<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934
              FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001.

                                       OR

[ ]           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934
              FOR THE TRANSITION FROM _______ TO ________.

                        COMMISSION FILE NUMBER 000-31153

                             MAGNOLIA VENTURES, INC.
                         -------------------------------
                 (Name of Small Business Issuer in its charter)


                Nevada                                          88-0355504
   -------------------------------                            --------------
   (State or other jurisdiction of                           (I.R.S. Employer
    incorporation or organization)                          Identification No.)


1105 Terminal Way, Suite 202 Century Park
              Reno, Nevada                                        89502
-----------------------------------------                        -------
(Address of principal executive offices)                        (Zip code)


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

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 such filing
requirements for the past 90 days. Yes [X] No [ ]

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

           At March 31, 2001, there were outstanding 21,000,000 shares of the
           Registrant's Common Stock, $.001 par value.

Transitional Small Business Disclosure Format: Yes [ ] No [X]



                                       -1-

<PAGE>   2

                                     PART I

                              FINANCIAL INFORMATION

Item I.   Financial Statements


                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                    CONTENTS


<TABLE>
<S>                                                                         <C>
INDEPENDENT AUDITOR'S REPORT ON THE
FINANCIAL STATEMENTS                                                           3
--------------------------------------------------------------------------------

FINANCIAL STATEMENTS

    Balance Sheets                                                             4

    Statements of Income                                                       5

    Statements of Stockholders' Equity                                         6

    Statements of Cash Flows                                                   7

    Notes to Financial Statements                                           8-10
--------------------------------------------------------------------------------
</TABLE>



                                      -2-
<PAGE>   3

                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Magnolia Ventures, Inc.
Las Vegas, Nevada


I have audited the accompanying balance sheets of Magnolia Ventures, Inc. (A
Development Stage Company) as of March 31, 2001 and December 31, 2000, and the
related statements of income, stockholders' equity, and cash flows for the three
months ended March 31, 2001, the year then ended December 31, 2000 and the
period June 13, 1994 (inception) through March 31, 2001. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit. The
financial statements of Magnolia Ventures, Inc. (A Development Stage Company) as
of December 31, 1999 were audited by other auditors whose has ceased operations
and whose report dated February 28, 2000, expressed an unqualified opinion on
those statements.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Magnolia Ventures, Inc. (A
Development Stage Company) as of March 31, 2001 and December 31, 2000 and the
results of its operations and cash flows for the three months ended March 31,
2001, the year ended December 31, 2000, and the period June 13, 1994 (inception)
through March 31, 2001, in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has no operations and has no established
source of revenue. This raises substantial doubt about its ability to continue
as a going concern. Management's plan in regard to these matters is also
described in Note 4. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ Kyle L. Tingle

Kyle L. Tingle
Certified Public Accountant

May 4, 2001
Henderson, Nevada



                                      -3-
<PAGE>   4

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                       March 31,    December 31,
                                                          2001           2000
                                                       ---------    ------------
<S>                                                     <C>         <C>
                                     ASSETS

CURRENT ASSETS
   Cash                                                 $     31       $     31
                                                        --------       --------

         Total current assets                           $     31       $     31
                                                        --------       --------

            Total assets                                $     31       $     31
                                                        ========       ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                     $  2,200       $      0
   Officers advances (Note 7)                             31,525         31,450
                                                        --------       --------

         Total current liabilities                      $ 33,725       $ 31,450
                                                        --------       --------


STOCKHOLDERS' EQUITY
   Common stock: $.001 par value;
       authorized 25,000,000 shares;
       issued and outstanding:
       21,000,000 shares at December 31, 2000:          $              $ 21,000
       21,000,000 shares at March 31, 2001;               21,000
   Additional Paid In Capital                            (18,900)       (18,900)
   Accumulated deficit during development stage          (35,794)       (33,519)
                                                        --------       --------

         Total stockholders' equity                     $(33,694)      $(31,419)
                                                        --------       --------

            Total liabilities and
            stockholders' equity                        $     31       $     31
                                                        ========       ========
</TABLE>


                 See Accompanying Notes to Financial Statements.



