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, 2001

                                       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,  2001,  approximately  37,295,646  shares of Common  Stock of the
issuer were outstanding.  As of June 30, 2001,  100,000 shares of Class B Common
Stock of the issuer were outstanding.


                                      -1-
<PAGE>

                           VIKING CAPITAL GROUP, INC.



                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------
PART I - FINANCIAL INFORMATION

  Item 1. Financial Statements

     Consolidated Balance Sheets - June 30, 2001(unaudited) and
     December 31, 2000                                                       3

     Consolidated Statements of Operations (unaudited) - For the
     three months ended June 30, 2001 and 2000, and for the period
     from inception (November 12, 1986) to June 30, 2001                     5

     Consolidated Statements of Operations (unaudited) - For the
     six months ended June 30, 2001 and 2000, and for the period from
     inception (November 12, 1986) to June 30, 2001                          6

     Consolidated Statements of Cash Flows (unaudited) - For the six
     months ended June 30, 2001 and 2000, and for the period from
     inception (November 12, 1986) to June 30, 2001                          7

     Notes to Consolidated Condensed Financial Statements                    9


  Item 2. Management's Discussion and Analysis or Plan of Operations.       11


PART II - OTHER INFORMATION

  Item 2. Changes in Securities                                             13

  Item 5. Other Information                                                 13

  Item 6. Exhibits                                                          13


SIGNATURES                                                                  15
EXHIBITS                                                                    16




                                      -2-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS
                                     ------
                                                                (Unaudited)

                                                                  June 30,    December 31,
                                                                    2001           2000
                                                               ------------   ------------
<S>                                                            <C>            <C>
CURRENT ASSETS

  Cash                                                         $      3,015   $     13,193
  Marketable securities                                               8,977           --
  Accounts receivable                                                  --             --
  Notes and other accounts receivable and accrued interest,
     including $74,115 and $19,384  due from related parties
     as of June 30, 2001 and December 31, 2000, respectively        107,694         81,164
                                                               ------------   ------------
     Total current assets                                           119,686         94,357
                                                               ------------   ------------
OFFICE FURNITURE, EQUIPMENT, SOFTWARE AND
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET                         495,592        649,808

OTHER ASSETS                                                         60,027         85,027
                                                               ------------   ------------
TOTAL ASSETS                                                   $    675,305   $    829,192
                                                               ============   ============

</TABLE>



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

                                      -3-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                           CONSOLIDATED BALANCE SHEETS



                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------

                                                                             (Unaudited)

                                                                              June 30,      December 31,
                                                                                 2001            2000
                                                                            ------------    ------------
<S>                                                                         <C>             <C>
CURRENT LIABILITIES
  Accounts payable and accrued expenses                                     $    201,611    $    248,473
  Accrued officers' payroll and payroll taxes                                  1,634,380       1,430,042
  Lease obligation, current portion                                                7,952          13,448
  Notes payable and accrued interest, including
     $68,242 and $42,574 due to related parties as of
     June 30, 2001 and December 31, 2000, respectively                           444,517         287,015
                                                                            ------------    ------------
     Total current liabilities                                                 2,288,460       1,978,978
                                                                            ------------    ------------
     Total liabilities                                                         2,288,460       1,978,978
                                                                            ------------    ------------
STOCKHOLDERS' DEFICIT
  Preferred stock $1.00 par value; 50,000,000 shares authorized;
     Series A Preferred Stock $1.00 par value; 2,500,000 shares
        authorized, no shares issued and outstanding                                --              --
     Series AA Preferred Stock $1.00 par value; 6,000,000 shares
        authorized, no shares issued and outstanding                                --              --
  Common stock $0.001 par value; 150,000,000 shares authorized;
     37,821,271 and 36,581,463 issued and 37,295,646 and 36,055,838
     outstanding, as of June 30, 2001 and December 31, 2000, respectively         37,821          36,581
  Common stock Class B $0.001 par value; 100,000 shares
     authorized, issued  and outstanding                                             100             100
  Paid-in capital                                                              9,812,192       9,514,125
  Deficits accumulated in the development stage                              (11,422,062)    (10,659,386)
                                                                            ------------    ------------
                                                                              (1,571,949)     (1,108,580)
                                                                            ------------    ------------

