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

                                   FORM 10-QSB


[X]  Quarterly Report pursuant Section 13 or 15(d) of the Securities Exchange
     Act of 1934


                 For the quarterly period ended January 31, 2006


[ ]  Transition report pursuant section 13 or 15(d) of the Securities Exchange
     Act of 1934



                                   333-111696
                                   ----------
                             Commission file number


                            YZAPP INTERNATIONAL INC.
                            ------------------------
        (Exact name of small business issuer as specified in its charter)

                                     Nevada
                                     ------
                          (State or other jurisdiction)

                                     Pending
                                     -------
       (IRS Employer of incorporation or organization Identification No.)

         6584 Willoughby Way, Langley, British Columbia, Canada V2Y 1K4
         --------------------------------------------------------------
                    (Address of principal executive offices)

                                  604 868 0264
                                  ------------
                           (Issuer's telephone number)


    -------------------------------------------------------------------------
   (Former Name, Address and Former Fiscal Year, if Changed Since Last Report)


Check whether the issuer:

     (1)  filed all reports required to be filed by Section 13 or 15(d) of the
          Exchange Act during the past 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........


Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).   Yes......No....X....


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes....X....  No.......


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes........ No........

Common Stock of 50,000,000 authorized at $0.001 par value, 11,546,041 shares
were outstanding as of March 20, 2006.

<PAGE>


                            YZAPP INTERNATIONAL INC.

                                   FORM 10-QSB

                                      INDEX



PART I. FINANCIAL INFORMATION                                            Page


Item 1. Financial Statements

     Consolidated Balance Sheets                                            3

     Consolidated  Statements of Operations                                 4

     Consolidated  Statements of Cash Flows                                 5

     Notes to Consolidated Financial Statements                             6

Item 2. Managements' Discussion and Analysis of Financial
        Condition and Results of Operations                                12

Item 3. Controls and Procedures                                            14

PART II. OTHER INFORMATION                                                 14

Item 1. Legal Proceedings                                                  14

Item 2. Changes in Securities                                              14

Item 3. Default Upon Senior Securities                                     14

Item 4. Submission of Matters to a Vote of Security Holders                14

Item 5. Other Information                                                  14

Item 6. Exhibits and Reports on Form 8-K                                   15

Signatures                                                                 15



<PAGE>
<TABLE>
<CAPTION>

                            YzApp International Inc.
                          (A Development Stage Company)
                           Consolidated Balance Sheets
                           (expressed in U.S. dollars)

                                                                January 31,    July 31,
                                                                   2006          2005
                                                                (unaudited)    (audited)
                                                                     $             $
                                                                 --------      --------
                                       ASSETS
<S>                                                                 <C>             <C>
Current Assets

  Cash                                                              2,561           274
  Other receivables - taxes                                         8,380         8,462
                                                                 --------      --------

Total Current Assets                                               10,941         8,736

Property and Equipment (Note 3)                                    11,374        12,474
Software Development Costs (Note 2 (j))                            37,756        35,429
                                                                 --------      --------

Total Assets                                                       60,071        56,639
                                                                 --------      --------


                       LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

  Accounts payable and accrued liabilities (Note 4)               300,860       293,842
  Due to related parties (Note 5(b))                               33,702        17,798
  Advances payable (Note 6)                                        34,852        12,264
  Current portion of long-term debt                                    --        12,500
                                                                 --------      --------

Total Liabilities                                                 369,414       336,404
                                                                 --------      --------

Contingencies and Commitments (Note 1)


                              STOCKHOLDERS' DEFICIT

Preferred Stock:
  1,000,000 authorized, $0.001 par value
  nil shares issued and outstanding                                    --            --

Common Stock:
  50,000,000 shares authorized, $0.001 par value
  11,406,041 shares issued and outstanding, respectively           11,406        11,406

Additional Paid-in Capital                                        699,299       699,299

Donated Capital                                                   127,152       107,652

Deficit Accumulated During the Development Stage               (1,090,433)   (1,059,926)

Accumulated Other Comprehensive Loss                              (56,767)      (38,196)
                                                                 --------      --------

Total Stockholders' Deficit                                      (309,343)     (279,765)
                                                                 --------      --------

Total Liabilities and Stockholders' Deficit                        60,071        56,639
                                                                 ========      ========
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                       3

<PAGE>
<TABLE>
<CAPTION>


                            YzApp International Inc.
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                           (expressed in U.S. dollars)
                                   (unaudited)


