UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10Q


QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                       ACT OF 1934 FOR THE PERIOD ENDING


                                 MARCH 31, 2001


                           MILINX BUSINESS GROUP, INC.
                           (Exact Name of Registrant)

                DELAWARE                                        91-1954074
 (State or Jurisdiction of Incorporation                     (I.R.S. Employer
            or  Organization)                             Identification Number)

               SUITE 3827, 1001 FOURTH AVENUE, SEATTLE, WASHINGTON
                    (Address of Principle Executive Offices)

                                      98154
                                   (Zip Code)

                        (206) 621-7032 or (604) 647-7600
              (Registrant's Telephone Number, Including Area Code)

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

_______ Yes                                                          No _______

There are 20,049,409  issued and  outstanding  common shares of the issuer as of
May 17, 2001.


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                           MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS

                                                                        March 31,       June 30,
                                                                          2001            2000
                                                                      (Unaudited)
                                                                      ------------    ------------
<S>                                                                  <C>             <C>
CURRENT ASSETS
    Cash                                                              $     40,992    $  2,162,430

    Receivables
        Trade                                                              161,200           9,334
        Subscriptions                                                      225,900         323,721
        General Sales Tax                                                   28,613         327,149
        Employee and stockholders                                           54,755          20,692
                                                                      ------------    ------------
           Total accounts receivable                                       470,468         680,896

       Due from Milinx Marketing Group                                      33,915          82,644

       Security deposits                                                   108,287         209,362
       Prepaid rent and other                                              155,252          43,549
                                                                      ------------    ------------

           Total current assets                                            808,914       3,178,881

PROPERTY AND EQUIPMENT-AT COST, net of accumulated depreciation          4,061,198       3,572,168

OTHER ASSETS
    Licenses                                                               800,000       2,036,985
       Capital lease deposits                                               28,997         203,915
       Security deposits                                                      --             1,300
                                                                      ------------    ------------

                                                                      $  5,699,109    $  8,993,249
                                                                      ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                  $  1,626,738    $    981,233
    Accrued liabilities                                                    362,999         279,758
    Convertible note payable, net of unamortized discount                  444,444            --
    Due to Milinx Management Corporation                                     3,586           3,586
    Capital lease obligations                                            1,170,023         536,061
    Loan Payable                                                            19,038            --
       Customer deposits                                                      --             2,529
                                                                      ------------    ------------

           Total current liabilities                                     3,626,828       1,803,167

CAPITAL LEASE OBLIGATIONS, net of current obligations                         --           927,808

MINORITY INTEREST                                                           56,604            --
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
    Series A 10% non-cumulative, voting convertible preferred stock          3,675           3,675
    Series B 10% non-cumulative, voting convertible preferred stock           --             1,681
    Series C 10% non-cumulative, voting convertible preferred stock          1,348           2,207
    Common stock                                                            22,138           9,671
    Additional paid in capital                                          20,218,076      14,908,291
    Unearned compensation                                                     --        (1,102,626)
    Accumulated deficit                                                (18,061,397)     (7,480,702)
    Accumulated other comprehensive deficit                               (168,163)        (79,923)
                                                                      ------------    ------------
                                                                         2,015,677       6,262,274
                                                                      ------------    ------------

                                                                      $  5,699,109    $  8,993,249
                                                                      ============    ============

        The accompanying notes are an integral part of these statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                 MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                                     Consolidated Statements of Operations
                                                  (Unaudited)

                                                         For the three months ended       For the nine months ended
                                                                  March 31,                      March 31,
                                                           2001            2000            2001            2000
                                                       ------------    ------------    ------------    ------------
<S>                                                   <C>              <C>             <C>             <C>
Net sales                                              $    165,031    $     56,926    $    276,514    $    156,735

Cost of sales                                               112,669         113,203         390,169         273,634
                                                       ------------    ------------    ------------    ------------

Gross Income (Loss)                                          52,362         (56,277)       (113,655)       (116,899)
                                                       ------------    ------------    ------------    ------------

Selling, general and administrative expenses              2,535,479       1,530,870       9,192,389       4,143,556

Other expenses (income)
    Interest                                                 57,548            --           178,586            --
    Impairment Loss                                         468,403            --           468,403            --
    Miscellaneous                                          (179,040)         (6,804)        (72,973)         (2,821)
                                                       ------------    ------------    ------------    ------------
                                                            346,911          (6,804)        574,016          (2,821)
                                                       ------------    ------------    ------------    ------------

Net Loss from operations before
minority interest and cumulative effect
of change in accounting principle                         2,830,028       1,580,343       9,880,060       4,257,634

Cumulative effect of change in accounting principle         705,133            --           705,133            --
                                                       ------------    ------------    ------------    ------------

Net loss from operations before minority interest         3,535,161       1,580,343      10,585,193       4,257,634

Minority interest share in net loss of  a subsidiary         (5,291)           --            (5,291)           --
                                                       ------------    ------------    ------------    ------------
Net Loss                                               $  3,529,870    $  1,580,343    $ 10,579,902    $  4,257,634
                                                       ============    ============    ============    ============

Net loss per common share - basic and diluted          $       0.18    $       0.17    $       0.64    $       0.48
                                                       ============    ============    ============    ============

The accompanying notes are an integral part of these statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                      MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                                          Consolidated Statements of Cash Flows
                                                       (Unaudited)

                                                                                    For the nine months ended
                                                                                             March 31,
                                                                                     2001                  2000
<S>                                                                         <C>                   <C>
Increase (Decrease) in cash

Cash flows from operating activities
    Net loss                                                                 $    (10,579,902)     $       (4,257,634)
                                                                             -----------------     -------------------
    Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization                                               1,560,205                 241,779
        Impairment Loss                                                               468,403                       -
        Cumulative effect of change in accounting principle                           705,133                       -
         Minority Interest                                                             (5,291)                      -
        Gain on sale of subsidiary's share                                           (178,505)                      -
        Write off of license and trademark costs                                            -                 304,500
        Write off of related party balances                                            32,705
        Shares issued in lieu of cancellation fees                                     80,000                       -
        Millennium units issued for services                                          100,000                       -
        Amortization of debt discount                                                  44,444
        Employee stock and stock option compensation                                  483,178                  32,000
            Changes in assets and liabilities
           Receivables                                                                112,471                (127,985)
                   Security deposits and prepaid expenses                             (10,628)                (18,298)
           Accounts payable, accrued liabilities and customer deposits                555,963                 723,819
                   Related party receivables                                           16,024                       -
                                                                             -----------------     -------------------

           Net cash used in operating activities                                  (6,615,800)              (3,101,819)

Cash flows from investing activities
    Acquisition of fixed assets                                                    (1,170,755)               (471,810)
    Acquisition of licenses and trademarks                                           (218,507)               (157,468)
    Cash acquired through Forestay                                                          -                     500
    Equipment deposits                                                                      -                (508,303)
                                                                             -----------------     -------------------

