Cyop Systems International 10QSB 2004 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[xx]

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

Commission file Number: 0-32355

CYOP SYSTEMS INTERNATIONAL INCORPORATED

(Exact name of small business issuer as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

98-0222927

(I.R.S. Employer Identification Number)

Suite 1304

925 West Georgia Street

Vancouver, British Columbia

V6C 3L2

(Address of principal executive offices)

(604) 484-9086

(Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

154,123,160 common shares as at September 30, 2004

Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]

CYOP SYSTEMS INTERNATIONAL INCORORATED

INDEX

PART 1.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Balance Sheet as of September 30, 2004 and December 31, 2003

Statement of Income for the period ended

September 30, 2004

Consolidated Statements of Cash Flows for the period ended

September 30, 2004

Consolidated Statements of Changes in Stockholders' Equity

Notes to Consolidated Financial Statements

Item 2

Management Discussion and Analysis

PART II.

OTHER INFORMATION

Item 1

Legal Proceedings

Item 2

Changes in Securities

Item 3

Defaults Upon Senior Securities

Item 4

Submission of Matters to a Vote of Security Holders

Item 5

Other Information

Item 6

Exhibits and Reports on Form 8K

SIGNATURES

CYOP SYSTEMS INTERNATIONAL

INCORPORATED

Consolidated Financial Statements

(Expressed in U.S. Dollars)

September 30, 2004

Index

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Deficiency

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Consolidated Balance Sheets
(Unaudited)
(Expressed in U.S. Dollars)
			September 30, 2004		December 31, 2003
ASSETS					(Audited)
Current
Cash and cash equivalents		$	4,827	$	9,057
Accounts receivable					-
Interest receivable			52,204		-
Prepaid expenses and deposit			3,129		2,500
Total current assets			60,160		11,557
Note receivable related party (Note 6)			1,622,769		1,605,986
Equipment(Note 3)			58,690		73,502
Intangible assets(Note 4)			65,062		86,749
Total assets		$	1,806,681	$	1,777,794
LIABILITIES
Current
Demand loans related party (Note 5a)		$	1,137,706	$	779,129
Accounts payable and accrued liabilities			189,029		211,714
Convertible debenture (Note 5c)			108,784		-
Player funds on deposit			42,283		49,067
Promissory note			50,000		-
Short-term loan (Note 5b)			212,725		212,725
Total current liabilities			1,740,528		1,252,635
Deferred revenue (Note 6)			2,175,468		2,182,512
Total Liabilities			3,915,996		3,435,147

Nature and continuance of operations (Note 1)

STOCKHOLDERS' (DEFICIENCY)
Share capital
Authorized:
500,000,000	shares of common stock with a par value
	of $0.00002 per share
Issued, allotted and outstanding:
154,123,160	shares of common stock		3,083		2,860
Additional paid-in capital			1,045,966		695,464
Deficit accumulated			(3,158,364)		(2,355,677)
Total stockholders' (deficiency)			(2,109,315)		(1,657,353)
Total liabilities and stockholders' (deficiency)		$	1,806,681	$	1,777,794
The accompanying notes are an integral part of these financial statements.

CYOP SYSTEMS INTERNATIONAL INCORPORATED
Consolidated Statements of Stockholders' Deficiency
Nine Months ended September 30, 2004											Page 1of 1
(Unaudited)
(Expressed in U.S. Dollars)
										Accumulated
							Compre-				other		Total
				Additional			hensive				compre-		Stock-
	Common stock				paid-in		income		Deficit		hensive		Holders'
	Shares	Amount			Capital		(loss)	accumulated			income		(deficiency)


Balance, December 31, 2003	142,973,410		2,860		695,464				(2,355,678)		-		(1,657,354)

Shares issued for legal services at $0.04 per
share on January 27, 2004	212,250		4		8,485				-		-		8,489

Shares issued for corporate finance fee at $0.032 per
share on January 27, 2004	7,500,000		150		239,850								240,000

Shares issued for escrow agent services at $0.032 per
share on January 27, 2004	312,500		6		9,994								10,000

Shares issued to Cornell Capital at $0.0032 per share	3,125,000		63		9,937								10,000
On September 9, 2004

Equity component of convertible debenture					9,979								9,979

Imputed interest on loan due to a related party	-		-		72,257				-		-		72,257

Components of comprehensive income

- net income (loss) for the period	-		-		-		(802,686)		(802,686)		-		(802,686)

Comprehensive income (loss)						$	(802,686)

Balance, September 30, 2004	154,123,160	$	3,083	$	1,045,966			$	(3,158,364)	$	-	$	(2,109,315)
The accompanying notes are an integral part of these financial statements.