                                        Six Months Ended              Three Months Ended           Inception
                                           January 31,                    January 31,             (24-Aug-00)
                                        2006        2005            2006              2005          through
                                                  (Restated -                      (Restated -     January 31,
                                                    Note 8)                          Note 8)          2006
                                         $            $               $                $                $
                                      ------        ------          ------           ------         ---------
<S>                                   <C>           <C>             <C>              <C>            <C>

REVENUE                                -              -              -                 -            16,940
                                      ------        ------          ------           ------         ---------

EXPENSES

Automobile                            11            909             -                367            15,247
Bank charges and interest             790           1,153           60               582            51,994
Depreciation                          1,872         2,624           908              1,359          26,545
Feasibility study                     -             -               -                -              11,814
Interest on long term debt            -             140             -                41             2,608
Loss on disposal of equipment         -             -               -                -              2,017
Management fees (Note 5(a))           19,500        24,000          7,500            12,000         181,334
Marketing                             -             -               -                378            32,479
Office and general                    1,263         5,156           (1,054)          1,643          73,495
Professional fees                     7,071         20,459          3,035            9,973          107,093
Sales and marketing consulting        -             10,566          -                -              264,289
Software development costs            -             -               -                -              278,334
Technical support                     -             -               -                -              18,136
Travel                                -             -               -                -              28,915
Wages and benefits                    -             -               -                -              10,554
Website hosting and server            -             -               -                -              40,227
                                      ------        ------          ------           ------         ---------

TOTAL EXPENSES                        30,507        65,007          10,449           26,343         1,145,081

Less expense recoveries               -             -               -                -              (34,919)
Less interest and other               -             -               -                -              (2,789)
                                      --------      --------        -------          -------        ---------

                                      30,507        65,007          10,449           26,343         1,107,373
                                      --------      --------        -------          -------        ---------

NET LOSS                              (30,507)      (65,007)        (10,449)         (26,343)       (1,090,433)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation
adjustment                            (18,571)      (15,406)        (7,378)          4,953          (56,767)
                                      --------      --------        -------          -------        ---------

COMPREHENSIVE LOSS                    (49,078)      (80,413)        (17,827)         (21,390)       (1,147,200)
                                      --------      --------         -------          -------        ---------

Net Loss Per Share - Basic and
Diluted                                -             -               -               -
                                      --------      --------        -------          -------

Weighted Average Common Stock
Outstanding                           11,406,000    11,386,000      11,406,000       11,386,000
</TABLE>




    The accompanying notes are an integral part of these financial statements


                                       4
<PAGE>
<TABLE>
<CAPTION>
                            YzApp International Inc.
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                           (expressed in U.S. dollars)
                                   (unaudited)

                                                      Six Months Ended
                                                         January 31,          Accumulated from
                                                    ----------------------     August 24, 2000
                                                     2006          2005      (Date of Inception)
                                                                (Restated -     to January 31,
                                                                  Note 8)           2006
                                                       $             $               $
                                                    -------       -------    ------------------
<S>                                                 <C>           <C>               <C>
OPERATING ACTIVITIES

Net loss                                            (30,507)      (65,007)          (1,090,433)

Adjustments to reconcile net loss to net cash:
Depreciation                                          1,872         2,624               26,545
Donated services                                     19,500        24,000              127,152
Loss on disposal of equipment                            --            --                2,017
Debt settled with common stock                           --        10,500
                                                                                        10,500
Expenses paid with common stock                          --            --              169,245

Change in operating assets and liabilities:
Accounts receivable                                      --            --                1,019
Other receivables - taxes                               622         1,815               (6,392)
Prepaid expenses                                         --            --                  480
Accounts payable                                    (11,896)          170              231,350
Due to related parties                                1,380            --               13,552
                                                   --------      --------           ----------
Net Cash Used In Operating Activities               (19,029)      (25,898)            (514,965)
                                                   --------      --------           ----------

INVESTING ACTIVITIES

Software development costs                               --            --              (29,687)
Purchase of property and equipment                       --            --              (34,420)
                                                   --------      --------           ----------

Net Cash Used In Investing Activities                    --            --              (64,107)
                                                   --------      --------           ----------

FINANCING ACTIVITIES

Increase in advances payable                         21,250        17,961               50,815
Net decrease in long-term debt                           --        (4,312)                (588)
Proceeds from issue of common stock                      --            --              529,251
                                                   --------      --------           ----------

Net Cash Provided By Financing Activities            21,250        13,649              579,478
                                                   --------      --------           ----------

