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

                                    FORM 10-Q

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


                                DECEMBER 31, 2000


                           MILINX BUSINESS GROUP, INC.
             (Exact name of registrant as specified in its charter)


                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)


                                   91-1954074
                    (I.R.S. Employer Identification Number)


              Suite 3827 - 1001 Fourth Avenue, Seattle, Washington
                    (Address of principal 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 (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

__X__    Yes                                                         _____    No

There are 17,959,236  issued and  outstanding  common shares of the issuer as of
January 31, 2001.


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                            MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                                     CONSOLIDATED BALANCE SHEETS

                                                                         December        June 30,
                                                                         31, 2000         2000
                                                                        (Unaudited)
                                                                      -------------   -------------
CURRENT ASSETS
<S>                                                                   <C>             <C>
    Cash                                                              $    226,751    $  2,162,430
    Receivables
        Trade                                                                9,198           9,334
        Subscriptions                                                       25,000         323,721
        General Sales Tax                                                  574,818         327,149
        Employee and stockholders                                           55,589          20,692
                                                                      ------------    ------------
           Total accounts receivable                                       664,605         680,896

    Due from Milinx Marketing Group                                         81,811          82,644

    Security deposits                                                       77,033         209,362
    Prepaid rent and other                                                 329,026          43,549
                                                                      ------------    ------------

           Total current assets                                          1,379,226       3,178,881

PROPERTY AND EQUIPMENT-AT COST, net of accumulated depreciation          4,376,056       3,572,168

OTHER ASSETS
    Licenses                                                             2,255,472       2,036,985
    Capital lease deposits                                                  23,829         203,915
    Security deposits                                                         --             1,300
                                                                      ------------    ------------

                                                                      $  8,034,583    $  8,993,249
                                                                      ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                  $  1,631,048    $    981,233
    Accrued liabilities                                                    375,798         279,758
    Convertible note payable, net of unamortized discount                  425,832
    Due to Milinx Management Corporation                                     3,586           3,586
    Capital lease obligations                                            1,502,957         536,061
    Customer deposits                                                         --             2,529
                                                                      ------------    ------------

           Total current liabilities                                     3,939,221       1,803,167

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

COMMITMENTS AND CONTIGENCIES                                                  --              --

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                                                            17,959           9,671
    Additional paid in capital                                          19,199,010      14,908,291
    Unearned compensation                                                 (434,567)     (1,102,626)
    Accumulated deficit                                                (14,530,734)     (7,480,702)
    Accumulated other comprehensive deficit                               (161,329)        (79,923)
                                                                      ------------    ------------
                                                                         4,095,362       6,262,274
                                                                      ------------    ------------
                                                                      $  8,034,583    $  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 six months ended
                                                          December 31,                December 31,
                                                    2000           1999           2000           1999
                                                -----------    -----------    -----------    -----------
<S>                                             <C>            <C>            <C>            <C>
Net sales                                       $    23,794    $    53,838    $   111,483    $    99,809

Cost of sales                                       129,263         59,774        277,500        160,431
                                                -----------    -----------    -----------    -----------

Gross (loss)                                       (105,469)        (5,936)      (166,017)       (60,622)
                                                -----------    -----------    -----------    -----------

Selling, general and administrative expenses      3,283,382      1,543,357      6,656,910      2,612,686

Other expenses
    Interest                                         70,865           --          121,038           --
    Miscellaneous                                   105,728          1,439        106,067          3,983
                                                -----------    -----------    -----------    -----------
                                                    176,593          1,439        227,105          3,983
                                                -----------    -----------    -----------    -----------

Net loss                                        $ 3,565,444    $ 1,550,732    $ 7,050,032    $ 2,677,291
                                                ===========    ===========    ===========    ===========

Net loss per common share - basic and diluted   $      0.21    $      0.17    $      0.48    $      0.31
                                                ===========    ===========    ===========    ===========

                    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 six months ended
                                                                                December 31,
                                                                           2000           1999
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
Increase (Decrease) in cash

