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 period ended June 30, 2003

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE  EXCHANGE
    ACT OF 1934
                     For the transition period from __ to __

                           Commission File No. 0-22744


                           VIKING CAPITAL GROUP, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


               Utah                                      87-0442090
  -------------------------------            ---------------------------------
  (State or other jurisdiction of            (IRS Employer Identification No.)
   incorporation or organization)


        Two Lincoln Centre, Suite 300, 5420 LBJ FWY, Dallas, Texas 75240
        ----------------------------------------------------------------
                    (Address of principal executive offices)


                                 (972) 386-9996
                                 --------------
                           (Issuer's telephone number)


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

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

As of June 30, 2003,  approximately  56,047,069  shares of Common Stock (Class A
Common) of the issuer were outstanding.  As of June 30, 2003,  100,000 shares of
Class B Common Stock of the issuer were outstanding.

<PAGE>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES


                                    CONTENTS




                                                                            PAGE
                                                                            ----

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

     Consolidated Balance Sheets at June 30, 2003 (Unaudited) and
         December 31, 2002....................................................3

     Consolidated Statements of Operations (Unaudited) for the three
         months ended June  30, 2003 and 2002.................................5

     Consolidated Statements of Operations (Unaudited) for the six
         months ended June  30, 2003 and 2002.................................6

     Consolidated Statements of Cash Flows (Unaudited) for the six
         months ended June 30, 2003 and 2002..................................7

     Notes to Consolidated Financial Statements...............................9

Item 2. Management's Discussion and Analysis or Plan of Operations............14

Item 3. Controls and Procedures...............................................19


PART II - OTHER INFORMATION

Item 2.  Changes in Securities................................................19

Item 5. Other Information.....................................................19

Item 6.  Exhibits and reports on Form 8-K.....................................22

SIGNATURES....................................................................23

EXHIBITS......................................................................24




<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                               (expressed in US $)


                                     ASSETS
                                     ------

                                                                     (unaudited)
                                                                       June 30,      December 31,
                                                                         2003            2002
                                                                     ------------    ------------
                                                                           (in thousands)
<S>                                                                  <C>             <C>
CURRENT ASSETS
   Cash and cash equivalents                                         $        123    $      1,423
   Other receivables                                                           --             549
   Prepaid expenses                                                            57              --
   Mortgage notes receivable                                                   --          13,226
   Notes receivable and accrued interest, (including related party
     amounts of  $117 and $113 at June 30, 2003
      (unaudited) and December 31, 2002, respectively) net of
     allowance of $191 at June 30, 2003(unaudited)
     and December 31, 2002                                                    224             113
   Deposit                                                                     --           1,210
   Real estate held for sale                                                   --          45,005
                                                                     ------------    ------------

        Total current assets                                                  404          61,526

PROPERTY AND EQUIPMENT
   Building                                                                    --          37,543
   Computer equipment                                                         157             157
   Furniture and office equipment                                              21              45
   Vehicles                                                                    --               3
   Building improvements                                                       --             710
                                                                     ------------    ------------

                                                                              178          38,458

   Accumulated depreciation and amortization                                 (174)         (2,246)
                                                                     ------------    ------------

             Net property and equipment                                         4          36,212

CAPITALIZED SOFTWARE                                                           50              50

NOTES AND OTHER RECEIVABLES FROM RELATED PARTIES                               --          12,316

INVESTMENTS IN AFFILIATES                                                      --           1,948

LONG TERM NOTE RECEIVABLE                                                   6,500              --

OTHER ASSETS                                                                   13              35
                                                                     ------------    ------------

TOTAL ASSETS                                                         $      6,971    $    112,087
                                                                     ============    ============

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                               3
<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS - Continued
                               (expressed in US $)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                (unaudited)
                                                                                  June 30,      December 31,
                                                                                    2003            2002
                                                                                ------------    ------------
                                                                                        (in thousands)
<S>                                                                             <C>             <C>
CURRENT LIABILITIES
  Current  maturities of long-term debt and other current debts
     (including $189 and $188 due to related parties at
     June 30, 2003(unaudited) and December 31, 2002, respectively,
     net of unamortized debt discount of $13 and $27 at June 30, 2003
     (unaudited) and December 31, 2002, respectively)                           $        770    $     20,147
  Accounts payable                                                                        91           9,851
  Accrued officers' salaryand payroll taxes                                            1,591           1,611
  Other accrued expenses                                                                  66          10,561
  Accrued litigation settlement                                                           --          15,600
  Other payables                                                                          --          12,085
  Due to related parties                                                                  --           1,523
  Deferred income tax liability                                                           --           8,152
  Current income taxes payable                                                            --             568
                                                                                ------------    ------------

             Total current liabilities                                                 2,518          80,098

LONG-TERM DEBT, less current portion (including $500 and $-0- due
     to related parties at June 30, 2003 and December 31, 2002, respectively)            500          25,531
                                                                                ------------    ------------

TOTAL LIABILITIES                                                                      3,018         105,629

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred stock $1.00 par value; 50,000,000 shares authorized:
     Series 2001 Callable Preferred Stock $1.00 par value; 5,000,000
        shares  authorized,  -0- and 1,800,000  shares issued and outstanding
        at June 30, 2003(unaudited) and December 31, 2002, respectively
        (liquidation preference of $18,000,000 at December 31, 2002)                      --           1,800
  Common stock $0.001 par value; 150,000,000 shares authorized,
     56,047,069 and 69,864,951 shares issued at June 30, 2003
     (unaudited) and December 31, 2002, respectively                                      56              70
  Common stock Class B $0.001 par value; 100,000 shares authorized,
     issued and outstanding                                                               --              --
  Additional paid-in capital                                                          33,766          37,022
  Accumulated deficit                                                                (29,869)        (29,393)
                                                                                ------------    ------------
                                                                                       3,953           9,499

             Less treasury stock;  -0- and 8,025,625 shares
             at cost, at June 30, 2003(unaudited) and December 31, 2002,
             respectively                                                                 --          (3,041)
                                                                                ------------    ------------

             Total stockholders' equity                                                3,953           6,458
                                                                                ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $      6,971    $    112,087
                                                                                ============    ============

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                                               4
<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               (expressed in US $)
                                   (unaudited)

                                                                         Three Months Ended
                                                                         ------------------
                                                                       June 30,      June 30,
                                                                         2003          2002
                                                                      ----------    ----------
                                                             (in thousands, except earnings per share)
<S>                                                                   <C>           <C>
REVENUES
     Rental income                                                    $       --    $      805
     Sales of real estate, net of sales taxes                                 --           170
     Other                                                                    --            14
                                                                      ----------    ----------

         Total revenues                                                       --           989

COST OF REVENUE
     Cost of real estate sales                                                --          (259)
     Write down of real estate held for sale                                  --        (1,118)
     Selling expenses                                                         --           (25)
                                                                      ----------    ----------

         Total cost of revenue                                                --        (1,402)
                                                                      ----------    ----------

GROSS PROFIT                                                                  --          (413)

GENERAL AND ADMINISTRATIVE EXPENSES                                         (198)       (1,541)
                                                                      ----------    ----------

Loss from operations                                                        (198)       (1,954)

OTHER INCOME (EXPENSE)
     Interest income (including $2 and $232 from related parties)             67           233
     Interest expense (including $10 and $2 to related parties)              (43)         (636)
     Income (loss) from equity accounted affiliates                           --          (105)
     Other income (expense)                                                    3            13
                                                                      ----------    ----------

         Total other income (expense), net                                    27          (495)
                                                                      ----------    ----------

Loss before provision for income taxes and non-controlling interest         (171)       (2,449)

         Income tax expense                                                   --          (371)
                                                                      ----------    ----------

Loss before non-controlling interest                                        (171)       (2,820)

NON-CONTROLLING INTEREST                                                      --           941
                                                                      ----------    ----------

NET LOSS                                                              $     (171)   $   (1,879)
                                                                      ==========    ==========

BASIC AND DILUTED LOSS PER SHARE                                      $    (0.00)   $    (0.03)
                                                                      ==========    ==========

