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

FORM 10-QSB

(Mark One)

x

For the quarterly period ended: 9/30/01

o

Commission file number 0-27123MEDIQUIK SERVICES, INC.(Exact Name of Small Business Issuer as Specified in Its Charter)

|Delaware                                                       | 74-2876711                          
|-------------------------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.)

4299 San Felipe
Suite 300
Houston, Texas 77027(Address of Principal Executive Offices)

(832) 200-7000(Issuer's Telephone Number, Including Area Code)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 	11,026,628 as of October 31, 2001

Transitional Small Business Disclosure Format (Check one): Yes o No x

MEDIQUIK SERVICES, INC.

|                                                             | Page
|------------------------------------------------------------ | ----
|PART I. FINANCIAL INFORMATION                                |     
|Item 1. Unaudited Financial Statements.                      |     
|Consolidated Condensed Balance Sheets                        | 3   
|September 30, 2001, and September 30, 2000                   |     
|Consolidated Condensed Statements of Operations              |     
|Three and Nine Months Ended September 30, 2001, and 2000     | 4   
|Consolidated Condensed Statements of Cash Flows              |     
|Nine Months Ended September 30, 2001 and 2000                | 5   
|Notes to Consolidated Condensed Financial Statements         | 6   
|Item 2. Management's Discussion and Analysis of Financial    |     
|Condition and Results of Operations                          | 7   
|PART II. OTHER INFORMATION                                   |     
|Item 1. Legal Proceedings.                                   | 9   
|Item 2. Changes in Securities.                               | 9   
|Item 3. Defaults Upon Senior Securities.                     | 9   
|Item 4. Submission of Matters to a Vote of Security Holders. | 9   
|Item 5. Other Information.                                   | 9   
|Item 6. Exhibits and Reports on Form 8-K                     | 9   

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

|MEDIQUIK
    SERVICES, INC.                                                                                                                                                                                                                      |               |             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------- | ------------
|CONSOLIDATED BALANCE
    SHEETS                                                                                                                                                                                                                  |               |             
|                                                                                                                                                                                                                                                 |               |             
|                                                                                                                                                                                                                                                 |               |             
|                                                                                                                                                                                                                                                 | September 30, | December 31,
|ASSETS                                                                                                                                                                                                                                           | 2001          | 2000        
|                                                                                                                                                                                                                                                 | (Unaudited)   |             
|CURRENT
    ASSETS:                                                                                                                                                                                                                              |               |             
|Cash and cash equivalents                                                                                                                                                                                                                        | $ 15,279      | $ 18,649    
|Accounts receivable, net of allowance
    of $464,377 and $351,794, respectively                                                                                                                                                                 | 432,975       | 290,332     
|Inventory                                                                                                                                                                                                                                        | 24,698        | 55,963      
|                                                                                                                                                                                                                                                 |               |             
|Total
    current assets                                                                                                                                                                                                                         | 472,952       | 364,944     
|                                                                                                                                                                                                                                                 |               |             
|PROPERTY
    AND EQUIPMENT:                                                                                                                                                                                                                      |               |             
|Office
    equipment                                                                                                                                                                                                                             | 131,773       | 131,497     
|Less
    accumulated depreciation                                                                                                                                                                                                                | (34,592)      | (20,141)    
|                                                                                                                                                                                                                                                 |               |             
|Total
    property and equipment                                                                                                                                                                                                                 | 97,181        | 111,356     
|                                                                                                                                                                                                                                                 |               |             
|INVESTMENTS                                                                                                                                                                                                                                      | -             | 1,303,782   
|                                                                                                                                                                                                                                                 |               |             
|OTHER
    ASSETS, Net                                                                                                                                                                                                                            | 413,339       | 349,382     
|                                                                                                                                                                                                                                                 |               |             
|TOTAL                                                                                                                                                                                                                                            | $ 983,472     | $ 2,129,464 
|                                                                                                                                                                                                                                                 |               |             
|LIABILITIES AND
    STOCKHOLDERS- EQUITY                                                                                                                                                                                                         |               |             
|                                                                                                                                                                                                                                                 |               |             
|CURRENT
    LIABILITIES:                                                                                                                                                                                                                         |               |             
|Accounts
    payable                                                                                                                                                                                                                             | $ 880,573     | $ 914,074   
|Accrued
    expenses                                                                                                                                                                                                                             | 52,298        | 204,521     
|Notes
    payable and subordinated debentures                                                                                                                                                                                                    | -             | -           
|                                                                                                                                                                                                                                                 |               |             
|Total
    current liabilities                                                                                                                                                                                                                    | 932,871       | 1,118,595   
|                                                                                                                                                                                                                                                 |               |             
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                    |               |             
|                                                                                                                                                                                                                                                 |               |             
|STOCKHOLDERS-EQUITY:                                                                                                                                                                                                                             |               |             
|Series A preferred stock - $.001 par
    value 513,266 shares authorized, 513,266 issued and outstanding as of
    December 31, 2000, and 0 issued and outstanding as of September 30, 2001
    ($20,530,640 involuntary liquidation preference) |               |             
|                                                                                                                                                                                                                                                 |              
|-                                                                                                                                                                                                                                                | 513          
|Series B preferred stock - $.001 par
    value 4,500 shares authorized, 0 issued and outstanding as of December 31,
    2000, 4,500 issued and outstanding as of September 30, 2001 ($90,000
    liquidation preference)                         |               |             
|                                                                                                                                                                                                                                                 |              
|5                                                                                                                                                                                                                                                | -            
|Common stock - $.001 par value
    50,000,000 shares authorized; 11,026,628 and 13,504,096shares issued and
    outstanding at September 30, 2001 and December 31, 2000, respectively                                                           
|                                                                                                                                                                                                                                                 |              
|11,027                                                                                                                                                                                                                                           | 13,504       
|Additional paid-in capital                                                                                                                                                                                                                       | 15,952,212    | 16,036,447  
|Accumulated deficit                                                                                                                                                                                                                              | (15,912,643)  | (15,039,595)
|                                                                                                                                                                                                                                                 |               |             
|Total
    stockholders' equity                                                                                                                                                                                                                   | 50,601        | 1,010,869   
|                                                                                                                                                                                                                                                 |               |             
|TOTAL                                                                                                                                                                                                                                            | $ 983,472     | $ 2,129,464 
|                                                                                                                                                                                                                                                 |               |             
|The
    accompanying notes are an integral part of these consolidated financial
    statements.                                                                                                                                                  |               |             