           Net cash used in investing activities                                   (1,389,262)             (1,137,081)
                                                                             -----------------     -------------------

Cash flows from financing activities
    Borrowings                                                                         19,038
    Issuance of convertible debentures                                                400,000
    Proceeds from sale of Millenium Units                                           2,132,860
    Proceeds from conversion of D warrants                                          3,629,748                       -
    Proceeds from issuance of Class A Units                                                 -               2,772,500
    Proceeds from issuance of Class D Units                                                 -               5,333,660
    Proceeds from conversion of Class D Units                                         325,970                       -
    Proceeds from issuance of common stock to employees                                 8,010                   3,550
      Payments on capital lease obligations                                          (543,762)                      -
                                                                             -----------------     -------------------

           Net cash provided by financing activities                                5,971,864               8,109,710
                                                                             -----------------     -------------------

Effect of the exchange rate changes on cash                                           (88,240)                 (8,420)

Net increase (decrease) in cash                                                    (2,121,438)              3,862,390

Cash at beginning of year                                                           2,162,430                   4,522
                                                                             -----------------     -------------------

Cash and cash equivalent at end of the period                                $         40,992      $        3,866,912
                                                                             =================     ===================

SUPPLEMENTAL DISCLOSURES
    Property acquired under capital lease                                    $       416,302       $                -
                                                                             =================     ===================


The accompanying notes are an integral part of these statements.
</TABLE>

<PAGE>

                  MILINX BUSINESS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1.  FINANCIAL STATEMENTS

The unaudited,  consolidated financial statements of Milinx Business Group, Inc.
(the  "Company" or "Milinx"),  and its  subsidiaries,  have been prepared by the
Company  pursuant to the rules and  regulations  of the  Securities and Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  (GAAP)  have been  condensed  or omitted  pursuant to such rules and
regulations.  The results of operations for interim  periods are not necessarily
indicative  of the results to be expected for the entire fiscal year ending June
30, 2001.  The Company was  incorporated  on December 10, 1998 and commenced its
operations  on February 10, 1999.  This Form 10-Q should be read in  conjunction
with the Form 10-K that includes consolidated  financial statements for the year
ended June 30, 2000 and June 30, 1999.

NOTE 2.           LOSS PER SHARE

Basic and  diluted  loss per share is based on the  weighted  average  number of
common shares  outstanding  during the period.  The weighted  average  number of
common shares  outstanding during the nine months ended March 31, 2001 and 2000,
was  16,419,713  and  8,871,738,  respectively.  The weighted  average number of
common shares outstanding during the three months ended March 31, 2001 and 2000,
was 19,938,830 and 9,216,000,  respectively. Diluted loss per share includes the
effect of all potentially  dilutive common stock  equivalents.  Diluted loss per
share  for the three  months  and nine  months  ended  March 31,  2001 and 2000,
equaled basic loss per share due to the anti-dilutive effect of the common stock
equivalents.  As of March 31,  2001 and 2000,  the Company  had  39,704,106  and
32,730,425 in outstanding dilutive common stock equivalents.

NOTE 3.  COMPREHENSIVE INCOME

The Company has adopted SFAS 130, Reporting  Comprehensive Income. The statement
requires  inclusion of foreign  currency  adjustments,  reported  separately  in
stockholder's  equity  as  other  comprehensive   income.  The  Company's  total
comprehensive loss for the three months and nine months ended March 31, 2001 and
2000 was $3,536,704; $10,668,142; $1,564,109 and $4,266,054, respectively.

NOTE 4.  MANAGEMENT PLANS

The Company's negative cash flow from operations is expected to continue through
at least the next two  quarters of the calendar  year.  Until  subscription  and
product  revenues  exceed cash operating  expenditures,  substantial  additional
equity  capital  will  have  to be  raised  to  fund  capital  expenditures  and
operations.
<PAGE>

During the third quarter of fiscal year 2000,  the Company  received  refunds of
approximately  $347,000,  from the Goods and Services Tax (GST Canada).  Most of
this tax was paid for goods and services acquired during the construction of the
data  centre.  The  Company  was  eligible  to claim  these  amounts  net of GST
collected from sales.

For the quarter ended March 31, 2001,  the Company raised a total of $1,192,869,
net of placement fees, in equity capital  through the sale of Millennium  Units.
The Millennium  Units (part of the  Millennium  Offering)  generally  consist of
eight common  shares of Milinx  Business  Group,  Inc. and four common shares of
Milinx Wireless,  Inc. and are offered at a price of $2.00 per unit.  Subsequent
to March 31, 2001 and through the date of this filing,  the Company  received an
additional  $326,900 in gross  proceeds  from the offering,  including  $225,900
outstanding as of March 31, 2001.

Milinx has  negotiated  a Standby  Equity  Financing  Commitment  from a private
investor in the amount of $30,000,000  that involves tranche sales of its voting
common  stock  for total  proceeds  of up to  $30,000,000.  The  Standby  Equity
Financing  will become  available  to the  Company  subject  to,  amongst  other
conditions,  the effective registration of the Common Stock through an S1 filing
with the Securities and Exchange Commission.

The Company is currently  placing a private offering in the amount of $1,450,000
to provide funding for  operations.  The Company has  significantly  reduced its
base  operating  cost,  increased  its  revenue,  lowered its loss per share and
released its core  business  software  suite.  Next stages after the funding for
continuing  operations  will be the  completion of the S1 and S8 filings,  which
will allow access to the Standby Equity Financing and a modest sum for payables.

NOTE 5.  LICENSES

As  of  January  1,  2001,  the  Company  changed  the  amortization  method  of
capitalizing  licensing  costs to straight  line from "seats sold to total seats
available" method. The management believes that due to subscription levels being
significantly lower than originally  estimated,  the straight-line  method would
more accurately reflect economic benefit of the underlying licenses.  Cumulative
effect of this change in the accounting principle was $705,133, which represents
an increase in net loss per share of $.04 for both three,  and nine months ended
March 31, 2001.

At March 31,  2001,  the  Company  evaluated  the  potential  impairment  of its
long-lived assets and concluded that while the license  agreements  currently in
place are expected to benefit the Company in the future,  there is a significant
doubt about the  recoverability of some of the costs over the remaining terms of
the underlying license  agreements.  As there is no assurance that such licenses
can be extended, the Company wrote off $468,403 in unamortized licensing costs.

