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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, 2002.                                         

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
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                   |  |           
|-------------------------------------------------- |  | ----------
|6767 Tropicana Avenue, Suite 207
Las Vegas, Nevada |  | 89103     
|                                                   |  |           
|(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, 2002, there were outstanding 21,000,000 shares of the
Registrants Common Stock, $.001 par value.

Transitional Small Business Disclosure Format: Yes /   / No /X/

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TABLE OF CONTENTS



|                             |                                                                                                |                                    |  |  |  |  |  | 
|---------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item I. Financial Statements                                                                  
|                             |                                                                                                | BALANCE SHEETS                    
|                             |                                                                                                | STATEMENTS OF INCOME              
|                             |                                                                                                | STATEMENTS OF STOCKHOLDERS EQUITY
|                             |                                                                                                | STATEMENTS OF CASH FLOWS          
|                             |                                                                                                | NOTES TO FINANCIAL STATEMENTS     
|                             | Item II. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                             | Item III. Qualitative and Quantitative Disclosures About Market Risk.                         
|PART II OTHER INFORMATION   
|                             | Item 1   Legal Proceedings                                                                   
|                             | Item 2   Changes in the Rights of the Companys Security Holders                             
|                             | Item 3   Defaults by the Company on its Senior Securities                                    
|                             | Item 4   Submission of Matter to Vote of Security Holders                                    
|                             | Item 5   Other Information                                                                   
|                             | Item 6  Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                   
|EXHIBIT 23.1                



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PART I

FINANCIAL INFORMATION




Item I. Financial Statements

MAGNOLIA VENTURES, INC.
(A Development Stage Company)
CONTENTS

|                                                         |                                    |  |   |      | 
|-------------------------------------------------------- | ---------------------------------- |  | - | ---- | 
|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 | 

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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, 2002
and December 31, 2001, and the related statements of income,
stockholders equity, and cash flows for the three months ended
March 31, 2002, the year then ended December 31, 2001 and the
period June 13, 1994 (inception) through March 31, 2002. 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, 2000 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, 2002 and December 31, 2001 and the results of its operations
and cash flows for the three months ended March 31, 2002, the year
ended December 31, 2001, and the period June 13, 1994 (inception)
through March 31, 2002, 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.

Kyle L. Tingle, CPA, LLC

May 22, 2002
Henderson, Nevada

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
BALANCE SHEETS

|                                     |                                                                                      |                                         |                            |                                            |        |           |    |              |        |         |    | 
|------------------------------------ | ------------------------------------------------------------------------------------ | --------------------------------------- | -------------------------- | ------------------------------------------ | ------ | --------- | -- | ------------ | ------ | ------- | -- | 
|                                     |                                                                                      |                                         |                            |                                            |        | March 31, |    | December 31,
|                                     |                                                                                      |                                         |                            |                                            |        | 2002      |    | 2001        
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|ASSETS                              
|                                    
|CURRENT ASSETS                       |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     | Cash                                                                                 |                                         | $                          | 31                                         |        |           | $  | 31           |       
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     |                                                                                      |                                         | Total current assets       |                                            | $      | 31        |    |              | $      | 31      |   
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     |                                                                                      |                                         |                            | Total assets                               |        | $         | 31 |              |        | $       | 31 | 
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|CURRENT LIABILITIES                  |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     | Accounts payable                                                                     |                                         | $                          | 3,379                                      |        |           | $  | 0            |       
|                                     | Officers advances (Note 7)                                                           |                                         |                            | 36,506                                     |        |           |    | 36,506       |       
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     |                                                                                      |                                         | Total current liabilities  |                                            | $      | 39,885    |    |              | $      | 36,506  |   
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|STOCKHOLDERS EQUITY                 |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     | Common stock: $.001 par value;
authorized 25,000,000 shares;
issued and outstanding: |                                         |                            |                                            |        |           |    |              |       
|                                     |                                                                                      | 21,000,000 shares at December 31, 2001: |                            | $                                          |        |           |    | $            | 21,000 |        
|                                     |                                                                                      | 21,000,000 shares at March 31, 2002;    |                            |                                            | 21,000 |           |    |              |        |        
|                                     | Additional Paid In Capital                                                           |                                         |                            | (18,900                                    | )      |           |    | (18,900      | )     
|                                     | Accumulated deficit during development stage                                         |                                         |                            | (41,954                                    | )      |           |    | (38,575      | )     
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     |                                                                                      |                                         | Total stockholders equity |                                            | $      | (39,854   | )  |              | $      | (36,475 | ) 
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             
|                                     |                                                                                      |                                         |                            | Total liabilities and
stockholders equity |        | $         | 31 |              |        | $       | 31 | 
|                                     |                                                                                      |                                         |                            |                                            |        |           |    |             

