SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

               Quarterly Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                For the quarterly period ended: June 30, 2001

                         Commission file number 0-26559

                               CIK No. 0001082603

                                  XIN NET CORP.
             (Exact name of registrant as specified in this charter)

                  Florida                         33-0751560
              -------------------------------     --------------------
              (State of other jurisdiction        (I.R.S. Employer
              of incorporation or organization)    Identification No.)

          #830 - 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2
          -------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (604) 632-9638

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.

                         YES  X          NO
                            -----         -----

As of June 30, 2001,  there were  21,360,010  shares of $0.001 par value common
stock outstanding


<PAGE>
                          PART 1. FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                         XIN NET CORP. AND SUBSIDIARIES
                                           CONSOLIDATED BALANCE SHEETS
                                    AS AT JUNE 30, 2001 AND DECEMBER 31, 2000
                                  ( Prepared by management and without audit )

<S>                                                         <C>                             <C>
STATED IN U.S. DOLLARS                                                 JUNE 30, 2001         DECEMBER 31, 2000
---------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
  Cash and Short term deposits                              $              1,903,780        $        2,619,288
  Investments                                                                  1,318                     1,333
  Accounts Receivables                                                       518,411                   604,971
  Other Receivables                                                            7,283                     6,631
  Inventory                                                                        -                    36,156
  Prepaid Expenses                                                            88,341                    46,146
  Deferred Costs                                                             488,143                   465,185
                                                             ------------------------       -------------------
TOTAL CURRENT ASSETS                                                       3,007,276                 3,779,710
PROPERTY AND EQUIPMENT, NET (NOTE 2)                                       1,055,513                 1,125,128
                                                             ------------------------       -------------------
TOTAL ASSETS                                                $              4,062,789        $        4,904,838
                                                             ========================       ===================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts Payable and Other Accrued Liabilities            $                748,935        $          511,693
  Unearned Revenue                                                         2,216,705                 2,112,760
  Security Deposit  (Note 4)                                                 100,000                         -
  Capital Lease Obligation, Current Portion (Note 3)                          92,560                    61,442
                                                             ------------------------       -------------------
                                                                           3,158,200                 2,685,895

CAPITAL LEASE OBLIGATION, NONCURRENT PORTION                                       -                    62,463
COMMITMENTS AND CONTINGENCIES (NOTES 3,4)                                          -                         -

STOCKHOLDERS' EQUITY
  Common Stock : $0.001 Par Value
    Authorized : 50,000,000
    Issued and Outstanding : 21,360,010                                       21,360                    21,360
  Additional Paid In Capital                                               7,214,045                 7,214,045
  Accumulated Deficit                                                     (6,178,290)               (4,926,669)
  Accumulated Other Comprehensive Income                                    (152,526)                 (152,256)
                                                             ------------------------       -------------------
TOTAL STOCKHOLDERS' EQUITY                                                   904,589                 2,156,480
                                                             ------------------------       -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $              4,062,789        $        4,904,838
                                                             ========================       ===================
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                             XIN NET CORP. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (Prepared by management and without audit)

<S>                                                  <C>                <C>                <C>               <C>
                                                       THREE MONTHS ENDED JUNE 30,             SIX MONTHS ENDED JUNE 30,
STATED IN U.S. DOLLARS                                   2001               2000                2001              2000
-------------------------------------------------------------------------------------------------------------------------
REVENUE
  Domain Name Registration                           $   599,036        $  174,684         $ 1,087,878       $   499,210
  E-Solutions                                            269,131           122,239             456,120           183,451
                                             --------------------------------------  ------------------------------------
                                                         868,167           296,923           1,543,998           682,661
COST OF REVENUE
  Domain Name Registration                               229,494           112,729             502,355           150,557
  E-Solutions                                             14,764             9,402              25,269             9,457
                                             --------------------------------------  ------------------------------------
                                                         244,258           122,131             527,624           160,014

GROSS PROFIT                                             623,909           174,792           1,016,374           522,647

EXPENSES
  Advertising and promotion                              104,198           256,322             238,948           387,864
  Amortization                                            47,685            52,812              93,972            87,521
  General and administrative                             260,630           400,887             538,844           625,944
  Salaries, wages and benefits                           387,910           150,473             812,363           236,141
  Telephone and communication                             48,868            14,920             182,557           110,931
                                             --------------------------------------  ------------------------------------
                                                         849,291           875,414           1,866,684         1,448,401
                                             --------------------------------------  ------------------------------------