  Less treasury stock - 525,625 shares at cost                                   (41,206)        (41,206)
                                                                            ------------    ------------

     Total stockholders' deficit                                              (1,613,155)     (1,149,786)
                                                                            ------------    ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                 $    675,305    $    829,192
                                                                            ============    ============

</TABLE>





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

                                      -4-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                  Three months ended June 30, 2001 and 2000 and
           Period from November 12, 1986 (inception) to June 30, 2001



                                                   Three months ended           Period from
                                                        June 30,             November 12, 1986
                                                  2001            2000        to June 30, 2001
                                             ------------    ------------     ----------------
<S>                                          <C>             <C>              <C>
Revenue                                      $       --      $      2,674       $    474,376
Cost of revenue                                      --             2,451             91,324
                                             ------------    ------------       ------------
Gross profit                                         --               223            383,052
                                             ------------    ------------       ------------

Costs and expenses
   Depreciation and amortization                   71,967          13,622            458,585
   General and administrative expenses            245,915         256,956         11,144,572
                                             ------------    ------------       ------------
       Total costs and expenses                   317,882         270,578         11,603,157
                                             ------------    ------------       ------------

   Loss from operations                          (317,882)       (270,355)       (11,220,105)

Other income(expense)
   Interest income                                  1,958           9,123            109,996
   Interest and penalty expense                   (11,814)         (6,523)          (307,651)
   Other                                              (16)           --               26,921
                                             ------------    ------------       ------------
       Total other income(expense)                 (9,872)          2,600           (170,734)
                                             ------------    ------------       ------------

Loss before income taxes                         (327,754)       (267,755)       (11,390,839)

Income tax provision                                 --              --                  (32)
                                             ------------    ------------       ------------

Net loss                                     $   (327,754)   $   (267,755)      $(11,390,871)
                                             ============    ============       ============
Loss per common share attributable to
   common stockholders
     Basic and fully diluted                 $      (.009)   $      (.008)
                                             ============    ============

Weighted average common shares outstanding     37,030,040      33,532,064
                                             ============    ============

</TABLE>







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

                                      -5-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                   Six months ended June 30, 2001 and 2000 and
           Period from November 12, 1986 (inception) to June 30, 2001



                                                    Six months ended            Period from
                                                        June 30,             November 12, 1986
                                                  2001            2000        to June 30, 2001
                                             ------------    ------------     ----------------
<S>                                          <C>             <C>              <C>
Revenue                                      $       --      $     15,666       $    474,376
Cost of revenue                                      --            13,366             91,324
                                             ------------    ------------       ------------
Gross profit                                         --             2,300            383,052
                                             ------------    ------------       ------------

Costs and expenses
   Depreciation and amortization                  154,217          28,982            458,585
   General and administrative expenses            588,523         685,369         11,144,572
                                             ------------    ------------       ------------
       Total costs and expenses                   742,740         714,351         11,603,157
                                             ------------    ------------       ------------

   Loss from operations                          (742,740)       (712,051)       (11,220,105)

Other income(expense)
   Interest income                                  3,981          18,815            109,996
   Interest and penalty expense                   (23,502)        (14,035)          (307,651)
   Other                                             (415)         (3,490)            26,921
                                             ------------    ------------       ------------
       Total other income(expense)                (19,936)          1,290           (170,734)
                                             ------------    ------------       ------------

Loss before income taxes                         (762,676)       (710,761)       (11,390,839)

Income tax provision                                 --              --                  (32)
                                             ------------    ------------       ------------

Net loss                                     $   (762,676)   $   (710,761)      $(11,390,871)
                                             ============    ============       ============

Loss per common share attributable to
   common stockholders
     Basic and fully diluted                 $      (.021)   $      (.022)
                                             ============    ============

Weighted average common shares outstanding     36,625,085      33,101,871
                                             ============    ============

</TABLE>




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

                                      -6-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                   Six months ended June 30, 2001 and 2000 and
           Period from November 12, 1986 (inception) to June 30, 2001