NOTE 6.  CONTINGENCIES

On April 4, 2001 Alantra  Venture  Corporation  filed a Summary of Action in the
Supreme Court of British  Columbia  against TRG, Milinx  Business  Group,  Inc.,
Milinx  Wireless Inc. and Maynard Dokken,  claiming  damages against the parties
for  inducement  to breach  contract  and trading of  confidential  information.
Milinx et al  dismisses  all such  claims  and has  provided  notice to  Alantra
seeking consent to dismiss the action or, failing that,  proceeding with summary
application  dismissing the claim, seeking special and increased legal costs. As
of April 19, 2001 this action has been suspended indefinitely.
<PAGE>

On April 6, 2001 Milinx Business Services,  Inc. and Milinx Business Group, Inc.
filed a Writ of Summons in the  Supreme  Court of British  Columbia  against Sun
Microsystems, Inc., Netscape Communications Canada, Inc., Netergy Networks, Inc.
Intraware  Canada,  Inc. and  Burntsand  Inc.  claiming for damages in excess of
10,000,000  Canadian  dollars  for  misrepresentations  and breach of  contract.
Sunrise International Leasing Corporation (with all correspondence under the SUN
Microsysytems  letterhead)  filed  a  Summons  and  Complaint  in the  State  of
Minnesota,  County of Hennepin  against Milinx Business  Group,  Inc. and Milinx
Business  Services Inc., for two Counts,  Breach of Equipment Lease by Services:
in excess of $50,000 in damages and immediate possession of equipment and Breach
of Lease  Guaranty  by Group:  in excess  of  $50,000  damages  and  seizure  of
equipment.  The company  takes the position that this is in reaction to the Writ
of Summons  issued in the Supreme  Court of British  Columbia and  therefore the
jurisdiction and claim should be part of and in the same jurisdiction of British
Columbia.  Milinx feels it is in a strong  position to prevail on these  actions
but  it is in no  way  guaranteed  a  beneficial  settlement  or  amount  of any
settlement.

After reaching an out of court settlement with Milinx Business  Services,  Inc.,
on  April  18,   2001,   Tantalus   Communications   Inc.   filed  a  Notice  of
Discontinuance,  releasing Milinx Business  Services,  Inc. from further action.
Milinx was not  required to pay any more than the  invoices  outstanding  before
their claim.

On October 4, 2000, three former employees of Services advanced separate actions
in British  Columbia  Supreme Court against  Services  alleging  breach of their
employment severance  agreements and claiming unspecified damages,  benefits and
of Reza  Bazargan's  claim of lack of vacation  wages.  The authority of British
Columbia that governs  employee wages has dismissed the  allegation  that Milinx
Business Services failed to pay vacation wages to Reza Bazargan.

The Company  believes  that these actions are without merit and has not provided
any  accruals.   Services  will  be  vigorously   defending  these  actions  and
counterclaiming  against the respective individuals for breach of employment and
severance  agreements,  and  claiming  return of all funds paid out under  their
respective severance agreements plus damages for wrongful breach.

Pending  before the Supreme  Court of British  Columbia is a Writ of Summons and
Endorsement  against Brian Foster, who was retained by Milinx to act as agent in
securing financing in exchange for a fee of $25,000. Milinx claims that although
it paid Mr.  Foster the fee of $25,000,  he did not  perform his duties.  Foster
denies that he received such fee, and the case is now set for an  examination of
discovery.

Milinx Business  Services,  Inc., Milinx Business Group, Inc. and Maynard Dokken
commenced  action against Jason and Pamela Franklin in the Alberta Supreme Court
claiming damages in excess of $150,000 per posting.  Milinx Business Group, Inc.
and Maynard Dokken commenced  action in October 2000,  against Raging Bull Inc.,
John  Doe  Services  Provider,  John Doe I, II and III,  all  individuals  whose
identities  became  known to  Milinx  through  Raging  Bull  Inc.,  and who have
undertaken  various  postings on Raging Bull Inc. that are  defamatory in nature
against Milinx.  Discontinuance of Action against one of the Defendants,  Future
Shop Ltd. (only) was filed by Milinx on March 16, 2001.

NOTE 7.  OTHER

As of the date of this filing, Milinx Business Services,  Inc. is not current on
its capital lease payments. The leases were between one and four months past due
as of March  31,  2001.  As of the  date of this  filing,  the  past due  amount
reflects from two or five months of past due payments. Due to the aforementioned
events of default,  the Company  classified  all capital  lease  liabilities  as
current for financial statements presentation purposes.
<PAGE>

On  December  29,  2000 the  holder  of  convertible  debentures  called  in the
outstanding principal balance by providing the Company with a thirty-day notice.
The Company is currently  negotiating  the terms of  repayment  and included the
total  balance  outstanding  on  the  debenture,  net of  unamortized  debenture
discount, as current liabilities in the accompanying  financial statements.  The
Company has requested an extension for repayment.

Milinx completed a Standby Equity Financing  Commitment  agreement  February 13,
2001 with  Bluefire  Capital,  Inc. in the amount of  $30,000,000  that involves
tranche  sales  of  its  voting  common  stock  for  total  proceeds  of  up  to
$30,000,000.  The Standby Equity  Financing will become available to the Company
subject to, amongst other conditions,  the effective  registration of the Common
Stock  through an S1 filing with the  Securities  and Exchange  Commission.  The
Company  authorized  150,000  warrants to Bluefire  Capital for  completing  the
contract.  The Company has not recorded the warrants  because they can be voided
by Milinx if Bluefire Capital does not perform as required in the agreement. The
Warrants  are reduced by 30,000 each time  Bluefire  Capital  cannot fund a draw
down request by Milinx.

Milinx  signed  an  agreement  with  Farmroots,   Inc,  to  create  and  host  a
vertical-market portal (vortal) site for $525,000. Milinx invoiced Farmroots for
$150,000 for development  services  rendered in February and March,  2001, which
represents  approximately  25% of the estimated  contract  revenues based on the
percentage of costs incurred  through March 31, 2001 ($70,000) to the total cost
over the life of the contract.

On December 17, 2000,  the Company  entered into an agreement  with Hungary Moda
and Ilingfor to license certain  wireless  technology  rights in the eastern and
central  European  market.   The  agreement  required  a  formal  signing  of  a
comprehensive  arrangement  before the end of March 2001.  Milinx did not pursue
this transaction due to the Chief Executive Officer's time constraints and focus
on the S/MAP business development  strategy.  Hungary Moda would like to proceed
with this  agreement.  Milinx  intends to continue  developing  the Hungary Moda
agreement once its current software  application  rollout and sales  development
strategy is completed.

NOTE 8.  SUBSEQUENT EVENTS

On  April  10,  2001,  the  Board  approved  an  Acknowledgement  &  Release  of
Obligations  by 545731 B.C. Ltd.  (formerly  Milinx  Marketing  Group,  Inc.). A
payment of $33,759 was received from 545731 B.C. Ltd.

Since March 31, 2001 through to the date of this filing, Milinx has sold 300,000
common shares of Milinx Business Group, Inc. and 600,000 common shares of Milinx
Wireless, Inc. as part of the ongoing Millennium Offering, for total proceeds of
$150,000, of which $40,000 has not been paid as of the date of this filing.

Barry Phillips resigned as a Director effective April 12, 2001.

As of the date of this  filing,  Milinx  Business  Services,  Inc.  had not paid
April, 2001 payroll tax and statutory  deductions to Revenue Canada. In addition
the Company is late in  distributing  71% of its May 15th payroll;  however,  it
expects to meet this obligation by May 21, 2001.