OPERATING LOSS                                          (225,382)         (700,622)           (850,310)         (925,754)
OTHER INCOME
   Interest income                                        12,805            41,663              41,517            89,753
                                             --------------------------------------  ------------------------------------
LOSS FROM CONTINUING OPERATIONS                         (212,577)         (658,959)           (808,793)         (836,001)
LOSS FROM DISCONTINUED OPERATIONS -
INTERNET ACCESS CARD SERVICES (NOTE 4)                  (210,713)         (282,629)           (442,828)         (456,458)
                                             --------------------------------------  ------------------------------------
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS                                         $  (423,290)       $ (941,588)        $(1,251,621)      $(1,292,459)
                                             ======================================  ====================================
BASIC AND DILUTED LOSS FROM CONTINUING
OPERATIONS PER SHARE (NOTE 5)                        $     (0.01)       $    (0.03)        $     (0.04)      $     (0.04)
                                             ======================================  ====================================
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING (NOTE 5)                    21,360,010        21,360,000          21,360,010        21,360,000
                                             ======================================  ====================================
</TABLE>



<PAGE>
<TABLE>
<CAPTION>
                                              XIN NET CORP. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                          FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND YEAR ENDED DECEMBER 31, 2000
                                       ( Prepared by management and without audit )

<S>                               <C>          <C>          <C>             <C>             <C>              <C>
                                                                                                ACCUMULATED
                                                 STOCK      ADDITIONAL                             OTHER
                                   COMMON      AMOUNT AT      PAID IN         ACCUMULATED      COMPREHENSIVE
STATED IN U.S. DOLLARS             SHARES      PAR VALUE      CAPITAL           DEFICIT           INCOME          TOTAL
-------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1999        21,360,000    $ 21,360    $ 7,214,025     $ (1,318,945)    $   (107,219)   $ 5,809,221

Exercise of Warrant for cash at
$2.00 per share in                        10           -             20                                               20
September 2000

Loss for the year ended
December 31, 2000                                                             (3,607,724)                     (3,607,724)

Other Comprehensive Income :
Translation                                                                                       (45,037)       (45,037)
Adjustments
                                -----------------------------------------------------------------------------------------
Balance, December 31, 2000        21,360,010      21,360      7,214,045       (4,926,669)        (152,256)     2,156,480

Loss for the six months ended
June 30, 2001                                                                 (1,251,621)                     (1,251,621)

Other Comprehensive Income :
Translation                                                                                          (270)          (270)
Adjustments

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

Balance, June 30, 2001            21,360,010    $ 21,360    $ 7,214,045     $ (6,178,290)    $   (152,526)   $   904,589
                                =========================================================================================
</TABLE>




<PAGE>
<TABLE>
<CAPTION>
                                    XIN NET CORP. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                             ( Prepared by management and without audit )

<S>                                                                 <C>                <C>
STATED IN U.S. DOLLARS                                                   2001               2000
----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                          $(1,251,621)       $(1,292,459)
  Adjustments to reconcile net loss to net cash
    Provided by (Used in) operating activities
    Depreciation and amortization                                       135,028             87,521
    Translation adjustments                                                (270)           (21,624)
    Changes in assets and liabilities
      Decrease in accounts receivables                                   86,560             11,977
      Increase in other receivables                                        (652)                 -
      Increase in prepaid expenses                                      (42,195)          (210,754)
      Decrease in inventory                                              36,156             76,638
      Increase in deferred costs                                        (22,958)                 -
      Increase in accounts payable                                      237,242            128,077
      Increase in unearned revenue                                      103,945            291,903
      Increase in securtiy deposit                                      100,000                  -
                                                             --------------------   ----------------
  Net cash used in operating activities                                (618,765)          (928,721)
                                                             --------------------   ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment                                   (65,413)          (580,243)
  Reduction in investment                                                    15                  -
  Increase in organizational costs                                            -             (1,269)
                                                             --------------------   ----------------
  Net cash flows used in investing activities                           (65,398)          (581,512)
                                                             --------------------   ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Principal payments on capital lease obligations                       (31,345)           (29,774)
                                                             --------------------   ----------------
  Net cash flows used in financing activities                           (31,345)           (29,774)
                                                             --------------------   ----------------

DECREASE IN CASH AND CASH EQUIVALENTS                                  (715,508)        (1,540,007)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                       2,619,288          5,512,614
                                                             --------------------   ----------------
CASH AND CASH EQUIVALENTS - END OF PERIOD                           $ 1,903,780        $ 3,972,607
                                                             ====================   ================