Effect of Exchange Rate Changes on Cash                  66         1,147                2,155
                                                   --------      --------           ----------

NET INCREASE (DECREASE) IN CASH                       2,287       (11,102)               2,561

CASH - BEGINNING OF PERIOD                              274        13,063                   --
                                                   --------      --------           ----------

CASH - END OF PERIOD                                  2,561         1,961                2,561
                                                   ========      ========           ==========


Supplemental Disclosures

  Interest paid                                       2,201           621                9,268
  Income taxes paid                                      --            --                   --
                                                   ========      ========           ==========


Non-Cash Financing Activities

  Common stock issued for services                       --            --              169,245
  Common stock issued for debt settlement                --        10,500               10,500
                                                   ========      ========           ==========
</TABLE>



    The accompanying notes are an integral part of these financial statements


                                        5



<PAGE>


                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006


1.   Nature of Operations and Continuance of Business

     YzApp International Inc. (the "Company") was incorporated in the State of
     Nevada on December 26, 2002. Effective October 15, 2003, the Company
     acquired all the outstanding common stock of YzApp Solutions Inc.
     ("Solutions"), a Company under common control. Prior to the acquisition the
     Company was a non-operating shell corporation with nominal net assets. The
     acquisition was a capital transaction in substance and therefore was
     accounted for as a reverse acquisition.

     The Company is based in Vancouver, British Columbia, Canada and its
     principal business is the development of software allowing the Company to
     act as an application service provider acting as a conduit between
     retailers and financial institutions.

     The Company is in the development stage and planned principal activities
     have commenced, but there has been no revenue generated therefrom. In a
     development stage company, management devotes most of its activities to
     developing a market for its products and services. These financial
     statements have been prepared on a going concern basis, which implies the
     Company will continue to realize its assets and discharge its liabilities
     in the normal course of business. The Company has not generated revenue and
     has never paid any dividends. The Company is unlikely to pay dividends or
     generate earnings in the immediate or foreseeable future. The continuation
     of the Company as a going concern and the ability of the Company to emerge
     from the development stage is dependent upon the continued financial
     support from its shareholders, the ability of the Company to obtain
     necessary equity financing to continue operations and to generate
     significant revenue. There is no guarantee that the Company will be able to
     raise any equity financing or generate profitable operations. As at January
     31, 2006, the Company has a working capital deficiency of $358,473 and has
     accumulated losses of $1,090,433 since inception. These financial
     statements do not include any adjustments to the recoverability and
     classification of recorded asset amounts and classification of liabilities
     that might be necessary should the Company be unable to continue as a going
     concern. These factors raise substantial doubt regarding the Company's
     ability to continue as a going concern.

     On August 23, 2005, the Company had its SB-2 Registration Statement
     declared effective by the United States Securities and Exchange Commission,
     which allows the Company to sell 3,000,000 shares of common stock at $0.50
     per share to raise approximate net proceeds of $1,350,000 after all
     offering costs.


2.   Summary of Significant Accounting Policies

     The financial statements have, in management's opinion, been properly
     prepared within reasonable limits of materiality and within the framework
     of the significant accounting policies summarized below:

     (a)  Basis of Presentation

          These consolidated financial statements are prepared in conformity
          with accounting principles generally accepted in the United States and
          are presented in U.S. dollars. All significant intercompany
          transactions and balances have been eliminated. The Company has not
          produced significant revenue from its principal business and is a
          development stage company as defined by Statement of Financial
          Accounting Standard ("SFAS") No. 7 "Accounting and Reporting by
          Development Stage Enterprises".

     (b)  Year End

          The Company's fiscal year end is July 31.

     (c)  Use of Estimates

          The preparation of financial statements in conformity with accounting
          principles generally accepted in the United States 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 periods. Actual results
          could differ from those estimates.


                                       6

<PAGE>



                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006

2.   Summary of Significant Accounting Policies (continued)


     (d)  Basic and Diluted Net Income (Loss) per Share

          The Company computes net income (loss) per share in accordance with
          SFAS No. 128, "Earnings per Share", which requires presentation of
          both basic and diluted earnings per shares (EPS) on the face of the
          income statement. Basic EPS is computed by dividing net income (loss)
          available to common shareholders (numerator) by the weighted average
          number of common shares outstanding (denominator) during the period.
          Diluted EPS gives effect to all dilutive potential common shares
          outstanding during the period including stock options, using the
          treasury stock method, and convertible preferred stock, using the
          if-converted method. In computing Diluted EPS, the average stock price
          for the period is used in determining the number of shares assumed to
          be purchased from the exercise of stock options or warrants. Diluted
          EPS excludes all dilutive potential common shares if their effect is
          anti-dilutive.