Cash flows from operating activities
    Net loss                                                            $(7,050,032)   $(2,677,291)
    Adjustments to reconcile net loss to net cash used in operating
        activities:
        Depreciation and amortization                                       826,771        178,737
        Shares issued in lieu of cancellation fees                           80,000           --
        Write off of license and trademark costs                               --          304,750
        Amortization of debenture discount                                   16,944           --
        Employee stock and stock option compensation                        304,528           --
        Changes in assets and liabilities
           Receivables                                                     (282,565)       (60,441)
           Security deposits and prepaid expenses                          (153,148)        (3,312)
           Accounts payable, accrued liabilities and customer deposits      587,960        203,917
                                                                        -----------    -----------

           Net cash used in operating activities                         (5,669,542)    (2,053,640)

Cash flows from investing activities
    Acquisition of fixed assets                                          (1,101,721)      (466,205)
    Acquisition of intangible assets                                       (218,507)      (156,823)
    Equipment deposits                                                         --           (3,759)
                                                                        -----------    -----------

           Net cash used in investing activities                         (1,320,228)      (626,787)
                                                                        -----------    -----------

Cash flows from financing activities
    Proceeds from sale of common stock as part of Millennium units          513,691           --
    Proceeds from sale of common stock through private placements           401,387           --
    Proceeds from conversion of D warrants                                3,629,748           --
    Proceeds from conversion of Class D Units                               325,970           --
    Proceeds from issuance of common stock to employees                       7,923          3,550
    Proceeds from issuance of Class A Units                                    --        2,772,500
    Principal payments on capital lease obligations                        (143,222)          --
    Proceeds from issuance of convertible debentures                        400,000           --
    Loans from shareholders                                                    --           26,709
                                                                        -----------    -----------

           Net cash provided by financing activities                      5,135,497      2,802,759
                                                                        -----------    -----------

Effect of the exchange rate changes on cash                                 (81,406)       (24,654)

Net increase (decrease) in cash                                          (1,935,679)        97,678

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

Cash at end of year                                                     $   226,751    $   102,200
                                                                        ===========    ===========

SUPPLEMENTAL DISCLOSURES
           Cash paid for interest                                       $    95,206    $     --

           Property acquired under capital lease                        $   348,696    $     --



                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.  BASIC AND DILUTED NET EARNINGS PER COMMON AND COMMON-EQUIVALENT 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 six months ended December 31, 2000 and 1999
was  14,721,984  and  8,681,413,  respectively.  The weighted  average number of
common shares  outstanding  during the three months ended  December 31, 2000 and
1999 was 16,642,652 and 8,892,826, respectively. Diluted loss per share includes
the effect of all potentially  dilutive common stock  equivalents.  Diluted loss
per share for the three months and six months  ended  December 31, 2000 and 1999
equaled basic loss per share due to the anti-dilutive effect of the common stock
equivalents.  As of December 31, 2000 and 1999,  the Company had  35,500,000 and
24,286,000 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 six months ended  December 31, 2000
and 1999 was $3,580,102; $7,131,438; $1,543,240 and $2,701,945, respectively.

NOTE 4.  NEW SUBSIDIARIES

Milinx  Wireless,  Inc.  ("Milinx  Wireless"),   a  subsidiary  of  Milinx,  was
incorporated in the State of Delaware on December 6, 2000. Milinx Wireless, Inc.
is structured to facilitate  the  advancement  of  proprietary  technology  into
global wireless development.  Milinx Wireless,  Inc. has 100,000,000  authorized
common shares.

<PAGE>

On December 10, 2000,  Milinx Wireless  entered into an agreement with Milinx to
exchange  50,000,000  shares  of  its  voting  common  stock  for  the  wireless
technology known as the CDPD FM Subcarrier Patent Application and related patent
filing  held by Milinx.  On  February  5, 2001,  Milinx  Wireless  approved  the
exchange of 35,000,000 of its voting common stock for a pending patent, which is
intended to provide downstream  bandwidth of 6.4 MB's for IP devices in a mobile
environment.  Neither intellectual property was originally recorded on the books
of the parent company, and therefore, was assigned a nominal cost.