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(Expressed in U.S. Dollars)
	For the Three Months Ended September 30		For the Nine Months Ended September 30
	2004	2003	2004	2003
Revenue
License fees	-	-	-	-
Service fees	2,608	4,030	12,732	23,656
Sale – Crediplay – related party (Note 6)	1,444	350	7,044	2,241
Ad sales	-	-	-	-
Banking fees	68	86	340	951
	4,120	4,466	20,116	26,848
Cost of sales	16,322	37,702	79,001	121,686

Gross profit (loss)	(12,202)	(33,236)	(58,885)	(94,838)

Sales and Marketing expenses	-	-	-	-

General and administrative expenses
Accounting and audit	(1,200)	(4,990)	(23,338)	(635)
Advertising and promotion expenses	-	(1,796)	(280)	(78,604)
Amortization of intangible assets	(7,229)	(7,229)	(21,687)	(21,687)
Bad debt	-	-	-	(12,189)
Bank charges and interest	(8,406)	(348)	(20,237)	(1,649)
Contractors and consultants fees	(99,428)	-	(300,500)	(32,700)
Corporate finance fees	-	-	(262,500)	-
Depreciation of fixed assets	(4,813)	(3,480)	(14,812)	(11,060)
Filing fees	(90)	(300)	(4,093)	(4,354)
Foreign exchange (gain) loss	-	-	-	(66)
Imputed interest expense – related party	(24,816)	(18,262)	(72,257)	(50,351)
Legal and other professional fees	(7,988)	(817)	(69,029)	(11,700)
Office and miscellaneous	(808)	(41)	(5,854)	(3,164)
Rent	(996)	(487)	(2,332)	(8,599)
Salaries and benefits	-	-	(8,043)	-
Telephone and bandwidth	(4,958)	(7,048)	(20,558)	(20,383)
Travel	-	(90)	-	(2,274)
	(160,732)	(44,888)	(825,520)	(259,415)
Operating income (loss)	(172,934)	(78,124)	(884,405)	(354,253)
Other income (loss)
Interest income related party	28,354	22,500	81,718	72,738
Write down of intangible assets	-	-	-	-
Write of leasehold improvement	-	-	-	-
Loss on disposal of fixed assets	-	-	-	-
Gain on disposal of subsidiary	-	-	-	-
Net income (loss) for the period	(144,580)	(55,624)	(802,687)	(281,515)
Earnings (loss) per share– basic and diluted	(0.00)	(0.00)	(0.00)	(0.00)
Weighted average number of
common shares outstanding –basic and diluted	151,711,475	142,973,410	150,446,907	142,973,410
The accompanying notes are an integral part of these financial statements.

CYOP SYSTEMS INTERNATIONAL INCORPORATED
& SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in U.S. Dollars)
	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2004			2003		2004		2003
Cash flows from (used in) operating activities
Net (loss) income for the year	(144,580)			(55,624)		(802,687)		(281,515)
Adjustments to reconcile net loss to net cash
Used in operating activities:
- amortization of intangible assets	7,229			7,229		21,687		21,687
- bad debt	-			-		-		-
- depreciation of fixed assets	4,813			3,480		14,812		11,060
- fixed asset write off	-			-		-		-
- share issuance for services	-			-		258,490		-
- imputed interest on related party loan	24,816			18,262		72,257		50,351
- accredited to convertible debenture	1,195			-		3,763		-
Changes in assets and liabilities:
- accounts receivable	98			-		-		-
- accounts payable and accrued liabilities	(21,295)			30,320		(22,685)		60,598
- deferred revenue	(1,444)			(350)		(7,044)		(2,241)
- interest receivable	(20,110)			(22,500)		(52,204)		(67,500)
- loan receivable	-			-		-		-
- note receivable related party	(5,635)			-		(16,783)		(5,238)
- prepaid expenses	(629)			(1,538)		(629)		(1,538)
- player funds on deposit	757			(1,673)		(6,784)		(9,883)
	(154,786)			(22,394)		(537,806)		(224,219)
Cash flows from financing activities
Shares issued for cash	-			-		-		-
Proceeds from promissory note	-			-		50,000		-
Increase in due from a director	138,425			20,809		358,576		224,322
Proceeds from convertible debenture	-			-		125,000
	138,425			20,809		533,576		224,322
Foreign exchange gain (loss) on cash held in
foreign currency
Increase (decrease) in cash and cash equivalents	(16,361)			(1,584)		(4,230)		102
Cash,beginning of period	21,188			5,939		9,057		4,253
Cash (deficiency), end of period		$	4,827	$	4,355	$	4,827	$	4,355
Cash represented by:
Cash		$	1,698	$	1,422	$	1,698	$	1,422
Cash with processors			3,129		2,933		3,129		2,933
		$	4,827	$	4,355	$	4,827	$	4,355
The accompanying notes are an integral part of these financial statements.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Nature and Continuance of Operations

The Company was incorporated on October 29, 1999 in the name of Triple 8 Development Corporation under the laws of the State of Nevada to engage in any lawful business or activity for which corporations may be organized under the laws of the State of Nevada. The Company changed its name to CYOP Systems International Incorporated on October 30, 2000. On November 3, 2000, the Company acquired 100% of the issued and outstanding shares of CYOP Systems Inc., Barbados (“CYOP Barbados”). This transaction was accounted for as a reverse acquisition recapitalization.