<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES OF MILINX BUSINESS GROUP, INC. AND ITS WHOLLY OWNED
SUBSIDIARIES  INCLUDED IN THIS FILING FOR THE THIRD FISCAL  QUARTER  ENDED MARCH
31, 2001. THIS DISCUSSION CONTAINS  FORWARD-LOOKING  STATEMENTS  INVOLVING RISKS
AND  UNCERTAINTIES,  SUCH AS OUR FUTURE  PLANS AND OUR  ABILITY TO MEET  REVENUE
GOALS, OBJECTIVES, EXPLANATIONS,  PROJECTIONS AND INTENTIONS. OUR ACTUAL RESULTS
MAY HAVE DIFFERED  MATERIALLY  FROM  PROJECTIONS  MADE IN OTHER SUCH FILINGS AND
COULD DIFFER  MATERIALLY  FROM THOSE  ANTICIPATED  IN THIS  FILING.  SIGNIFICANT
FACTORS THAT COULD CAUSE OR CONTRIBUTE  TO  DIFFERENCES  AS SUCH,  INCLUDE THOSE
DISCUSSED IN "RISK  FACTORS" AS WELL AS THOSE SET FORTH IN THIS FILING AND OTHER
FILINGS MADE BY THE COMPANY. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
MADE AS OF THE DATE OF THIS FILING.  RESULTS COULD DIFFER  MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS.  UNLESS SPECIFIED OTHERWISE AND
AS USED HEREIN,  THE TERMS "WE",  "US" OR "OUR" REFER TO MILINX  BUSINESS GROUP,
INC. AND ITS WHOLLY OWNED SUBSIDIARIES.

Milinx Overview

Milinx was  incorporated in the State of Delaware in December 1998 and commenced
active  operations  on  February  10,  1999.  Since that time,  the  Company has
invested  significant  financial  resources in the building and  completion of a
data center, computer hardware, software, integration,  technology,  proprietary
software applications, and in recruiting talented and experienced personnel.

Milinx is a Systems  Mobile  Application  Provider  ("S/MAP"),  which is broadly
defined as a firm that develops proprietary  software,  delivers and hosts these
applications on an application data center and delivers these services through a
network.  S/MAPs  deliver  applications  and  support on as a  subscriber  based
product.  This  product  is  delivered  over  a  dedicated  network  to  Service
Providers.  S/MAP's also provide premium support  packages to Service  Providers
and  Companies  with a dedicated  network  connection  to the  application  data
center.

ASPTechone, Inc. is a wholly owned subsidiary of Milinx. ASPTechone is a Service
Provider that resells products and services to individuals and companies without
a dedicated  network  connection.  Service  Providers  ("SP) such as Application
Service  Providers  ("ASP"),  Internet Service  Providers  ("ISP") and Telephone
Companies   ("Telcos")   are  companies   that   primarily   sell  Internet  and
communication  products and services.  ASP's primarily  resell  applications and
services through a network.

We believe that the ASP delivery model of Information Technology ("IT") services
is well positioned to become a dominant global business computing model by 2004,
when Ovum, an International  Research and Marketing Firm, projects US$44 billion
dollars in revenues from these firms.

While some  applications  have been developed and are in use,  Milinx expects to
continue  developing  applications  for the  foreseeable  future to enhance  its
service to customers.

To the customer, the SP sales model offers the following distinct advantages:

>        Familiarity of provider, brand recognition.

>        Existing marketing channels.

>        The latest software, both readily available and more affordable and new
         applications deployed much more expeditiously.

>        The focus of the customer and their capital resources can be shifted to
         its core competency  rather than supporting and implementing  expensive
         IT applications.
<PAGE>

In August 2000,  the Company  opened its first data center  occupying the entire
floor of an office building in Vancouver,  BC, with a floor area of 14000 square
feet. The data center can currently  accommodate up to 500,000 subscribers,  and
our plan is to supplement  with "mini" data centers  globally or co-located data
storage with strategic  partners.  Milinx also leases an additional 4,998 square
feet in Vancouver, BC, which is used for administration and storage.

With the completion of our first  application data center the  implementation of
our  marketing  plan began in earnest.  We  researched  our known and  perceived
competitors  in  parallel  with  ramping  up of  the  S/MAP  infrastructure  and
development  of the initial suite of offerings  that would be most  appealing to
the marketplace.

Sales Strategy

Milinx has divided its clients into two categories: a) Service Providers; and b)
Non Service Providers.  The key distinguishing  factor is that Service Providers
primarily  sell  Internet  and  communication  network  products and service and
include ASPs, ISPs, and Telcos.  Generally, the Service Providers are clients of
Milinx  and the  non-Service  Providers  are  clients of ASP  Techone.  However,
corporations that non-Service  Providers and have a dedicated network connection
are also Milinx  customers.  Distribution  of Milinx  products  and services are
delivered   through  one  of  these  two  groups  using  three   distinct,   but
complementary, sales channels:

Direct:  ASP Techone  has  initiated  its direct  sales  generation  through two
comprehensive  programs;  an  outbound  call  campaign  and an  inbound  traffic
generation strategy.  The direct sales effort is directed to a small niche group
of marketing  professionals.  Direct  marketing  will be managed  remotely  with
Milinx's own miSALES software application once this application is completed.

The outbound call campaign  generates new users by contacting small business and
offering  them free trials of Milinx  products.  After the free trial period the
users are transferred into paying subscribers.

The inbound client strategy generates traffic through promotional campaigns that
encourage  bring in new users through a 1 800 number or IP traffic.  The inbound
leads are created through the following promotional vehicles:

           - mailouts                                  - web advertising
           - periodical advertising                    - billboards
           - cable listing advertising                 - web advertising
           - regional sales force

Direct marketing begins during the development process,  which will be initiated
by aggressive  campaigns to expand the subscriber  base with demo and free trial
accounts.  After the free trial  period,  billing is  activated on demo and free
trial accounts,  which transforms users into subscribers.  Existing  subscribers
are up-sold to new services and business suite packages.
<PAGE>

Milinx has initiated a direct sales campaign for its miPORTAL products. miPORTAL
customers are sold the portal directly as the end user of the product.  miPORTAL
owners can sell Milinx  products and services  through  their  portal,  with the
option of rebranding  them as their own products.  The sales of Milinx  products
through the portal now becomes an indirect  channel whereby the portal owner now
buys our products in a wholesale  manner and then resells to it's customers in a
retail manner.

The portal owners (or any Service  Provider) can "broker" our products to other,
smaller  indirect  channels by buying our products in "bulk" (ie. in 10,000 unit
quantities)  and  reselling  them to smaller  Service  Providers  with a mark-up
attached. The smaller Service Provider will then sell to customers in the retail
market.  This  markup  will  still be less than the price  the  smaller  Service
Provider can buy our products  from us at,  giving both parties the incentive to
want to buy our products.

Milinx has established  that its miPORTAL product and unit bundle sales strategy
is viable  through its agreement with Farmroots  Inc.,  which  contracts for the
development  of a custom  agricultural  portal and the purchase of product units
for  resale to its  subscribers.  Additionally,  Milinx is  negotiating  several
similar contracts for portal development and unit sales.