As further discussed,  the Company sold shares of Milinx Wireless as part of its
Millennium units offering ("Millennium Offering") and, therefore, as of December
31, 2000, there is an immaterial  minority  interest in Milinx Wireless.  Due to
immateriality, it was not included in the accompanying financial statements.

ASP Technology One, Inc. ("ASP Techone") was incorporated in the State of Nevada
on August 4, 2000, as a wholly owned  subsidiary of Milinx Business Group,  Inc.
for the  purposes of  facilitating  the sign-up of  Resellers  to market  Milinx
products and  services  and to act as the  Application  Service  Provider  (ASP)
subsidiary of Milinx.

NOTE 5.  MANAGEMENT PLANS

The Company's negative cash flow from operations is expected to continue through
the at least  the next two  quarters  of the  fiscal  year.  Until  subscription
revenue  exceeds cash  operating  expenditures,  substantial  additional  equity
capital will have to be raised to fund capital expenditures and operations.

For the quarter ended December 31, 2000, the Company raised a total of $868,415,
net of  placement  fees,  in equity  capital.  The Company is  currently  in the
process of completing  its  Millennium  Offering  consisting of common shares of
Milinx Business Group,  Inc. and Milinx  Wireless,  Inc. at a price of $2.00 per
unit.  Each unit consists of four common shares of Milinx and 8 common shares of
Milinx  Wireless.  For the  first  $7,000,000  in gross  proceeds  received,  an
additional  bonus share of Milinx  Wireless  will be issued to each  subscriber.
Gross  proceeds of $598,546 were received  during the quarter ended December 31,
2000.  Subsequent to December 31, 2000 and through the date of this filing,  the
Company received an additional $931,768 in gross proceeds from the offering.

NOTE 6.  CONTINGENCIES

On January 12, 2001,  Tantalus  Communications  Inc.  commenced  action  against
Milinx  Business  Services,  Inc.  ("Services"),  a wholly owned  subsidiary  of
Milinx,  in the Supreme Court of British  Columbia,  claiming damages for unpaid
invoices  for  services  performed,  in the  amount of  $65,092  plus legal fees
incurred. Services commenced a counterclaim against Tantalus Communications Inc.
and the parties settled out of court on February 17, 2001.

On January 5, 2000 Milinx filed a Writ of Summons and Endorsement  against Brian
Foster ("Foster"), who was retained by Milinx to act as agent in securing future
financing for a $25,000 fee. The Company paid Foster  $25,000 and claims that he
did  not,  in  fact,  perform  his  duties.  The  case  is now  set  for a brief
examination for discovery.
<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. 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.

Milinx Business  Services,  Inc., Milinx Business Group, Inc. and Maynard Dokken
commenced an action in October 2000 against Raging Bull Inc.,  John Doe Services
Provider,  John Doe I, II, and III and Jane Doe I, II and III. Raging Bull is an
Internet  Bulletin  Board that permits users to post inquiries and opinions with
respect to various securities. John Doe Services Provider is an Internet Service
Provider or Providers ("ISPs").  John Doe I, II, and III and Jane Doe I, II, and
III,  all  individuals  whose  identities  are unknown to the  Plaintiffs,  have
undertaken  various  postings on Raging  Bull Inc.  that are  defamatory  to the
Plaintiffs.  The  Plaintiffs  were granted an Order that,  amongst other things,
Raging Bull Inc. must either defend the action or provide all information in its
possession to assist in identifying the remaining  Defendants.  Raging Bull Inc.
has provided the  information  identifying  the ISPs and the pleadings have been
amended naming Netcom Canada Inc.,  UUNet Canada Inc.,  Future Shop Ltd.,  Telus
Advanced  Communications and MTS Advanced Inc. as Defendants.  Amended pleadings
have since been filed.

NOTE 7.  OTHER

As of the date of this filing, Milinx Business Services,  Inc. is not current on
its capital lease payments.  Most of these leases were two months past due as of
December 31, 2000. As of the date of this filing,  the past due amount  reflects
either  two or three  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.