CYOP Barbados was incorporated under the laws of Barbados on June 20, 2000. On August 31, 2000, CYOP Barbados acquired 100% of the issued and outstanding shares of Moshpit Entertainment Inc., Canada (“Moshpit”), a company incorporated under the laws British Columbia, Canada. CYOP Barbados sold 100% of the issued and outstanding shares of Moshpit by an agreement dated April 1, 2002 to a former stockholder and the sole director (see Note 8).

The Company, and its subsidiary, is a provider of multimedia transactional technology solutions and services for the entertainment industry. The Company’s range of products and services include financial transaction platforms for on-line video games and integrated e-commerce transaction technology for on-line merchants. These services are considered as one segment only based on internal organizational structure.

These consolidated financial statements have been prepared using the generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has suffered recurring losses from operations and has a net capital deficiency. The ability of the Company to continue as a going concern is dependent upon many factors, including the ability of the Company to obtain financing to fund working capital requirements, the degree of competition encountered by the Company, technology risks, government regulation and general economic conditions. The Management’s plan in this regard is to raise equity financing as required and keep abreast with the multimedia technology. These consolidated financial statements do not include any adjustmen ts that might result from this uncertainty.

In fiscal year 2003, the company had completed a stock split, which five (5) new shares were exchanged for every one (1) old share. The consolidated financial statements have been restated to reflect the stock split.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies

(a)

Basis of Consolidation

These consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, include the accounts of the Company and its subsidiary CYOP Barbados. Significant inter-company accounts and transactions have been eliminated.

(b)

Accounting Estimates

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

(c)

Cash Equivalents

Cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less when purchased. As at September 30, 2004, cash equivalents consist of cash with processors, totaling $3,129 (September 30, 2003 - $2,933).

(d)

Equipment

Equipment is recorded at historical cost. Depreciation is charged to earnings in amounts sufficient to allocate the costs over their estimated useful lives, as follows:

Audio and visual equipment	20% declining-balance basis
Computer hardware	30% declining-balance basis
Computer software	100% declining-balance basis
Office furniture and equipment	20% declining-balance basis

(e)

Revenue recognition

The Company derives revenue from providing services on software development and online Internet transaction platform maintenance. Service revenues are recognized when services have been performed and delivered in accordance with service agreements, the Company has no significant remaining performance requirements, there are no material uncertainties regarding customer acceptance and collection of the resulting receivable is deemed probable.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies(continued)

(f)

Software Development Costs

Software development costs incurred prior to the establishment of technological feasibility are charged to expenses as incurred.

(g)

Advertising and Promotion

The Company expenses advertising and promotion costs as incurred. Total advertising and promotion costs charged to expenses for the period ending September 30, 2004 is $280.00 (September 30, 2003 - $78,604).

(h)

Foreign Currency Translations

The Company and CYOP Barbados maintain their accounting records in U.S. dollars. Foreign currency transactions are translated into their functional currency in the following manner.

At the transaction date, each asset, liability, revenue and expense is translated into the functional currency by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.

(i)

Income Taxes

The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The effect on deferred income tax assets and liabilities of a change in income tax rates is included in the period that includes the enactment date.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies(continued)

(j)

Long-Lived Assets Impairment

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable, in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows that is expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis.

(k)

Intangible Assets

The Company adopted the Statement of Financial Accounting Standards No. 142 (SFAS 142),“Goodwill and Other Intangible Assets”, which requires that goodwill and intangible assets with indefinite life are not amortized but rather tested at least annually for impairment. Intangible assets with a definite life are required to be amortized over its useful life or its estimated useful life.

(l)

Financial Instruments and Concentration of Risks

Fair value of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgement, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The carrying value of cash and cash equivalents, interest receivable, note receivable, demand loans, accounts payable and accrued liabilities, player funds on deposit and short-term loans approximate their fair values because of the short-term maturity of these instruments.

Financial instruments that potentially subject the Company to concentration of credit risk consist of interest receivable and note receivable, the balances of which are stated on the balance sheet. The Company performs ongoing credit evaluations of its debtors and maintains allowances for possible losses with, when realized, have been within the range of management’s expectations. The Company places its cash in high credit quality financial institutions. The Company does not require collateral or other security to support financial instruments subject to credit risk.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies(continued)

(m)

Accounting for Derivative Instruments and Hedging Activities

The Financial Accounting Standards Board (“FASB”) issued SFAS No. 133Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

As at September 30, 2004, the Company has not entered into any derivative contracts either to hedge existing risks or for speculative purposes.