|MEDIQUIK SERVICES, INC.                                                                     |               |               |            |             |             
|------------------------------------------------------------------------------------------- | ------------- | ------------- | ---------- | ----------- | ------------
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                                          
|                                                                                            |               |               |            |             |             
|                                                                                            |               |               |            |             |             
|                                                                                            | Three Months  | Nine Months  
|                                                                                            | Ended         | Ended        
|                                                                                            | September 30, | September 30,
|                                                                                            | 2001          | 2000          |            | 2001        | 2000        
|                                                                                            |               |               |            |             |             
|                                                                                            |               |               |            |             |             
|                                                                                            |               |               |            |             |             
|SALES                                                                                       | $ 690,232     | $ 520,028     |            | $ 1,900,878 | $ 1,227,497 
|                                                                                            |               |               |            |             |             
|COST
    OF SALES                                                                           | 452,812       | 326,879       |            | 1,253,865   | 905,506     
|                                                                                            |               |               |            |             |             
|Gross
    profit                                                                            | 237,420       | 193,149       |            | 647,013     | 321,991     
|                                                                                            |               |               |            |             |             
|OPERATING EXPENSES:                                                                         |               |               |            |             |             
|Salaries - officers                                                                         | 53,775        | 100,106       |            | 204,043     | 352,581     
|Consulting fees                                                                             | 17,225        | 81,597        |            | 61,116      | 392,286     
|Other                                                                                       | 345,451       | 543,452       |            | 1,254,199   | 1,414,649   
|                                                                                            |               |               |            |             |             
|Total
    operating expenses                                                                | 416,451       | 725,155       |            | 1,519,358   | 2,159,516   
|                                                                                            |               |               |            |             |             
|LOSS
    FROM OPERATIONS                                                                    | (179,031)     | (532,006)     |            | (872,345)   | (1,837,525) 
|                                                                                            |               |               |            |             |             
|OTHER
    INCOME (EXPENSE):                                                                 |               |               |            |             |             
|Interest income                                                                             | 153           |               |            | 1,290       |             
|Interest expense                                                                            | (252)         | (406)         |            | (1,993)     | (5,798)     
|                                                                                            |               |               |            |             |             
|Total
    other (expense) income                                                            | (99)          | (406)         |            | (703)       | (5,798)     
|                                                                                            |               |               |            |             |             
|NET
    LOSS                                                                                | $ (179,130)   | $ (532,412)   |            | $ (873,048) | $(1,843,323)
|                                                                                            |               |               |            |             |             
|BASIC AND DILUTED LOSS PER SHARE                                                            |               |               |            |             |             
|$ (0.01)                                                                                    | $ (0.08)      |               | $ (0.06)   | $ (0.29)   
|                                                                                            |               |               |            |             |             
|BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF
    COMMON SHARES OUTSTANDING                  |               |               |            |             |             
|                                                                                            |               |               |            |            
|13,504,096                                                                                  | 6,471,414     |               | 13,504,096 | 6,345,522  
|                                                                                            |               |               |            |             |             
|The accompanying notes are an integral part of
    these consolidated financial statements.