                                      -4-
<PAGE>   5

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                              STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                                                             JUNE 13, 1994
                                           THREE MONTHS ENDED                      YEARS ENDED              (INCEPTION) TO
                                      MARCH 31,          MARCH 31,       DECEMBER 31,       DECEMBER 31,         MARCH 31,
                                           2001               2000               2000               1999              2001
                                   ------------       ------------       ------------       ------------    --------------
                                                      (UNAUDITED)
<S>                                <C>                <C>                <C>                <C>               <C>
REVENUES                           $          0       $          0       $          0       $          0      $          0


COST OF REVENUE                               0                  0                  0                  0                 0
                                   ------------       ------------       ------------       ------------      ------------

  GROSS PROFIT                     $          0       $          0       $          0       $          0      $          0

GENERAL, SELLING AND
  ADMINISTRATIVE EXPENSES                 2,275             11,075             31,295                  0            36,450
                                   ------------       ------------       ------------       ------------      ------------
         OPERATING (LOSS)          $     (2,275)      $    (11,075)      $    (31,295)      $          0      $    (36,450)

NONOPERATING INCOME (EXPENSE)
  INTEREST INCOME                             0                  0                  0                  0               656
                                   ------------       ------------       ------------       ------------      ------------

  NET (LOSS)                       $     (2,275)      $    (11,075)      $    (31,295)      $          0      $    (35,794)
                                   ============       ============       ============       ============      ============

  NET (LOSS) PER SHARE, BASIC
    AND DILUTED (NOTE 2)           $      (0.00)      $      (0.00)      $      (0.00)      $       0.00      $      (0.00)
                                   ============       ============       ============       ============      ============

AVERAGE NUMBER OF SHARES
  OF COMMON STOCK
  OUTSTANDING                        21,000,000         21,000,000         21,000,000         21,000,000        21,000,000
                                   ============       ============       ============       ============      ============
</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                      -5-
<PAGE>   6

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                       STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                     Accumulated
                                      Common Stock and Capital        (Deficit)
                                       In Excess of Par Value          During
                                     -------------------------       Development
                                      Shares           Amount           Stage
                                     ----------      ----------      ----------
<S>                                  <C>             <C>             <C>
Balance, December 31, 1998           21,000,000      $    2,100      $   (2,224)

Net (loss), December 31, 1999                                                 0
                                     ----------      ----------      ----------

Balance, December 31, 1999           21,000,000      $    2,100      $   (2,224)

Net (loss), December 31, 2000                                           (31,295)
                                     ----------      ----------      ----------

Balance, December 31, 2000           21,000,000      $    2,100      $  (33,519)

Net (loss) January 1, 2001 to
March 31, 2001                                                           (2,275)
                                     ----------      ----------      ----------

Balance, March 31, 2001              21,000,000      $    2,100      $  (35,794)
                                     ==========      ==========      ==========
</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                      -6-
<PAGE>   7

                            MAGNOLIA VENTURES, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                 JUNE 13, 1994
                                         THREE MONTHS ENDED             YEARS ENDED             (INCEPTION) TO
                                      MARCH 31,      MARCH 31,   DECEMBER 31,   DECEMBER 31,         MARCH 31,
                                           2001           2000           2000           1999              2001
                                      ---------      ---------   ------------   ------------    --------------
<S>                                   <C>            <C>         <C>            <C>             <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
    NET (LOSS)                         $ (2,275)      $(11,075)      $(31,295)      $      0          $(35,794)
    ADJUSTMENTS TO RECONCILE
    NET (LOSS) TO CASH
    (USED IN) OPERATING
    ACTIVITIES:
    CHANGES IN ASSETS
    AND LIABILITIES
    INCREASE IN ACCOUNTS PAYABLE          2,200              0              0              0             2,200
    INCREASE IN OFFICER ADVANCES             75         11,075         31,295              0            31,525
                                       --------       --------       --------       --------          --------