WEIGHTED-AVERAGE NUMBER OF SHARES
     OUTSTANDING - BASIC AND DILUTED                                      54,856        58,138
                                                                      ==========    ==========

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                                               5
<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               (expressed in US $)
                                   (unaudited)

                                                                          Six Months Ended
                                                                          ----------------
                                                                       June 30,      June 30,
                                                                         2003          2002
                                                                      ----------    ----------
                                                             (in thousands, except earnings per share)
<S>                                                                   <C>           <C>
REVENUES
     Rental income                                                    $      286    $    1,356
     Sales of real estate, net of sales taxes                                 --           318
     Other                                                                    --            14
                                                                      ----------    ----------

         Total revenues                                                      286         1,688

COST OF REVENUE
     Cost of real estate sales                                                --          (364)
     Write down of real estate held for sale                                  --        (1,118)
     Selling expenses                                                         (7)          (81)
                                                                      ----------    ----------

         Total cost of revenue                                                (7)       (1,563)
                                                                      ----------    ----------

GROSS PROFIT                                                                 279           125

GENERAL AND ADMINISTRATIVE EXPENSES                                         (626)       (2,426)
WRITE OFF OF MORTGAGE NOTES RECEIVABLE                                        --          (139)
                                                                      ----------    ----------

Loss from operations                                                        (347)       (2,440)

OTHER INCOME (EXPENSE)
     Interest income (including $43 and $232 from related parties)           150           235
     Interest expense (including $19 and $4 to related parties)             (312)       (1,481)
     Income (loss) from equity accounted affiliates                           (5)         (102)
     Other income (expense)                                                    3             5
                                                                      ----------    ----------

         Total other income (expense), net                                  (164)       (1,343)
                                                                      ----------    ----------

Loss before provision for income taxes and non-controlling interest         (511)       (3,783)

         Income tax benefit (expense)                                         34           (86)
                                                                      ----------    ----------

Loss before non-controlling interest                                        (477)       (3,869)

NON-CONTROLLING INTEREST                                                      --         1,255
                                                                      ----------    ----------

NET LOSS                                                              $     (477)   $   (2,614)
                                                                      ==========    ==========

BASIC AND DILUTED LOSS PER SHARE                                      $    (0.01)   $    (0.05)
                                                                      ==========    ==========

WEIGHTED-AVERAGE NUMBER OF SHARES
     OUTSTANDING - BASIC AND DILUTED                                      55,913        57,825
                                                                      ==========    ==========

</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                                               6
<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (expressed in US $)
                                   (unaudited)

                                                                                              Six Months Ended
                                                                                              ----------------
                                                                                           June 30,      June 30,
                                                                                             2003          2002
                                                                                          ----------    ----------
                                                                                               (in thousands)
<S>                                                                                       <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                             $     (477)   $   (2,614)
     Non-cash charges included in operations
         Bad debt expense                                                                          2            --
         Depreciation and amortization                                                           176         1,050
         Amortization of deferred financing costs                                                 --            29
         Amortization of debt discount                                                            13            --
         Other payables paid with promissory note                                                  7            --
         Common stock issued for services                                                          6            63
         Accounts payable paid in common stock                                                    31            --
         Expenses paid with promissory note                                                       43            --
         Stock options issued for services                                                        --            30
         Loss from equity accounted  affiliates                                                    5           102
         Non-controlling interest                                                                 --        (1,255)
         Write off of mortgage notes receivable                                                   --           139
         Write off of accounts receivable                                                         --           248
     Changes in assets and liabilities (net of effect of divestiture of Fei Yun Viking)
         Decrease in real estate held for sale                                                    --         1,303
         Decrease in mortgage loans receivable                                                    84         1,875
         (Increase) in accrued interest receivable                                              (151)           (3)
         Increase (decrease) in other assets and receivables                                     (44)           (5)
         Decrease in accounts payable                                                           (157)         (360)
         Decrease in accrued officers' salary and
            payroll taxes                                                                        (19)           --
         Increase in customer deposits                                                            --         6,040
         Increase in other accrued expenses                                                      135           756
         Increase in deferred income tax liability                                                --            86
         Decrease in other payables                                                             (132)         (601)
                                                                                          ----------    ----------

Net cash provided by (used in) operating activities                                             (478)        6,883

CASH FLOWS FROM INVESTING ACTIVITIES

     Purchases of property, plant and equipment                                                   --           (65)
     Loans made                                                                                   --            (4)
     Loans made to shareholders                                                                   --           (36)
     Net advances to related parties                                                             (44)       (2,390)
     Decrease in cash balances due to divestiture of Fei Yun Viking                           (1,379)           --
                                                                                          ----------    ----------

Net cash used in investing activities                                                         (1,423)       (2,495)

</TABLE>


                                 - Continued -

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                                               7
<PAGE>
<TABLE>
<CAPTION>

                   VIKING CAPITAL GROUP, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                               (expressed in US $)
                                   (unaudited)

                                                                                              Six Months Ended
                                                                                              ----------------
                                                                                           June 30,      June 30,
                                                                                             2003          2002
                                                                                          ----------    ----------
                                                                                               (in thousands)
<S>                                                                                       <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Capital contributions                                                                $       --    $      798
     Proceeds from notes payable                                                                 209           215
     Proceeds from notes payable and advances - related party                                    564           793
     Repayments of notes payable                                                                (202)         (190)
     Repayments of notes payable - related party                                                 (65)          (10)
     Proceeds from sale of common stock                                                           95           271
                                                                                          ----------    ----------

Net cash provided by financing activities                                                        601         1,877
                                                                                          ----------    ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                          (1,300)        6,265

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               1,423         7,191
                                                                                          ----------    ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                $      123    $   13,456
                                                                                          ==========    ==========

SUPPLEMENTAL DISCLOSURES

     Cash flow information:

         Interest paid                                                                    $      168    $      515
         Income taxes paid                                                                        --            --

     Non-cash financing activities:
         Common stock issued for:
             Repayment of notes payable                                                            5            84
             Notes receivable                                                                     --            --
             Payment of interest                                                                  --             6
             Payment of services                                                                   6            --
             Payment of accounts payable                                                          31            --

         Common stock cancelled for conversion of note receivable                                 --             1

         Common stock received for divestiture of Fei Yun Viking (7.0 million shares)           (236)           --
         Common stock received for divestiture of Wuxi Viking (1.4 million shares)               604            --

         Preferred stock received for divestiture of Fei Yun Viking (1.8 million shares)       1,800            --

         Long term note receivable received in connection
              with divestiture of Fei Yun Viking                                               6,500            --

         Notes payable issued for:
              Payment of expenses                                                                 43            --
              Payment of accrued interest                                                         11            --


</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                                                               8
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - BASIS OF PRESENTATION

The consolidated  interim  financial  statements  include the accounts of Viking
Capital  Group,  Inc.,  its  consolidated  subsidiaries,  and  equity  accounted
investments (collectively the "Company").

The consolidated interim financial statements included herein have been prepared
by the Company,  without  audit,  pursuant to the rules and  regulations  of the
Securities and Exchange Commission (the "SEC"). Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally accepted  accounting  principals  ("GAAP") have been condensed or
omitted  pursuant to such rules and  regulations,  although the Company believes
that  the  disclosures  are  adequate  to make  the  information  presented  not
misleading.  It  is  suggested  that  these  financial  statements  be  read  in
conjunction  with  the  consolidated  financial  statements  and  related  notes
included in the Company's  Form 10-KSB as of and for the year ended December 31,
2002.