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.

NOTE 8.  SUBSEQUENT EVENTS

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  calls for a deposit of $350,000  and
requires a formal signing of a comprehensive arrangement before the end of March
2001. In this agreement,  licensing fees in the amount of $1,550,000 are payable
in the first 6 months for the right to distribute thorough our S/MAP Application
Data Center products to these markets. These parties will be responsible for any
cost  associated  with the  customization  of these products to deliver a usable
interface  in the local  language  and any other  customization.  The  agreement
further  provides  for a  15%  gross  royalty  on  all  revenue  generated  from
subscriptions of these products.  The agreement further  contemplates  licensing
fees generated by the implementation of a wireless network using Milinx wireless
technology.  In this agreement there is an option by the licensee to buy out the
rights to the original wireless  technology for an additional  $25,000,000.  The
master agreement has not been signed.
<PAGE>

On December 12, 2000,  Milinx signed a Consulting  Agreement to  facilitate  the
signing of a licensing  contract with Hungary Moda and Ilingfor.  The consulting
agreement  called for a  commission  equal to $350,000  plus 50,000  shares upon
receipt of the signed license agreement and the first payment, and an additional
payment of$10,000.

Upon receipt of the payment  order in the amount  $350,000 from Hungary Moda and
Ilingfor,  the  Company  assigned  it  to  the  agent  in  satisfaction  of  the
aforementioned $350,000 commission.

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 Company is in the
process of finalizing details of this arrangement.

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.

Milinx has agreed to terms and conditions, and signed an agreement with a lender
to negotiate, from the lender's internal fund, for a Promissory Note Bridge Loan
providing for no less than  $1,000,000  and up to  $3,500,000 of financing.  The
lender will receive certain equity considerations as part of the agreement.

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  SECOND  FISCAL  QUARTER  ENDED
DECEMBER 31, 2000. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS INVOLVING
RISKS  AND  UNCERTAINTIES,  SUCH AS OUR  FUTURE  PLANS AND OUR  ABILITY  TO MEET
REVENUE GOALS, OBJECTIVES, EXPECTATIONS, PROJECTIONS, AND INTENTIONS. OUR ACTUAL
RESULTS MAY HAVE DIFFERED  MATERIALLY FROM PROJECTIONS MADE IN OTHER FILINGS AND
COULD  DIFFER  MATERIALLY  FROM  THOSE   ANTICIPATED  IN  SUCH   FORWARD-LOOKING
STATEMENTS  WHEREVER THEY APPEAR 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.
<PAGE>

A Systems Mobile  Application  Provider  ("S/MAP") 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.

Milinx, through it's wholly owner subsidiary,  ASPTechone has surpassed its goal
of 15,000 users and 5,000  resellers / agents.  The strategy has been successful
with a 30-day free trial and subsequent activation.  We are currently converting
our users to  subscribers  and based on our  conversion  rate will then generate
revenues for operations.  We anticipate that it will take approximately  150,000
subscribers to achieve  profitability based on average monthly revenue to Milinx
of $17.70 per month.

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.

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.

In August 2000,  the Company  opened its first data center  occupying the entire
floor of an office  building in  Vancouver,  BC. 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.

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.

<PAGE>


Marketing and Sales Channels

Marketing Goals
---------------

There are three ways that Milinx will reach its target  market:  a) Milinx sells
indirectly to individual  and corporate  users through  Service  Providers  that
rebrand and resell Milinx  products and  services;  b) Milinx  indirectly  sells
products to individual and corporate users through its  subsidiary,  ASPTechone;
and c) Milinx indirectly sells products and services through Branded  Resellers,
Resellers,  Reseller Agents and Affiliates that have signed up with  ASPTechone.
Milinx will use direct and indirect  channels to market Milinx  applications  to
the much sought after individual and corporate users.