</TABLE>


<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                  ( Prepared by management and without audit )

STATED IN U.S. DOLLARS                            2001                  2000
-------------------------------------------------------------------------------

SUPPLEMENTAL INFORMATION :

Cash paid for :
    Interest                                  $  6,000              $  9,299

    Income taxes                                     -                     -



<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( PREPARED BY MANAGEMENT AND WITHOUT AUDIT )

1        BASIS OF PRESENTATION

         The accompanying  unaudited financial  statements have been prepared in
         conformity  with generally  accepted  accounting  principles.  However,
         certain  information  and  footnote  disclosures  normally  included in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles  have been omitted or condensed  pursuant to the
         rules  and  regulations  of  the  Securities  and  Exchange  Commission
         ("SEC").  In the opinion of the management all  adjustments of a normal
         recurring nature necessary for a fair  presentation have been included.
         The results  for interim  periods  are not  necessarily  indicative  of
         results for the entire year.  These  condensed  consolidated  financial
         statements and  accompanying  notes should be read in conjunction  with
         the Company's annual  consolidated  financial  statements and the notes
         thereto for the fiscal  year ended  December  31, 2000  included in its
         Annual Report on Form 10-KSB.

         The unaudited condensed  consolidated  financial statements include Xin
         Net Corp. and its subsidiaries.  Significant inter-company transactions
         and accounts have been eliminated.

2        PROPERTY AND EQUIPMENT

           Property and equipment consists of the following :

                                             JUNE 30, 2001    DECEMBER 31, 2000
                                           ------------------------------------
           Office equipment                     $  232,811       $     230,809

           Equipment                             1,137,765           1,074,464
           Computer software                        83,299              83,156

           Furniture                                28,912              28,912
                                           ------------------------------------
           Total                                 1,482,787           1,417,341

           Less : Accumulated depreciation        (427,274)           (292,213)
                                           ------------------------------------
           Net book value                      $ 1,055,513       $   1,125,128
                                           ====================================

         The   depreciation   expense  charged  to  continuing   operations  and
         discontinued operations for the six-month period is $93,972 and $41,056
         respectively.


<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )

3        CAPITAL LEASE OBLIGATION

         The  Company  leases  computer  equipment,  through  its  wholly  owned
         subsidiary   company   Infornet   Investment   Corp.,    repayable   at
         approximately  $5,330  (CND  8,407)  per  month to June 30,  2002.  The
         liability  includes  imputed  interest at an average  rate of 6.12% per
         annum.

                Total minimum lease payments
                For the year ended June 30

                                       2002                         $   96,593
                Less : Amount representing interest                     (4,033)
                                                                    ------------
                Present value of minimum lease payment                  92,560
                Less : Current portion                                 (92,560)
                                                                    ------------
                                                                    $        -
                                                                    ============


4        DISCONTINUED OPERATIONS

         The Board of  Directors  of the  Company  decided  to  discontinue  the
         unprofitable internet access provision ("ISP") services in the People's
         Republic of China ("P.R.C.").  The Company's joint venture partner, Xin
         Hai  Technology  Development  Ltd., has signed an agreement on June 22,
         2001 to sell its ISP operation and related assets to a private  company
         in Beijing,  P.R.C. for a sales proceeds of $700,000.  The agreement is
         subject to payments  being made by the other party at  specified  dates
         and to Company  shareholders'  approval at the Annual  General  Meeting
         planned for September 2001.  $100,000 and $50,000 have been received as
         a security  deposit for the  transaction  on June 22, 2001 and July 12,
         2001 respectively.


<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )


4        DISCONTINUED OPERATIONS (CONTINUED)

         The estimated  gain on disposal of the ISP services,  together with the
         related assets and liabilities to be disposed, are as follows :

         Sales proceeds                                             $  700,000
         Less : Capital assets                          $ 320,771
                    Accounts receivable                   290,016
                                                    -------------
                                                                      (610,787)

         Add : Unearned revenue                                        316,627
                                                                   -------------
         Gain on disposal of ISP business                           $  405,840
                                                                   =============


<TABLE>
<CAPTION>
         The results of the  discontinued ISP operations for the three-month and
         six-month periods ended June 30, 2001 and 2000 are as follows :
<S>                                       <C>             <C>               <C>             <C>
                                              Three months ended                 Six months ended
                                          6/30/2001       6/30/2000          6/30/2001        6/30/2000
                                          ---------       ---------          ---------        ---------