     (e)  Foreign Currency Translation

          The Company's functional currency is the Canadian dollar. The
          financial statements of the Company are translated to United States
          dollars under the current rate method in accordance with SFAS No. 52
          "Foreign Currency Translation". Under the current rate method, all
          assets and liabilities are translated at the current rate, while
          stockholders' equity accounts are translated at the appropriate
          historical rate. The revenues and expenses that occur evenly over the
          period are translated at the weighted-average rate for the period. The
          cumulative translation adjustments balance is reported as a component
          of accumulated other comprehensive income.

     (f)  Comprehensive Loss

          SFAS No. 130, "Reporting Comprehensive Income," establishes standards
          for the reporting and display of comprehensive income and its
          components in the financial statements. At January 31, 2006 and 2005,
          the only component of comprehensive loss was foreign currency
          translation adjustments.

     (g)  Financial Instruments and Concentrations of Risk

          The Company's financial instruments consist of cash, other receivables
          - taxes, accounts payable, accrued liabilities, due to related
          parties, advances payable and the current portion of long-term debt.
          It is management's opinion that the Company is not exposed to
          significant interest, currency or credit risks arising from these
          financial instruments. The fair value of these financial instruments
          approximates their carrying values. The Company does ongoing credit
          evaluations of customers and establishes reserves for credit losses.
          The Company did not experience any material credit loss in the year.

          Virtually all of the Company's software development costs were
          incurred to one subcontractor. The Company's business could be
          adversely affected should a modification to the software be required
          and the subcontractor is no longer in business.

          The Company is dependent on one major customer to market its software
          to Canadian recreational equipment dealers.

     (h)  Property and Equipment

          Property and equipment are capitalized at original cost and amortized
          over their estimated useful lives at the following annual bases and
          rates:

          Computer equipment                             30% declining balance
          Furniture and fixtures                         20% declining balance
          Equipment under capital lease                  30% declining balance

          One-half the normal amortization is taken in the year of acquisition.

                                       7

<PAGE>

                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006

2.   Summary of Significant Accounting Policies (continued)

     (i)  Long-Lived Assets

          In accordance with Financial Accounting Standards Board ("FASB") SFAS
          No. 144, "Accounting for the Impairment or Disposal of Long-Lived
          Assets", the carrying value of intangible assets and other long-lived
          assets is reviewed on a regular basis for the existence of facts or
          circumstances that may suggest impairment. The Company recognizes
          impairment when the sum of the expected undiscounted future cash flows
          is less than the carrying amount of the asset. Impairment losses, if
          any, are measured as the excess of the carrying amount of the asset
          over its estimated fair value.

     (j)  Software Development Costs

          SFAS No. 86, "Accounting for the Costs of Computer Software to be
          Sold, Leased or Otherwise Marketed", requires the capitalization of
          certain software development costs subsequent to the establishment of
          technological feasibility. Based on the Company's product development
          process, technological feasibility is established upon the completion
          of a working model. Amortization of these costs will commence when the
          product is ready for release to customers.

          Total software development costs incurred are as follows:
<TABLE>
<CAPTION>

                                                                Six Months     Six Months      Period from
                                                                  Ended          Ended       August 24, 2000
                                                                January 31,    January 31  (Date of Inception)
                                                                   2006           2005     to January 31, 2006
                                                                     $              $                 $
<S>                                                            <C>              <C>               <C>
           Software development costs incurred by others             -               -            308,866

           Less:  Software development costs capitalized             -               -             30,532
                                                                -------         -------         ---------

           Software development costs expensed                       -               -            278,334
                                                                =======         =======         =========
</TABLE>


          Software development costs capitalized on the balance sheet are
          $37,756. The difference of $7,224 from the above table is a result of
          changes in the foreign exchange rate between the Canadian and U.S.
          dollars.

     (k)  Revenue Recognition

          The Company recognizes revenue from the sale of products and services
          in accordance with Securities and Exchange Commission Staff Accounting
          Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial
          Statements." Revenue consists of software licensing and is recognized
          only when the price is fixed or determinable, persuasive evidence of
          an arrangement exists, the service is performed, and collectibility is
          reasonably assured. Licensing revenue consists of revenue from
          licensing the Company's software and is recognized when the software
          has been delivered and there are no significant remaining obligations.
          The Company recognizes revenue from licensing its software products in
          accordance with AICPA Statement of Position No. 97-2, as amended,
          "Software Revenue Recognition" and SAB 104.