|MEDIQUIK SERVICES, INC.                                                                     |               |              
|------------------------------------------------------------------------------------------- | ------------- | -------------
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS (UNAUDITED)                                       |               |              
|                                                                                            |               |              
|                                                                                            |               |              
|                                                                                            | Nine Months  
|                                                                                            | Ended        
|                                                                                            | September 30,
|                                                                                            | 2001          | 2000         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                       |               |              
|Net loss                                                                                    | $ (873,048)   | $ (1,843,323)
|Adjustment for noncash transactions:                                                        |               |              
|Common and Preferred stock,
    options, and warrants issued for goods and services         | 216,560       | 228,249      
|Depreciation and amortization                                                               | 66,349        | 32,852       
|Provision for losses on
    accounts receivable                                             | 112,584       | 196,273      
|Net changes in assets and
    liabilities:                                                  |               |              
|Accounts receivable                                                                         | (255,225)     | (391,557)    
|Inventory                                                                                   | 31,265        | (67,808)     
|Accounts payable                                                                            | (33,501)      | 759,598      
|Accrued expenses                                                                            | (152,223)     | (421,004)    
|Other assets                                                                                | (115,855)     | (16,254)     
|                                                                                            |               |              
|Net cash used in operating activities                                                       | (1,003,094)   | (1,522,974)  
|                                                                                            |               |              
|CASH FLOWS FROM INVESTING ACTIVITIES
    -                                                  |               |              
|Capital expenditures                                                                        | (276)         | (152,929)    
|Investment in MiraQuest
    Ventures, LLC                                                   | -             | (5,980,001)  
|                                                                                            |               |              
|Net cash used in investing activities                                                       | (276)         | (6,132,930)  
|                                                                                            |               |              
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                       |               |              
|Repayment of
    indebtedness                                                               |               | (85,000)     
|Proceeds from Borrowing                                                                     | -             | 101,195      
|Proceeds from sale of
    common stock                                                      | -             | 317,500      
|Proceeds from sales of
    interests in subsidiary                                          | -             | 8,000        
|Proceeds from Ball/MiraQuest
    transactions                                               | 1,000,000     | 7,280,001    
|                                                                                            |               |              
|Net cash provided by financing activities                                                   | 1,000,000     | 7,621,696    
|                                                                                            |               |              
|NET (DECREASE) INCREASE IN CASH AND
    CASH EQUIVALENTS                                    | (3,370)       | (34,208)     
|                                                                                            |               |              
|CASH AND CASH EQUIVALENTS, Beginning
    of period                                          | 18,649        | 47,424       
|                                                                                            |               |              
|CASH AND CASH EQUIVALENTS, End of
    period                                                | $ 15,279      | $ 13,216     
|                                                                                            |               |              
|The accompanying notes are an
    integral part of these consolidated financial statements.