In the opinion of  management,  the  unaudited  interim  consolidated  financial
statements of the Company contain all adjustments, consisting only of those of a
normal  recurring  nature,  necessary to present fairly the Company's  financial
position  and the  results  of its  operations  and cash  flows for the  periods
presented.  The  preparation  of financial  statements in  accordance  with GAAP
requires  management  to make  estimates  and  assumptions.  Such  estimates and
assumptions  affect the reported amounts of assets and  liabilities,  as well as
the  disclosures  of  contingent  assets  and  liabilities  at the  date  of the
financial  statements,  and the reported  amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

NOTE B - STOCK-BASED COMPENSATION

The Company accounts for stock-based  employee  compensation using the intrinsic
value-based  method  prescribed by Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations. As such,
compensation  expense is recorded on the date of grant of a stock  option to the
extent the  current  market  price of the  underlying  stock  exceeds the option
exercise price. The Company did not record any  compensation  expense related to
stock options granted to employees  during the three and six month periods ended
June 30, 2003 and 2002.  Had the Company  determined  compensation  based on the
fair value at the grant date for its stock options under  Statement of Financial
Accounting Standards ("SFAS") No.123, "Accounting for Stock-Based Compensation,"
as amended by SFAS No. 148, net loss and loss per share would have  increased as
shown in the table below.

                                                                    Three Months Ended         Six Months Ended
                                                                  -----------------------   -----------------------
                                                                   June 30,    June 30,      June 30,    June 30,
                                                                     2003        2002          2003        2002
                                                                     ----        ----          ----        ----
                                                                      (in thousands)            (in thousands)
<S>                                                                <C>         <C>           <C>         <C>

Net loss attributable to common stockholders, as reported          $   (171)   $ (1,879)     $   (477)   $ (2,614)
Add:  Stock  based  employee  compensation  expense  included in
reported net loss                                                        --          --            --          --
Deduct:  Stock-based  employee  compensation  expense determined
under fair value based method                                           (16)       (512)          (41)       (724)
                                                                   ---------   ---------     ---------   ---------
Proforma net loss                                                  $   (187)   $ (2,391)     $   (518)   $ (3,338)
Weighted average shares                                              54,856      58,138        55,913      57,825
Net loss per share as reported                                     $  (0.00)   $  (0.03)     $  (0.01)   $  (0.05)
                                                                   =========   =========     =========   =========
Proforma net loss per share                                        $  (0.00)   $  (0.04)     $  (0.01)   $  (0.06)
                                                                   =========   =========     =========   =========
</TABLE>

NOTE C - OPERATIONS DISPOSED OF

Effective January 31, 2003,  pursuant to a Stock & Note Receivable For Ownership
Agreement  dated January 31, 2003, the Company sold its 96% ownership of Beijing
Fei Yun Viking Enterprises  Company,  Ltd. ("Fei Yun Viking") to Beijing Fei Yun
Property  Development  Company,  Ltd.  ("Fei Yun  Property").  Among the  assets
included in Fei Yun Viking is a 60% ownership of a  commercial/residential  real
estate  company  ("Golden  Horse/Sunshine  Plaza"),  40% ownership of a toll-way
construction  and operating  company,  100% of the operations  and  distribution
system of a chemical  exchange  company,  and two notes  receivable plus accrued
interest. In

                                                                               9
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE C - OPERATIONS DISPOSED OF (Continued)

exchange for the 96% ownership of Fei Yun Viking,  Viking  Capital  Group,  Inc.
received  1.8  million  shares of its  Series  2001  Callable  Preferred  Shares
(originally  issued and recorded at $18 million),  7,000,000  common  restricted
shares of Viking Capital Group, Inc. and a $6.5 million note receivable due from
Hebei Kangshun  Feiyun Organic Waste  Processing  Company,  Ltd.("Organic  Waste
Company"). The note is effectively collateralized by a 40% ownership interest in
Organic Waste  Company.  The Company also received 7.5 million  common shares of
the Company that were held as treasury shares at Fei Yun Viking.

Effective March 28, 2003, the Company sold its 25% equity ownership  position in
Wuxi Viking Garment Co., Ltd. (Wuxi).  Viking Capital Group,  Inc.  received 1.4
million common  restricted  shares of Viking Capital Group, Inc. in exchange for
its 25% equity ownership position in Wuxi.

Unaudited pro-forma financial information for the six months ended June 30, 2003
and 2002,  as though  the  dispositions  of Beijing  Fei Yun Viking  Enterprises
Company,  Ltd. and Wuxi Viking Garments Company, Ltd. had occurred on January 1,
2002 is as follows (in thousands):

                                                         Six months ended
                                                         ----------------
                                                      June 30,       June 30,
                                                        2003           2002
                                                    -----------    -----------

     Revenues                                       $        --    $        --
                                                    ===========    ===========
     Net income (loss)                              $      (347)   $      (344)
                                                    ===========    ===========

     Net income (loss) per share:
       Basic and diluted                            $     (0.01)   $     (0.01)
                                                    ===========    ===========


NOTE D - SEGMENTS

During the quarter ended March 31, 2003,  the Company sold all of its reportable
segments but did recognize revenue and expenses for such segments prior to their
sale. The Company's  operations are  classified  into four principal  reportable
segments  for  the  first  quarter  of  2003;   real  estate,   chemical  sales,
construction,  and  garment  manufacturing.  All  businesses  were  located  and
operated in the People's  Republic of China.  The real estate  segment owned and
operated a commercial and residential property.  The chemical segment traded and
transported  chemical  products.  The  construction  segment was  constructing a
highway in the Jiangsu  Province of the People's  Republic of China. The garment
manufacturing  segment  manufactured  clothing  specifically  focusing on export
garments.

The following  table presents  information  about the four segments  through the
dates of disposition (in thousands):

                                      Chemical                         Garment
                       Real Estate      Sales      Construction     Manufacturing     Adjustment     Consolidated
                       -----------      -----      ------------     -------------     ----------     ------------
<S>                    <C>            <C>          <C>              <C>               <C>            <C>

 Revenues from
  external customers    $    286      $     --       $     --         $     --         $     --        $    286
 Interest income              --            --             --               --               83              83
 Interest expense           (240)           --             --               --              (28)           (268)
 Depreciation and
 amortization               (176)           --             --               --               --            (176)
 Income (loss) from
 equity accounted
 investment                   --            --            (16)              11               --              (5)
 Income tax benefit
 (expense)                    34            --             --               --               --              34
 Net income (loss)          (128)           (1)           (16)              11             (171)           (305)

</TABLE>


                                                                              10
<PAGE>

                           VIKING CAPITAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE D - SEGMENTS (Continued)

The real estate, chemical sales, construction and garment manufacturing segments
represent  the  foreign  operations  in the  People's  Republic  of  China.  The
adjustments  represent the corporate  expenses to reconcile  segment  amounts to
consolidated balances for the quarter ended March 31, 2003.

NOTE E - SHORT TERM PROMISSORY NOTES PAYABLE

During  the  current  quarter,  the  Company  entered  into new notes or renewed
existing  notes,  some of which  are  convertible  to common  restricted  stock,
totaling $162,026. Included in this total is $6,893 of accrued interest that was
added to principal. All outstanding short term promissory notes at June 30, 2003
mature  within  one year or on demand,  bear  interest  ranging  from 10% to 12%
(except  for  $43,000 of notes  that bear no  interest)  and are  secured by the
assets and net worth of the Company (except for a $100,000 note which is secured
by 200,000  free  trading  shares owned by  directors  and  shareholders  of the
Company).  Interest  payments on these notes are due  quarterly,  semi-annually,
annually or at the end of the term of the note.

During the current  quarter,  $5,200 of principal  and $161 of accrued  interest
were repaid with common restricted stock.

During the current  quarter,  promissory  note  principal  and accrued  interest
repayments  were made  totaling  $247,323  and $20,547,  respectively.  Of these
amounts, $45,000 in principal and $991 in interest were paid to related parties.

NOTE F - LONG-TERM PROMISSORY NOTE PAYABLE

During the  current  quarter,  the  Company  entered  into a $500,000  long-term
promissory note payable with an existing shareholder and related party. The note
bears interest at 12% per annum and matures in ten years.  Interest payments are
to be made  semi-annually  with the exception of the first year's interest which
is paid in advance.  Five equal  principal  payments of $100,000  each are to be
paid annually  beginning on the sixth  anniversary date of the note. The note is
collateralized by the assets and net worth of the Company.

