SECURITIES & 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 Quarter Ended                               Commission File No.
     ---------------------                               -------------------
        March 31, 2001                                       000-26523

                         VPN Communications Corporation
                  --------------------------------------------
                 (Name of small business issuer in its charter)

                Nevada                                        93-0943718
     -------------------------------                       -----------------
     (State or other jurisdiction of                      (IRS Employer
      incorporation or organization)                      Identification No.)

                         3941 S. Bristol Unit E Box 545
                           Santa Ana, California 92704
                     --------------------------------------
                    (Address of Principal Executive Offices)

        Registrant's telephone number including area code: (949) 255-4649

                 Former name, former address, and former fiscal
                   year end, if changed since last report. N/A

            Check whether the issuer (1) filed all report required to
          be filed with 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

    Applicable only to issuers involved in bankruptcy proceedings during the
                             proceeding five years.

 Check whether the registrant filed all document and report required to be filed
   by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
                  securities under a plan confirmed by a court.

                                       N/A

                      Applicable only to corporate issuers.

         State the number of shares outstanding of each of the issuer's
           classes of common equity as of the latest practicable date:
                       20,167,008 as of February 10, 2001.

                      Transitional Small Disclosure Format

                                  Yes       No / X /

<PAGE>


PART I

Item 1.  FINANCIALS


                         VPN COMMUNICATIONS CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2001
                                   (UNAUDITED)



                                                                      March 31,
                                     ASSETS                             2001
                                     ------                         -----------

CURRENT ASSETS:
             Cash & cash equivalent                                 $     7,076
             Prepaid expenses                                             2,666
                                                                    -----------
                         Total current assets                             9,742
                                                                    -----------

PROPERTY AND EQUIPMENT, net                                             112,673
                                                                    -----------

OTHER ASSETS:
             Accrued receivables                                          2,814
                                                                    -----------
                                                                    $   125,229
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------


CURRENT LIABILITIES:
             Accounts payable                                       $   600,240
             Accrued expenses                                           277,209
             Notes payable Related parties                              131,677
             Loans payable Others                                        44,658
                                                                    -----------
                         Total current liabilities                    1,053,784
                                                                    -----------

COMMITMENT

STOCKHOLDERS' DEFICIT

             Common stock,  $.001 par value;
             50,000,000 shares authorized; 25,382,008 shares
             issued and outstanding                                      25,382
             Additional paid in capital                               1,278,588
             Accumulated deficit                                     (2,232,525)
                                                                    -----------
                         Total stockholders' deficit                   (928,555)
                                                                    -----------

                                                                    $   125,229
                                                                    ===========

<PAGE>
<TABLE>
<CAPTION>


                                      VPN COMMUNICATIONS CORPORATION
                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                               (UNAUDITED)
                                    MARCH 31, 2001 AND MARCH 31, 2000



                                             Three Months    Three Months     Six Months      Six Months
                                                 Ended          Ended           Ended           Ended
                                               March 31,       March 31,       March 31,       March 31,
                                                 2001            2000            2001            2000
                                             ------------    ------------    ------------    ------------
<S>                                          <C>             <C>             <C>             <C>
Net revenue                                  $          0    $     31,247    $          0    $     31,747

Cost of revenue                                     8,474          61,311           8,474          61,311

Gross loss                                         (8,474)        (30,064)         (8,474)        (29,564)

Total Operating Expenses                          122,004         180,683         241,106         190,864

Loss from Operations                             (130,478)       (210,747)       (249,580)       (220,428)

Non-Operating Income (expense):
          Interest expense                         (1,684)              0          (7,142)         (3,590)
          Interest income                               0               0               0               0
          Other expense                                 0         (17,774)              0         (17,774)
          Loss on sale of liability                 1,004               0           1,004               0
          Gain on retirement of assets                  0           5,821               0           5,821

Total Non-Operating Income (Expenses)                (680)        (11,953)         (6,138)        (15,543)

Loss before income taxes                         (131,158)       (222,700)       (255,718)       (235,971)

Provision for income taxes                            800             800           1,600             800

Net Loss                                     $   (131,958)   $   (223,500)   $   (257,318)   $   (236,771)
                                             ============    ============    ============    ============
Basic & diluted weighted average number of
    common stock outstanding                   25,382,008       6,428,080      25,382,008       6,428,080
                                             ============    ============    ============    ============

Basic and diluted net Loss per share         $      (0.01)   $    (0.0348)   $      (0.01)   $    (0.0368)
                                             ============    ============    ============    ============