MEDIQUIK SERVICES, INC.
Notes to Consolidated Financial Statements (Unaudited)

September 30, 2001

A. BASIS OF PRESENTATION      The interim consolidated financial statements and notes thereto of MediQuik Services, Inc. and its subsidiary (collectively, the "Company" or "MediQuik") have been prepared by management without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, the accompanying financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results for the periods presented. Such adjustments are of a normal recurring nature. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the SEC's rules and regulations. However, management believes that the disclosures presented herein are adequate to make the information not misleading. The accompanying consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.
      The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could differ from those estimates. The results of operations for any interim period are not necessarily indicative of results for the full year.B. INVESTMENTS/EQUITY TRANSACTIONSEffective July 27, 2001, the Company, MiraQuest Ventures, LLC ("MiraQuest"), Ball Investors, LLC ("Ball Investors"), and the Allen and Connie Ball Living Trust ("Ball Trust") entered a Partial Transaction Reversal Agreement to restructure certain stock exchange and loan transactions between the Company and MiraQuest, Ball Investors, and Ball Trust (the "Restructure Transaction"). The net effect of the Restructure Transaction immediately following the closing was to reduce the carrying value of liabilities by $1,000,000, the carrying value of long-term assets by $1,303,782, and paid in capital by the net difference of $303,782. Total shares of common stock outstanding was reduced from 23,769,416 shares (on a fully diluted basis) to 11,026,528 (on a fully diluted basis) and MiraQuest's ownership of the company was reduced from 17,314,316 shares on a fully diluted basis (73%) to 4,571,428 common shares on a fully diluted basis (41%). In addition, in connection with the Restructure Transaction in the third quarter, the Company issued 4,500 shares of Series B Preferred shares with a liquidating preference of $90,000 for the forgiveness of $90,000 of trade payables, and redeemed the entire 513,266 shares of Series A Preferred Shares previously issued.
      In the Third Quarter of 2001, the Company granted incentive options to employees (qualified) and consultants (non-qualified) pursuant to its Incentive Compensation Plan for 633,333 shares, exercisable over ten years at $0.25 per share. In addition, the Company granted five-year options for the year 2000-2001 Directors in the total amount of 450,000 shares, and 10-year options for the year 2001-2002 Directors in the total amount of 225,000 shares, all at $0.25 per share. The Company also converted $126,560 of accrued salaries into 506,240 10-year options at $0.25 per share, and granted an officer and director 10-year options to purchase 100,000 shares of its stock at $0.25 per share.Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsForward Looking Statements
      This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements as indicated by the use of words like "expects", "believes", and "anticipates" and other similar words and phrases. Such statements reflect management's current view of future financial performance based on certain assumptions, risks, and uncertainties. If any assumptions, risks, uncertainties, or unanticipated outside factors change or occur, such changes may have a material impact on actual financial results. The Company is under no obligation to revise any such forward-looking statements contained herein. Readers are cautioned to not place undue reliance on any forward-looking statements contained in this discussion.
Liquidity and Capital Resources
      Our principal cash requirements to date have been to fund working capital in order to support growth of net sales. Because revenue from operations has been inadequate to completely fund these requirements, we have engaged in private offerings of securities, loans, extensions of credit from vendors, and the MiraQuest Transaction to provide the necessary working capital and have instituted cost saving measures, including a reduction in force and salary reductions. We anticipate that as revenue from sales to managed care plans increases, we will be able to satisfy all of our working capital requirements from such revenue, however, we cannot assure you that this will be the case. We believe the systems and cost structure in place now give us a significant opportunity to capitalize on increased volume.
      Until we are able to fund our working capital needs from internal sources, we expect to pursue additional equity and debt financing to meet future working capital requirements. To attract additional investors or merger partners, the Company has agreed to purchase and MiraQuest Ventures, LLC has agreed to sell, for a nominal amount, sufficient shares of the Company's common stock and warrants owned by MiraQuest to reduce MiraQuest's total ownership in MediQuik to 3,604,956 common shares. Such transaction will take place upon the completion of a capital investment of $3,000,000 (or part thereof) into MediQuik by a third party or parties. We are focusing our fourth quarter efforts on increasing the volume of higher margin medical supplies, reducing the low- or negative-gross margin pharmacy component, increasing operating efficiencies, cash control, and securing the financial resources to take advantage of this opportunity.
Results of Operations
      Revenues increased $170,204 (33%) for the third quarter and $673,381 (55%) for the first nine months of 2001 compared to the same periods for the prior year. This improvement is primarily the result of an increase in the number of clients served through managed care plans and the amount of goods and services sold per client.