          NET CASH (USED IN)
             OPERATING ACTIVITIES      $      0       $      0       $      0       $      0          $ (2,100)
                                       --------       --------       --------       --------          --------

CASH FLOWS FROM
INVESTING ACTIVITIES                   $      0       $      0       $      0       $      0          $      0
                                       --------       --------       --------       --------          --------

CASH FLOWS FROM
FINANCING ACTIVITIES
    ISSUANCE OF COMMON STOCK                  0              0              0              0             2,100
                                       --------       --------       --------       --------          --------

          NET CASH (USED IN)
             FINANCING ACTIVITIES      $     00       $      0       $      0       $      0          $  2,100
                                       --------       --------       --------       --------          --------

          NET INCREASE (DECREASE)
             IN CASH                   $      0       $      0       $      0       $      0          $     31

CASH, BEGINNING OF PERIOD                    31             31             31             31          $      0
                                       --------       --------       --------       --------          --------
CASH, END OF PERIOD                    $     31       $     31       $     31       $     31          $     31
                                       ========       ========       ========       ========          ========

</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



                                      -7-
<PAGE>   8

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                      MARCH 31, 2001, AND DECEMBER 31, 2000


NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

        NATURE OF BUSINESS:

        MAGNOLIA VENTURES, INC. ("COMPANY") WAS ORGANIZED JUNE 13, 1994 UNDER
        THE LAWS OF THE STATE OF NEVADA. THE COMPANY CURRENTLY HAS NO OPERATIONS
        AND, IN ACCORDANCE WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARD
        (SFAS) NO. 7, "ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE
        ENTERPRISES," IS CONSIDERED A DEVELOPMENT STAGE COMPANY.

        A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES IS AS
        FOLLOWS:

        ESTIMATES

        THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES REQUIRES MANAGEMENT TO MAKE ESTIMATES AND
        ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNTS OF ASSETS AND LIABILITIES
        AND DISCLOSURE OF CONTINGENT ASSETS AND LIABILITIES AT THE DATE OF THE
        FINANCIAL STATEMENTS AND THE REPORTED AMOUNTS OF REVENUES AND EXPENSES
        DURING THE REPORTING PERIOD. ACTUAL RESULTS COULD DIFFER FROM THOSE
        ESTIMATES.

        CASH

        FOR THE STATEMENTS OF CASH FLOWS, ALL HIGHLY LIQUID INVESTMENTS WITH
        MATURITY OF THREE MONTHS OR LESS ARE CONSIDERED TO BE CASH EQUIVALENTS.
        THERE WERE NO CASH EQUIVALENTS AS OF MARCH 31, 2001 AND 2000, AND
        DECEMBER 31, 2000 AND 1999.

        INCOME TAXES

        INCOME TAXES ARE PROVIDED FOR USING THE LIABILITY METHOD OF ACCOUNTING
        IN ACCORDANCE WITH SFAS NO. 109 "ACCOUNTING FOR INCOME TAXES." A
        DEFERRED TAX ASSET OR LIABILITY IS RECORDED FOR ALL TEMPORARY
        DIFFERENCES BETWEEN FINANCIAL AND TAX REPORTING. TEMPORARY DIFFERENCES
        ARE THE DIFFERENCES BETWEEN THE REPORTED AMOUNTS OF ASSETS AND
        LIABILITIES AND THEIR TAX BASIS. DEFERRED TAX ASSETS ARE REDUCED BY A
        VALUATION ALLOWANCE WHEN, IN THE OPINION OF MANAGEMENT, IT IS MORE
        LIKELY THAN NOT THAT SOME PORTION OR ALL OF THE DEFERRED TAX ASSETS WILL
        NOT BE REALIZED. DEFERRED TAX ASSETS AND LIABILITIES ARE ADJUSTED FOR
        THE EFFECT OF CHANGES IN TAX LAWS AND RATES ON THE DATE OF ENACTMENT.