</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                VPN COMMUNICATIONS CORPORATION
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (UNAUDITED)
                               MARCH 31, 2001 AND MARCH 30, 2000


                                                                      Six Months   Six Months
                                                                        Ended        Ended
                                                                       March 31     March 31
                                                                         2001         2000
                                                                      ---------    ---------
<S>                                                                   <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
            Net Loss                                                  $(612,834)   $(374,887)
            Adjustments to reconcile net loss to net cash
            provided by operating activities:
                      Depreciation and amortization                       3,930        4,237
                      Write off of note receivable                      355,516      (39,609)
                      Issuance of original shares                          --        132,299
                      Issuance of shares for consulting services         18,355            0
                      (Increase) / decrease in current assets:
                                 Accounts receivable                        (89)      (9,071)
                                 Prepaid expenses                        40,649      (22,000)
                                 Inventory                                    0       (1,121)
                      Increase / (decrease) in current liabilities:
                                 Accounts payable                       196,202      130,609
                                 Accrued expenses                       (22,556)      47,169
                      Net cash provided by operating activities         (20,827)    (132,374)

CASH FLOWS FROM FINANCING ACTIVITIES:
                      Net proceeds from loans:
                      Notes payable                                     (21,891)     190,552
                      Issuance of shares for cash                        48,395            0
                      Net cash used in financing activities              26,504      190,552

CASH FLOWS FROM INVESTING ACTIVITIES
                      Furniture and equipment                                 0     (101,632)
                      Net cash used in investing activities                   0     (101,632)

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENT                         5,677      (43,454)

CASH & CASH EQUIVALENT, BEGINNING BALANCE                                 1,399        9,369

CASH & CASH EQUIVALENT, ENDING BALANCE                                $   7,076    $ (34,085)
                                                                      =========    =========

SUPPLEMENTAL INFORMATION:

            CASH PAID FOR INTEREST                                    $       0    $       0
                                                                      =========    =========

            CASH PAID FOR INCOME TAXES                                $       0    $       0
                                                                      =========    =========


            SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITY

            (1)   The company issued 7,708,104 shares for cancellation of debt totaling $410,377

            (2)   The company issued 5,215,000 shares for private placement funds totaling $18,355

            (3)   The company issued 1,460,000 shares of common stock for cash $48,395

                See accompanying notes.

</TABLE>
<PAGE>


                  VPN COMMUNICATION CORPORATION AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                              MARCH 31, 2001 & 2000

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Organization and Nature of Operation

The Company was organized November 29, 1986, under the laws of the state of
Nevada, as Fernwood Financial, Inc. In 1988, the Company merged with Mimetics,
Inc., a California Corporation and changed its name to Exhibitronix, Inc. In
1990-1991, the Company became insolvent and disposed of all of its assets to
satisfy its creditors. From 1991 until June 30, 2000 the Company had no
operations. On March 14, 2000, the Company changed its name from Exhibitronix,
Inc. to VPN Communications Corporation. Pursuant to a reorganization agreement
dated April 19, 2000, VPN Communications Corporation (VCC) acquired one hundred
percent (100%) of the common shares of VPNCOM.Net Corporation (VPN).

VPNCOM.Net Corporation, formerly "City Pacific International USA., Inc.", was
incorporated in the state of Nevada on July 15,1997 to provide
telecommunications products and services for commercial and residential
customers and clientele, directly or through joint ventures with strategic
partners. VPN's activities from inception until 1998 consisted primarily of
reviewing possible business opportunities and acquisitions, and maintaining the
business entity. During the year, VPN's activities included providing integrated
communications involving virtual private networks and Internet solutions for
corporations and muti-dwelling unit properties and entities. Currently, the
Company has no on-going revenue or any operation.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of VCC
and its 100% wholly owned subsidiary, VPN. All significant inter-company
accounts and transactions have been eliminated in consolidation. The acquisition
of VPNCOM.Net has been accounted for as a purchase and treated as a reverse
acquisition since the former owners of VPNCOM.Net controlled 100% of the total
shares of common stock of the Company outstanding immediately following the
acquisition on April 19, 2000. The historical results for the quarter ended
March 31, 2001 include both VPN Communications Corporation and VPNCOM.Net, while
the historical results for the quarter ended March 31, 2000 include only
VPNCOM.Net.

Basis of Preparation:

The accompanying unaudited condensed consolidated interim financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission for the presentation of interim financial
information, but do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. The
audited consolidated financial statements for the two years ended September 30,
2000 was filed on January 16, 2001 with the Securities and Exchange Commission
and is hereby referenced. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the three month and six month period ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 2001.