NOTE G - RELATED PARTY TRANSACTIONS

During  the  current   quarter,   the  Company   entered  into  $26,405  of  new
current/short  term promissory notes with related  parties.  These notes are all
due on demand or within  ninety days and bear interest at 12% per year. Of these
notes, $25,000 were repaid during the current quarter.  Current/short term notes
payable with related parties at the end of the current quarter totaled  $189,005
plus  accrued  interest of $32,542.  The Company  also  entered  into a $500,000
long-term promissory note with a related party. This note is described in Note F
above.

The Company also entered into a transaction with this same related party for the
purchase of  1,500,000  common  restricted  shares at $0.05 per share and a five
year option for the purchase of 5,555,567  common  restriced shares at $0.09 per
share.

During the current  quarter,  there were no new notes  receivable  with  related
parties and no  repayments  were made.  At the end of the current  quarter,  the
balance of notes  receivable  from  related  parties was  $103,821  plus accrued
interest of $12,982.

NOTE H - SHAREHOLDERS' EQUITY

During the  current  quarter,  the  Company  issued  1,700,000  shares of common
restricted  stock for cash of $85,000  and 107,214  shares of common  restricted
stock in payment of $5,361 of promissory notes and accrued interest.

During the current  quarter,  the Company  granted a one-year option to purchase
50,000  shares of common  restricted  stock at $0.10 per share.  This option was
issued in connection with the purchase of common  restricted stock for cash. The
Company also issued a five-year  option to purchase  5,555,567  shares of common
restricted  stock at $0.09 per share.  The option was issued in connection  with
the purchase of common restricted stock for cash.


                                                                              11
<PAGE>

                           VIKING CAPITAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE H - SHAREHOLDERS' EQUITY (Continued)

In connection  with the divestiture of Fei Yun Viking,  as further  described in
Note C, the  Company  received  1.8 million  shares of its Series 2001  Callable
Preferred  stock.  These shares were  cancelled and returned to  authorized  and
un-issued  preferred  stock.  No shares of  preferred  stock of any series  were
outstanding  at the end of the  current  quarter.  The Company  also  received 7
million common shares of Viking that were added to treasury shares in connection
with the divestiture of Fei Yun Viking during the prior quarter.

During the current quarter,  16,418,750  shares (common stock) of the 16,425,625
treasury  shares  listed in the prior  quarter  were  cancelled  and returned to
authorized and un-issued shares. An adjustment of 6,875 common shares previously
listed as  treasury  shares  were added back to  outstanding  shares  during the
current quarter.


NOTE I - GOING CONCERN AND OTHER INFORMATION

The consolidated  financial statements have been prepared on the assumption that
the Company  will  continue  as a going  concern.  The  Company has  experienced
recurring  losses from operations and negative cash flows from operations  since
its  inception.  Additionally,  as  further  described  in Note C,  the  Company
disposed of its primary revenue  generating  assets effective  January 31, 2003.
Lastly,  at June  30,  2003  the  Company's  current  liabilities  significantly
exceeded its current liquid assets.  These  conditions raise  substantial  doubt
about the Company's ability to continue as a going concern.

The Company will  continue to incur  expenses  relating to  corporate  overhead,
considering acquisitions and other business opportunities.  As further described
in Note C, the Company  disposed of its foreign  operations  on January 31, 2003
and March 28, 2003. These disposals significantly reduced the corporate overhead
expenses of the  Company;  however,  the Company  has been and  continues  to be
dependent  upon outside  financing in the form of debt and equity to perform its
business  development  activities and cover current overhead expenses.  Although
the Company has been  successful at raising  capital in the past, if the Company
is unable to raise  capital,  it may be required to sell  assets.  Such  actions
could have a material adverse effect on the Company's business and operations.

The  Company  also  intends  to  obtain  additional  funds in order to  complete
acquisitions and to develop other businesses in the U.S and abroad. This capital
may come from additional debt or equity issuances.

The consolidated  financial statements do not include any adjustments to reflect
the  possible  effects on the  recoverability  and  classification  of assets or
classification of liabilities which may result from the inability of the Company
to continue as a going concern.

NOTE J - EMPLOYEE BENEFIT PLAN

An  Employee  Benefit  Plan was  created in 1995 and has since been  amended and
updated to designate a specified  number of shares  issuable under the plan. The
shares  authorized  under the plan are  registered  under  Form S-8.  During the
quarter  ended March 31,  2003,  the plan was  modified to  authorize a total of
10,000,000 common shares under the plan.  Accordingly,  an additional  5,750,000
shares were  registered  under Form S-8 on March 25, 2003. The plan's purpose is
to make  available  free trading  shares to officers,  directors and  employees,
including  consultants and others,  in conformity with the rules and regulations
established for Form S-8 shares, in payment or recognition of their services and
contributions to the success of the Company.  Issuance of these shares is at the
discretion  of the Board of Directors  and/or a  Compensation  Committee.  These
shares may also be issued in conjunction with the exercise of options.

NOTE K - LONG-TERM NOTE RECEIVABLE

A  long-term  note  receivable  was  obtained as part of the  proceeds  from the
divestiture  of Fei Yun  Viking.  The note  originated  on January  31, 2003 for
$6,500,000  due and payable by Hebei Kangshun  Feiyun  Organic Waste  Processing
Company,  Ltd.(Organic Waste Company), a Chinese entity. The note bears interest
at the  rate  of 4% per  annum  with  interest  to be paid  annually.  Principal
payments in an amount equal to half of the  original  note  principal  are to be
made on the fifth  anniversary  and tenth  anniversary  of the note. The note is
collateralized by a 40% ownership interest in Organic Waste Company.


                                                                              12
<PAGE>

                           VIKING CAPITAL GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE L - PREPAID EXPENSES

The  Company  prepaid  one year of  interest  totaling  $60,000 on the  $500,000
long-term  promissory  note  payable  with a related  party  during  the  second
quarter.  This  balance will be reduced by the accrued  interest  expense on the
note each quarter.

NOTE M - INCOME TAXES

Deferred income taxes are determined using the asset and liability method, under
which deferred tax assets and  liabilities  are calculated  based on differences
between financial accounting and tax bases of assets and liabilities.  Valuation
allowances are  established  when necessary to reduce deferred tax assets to the
amount expected to be realized.  Income tax expense or benefit is the payable or
refund for the period plus or minus the change during the period in deferred tax
assets and liabilities.

No income tax  benefit  expense has been  recorded  (other  than  $34,000  which
relates to the foreign operations that were disposed of during the first quarter
of  2003)   because  the  Company  has  net   operating   loss   carry-forwards.
Additionally,   realization   of  the  benefit  of  these  net  operating   loss
carryforwards  and other deferred tax assets appear uncertain.  Accordingly,  no
deferred tax assets are recorded.

NOTE N - SUBSEQUENT EVENTS

Subsequent  to June 30, 2003,  consulting  fees of $63,200  were paid  including
$36,750 of prepaid fees. Additionally, promissory note principal and interest of
$27,065 were paid in cash and $23,259 of principal  and interest  were paid with
common  restricted stock. The Company also received $24,000 of proceeds from new
promissory notes.





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                                                                              13
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operations.

The following  discussion  should be read in conjunction  with the  consolidated
financial  statements  and related notes and the other  information  included in
this report.

The majority of the  Company's  assets and all of its revenues  during last year
were  due  to  Beijing  Fei  Yun  Viking  Enterprises  Company,   Ltd.  and  its
subsidiaries ("Fei Yun Viking") including Golden  Horse/Sunshine  Plaza. Fei Yun
Viking,  which was a 96% owned subsidiary of Viking,  was sold effective January
31, 2003.  Therefore,  the information given for the three and six month periods
ended June 30, 2003 and 2002 are not directly comparable.

Fei Yun Viking was  originally  purchased  for 1.8 million  Series 2001 Callable
Preferred  Shares and 14 million common shares.  Fei Yun Viking was sold for 1.8
million  Series  2001  Callable  Preferred  Shares of Viking,  7,000,000  common
restricted  shares of Viking and a $6.5 million note  receivable  due from Hebei
Kangshun Feiyun Organic Waste Processing Company,  Ltd. Viking also received 7.5
million  of its  common  shares  that  were held as  treasury  shares at Fei Yun
Viking.