We have also  increased  our direct sales force for our products by offering the
"Account Manager" independent sales agent position to our resellers,  agents and
to  other  potential  sales  affiliates.  This  channel,  properly  managed  and
directed, could be an extremely valuable asset to our success.

Indirect:  Indirect sales are achieved  through Service  Providers.  Branded and
Rebranded Milinx products are delivered  through the Application Data Center and
can be transparently delivered to the rebranded Service Providers customer base.
Milinx   professional   services  customize  their  site  and  create  rebranded
applications. The rebranded Service Providers product line is the Milinx product
line.  Branded  and  rebranded  Service  Providers  typically  are larger  sized
Internet and communications  network Service Providers such as ISPs, Telcos, and
ASPs.

We believe that the timing is very  opportune  for this  business  model for the
following reasons:

          -    rapidly increasing awareness and acceptance of web based software
               solutions;

          -    the  exponential  growth  that  has  occurred  and we  expect  to
               continue to occur of e-Commerce and Internet usage  (according to
               CommerceNet  Research  Center,  projected  users will  number 490
               million in 2002); and

          -    the expanding  demands of small and medium sized  businesses  for
               cost effective, robust,  state-of-the-art IT solutions along with
               a profitable and facile Internet presence.

The offerings  with which Milinx has entered the SP market  represent a suite of
products  encompassing  depth,  functionality  and  comprehensiveness  with full
integration for our key target sectors, and positions the Company to score rapid
penetration gains that are necessary to achieve a significant market share.
<PAGE>

Milinx Marketing Strategy

There are three initial  market  segments that Milinx is targeting.  Our initial
markets are ASP Resellers,  Business/Internet  Consultants,  and ASPs/ISP's/Next
Gen Telco's.  These market segments are classified as indirect channels and will
be  used to  market  Milinx  applications  to the  much  sought  after  SOHO/SME
corporate user, our 3rd market segment.

Milinx  will  target  North  America  first and then other  regions of the world
namely ASIA and Europe.  Milinx will provide an  aggressive  commission  plan to
these resellers to ensure the appropriate level of commitment.

The ASP Reseller  program will provide Milinx with the necessary  revenue stream
to grow our  business  into other  sectors of the  market,  ISP's/ASPs/Next  Gen
Telco's and Corporate  Users.  Milinx is facilitating the transition by offering
the miPORTAL  product,  which allows the portal owners to resell Milinx products
and services. The Service Provider sector requires value added services that are
white labeled or co-labeled to better  service their  customer base and increase
revenues.

The third sector of our market is corporate  users.  Milinx has chosen to target
portals and B2B exchanges  that target  corporate  users as our initial  market.
Again this is an indirect  channel to leverage  the brands of others in order to
give Milinx credibility and trust amongst potential customers.

Milinx' product offering success will rely on its ability to complement a strong
brand  communications plan with a positive brand experience.  Alignment of brand
experience with brand promise - a key to effective brand  management  programs -
will  enable  Milinx  to  establish  and  maintain  its image as a  provider  of
flexible, consumer-focused service.

The Contact Center team will be responsible  for application  support,  outbound
sales  campaigns  and  inbound  calls.  Their  team will  become our key area of
closing business and signing up subscribers for our services.  They will also be
an important resource for our resellers to call on for sales support.

Product Overview

Milinx is now making our initial  product  offering to  customers.  However,  as
market  conditions  dictate  and the  results of our  Research  and  Development
efforts  come to  fruition,  new  services  may be  added or  existing  products
revised,  deleted or modified to supplement  present  offerings and  continually
expand our product line. Initially,  our two primary target markets for Milinx's
services  will  be  the  Small  Office/Home  Office  (SOHO)  market,   generally
consisting  of fewer than 10 employees  with an 8.9% annual  growth rate and the
Small to Medium Enterprises (SME) market with up to 150 employees (International
Data Corporation).

Direct and indirect subscribers of Milinx products benefit in the following way:
Milinx  products are user friendly and convenient  which saves the user valuable
time. They can be accessed anytime anywhere through the Internet.  Milinx stands
behind its products  with 24-hour  product  support for all users.  Subscription
based services make it affordable because users do not need to pay large upfront
costs for business  applications  they need to install and  configure.  They can
build a  virtual  network  easily in  real-time.  The user  experiences  greater
security because data is stored behind multiple  firewalls,  it is encrypted and
the storage facilities are secure.  Subscribers have available to them basic IT,
network support and  scalability.  Software  application  integration  costs are
virtually  eliminated.  Business  information  generated  from the  applications
occurs in real time.
<PAGE>

Previous  filings  forecasted a product release  schedule for the 3rd quarter of
fiscal 2001.  The product  release  schedule has been revised due to a change in
the  strategic  product  mix,  by  production  delays  caused by a  shortage  of
technical staff, and additional  testing to ensure  application  integration and
usability is at a high quality level.  However,  Milinx has expanded its product
offering to eight software applications.

Services that are currently available to Milinx customers are:

miDESKTOP:          miDESKTOP  will  provide   business  people  with  computing
                    solutions  that  have all of the  features  of an  operating
                    system, but on a fully hosted basis.  Unlike other operating
                    systems  we  use  all  of  our  own  facilities  to  operate
                    miDESKTOP, which will integrate with, miNETWORK, miDRIVE and
                    miWEBVOICE.  It allows  the user to  dynamically  create and
                    modify their Milinx active desktop. Users have the option of
                    setting  key  parameters  to  automatically  display  system
                    icons, permanently change desktop characteristics,  defining
                    contents of advertising and static space, managing miDESKTOP
                    content  and  appearance,   changing  background  and  text,
                    creating  and  modify  shortcuts  to  Milinx  and  other Web
                    applications and Web sites,  setting  miDESKTOP  permissions
                    for  shortcuts  and  different  users  and  backing  up  and
                    recovering chat space performed automatically.

miCALENDAR:         Provides users and  organizations  with the ability to track
                    their schedules at a glance.  Functional  offerings  include
                    the  ability  to  create  appointments,  schedules  and  set
                    alarms.  Users can share their  calendars  with other users.
                    Views can be based on daily, weekly, monthly, yearly or when
                    Chat  Rooms  are  booked,  visits  from out of  town,  in an
                    automated architecture.

miPORTAL:           The  Milinx  Portal  Suite is a  full-featured  portal  that
                    operates  in a  secure  web-based  environment.  The  Milinx
                    Portal is designed to build  unique  communities  and allows
                    views of employees, partners, suppliers and customers from a
                    single window.  Milinx Portal Suite offers users the ability
                    to  completely  customize  their  views for  their  specific
                    requirements.  It also builds in Business  Intelligence  and
                    Knowledge Management.