(n)

Net Income (Loss) Per Share

Basic net income (loss) per share are computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per share incorporates the incremental shares issuable upon the assumed exercise of stock options and other dilutive securities. Diluted income (loss) per share is equal to the basic income (loss) per share as the stock options to acquire 25,000 common shares that are outstanding at September 30, 2004 are anti-dilutive.

(o)

Comprehensive Income

The Company has adopted Statement of Financial Accounting Standard No. 130 (SFAS 130),“Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners.

(p)

Stock-based Compensation

The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-based Compensation" and SFAS No. 148 “Accounting for Stock-based Compensation – Transition and Disclosure”, an amendment to SFAS No. 123. SFAS 123 encourages, but does not require, companies to adopt a fair value based method for determining expense related to stock-based compensation. The Company accounts for stock-based compensation issued to employees and directors using the intrinsic value method as prescribed under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies(continued)

(q)

New Accounting Pronouncements

In January 2003, the Financial Accounting Standard Board issued FASB Interpretation No. 46 (FIN 46),Consolidation of Variable Interest Entities – An Interpretation of Accounting Research Bulletin (ARB) No. 51. This interpretation addressed the requirements for business enterprises to consolidate related entities in which they are determined to be the primary economic beneficiary as a result of their variable economic interest. The interpretation is intended to provide guidance in judging multiple economic interests in an entity and in determining the primary beneficiary. The interpretation outlines disclosure requirements for VIEs in existence prior to January 31, 2003, outlines consolidation requirements for VIEs created after January 31, 2003. The company has reviewed its major commercial relationship and its overall economic inte rests with other companies consisting of related parties, vendors, loan creditors and other suppliers to determine the extent of its variable economic interest in these parties. The review has not resulted in a determination that the Company would be judged to be the primary economic beneficiary in any material relationships, or that any material entities would be judged to be Variable Interest Entities of the Company.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This Statement is effective for contracts entered into or modified after June 30, 2003. The Company does not expect the implementation of SFAS No. 149 to have an impact on its consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This Statement is effective for financial instruments entered into or modified after May 30, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not expect the implementation of SFAS No. 150 to have a material impact on its consolidated financial statements.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Significant Accounting Policies(continued)

(q)

New Accounting Pronouncements (continued)

In December 2003, the FASB issued SFAS No. 132(R), a revision to SFAS No. 132, “Employers’ Disclosure about Pensions and Other Postretirement Benefits. SFAS No. 132(R) requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. SFAS No. 132(R) is effective for financial statements with fiscal years ending after December 15, 2003, with the exception of disclosure requirements related to foreign plans and estimated future benefit payments which are effective for fiscal years ending after June 15, 2004. The adoption of SFAS No. 132(R) did not impact our consolidated financial position or results of operations.

In a December 11, 2003 speech at the American Institute of Certified Public Accountants and Securities and Exchange Commission (“SEC”) expressed the opinion that rate-lock commitments represent written put options, and therefore be valued as a liability. The SEC expressed that they expect registrants to disclose the effect on the financial statement of recognizing the rate-lock commitments as written put options, for quarters commencing after March 15, 2004. Additionally, the SEC recently issued Staff Accounting Bulletin (SAB) No. 105. SAB No. 105 clarifies the SEC’s position that the inclusion of cash flows from servicing or ancillary income in the determination of the fair value of interest rate lock commitments is not appropriate. The Company has not yet determined the impact on the consolidated financial statements of SAB No. 105, which m ust be implemented for loan commitments entered into on or after April 1, 2004. The Company is currently analyzing the impact of the SEC’s position and will, if required, account for its loan origination commitments as prescribed.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Equipment

	September 30, 2004
	Cost	Accumulated depreciation	Net book Value

Audio and visual equipment	$ 21,558	$ 13,023	$ 8,535
Computer hardware	96,864	49,357	47,507
Computer software	3,088	3,088	-
Office furniture and equipment	9,227	6,579	2,648
Total	$ 130,737	$ 72,047	$ 58,690

	December 31, 2003
	Cost	Accumulated depreciation	Net book Value

Audio and visual equipment	$ 21,558	$ 11,576	$ 9,982
Computer hardware	96,864	36,441	60,423
Computer software	3,088	3,088	-
Office furniture and equipment	9,227	6,130	3,097
Total	$ 130,737	$ 57,235	$ 73,502

For the period ended September 30, 2004, depreciation expenses charged to general and administrative, were $14,812 (September 30, 2003 - $11,060).

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Intangible Assets

On May 21, 2002, the Company terminated the software development agreement and a software licensing, technical support and operation of customer service and data centre agreement with a related company (related by a common director). As at that date $240,000 license fees were billed with $200,000 remained unpaid at May 21, 2002.

In satisfaction of this unpaid amount and in consideration of terminating the agreement the related company assigned all right, title and interest in:

(a)

the Skill-Bingo Patents and the Skill-Bingo Inventions purchased from FYRC Inc.