     (l)  Income Taxes

          Potential benefits of income tax losses are not recognized in the
          accounts until realization is more likely than not. The Company has
          adopted SFAS No. 109 "Accounting for Income Taxes" as of its
          inception. Pursuant to SFAS No. 109 the Company is required to compute
          tax asset benefits for net operating losses carried forward. Potential
          benefit of net operating losses have not been recognized in these
          financial statements because the Company cannot be assured it is more
          likely than not it will utilize the net operating losses carried
          forward in future years.

                                       8

<PAGE>


                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006


2.   Summary of Significant Accounting Policies (continued)

     (m)  Stock-Based Compensation

          The Company records stock-based compensation in accordance with SFAS
          No. 123, "Accounting for Stock-Based Compensation". All transactions
          in which goods or services are the consideration received for the
          issuance of equity instruments are accounted for based on the fair
          value of the consideration received or the fair value of the equity
          instrument issued, whichever is more reliably measurable. Equity
          instruments issued to employees and the cost of the services received
          as consideration are measured and recognized based on the fair value
          of the equity instruments issued.

     (n)  Recent Accounting Pronouncements

          In May 2005, the Financial Accounting Standards Board (FASB) issued
          SFAS No. 154, "Accounting Changes and Error Corrections - A
          Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS 154 changes
          the requirements for the accounting for and reporting of a change in
          accounting principle and applies to all voluntary changes in
          accounting principle. It also applies to changes required by an
          accounting pronouncement in the unusual instance that the
          pronouncement does not include specific transition provisions. SFAS
          154 requires retrospective application to prior periods' financial
          statements of changes in accounting principle, unless it is
          impracticable to determine either the period-specific effects or the
          cumulative effect of the change. The provisions of SFAS No. 154 are
          effective for accounting changes and correction of errors made in
          fiscal years beginning after December 15, 2005. The adoption of this
          standard is not expected to have a material effect on the Company's
          results of operations or financial position.

          In December 2004, the FASB issued SFAS No. 153, "Exchanges of
          Nonmonetary Assets - An Amendment of APB Opinion No. 29". The guidance
          in APB Opinion No. 29, "Accounting for Nonmonetary Transactions", is
          based on the principle that exchanges of nonmonetary assets should be
          measured based on the fair value of the assets exchanged. The guidance
          in that Opinion, however, included certain exceptions to that
          principle. SFAS No. 153 amends Opinion No. 29 to eliminate the
          exception for nonmonetary exchanges of similar productive assets and
          replaces it with a general exception for exchanges of nonmonetary
          assets that do not have commercial substance. A nonmonetary exchange
          has commercial substance if the future cash flows of the entity are
          expected to change significantly as a result of the exchange. The
          provisions of SFAS No. 153 are effective for nonmonetary asset
          exchanges occurring in fiscal periods beginning after June 15, 2005.
          Early application is permitted and companies must apply the standard
          prospectively. The adoption of this standard did not have a material
          effect on the Company's results of operations or financial position.

          In December 2004, the FASB issued SFAS No. 123R, "Share Based
          Payment". SFAS 123R is a revision of SFAS No. 123 "Accounting for
          Stock-Based Compensation", and supersedes APB Opinion No. 25,
          "Accounting for Stock Issued to Employees" and its related
          implementation guidance. SFAS 123R establishes standards for the
          accounting for transactions in which an entity exchanges its equity
          instruments for goods or services. It also addresses transactions in
          which an entity incurs liabilities in exchange for goods or services
          that are based on the fair value of the entity's equity instruments or
          that may be settled by the issuance of those equity instruments. SFAS
          123R focuses primarily on accounting for transactions in which an
          entity obtains employee services in share-based payment transactions.
          SFAS 123R requires a public entity to measure the cost of employee
          services received in exchange for an award of equity instruments based
          on the grant-date fair value of the award (with limited exceptions).
          That cost will be recognized over the period during which an employee
          is required to provide service in exchange for the award - the
          requisite service period (usually the vesting period). SFAS 123R
          requires that the compensation cost relating to share-based payment
          transactions be recognized in financial statements. That cost will be
          measured based on the fair value of the equity or liability
          instruments issued. Public entities that file as small business
          issuers will be required to apply SFAS 123R in the first interim or
          annual reporting period that begins after December 15, 2005. The
          adoption of this standard is not expected to have a material effect on
          the Company's results of operations or financial position.