        REPORTING ON COSTS FOR START-UP ACTIVITIES

        STATEMENT OF POSITION 98-5 ("SOP 98-5), "REPORTING ON THE COSTS OF
        START-UP ACTIVITIES" WHICH PROVIDES GUIDANCE ON THE FINANCIAL REPORTING
        OF START-UP AND ORGANIZATION COSTS, REQUIRES MOST COSTS OF START- UP
        ACTIVITIES AND ORGANIZATION COSTS TO BE EXPENSED AS INCURRED. WITH THE
        ADOPTION OF SPO 98-5, THERE HAS BEEN LITTLE TO NO EFFECT ON THE
        COMPANY'S FINANCIAL STATEMENTS.



                                      -8-
<PAGE>   9

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                      MARCH 31, 2001, AND DECEMBER 31, 2000


NOTE 2. STOCKHOLDERS' EQUITY

        COMMON STOCK

        THE AUTHORIZED COMMON STOCK OF THE COMPANY CONSISTS OF 25,000,000 SHARES
        WITH PAR VALUE OF $0.001. ON JUNE 13, 1994, THE COMPANY AUTHORIZED AND
        ISSUED 2,100 SHARES OF ITS NO PAR VALUE COMMON STOCK IN CONSIDERATION OF
        $2,100 IN CASH.

        ON DECEMBER 3, 1999, THE STATE OF NEVADA APPROVED THE COMPANY'S RESTATED
        ARTICLES OF INCORPORATION, WHICH INCREASED ITS CAPITALIZATION FROM
        25,000 COMMON SHARES TO 25,000,000 COMMON SHARES. THE NO PAR VALUE WAS
        CHANGED TO $0.001 PER SHARE.

        ON DECEMBER 3, 1999, THE COMPANY'S SHAREHOLDERS APPROVED A FORWARD SPLIT
        OF ITS COMMON STOCK AT ONE HUNDRED SHARES FOR ONE SHARE OF THE EXISTING
        SHARES. THE NUMBER OF COMMON STOCK SHARES OUTSTANDING INCREASED FROM
        2,100 TO 210,000. PRIOR PERIOD INFORMATION HAS BEEN RESTATED TO REFLECT
        THE STOCK SPLIT

        ON FEBRUARY 8, 2000, THE COMPANY'S SHAREHOLDERS APPROVED A FORWARD SPLIT
        OF ITS COMMON STOCK AT ONE HUNDRED SHARES FOR ONE SHARE OF THE EXISTING
        SHARES. THE NUMBER OF COMMON STOCK SHARES OUTSTANDING INCREASED FROM
        210,000 TO 21,000,000. PRIOR PERIOD INFORMATION HAS BEEN RESTATED TO
        REFLECT THE STOCK SPLIT

        PREFERRED STOCK

        ON FEBRUARY 8, 2000, THE STATE OF NEVADA APPROVED THE COMPANY'S RESTATED
        ARTICLES OF INCORPORATION WHICH CREATED A NEW CLASS OF SERIAL PREFERRED
        STOCK, WITH A PAR VALUE OF $0.01. THE COMPANY HAS AUTHORIZED 10,000,000
        SHARES OF SERIAL PREFERRED STOCK. NO SHARES OF SERIAL PREFERRED STOCK
        HAS BEEN ISSUED.

        NET LOSS PER COMMON SHARE

        NET LOSS PER SHARE IS CALCULATED IN ACCORDANCE WITH SFAS NO. 128,
        "EARNINGS PER SHARE." THE WEIGHTED- AVERAGE NUMBER OF COMMON SHARES
        OUTSTANDING DURING EACH PERIOD IS USED TO COMPUTE BASIC LOSS PER SHARE.
        DILUTED LOSS PER SHARE IS COMPUTED USING THE WEIGHTED AVERAGED NUMBER OF
        SHARES AND DILUTIVE POTENTIAL COMMON SHARES OUTSTANDING. DILUTIVE
        POTENTIAL COMMON SHARES ARE ADDITIONAL COMMON SHARES ASSUMED TO BE
        EXERCISED.