(b)

the Skill-Bingo game software

(c)

the website located athttp://www.bigrbingo.com

(d)

the trademark “BiG’rBingo”

(e)

the BiG’rBingo customer deposits

The above has been collectively recorded as intellectual property with an expected useful life of 5 years.

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. This statement requires that intangible assets with an indefinite life are not amortized. Intangible assets with a definite life are amortized over its useful life or estimated of its useful life. Indefinite life intangible assets will be tested for impairment annually, and will be tested for impairment between annual tests if any events occurs or circumstances change that would indicate that the carrying amount may be impaired. Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimate d non-discounted cash flows used in determining the fair value of the assets. The amount of the impairment loss to be recorded is calculated by the excess of the assets carrying value over its fair value.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Intangible Assets (continued)

The changes in the carrying amount of intellectual property as follows:

		September 30, 2004		Dec 31, 2003

Balance, beginning of year	$	86,749	$	115,665
Amortization		(21,687)		(28,916)

Balance, end of year	$	65,062	$	86,749

Loans

(a)

Demand Loans Related Party

September 30, 2004

Dec 31, 2003

Non-interest bearing and unsecured:

- Jack Carley – related to a director and stockholder

44,625

- Mitch White – a director and stockholder

969,888

731,797

- Gordon Samson – a director

78,193

2,707

- Patrick Smyth

45,000

Total

1,137,706

779,129

(b)

Short-term Loan

	September 30, 2004	Dec 31, 2003
Interest at 10% per annum, on demand:
- RedRuth Ventures	$ 212,725	$212,725

(c)

Convertible debenture

In connection with the standby equity distribution agreement as filed on March 1, 2004, the Company issued in January 2004 to the Investor $125,000 of convertible debentures that are convertible into shares of common stock at a discounted market price. The convertible debentures are secured by all of Company’s assets, interest bearing at 5% per annum and matured two years from the date of issuance. The Company has the right to redeem the debenture upon 30 days notice for 120% of the amount plus accrued interest. Upon such redemption, the Company will issue the investor a warrant to purchase 50,000 shares of common stock at an exercise price of $0.036 per share for every $100,000 of debentures that were redeemed.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

(c)

Convertible debenture (continued)

Upon the issuance of the notes, the net proceeds ($125,000) received were allocated between the liability and equity components of the notes. On September 9, 2004 Cornell Capital LLP exercised their right to draw 3,125,000 common shares at $0.0032 per common share for a pay down of $10,000 on the debenture. The liability component ($108,784) represents the present value of the notes discounted using the interest rate that would have been applicable to non-convertible debt and accrued interest. The equity component ($9,979) represents the residual value of proceeds after allocated to the liability component. Over the terms of the notes, the liability and the interest components are accreted to their face value.

(d)

Promissory Note

On April 8, 2004 the Company executed a Promissory Note (the “Note”) with the Holder, Cornell Capital Partners, LP for $50,000.00. The Note is secured pursuant to the prior Security Agreement dated January 28, 2004 between the Holder and the Company. The Holder is entitled to interest at the rate of twenty four percent (24%) per annum or the highest permitted by applicable law, if lower.

Sale and License-back of Computer Software

On December 14, 2001, the Company sold computer software identified as Crediplay System to the sole director and a major stockholder and creditor of the Company for $3,000,000. The purchase price was settled by retiring $1,200,000 of debt owed to the purchaser and a promissory note for $1,800,000. The promissory note bears interest at 5% per annum with maturity on December 14, 2010. The promissory note is secured through a first priority lien and security interest in the Crediplay System. As at December 31, 2002 the present value of the promissory note was $1,585,034 after calculating at the discount rate of 7% and accruing interest of 5%. Interest receivable was calculated at 1,800,000 X 5% or $90,000. As at September 30, 2004, the present value of the promissory note was $1,622,769 after calculating at the discount rate of 7% and accruing interest of 5%.

Pursuant to a Marketing, Development and Distribution Agreement entered into on the same date, the Crediplay System was licensed back to the Company for a term of 15 years. A licensing fee payable will be calculated on Gross Earnings derived from the Crediplay System as follows:

2002	Gross Earnings x 20%
2003	Gross Earnings x 17%
2004	Gross Earnings x 15%
2005 to 2017	Gross Earnings x 10%

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Sale and License-back of Computer Software (continued)

As there have been only minor revenues for 2003 and 2004 due to the lack of capitalization of the Company, the Promissory Note for $1.8 million (“the note”) has been further guaranteed by the demand loan of $731,797 as at December 31, 2003 owed to Mitch White (See note 5(a)). This guarantee was executed at December 31, 2003 to ensure the note is further collateralized, as the note has not been paid down by revenues as contemplated in the exploitation and marketing agreements executed December 31, 2001 and filed on Edgar by Form 8-K on April 15, 2002.