miMESSAGING:        Unified  messaging is the key to  organizing  communications
                    and controlling  costs. By integrating all incoming messages
                    into  a  single,   universal   inbox  you  can  examine  and
                    prioritize communications with flexibility. Functions can be
                    tailored to your  personal  needs and  information  overload
                    avoided.  The  express  product  does not bundle any airtime
                    into the package.

miCATALOG:          An SOHO  product  that allows  users to create and  maintain
                    their own  e-commerce  website.  Users can  upload up to 100
                    items from inventory for display.

miCOMMERCE:         The  foundation of miCOMMERCE  (formerly  miSTORE) is a SOHO
                    targeted  product that allows small  organizations to create
                    and maintain their own e-commerce  website.  During the sign
                    up process, a vendor account will be set up.

miCUSTOMER:         Customer management tool that allows  organizations to track
                    and monitor customer orders and preferences. In doing so, it
                    provides  organizations  with the ability to target specific
                    customer segments and learn more about their customers.

miSALES:            Allows  organizations  to track  the  productivity  of their
                    sales  representatives,  manage  field sales  personnel  and
                    teams as well as monitor and distribute sales leads.
<PAGE>



We expect the  following  products to be completed in the fourth  quarter of the
2001 fiscal year:

miBILLING:          The basic  product  provides  online  bill  presentment  and
                    e-payment.   Provides  companies  with  the  opportunity  to
                    private label their  invoices.  More advanced  features will
                    include  tiered  billing,  customization,  AR, AP as well as
                    invoice and commission tracking.

miCHATROOM:         A chat and management application that allows subscribers to
                    dynamically   create  a  chat  room  in  a  virtual   space.
                    Subscribers of miCHATROOM will be able to create a chat room
                    or a topic  of  their  choice.  Set  permissions  on who can
                    participate,  what  their  involvement  will be and set chat
                    room  availability  and time  frames to manage  the  virtual
                    room.

miCOLLABORATION:    A central  library  system for  documents  that allows every
                    user to view  the same  information  and  work  together  on
                    common  documents.  Messages  can be displayed as a threaded
                    dialog  for  easy   reference.   Various  levels  of  access
                    authority protect critical information.


miDRIVE:            A storage allocation and management product, securely hosted
                    at  the  Milinx  Application  Data  Center.  Subscribers  to
                    miDRIVE  can  format  acquired  space on Milinx  servers  by
                    setting up appropriate  directories,  and set permissions so
                    others  can  read,   update,   modify,  or  delete  specific
                    information.

miNETWORK           A network  configuration  wizard and administration  control
                    application.

miWEBVOICE:         Users will be able to place and receive  calls through their
                    personal computers to other Milinx miWEBVOICE users.


miWORKFLOW:         Tracks, processes and measures results.  Provides management
                    with the  ability to assign and track  tasks and to identify
                    the process flow of those tasks.

LIQUIDITY AND CAPITAL RESOURCES

For the period  reported,  Milinx's  ability to  mobilize  cash has been  almost
entirely  dependent  on its  ability  to sell  securities  and to extend  vendor
payment  terms.  Milinx has payables to many vendors that are  currently  ninety
days or more past due. In general,  vendors are working  cooperatively  with the
Company and are accepting  extended payment  schedules.  Should revenues grow as
expected  over  the next  two  quarters,  reductions  in the  total  outstanding
payables could occur starting with the final quarter, fiscal year 2001.
<PAGE>

Milinx will have to continue raising capital over the next year while sales grow
to support  operations.  As the number of resellers and  subsequent  users grow,
Milinx  expects  to be  less  dependent  on the  selling  of  securities  to pay
expenses.

Proceeds  from the  sale of  securities  in the  first  full  fiscal  year  were
$11,629,298 and for the first nine months of this year were $6,096,588.

Construction  of  the  now  completed  data  center   represents  a  significant
non-recurring  expenditure  and  there  are no  immediate  plans  to do  another
multi-city  road show.  While some  applications  have been developed and are in
use,  Milinx expects to continue  developing  applications  for the  foreseeable
future to enhance its service to customers.

While establishing itself in new space and building out the data center, capital
expenditures  in the first fiscal year were  $3,830,099  and for the nine months
just ended  March 31,  2001 were  $1,389,262.  Heavy  promotion  and data center
related  expenses  resulted  in a  temporary  increase  in the  cost of sales as
anticipated  during the transition from a development  company to a sales driven
organization.

Milinx has formed a new subsidiary called Milinx Wireless,  Inc. for the purpose
of holding  proprietary  wireless  technology  developed  in Milinx and  certain
wireless  technology has been  transferred to Milinx  Wireless,  Inc. Milinx has
entered into a Heads of Agreement  license with Hungary Moda  Communications  of
Hungary  that has  potential  for  producing  license  revenue  to Milinx in the
future. See NOTE 7 for additional information.

Milinx has  negotiated  a Standby  Equity  Financing  Commitment  from a private
investor in the amount of $30,000,000  that involves tranche sales of its voting
common  stock  for total  proceeds  of up to  $30,000,000.  The  Standby  Equity
Financing  will become  available  to the  Company  subject  to,  amongst  other
conditions,  the effective registration of the Common Stock through an S1 filing
with the Securities and Exchange Commission.

A further  extension  to the  Millennium  Offering  was approved by the Board of
Directors of Milinx  Business Group,  Inc. on May 4, 2001,  bringing the closing
date of the Millennium Offering to June 22, 2001.

Revenue, Cash Flow, and Profitability Projections

The Company is continuing to project positive cash flow, in calendar Q4 2001 and
profitable operations in calendar Q1 of 2002.

Results of Operations

The cost  savings  of the  reductions  initiated  in the second  quarter  ending
December 31, 2000,  were  positively  reflected in the third quarter  operations
results. Reductions in personnel and the curtailment of advertising, consulting,
and  travel  and  entertainment  expenses  were  realized  throughout  the third
quarter.  These cost savings were partially  offset by ongoing rent  obligations
resulting  from  a new  facility  lease  (now  terminated  -  see  Item  5)  and
depreciation  of  newly  acquired  assets.   The  Company  continues  to  reduce
expenditures  wherever possible and additional cost savings will be demonstrated
in the upcoming fourth quarter results.
<PAGE>

Revenue and Cost of Sales

For the quarter  ended March 31,  2001,  revenues  were  $165,031 as compared to
$56,926  for the same  period  ended March 31, 2000 an increase of 189% and 593%
higher  compared to $23,794 for the quarter ending  December 31, 2000.  This was
due primarily to revenues  generated by the Farmroots  contract (see NOTE 7), as
well as transition from a different  product mix and a phase out of the original
products.  Cost of goods sold for the  three-month  period had a net decrease of
$534 over the same period  last year  primarily  due to a reduction  of expenses
related  to  promotions  and  telecommunication  lines by  $70,534  offset by an
increase in production  costs related the development of the Farmroots portal of
$70,000.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses  decreased  by 23% for the three
months ended March 31, 2001, as compared to the quarter ended December 31, 2000.
This decrease of $747,903 to $2,253,579 in the third quarter,  was principally a
result of decreases to the following expenditures:

>>       Wages and salaries for the three months ended March 31, 2001, decreased
         by $575,066 to $896,423,  as a result of staff reductions at the end of
         November 2000 and the effects of the reductions were delayed until this
         quarter.  Spending  in this  area  has  decreased  by 39% over the last
         quarter.  The  Company  will  continue  to  adjust  staffing  levels as
         necessary.

