securities Act, Rule 701 and Regulation S promulgated thereunder.

In October 2000 the Company  issued 50,000 common shares valued at $17,200 based
on their  closing  prices when issued for services  rendered.  These shares were
issued in reliance on the exemption  provided in Section 4(2) of the  Securities
Act and Regulation S promulgated thereunder.

In November 2000 the Company issued 1,000,000 common shares for cash at $.05 per
share. These shares were issued in reliance on the exemption provided in Section
4(2) of the Securities Act and Regulation S promulgated thereunder.

In November  2000 the Company  issued  225,000  common  shares valued at $38,250
based on their closing  prices when issued for purchase  commitments  related to
the Company'  acquisition  of CMD Capital  Limited.  These shares were issued in
reliance on the  exemption  provided in Section 4(2) of the  Securities  Act and
Regulation S promulgated thereunder.

In November  2000 the Company  issued  125,000  common  shares valued at $17,500
based on their closing  prices when issued for services  rendered.  These shares
were  issued in  reliance  on the  exemption  provided  in  Section  4(2) of the
Securities Act and Rule 701 promulgated thereunder.

In November  2000 the Company  issued  426,057  common  shares valued at $66,090
based on their closing  prices when issued for services  rendered.  These shares
were  issued in  reliance  on the  exemption  provided  in  Section  4(2) of the
Securities Act and Regulation S promulgated thereunder.

In November  2000 the Company  issued a  convertible  note for $250,000  bearing
interest at 10% per annum and due  November 30,  2001.  The note is  convertible
into common  shares of the  Company at the lower of 70% of the  average  closing
price for the five days  prior to the  conversion  or  $0.06566  per  share.  As
additional  consideration  the  Company  granted a warrant to acquire  1,500,000
common shares at an exercise  price of $0.0938 per share  expiring  December 12,
2005. The note and warrants were issued in reliance on the exemption provided in
Section 4(2) of the  Securities  Act and Rule 501 and  Regulation D  promulgated
thereunder.  As security for the note the Company issued  6,500,000 shares to be
held in escrow.  While held in escrow  these  shares  are not  considered  to be
outstanding.

In December  2000 the Company  issued  500,000  common  shares valued at $39,000
based on their closing  prices when issued for services  rendered.  These shares
were  issued in  reliance  on the  exemption  provided  in  Section  4(2) of the
Securities Act and Regulation S promulgated thereunder.

In December 2000 to March 2001 the Company  issued  945,400 common shares valued
at $59,260  based on their  closing  prices when issued for  services  rendered.
These shares were issued in reliance on the  exemption  provided in Section 4(2)
of the Securities Act and Rule 701 promulgated thereunder.

In December 2000 the Company granted warrants to acquire 1,800,000 common shares
at an  exercise  price of $.25 per  share  expiring  December  13,  2005.  These
warrants  were issued in reliance on the  exemption  provided in Section 4(2) of
the Securities Act and Rule 701 promulgated thereunder.

In December 2000 the Company granted warrants to acquire 6,500,000 common shares
at an  exercise  price of $.25 per  share  expiring  December  13,  2005.  These
warrants  were issued in reliance on the  exemption  provided in Section 4(2) of
the Securities Act and Rule 701 and Regulation S promulgated thereunder.

In January,  February and March 2001 the Company  issued a series of convertible
notes totaling  $203,671  bearing interest at 10% per annum and due November 30,
2001. The notes are  convertible  into common shares of the Company at the lower
of the average  closing  price for the five days prior to the  conversion or the
closing price when funds  advanced.  Closing  process when advanced  ranged from
$0.02 to $.06 per share. As additional  consideration  the Company has agreed to
issue shares for a commission of 12.5%, of which 442,284 have been issued. These
shares were issued in reliance on the exemption  provided in Section 4(2) of the

<PAGE>

Securities Act and Rule 501 and Regulation S promulgated thereunder. As security
for the notes the Company issued 10,000,000  shares to be held in escrow.  While
in escrow these shares are not to be outstanding.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
----------------------------------------

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------------------------------------------------------------

The Company's  Annual Meeting of Shareholders was held on November 29, 2000. The
proposals  introduced and voted were  previously  reported in the Company's 10-Q
for the period ended December 31, 2000 and are incorporated herein by reference.

ITEM 5.  OTHER INFORMATION
--------------------------

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

(a)      Exhibits

The following  Exhibits are  incorporated  herein by reference or are filed with
this report as indicated below.

INDEX TO EXHIBITS

EXHIBIT
NO.               DESCRIPTION
-------           -------------------------

2.1  Share  Purchase  Agreement  dated as of June 30,  2000  among  CathayOnline
     Technologies (Hong Kong) Limited,  SNet Communications  (HK) Limited,  Ting
     Kan Nok,  CMD  Capital  Limited,  CathayBancorp.com,  Limited  and  Premier
     Brands,  Inc.  (Filed as Exhibit 2.1 to the  Company's  10-K  report  dated
     October 2, 2000 and incorporated herein by reference)

3.1  Articles of  Incorporation  of  CathayOnline  Inc. (Filed as Exhibit 3.1 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

3.2  Amended and Restated By-Laws of CathayOnline  Inc. (Filed as Exhibit 3.2 to
     the Company's 10-K report dated October 2, 2000 and incorporated  herein by
     reference)

4.1  Specimen  Form of  Common  Stock  Certificate.  (Filed  as  Exhibit  4.1 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

4.2  Form of Warrant issued to Employees and Consultants.  (Filed as Exhibit 4.2
     to  Amendment  No. 1 to the  Company's  Current  Report  on Form 8-K  dated
     January 18, 2000 and incorporated herein by reference.)