Initially  Milinx will develop ASP Techone and indirectly  pursue the individual
user and corporate markets through Branded Resellers, Resellers, Reseller Agents
and  Affiliates.  ASP Techone will directly  pursue the individual and corporate
user market through its inside sales force. The ASP Techone development program,
will provide Milinx with the necessary  revenue stream to grow our business into
other sectors of the market,  ISPs/ASPs/Next  gen Telco's and  Corporate  Users.
This former  sector  requires  value added  services  that are white  labeled or
co-labeled to better service their customer base and increase revenues.

ASP  Techone  intends  to engage an  experienced  marketing  firm to assist  ASP
Techone in the  recruitment of Resellers in North  America.  Publicity is key to
our success and this firm will  provide us with the  necessary  exposure to gain
credibility and interest in the market.

Milinx is currently in a strategic agreement with AOL Canada to co-market Milinx
applications to its ISPs user base. These joint venture agreement between Milinx
and these  organizations  initially  involves  offering the miMESSAGING  unified
messaging  solution,  Web-delivered  as a productivity  tool to their subscriber
base.

Another  large  market  segment  is  corporate  users with a  dedicated  network
connection.  Targeting  corporate  users is an indirect  channel to leverage the
brands of others in order to give Milinx credibility and trust amongst potential
customers.  Corporate  users do not primarily  sell Internet and  communications
products and services like Service Providers, but they have substantial size and
may require their own network.  If the corporate  user requires its own network,
then it can subscribe to Premium  Support  directly from Milinx,  which includes
providing  the  corporate  users with a  dedicated  network  connection.  If the
corporate user does not require  Premium  Support it can access Milinx  products
and services  through ASP Techone or any other Milinx Service  Provider  client.
ASP Techone has chosen to target portals and B2B exchanges that target corporate
users as our initial market.

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 ASPTechone  Customer Sales will be responsible  for outbound sales campaigns
and inbound sales calls from non-Service  Providers.  Their team will become our
key area of closing  business and signing up subscribers for our services.  Like
all Service Providers,  ASPTechone will be responsible for its own Sales Support
and will  also be an  important  resource  for ASP  Techone  customers,  Branded
Resellers, Resellers, Reseller Agents and Affiliates.
<PAGE>

Sales Channels
--------------

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  can be managed  remotely  with
Milinx's own miSales software application.

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.

Indirect:  Indirect sales are achieved through ASPTechone Affiliates,  Resellers
and Reseller Agents that market into specifically oriented to the individual and
corporate  user  market.  They are an  independent  targeted  group of  business
professionals who contract with our wholly owned subsidiary, ASP Techone, Milinx
professional  services  customize their site and create  rebranded  applications
with a unique feel and identity.

Indirectly 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.
<PAGE>

As an  example,  in  September  2000,  we  successfully  concluded  a  Strategic
Marketing  Alliance  with  AOL  Canada  to offer  our  services  to that  firm's
subscribers.  We expect that this marketing opportunity will expand and allow us
valuable entree into a very wide spectrum of geographic locations. By leveraging
these  alliances we expect to be able to  introduce  our services to millions of
users in a very cost effective and timely manner.

On November  15,  2000,  Milinx  executed a  non-binding  Letter of Agreement to
purchase  the  assets of the BIG  Online  Division  of  Metasoft  Systems,  Inc.
(Metasoft)  that  includes   approximately  2,600  business  clients  consisting
principally of non-profit organizations. Previously, the Company entered into an
agreement to market its  miMessaging  unified  messaging  service to  Metasoft's
clientele and other Milinx services as they become available. As of December 22,
2000,  Milinx has chosen not to purchase  Metasoft,  however Metasoft intends to
become a rebranded Service Provider through ASPTechone.

We are currently  considering the purchase of SPs that would enhance our product
and services, and would expand our subscriber base.

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.  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).

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.

Product Overview

Milinx is now making our initial  offering to customers in five  increments that
began in June  2000 and will  finish  it's  initial  launch by  September  2001.
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.
<PAGE>

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.