         Revenue                          $ 398,995       $ 566,293         $  832,696      $   796,680

         Operating costs                   (609,708)       (848,922)        (1,275,524)      (1,253,138)

                                        -------------------------------  ----------------------------------
         Net loss                         $(210,713)      $(282,629)        $ (442,828)     $  (456,458)
                                        ===============================  ==================================
</TABLE>



<PAGE>

                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )

<TABLE>
<CAPTION>
5        BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

         Basic  earnings  (loss) per share are computed by dividing net earnings
         (loss) available to common stockholders by the weighted-average  number
         of common shares  outstanding  during the period.  Diluted earnings per
         share  is  computed  by  dividing  net  earnings  available  to  common
         stockholders   by  the   weighted-average   number  of  common   shares
         outstanding  during  the  period  increased  to  include  the number of
         additional   common  shares  that  would  have  been   outstanding   if
         potentially dilutive common shares had been issued.

         The following table sets forth the  computations of shares and net loss
         used in the  calculation  of basic and  diluted  loss per share for the
         quarters ended June 30, 2001 and 2000 :

<S>                                                <C>          <C>             <C>           <C>
                                                       Three months ended            Six months ended
                                                     6/30/2001    6/30/2000       6/30/2001     6/30/2000
                                                     ---------    ---------       ---------     ---------

         Net loss from continuing operations       $  (212,577) $  (658,959)    $  (808,793)  $  (836,001)

         Weighted-average shares outstanding        21,360,010   21,360,000      21,360,010    21,360,000

         Effect of dilutive securities :
         Dilutive options                                    -            -               -             -
         Dilutive warrants                                   -            -               -             -
                                                 --------------------------- ------------------------------
         Dilutive potential common shares                    -            -               -             -
                                                 --------------------------- ------------------------------

         Adjusted weighted-average shares
            and assumed conversions                 21,360,010   21,360,000      21,360,010    21,360,000

         Basic loss from continuing operations
         per share                                 $     (0.01) $     (0.03)     $    (0.04)  $     (0.04)
                                                 =========================== ==============================

         Diluted loss from continuing operations
         per share                                 $     (0.01) $     (0.03)     $    (0.04)  $     (0.04)
                                                 =========================== ==============================

</TABLE>

         Due to the loss for the three-month periods and six-month periods ended
         June 30, 2001 and 2000, the effect of outstanding  options and warrants
         was not included as the effect would be anti-dilutive.


<PAGE>

                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )

6        TOTAL AMOUNT ADVANCED TO JOINT VENTURE

         As at June 30,  2001,  the total amount  advanced to the joint  venture
         project is $3,153,484.

<TABLE>
<CAPTION>
7        SEGMENT AND GEOGRAPHIC DATA

         The Company's  reportable  segments are  geographic  areas that provide
         internet-related   services  and  products  to  the  Chinese   markets.
         Summarized  financial  information  concerning the Company's reportable
         segments is shown in the following  table.  The "Other" column includes
         corporate  related items,  and, as it relates to segment profit (loss),
         income and expenses not allocated to reportable segments.

<S>                                       <C>                   <C>             <C>              <C>
                                               CHINA            CANADA            OTHER              TOTAL

         FOR THREE MONTHS ENDED JUNE 30, 2001
         ------------------------------------
         Revenue from continuing
            operations                     $  868,167                -                  -        $   868,167


         Operating loss                     (179,066)           (3,424)           (42,892)          (225,382)


         Total assets                       2,765,298           22,797          1,274,694          4,062,789

         FOR THREE MONTHS ENDED JUNE 30, 2000
         ------------------------------------
         Revenue from continuing
            operations                     $  296,923                -                  -        $   296,923


         Operating loss                      (641,116)          (3,656)           (55,850)          (700,622)


         Total assets                       2,654,098           29,014          2,668,201          5,351,313

</TABLE>





<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )

<TABLE>
<CAPTION>
7        SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<S>                                       <C>                   <C>             <C>              <C>
                                               CHINA            CANADA            OTHER              TOTAL

         FOR SIX MONTHS ENDED JUNE 30, 2001
         ----------------------------------
         Revenue from continuing
            operations                    $ 1,543,998                -                  -        $ 1,543,998


         Operating loss                      (764,315)          (6,541)           (79,454)          (850,310)