The development costs of the Crediplay System expended by the Company amounted to approximately $1,273,406 of which $778,348 was expensed previously. Management of the Company has estimated the $3,000,000 value based on the discounted future cash flow projection and the estimate provided by knowledgeable parties of the software.

The gain on the sale of the Crediplay System is calculated as follows:

Sales price
Retirement of loan due to the purchaser	$	1,200,000
Present value of $1,800,000 promissory note discounted at 7% per annum		1,565,452
		2,765,452
Software development costs incurred in 2001		(495,058)
Deferred gain as at December 31, 2001	$	2,270,394
Recognized gain in 2002		(71,842)
Deferred gain as at December 31, 2002	$	2,198,552
Recognized gain in 2003		(16,040)
Deferred gain as at December 31, 2003	$	2,182,512
Recognized gain in 2004		(7,044)
Deferred gain as at September 30, 2004	$	2,175,468

The deferred gain is amortized in proportion to the licensing fees payable over the term of the agreement.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Stockholders’ Equity (Deficit)

Issuance of Common Shares

During the period, the Company issued 7,500,000 shares to Cornell Capital LLP as a corporate finance fee and 312,500 to Newbridge Securities Corp as an escrow agent fee in connection with the Standby equity underwriting agreement for financing as originally filed on the Company’s SB-2 on March 1, 2004. These shares were issued at $0.032 per share. Additionally per an S-8 filed on October 29, 2003 for legal services 212,500 shares were issued for legal services at $0.04 per share. A further 3,125,000 common shares were issued to Cornell Capital at $0.0032 per share paying down the convertible debenture by $10,000.00.

During the fiscal year 2003, the Company issued 600,000 shares of common stock for equipment at $0.06 per share. The 600,000 shares of common stock were recorded at $36,000 as the fair value of equipment received.

2003 Consultant Stock Plan

On October 21, 2003, the Board of Directors of the Company approved and adopted “2003 Consultant Stock Plan” (“2003 Plan”). Pursuant to the 2003 Plan, it is a ten (10) year plan to grant common shares or right to received common shares by consultants (per individual agreement) to a maximum 500,000 shares. The allocated number of shares includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to the stock plan described herein as the result of any future stock split, stock dividend or similar adjustment of the registrant's outstanding common stock.

(c)

Stock Option

There was no stock options granted for the period ended September 30, 2004.

A summary of the stock option outstanding as at September 30, 2004 is as follows:

Weighted Average

Exercise Price

Options outstanding at September 30, 2004,

25,000

$1.00

Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding and Exercisable	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$0 - $1.00	25,000	1.67	$1.00

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Notes to Consolidated Financial Statements

Nine months ended September 30, 2004 and 2003

(Unaudited)

(Expressed in U.S. dollars)

Income Taxes

As at September 30, 2004 the Company has non-capital losses and undepreciated capital cost of approximately $2,112,000 and $58,000, respectively, which can be carried forward for tax purposes and are available to reduce taxable income of future years. The non-capital losses expire commencing in 2006 through 2010.

The tax effect of temporary differences that give rise to the Company’s deferred tax assets are as follows:

	2004	2003
Undepreciated capital cost of capital assets over their net book value	$ 19,000	$ 20,000
Estimated tax loss carryforward	715,000	650,00
Less: valuation allowance	(734,000)	(670,000)
	-	-

The valuation allowance reflects the realization of the tax assets is unlikely.

Related Party Transactions

Related party transactions not disclosed elsewhere in the consolidated financial statements are as follows:

(a)

In the period ending September 30, 2004, the Company recorded an imputed interest of $72,257 (September 30, 2003 - $50,351) at an interest rate of 10% per annum on interest-free loan totaling $1,137,706 from directors and stockholders of the Company.

(b)

Pursuant to management and consulting agreements effective January 1, 2003, management were to be paid by base fees with certain incentive compensations and bonuses subject to achievement of performance goals and approval by the Compensation Committee.

As of December 31, 2003, consulting and management fees, totaling $300,000, were payable but the management had agreed to forgive the debts without recourse. No incentive compensations and bonuses were granted and outstanding as of December 31, 2003.

As at September 30, 2004 the related amounts have been recorded as a liability and due to directors.

(c)

See Note 5 and 6.

10.

Non-Cash Activities

(a)

In 2003, the management of the Company forgave $300,000 of the annual base salaries without recourse. See Note 9 (b).

(b)

See Note 7 (a)

11.

Subsequent events

(a)

Standby Equity Distribution Agreement

An amended SB-2 was filed on May 6, 2004 to clear the standby equity distribution agreement.

An amended SB-2 was filed on June 6, 2004 to clear the standby equity distribution agreement.

The Company signed an agreement in January 2004 to periodically issue and sell to Cornell Capital Partners, LP (“ the Investor”) shares of common stock for a total purchase price of $5.0 million.

The Company paid the Investor a commitment fee of $240,000 by issuing 7,500,000 shares of common stock (issued). In addition, the Investor will be entitled to retain 4% of each advance under the standby equity distribution agreement.