See Accompanying Notes to Financial Statements.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF INCOME

|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |            |        |   |        |            |         |   |        |            |         |  
|--------------------------------------------- | ---------------------------------------------------- | ---------------- | ----- | ------------------ | ------ | ----------- | ----- | -------------- | ------ | ------------ | ----- | ---------- | ------ | - | ------ | ---------- | ------- | - | ------ | ---------- | ------- | -
|                                              |                                                      |                  |       | Three months ended |        | Years Ended |       | June 13, 1994 
|                                              |                                                      |                  |       |                    |        |             |       | (inception) to
|                                              |                                                      |                  |       | March 31,          |        | March 31,   |       | December 31,   |        | December 31, |       | March 31, 
|                                              |                                                      |                  |       | 2002               |        | 2001        |       | 2001           |        | 2000         |       | 2002      
|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |           
|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  |                                                      |                  | 3,379 |                    |        |             | 2,275 |                |        |              | 5,056 |            |        |   | 31,295 |            |         |   | 42,610 |           
|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |            |        |   |        |            |         |   |        |           
|                                              |                                                      | Operating (loss) |       | $                  | (3,379 | )           |       | $              | (2,275 | )            |       | $          | (5,056 | ) |        | $          | (31,295 | ) |        | $          | (42,610 | )
|Nonoperating income (expense)
Interest income |                                                      |                  | 0     |                    |        |             | 0     |                |        |              | 0     |            |        |   | 0      |            |         |   | 656    |           
|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |            |        |   |        |            |         |   |        |           
|                                              | Net (loss)                                           |                  | $     | (3,379             | )      |             | $     | (2,275         | )      |              | $     | (5,056     | )      |   | $      | (31,295    | )       |   | $      | (41,954    | )      
|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |            |        |   |        |            |         |   |        |           
|                                              | 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 |        
|                                              |                                                      |                  |       |                    |        |             |       |                |        |              |       |            |        |   |        |            |         |   |        |           

See Accompanying Notes to Financial Statements.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS EQUITY

|                              |  |                          |            |             |  |       |       |  |  |             |         |  
|----------------------------- |  | ------------------------ | ---------- | ----------- |  | ----- | ----- |  |  | ----------- | ------- | -
|                              |  |                          |            |             |  |       |       |  |  | Accumulated
|                              |  | Common Stock and Capital |            | (Deficit)  
|                              |  | In Excess of Par Value   |            | During     
|                              |  |                          |            | Development
|                              |  | Shares                   |            | Amount      |  | Stage
|                              |  |                          |            |             |  |      
|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) December 31, 2001  |  |                          |            |             |  |       |       |  |  |             | (5,056  | )
|                              |  |                          |            |             |  |       |       |  |  |             |         |  
|Balance, December 31, 2001    |  |                          | 21,000,000 |             |  | $     | 2,100 |  |  | $           | (38,575 | )
|Net (loss), March 31, 2002    |  |                          |            |             |  |       |       |  |  | $           | (3,379  | )
|                              |  |                          |            |             |  |       |       |  |  |             |         |  
|Balance, March 31, 2002       |  |                          | 21,000,000 |             |  | $     | 2,100 |  |  | $           | (41,954 | )
|                              |  |                          |            |             |  |       |       |  |  |             |         |  