         Total assets                       2,765,298           22,797          1,274,694          4,062,789

         FOR SIX MONTHS ENDED JUNE 30, 2000
         ----------------------------------
         Revenue from continuing
            Operations                    $   682,661                -                  -        $   682,661


         Operating loss                      (816,245)          (6,597)          (102,912)          (925,754)


         Total assets                       2,654,098           29,014          2,668,201          5,351,313

</TABLE>

8        SUBSEQUENT EVENTS

         On July 31, 2001, the Company signed a letter of intent to acquire 100%
         ownership of  ProtectServe  Pacific  Ltd.  ("PSP"),  a  privately-owned
         company based in Hong Kong. PSP is an innovative developer and provider
         of  state-of-the-art  web-based  surveillance,  monitoring  and control
         systems.


<PAGE>
                         XIN NET CORP. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000

                  ( Prepared by management and without audit )

8        SUBSEQUENT EVENTS (CONTINUED)

         Prior to a formal purchase agreement being signed, the Company may make
         cash  loans to PSP in order  to  allow  it to  begin  implementing  its
         expansion  plan.  After a formal  agreement  to  purchase  PSP has been
         signed,  the Company will issue 4.2 million restricted common shares to
         PSP, in exchange of 100% of ownership  of PSP, and PSP will  nominate 3
         new members to sit on the Company's Board of Directors. These directors
         will be slated for  election  at the  Company  annual  general  meeting
         ("AGM")  currently  being  planned for  September  2001.  In  addition,
         contingent  upon  performance  criteria,  the Company will grant to PSP
         stock purchase  options at the nominal price of $0.001 per option.  The
         exact  amount of such  options to be  granted,  to a maximum  amount of
         approximately 18 million, will be determined by the level of net income
         achieved by PSP for the 12-month period ending on June 30, 2002.

         The Company also intends to transfer  its current  business  assets and
         liabilities, except for cash $800,000 (which will be used to manage and
         expand PSP operations), to a new US-incorporated company and distribute
         by way of a dividend this new company's shares, on a pro-rata basis, to
         the shareholders of the Company as of the record date for the AGM.

<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------

         The  following  discussion  should  be read  in  conjunction  with  the
Company's  financial  statements  and the notes thereto and the other  financial
information  appearing  elsewhere in this  document.  In addition to  historical
information,  the following  discussion and other parts of this document contain
certain  forward-looking  information.  When used in this discussion,  the words
"believes," "anticipates," and "expects" and similar expressions are intended to
identify  forward-looking  statements.  Such  statements  are subject to certain
risks and  uncertainties,  which could cause actual results to differ materially
from those  projected due to a number of factors  beyond the Company's  control.
The  Company  does  not  undertake  to  publicly  update  or  revise  any of its
forward-looking  statements  even if experience or future  changes show that the
indicated  results or events will not be realized.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date  hereof.  Readers are also urged to  carefully  review and consider the
Company's discussions regarding the various factors,  which affect its business,
included in this section and elsewhere in this report.

         On June 22, 2001 the Company,  through Xin Hai  Technology  Development
Ltd.,  (Xin Hai) its Chinese  joint  venture  partner,  entered  into an "Assets
Transfer  Agreement"  under which the  Company  has agreed to  transfer  all the
assets  of  the  ISP  (Internet  Access  Provision)  operations  in  China  to a
Beijing-based  Chinese company. The transfer includes all transferable  permits,
equipment, agency contracts,  customers, accounts, employees and operations. The
price for the  transfer  of assets by the  Company  is  $700,000  payable to the
Company in Renminbi at the official exchange rate, as thus:  $350,000 payable as
a deposit  upon signing  with  $350,000 to be paid upon  receipt of  shareholder
approval  of  the  asset  transfer  by  Company   shareholders.   (Xin  Hai  has
subsequently  agreed to different  terms  regarding  the payment of the deposit:
$100,000 has been received on June 22, 2001 and an additional sum of $50,000 has
been  received  on July 12,  2001.  The balance of $200,000 is to be received in
August 2001). The Company has agreed to assign Logo, lines,  numbers,  locations
and all  accounts  and  assets and has agreed not to compete in China in the ISP
business.  No fixed debt is assumed by  purchaser,  but  ongoing  contracts  for
Internet access provision,  ... etc, will be assumed by buyer. The Company filed
the "Assets  Transfer  Agreement"  with the Securities  and Exchange  Commission
(SEC) in its July 12, 2001 8-K/A Amended Current Report.