                                                                  Six months ended            Period from
                                                                      June 30,             November 12, 1986
                                                                2001            2000        to June 30, 2001
                                                           ------------    ------------     ----------------
<S>                                                        <C>             <C>              <C>
Cash flows from operating activities
   Net loss                                                $   (762,676)   $   (710,761)      $(11,390,871)
   Non-cash charges included in operations
     Provision for doubtful accounts                               --              --               72,562
     Depreciation and amortization                              154,217          28,982            458,585
     Common stock issued for services and interest               59,184         167,629          2,831,209
     Stock options issued for services                           47,623            --              114,162
     Note payable issued for services                              --              --                3,200
     Note payable issued for interest expense                      --              --                3,660
     Common stock issued for accrued expenses,
       Expense reimbursement, fees, other                          --              --              187,988
     Provision for doubtful notes receivable                       --              --               52,754
     Loss on assets                                                --              --               15,000
     Advances to stockholder expensed to consulting                --              --               57,705
   Changes in assets and liabilities
     Decrease in accounts receivable                               --             6,350                205
     (Increase) in interest receivable                           (3,981)        (16,087)            (6,126)
     (Increase) in deposits                                        --              --              (31,767)
     Decrease in other assets, receivables                       55,000           5,332              2,325
     (Decrease) in accounts payable and accrued expenses        (46,862)        (63,650)           344,151
     Increase in interest payable                                 5,895            --                5,895
     Increase in accrued payroll and payroll taxes              204,338         169,587          1,525,847
                                                           ------------    ------------       ------------
       Net cash used for operating activities                  (287,262)       (412,618)        (5,753,516)

Cash flows from investing activities
   Capital expenditures                                            --              --             (837,940)
   Loans made                                                   (52,550)           --             (447,377)
   Loan repayments                                                 --              --              114,500
   Other                                                           --              --              (15,050)
                                                           ------------    ------------       ------------
       Net cash used for investing activities                   (52,550)           --           (1,185,867)

Cash flows from financing activities
   Stock sale expenses                                             --              --              (11,716)
   Proceeds from sale of common stock                           175,000         405,249          4,988,089
   Proceeds from notes payable                                  174,730         120,199          2,822,783
   Principal repayments of notes payable                        (14,600)        (89,999)          (759,919)
   Principal payments on capital lease obligations               (5,496)        (15,893)           (99,686)
   Proceeds from preferred stock sale                              --              --               20,000
   Repurchase of preferred stock                                   --              --              (11,319)
   Preferred dividends paid                                        --              --               (5,834)
                                                           ------------    ------------       ------------
       Net cash provided by financing activities                329,634         419,556          6,942,398

Increase (decrease) in cash                                     (10,178)          6,938              3,015

                                  - continued -

</TABLE>

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

                                      -7-
<PAGE>
<TABLE>
<CAPTION>

                           VIKING CAPITAL GROUP, INC.
                        (A Development Stage Enterprise)

                CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
                                   (Unaudited)
                     Six months ended June 30, 2001 and 2000
         and Period from November 12, 1986 (inception) to June 30, 2001


                                                           Six months ended         Period from
                                                               June 30,          November 12, 1986
                                                          2001         2000       to June 30, 2001
                                                       ----------   ----------    ----------------
<S>                                                    <C>          <C>           <C>
Cash at beginning of period                                13,193        8,434             --
                                                       ----------   ----------       ----------
Cash at end of period                                  $    3,015   $   15,372       $    3,015
                                                       ==========   ==========       ==========

Cash flow information:
   Interest paid                                       $    8,870   $    9,361       $  130,189
   Income taxes paid                                   $     --     $     --         $       32

Non-cash investing activities:
   Repayment of note receivable - non cash method      $     --     $     --         $   21,000
   Common stock issued for:
     Acquisition of NIAI                               $     --     $     --         $   10,000
     Acquisition of VISI                               $     --     $     --         $      434
     Oil lease                                         $     --     $     --         $   40,000
   Marketable securities acquired for note payable     $    8,977   $     --         $    8,977

Non-cash financing activities:
   Preferred stock issued for:
     Note payable-related party                        $     --     $     --         $   60,000
     Accrued interest-related party                    $     --     $     --         $    4,500
     Accrued expenses-related party                    $     --     $     --         $   25,500

Common stock issued for:
   Repayment of notes payable                          $   17,500   $    5,199       $1,456,734
   Payment of interest                                 $      434   $       49       $  148,445
   Payment of accounts payable and exp reimbursement   $     --     $     --         $   15,000
   Conversion of preferred stock                       $     --     $     --         $  100,000
   Payment of preferred stock dividend                 $     --     $     --         $   25,556
   Notes receivable                                    $     --     $     --         $  832,032