The investor intends to sell any shares purchased under the standby equity distribution agreement at the then prevailing market price.

A registered broker-dealer was engaged to advise the Company in connection with the standby equity distribution agreement. The broker-dealer was paid a fee of $10,000, payable by the issuance of 312,500 shares of Company’s common stock (issued) and is not participating as an underwriter in this offering.

12.

Geographic Information

All the Company’s operations and fixed assets are located in the U.S.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following management's discussion and analysis of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report for the nine months ended September 30, 2004. This quarterly report contains certain forward-looking statements and the Company's future operation results could differ materially from those discussed herein.

We were incorporated on October 29, 1999 under the laws of the State of Nevada as Triple 8 Development Corporation to engage in any lawful corporate purpose. We changed our name to CYOP Systems International Incorporated on October 30, 2000.

We have not been involved in any bankruptcy, receivership or similar proceedings.

We have been primarily focused on developing our product for market launch. Management has financed most of our operations to date. Management will continue to fund our operations through shareholders loans until our equity financing is closed. We will satisfy cash requirements solely from funds loaned by management or family and friends or private investors until this time. However, management is not under any contractual obligation to provide continued funding. We will spend approximately $1/2 million in the next 12 months to maintain current operations at our current expenditure rate; not including any marketing initiatives or expansion plans. Additional funds in the amount of $1.5 million will be expended for a complete launch of the Crediplay system including a full marketing budget. Executive and key personnel have executed management contracts and to ensure retention of executiv e and key personnel the Company will be paying fees and salaries or accruing them as necessary for 2004.

We anticipate contracting additional human resources as required during the next 12 months. We do not expect to acquire any material physical assets or significant equipment in the next 12 months. We will not be performing any significant research and development in the next 12 months as our pay for play software is complete and tested.

We launched our first pay-for-play online video game, Urban Mercenary in February 2001. In March 2001, the Company secured the Canadian Imperial Bank of Commerce as the Company's merchant account processor. Merchant processors now include Banner Bank.

In September 2002, we launched a suite of free and “pay for play” games including card, strategy, arcade, sports and multiplayer games, terminating our licensing contract with Bingo.com. These games are licensed from third-party’s and the company continues to talk to and discuss arrangements with third party game developers to ensure leading edge games are available on the proprietary sitewww.skillarcade.com for our members.

In order for our Company to expand it's operations and realize profits from pay for play online video gaming we are actively signing up affiliate company’s and pursuing strategic acquisitions and partnerships that bring internet traffic and more games to be integrated into our existing suite of games. Sina.com as disseminated by news release dated May 4, 2004. Until we increase our Company's exposure and attract players to our website and/or complete strategic acquisitions and partnerships we cannot expect large volumes of players for our online pay for play video game. Revenues will be derived from licensing fees from third parties that already have an established community and significant traffic to their web sites.

Liquidity and Capital Resources

The Company does not yet have an adequate source of reliable, long-term revenue to fund operations. As a result, the Company is reliant on outside sources of capital funding. There can be no assurances that the Company will in the future achieve a consistent and reliable revenue stream adequate to support continued operations. The Company has secured a source of capital funding, as an equity funding with regulatory clearance of the SB-2 registration statement granted with the August 12, 2004 filing of the SB-2/A.

The Company had cash and cash equivalents of $4,827 at September 30, 2004 and a working capital deficit of $(1,680,368) with the deficiency arising primarily from $1,137,706 in loans from directors and accrued compensation for executives, compared to a working capital deficit of ($1,070,869) at September 30, 2003 to satisfy requirements for operations for the same period ending September 30, 2003. This reflects the continued commitment by management with an increase of advancing shareholder loans to cover the cost of operations.

During the nine month period ended September 30, 2004, the Company used cash of $537,806 in operating activities compared to using $224,219 in the prior period ended September 30, 2003. This is a reflection of primarily three things; significant legal expenses and corporate finance fees incurred in connection with the equity financing being undertaken and consulting fees now being accrued if not paid.

Net cash provided by financing activities for the nine month period ending September 30, 2004 was $533,576 for the period originating from further advances made by directors of the Company and a $125,000 convertible debenture provided by Cornell Capital LLP., and a $50,000 promissory note from Cornell Capital LLP., which compares to $224,322 in net cash provided to the Company for the same period in 2003.

Our future capital requirements will depend on a number of factors, including costs associated with development of our Web portal, the success and acceptance of our new games and the possible partnerships and/or acquisition of complementary businesses, products and technologies. We do not have sufficient cash and cash equivalents on hand to conduct our operations through the fourth quarter of 2004, and are substantially dependent on the equity financing and interim funding from our Chairman and CEO to continue operations.

As disclosed herein the Company concluded an underwriting in the first quarter with Cornell Capital LLP and the associated SB-2 was filed on March 1, 2004 and as amended on May 6, 2004, June 22, 2004, and August 5, 11, 12 and 16, 2004 on Edgar.

