<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(   )  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED

( X )  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001


                               Commission File No.
                                   33-24608-LA

                           ASPAC COMMUNICATIONS , INC.
                          -----------------------------
             (Exact name of registrant as specified in its charter)


              Delaware                                 95-4068292
--------------------------------           -------------------------------------
(State or Other Jurisdiction of            I.R.S. Employer Identification Number
Incorporation or Organization)


                       21221 South Western Ave. Suite 215
                           Torrance, California 90501
          ------------------------------------------------------------
           (Address of Principal Executive Offices including Zip Code)


Registrant's telephone number, including Area Code:  310/328-7666

Securities to be Registered Under Section 12(b) of the Act:   None

Securities to be Registered Under Section 12(g) of the Act:

                        Common Stock, $.00001 Par Value
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or 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 [ ]     NO [X]

Number of shares of common stock, $0.00001 par value, outstanding at January 22,
2002: 22,034,969

<PAGE>
<TABLE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                Aspac Communications, Inc.
                               (A Development Stage Company)
                                Consolidated Balance Sheets
<CAPTION>

                                                        SEPTEMBER 30, 2001  SEPTEMBER 30, 2000
                                                           (UNAUDITED)
                                                           ------------        ------------
<S>                                                        <C>                 <C>
Assets
Current assets:
  Cash                                                     $   902,492         $ 2,194,910
  Short-term investment                                              -           1,009,415
  Inventory                                                     40,448                   -
  Prepaid expenses and other current assets                    164,186             229,349
  Interest receivable                                                -              24,528
                                                           ------------        ------------
TOTAL CURRENT ASSETS                                         1,107,126           3,458,202

Property and equipment, net                                  1,459,002             185,816
Intangible assets, net of accumulated amortization of
  $33,000 (2001) and $8,250 (2000)                             288,750             321,750
Other assets                                                     8,660              33,313
                                                           ------------        ------------
TOTAL ASSETS                                               $ 2,863,538         $ 3,999,081
                                                           ============        ============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable and accrued expenses                    $   155,131         $    18,843
  Accrued salaries                                             103,809             103,720
  Line of Credit                                                10,000                   -
  Deferred revenue                                               2,119                   -
                                                           ------------        ------------
Total current liabilities                                      271,059             122,563

Minority interest                                               20,731             230,157

Stockholders' equity:
  Common stock, $0.00001 par value, 50,000,000
    shares authorized, 22,034,969 (2001) and
    21,934,969 (2000) shares issued and outstanding                220                 219
  Additional paid-in capital                                 5,611,328           5,496,866
  Deficit accumulated during development stage              (2,970,108)         (1,619,356)
  Accumulated other comprehensive income (loss)                    598              (1,152)
  Deferred stock compensation                                  (70,290)           (230,216)
                                                           ------------        ------------
Total stockholders' equity                                   2,571,748           3,646,361
                                                           ------------        ------------
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                    $ 2,863,538         $ 3,999,081
                                                           ============        ============
</TABLE>

SEE ACCOMPANYING NOTES.

                                            2
<PAGE>
<TABLE>

                                          Aspac Communications, Inc.
                                         (A Development Stage Company)
                                     Consolidated Statements of Operations
                                                  (UNAUDITED)
<CAPTION>

                                                 THREE MONTHS                    TWELVE MONTHS             SEP.26, 1997
                                              ENDED SEPTEMBER 30              ENDED SEPTEMBER 30          (INCEPTION) TO
                                             2001            2000             2001           2000         SEP. 30, 2001
                                        ----------------------------------------------------------------------------------
<S>                                      <C>             <C>             <C>             <C>               <C>
Net revenues                             $    13,124     $         -     $    15,567     $         -       $     15,567
Cost of revenues                              14,182               -          32,516               -             32,516
                                        ----------------------------------------------------------------------------------
  Gross margin
                                              (1,058)              -         (16,949)              -            (16,949)

Operating expenses:
  Selling, general & administrative
    Expenses                                 398,140         316,173       1,400,024         787,585          3,213,110
  Research, development &
    engineering expenses                           -         241,187          20,513         338,286             20,513
  Depreciation and amortization               62,132          12,851         132,660          21,171            161,363
                                        ----------------------------------------------------------------------------------
Total operating expenses                     460,272         570,211       1,553,197       1,147,042          3,394,986