Note payable issued for services                       $     --     $     --         $    6,860
Assignment of oil lease in payment of note payable     $     --     $     --         $   40,000

Common stock acquired for conversion of
   note receivable                                     $     --     $     --         $    6,406

Common stock canceled for conversion of
   note receivable                                     $   60,000   $     --         $   65,600

Additions to equipment under capital leases            $     --     $     --         $  107,631


</TABLE>

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

                                      -8-
<PAGE>

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION

The consolidated  interim  financial  statements  include the accounts of Viking
Capital  Group,  Inc.  and  its  wholly  owned  subsidiaries  (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,
2000.

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.

2.       MARKETABLE SECURITIES

Marketable  securities  consist of an investment  in an equity  security and are
classified as available for sale.  Unrealized  gains and losses will be adjusted
directly  to  stockholder  deficits.  There were no  unrealized  gains or losses
through June 30, 2001.

3.       SOFTWARE DEVELOPMENT COSTS

Software development costs have been capitalized in accordance with Statement of
Financial  Accounting  Standards No. 86,  "Accounting  for the Costs of Computer
Software to be Sold,  Leased or Otherwise  Marketed" ("SFAS 86"). Under SFAS 86,
capitalization  of software  development  costs begins upon the establishment of
technological  feasibility  and ends when a product  is  available  for  general
release to customers.  For the six month period ending June 30, 2001 and for the
year ended  December  31, 2000 the Company  amortized  $137,288  and $143,448 of
software costs, respectively, using an estimated useful life of three years.

Management periodically evaluates the recoverability, valuation and amortization
of capitalized  software cost. As part of this review,  management considers the
undiscounted  projected  future net  earnings.  If the  undiscounted  future net
earnings are less than the stated value,  software costs will be written down to
fair value.

4.       RELATED PARTY TRANSACTIONS

During the current quarter,  the Company entered into $7,600 of promissory notes
payable with related  parties.  At June 30, 2001 thre were $62,600 in promissory
notes  payable to related  parties.  During the  current  quarter,  the  Company
entered into $31,150 of promissory  notes  receivable with related  parties.  At
June 30,  2001,  there were $71,628  promissory  notes  receivable  from related
parties.

5.       OPTIONS ISSUED

During the current quarter, the Company granted 433,334 share options for common
restricted  stock  exercisable  at $0.30 per share and 34,167 share  options for
common  restricted  stock  exercisable at $0.25 per share in connection with the
purchase of common  shares for cash.  All of these options are  exercisable  and
expire within one year.


                                      -9-
<PAGE>

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


6.       OTHER

The financial  statements  have been prepared on the assumption that the Company
will  continue as a going  concern.  Its  continued  existence  depends upon the
success of management's  efforts to raise additional  capital  necessary to meet
the Company's  obligations as they come due and to obtain sufficient  capital to
execute its business plan.

There can be no degree of assurance given that the Company will be successful in
completing additional financing transactions. Should the Company be unsuccessful
in its efforts to obtain adequate  financing,  it's current financial  condition
may be affected adversely, and such affects may be material.

7.       ACCOUNTING CHANGES

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 141 "Business  Combinations" which requires
the  purchase  method  of  accounting  for  business  combination   transactions
initiated after June 30, 2001.

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 142 "Goodwill and Other Intangible Assets".
The statement requires that goodwill recorded on acquisitions completed prior to
July 1, 2001 be amortized  through December 31, 2001.  Goodwill  amortization is
precluded on acquisitions  completed after June 30, 2001.  Effective  January 1,
2002,  goodwill will no longer be amortized but will be tested for impairment as
set forth in the  statement.  We are  currently  reviewing  the new standard and
evaluating  the  effects of this  standard  on our future  financial  condition,
results of operations, and accounting policies and practices.