As there have been only minor revenues for 2002 and 2003 due to the lack of capitalization of the Company, the Promissory Note for $1.8 million (“the note”) has been further guaranteed by the shareholder loan of Mitch White. This guarantee was executed at December 31, 2003 to ensure the note is further collateralized as no reductions have been made as contemplated in the agreements executed December 31, 2001 and filed on Edgar by Form 8-K on April 15, 2002.

The Company’s consolidated financial statements have been prepared on a continuing operation basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

Results of operations for the quarter ended September 30, 2004 as compared to the quarter ended September 30, 2003.

Revenue

For the quarter ended September 2004 the Company generated revenue of $4,120, from operations. The same quarter period ending September 30, 2003 generated revenues of $4,466. Current revenues are now from a wide variety of affiliates and the company’s proprietary URL.

Cost of Sales

Cost of Sales for the three-month period ended September 30, 2004 was $16,322 and for the same three-month period ended September 30, 2003 $37,702 all with various third parties marketing companies. This cost of sales is primarily sales and marketing expenses for co-brand advertising and keyword buys for our site and participation in trade shows.

We expect to continue to incur sales and marketing expenses to further our efforts to increase traffic to our Web portal and develop licensee opportunities with gaming portals. These costs will include commissions, salaries, advertising, and other promotional expenses intended to increase traffic to licensees and improve revenue. There can be no assurances that these expenditures will result in increased traffic or significant new revenue sources.

General and Administrative expenses

General and administrative expenses consist primarily of contract personnel costs, legal and audit professional fees, insurance and other general corporate and office expenses, including accruing executive compensation for the three-month period ending September 30, 2004 of $99,428. General and administrative expenses increased to $160,732 for the three-month period ended September 30, 2004 from $44,888 for the same period ended September 30, 2003. This is an increase of $115,844 primarily due to the accrued compensation costs in order to retain top-level executives.

We expect to continue to incur general and administrative expenses to support the business, and there can be no assurances that the Company will be able to generate sufficient revenue to cover these expenses. The Company will be relying on the equity financing to support the business.

"CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Except for historical matters, the matters discussed in this Form 10-QSB are forward-looking statements based on current expectations and involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements under the following heading: "Managements Discussion and Analysis or Plan of Operations" the timing and expected profitable results of sales and the need for additional financing.

Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports required to be filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-ben efit relationship of possible controls and procedures.

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.

There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.

PART II

OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS

None

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

Exhibit 31.1 Rule 13(a) – 14(a)/15(d) – 14(a) Certification

Exhibit 32.1 Section 1350 Certifications

(b)

Reports on Form 8-K

On May 25, 2004 The Company filed a report on Form 8-K, Item 5 describing the relocation of the Company’s administrative office to 1304-925 West Georgia Street, Vancouver, BC. V6C 3L2.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CYOP SYSTEMS INTERNATIONAL INCORPORATED

Dated: October 30, 2004

Per:

/s/ Mitch White____________

Mitch White CEO, and Director

Rule 13a – 14(a)/15(d) – 14(a)

I, Mitch White, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CYOP Systems International Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: October 30, 2004

/s/ Mitch White

Mitch White

Chief Executive Officer

Rule 13a – 14(a)/15(d) – 14(a)

I, Gordon Samson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CYOP Systems International Inc.;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

Date: October 30, 2004

/s/ Gordon Samson

Gordon Samson

Chief Financial Officer

Section 1350 Certifications

CERTIFICATE OF CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Mitch White, Chief Executive Officer and Director of CYOP Systems International Inc., certify that the Quarterly Report on Form 10-QSB (the "Report") for the quarter ended September 30, 2004, filed with the Securities and Exchange Commission on the date hereof:

(i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934, as amended, and

(ii)

the information contained in the Report fairly presents in all material respects, the financial

condition and results of operations of CYOP Systems International Inc.

By:

/s/ Mitch White
CEO and a member of the Board of Directors

A signed original of this written statement required by Section 906 has been provided to CYOP Systems International Inc., and will be retained by CYOP Systems International Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

Section 1350 Certifications

CERTIFICATE OF CHIEF FiINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Gordon Samson, Chief Financial Officer, Director and principal accounting officer of CYOP Systems International Inc., certify that the Quarterly Report on Form 10-QSB (the "Report") for the quarter ended September 30, 2004, filed with the Securities and Exchange Commission on the date hereof:

(i) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange

Act of 1934, as amended, and

(iii)

the information contained in the Report fairly presents in all material respects, the financial

condition and results of operations of CYOP Systems International Inc.

By:

/s/ Gordon Samson
CFO and a member of the Board of Directors
(who also performs the function of principal accounting officer)

Cyop Systems International (CYOS) Inactive 10QSB2004 Q3 Quarterly report (small business)