        BASIC NET LOSS PER COMMON SHARE IS BASED ON THE WEIGHTED AVERAGE NUMBER
        OF SHARES OF COMMON STOCK OUTSTANDING OF 21,000,000 DURING 2001, 2000,
        1999, AND SINCE INCEPTION. AS OF DECEMBER 31, 2001, 2000, 1999, AND
        SINCE INCEPTION, THE COMPANY HAD NO DILUTIVE POTENTIAL COMMON SHARES.



                                      -9-
<PAGE>   10

                             MAGNOLIA VENTURES, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                      MARCH 31, 2001, AND DECEMBER 31, 2000

NOTE 3. INCOME TAXES

THERE IS NO PROVISION FOR INCOME TAXES FOR THE PERIOD ENDED MARCH 31, 2001, DUE
TO THE NET LOSS AND NO STATE INCOME TAX IN NEVADA, THE STATE OF THE COMPANY'S
DOMICILE AND OPERATIONS. THE COMPANY'S TOTAL DEFERRED TAX ASSET AS OF MARCH 31,
2001 IS AS FOLLOWS:

<TABLE>
               <S>                                   <C>
               NET OPERATING LOSS CARRY FORWARD      $ 35,794
               VALUATION ALLOWANCE                   $(35,794)
                                                     --------

               NET DEFERRED TAX ASSET                $      0
</TABLE>

THE NET FEDERAL OPERATING LOSS CARRY FORWARD WILL EXPIRE BETWEEN 2016 AND 2021.
THIS CARRY FORWARD MAY BE LIMITED UPON THE CONSUMMATION OF A BUSINESS
COMBINATION UNDER IRC SECTION 381.

NOTE 4. GOING CONCERN

THE COMPANY'S FINANCIAL STATEMENTS ARE PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES APPLICABLE TO A GOING CONCERN. THIS CONTEMPLATES
THE REALIZATION OF ASSETS AND THE LIQUIDATION OF LIABILITIES IN THE NORMAL
COURSE OF BUSINESS. CURRENTLY, THE COMPANY DOES NOT HAVE SIGNIFICANT CASH OF
OTHER MATERIAL ASSETS, NOR DOES IT HAVE OPERATIONS OR A SOURCE OF REVENUE
SUFFICIENT TO COVER ITS OPERATION COSTS AND ALLOW IT TO CONTINUE AS A GOING
CONCERN. IT IS THE INTENT OF THE COMPANY TO SEEK A MERGER WITH AN EXISTING,
OPERATING COMPANY. UNTIL THAT TIME, THE STOCKHOLDERS, OFFICERS, AND DIRECTORS
HAVE COMMITTED TO ADVANCING THE OPERATING COSTS OF THE COMPANY.

NOTE 5. RELATED PARTY TRANSACTIONS

THE COMPANY NEITHER OWNS NOR LEASES ANY REAL OR PERSONAL PROPERTY. AN OFFICER OF
THE CORPORATION PROVIDES OFFICE SERVICES WITHOUT CHARGE. SUCH COSTS ARE
IMMATERIAL TO THE FINANCIAL STATEMENTS AND ACCORDINGLY, HAVE NOT BEEN REFLECTED
THEREIN. THE OFFICERS AND DIRECTORS FOR THE COMPANY ARE INVOLVED IN OTHER
BUSINESS ACTIVITIES AND MAY, IN THE FUTURE, BECOME INVOLVED IN OTHER BUSINESS
OPPORTUNITIES. IF A SPECIFIC BUSINESS OPPORTUNITY BECOMES AVAILABLE, SUCH
PERSONS MAY FACE A CONFLICT IN SELECTING BETWEEN THE COMPANY AND THEIR OTHER
BUSINESS INTEREST. THE COMPANY HAS NOT FORMULATED A POLICY FOR THE RESOLUTION OF
SUCH CONFLICTS.

NOTE 6. WARRANTS AND OPTIONS

THERE ARE NO WARRANTS OR OPTIONS OUTSTANDING TO ACQUIRE ANY ADDITIONAL SHARES OF
COMMON STOCK OF THE COMPANY.