8.       EVENTS SUBSEQUENT TO JUNE 30, 2001

Subsequent  to June 30, 2001,  approximately  391,667  share  options for common
restricted  stock were  granted.  These options are  exercisable  at the rate of
$0.30 per share and are  exercisable  and expire within one year and were issued
in connection with the sale of common restricted shares. Also subsequent to June
30,  2001,  the  Company  issued  1,200,000  common   restricted  share  options
exercisable at $0.25 per share in payment of services.  All of these options are
exercisable and expire within 10 years. Additionally,  the Company issued 21,075
common shares for services valued at $3,788,  783,333 common  restricted  shares
for $117,500 cash, 226,000 common restricted shares for conversion of promissory
notes and interest of $33,900, and received $9,600 for new promissory notes.

Subsequent  to June 30,  2001,  the  Company  purchased  25% of Beijing  Fei Yun
Property  Development Co., Ltd., (Fei Yun) of Beijing China. The agreement gives
Viking  control of Fei Yun via the transfer of the voting  rights of over 51% of
the ownership of Fei Yun. The Company issued 21,500,000 common restricted shares
for its 25% ownership. Of these shares, 7,500,000 will remain in Fei Yun for the
purpose  of  raising  capital  for Fei Yun for new  acquisitions  and  expansion
working capital.



                                      -10-
<PAGE>

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

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,   changes  or  anticipated  changes  in  regulatory   environments,
competitive   factors,   general  economic   conditions,   customer   relations,
relationships  with  vendors,   the  interest  rate  environment,   governmental
regulation and supervision,  international  relations between the US and foreign
countries,   seasonality,   distribution  networks,  product  introductions  and
acceptance, technological change, changes in industry practices, 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.

Material Changes in Results of Operations

The  current  and prior  quarter's  activities  have been  focused  on  reducing
operating costs and continuing efforts to explore growth through acquisition and
growth through its Application  Service  Provider (ASP) business model.  The ASP
focus has been met with  resistance  from its  potential  financial  institution
customers because of the Company's lack of assets,  revenue and profits. The ASP
business  model  focus  begins  with,  and then  expands  upon,  remote  banking
services.

Thus,  the Company has changed its initial  focus to the  acquisition  of income
producing  assets (or businesses)  that would generate a significant net income.
Raising  significant  capital  for these  purposes  has been  difficult  for the
Company.

The Company has also been searching for acquisition  targets using the Company's
stock. Prior to the collapse of the dot com surge, the US market place expressed
an  interest  in  accepting  the  Company's  stock  but  the  acquisition  of  a
significant  sized  operating   successful   company  or  acquisition  of  other
significant  assets  has not been  completed  in the US.  Therein,  the  Company
re-directed  its human  resources  to engage their  contacts  outside the United
States, specifically, China.

The efforts of creating  contacts and focusing its acquisition  efforts in China
first  began to bear  fruit in  February  of 2001,  when the  Company  signed an
agreement with a Chinese  privatization  authority.  The agreement calls for the
Company to act as an  intermediate  for individuals or companies in the Americas
who wish to buy privatized Chinese assets.  Though the Company has not generated
any fees to date from  this  agreement,  it has  generated  several  acquisition
targets  for the Company  from both the  privatization  effort and from  already
private companies in China. These targets all have significant assets,  revenues
and profits.  Subsequent to June 30, 2001,  the Company  acquired 25% and voting
control of a diversified  holding  company in Beijing,  China called Beijing Fei
Yun Property  Development Co., Ltd., (Fei Yun) for 21,500,000  common restricted
shares.  The primary  business of this entity is  development  and management of
commercial and residential real estate. The purchase agreement grants control to
the Company via the two largest share holders of Fei Yun assigning  their voting
rights to a voting  committee  which the Company  controls.  The agreement  also
grants the Company  first  right of refusal to purchase  any shares for sale and
the  right  to  purchase  in  excess  of 51% of Fei Yun at any  time at its then
current  market  value.  As of June  30,  2001,  Fei Yun  had  (approximate  and
unaudited), in U.S. dollars, total assets in excess of $200 million, revenues of
$38 million,  and net profits after taxes of $5 million.  Projections for fiscal
year 2001 for all Fei Yun  operations are  approximately  $88 million in revenue
and $12 million or more in net profits  after  taxes.  All of these  amounts are
qualified in their entirety by future reference to audited financial information
which  will be  provided  in  accordance  with the  requirements  of Form 8K for
interim events.