<PAGE>


2. AGREEMENT TO SALE THE SUBSIDIARY

On November 6, 2000, the Company agreed to an Enforceable Letter of Intent with
Paul Stevens, an officer of VPNCOM.net (a Subsidiary), to sell to Mr. Stevens
1,500 shares, which constitutes all of the issued shares, of the Company's
wholly owned Subsidiary VPNCOM.net (the Subsidiary).

The Company will receive, in exchange for the Subsidiary, $1 and the assumption,
by Mr. Stevens, of all of the outstanding liabilities of the Subsidiary in the
amount of $976,622. As of the date of this transaction the Subsidiary has no
on-going revenue and has produced no profit. The transaction has not been
consummated through March 31, 2001.


3. GOING CONCERN UNCERTAINTY

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
company as a going concern. However, the Company has incurred net losses from
inception to March 31, 2001 of $2,232,525. The continuing losses have adversely
affected the liquidity of the company. Losses are expected to continue for the
immediate future. The Company's current liabilities exceed its total assets by
$928,555. The Company faces continuing significant business risks, including,
but not limited to, its ability to maintain vendor and supplier relationships by
making timely payments when due.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet is dependent upon continued operations of the company, which in turn is
dependent upon the Company's ability o raise additional capital, obtain
financing and succeed in its future operations, The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursuing
additional funding and potential merger or acquisition candidates and strategic
partners which would enhance stockholders' investment. Management believes that
the above actions will allow the Company to continue operations through the next
fiscal year.

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation

     The discussion and financial statements contained herein are for the three
months and the six months ended March 31, 2001 and March 31, 2000. The following
discussion regarding the financial statements of the Company should be read in
conjunction with the financial statements of the Company included herewith.

OVERVIEW

     The Company has recently entered into an enforceable letter of intent to
divest itself of its wholly owned subsidiary and only operating unit, VPNCOM.NET
Corporation. The finalization of this divestiture is pending. The financial
information included herein reflects the status of the Company as if this
transaction is not taking place.

     The Company is in the process of identifying new merger or acquisition
"targets." It is the Company's intention to look for candidates in the areas of
technology or telecommunications. These types of companies, management feels,
are in keeping with the direction the Company has been going and with the
expertise it has developed.

     (A) PLAN OF OPERATIONS

     The Company expects to require minimal cash during the next six months. The
Company depends on management for what funding is necessary while additional
capital is sought. There is no assurance the Company will be successful in
raising additional capital. However, the Company is actively seeking both
institutional debt and private equity financing to assure that it will be
capable of financing the continuation of the business. Should the Company fail
to raise additional funding, it will be forced to curtail or even cease
operations altogether.

     The Company expects, for the foreseeable future, to have, insufficient
capital with which to provide merger or acquisition candidates substantial cash
or other assets. Management believes, however, that the Company will offer
owners of potential merger or acquisition candidates the opportunity to acquire
a controlling ownership interest in a public company at substantially less cost
than would be required for them to conduct an initial public offering. A merger
or acquisition candidate will, however, incur significant post merger or
acquisition registration costs in the event candidate company's shareholders
wish to offer a portion of their shares for subsequent sale.


     (B) RESULTS OF OPERATIONS

     The Company has generated little or no revenue and does not anticipate
generating any material revenues in the near future. At the present time, the
Company's only cash requirements are for rent and salaries. The Company's sole
source of capital during the three months ended March 31, 2001, was investment
capital provided by related parties and third parties. The Company anticipates
that it will require additional capital contributions to fund its operations
during the next two fiscal quarters ending September 30, 2001. The Company
intends to seek investors for additional capital for continued operations. In
addition, the Company is actively seeking institutional type investors as a
source of funding. In the event the Company does not attract such capital, and
is unable to generate revenues sufficient to support its expenses, it would be
required to eventually curtail or even cease operations. The Company's
substantial financial losses since its inception have raised a substantial doubt
with the Company's auditors as to the Company's ability to continue as a going
concern.