This  transaction  was  disclosed  in a  February  3, 2003 Form 8-K filing and a
February  18, 2003 Form 8-K filing both with an event date of January 31,  2003.
The Form 8-K filed on February 18, 2003 was subsequently updated by an amendment
to Form 8-K filed on May 29, 2003  updating  item 7(b) with  proforma  financial
information.  The Company  also sold its 25% equity  ownership  position in Wuxi
Viking  Garment Co., Ltd. (Wuxi Viking) during the quarter ended March 31, 2003.
The Company  received 1.4 million  Viking common  restricted  shares for its 25%
equity ownership position in Wuxi Viking.  This sale,  completed March 28, 2003,
was  considered  insignificant  based  upon the  requirements  set forth for the
filing of an 8-K and, therefore, no 8-K filing was made.

Forward Looking Statements

This  quarterly  report  on  form  10-QSB  contains  certain   "forward-looking"
statements as such term is defined in the Private  Securities  Litigation Reform
Act of 1995 and information  relating to the Company and its  subsidiaries  that
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to the Company's management. When used in
this  report,  the  words  "anticipate,"  "believe,"  "estimate,"  "expect"  and
"intend" and words or phrases of similar  import,  as they relate to the Company
or  its   subsidiaries   or  Company   management,   are  intended  to  identify
forward-looking   statements.   Such  statements   reflect  the  current  risks,
uncertainties  and  assumptions  related to certain factors  including,  without
limitations, both inside and outside the U.S., changes or anticipated changes in
regulatory  environments,  competitive  factors,  general  economic  conditions,
customer  relations,  relationships  with vendors,  Viking and its subsidiaries'
ability to recruit and retain skilled personnel,  the interest rate environment,
governmental  regulation and supervision,  international  relations  between the
U.S.    and   foreign    countries,    seasonality,    distribution    networks,
telecommunication networks, product introductions and acceptance,  technological
change,  changes  in  industry  practices,   timely  completion  and  successful
integration of acquisitions,  economic,  social and political  conditions in the
countries in which  Viking,  its customers or its  suppliers  operate  including
security risks,  possible  disruptions in the communication  and  transportation
networks and  fluctuations in foreign currency  exchange rates,  one-time events
and other factors described herein and in other filings made by the Company with
the Securities and Exchange Commission.  Based upon changing conditions,  should
any one or more of these  risks or  uncertainties  materialize,  or  should  any
underlying assumptions prove incorrect,  actual results may vary materially from
those  described  herein  as  anticipated,   believed,  estimated,  expected  or
intended.   The  Company  does  not  intend  to  update  these   forward-looking
statements.

Plan Of Operations

Viking Capital Group, Inc.("Viking" or "Company") is a diversified international
holding  company  whose mission is to become the  recognized  leader at creating
extraordinary  long-term value for its shareholders through acquisitions and fee
income.  To achieve our mission,  Viking  identifies  businesses for acquisition
that are currently not optimizing opportunities that are available. To determine
the opportunities  available,  Viking looks at the overall business  environment
with a clear focus on fundamental  changes in politics,  regulation,  technology
and world  economics.  The Company has in the past been focusing on asset growth
and is now shifting towards a focus on revenue and profit growth.

The Company,  in 2002,  focused on  acquisitions in China and is now focusing on
acquisitions  in the US.  Effective  January 31, 2003,  the Company sold its 96%
interest in Beijing Fei Yun Viking Enterprises Company, Ltd. ("Fei Yun Viking").
The sale was  precipitated by a number of economic  factors.  Specifically,  the
Company had intended

                                                                              14
<PAGE>

to raise $18 million for the purpose of acquiring  the  remaining  40% of Golden
Horse. However, market conditions in the US did not allow it to be accomplished.
While  disappointing to have expended such time,  effort and resources,  only to
sell off assets  acquired,  the Company  believes it is best to move on to other
opportunities in the U.S. that have recently presented themselves because of the
change in investment banking attitudes and the over-all US economy.

The Company expects that it may acquire other companies in China, but not in the
immediate future.  Instead,  transactions  involving  entities in China, if any,
will focus on fee-based income that may include providing services pertaining to
the  Company's  knowledge  and expertise in the  acquisition  and  management of
Chinese  entities.  Other  areas  of  activity  relating  to China  may  include
commission or fee based income for product or service sales transactions.

The Company will focus on the U.S. for its  acquisitions  in the near future and
will also seek fee income  within the U.S.  The  Company  is  currently  working
towards and intends to purchase one or more profitable companies that will allow
the Company to take  advantage of its  approximately  $12 million tax loss carry
forward.  While  strategic  purchases  pertaining to financial  services  and/or
services  needed  by  financial  institutions  are  preferred,   the  overriding
principle  will be  profitability.  Therefore,  no industry  will be excluded in
efforts to increase shareholder wealth.

Another type of acquisition the Company would like to make,  after acquiring one
or more smaller profitable companies, is a life insurance company. The Company's
plan is to be flexible in its business  approach  with any  potential  insurance
company investors.  These potential insurance company investors may wish to work
with Viking in any of several  ways,  including,  but not limited to,  retaining
Viking as an  acquisition  team to manage the  acquisition  of a life  insurance
company on their behalf or investing in Viking for the purpose of acquiring life
insurance companies that Viking would own.

Funding for such  acquisitions  is expected to come from  institutional  lenders
and/or institutional equity investors in conjunction with the utilization of the
Company's  approximately  $12  million  tax loss carry  forward  (subject to any
limitations under the Internal Revenue Code), other assets the Company owns, and
the assets and/or cash flow of an acquired  company.  Targets will be considered
based  primarily  upon their sales and profits with little weight given to asset
size.

After 1) one or more smaller  companies  are  acquired  and 2) a life  insurance
company has been acquired and 3) the Company has an established  sound cash flow
that will allow the Company to raise additional working capital, the Company may
pursue Remote Banking Business.  The Remote Banking Business would provide banks
with the  ability  to give their  depositors  access to their  accounts  via the
internet.  The Company previously pursued Remote Banking Business with banks and
banking groups,  with a good degree of interest.  However,  potential  customers
declined to sign a long-term contract for the Company's remote banking services,
as they deemed the Company's assets, cash flow and profitability unacceptable to
meet certain of their requirements.

The Company  expects  that it will need  additional  cash during the next twelve
months for working capital and acquisitions and therefore desires and expects to
raise significant  amounts of capital to pursue  acquisitions during that period
of time.  Capital  raised  for  acquisitions  is  generally  tied to a  specific
acquisition  when made  available  to the  Company.  The  Company  does not have
committed capital sources at this time for any acquisition. The Company may also
use assets it already  owns,  including  the $6.5 million note dated January 31,
2003 the Company obtained from the divestiture of Fei Yun Viking, as all or part
of the purchase price of future acquisitions. Additionally, the Company plans to
utilize its  approximately  $12 million tax loss carry  forward  (subject to any
limitations in the Internal Revenue Code) in conjunction with a potential equity
or debt financed  acquisition of a target company.  The Company expects to raise
the  capital  required  for  these  acquisitions  via the  private  offering  of
preferred stock, debt or a combination thereof.

Capital raised will be for additional  acquisitions,  fees and costs  associated
with acquisitions, working capital and potential debt reduction.

The Company has been dependent upon raising capital for its U.S.  administrative
and management operations ("Parent Operations"). The Company has been successful
in the past in meeting its Parent  Operations cash needs from private  investors
and will continue to raise capital for these  purposes  from  qualified  private
investors  for the  foreseeable  future.  During the three months ended June 30,
2003, the Company raised approximately  $690,405 to meet the needs of its Parent
Operations  and to pay its debts.  Potential  increases to the Company's  Parent
Operations

                                                                              15
<PAGE>

cash  needs   include   hiring   additional   employees  in  the  financial  and
administrative   departments  and  potential   increases  in  professional  fees
associated with acquisitions and related audits. Management believes that it can
continue to raise  funds from  private  investors  for its cash needs for Parent
Operations. The Company is expecting to raise significant amounts of capital for
the purposes described above,  including working capital.  However, there can be
no degree of  assurance  that the Company can  continue  to raise  capital  from
private  investors or that it can raise funds from any other sources in large or
small amounts.