Loss from operations                        (461,330)       (570,211)     (1,570,146)     (1,147,042)        (3,411,935)

Other income (expense):
  Abandoned offering costs                         -               -               -               -           (158,650)
  Interest income                              1,296          52,306          49,282          74,890            125,078
  Interest expense                                 -               -               -          (7,821)           (40,528)
  Other income (expense)                     (39,656)           (180)        (39,315)         (2,418)           (39,469)
                                        ----------------------------------------------------------------------------------
Total other income (expense)                 (38,360)         52,126           9,967          64,651           (113,569)


Net loss before minority interest
  and extraordinary item                    (499,690)       (518,085)     (1,560,179)     (1,082,391)        (3,525,504)


Minority interest                             80,204          64,637         209,427         108,009            317,436
                                        ----------------------------------------------------------------------------------

Net loss before extraordinary item          (419,486)       (453,448)     (1,350,752)       (974,382)        (3,208,068)
Extraordinary gain on
  extinguishment of debt                           -               -               -         237,960            237,960
                                        ----------------------------------------------------------------------------------
Net loss                                 $  (419,486)    $  (453,448)    $(1,350,752)    $  (736,422)      $ (2,970,108)
                                        ==================================================================================

Net loss per common share -
  basic and diluted:
Net loss before extraordinary item       $      (0.02)   $      (0.02)   $      (0.06)   $      (0.05)     $       (0.16)
Extraordinary item                                  -               -               -            0.01               0.01
                                        ----------------------------------------------------------------------------------
Net loss                                 $      (0.02)   $      (0.02)   $      (0.06)   $      (0.04)     $       (0.15)
                                        ==================================================================================

Weighted average common shares
  outstanding - basic and diluted          22,034,969      21,924,643      22,010,914      21,097,576         20,160,504
                                        ==================================================================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                                      3
<PAGE>
<TABLE>

                                     Aspac Communications, Inc.
                                    (A Development Stage Company)
                                Consolidated Statements of Cash Flows
                                             (UNAUDITED)
<CAPTION>

                                                              TWELVE MONTHS               SEP.26, 1997
                                                            ENDED SEPTEMBER 30           (INCEPTION) TO
                                                           2001              2000         SEP.30, 2001
                                                     ----------------------------------------------------
<S>                                                    <C>               <C>               <C>
OPERATING ACTIVITIES
  Net loss                                             $(1,350,752)      $  (736,422)      $(2,970,108)
  Adjustment to reconcile net loss to net cash
   used in operating activities:
    Depreciation & amortization                            132,660            21,171           162,333
    Minority interest in losses of consolidated
      Subsidiary                                          (209,427)         (108,009)         (317,436)
    Interest expense on extinguished debt                        -             7,821             7,821
    Gain on extinguishment of debt, net                          -          (237,960)         (237,960)
    Write-off registration costs                                 -                 -           120,000
    Amortization of deferred stock compensation             79,390            42,784           127,674
    Loss on disposal of assets                              39,653             3,061            42,714
    Changes in operating assets and liabilities:
       Inventory                                           (40,448)                -           (40,448)
       Prepaid expenses and other current assets            83,913          (223,124)         (145,436)
       Interest receivable                                  24,528           (24,528)                -
       Other assets                                         24,654            (8,451)           (6,904)
       Account payable & accrued expenses                  138,496           (67,511)          261,059
                                                     ----------------------------------------------------
  Net cash used in operating activities                 (1,077,333)       (1,331,168)       (2,996,691)


INVESTING ACTIVITIES
  Redemption of short-term investment                    1,009,415        (1,009,415)                -
  Purchase of property and equipment                    (1,236,249)         (150,960)       (1,434,480)
  Other assets                                                   -                 -           (90,000)
  Payment under stock subscription agreement                     -                 -            (2,700)
                                                     ----------------------------------------------------
  Net cash used in investing activities                   (226,834)       (1,160,375)       (1,527,180)

FINANCING ACTIVITIES
  (Payments) proceeds from notes and loan payable                -           (18,120)          527,155
  (Payments) advances from line of credit                   10,000          (111,946)           10,000
  Net proceeds from sale of common stock                         -         4,472,500         4,562,600
  Minority investment in joint venture                           -           338,166           338,166
  Repayment of advances                                          -                 -           (12,155)
                                                     ----------------------------------------------------
  Net cash provided by financing activities                 10,000         4,680,600         5,425,766