4.3  Form of Warrant  issued in April 1999  Offering.  (Filed as Exhibit  4.3 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

<PAGE>

4.4  Form of Warrant  issued in June 1999  Offering.  (Filed as  Exhibit  4.4 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

4.5  Form of Warrant  Issued in Regulation S Offering.  (Filed as Exhibit 4.5 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

10.1 Management and  Consultancy  Service  Agreement with Sichuan Guo Xun Xin Xi
     Chan Ye You Xian Gong Si.  (Filed as Exhibit 10.1 to Amendment No. 1 to the
     Company's   Current   Report  on  Form  8-K  dated  January  18,  2000  and
     incorporated herein by reference.)

10.2 Agreement to Acquire TorchMail.com Inc. (Filed as Exhibit 10.2 to Amendment
     No. 1 to the  Company's  Current  Report on Form 8-K dated January 18, 2000
     and incorporated herein by reference.)

10.3 Employment Agreement between CathayOnline Inc. and Brian Ransom.  (Filed as
     Exhibit 10.6 to Amendment No. 1 to the Company's Current Report on Form 8-K
     dated January 18, 2000 and incorporated herein by reference.)

10.4 Management  Agreement with Owen Li. (Filed as Exhibit 10.7 to Amendment No.
     1 to the  Company's  Current  Report on Form 8-K dated January 18, 2000 and
     incorporated herein by reference.)

10.5 Consulting  Agreement  with Peter Lau.  (Filed as Exhibit 10.8 to Amendment
     No. 1 to the  Company's  Current  Report on Form 8-K dated January 18, 2000
     and incorporated herein by reference.)

10.6 Co-Branded  Site  Services  Agreement  dated as of October 27, 1999 between
     register.com,  inc.  and  TorchMail.com,  Inc.  (Filed As Exhibit  10.11 to
     Amendment No. 1 to the Company's  Current  Report on Form 8-K dated January
     18, 2000 and incorporated herein by reference.)

10.7 Lease Agreement with Sichuan Dongfu Group Company.  (Filed as Exhibit 10.12
     to  Amendment  No. 1 to the  Company's  Current  Report  on Form 8-K  dated
     January 18, 2000 and incorporated herein by reference.)

10.8 Lease Agreement with Beijing Tongkai Development Co., Ltd. for Office Space
     in  Beijing,  China.  (Filed as  Exhibit  10.14 to  Amendment  No. 1 to the
     Company's   Current   Report  on  Form  8-K  dated  January  18,  2000  and
     incorporated herein by reference.)

10.9 Cooperation  Agreement  dated as of May 11, 2000 among Wuyi  University  of
     Jiangmen,  CathayOnline  Technologies (Hong Kong) Limited,  and Sichuan Guo
     Xun Xin Xi Chan Ye You Xian Gong Xi (Filed as Exhibit 10.9 to the Company's
     10-K report dated October 2, 2000 and incorporated herein by reference)

10.10Cooperation  Agreement with the Second Institution of the Aerospace Machine
     & Electronic  Group (Filed as Exhibit  10.10 to the  Company's  10-K report
     dated October 2, 2000 and incorporated herein by reference)

<PAGE>

10.11Cooperation Agreement dated February 16, 2000 between  TorchMail.com,  Inc.
     and Digital  Technology  Co. Ltd.  of National  Library of China  (Filed as
     Exhibit  10.11 to the  Company's  10-K  report  dated  October  2, 2000 and
     incorporated herein by reference)

10.12Consulting  agreement dated December 6, 2000 with  Trueyou.com  Inc. (Filed
     as Exhibit 10.12 to the Company's  10-Q report dated  February 15, 2001 and
     incorporated herein by reference)

10.13Financing  agreement with Generation  Capital Associates dated November 22,
     2000 including  attached escrow  agreement,  warrant  agreement and form of
     convertible note.*

10.14Financing  agreement  with Knights  Bridge  Capital dated December 12, 2000
     including attached escrow agreement and form of convertible note.*

21.1 List of  Subsidiaries  (Filed as Exhibit 21.1 to the Company's  10-K report
     dated October 2, 2000 and incorporated herein by reference)


-----------------------
  *  Filed with this report


(b)      Reports on Form 8-K

None.


<PAGE>
                                   SIGNATURES

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

                               CATHAYONLINE, INC.
                               ------------------
                                  (Registrant)


DATE:   May 15, 2000                        BY:    /S/ KEN LEVY
       --------------------                       ----------------------
                                                     Ken Levy
                                                     President and Director

DATE:  MAY 15, 2000                        BY:    /S/ GLENN OHLHAUSER
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                                                     Glenn Ohlhauser
                                                     Chief Financial Officer and
                                                     Secretary