Consolidated  liabilities at June 30, 2003 were approximately  $3,018,000 versus
$2,698,000  at March  31,  2003 and  $105,629,000  at  December  31,  2002.  The
reduction from the year-end  figure can be attributed to the  divestiture of Fei
Yun Viking in January  2003.  The increase from the prior quarter to the current
quarter can be  attributed  to a new ten-year  promissory  note of $500,000 with
reductions of other debts from the proceeds of the long-term promissory note. Of
the total  liabilities  at June 30, 2003,  approximately  $770,000 and $500,000,
respectively,   is  short-term  and  long-term  promissory  notes  with  private
investors, not banks or other institutions.  Additionally, approximately $91,000
is accounts payable and the balance of approximately  $1,657,000 is comprised of
unpaid  accrued  officers'  salary and  payroll  taxes of  $1,591,000  and other
accrued expenses of $66,000.

Discussion of Operations

The majority of the  Company's  assets and all of its revenues  during 2002 were
due to entities  in China  which were sold  January  31,  2003.  Therefore,  the
comparative information given for the three and six month periods ended June 30,
2003 and 2002 is not directly comparable.

Effective  January 31, 2003, the Company sold its 96% interest in Fei Yun Viking
as disclosed  in its filing on Form 8-K filed  February 3, 2003 and February 18,
2003 with an event date of January  31,  2003.  A  subsequent  amendment  to the
February  18,  2003 Form 8-K was filed on May 29,  2003 to update item 7(b) with
proforma financial  information.  Effective March 28, 2003, the Company sold its
25% equity  interest in Wuxi Viking  Garments Co., Ltd. No Form 8-K was filed on
this disposition  because it did not meet the  significance  test required for a
Form 8-K filing.

Where  appropriate,  income  and  expenses  pertaining  only to the  U.S.  based
administrative  and management parent company  operations will be referred to as
"Parent Operations".

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2003 AND 2002

Revenues

For the second quarter of 2003,  revenues were zero compared to $989 thousand in
the comparable period in 2002. Fei Yun Viking and its  subsidiaries,  which were
sold effective  January 31, 2003, were the source of revenues for the comparable
period a year ago.

Equity Accounted Investments

For the second quarter of 2003, the Company had no equity accounted  investments
versus the comparable period of 2002 in which Viking incurred a combined loss of
approximately  $105  thousand due to its equity  accounted  investments  in Wuxi
Viking Garments  Company,  Ltd. and Lianyugang East Sea Highway  Development and
Management Company, Ltd. (Tollway).

Both of these equity accounted investments were sold during the first quarter of
2003.

General and Administrative Expenses

Consolidated  G&A costs for the second quarter of 2003 were  approximately  $198
thousand versus $1,541 thousand for the comparable  period in 2002. The decrease
is  primarily  due to the  divestiture  of Fei Yun Viking  and its  subsidiaries
effective  January  31,  2003.  The  depreciation  portion  of these  costs  was
negligible  in  the  second  quarter  of  2003  versus  $1,050  thousand  in the
comparable period in 2002.

Parent  Operations  G&A costs for the second  quarter of 2003 were $198 thousand
versus $167 thousand for the comparable period in 2002.

                                                                              16
<PAGE>

Interest Expense

Consolidated  interest expense for the second quarter of 2003 was  approximately
$43  thousand  versus  $636  thousand  for the  comparable  period in 2002.  The
decrease is due to the  divestiture of Fei Yun Viking and its  associated  debts
effective  January 31, 2003,  thus  relieving  the company of accruing  interest
costs on the associated debts.

Parent  Operations  interest expense in the second quarter of 2003 and 2002 were
approximately $43 thousand and $20 thousand,  respectively.  The increase is due
to increased interest bearing debts.

Interest Income

Consolidated  interest  income for the second quarter of 2003 was  approximately
$67 thousand  versus  approximately  $233 thousand for the comparable  period in
2002. The decrease is primarily due to the divestiture of Fei Yun Viking and its
subsidiaries  during the first quarter of 2003 that had several notes receivable
accruing interest.

Parent   Operations   interest  income  for  the  second  quarter  of  2003  was
approximately $67 thousand versus $2 thousand for the comparable period in 2002.
The increase is due to interest  income from the $6.5  million note  received in
connection with the sale of Fei Yun Viking.

Net Income(Loss)

Consolidated  net loss for the  second  quarter of 2003 was  approximately  $171
thousand versus a net loss of $1,879 thousand for the comparable period in 2002.
The change is due to the  divestiture of Fei Yun Viking during the first quarter
of 2003 and the resulting reduction in expenses associated with its operations.

Parent  Operations  net  loss  for the  second  quarter  of 2003  and  2002  was
approximately $171 thousand and $190 thousand, respectively.

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2003 AND 2002

Revenues

For the six month  period  ended  June 30,  2003,  revenues  were $286  thousand
compared to $1,688 thousand in the comparable  period in 2002. The $286 thousand
of revenue was due  entirely  to rental  income at Golden  Horse/Sunshine  Plaza
during the month of January  before Fei Yun Viking was sold.  Fei Yun Viking and
its  subsidiaries  were the source of revenues for the comparable  period a year
ago. Fei Yun Viking and its subsidiaries were sold effective January 31, 2003.

Equity Accounted Investments

For the six month  period ended June 30,  2003,  the Company  incurred a loss of
approximately  $5 thousand due to its equity  accounted  investments  versus the
comparable period of 2002 in which Viking incurred a loss of approximately  $102
thousand.

Viking's equity accounted  investments in Wuxi Viking Garments Company, Ltd. and
Lianyugang East Sea Highway Development and Management  Company,  Ltd. (Tollway)
were sold during the first quarter of 2003.

General and Administrative Expenses

Consolidated G&A costs for the six months ended June 30, 2003 were approximately
$626 thousand  versus $2,426  thousand for the  comparable  period in 2002.  The
decrease  is  primarily  due to  the  divestiture  of Fei  Yun  Viking  and  its
subsidiaries effective January 31, 2003.

Parent  Company  G&A costs for the six months  ended June 30, 2003 and 2002 were
$368 thousand versus $403 thousand, respectively.

                                                                              17
<PAGE>

Interest Expense

Consolidated  interest  expense  for the six  months  ended  June  30,  2003 was
approximately  $312 thousand versus $1,481 thousand for the comparable period in
2002.  The  decrease  is due to  the  divestiture  of Fei  Yun  Viking  and  its
associated  debts  effective  January 31, 2003,  thus  relieving  the company of
accruing interest costs on the associated debts.

Parent  Operations  interest  expense for the six months ended June 30, 2003 and
2002 were approximately $72 thousand and $65 thousand, respectively.

Interest Income

Consolidated  interest  income  for the six  months  ended  June  30,  2003  was
approximately   $150  thousand  versus   approximately  $235  thousand  for  the
comparable  period in 2002. The decrease is primarily due to the  divestiture of
Fei Yun Viking and its  subsidiaries  during the first  quarter of 2003 that had
several notes receivable accruing interest.

Parent  Operations  interest  income  for six  months  ended  June 30,  2003 was
approximately  $111  thousand  versus $3 thousand for the  comparable  period in
2002. The increase is due to interest income from the $6.5 million note received
in connection with the sale of Fei Yun Viking.

Net Income(Loss)

Consolidated  net loss for the six months ended June 30, 2003 was  approximately
$477 thousand versus a net loss of $2,614 thousand for the comparable  period in
2002.  The change is due to the  divestiture  of Fei Yun Viking during the first
quarter of 2003 and the  resulting  reduction  in expenses  associated  with its
operations.

Parent  Operations  net  loss  for  the six  months  ended  June  30,  2003  was
approximately  $369  thousand  versus  a net  loss  of  $473  thousand  for  the
comparable period in 2002.