Foreign exchange impact on cash                              1,749            (1,152)              597

Increase (decrease) in cash and cash equivalent         (1,292,418)        2,187,905           902,492
Cash and cash equivalents at beginning of period         2,194,910             7,005                 -
                                                     ----------------------------------------------------
Cash and cash equivalents at end of period             $   902,492       $ 2,194,910       $   902,492
                                                     ====================================================
</TABLE>

SEE ACCOMPANYING NOTES.

                                                 4
<PAGE>


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

NON-CASH TRANSACTIONS

In February 2001, the Company issued 120,000 shares of common stock valued at
$1.625 per share and agreed to pay $40,000 in cash for networking equipment to
be delivered in four equal installments. Three installments have been delivered
during the twelve months ended September 30, 2001. The $40,000 cash payment will
be made upon completion of all deliveries.


SEE ACCOMPANYING NOTES.

                                       5
<PAGE>

                    ASPAC COMMUNICATIONS, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2001
                                   (UNAUDITED)

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

         The accompanying unaudited consolidated financial statements have been
         prepared in accordance with accounting principles generally accepted in
         the United States for interim financial information and the rules and
         regulations of the Securities and Exchange Commission for interim
         financial information. Accordingly, they do not include all the
         information and footnotes required by accounting principles generally
         accepted in the United States for complete financial statements.

         It is management's opinion, however that all adjustments (consisting of
         normal recurring accruals) have been made which are considered
         necessary for a fair presentation of the results of operations for the
         periods presented.

         The Company is operating as a development stage company to develop
         interactive broadband communication and online services in the Far East
         including the People's Republic of China. The Company did commence its
         planned principal operations during the September 30, 2001 period,
         although the revenue is not significant at this time.

         For further information, refer to the consolidated financial statements
         and footnotes included in the Company's Form 10-KSB for the year ended
         September 30, 2000.

NOTE 2 - PRINCIPLES OF CONSOLIDATION
------------------------------------

         The consolidated financial statements include the accounts of ASPAC
         Communications, Inc. and its joint venture subsidiary, YeeYoo Network
         Information Technology, Ltd. ("YeeYoo"), in which the Company owns a
         65% interest. Significant inter-company balances and transactions have
         been eliminated in consolidation.

         The balances and transactions of the Company's overseas subsidiaries as
         of and for the three and twelve month period ended September 30, 2001
         are translated at the exchange rate in effect at the balance sheet date
         and at the average exchange rate for the period presented,
         respectively.

NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------

         Property and equipment consists of the following:

                                                  SEPTEMBER 30,   SEPTEMBER 30,
                                                      2001            2000
                                                  ----------------------------
                Computer equipment and software   $  1,308,283   $   104,286
                Furniture and equipment                 39,570        77,845
                Automobiles                             66,158        18,114
                Construction in progress               151,658            --
                                                  ----------------------------
                                                     1,565,669       200,245
                Less: accumulated depreciation        (106,667)      (14,429)
                                                  ----------------------------
                                                  $  1,459,002   $   185,816
                                                  ----------------------------

                                       6
<PAGE>

         Construction in progress relates to network system setup, fiber optic
         cable installation, and software development.

NOTE 4 - LINE OF CREDIT
-----------------------

         In September 2001, the Company borrowed $10,000 from its $30,000 bank
         line of credit. The line bears interest at a variable rate, currently
         at 8.25% per annum.

NOTE 5 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

         In the past, the Chinese government has prohibited foreign investment
         in value-added telecommunication services, including Internet access
         and content services. Under the trade agreement China signed with the
         United States in November, 1999, as part of China's bid to join the
         World Trade Organization ("WTO"), China pledged to open the value-added
         sector, including the Internet service and content business, to allow
         for 49% foreign ownership for the first two years after China's entry
         into the WTO and 50% thereafter. The Chinese government is drafting new
         policies and regulations governing foreign investment and other
         activities in the Internet industry based on its WTO commitment. To
         comply with the new regulations, the Company's equity percentage in its
         YeeYoo joint venture may have to be reduced from the current 65% level.
         However, the Company anticipates that it will maintain its operating
         control of the joint venture by retaining control of the Board of
         Directors and the management of the joint venture. In anticipation of
         the new regulations, the Company is in discussion with several
         potential strategic partners to exchange the Company's joint venture
         equity in excess of the 49% foreign ownership pursuant to new Chinese
         policies for certain assets. These assets may include wireless
         frequency usage rights, PSTN connections for Voice over IP networks,
         and additional bandwidth for international links. There is no assurance
         that the Company will be able to reach any agreement with these
         potential strategic partners or, if any, at terms favorable to the
         Company.