<PAGE>

         On July 31, 2001 the Company  signed a letter of intent to acquire 100%
ownership of Protectserve Pacific Ltd. ("PSP"), a privately-owned  company based
in Hong Kong.  PSP is an innovative  developer and provider of  state-of-the-art
web-based surveillance, monitoring & control systems. Prior to a formal purchase
agreement being signed, the Company may make cash loans to PSP in order to allow
it to begin its  expansion  plan.  After a formal  agreement to purchase PSP has
been signed, the Company will issue 4.2 million restricted common shares to PSP,
in exchange of 100% of ownership of PSP, and PSP will  nominate 3 new members to
sit on the Company's  Board of  Directors.  These  directors  will be slated for
election at the Company annual general meeting (AGM) currently being planned for
September 2001. In addition,  contingent upon performance criteria,  the Company
will  grant to PSP stock  purchase  options at the  nominal  price of $0.001 per
option.  The exact amount of such options to be granted,  to a maximum amount of
approximately 18 million, will be determined by the level of net income achieved
by PSP for the 12-month period ending June 30, 2002. The Company also intends to
transfer its current business assets and  liabilities,  except for cash $800,000
(which  will  be  used  to  manage  and  expand  PSP   operations),   to  a  new
US-incorporated  company and  distribute by way of a dividend this new company's
shares,  on a pro-rata basis, to the Company  shareholders as of the record date
for the AGM.  The  Company  filed the letter of intent in its August 3, 2001 8-K
Current Report to the SEC.


LIQUIDITY AND CAPITAL RESOURCES

         The Company had cash capital of $1,903,780 at June 30, 2001.

         The Company has no other  capital  resources  other than the ability to
use its common stock to achieve additional capital raising. It did not raise any
additional capital during second quarter of 2001. It has equipment of $1,055,513
on the books,  which is not  necessarily  liquid at such value.  Other than cash
capital, its other assets would be illiquid.

         At the end of the  quarter,  it had  $3,007,276  in current  assets and
current liabilities of $3,158,200.

         Of the $1,903,780 cash capital at the end of the quarter,  an amount of
$1,103,780  will be used  to fund  the  continuing  operations  of  domain  name
registration services and e-solutions. The balance of $800,000 will be set aside
to be used in the management and expansion of Protectserve Pacific Ltd. business
(reference:  letter of intent signed on July 31, 2001). The Company has material
commitments to expend funds to cover operating expenses of current operations in
China. The trend of operating losses could continue due to the Company not being
able to increase revenue  sufficiently  and/or reduce operating costs to a level
such that current operations may break even or turn a profit.

         Net cash flows used in  operating  activities  decreased to $618,765 in
the first six months in 2001 from $928,721 in the corresponding  period in 2000.
The three largest changes which contributed to this result were: the increase in
accounts  payable  ($237,242  in the period in 2001  compared to $128,077 in the
same period in 2000),  the  increase in unearned  revenue  ($103,945  in the six
month  period in 2001  compared  to $291,903 in the same period in 2000) and the
increase in prepaid expenses ($42,195 in the period in 2001 compared to $210,754
in the same  period in  2000).  Net cash flow  used in  investing  decreased  to
$65,398  in  the  six  month  period  in  2001  as  compared   $581,512  in  the
corresponding  period  in 2000  mainly  due to  purchases  of  equipment,  which
decreased  to $65,413 in the six month  period  2001 from  $580,243  in the same
period in 2000. Net cash flow used in financing  activities increased marginally
to  $31,345  in the period in 2001,  compared  to  $29,774 in the  corresponding
period in 2000.
<PAGE>

Changes in Financial Condition:

         At the end of the second quarter 2001,  Company assets had decreased to
$4,062,789  compared to  $4,904,838 at year-end  2000.  Current  assets  totaled
$3,007,276  at the end of the second  quarter  2001  compared to  $3,779,710  at
year-end 2000.  Total  liabilities at end of second quarter 2001 were $3,158,200
compared  to  $2,748,358  at  year-end  2000.  At June 30,  2001 the Company had
$1,903,780 in cash compared to $2,619,288 at year-end 2000.

Need for Additional Financing:

         The Company  has  sufficient  capital to meet its  current  cash needs,
including the costs of compliance with the continuing reporting  requirements of
the  Securities  Exchange  Act of  1934.  It may have to seek  loans  or  equity
placements to cover future cash needs to continue  expansion of business.  There
is no assurance,  however,  that the available funds will ultimately prove to be
adequate to continue Company business and its needs for additional financing are
likely to persist.