See Accompanying Notes to Financial Statements.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS

|                                                              |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |         |        |  
|------------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------- | -- | ------------------ | - | ----------- | -- | -------------- | - | ------------ | -- | --------- | - | - | -- | ------- | - | - | ----- | ------- | ------ | -
|                                                              |                                                                             |                                         |    | Three months ended |   | Years Ended |    | June 13, 1994 
|                                                              |                                                                             |                                         |    |                    |   |             |    | (inception) to
|                                                              |                                                                             |                                         |    | March 31,          |   | March 31,   |    | December 31,   |   | December 31, |    | March 31,
|                                                              |                                                                             |                                         |    | 2002               |   | 2001        |    | 2001           |   | 2000         |    | 2002     
|                                                              |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |          
|Cash Flows From
Operating Activities                          |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |        
|                                                              | Net (loss)                                                                  |                                         | $  | (3,379             | ) |             | $  | (2,275         | ) |              | $  | (5,056    | ) |   | $  | (31,295 | ) |   | $     | (41,954 | )     
|                                                              | Adjustments to reconcile
net (loss) to cash
(used in) operating
activities: |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |         |       
|                                                              | Changes in assets
and liabilities                                           |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |         |       
|                                                              | Increase in accounts payable                                                |                                         |    | 3,379              |   |             |    | 2,200          |   |              |    | 0         |   |   |    | 0       |   |   |       | 3,379   |       
|                                                              | Increase in officer advances                                                |                                         |    | 0                  |   |             |    | 75             |   |              |    | 5,056     |   |   |    | 31,295  |   |   |       | 36,506  |       
|                                                              |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |        
|                                                              |                                                                             | Net cash (used in)
operating activities |    | $                  | 0 |             |    | $              | 0 |              |    | $         | 0 |   |    | $       | 0 |   |       | $       | (2,069 | )
|                                                              |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |        
|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 |    | $                  |   |             |    | $              | 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    |        
|                                                              |                                                                             |                                         |    |                    |   |             |    |                |   |              |    |           |   |   |    |         |   |   |       |        

See Accompanying Notes to Financial Statements.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002, and December 31, 2001

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, 2002 and December 31,
2001.

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.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002, and December 31, 2001

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 2002, 2001,
2000, and since inception. As of March 31, 2002 and since inception, the
Company had no dilutive potential common shares.

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MAGNOLIA VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2002, and December 31, 2001

Note 3. Income Taxes

There is no provision for income taxes for the period ended March 31,
2002, 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, 2002 is as follows:

|                                 |  |   |         |  
|-------------------------------- |  | - | ------- | -
|Net operating loss carry forward |  | $ | 41,954  |  
|Valuation allowance              |  | $ | (41,954 | )
|                                 |  |   |         |  
|Net deferred tax asset           |  | $ | 0       |  
|                                 |  |   |         |  

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.

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

The Company currently has no 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.

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




PART II

OTHER INFORMATION




Item 1   Legal Proceedings

None




Item 2   Changes in the Rights of the Companys
Security Holders

None




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

(a)  Board Meeting

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

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, and (ii)
discussions with the independent auditors the matters required to

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be discussed
by the Statement On Auditing Standards No. 61 and No. 90, 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 auditor 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

There were no reports on Form 8-K filed during the quarter for which this
report is filed. The following exhibit is filed with this report:

23.1 
Consent of Kyle L. Tingle, CPA.




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 23, 2002 |  | MAGNOLIA VENTURES, INC.
|                   
|                   
|                    |  | By:                     |  | /s/ Peggy Melilli      
|                    |  |                         |  |                        
|                    |  |                         |  | Peggy Melilli
President

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