NOTE 6 - CHANGE OF FISCAL YEAR
------------------------------

         On July 25, 2001, the Board of Directors of the Company adopted a
         change in its fiscal year end from September 30 to December 31. Given
         that the transition period is three months, quarter-ends for the new
         fiscal year will correspond to those of the old fiscal year. The
         transition period of October 1, 2000 to December 31, 2000 (unaudited)
         is included in the Form 10-QSB filed by the registrant in February of
         2001. The Company's Form 10-KSB for the year ended December 31, 2001
         will include the audited financial statements for the transition
         period, of October 1, 2000 through December 31, 2000 and the audited
         financial statements for the year ended December 2001.

NOTE 7 - SUBSEQUENT EVENTS
--------------------------

         On October 12, 2001, the Company signed a Definitive Acquisition
         Agreement with CERNET Corporation. CERNET Corporation is a for-profit
         entity established by CERNET as the exclusive operator and manager of
         the entire CERNET operations and CERNET's network infrastructure. The
         agreement stipulates that CERNET Corporation will invest three million
         dollars ($3,000,000) in the Company, provide a revolving line of credit
         of one hundred million dollars ($100,000,000), grant an exclusive
         partnership in wireless broadband Internet access, and waive the
         Company's prior commitment to invest $2 million in CERNET's
         infrastructure. In return, the Company will issue CERNET Corporation
         approximately one million shares of Series A preferred stock, a new
         class of preferred stock to be created at the closing of the agreement.
         Each Series A preferred share is convertible to 10 shares of the
         Company's common stock and carries 50 equivalent common stock voting
         rights. Upon closing of this agreement, CERNET Corporation will obtain
         control of approximately 70% of the shareholders' voting rights of the
         Company. The closing of this agreement is subject to approval of the
         board of directors and shareholders of the Company and CERNET
         Corporation and approvals from related Chinese governing authorities.
         As of the date of this report, such approvals have not been obtained.

                                       7
<PAGE>

         On October 12, 2001, the Company signed a series of Agreements for
         Assignment of Rights and Obligations with CERNET to transfer all
         previous agreements the Company entered into with CERNET to CERNET
         Corporation, including the Joint Venture Contract. On the same date,
         the Company also signed a series of Agreements for Assignment of Rights
         and Obligations with Sino-Tech to transfer all previous agreements the
         Company entered into with Sino-Tech to Beijing Juqiang Technology Co.,
         including the Joint Venture Contract. Beijing Juqiang Technology Co. is
         an affiliate of Sino-Tech.

                                       8
<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS
--------------------------

         Included in this report are various forward-looking statements, which
can be identified by the use of forward looking words such as "may," "will,"
"expect," "anticipate," "estimate," "continue," "believe" or other similar
words. These statements are forward-looking and reflect the Company's current
expectations. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the actual results, performance,
or achievements of the Company, or industry results, to be materially different
from any future results, performance, achievements, or expectations expressed or
implied by such forward-looking statements. The Company disclaims any obligation
to update any such factors or to announce the result of any revisions to any of
the forward-looking statements contained herein to reflect future development.
No assurance can be given that such predictions will prove correct or that the
anticipated future results will be achieved; actual events or results may differ
materially, either because one or more of such predictions proves to be
erroneous, or as a result of risks facing the Company. Such risks include, but
are not limited to, the Company's ability to successfully market its services to
new customers, its ability to manage growth and to obtain required permits and
authorizations in a timely manner, changes in the economic and political
environments in China, changes in technology, changes in the Internet
marketplace in China, competitive factors and other risks described in our
annual report on Form 10-KSB that could cause actual results to differ
materially from the future results indicated, expressed, or implied in such
forward-looking statements.