In the fourth  quarter of calendar  year 2000,  Milinx  reported  the  following
product development schedule:

Services that are currently available to Milinx customers are:

miMAIL:                             A secure web-based e-mail solution  designed
                                    for business  users.  Offers large  capacity
                                    inbox storage and anywhere, secure access.

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 UM:                     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.

miSTORE:                            The  foundations  of miCOMMERCE  and miSTORE
                                    are 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.

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.
<PAGE>

The  following  products are expected to be released  during the third  quarter,
2001.

miOFFICE:                           miOFFICE   is  the   web-top  for  all  your
                                    applications and  information.  It is set to
                                    remember your settings whether you access it
                                    from home or the office.  Accessible anytime
                                    anywhere  it will  be  expanded  to  include
                                    Office   product   suites   such   as   word
                                    processing,   spreadsheet   &   presentation
                                    software.

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

miADVERTISING:                      miADVERTISING  is designed to assist clients
                                    with   in   designing,    implementing   and
                                    monitoring  a marketing  campaign  for their
                                    products. It will be integrated into many of
                                    the Milinx products.

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.

miHR:                               miHR is a scalable  human resource tool that
                                    offers   various   features.   Among   these
                                    features include recruiting  (especially for
                                    high-tech companies),  payroll and benefits,
                                    labor relations, training, policy authoring,
                                    career   path    assessment   and   employee
                                    performance appraisals

The following  products are expected to be released  during the fourth  quarter,
2001:

miCOMMERCE:                         Similar to miCATALOG/miSTORE,  miCOMMERCE is
                                    a scalable  e-commerce  product  that allows
                                    Small and Medium  enterprises  to create and
                                    maintain  their  own   e-commerce   site  in
                                    addition,      miCOMMERCE      will     have
                                    e-procurement, B2B exchanges,  comprehensive
                                    reporting,  facilitate  for the  creation of
                                    vendor accounts during the signup process as
                                    well as other features.
<PAGE>

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

miMEETING:                          miMEETING  is  a  chat  room  and  IP  phone
                                    meeting  place  that  provides  for 100's of
                                    participants  simultaneously.   It  provides
                                    moderator  and voice  controls  along with a
                                    text   discussion   web  top  for   parallel
                                    discussions

miDRIVE:                            High  security data storage is maintained on
                                    the subscribers hard drive and in the Milinx
                                    Application   Data   center   with  128  bit
                                    encryption.  miDRIIVE  will sync the data on
                                    the  hard  drive  and the  Application  Data
                                    Center  and  will be  able to  differentiate
                                    between the two to ensure no  information is
                                    lost.  It also will  transmit the  encrypted
                                    data through Secure Socket Layer (SSL) for a
                                    redundant layer of security

Throughout  2002 we expect to see the following new services added to the Milinx
suite of offerings:

miMESSAGING UC:                     Same as  miMESSAGING  UM except  it includes
                                    unified  communications.   Many  forms   of
                                    communications  such  as  home  phone, cell
                                    phone,  email,  voice  messaging and fax are
                                    accessed  at a  single  point  with a single
                                    message and setting  storage  point.  Single
                                    point unified communications.

miCAST:                             This  proprietary  product  integrates voice
                                    into e-mails with a viewer type control that
                                    pops  up  once  the  hyper  linked  word  is
                                    selected.    You    can    provide    verbal
                                    definitions,  send a  wireless  e-mail of 20
                                    words and with miCAST you can send the whole
                                    picture by  speaking  what you mean in every
                                    word. No need to send  a  2,500 word e-mail.
                                    It can also be used to build a voice overlay
                                    as you read your e-mail.

miNETWORK:                          (VoIP, VPN).     A VPN carries programs and
                                    data with the  utmost security. At the same
                                    time  this technology  reduces  costs  that
                                    formerly kept  secure remote networks out of
                                    reach for  most  companies. A  VPN  securely
                                    connects   satellite  offices,   traveling
                                    employees, telecommuters  and  clients  to a
                                    company's headquarters. Milinx will do  this
                                    by  using  encryption,  authentication  and
                                    access-control technologies to create secure
                                    "tunnels"  through the Internet,  connecting
                                    head office and  remote  users  through  the
                                    Milinx Application Data Center.