          In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107
          ("SAB 107") to give guidance on the implementation of SFAS 123R. The
          Company will consider SAB 107 during implementation of SFAS 123R.

                                       9
<PAGE>



                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006

2.   Summary of Significant Accounting Policies (continued)

     (o)  Interim Financial Statements

          These interim unaudited financial statements have been prepared on the
          same basis as the annual financial statements and in the opinion of
          management, reflect all adjustments, which include only normal
          recurring adjustments, necessary to present fairly the Company's
          financial position, results of operations and cash flows for the
          periods shown. The results of operations for such periods are not
          necessarily indicative of the results expected for a full year or for
          any future period.


3.   Property and Equipment
<TABLE>
<CAPTION>

                                                                       January 31,      July 31,
                                                                           2006           2005
                                                       Accumulated     Net Carrying   Net Carrying
                                          Cost         Depreciation       Value           Value
                                            $               $               $               $

<S>                                      <C>               <C>            <C>            <C>
     Computer equipment                  11,758            8,764          2,994          3,284
     Furniture and fixtures               5,089            3,294          1,795          1,968
     Equipment under capital lease       26,398           19,813          6,585          7,222
                                        -------          -------        -------         ------

                                         43,245           31,871         11,374         12,474
                                        =======          =======        =======        =======
</TABLE>


4.   Accounts Payable

     At January 31, 2006, the Company was indebted to Inglenet Solutions Inc.
     ("Inglenet") in the amount of $231,012 (July 31, 2005 - $216,775), which
     included accrued interest of $53,877 (July 31, 2005 - $50,556) incurred for
     development of the Company's software. This amount is secured by the source
     code to the Company's software until the amount owing is repaid in full. Up
     to July 31, 2004, the Company recognized interest at a rate of 24% per
     annum. Effective July 31, 2004, no further interest is being accrued. The
     Company agreed to repay Inglenet instalments of 10% of the outstanding
     amount per month beginning 3 months after the commercial release of the
     software.


5.   Related Party Transactions

     (a)  In the three months ended January 31, 2006, the Company incurred
          management fees for ongoing management of the Company's affairs to a
          director and officer of the Company of $7,500 (2004 - $12,000), all of
          which was waived and recognized as donated services.

     (b)  At January 31, 2006, the Company owed $33,702 (July 31, 2005 -
          $17,798) to the President of the Company for advances and expenses
          paid on behalf of the Company. The amount is non-interest bearing,
          unsecured and due on demand.


6.   Advances Payable


     At January 31, 2006, the Company owed $34,852 to shareholders for cash
     advances. The amounts are non-interest bearing, unsecured and due on
     demand.


7.   Stock Option Plan

     During the fiscal year ended July 31, 2004, the Company instituted a stock
     option plan. Under the terms of the plan, the Company may award options to
     purchase common shares of the Company, not to exceed 2,000,000 shares. To
     date, no options have been granted under the plan.


                                       10
<PAGE>



                            YzApp International Inc.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           (expressed in U.S. dollars)
                                   (unaudited)
                                January 31, 2006

8.   Restatements

     (a)  The consolidated statement of operations for the three months ended
          October 31, 2004 has been restated to include $12,000 in additional
          management fees, all of which were donated.
<TABLE>
<CAPTION>

                                   Three Months Ended
                                       October 31,                   Three Months Ended
                                          2004                           October 31,
                                    (As Originally                          2004
                                       Reported)       Adjustments       (Restated)
                                          $                $                $

<S>                                    <C>             <C>                <C>
         EXPENSES

            Management fees                   -          12,000             12,000

         NET LOSS                      (26,664)        (12,000)           (38,664)
</TABLE>




     (b)  The consolidated statement of cash flows for the three months ended
          October 31, 2004 has been restated to include an increase in net loss
          of $12,000 and an increase in donated services of $12,000.
<TABLE>
<CAPTION>

                                                              Three Months Ended
                                                                 October 31,                     Three Months Ended
                                                                    2004                            October 31,
                                                               (As Originally                          2004
                                                                  Reported)       Adjustments       (Restated)
                                                                      $                $                 $

<S>                                                               <C>             <C>                <C>
         OPERATING ACTIVITIES

         Net loss                                                 (26,664)        (12,000)           (38,664)

         Adjustments to reconcile net loss to net cash:
            Donated services                                             -          12,000             12,000

</TABLE>



9.   Subsequent Event

     Subsequent to the quarter ended January 31, 2006 the Company completed a
     share offering and raised $70,000 through the issuance of 140,000 shares at
     $0.50 per share. The Company intends to raise the additional capital
     through debt financing and or the sale of its securities. However, no
     assurances can be given that the Company will be successful in its efforts.