      Cost of goods sold decreased to 66% of sales for the first nine months of 2001 compared to 74% in 2000, while the third quarter cost of goods sold increased slightly to 66% versus 63% for the same period in 2000. As a result, gross profits increased by $325,022 (101%) for the nine months and $44,271 (23%) for the third quarter compared to 2000. The gross margin available on sales of medical supplies is relatively high because of volume buying discounts. The gross margin available on sales of pharmaceutical products is relatively low because of the cost of outsourcing fulfillment to a licensed provider. The gross margin on sales of disease management tools is relatively high but sales of these products do not make up a substantial part of our revenues. The decline in cost of goods sold and the resulting improvement in gross profits for the nine months ended September 30, 2001, are the results of increased sales of medical supplies as a percentage of the total products supplied to our clients, bringing the order fulfillment function in house, and improved purchasing practices.
      Operating expenses decreased $308,704 (43%) for the third quarter and $640,159 (30%) for the first nine months of 2001 compared to 2000. This reduction in the third quarter continues to reflect the salary and personnel reductions that were begun in the fourth quarter of the last fiscal year and which were partially offset during the first quarter of 2001 by unusual legal and accounting expenses.
      The increase in sales and gross profit margins coupled with the reduction in operating expenses resulted in a reduction in the net loss from operations of $353,281 (66%) for the third quarter and $970,275 (53%) for the first nine months of 2001 compared to the same periods of 2000. Net loss for the third quarter was reduced to $179,131 ($.01 per share) for the third quarter of 2001 compared to $532,412 ($.12 per share) for the third quarter of 2000. Net loss for the first nine months of 2001 was reduced to $872,345 ($.05 per share) compared to $1,843,323 ($.21 per share) for the first nine months of 2000.
      In October of 2001, a major health plan customer of the Company announced its withdrawal from the Company's market. While the revenues constituted approximately one-third of the Company's business on a net revenue basis, the Company estimates it accounted for approximately 5% to 10% of the gross profits. This was mainly due to the fact that a major portion of the business was pharmacy-related and thus subject to extremely low or negative gross margins, as well as to lower-than average reimbursement rates on medical supply business. The Company has negotiated a separation agreement, and expects to experience a net gain by collecting some billings previously reserved. At the same time, the Company has validated its disease management technology and has negotiated a major health care provider contract which is expected to begin implementation in November.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is a party defendant and party counter-plaintiff in a civil lawsuit involving the Bayer Corporation that was initially filed on December 6, 2000, in the United States District Court for the Southern District of Texas, Houston Division. Both parties claim breach of certain supply and distribution contracts as to the other. Bayer Corporation seeks compensatory damages of $494,004 while the Company seeks an unspecified amount of damages. The Company has vigorously defended Bayer's claim and continues to pursue its claim against Bayer. We are unable to predict the outcome of the suit or estimate the loss, if any, that may result from this matter and have made no reserves on the Company's financial statements. An adverse decision in this matter would adversely affect our financial condition and the results of operations in the period in which it occurs. This is the only lawsuit to which the Company is a party.Item 2. Changes in Securities.As of July 27, 2001, the Company issued 4,500 shares of its Series "B" Preferred Stock to MiraQuest in connection with the partial reversal of certain stock exchange and loan agreements between the Company, MiraQuest, Ball Investors, and Ball Trusts. Under the rights and preferences of the Series "B" Preferred Stock, such stock has a preferential right to receive distributions of assets over the holders of the Company's common stock to the extent of $20.00 per share. The Series "B" Preferred Stock was acquired for investment purposes in a transaction exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and the rules promulgated thereunder.Item 3. Defaults Upon Senior Securities.Not Applicable.Item 4. Submission of Matters to a Vote of Security Holders.
      Not Applicable.Item 5. Other Information.
      Not Applicable.Item 6. Exhibits and Reports on Form 8-K.
      (a) Exhibits
          None
      (b) Reports on Form 8-K

None

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.

|                            | MediQuik Services, Inc.         
|--------------------------- | --------------------------------
|                            |                                 
|                            |                                 
|Date:     November 14, 2001 | By:     /s/ Robert Teague       
|                            | Robert Teague                   
|                            | Chief Executive Officer and     
|                            | Chairman of the Board           
|                            | (principal executive officer and
|                            | principal financial officer)