OVERVIEW
--------

         ASPAC Communications, Inc. (the "Company") is a Delaware corporation
headquartered in Torrance, California. The Company is a development stage
company with the objective to develop, finance, and invest in telecommunication
and Internet related projects primarily in the People's Republic of China ("PRC"
or "China"). The Company's key management and shareholders include institutions
and individuals that have participated in and directed the modernization of
China's telecommunication industry. Over the years, they have developed in-depth
knowledge of this highly protected and rapidly growing sector, and established
close contacts with the key players and the bureaucratic hierarchy. After
conducting numerous feasibility studies of telecommunication investment projects
in the past few years, the Company has set its focus on the wireless broadband
Internet Service Provider ("ISP") and other advanced Internet communication
services in China. The tremendous market potential of the Internet market in
China, the relatively wide open competitive landscape, and the pacesetting
experience from the U.S. Internet market are the fundamentals for the Company's
renewed focus.

         The Company's China objective is to provide nationwide wireless
broadband services that encompass high speed Internet access, Voice over IP
("VoIP"), and full motion video. To meet this objective, the Company has
successfully secured the exclusive usage right of a wide spectrum of frequencies
in Beijing. Additionally, in order to ensure the high level of quality for the
wireless broadband service, the Company has acquired the critical guaranteed
international bandwidth. Furthermore, the Company has developed an advanced
wireless "point-to-multipoint" system for the high-speed "last-mile" solution so
that the service can reach customers efficiently and cost effectively.

         To execute the Company's China objective, ASPAC formed a Sino-foreign
joint venture in fiscal year 2000 named YeeYoo Network Information Technology,
Ltd. ("YeeYoo"), with CERNET Corporation and Beijing Juqiang Technology, Ltd. as
the joint venture partners. The Company has a controlling interest in YeeYoo. In
fiscal year 2001, YeeYoo launched its services in Beijing, China and anticipates
the expansion of its services to other provinces in fiscal year 2002.

                                       9
<PAGE>

RESULTS OF OPERATION FOR THE THREE AND TWELVE MONTHS ENDED SEPTEMBER 30, 2001 AS
--------------------------------------------------------------------------------
COMPARED TO THE THREE AND TWELVE MONTHS ENDED SEPTEMBER 30, 2000:
-----------------------------------------------------------------

         REVENUES. The Company launched its service in Beijing, China through
its YeeYoo joint venture subsidiary in 2001. The Company generated revenue of
$13,124 and $15,567 during the three and twelve months ended September 30, 2001
primarily from the monthly fee of providing broadband Internet access services.
The Company did not generate revenue during the three and twelve months ended
September 30, 2000.

         COST OF REVENUES. Cost of revenues principally includes domestic and
international backbone connection fees and other fees associated with
establishing and maintaining ongoing services to customers. Most of the backbone
connection fees are fixed cost. During the three and twelve months ended
September 30, 2001, the Company incurred $14,182 and $32,516 in Cost of
Revenues. The Company did not incur cost of revenues during the three and twelve
months ended September 30, 2000.

         OPERATING EXPENSE. Operating expenses decreased 19% from $570,211 to
$460,272 during the three months ended September 30, 2000 and 2001,
respectively, and increased 35% from $1,147,042 to $1,553,197 during the twelve
months ended September 30, 2000 and 2001, respectively. The changes primarily
consist of changes from the following expenses:
         (1)      Selling, general and administrative expenses increased 26% and
                  78% from $316,173 and $787,585 during the three and twelve
                  months ended September 30, 2000, respectively, to $398,140 and
                  $1,400,024 during the three and twelve months ended September
                  30, 2001. The increase primarily resulted from the increased
                  number of employees after the formation of the YeeYoo joint
                  venture, increased level of salaries paid to employees,
                  consulting services used to conduct legal and business
                  research, increased sales & marketing efforts, and the
                  amortization of deferred stock compensation. We expect that
                  selling, general, and administrative expenses will continue to
                  increase in future periods as our YeeYoo joint venture expands
                  its wireless broadband services in China.
         (2)      Research and development expenses decreased from $241,187 and
                  $338,286 for the three and twelve months ended September 30,
                  2000 to $-0- and $ 20,513 for the three and twelve months
                  ended September 30, 2001. The higher balances of research and
                  development expense in 2000 were primarily related to the
                  initial research fees paid associated with system design,
                  integration and system deployment. Most research and
                  development activities relating to system design, integration
                  and system deployment were completed by March 2001.
         (3)      Depreciation and amortization expenses increased 383% and 527%
                  from $12,851 and $21,171 during the three and twelve months
                  ended September 30, 2000 to $62,132 and $132,660 during the
                  three and twelve months ended September 30, 2001, due to
                  higher amount of property and equipment purchased and recorded
                  primarily related to YeeYoo's network deployment in Beijing,
                  China.