                                       11
<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


When used herein, the words "may", "will", "expect", "anticipate", "continue",
"estimate", "project", "intend", "plan" and similar expressions are intended to
identify forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, regarding events, conditions and
financial trends that may affect YZAPP INTERNATIONAL INC'S (YZAPP or the
Company) future plans of operations, business strategy, operating results and
financial position. All statements, other than statements of historical facts,
included or incorporated by reference in this Form 10-QSB which address
activities, events or developments which the Company expects or anticipates will
or may occur in the future, including such things as future capital expenditures
(including the amount and nature thereof), business strategy, expansion and
growth of the Company's business and operations, and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions and expected future developments as
well as other factors it believes are appropriate in the circumstances. Such
statements are not guarantees of future performance and are subject to risks and
significant uncertainties and that actual results may differ materially from
those included within the forward-looking statements as a result of various
factors. The occurrence of any unanticipated events may cause actual results to
differ from those expressed or implied by the forward-looking statements
contained herein. You are cautioned not to place undue reliance on these
statements, which speak only as of the date of this report.

Overview

 Our operation activities have been related primarily to the research,
development and marketing of our interactive credit application called the
Intelligent Credit Application or "ICA". There are two versions of this
application, one for use by retailers and financial institutions and another
simplified version for consumers or those unfamiliar with computers or software.
These two versions are called the ICA Business Office also known as SalesMax and
the ICA Weblink respectively. We are no longer conducting research as our user
acceptance testing was completed on August 31, 2004. The results of the testing
indicated that the dealers could connect with, and use as intended, the
Intelligent Credit Application. The dealers requested a number of enhancements
so that the software would be easier to use and could print additional
documents. The full results of the user acceptance testing and desired
enhancements are contained in a document that is ready for programmers to use in
programming the required modifications. Our marketing activities are conducted
by Brian Jaggard and Douglas Dunn on a voluntary basis.

Along with the efforts of our own staff, we rely on a third party to market and
sell our products. We currently maintain an agreement with a third-party The
Sawka Group, regarding the marketing and distribution of our software. The
contractual agreement gives the Sawka group exclusive rights to market the
SalesMax version of the Intelligent Credit Application to recreational equipment
dealers in Canada. In return, YzApp may collect user and administration fees for
the use of the software from Sawka dealers who would use the Intelligent Credit
Application. We anticipate that sales after our launch will begin cash flow
within 12 months. We currently have no sales commitments, however we are working
with the Sawka Group on several marketing options and tactics however they may
require further modification of the software. We have been working in the past
quarter and expect to continue to develop the Modification Requirements
document.

We will not begin enhancements outlined in the Version 2 document of the
existing software until we raise money. In the interm we continue to seek new
clients for both our existing software and customized versions. We will not
customize the software for any customers unless the cost of the customization is
advanced by a customer. If the cost of the customization is advanced by the
customer, we expect to enter into an agreement to provide the customized version
exclusively to that customer for a non-recreational equipment market. We will
retain the right to market other versions of the software for non-recreational
equipment markets and for recreational equipment markets outside Canada.

Highlights of the Quarter

Revenues

With no other active operation, there has been no revenue to report for the
current quarter or for the same quarter last year.


                                       12
<PAGE>

Expenses

General and administrative expenses for the quarter ended January 31, 2006 were
$2,949 compared to $16,370 for the same quarter in 2005. Lower expenses were
largely a result of reduced professional fees and no sales and marketing
consulting fees in 2005 which were $ 88,296 in 2004.

Expenses included in this quarter were Management fees of $12,000 which was owed
to the President and waived by the President and professional fees of $3,035
which were lower than the $9,973 incurred in 2004.

Depreciation and amortization expense for the three months ended January 31,
2006 was $908 compared to $1,359 for the same period last year.

Net Income (Loss)

Net loss for the three months ended January 31, 2006 was $10,449 compared to a
loss of $26,343 for the three months ended January 31, 2005.


Liquidity and Capital Resources

Any company such as ours faced with liquidity pressures can be expected to make
internal adjustments to maximize near-term cash flow. We are addressing internal
sources of liquidity as follows. Executive salaries are being reduced. Current
shareholders, friends and family are providing expertise at no charge in several
areas. We have also reduced over all operational cost via relocation of our
server and other elements of our operation. We are reducing capital expenditures
by delaying the purchase of equipment such as additional servers and other
hardware.