>>       During the six months  ended  December  31,  2000,  the  Company  spent
         approximately $458,000 in a substantial marketing effort to promote our
         new  products.  These  costs were  related to the  ten-city  road show,
         during  which we traveled to major  cities  throughout  North  America,
         increasing  consumer  and  reseller  awareness of the many new products
         being offered. The costs associated with the road show pertained to the
         previous quarter and did not recur in the third quarter.

>>       General  advertising  expenses  for the second and third  quarter  were
         $40,274  and  $72,781  respectively.  The  increase  was  for  a  sales
         promotion  at a  Comdex  event  to  increase  brand  awareness  in  the
         marketplace.

>>       During  the  nine  months  ended  March  31,  2001,   depreciation  and
         amortization expenses increased to $1,560,205 primarily due to a change
         in  amortization  method of the companies  licensing  cost.  Due to the
         completion  of the Data  Centre  and  changing  the  focus to  internal
         software  development,  this expense will likely  remain  consistent at
         approximately $460,000 per quarter.

>>       Consulting  fees for the three months ended March 31, 2001 decreased by
         $46,175 to $130,797.  As part of the  Company's  cost  reductions,  the
         spending  in this area has  decreased  by 26%  compared  to the  second
         quarter of 2001.  These  reductions  were due to the  completion of the
         data center, accounting system implementation,  and expenses related to
         consultation on corporate strategy.

>>       Telephone  expenses  decreased  by $42,341 to $52,040  during the third
         quarter,  a 45% decrease  compared to the second quarter.  The decrease
         was a result  of  consolidating  access  lines to match  the  Company's
         requirements.

>>       Travel and  entertainment  expenses for the nine months ended March 31,
         2001 were  $179,904  while for six months ended  December 31, 2000 were
         $174,465.  This  expense was sharply  curtailed as $50,357 was spent in
         the second  quarter  and only $5,439 in the third  quarter,  decreasing
         this expense by 89%.
<PAGE>

>>       At March 31, 2001,  the Company  evaluated the potential  impairment of
         its long-lived  assets and concluded that while the license  agreements
         currently  in place are  expected to benefit the Company in the future,
         there is a  significant  doubt  about a  recoverability  of some of the
         costs over the remaining terms of the underlying license agreements. As
         there is no assurance  that such licenses can be extended,  the Company
         wrote off $468,403 in unamortized licensing costs.

>>       For the  three  months  ended  March 31,  2001,  the  Company  recorded
         $178,650 in  amortization  expenses  related to deferred  compensation.
         Assuming  the share price  increases  in the future,  until  underlying
         stock options are exercised, this expense will commensurately increase.

Risk Factors

INVESTING  IN OUR  COMPANY  INVOLVES  CONSIDERABLE  RISK.  YOU SHOULD  CAREFULLY
CONSIDER THE RISKS SET FORTH IN THIS FILING AND OTHER  FILINGS IN DETAIL  BEFORE
MAKING AN INVESTMENT  DECISION.  THESE RISKS AND  UNCERTAINTIES ARE NOT THE ONLY
ONES  THAT WE FACE OR THAT MAY  ADVERSELY  AFFECT  OUR  BUSINESS.  IF ANY OF THE
FOLLOWING  RISKS OR  UNCERTAINTIES  ACTUALLY OR PARTIALLY  OCCURS,  OUR COMPANY,
FINANCIAL  CONDITION,  OR RESULTS OF OPERATIONS  COULD BE  MATERIALLY  ADVERSELY
AFFECTED.  THIS FILING ALSO CONTAINS  CERTAIN  FORWARD-LOOKING  STATEMENTS  THAT
INHERENTLY  INVOLVE  RISK AND  UNCERTAINTY.  OUR ACTUAL  RESULTS  COULD  DEVIATE
MATERIALLY FROM THOSE DESCRIBED IN THE  FORWARD-LOOKING  STATEMENTS.  THIS COULD
OCCUR BECAUSE OF THE RISKS SET FORTH IN THIS  DOCUMENT,  OUR OTHER  FILINGS,  OR
UNANTICIPATED EVENTS AND OCCURRENCES NOT YET FORESEEN.

Milinx is presently  experiencing  financial  difficulties  and may not have the
cash,   equity  capital,   credit,   or  working  capital  to  pay  our  current
expenditures.   Sales  may  not  grow  to  the  levels  forecast,   new  product
introductions  may be delayed,  and  critical  suppliers  could seize  operating
equipment or sue for late payment. We are seeking equity financing which may not
be available on acceptable on terms and conditions to us, if at all.

We are  operating at a  significant  loss,  which will further erode our already
limited  resources.  As well,  our monthly  cash flow  deficit is  approximately
$450,000  and  is  still  being  reduced  significantly.  However,  there  is no
assurance  that this can be  accomplished  before our limited cash resources are
exhausted.

Our marketing program is being revised and retargeted and we have not yet proven
the new program to be economically viable.

Only our platform proprietary applications are available,  some of which are yet
to be commercially proven, as well, the ASP business model has yet to be proven.

We are competing with companies with substantially more financial  resources and
brand awareness.

Additional  Executive and IT personnel  need to be hired.  However,  our present
financial difficulties may make that difficult to achieve.
<PAGE>

The  trading  price  of  our  common  stock  could  be  subject  to  significant
fluctuations.  On a fully  diluted  basis,  we would have  39,704,106  shares of
common stock available if all preferred  shares were converted into common stock
and options and warrants  are  exercised.  We cannot  predict the effect if any,
this would have on our share price.

Break-even  will  depend on  Milinx  successfully  completing  and  selling  new
products.  There can be no  assurances  that there will be market  acceptance of
upcoming new products.

ITEM 3.           QUANTITIVE AND QUALATIVE DISCLOSURES ABOUT MARKET RISK.

At March 31, 2001 we had $1,626,738 of accounts payable outstanding, which was a
slight  decrease from $1, 631,048 at December 31, 2000. The Company has $444,444
of convertible  debt,  bearing interest at 12% outstanding at March 31, 2001. At
March 31, 2001,  $1,170,023 in lease  obligations was  outstanding.  The Company
continues  to manage its  liquidity  risk  through  our  regular  operating  and
financing  activities.  There have been no changes in our interest rate risk and
other market risks.