         No commitments to provide additional funds have been made by management
or  other  stockholders.  Accordingly,  there  can  be  no  assurance  that  any
additional  funds  will  be  available  to the  Company  to  allow  it to  cover
operations expenses.

         If future revenue declines, or operations are unprofitable,  it will be
forced to  finance  its  current  operations  through  the sale of assets it has
(reference:  ISP "Assets Transfer  Agreement" signed on June 22, 2001), or enter
into the sale of stock for  additional  capital,  none of which may be  feasible
when needed.  Besides the  acquisition of Hong Kong-based  Protectserve  Pacific
Ltd.  (reference:  letter of intent signed on July 31, 2001), the Company has no
specific management ability, nor financial resources or plans to enter any other
business as of this date.

         From the aspect of whether it can continue  toward the business goal of
maintaining  and expanding the joint venture for internet  services in China, it
may use all of its available capital without generating a profit.

         The  effects  of  inflation  have  not  had a  material  impact  on its
operation, nor is it expected to in the immediate future.

Market Risk:

         The  Company  does not hold any  derivatives  or  investments  that are
subject  to market  risk.  The  carrying  values of any  financial  instruments,
approximate  fair value as of those dates because of the  relatively  short-term
maturity  of these  instruments  which  eliminates  any  potential  market  risk
associated with such instruments.


<PAGE>

RESULTS OF  OPERATIONS  FOR THE  QUARTER  ENDED JUNE 30, 2001 AS COMPARED TO THE
QUARTER ENDED JUNE 30, 2000.

Discontinued Operations: Internet Access Provision ("ISP") Operations

         The Company phased out and eventually  discontinued its ISP services in
China during second quarter 2001.  Revenue  generated by ISP operations  totaled
$398,995 in the quarter  compared  to $566,293 in the  corresponding  quarter in
2000.  ISP operating  costs were $609,708 in second quarter 2001 compared to ISP
operating  costs of $848,922 in the same period in 2000.  Resulting ISP net loss
amounted to $210,713 in second quarter 2001 compared to ISP net loss of $282,629
in the same period in 2000.

Continuing  Operations:  Domain Name Registration  Services and E-Solutions (Web
Site Design & Hosting, and E-Commerce Platforms)

         The Company  achieved  revenue of $868,167  in second  quarter  2001 as
compared to revenue of $296,923 in second  quarter 2000. The Company had cost of
revenue of $244,258  in the period in 2001,  as compared to $122,131 in the same
period in 2000.  Gross profit in second  quarter  2001 was $623,909  compared to
$174,792 in second  quarter 2000.  The Company  incurred  operating  expenses of
$849,291 in second  quarter 2001  compared to operating  expenses of $875,414 in
second  quarter  2000.  Operating  loss for second  quarter 2001 was $225,382 in
contrast  to same  period  2000  operating  loss of  $700,622.  The  Company had
interest  income of $12,805 in second quarter 2001 and $41,663 in second quarter
2000.  The net loss  from  continuing  operations  in  second  quarter  2001 was
$212,577  ($0.01/share)  compared  to the net  loss in  second  quarter  2000 of
$658,959 ($0.03/share).

         Revenues  increased to $599,036 in second  quarter 2001 from 174,684 in
second  quarter  2000 for domain name  registrations,  and to $269,131 in second
quarter 2001 from $122,239 in the same quarter in 2000 for e-solutions.

         Operating  expenses  decreased to $849,291 in second  quarter 2001 from
$875,414 in second  quarter  2000.  The largest  changes were:  advertising  and
promotion  decreased to $104,198 in second  quarter 2001 compared to $256,322 in
second quarter 2000; general and  administrative  expenses decreased to $260,630
in  second  quarter  2001 from  $400,887  in the  corresponding  period in 2000;
salaries,  wages and  benefits  increased to $387,910 in the period in 2001 from
$150,473 in the same period in 2000; and telephone and  communication"  expenses
increased to $48,868 in second  quarter  2001 from $14,920 in the  corresponding
quarter in 2000.

<PAGE>

RESULTS OF  OPERATIONS  FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2001 AS COMPARED
TO THE SIX MONTH PERIOD ENDED JUNE 30, 2000.