Our auditors have issued a going concern opinion. This means that our auditors
believe there is substantial doubt that we can continue as an on-going business
for the next twelve months unless we obtain additional capital to pay our bills.
This is because we have not generated any revenues with our basic product
offering and no revenues are anticipated until we complete the development of
our website and source out customers to buy our products. We believe the
technical aspects of our software are sufficiently developed to use for our
operations at present. Additional customized versions can be available within 90
days from raising additional capital.

In the event that the commercial introduction of the software is delayed or
other problems occur, we must raise cash from sources other than operations. Our
only other sources for cash at this time is investments by others in our company
and some revenue from consulting fees. In February 2006 we sold 140,000 shares
under our SB 2 registration statement raising $70,000. The offering period on
the SB-2 offering has expired. As a result further investment in the Company
will be by private placement. We must raise cash to implement our project and
continue our operations.

We rely heavily on the support of our software outsourcing company, Inglenet
Solutions. This company is owed the balance of $162,000 for the original cost of
software development. The balance owed to Inglenet and potential interest of
$49,146 as of January 31, 2006 is recorded on our balance sheet under Accounts
Payable and Accrued Liabilities. To secure our indebtedness to them, they hold
the source code. This means that we are unable to make significant changes in
the software without their participation. Until we have satisfied this debt, we
are required to use their development team for upgrades and customization. This
limits our ability to search for competitive quotes or to make any changes or
modifications with internal software engineers. There is no payment schedule,
however, if we raise sufficient funds, we will make arrangements to satisfy this
indebtedness and exclusively hold the source code. Our intention is to repay
Inglenet in one lump sum as soon as the funds are available.

If we are unable to; secure a suitable arrangement with our software outsourcing
firm for upgrades and customization or enough customers willing to buy the
products at higher than the cost of our fixed and variable expenses, we may need
to find alternative sources, like a second public offering, a private placement
of securities, or loans from our officers or others in order for us to maintain
our operations. At the present time, we have not made any arrangements to raise
additional cash. If we need additional cash and cannot raise it we will either
have to suspend operations until we do raise the cash, or cease operations
entirely.

We need more money and we will have to revert to obtaining additional money as
described in the paragraph above. Other than as described, we have no other
financing plans.

                                       13
<PAGE>

Item 3. Controls and Procedures

The Company's principal executive and financial officers have evaluated our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) as of January 31, 2006. They have
determined that such disclosure controls and procedures are effective to ensure
that information required to be disclosed in our filings under the Securities
Exchange Act of 1934 with respect to the Company is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms and is accumulated and communicated to our
management, including the Company's principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosures.

The Company has made no significant changes in its internal controls over
financial reporting during the most recent fiscal quarter covered by this Report
that materially affected or are reasonably likely to materially affect our
internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. - Legal Proceedings

There were no new legal proceedings during the quarter ended January 31, 2006.

Item 2. - Changes in Securities:    None

Item 3. - Default Upon Senior Securities:     There are no defaults to report.

Item 4. - Submission of Matters to a Vote of Security Holders:         None.

Item 5. - Other Information:         None



                                       14
<PAGE>




Item 6.  Exhibits and Reports On Form 8-K

(a)      Exhibits.

          3.1  -- Articles of Incorporation (1)
          3.2  -- Bylaws (1)
          10.1 -- Agreement and Plan of Reorganization (1)
          10.2 -- Inglenet Professional Services Agreement (1)
          10.3 -- Sawka Group Agreement (2)
          10.4 -- Waiver of Compensation by Brian Jaggard (3)
          31   Certifications of CEO and CFO pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002
          32   Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350,
               as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
               2002

          (1)  Incorporated by reference from Form SB-2 filed on January 2, 2004
          (2)  Incorporated by reference from Form SB-2 Amendment No. 2 filed on
               July 8, 2004
          (3)  Incorporated by reference from Form SB-2 Amendment No. 5 filed on
               April 26, 2005



(b)  Reports on Form 8-K - The Company filed no reports on Form 8K during the
     quarter ended January 31, 2006.


                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Company has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date: March 20, 2006             YZAPP INTERNATIONAL INC.
                                      (Registrant)

                                 By:  /s/ Brian Jaggard
                                      ------------------------
                                      Brian Jaggard,
                                      Chief Financial Officer, President and CEO



                                       15

<PAGE><PAGE>