Liquidity and Capital Resources

Cash needs for general and administrative  expenses at the Viking Capital Group,
Inc. U.S.  administrative  and  management  level  ("Parent  Company") have been
satisfied in the past by new promissory  notes and the sale of common stock. The
Parent Company level will continue to rely upon raising  additional  capital for
its cash needs at least for the  immediate  future and believes that its current
fund   raising   methods  will  be   sufficient   to  satisfy  its  general  and
administrative  needs  barring any  unexpected  or  significant  changes in such
costs. The Company will need to raise substantial  additional capital for future
acquisitions.  The Company does not have any binding  agreements  to supply such
cash at this time.  The  Company  continues  to seek debt  financing  and equity
financing  on a large  scale for future  acquisitions  and  growth.  The Company
expects that it will be able to augment institutional debt or equity investments
through the use of its approximately $12 million tax loss carryforward,  the use
of other  assets  it  already  owns,  and/or  the  assets  and cash flow from an
acquired company.

Consolidated  liabilities at June 30, 2003 were  approximately  $3,018  thousand
versus $2,698  thousand at March 31, 2003 and $105,629  thousand at December 31,
2002.  The  reduction  from  the  year-end  figure  can  be  attributed  to  the
divestiture  of Fei Yun  Viking in January  2003.  The  increase  from the prior
quarter to the current  quarter can be attributed  to a new ten-year  promissory
note of  $500,000  with  reductions  of other  debts  from the  proceeds  of the
long-term promissory note. The long-term promissory note is to be repaid in five
$100,000 payments beginning on the sixth anniversary date of the note.  Interest
on this  note is at 12% per  annum  and is to be  paid  semi-annually
with the exception of the first year's  interest which has been paid in advance.
Of the total liabilities at June 30, 2003,  approximately $770 thousand and $500
thousand,  respectively,  is  short-term  and  long-term  promissory  notes with
private investors, not banks or other institutions.  Additionally, approximately
$91 thousand is accounts payable.  The balance of approximately  $1,657 thousand
is  comprised  of unpaid  accrued  officers'  salary &  payroll  taxes of $1,591
thousand and other accrued expenses of $66 thousand.

Net cash used in operating activities for the six months ended June 30, 2003 was
approximately  $478  thousand  compared to $6,883 of cash  provided by operating
activities during the comparable  period in 2002. The significant  change is due
directly to the  divestiture  of Fei Yun Viking and its  subsidiaries.  The cash
provided in the prior year was due to customer  deposits at the now divested Fei
Yun Viking.

                                                                              18
<PAGE>

Net cash used in investing activities for the six months ended June 30, 2003 was
approximately  $1,423  thousand  compared to $2,495  thousand  used in investing
activities in the comparable  period in 2002. The current  period's use of funds
is primarily due to the  divestiture  of $1,379  thousand in cash as part of the
divestiture of Fei Yun Viking. The balance of $44 thousand in funds used is also
due to activities at Fei Yun Viking prior to its sale.

Net cash provided by financing activities for the six months ended June 30, 2003
was approximately $601 thousand versus $1,877 thousand for the comparable period
in 2002. During the current six months ended June 30, 2003, all of the financing
amounts  relate  to  Parent  Operations  activities  including  proceeds  of $95
thousand from the sale of stock and a net $506 thousand  from  promissory  notes
($773  thousand new less $267  thousand in  repayments).  During the  comparable
period in 2002, the financing was from a mixture of Parent Operations activities
and  activities  at Fei Yun Viking  including  approximately  $798  thousand  of
capital contributions, a net increase of notes payable of $808 thousand and $271
thousand in proceeds from the sale of common stock of the Company.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements.

Item 3.  Controls and Procedures

Within 90 days  prior to the  filing  date of this  report,  we,  the  principal
executive  officer/principal  financial officer carried out an evaluation of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on this evaluation, the principal executive officer/principal
financial  officer  concluded  that our  disclosure  controls and procedures are
effective in ensuring that material  information is timely communicated to us to
enable us to evaluate  information and determine the information  required to be
included in our periodic SEC reports.  It should be noted that the design of any
system  of  controls  is  based  in part  upon  certain  assumptions  about  the
likelihood of future events,  and there can be no assurance that any design will
succeed in achieving  its stated goals under all  potential  future  conditions,
regardless of how remote.

In  addition,  we  reviewed  our  internal  controls,  and  there  have  been no
significant  changes in our  internal  controls or in other  factors  that could
significantly  affect  those  controls  subsequent  to the  date of  their  last
evaluation.

PART II - OTHER INFORMATION

Item 2. Changes in Securities

During the three month  period ended June 30, 2003,  the Company  issued  common
restricted shares (Class A Common) in private  transactions under exemption from
registration under the Securities Act pursuant to Section 4(2) and/or Regulation
D, Rule 506.  Sales have been made to  accredited  investors  only.  In summary;
1,700,000  common  restricted  shares were issued for $85,000 cash.  The Company
also issued  107,214  common  restricted  shares in payment of promissory  notes
principal and interest totaling $5,361.

Item 5. Other Information

General
-------

The Company's  common stock trades on the OTC  Electronic  Bulletin  Board.  Its
symbol  is  "VGCP".  Company  information  can be  found  on  its  web  site  at
www.vcgi.com.

Risk Factors
------------

The Company faces substantial risks at all times. Some of these risks are listed
here. This list is not intended to be an exhaustive description of risks, but as
a reminder that there are substantial  risks involved in investing in this stock
or any stock. Persons inclined to invest in the Company or any company should do
so only after  personal due  diligence  and a personal  assessment of their risk
tolerance. We encourage you to review this entire document and our annual report
on Form 10-KSB and to perform other information gathering of your own.

                                                                              19
<PAGE>

     1)   Our  ability  to acquire  other  companies  is subject to  substantial
          obstacles.  Our  failure  to  overcome  any  of  these  obstacles  may
          materially and adversely affect our planned growth.

     One key element of our  strategy is to acquire  additional  companies.  The
     success  of our  acquisitions  will  depend  on  our  ability  to  overcome
     substantial obstacles,  such as the availability of acquisition candidates,
     our ability to compete  successfully with other potential acquirors seeking
     similar or the same  acquisition  candidates,  the availability of funds to
     finance  acquisitions  and the  availability  of  management  resources  to
     oversee  the  operation  of  acquired  businesses.  The Company has limited
     resources  and  we  can  offer  no  assurance   that  we  will  succeed  in
     consummating  any  additional  acquisitions  or  that  we  will  be able to
     integrate and manage any acquisitions successfully.

     2)   A  substantial  portion  of our  outstanding  common  stock is  freely
          tradable and may be sold into the market at any time.

     Of the  Company's  outstanding  common stock at June 30,  2003,  20,528,082
     shares are currently freely trading shares, and the remaining approximately
     35,518,987 common restricted shares may be eligible for removal of transfer
     restrictions  within one year.  Nevertheless,  trading  activity in Company
     stock is thin, making the shares subject to sudden drops in price if one or
     more  shareholders  choose to sell their  shares at or about the same time.
     This  could   cause  the  market   price  of  our  common   stock  to  drop
     significantly, even if our business is growing.

     3)   Our share price has been and may continue to be volatile.

     Our common stock has experienced in the past, and is expected to experience
     in the future, significant price and volume volatility, which substantially
     increases the risk of loss to shareholders.

     4)   We depend heavily on key personnel, and would be adversely affected if
          we ceased to employ these key personnel.

     Our  performance  would be severely  adversely  affected by the  departure,
     disability or death of one or more of our directors or executive  officers.
     In particular, our Chairman and Chief Executive Officer, William J. Fossen,
     has spent years developing relationships with powerful individuals in China
     and learning the culture in China.  These have been significant  factors in
     the Company's ability to learn about and do business in China. Further, his
     experience,  reputation,  contacts and  knowledge  regarding  the insurance
     industry within the U.S. cannot be overestimated in determining the success
     of any endeavors into the insurance market place. Moreover, we benefit from
     and rely on the substantial  experience of all our executives and advisors.
     We  compete  for  qualified  employees  and  advisors.  If we are unable to
     recruit and retain qualified employees and advisors at competitive salaries
     or fees, our business will be adversely affected.