         Overall, we anticipate that operating expenses will continue to
increase during fiscal 2001 compared to 2000 as the Company continues to expand
its businesses in China.

         OTHER INCOME (EXPENSE). Other income (expense), decreased from income
of $52,126 and $64,651 during the three and twelve months ended September 30,
2000, respectively, to net expense of $38,360 during the three months ended
September 30, 2001 and net income of $9,967 during the twelve months ended
September 30, 2001. The decreases in Other Income (Expense) were primarily due
to losses on the sale of fixed assets during the three months ended September
30, 2001 and reductions on interest income as a result of lower levels of cash
and short-term investment balances during the periods.

                                       10
<PAGE>

         NET LOSS. Excluding extraordinary items, the Company's net loss
decreased 7% from $453,448 to $419,486 during the three months ended September
30, 2000 and 2001, respectively, and increased 39% from $974,382 and to
$1,350,752 during the twelve months ended September 30, 2000 and 2001,
respectively. The decrease of net loss before extraordinary items for the three
month period were primarily related to reduced research and development expenses
since the system design, integration and deployment activities were mostly
completed by March 2001. The increased net loss before extraordinary items for
the twelve month period was primarily due to the greater operating expenses as
the Company expanded its business activities to deploy wireless broadband
services in China. There were no extraordinary activities recorded during the
three and twelve months ended September 30, 2001. The net loss after
extraordinary items was $419,486 and $1,350,752 for the three and twelve months
ended September 30, 2001, compared to net loss of $453,448 and $736,422 for the
three and twelve months ended September 30, 2000. The extraordinary items
recorded during the twelve months ended September 30, 2000 primarily relates to
the extraordinary gain resulted from the conversion of the Company's promissory
note to the Company's common stock.

LIQUIDITY AND CAPITAL RESOURCES AND CERTAIN EVENTS SUBSEQUENT TO SEPTEMBER 30,
------------------------------------------------------------------------------
2001
----

         The Company has incurred losses since inception and we anticipate that
the Company will continue to incur losses in the foreseeable future. The Company
is not capable of supporting existing business operations in its present form.
Since the beginning of its operations, the Company has financed its development
stage activities primarily through equity investments, including the sale of
common stock, and loans from its founding stockholders.

         There is no guarantee that the Company will ever achieve profitable
operations. Approximately $1,077,3333 was used in the Company's operating
activities for the twelve months ended September 30, 2001 compared to $1,331,168
for the twelve months ended September 30, 2000. The decrease in cash used in the
Company's operating activities primarily relates to the decrease of prepaid
expense and other assets balances and higher balances of accounts payable and
accrued expenses.

         During the twelve months ended September 30, 2001, the Company used net
cash of $226,834 in its investing activities, compared to $1,160,375 net cash
used during the twelve months ended September 30, 2000. This decrease primarily
relates to the redemption of short-term investments offset by purchases of
property and equipment.

         During the twelve months ended September 30, 2001, the Company receive
$10,000 from its financing activities, compared to $4,680,600 net cash received
during the twelve months ended September 30, 2000. The net cash received during
the twelve months ended September 30, 2001 primarily relates to the use of a
bank line of credit and the net cash received during the twelve months ended
September 30, 2000 was primarily generated by net proceeds from the sale of
common stock during the Company's private placement which ended March 31, 2000.