                                      -11-
<PAGE>

The Company believes that its purchases will  significantly  enhance its ability
to raise capital in the US market. The Company will then return to its US market
focus regarding its ASP business.  The Company expects that the Company's future
audited financial  statements will provide financial stability acceptable to its
banking customers.

Fei Yun's name will be changed to Beijing Fei Yun Viking  Enterprises Co., Ltd.,
and its two  executive  leaders  have joined the Viking  executive  team as vice
presidents.

Though the  Company  will  continue  its  acquisitions  in China and the further
growth of Fei Yun, the Company will also continue its search for life  insurance
companies in the US. Viability of life insurance  company  acquisitions  will be
determined  by the Company  receiving  state and/or local  government  financial
incentives and utilization of the Company's stock as part of the purchase price.
The final determining factor in any life insurance company acquisition will be a
comparison of return on funds  raised/invested  by the Company versus returns on
other  current  projects  where  those same funds may be  deployed.  The Company
currently has no insurance company targets that meet these requirements.

The  acquisition  of Fei Yun does not  require  any  additional  space  and will
require only a few additional employees.

If the Company is successful in implementing  its plan of operations for the ASP
business,  the Company  does not  anticipate  that it will be required to lease,
acquire, or construct  significant  additional  facilities and equipment or hire
substantial additional employees to carry out such operations.

Material Changes in Financial Condition, Liquidity and Capital Resources for the
quarter ended June 30, 2001.

In  connection  with its efforts to attract  capital and  implement  its plan of
business,  the Company  incurred losses for the quarters ended June 30, 2001 and
2000, of $327,754 and $267,755,  respectively. The increase in cost is due to an
increase  in  depreciation  and   amortization   costs  of  $58,345  related  to
capitalized software development costs.

At June 30,  2001,  the  Company had cash on hand of $3,015,  current  assets of
$119,686  including  cash and $107,694 in notes and interest  receivable,  total
assets of $675,305 and liabilities totaling $725,161 excluding accrued officers'
salary of  $1,563,299.  Subsequent  to June 30,  2001,  the Company  received an
additional  $9,600 via promissory  notes and $117,500 via private sale of stock.
As of the end of the second quarter,  the Company  anticipates that the funds on
hand at June 30, 2001 will not sustain current operations beyond the next twelve
months and are not  sufficient to implement  any of the  Company's  full plan of
operations.  Accordingly, in order to sustain operations past such period and to
implement  the  Company's  full plan of  operations,  the  Company  must  secure
additional  funds.  There can be no degree of assurance that the Company will be
successful in securing additional funds. Management believes that, subsequent to
June  30,  2001,  the  acquisition  of 25%  ownership  and  control  of Fei Yun,
completed in the third quarter,  changes the Company's  financial position as it
pertains to the above discussion.




                                      -12-
<PAGE>

                           PART II - OTHER INFORMATION

Item 2. Changes in Securities

During the  quarter  ended June 30,  2001,  the Company  sold common  restricted
shares (Class A Common) in private sales 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;  866,666 common shares
were issued for cash of $130,000,  204,969 common shares were issued for payment
of  services  valued at  $30,750,  and  81,948  common  shares  were  issued for
conversion of  promissory  notes to stock in the amounts of $12,500 in principal
and $275 in interest.



Item 5. Other Information

         The Company's common stock trades on the OTC Electronic Bulletin Board.
Its symbol is "VGCP".

         Company  information can be found on the World Wide Web. The address is
www.vcgi.com.

         It should be noted that  significant  events took place  subsequent  to
June 30, 2001. Please refer to Item 2.  Management's  Discussion and Analysis or
Plan of Operations.



Item 6.  Exhibits and Reports

                  Exhibit 21.1      List of subsidiaries of the Registrant









                                      -13-
<PAGE>

                                  EXHIBIT INDEX
                                  -------------



EXHIBIT
NUMBER            DESCRIPTION
-------           -----------


21.1              List of Subsidiaries of the Registrant










                                      -14-
<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 14, 2001             By:  /s/ William J. Fossen
                                    ----------------------------------
                                    William J. Fossen, CEO


Dated:  August 14, 2001             By:  /s/ Matthew W. Fossen
                                    ----------------------------------
                                    Matthew W. Fossen,
                                    Chief Financial Officer
                                    President







                                      -15-