Discontinued Operations: Internet Access Provision ("ISP") Operations

         Revenue  generated by ISP operations  totaled $832,696 in the six month
period in 2001  compared to $796,680 in the  corresponding  period in 2000.  ISP
operating  costs were  $1,275,524  in first six month period in 2001 compared to
ISP operating costs of $1,253,138 in the same period in 2000.  Resulting ISP net
loss for amounted to $442,828 in first six month period in 2001  compared to ISP
net loss of $456,458 in the same period in 2000.

Continuing  Operations:  Domain Name Registration  Services and E-Solutions (Web
Site Design & Hosting, and E-Commerce Platforms)

         The Company  achieved revenue of $1,543,998 in first six months of 2001
as  compared to revenue of $682,661  in the  corresponding  period in 2000.  The
Company had cost of revenue of  $527,624  in the period in 2001,  as compared to
$160,014 in the same  period in 2000.  Gross  profit in the six month  period in
2001 was $1,016,374  compared to $522,647 in the  corresponding  period in 2000.
The Company  incurred  operating  expenses of  $1,866,684  in the period in 2001
compared to operating  expenses of  $1,448,401  in the  corresponding  period in
2000.  Operating  loss for the six month period in 2001 was $850,310 in contrast
to same period 2000 operating loss of $925,754.  The Company had interest income
of  $41,517 in the period in 2001 and  $89,753  in the  corresponding  period in
2000.  The net loss from  continuing  operations in the six month period in 2001
was $808,793  ($0.04/share) compared to the net loss in the corresponding period
in 2000 of $836,001 ($0.04/share).

         Revenues  increased to  $1,087,878 in the six month period in 2001 from
$499,210 in the corresponding period in 2000 for domain name registrations,  and
to $456,120 in second quarter 2001 from $183,451 in the same quarter in 2000 for
e-solutions.

         Operating  expenses  increased to $1,866,684 in the period in 2001 from
$1,448,401  in the  corresponding  period in 2000.  The  largest  changes  were:
advertising and promotion  decreased to $238,948 in the first six months in 2001
compared to $387,864 in the same six months in 2000;  general and administrative
expenses  decreased  to  $538,844  in the  period in 2001 from  $625,944  in the
corresponding period in 2000; salaries, wages and benefits increased to $812,363
in the period in 2001 from  $236,141 in the same period in 2000;  and  telephone
and  communication"  expenses  increased  to $182,557 in the period in 2001 from
$110,931 in the corresponding period in 2000.


<PAGE>

Future Trends:

         The Company has  discontinued  its Internet access  provision  services
(ISP) in order to help buck the trend of operating  losses.  The sale of its ISP
assets,  as referred to earlier,  if and when approved by Company  shareholders,
would provide  additional cash to fund ongoing  operations and a certain measure
of expansion.

         The Company has  implemented  cost-saving  measures which have produced
notable  results in second  quarter 2001.  While  revenue  increased by 28.5% to
$868,167 in second  quarter  2001 from  $675,831  in the first  quarter in 2001,
expenses  decreased by 16.5 % to $849,291 in second quarter 2001 from $1,017,393
in the first quarter 2001. Resulting loss from continuing  operations for second
quarter   2001  was  $212,577   ($0.01/share)   compared  to  loss  of  $596,216
($0.03/share) for the first quarter 2001.

         In spite of increasing revenue and taking measures to control expenses,
which have produced notable results in second quarter 2001, operating losses may
still continue from current domain name  registration and E-solutions  business.
The Company cannot assure that any profit on revenue can occur in the future.

<PAGE>
                                     PART II

                                OTHER INFORMATION

Item 1.           Legal Proceedings - None.

Item 2.           Changes in securities - None.

Item 3.           Defaults upon senior securities - None.

Item 4.           Submission of matters to a vote of security holders - None.

Item 5.           Other information - None.

Item 6.           Exhibits and reports on Form 8-K

                         (a)  The  following  are  filed  as  Exhibits  to  this
                    Quarterly Report.  The numbers refer to the Exhibit Table of
                    Item 601 of Regulation S-K:

                                    None.

                         (b) Reports on Form 8-K filed  during the three  months
                    ended June 30, 2001. (incorporated by reference)

                                8-K filed May 23, 2001
                                8-K filed June 27, 2001




<PAGE>


                                   Signatures

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf of the
undersigned thereunto duly authorized.

Dated: August 13, 2001

                                          XIN NET CORP.



                                          by:/s/Marc Hung
                                          Marc Hung, President