         The Company currently has a commitment to ultimately invest $3.25
million in the joint venture pursuant to the joint venture contract dated
December 31, 1999 in exchange for 65% of the equity in the YeeYoo joint venture.
As of the date of this report, the Company has invested $2.15 million in the
joint venture. In addition, the Company has committed to pay $2,000,000 to
CERNET Corporation in exchange for certain guaranteed international connection
bandwidth and free usage of such international connection bandwidth for 18
months. As of the date of this report, the Company has not made any payments to
CERNET and no decision has been made as to the timing and the manner of the
payment (in cash or by issuance of the Company's common stock). CERNET
Corporation has agreed to waive such commitment pursuant to the Definitive
Acquisition Agreement, dated October 12, 2001, pending the closing of the
Definitive Acquisition agreement. The closing of the Definitive Acquisition
Agreement is subject to approval of the board of directors and shareholders of
ASPAC and CERNET Corporation and approvals from related Chinese governing
authorities. As of the date of this report, such approvals have not been
obtained.

                                       11
<PAGE>

         The growth of the Company's business in China will require capital
investments in China for the foreseeable future. The YeeYoo joint venture has
generated nominal revenues to date and any future profits will likely be
re-invested to fund the expansion of the business. The Company will continue to
evaluate possible acquisitions of or investments in businesses, products, and
technologies that are complimentary to those of the Company, which may require
the use of cash. The Company believes that existing cash, investments and
borrowings available under its credit facilities will be sufficient to fund its
current operations through 2001. However, the Company may sell additional equity
or debt securities or seek additional credit facilities if it believes such
actions would be a better way to fund acquisition-related or other costs. Sales
of additional equity or convertible debt securities would result in additional
dilution to the Company's stockholders. The Company may need to raise additional
funds sooner in order to support more rapid expansion, develop new or enhanced
services or products, respond to competitive pressures, acquire complementary
businesses or technologies or take advantage of unanticipated opportunities. The
Company' future liquidity and capital requirements will depend upon numerous
factors, including the success of the services offered by the Company and its
Joint Venture and competing technological and market developments.

         The Company expects to maintain its research and development activities
at current levels. The Company does not anticipate any purchase or sale of plant
and significant equipment except the purchase of network equipment and network
infrastructure development during the normal course of business. The Company
expects an increase in its number of employees as the Company and its joint
venture start and expand its network operations in China.

SUBSEQUENT EVENTS
-----------------

         On October 12, 2001, the Company signed a Definitive Acquisition
Agreement with CERNET Corporation. CERNET Corporation is a for-profit entity
established by CERNET as the exclusive operator and manager of the entire CERNET
operations and CERNET's network infrastructure. The agreement stipulates that
CERNET Corporation will invest three million dollars ($3,000,000) in ASPAC,
provide a revolving line of credit of one hundred million dollars
($100,000,000), grant an exclusive partnership in wireless broadband Internet
access, and waive ASPAC's prior commitment to invest $2 million in CERNET's
infrastructure. In return, the Company will issue CERNET Corporation
approximately one million shares of Series A preferred stock, a new class of
preferred stock to be created at the closing of the agreement. Each Series A
preferred share is convertible to 10 shares of the Company's common stock and
carries 50 equivalent common stock voting rights. Upon closing of this
agreement, CERNET Corporation will obtain control of approximately of the 70%
shareholders' voting rights of the Company. The closing of this agreement is
subject to approval of the board of directors and shareholders of ASPAC and
CERNET Corporation and approvals from related Chinese governing authorities. As
of the date of this report, such approvals have not been obtained.

         On October 12, 2001, the Company signed a series of Agreements for
Assignment of Rights and Obligations with CERNET to transfer all previous
agreements the Company entered into with CERNET to CERNET Corporation, including
the Joint Venture Contract. On the same date, the Company also signed a series
of Agreements for Assignment of Rights and Obligations with Sino-Tech to
transfer all previous agreements the Company entered into with Sino-Tech to
Juqiang Technology, Ltd, including the Joint Venture Contract. Juqiang
Technology, Ltd. is an affiliate of Sino-Tech.

                                       12
<PAGE>

                           PART II---OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

        There are no material legal proceedings pending or, to our knowledge,
threatened against the Company.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.

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

        None.

ITEM 5. OTHER INFORMATION

        None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

        None.

(b) Reports on Form 8-K.

        No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 2001.

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<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.



                                                     ASPAC COMMUNICATIONS, INC.




                                                     By: /S/ Jeffrey G. Sun
                                                       -------------------------
                                                         Jeffrey G. Sun
                                                         Chief Executive Officer


                                                     Date:    January 22, 2002

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