We develop our services in Canada and market our  services in the United  States
and  Canada.  As we expand our  operations  in these two  markets and outside of
North America,  our financial  results could be affected by various factors such
as changes in foreign  currency  rates or weak  economic  conditions  in foreign
markets.   Because  all  our  services  are  denominated  in  U.S.  dollars,   a
strengthening   of  the  dollar  could  make  our  products  and  services  less
competitive in international markets.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

On April 4, 2001 Alantra  Venture  Corporation  filed a Summary of Action in the
Supreme Court of British  Columbia  against TRG, Milinx  Business  Group,  Inc.,
Milinx  Wireless Inc. and Maynard Dokken,  claiming  damages against the parties
for  inducement  to breach  contract  and trading of  confidential  information.
Milinx et al  dismisses  all such  claims  and has  provided  notice to  Alantra
seeking consent to dismiss the action or, failing that,  proceeding with summary
application  dismissing the claim, seeking special and increased legal costs. As
of April 19, 2001 this action has been suspended indefinitely.

On April 6, 2001 Milinx Business Services,  Inc. and Milinx Business Group, Inc.
filed a Writ of Summons in the  Supreme  Court of British  Columbia  against Sun
Microsystems, Inc., Netscape Communications Canada, Inc., Netergy Networks, Inc.
Intraware  Canada,  Inc. and  Burntsand  Inc.  claiming for damages in excess of
10,000,000  Canadian  dollars  for  misrepresentations  and breach of  contract.
Sunrise International Leasing Corporation (with all correspondence under the SUN
Microsysytems  letterhead)  filed  a  Summons  and  Complaint  in the  State  of
Minnesota,  County of Hennepin  against Milinx Business  Group,  Inc. and Milinx
Business  Services Inc., for two Counts,  Breach of Equipment Lease by Services:
in excess of $50,000 in damages and immediate possession of equipment and Breach
of Lease  Guaranty  by Group:  in excess  of  $50,000  damages  and  seizure  of
equipment.  The company  takes the position that this is in reaction to the Writ
of Summons  issued in the Supreme  Court of British  Columbia and  therefore the
jurisdiction and claim should be part of and in the same jurisdiction of British
Columbia.  Milinx feels it is in a strong  position to prevail on these  actions
but  it is in no  way  guaranteed  a  beneficial  settlement  or  amount  of any
settlement.

After reaching an out of court settlement with Milinx Business  Services,  Inc.,
on  April  18,   2001,   Tantalus   Communications   Inc.   filed  a  Notice  of
Discontinuance,  releasing Milinx Business  Services,  Inc. from further action.
Milinx was not  required to pay any more than the  invoices  outstanding  before
their claim.
<PAGE>

On October 4, 2000, three former employees of Services advanced separate actions
in British  Columbia  Supreme Court against  Services  alleging  breach of their
employment severance  agreements and claiming unspecified damages,  benefits and
of Reza  Bazargan's  claim of lack of vacation  wages.  The authority of British
Columbia that governs  employee wages has dismissed the  allegation  that Milinx
Business Services failed to pay vacation wages to Reza Bazargan.

The Company  believes  that these actions are without merit and has not provided
any  accruals.   Services  will  be  vigorously   defending  these  actions  and
counterclaiming  against the respective individuals for breach of employment and
severance  agreements,  and  claiming  return of all funds paid out under  their
respective severance agreements plus damages for wrongful breach.

Pending  before the Supreme  Court of British  Columbia is a Writ of Summons and
Endorsement  against Brian Foster, who was retained by Milinx to act as agent in
securing  financing  in exchange  for a fee of  $25,000.00.  Milinx  claims that
although it paid Mr.  Foster the fee of  $25,000,  he did not perform his end of
the bargain.  Foster  denies that he received  such fee, and the case is now set
for an examination of discovery.

Milinx Business  Services,  Inc., Milinx Business Group, Inc. and Maynard Dokken
commenced  action against Jason and Pamela Franklin in the Alberta Supreme Court
claiming damages in excess of $150,000 per posting.  Milinx Business Group, Inc.
and Maynard Dokken commenced  action in October 2000,  against Raging Bull Inc.,
John  Doe  Services  Provider,  John Doe I, II and III,  all  individuals  whose
identities  became  known to  Milinx  through  Raging  Bull  Inc.,  and who have
undertaken  various  postings on Raging Bull Inc. that are  defamatory in nature
against Milinx.  Discontinuance of Action against one of the Defendants,  Future
Shop Ltd. (only) was filed by Milinx on March 16, 2001.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

During the quarter the Company  issued the  following  unregistered  securities.
Unless  indicated,  cash and net proceeds are the same.  Also unless  indicated,
sales under Rule 506 were to persons  believed to be  accredited  investors,  as
defined in Regulation D.

Under  Regulation  S, during the three months ended March 31, 2001,  the Company
sold 1,436,466  Millennium units at $2.00 per unit for total gross cash proceeds
to date, of $718,235 in a joint offering with Milinx Wireless, Inc.

Also  during the three  months  ended  March 31,  2001,  the  Company  issued an
additional  792,872  common shares to the  subscribers  of the $4.50 offering to
offer them  comparable  terms to  Millennium  unit  purchasers,  as  pursuant to
Securities and Exchange Commission rules and regulations.

In  addition to the above,  during the three  months  ending  March 31, 2001 the
Company issued 43,500 common shares in connection  with the exercise of employee
stock options, for total cash proceeds of $87.

Further,  as  part  of  the  Millennium  Offering,  the  Company  issued  62,931
Millennium Units in lieu of placement costs.
<PAGE>

During the quarter ended March 31, 2001,  the Company  issued 50,000  Millennium
units in lieu of consulting fees.

The above mentioned proceeds were used for general working capital and operating
purposes,  including the lease and rental of equipment,  legal,  accounting  and
transfer  agent  fees,  salaries to  employees,  directors  and  officers of the
Company and the rollout of the Company's S/MAP products.

A further  extension  to the  Millennium  Offering  was approved by the Board of
Directors of Milinx  Business Group,  Inc. on May 4, 2001,  bringing the closing
date of the Millennium Offering to June 22, 2001.

On March  28,  2001  the  Board of  Directors  of  Milinx  Business  Group  Inc.
authorized for issuance 6,000,000  Preferred Series D shares, none of which have
been issued to date.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5.  OTHER INFORMATION.

On April 16, 2001 Barry Phillips  resigned as Director of Milinx Business Group,
Inc. to pursue personal interests.  Milinx wishes the best to Mr. Phillips,  and
will be naming his replacement shortly.

On April 11, 2001, the Company  successfully  terminated a lease  agreement with
Bentall Property. The settlement cost was $33,000.

On  November  15,  2000 the Company  received  net  proceeds in the amount of US
$400,000  from  Millennium  III Trust,  in return for a demand note for $444,444
maturing on March 31, 2001 with interest at a rate of 12% per annum. On December
29, 2000,  Milinx Business Group,  Inc. received 30 days notice for repayment of
the  demand  note,  together  with  interest.  Currently,  the two  parties  are
negotiating an acceptable settlement of this matter.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

None.
<PAGE>

SIGNATURES


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

MILINX BUSINESS GROUP, INC.                          May 21, 2001


/s/ Mikiko Fujisawa
---------------------------------
Mikiko Fujisawa,
Director and Treasurer