NOTE 7. OFFICERS ADVANCES

THE COMPANY HAS INCURRED COSTS WHILE SEEKING ADDITIONAL CAPITAL THROUGH A MERGER
WITH AN EXISTING COMPANY. AN OFFICER OF THE COMPANY HAS ADVANCED FUNDS ON BEHALF
OF THE COMPANY TO PAY FOR THESE COSTS. THESE FUNDS HAVE BEEN ADVANCED INTEREST
FREE.



                                      -10-
<PAGE>   11

Item II.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations

          The Company has not commenced business activities and has no assets or
operations. The Company has had no preliminary negotiations to effectuate a
business combination.

          The Company is dependent upon its officers to meet any de minimis
costs which may occur. Peggy Melilli, an officer and director of the Company,
has agreed to provide the necessary funds, without interest, for the Company to
comply with the Securities Exchange Act of 1934, as amended; provided that she
is an officer and director of the Company when the obligation is incurred. All
advances are interest-free.

          In addition, since the Company has had no operating history nor any
revenues or earnings from operations, with no significant assets or financial
resources, the Company will in all likelihood sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a profitable business opportunity and consummate such a
business combination.

          This discussion may contain certain forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Actual
results could differ materially from those forward-looking statements. The
factors that may cause actual results to differ materially is that the Company
has no arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public company
and that there can be no assurance that the Company will be successful in
identifying and evaluating suitable business opportunities or including a
business combination.

Item III. Qualitative and Quantitative Disclosures About Market Risk.

          The Company has neither considered or conducted any research
          concerning qualitative and quantitative market risk.

                                     PART II

                                OTHER INFORMATION

<TABLE>
<S>       <C>                                                               <C>
Item 1 -  Legal Proceedings ............................................    None

Item 2 -  Changes in the Rights of the Company's
          Security Holders .............................................    None
</TABLE>



                                      -11-
<PAGE>   12

<TABLE>
<S>       <C>                                                               <C>
Item 3 -  Defaults by the Company on its
          Senior Securities ............................................    None

Item 4 -  Submission of Matter to Vote of Security
          Holders ......................................................    None

Item 5 -  Other Information
</TABLE>

          (a) Board Meeting

          The board held one meeting during the current quarter, which was a
special meeting.

          (b) Committees

          The board of directors has not established any audit committee. In
addition, the Company does not have any other compensation or executive or
similar committees. The Company will not, in all likelihood, establish any audit
committee until such time as the Company completes a business combination, of
which there can be no assurance. The Company recognizes that an audit committee,
when established, will play a critical role in the financial reporting system of
the Company by overseeing and monitoring management's and the independent
auditors' participation in the financial reporting process. At such time as the
Company establishes an audit committee, its additional disclosures with the
Company's auditors and management may promote investor confidence in the
integrity of the financial reporting process.

          Until such time as an audit committee has been established, the full
board of directors will undertake those tasks normally associated with an audit
committee to include, but not by way of limitation, the (i) review and
discussion of the audited financial statements with management, (ii) discussions
with the independent auditors the matters required to be discussed by the
Statement On Auditing Standards No. 61, as may be modified or supplemented, and
(iii) received from the auditors disclosures regarding the auditors'
Independents Standards Board Standard No. 1, as may be modified or supplemented.

          The board of directors of the Company, consistent with its intent to
enhance the reliability and credibility of its financial statements, has
submitted the financial statements included in this Form 10-QSB to its
independent auditors prior to the filing of this report. An audit was completed
for the period then ended.


Item 6 -  Exhibits and Reports on Form 8-K

        The following exhibits are filed with this report:

               (a)    No reports on Form 8-K were filed during the quarter for
                      which the report is filed.



                                      -12-
<PAGE>   13

                                    SIGNATURE

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

Dated: May 11, 2001                          MAGNOLIA VENTURES, INC.



                                             By: /s/ Peggy Melilli
                                                 -------------------------------
                                                 Peggy Melilli
                                                 President



                                      -13-