     5)   Our  business has  substantial  cash  requirements  and we may require
          additional  sources of funds if our current sources are unavailable or
          insufficient to satisfy these  requirements,  and we cannot assure you
          that these additional  sources of funds will be available or available
          on reasonable terms.

     We have  substantial  cash  requirements  in connection with our operations
     including but not limited to a) compliance  costs  consisting  primarily of
     audit accountants and attorneys b) capital  expenditure and c) debt service
     obligations.  If the cash we generate  from our  operations  or that we can
     access from other sources is not available  when needed or is  insufficient
     to satisfy our requirements,  we may require  additional  sources of funds,
     including  by way of possible  asset sales.  We cannot  assure you that any
     required  additional  sources of funds would be  available  or available on
     reasonable  terms,  particularly  in light of our existing debt levels,  or
     that we would be able to dispose of assets to raise cash in a timely manner
     or for fair value. If we do not generate  sufficient  amounts of capital to
     support  our  operations  and  service  our  debt,  or we do  not  generate
     sufficient  amounts of capital at the times needed and on reasonable terms,
     our business will likely be adversely affected.

     6)   Prior to the  divestiture of our Chinese  subsidiaries,  substantially
          all of our assets and revenues were derived from  businesses in China.
          We  currently  hold  assets due from and  collateralized  by a Chinese
          business.  The Company may conduct other business  activities in China
          in the future.  Additional  risks pertaining to operating in a foreign
          country must be considered.

          The  Chinese  government  could  change its  policies  toward  private
          enterprise or even  nationalize  or expropriate  private  enterprises,
          which  could  result  in the  total  loss  of our  investment  in that
          country.

                                                                              20
<PAGE>

               Investments  in  businesses  in China are subject to  significant
          political and economic  uncertainties and may be adversely affected by
          political,  economic and social  developments in China.  Over the past
          several  years,  the Chinese  government has pursued  economic  reform
          policies  including the encouragement of private economic activity and
          greater  economic  decentralization.  The Chinese  government  may not
          continue to pursue these policies or may  significantly  alter them to
          our detriment from time to time with little, if any, prior notice.

               Changes  in   policies,   laws  and   regulations   or  in  their
          interpretation,   or  the   imposition   of   confiscatory   taxation,
          restrictions on currency  conversion,  restrictions or prohibitions on
          dividend  payments to  stockholders,  devaluations  of currency or the
          nationalization or other expropriation of private  enterprises,  could
          have a material adverse effect on our businesses.  Nationalization  or
          expropriation  could cause a total loss of our investment in China and
          the total loss of your investment.

          A lack of adequate  remedies and impartiality  under the Chinese legal
          system may adversely  impact our ability to do business and to enforce
          the agreements to which the Company is a party.

               We and our subsidiaries  have in the past, and may in the future,
          regularly enter into agreements  governed by Chinese law in the course
          of our Chinese business  operations.  Our business would be materially
          and adversely  affected if the other parties to such agreements do not
          honor them. In the event of a dispute, enforcement of these agreements
          in China could be extremely difficult. Unlike the United States, China
          has a civil law system  based on written  statutes  in which  judicial
          decisions have little  precedential  value. The Chinese government has
          enacted  some  laws  and  regulations  dealing  with  matters  such as
          corporate organization and governance,  foreign investment,  commerce,
          taxation  and  trade.   However,   the   government's   experience  in
          implementing, interpreting and enforcing these laws and regulations is
          limited,  and our ability to enforce  commercial  claims or to resolve
          commercial disputes is uncertain. Furthermore, enforcement of the laws
          and  regulations  may be  subject  to  the  exercise  of  considerable
          discretion by agencies of the Chinese government, and forces unrelated
          to the legal  merits of a particular  matter or dispute may  influence
          their  determination.  These uncertainties could limit the protections
          that are available to us.

          If  relations  between the United  States and China  deteriorate,  our
          stock price may decrease  and we may have  difficulty  accessing  U.S.
          capital markets.

               At various times during recent years, the United States and China
          have had significant disagreements over political and economic issues.
          Controversies may arise in the future between these two countries. Any
          political or trade controversies  between the United States and China,
          whether or not  directly  related  to our  business,  could  adversely
          affect the market  price of our common stock and our ability to access
          U.S. capital markets.


          Business licenses are required and may not be renewed.

               Activities  in  China  require  business  licenses  from  various
          Chinese governmental entities. The licenses that we have been required
          to hold in the  past and may be  required  to hold in the  future  are
          subject to periodic  review and approval.  We are not certain that the
          Chinese government will renew such licenses or that it will not revoke
          such licenses with little, if any, prior notice.

          Our  business  is  susceptible  to the  risk  of  manmade  or  natural
          disasters that may result in damage not covered by insurance.

               Prior to the divestiture of Fei Yun Viking, our largest asset was
          our  interest in Sunshine  Plaza/Golden  Horse.  Additionally,  we may
          purchase other real estate interests in China in the future.  Any real
          estate business we may conduct would be severely affected if a natural
          or manmade  disaster  damages the site or the structures upon which it
          is situated. Fire fighting and disaster relief and assistance in China
          are not well  developed  by Western  standards.  Damaged  residential,
          office and retail space,  losses from the interruption of our business
          and negative  publicity  resulting from a natural or manmade  disaster
          would adversely  affect any real estate business we may be conducting.
          We do not have business interruption  insurance.  Although the Company
          may maintain property damage  insurance,  the insurance policy may not
          be  enforceable in every  instance,  or sufficient to cover all losses
          that result from manmade or natural disasters.


                                                                              21
<PAGE>

Item 6.  Exhibits and Reports on Form  8-K

a)       Exhibits

Exhibit
Number            Description of Exhibit
-----             ----------------------

  2.1   Contract  for  disposition  of 96% of Beijing Fei Yun
        Viking Enterprises Co., Ltd.                                  (a)
  3.1   Amended and  Restated  Articles of  Incorporation  of
        Viking Capital Group, Inc.                                    (b)
  3.2   Amendment to Amended and  Restated  Articles
        of Incorporation of Registrant                                (c)
  3.3   Bylaws of Viking Capital Group, Inc. as amended               (d)
 31.1   Section 302 Certification Of Chief Executive Officer
 31.2   Section 302 Certification Of Chief Financial Officer
 32.1   Section 906 Certification Of Chief Executive Officer
 32.2   Section 906 Certification Of Chief Financial Officer


Note
----

(a)     Incorporated  by  reference  pursuant to Exchange Act Rule 12b-23 to the
        Registrant's Form 8-K filed on February 18, 2003 with event date January
        31, 2003.
(b)     Incorporated  by  reference  pursuant to Exchange Act Rule 12b-23 to the
        Registrant's Form 14A (File No. 0-22744) for 1996.
(c)     Incorporated  by  reference  pursuant to Exchange Act Rule 12b-23 to the
        Registrant's Form 10KSB for fiscal year 2001.
(d)     Incorporated  by  reference  pursuant to Exchange Act Rule 12b-23 to the
        Registrant's Form 10-SB(File No. 0-22744) effective December 27, 1993.


b)      Reports on Form 8-K

        During the current quarter an amendment to Form 8-K was filed on May 29,
        2003 to update the Form 8-K filed on  February  18, 2003  regarding  the
        divestiture of Fei Yun Viking to include proforma financial  information
        as required by Item 7(b) of Form 8-K.



              (The remainder of this page is intentionally blank.)









                                                                              22
<PAGE>

                                   SIGNATURES



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



                               VIKING CAPITAL GROUP, INC.

Dated: August 13, 2003         By:  /s/ William J. Fossen
                                    ---------------------------
                                    William J. Fossen
                                    Chief Executive Officer


Dated: August 13, 2003         By:  /s/ Matthew W. Fossen
                                    ---------------------------
                                    Matthew W. Fossen
                                    Chief Financial Officer
                                    President




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