<PAGE>
<TABLE>
<CAPTION>


       The following table sets forth, for the periods indicated, selected
financial information for the Company:

                                             THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                  March 31                           March 31
                                           2001              2000            2001               2000
-----------------------------------------------           ---------       ---------          ---------
<S>                                          <C>            <C>                  <C>           <C>
Total revenue                                $0             $31,247              $0            $31,247

Cost of revenue                          $8,474             $61,311          $8,474            $61,311

-----------------------------------------------           ---------       ---------          ---------
Gross loss                              ($8,474)           ($30,064)        ($8,474)          ($29,564)

Total Operating Expenses               $122,004            $180,683        $241,106           $190,864

-----------------------------------------------           ---------       ---------          ---------

Loss from operations                  ($130,478)          ($210,747)      ($249,580)          (220,428)

-----------------------------------------------           ---------       ---------          ---------

  Interest expense                      ($1,684)                 $0         ($7,142)           ($3,590)

  Other Income (Expense)                     $0            ($17,774)             $0           ($17,774)

  Loss on Sale of Liability              $1,004                  $0          $1,004                 $0

  Gain on Retirement of Assets               $0              $5,821              $0             $5,821

-----------------------------------------------           ---------       ---------          ---------
Loss before taxes                     ($131,158)          ($222,700)      ($255,718)         ($235,971)

-----------------------------------------------           ---------       ---------          ---------
Provision for Income Taxes                 $800                $800          $1,600               $800

-----------------------------------------------           ---------       ---------          ---------
Net loss                              ($131,958)          ($223,500)      ($257,318)         ($236,771)

-----------------------------------------------           ---------       ---------          ---------
</TABLE>


THREE MONTHS ENDED March 31, 2001 AS COMPARED TO THREE MONTHS ENDED March 31,
2000

     REVENUES AND COST OF REVENUES.

     The Company had no revenues for the three months ended March 31, 2001.
Revenues were $31,247 for the corresponding period a year ago. The Company
incurred revenue costs of $8,474 for the quarter ended March 31, 2000, as
compared to $61,311 for the quarter ended March 31, 2000.

     GENERAL, ADMINISTRATIVE, AND SELLING EXPENSES.

     Operating expenses were $122,004 for the quarter ended March 31, 2001, as
compared to $180,683 for the quarter ended March 31, 2000. The decrease in
operating expenses was due to a decrease in the overall operations in the
period, as compared to the same period last year. The Company decreased its
sales, and marketing activities in the period; it was in the process of
divesting itself of its operating unit.

     INTEREST EXPENSE.

     The Company had $1,684 of interest expense for the three months ended March
31, 2001 as compared to an interest income of $7,142 for the three months ended
March 31,2000. The decrease was due to debt reductions previously discussed.

<PAGE>


     INCOME (LOSS) BEFORE TAXES.

     The Company has a loss before taxes of $131,158 for the three months ended
March 31, 2001 as compared to a loss before taxes of $222,700 for the three
months ended March 31, 2000. The decrease in loss reflects the decrease in
operations during the period.

     TAXES ON INCOME.

     Income tax provision for the three months ended March 31, 2001 were $800 as
compared to income tax provision of $800 for the three months ended March 31,
2000.

     NET INCOME/LOSS

     The Company had a net loss of $131,958 for the quarter ended March 31, 2001
as compared to a net loss of $223,500 for the quarter ended March 31, 2000. The
decrease in loss is attributed to reduced costs associated with reduced
operations prior to the sale of its operating unit.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company has virtually no assets and, after completing the sale of
VPNCOM.NET Corporation, no liabilities. As of November 6, 2000 it has been
dependent upon its officers for its minimal cash requirements. Management
anticipates operational costs will remain limited until such time as significant
evaluation work is undertaken regarding prospective mergers or acquisitions.
There can be no assurance that funds for such purposes will be available to the
Company on acceptable terms or at all.

The Company has no long-term capital commitments.

PART II

OTHER INFORMATION


Item 1.   LEGAL PROCEEDINGS

None

Item 2.   CHANGES IN SECURITIES

None

Item 3.   DEFAULTS UPON SENIOR SECURITIES

None

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

No matter was submitted to a vote of the security holders of the Company during
its fiscal quarter ended March 31, 2001.

Item 5.   OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

         None


(b)  Reports on Form 8-K.

         None

<PAGE>


                                 SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            VPN Communications Corporation

Date: May 18, 2001
                                            By:  /s/  E. G. Marchi
                                               --------------------------------
                                                      E. G. Marchi
                                                      Director, President and
                                                      Chief Executive Officer

Date: May 18, 2001
                                            By:  /s/  Ken Gough
                                               --------------------------------
                                                      Ken Gough
                                                      Director
Date: May 18, 2001
                                            By:  /s/  Henry Smith
                                               --------------------------------
                                                      Dr. Henry Smith
                                                      Director