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.

miPROJECT:                          A  project  management  template,  miPROJECT
                                    offers  a  template  gallery  that  contains
                                    timelines,  resource planning, and personnel
                                    requirements    for   various    specialized
                                    projects and industries,  Milinx Project and
                                    Workflow Management will be a handy tool for
                                    anyone planning a project or series of tasks
                                    with  specific   dates  and  milestones  and
                                    anyone  else  who  has a  lot  of  tasks  to
                                    juggle.
<PAGE>

miSCM:                              A system that  coordinates the order taking,
                                    order   generation   and   fulfillment   (or
                                    distribution)   of  products,   services  or
                                    information along the supply chain network.

miACCOUNTING:                       An  advance   accounting   application  with
                                    features   such  as   accounts   receivable,
                                    accounts payable, risk management, inventory
                                    and others.

miPORTAL EIP:                       An  enterprise   information   portal that
                                    builds its own knowledge  base,  creates its
                                    own  knowledgebase  and  performs  automated
                                    reporting.  This  will be a useful  tool for
                                    subscribers  of  Milinx   products   because
                                    reports  are  triggered  by  key  events  or
                                    milestones.

Competition

The market for our services is now and will continue to be very competitive.  To
obtain  customers,  Milinx has spent and will be further  expending  significant
financial  resources.  These payments include  advertising,  commissions,  share
warrants, and other financial inducements.  Generally,  our competition includes
other S/MAPs and ASPTechone's  competition  includes ASPs, Systems  Integrators,
ISPs and web hosting  companies,  software  companies and telcos. We have yet to
achieve  any  significant   market  share  and  many  of  our  competitors  have
substantially more financial resources and brand recognition than we do.

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  to pay  bills.  Since
start-up,  Milinx has built and completed a data center,  engaged in promotional
programs such as its ten-city road show to introduce  Milinx to the public,  and
developed  proprietary  applications  for use with its new data center such that
during this phase of development, Milinx has been unable to depend on revenue to
pay expenses.

Proceeds  from the  sale of  securities  in the  first  full  fiscal  year  were
$11,629,298 and for the first six months of this year were $4,878,719.

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.  As the number of  resellers  and
subsequent  users grow,  Milinx  expects to be less  dependent on the selling of
securities to pay expenses.  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 six months just ended were  $1,320,288.  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 will have to continue raising capital over the next
year while sales grow to support operations.

<PAGE>

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.

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.

Milinx has agreed to terms and  conditions and signed an agreement with a lender
to negotiate, from the lender's internal fund, for a Promissory Note Bridge Loan
providing for no less than  $1,000,000  and up to  $3,500,000 of financing.  The
lender will receive certain equity considerations as part of the agreement.

Revenue, Cash Flow, and Profitability Projections

On July 21,  2000,  Milinx  filed a Form 8-K with the SEC,  which,  among  other
things,  forecasted  positive  cash flow in calendar  Q1 of 2001 and  profitable
operations in calendar Q2 in 2001. Due principally to significantly  slower than
anticipated  build-up of revenues,  the Company has revised its  forecasts  such
that we are now not  projecting  positive  cash flow until  calendar Q4 2001 and
profitable operations until calendar Q1 of 2002.

Results of Operations

During the second quarter ended  December 31, 2000, the Company  conscientiously
reduced its operating  expenses  through a reduction in personnel and curtailing
of advertising,  consulting,  and travel and  entertainment  expenses.  However,
these cost savings were partially  offset by increases in rent  (resulting  from
new  facility  lease),  depreciation  of newly  acquired  assets  and  increased
telecommunication  expenses.  These  increases are all associated  with the data
center becoming operational.

Revenue and Cost of Sales

For the quarter  ended  December 31, 2000,  revenues were $23,794 as compared to
$53,838 for the same period  ended  December  31,  1999.  This was a result of a
transition to a different  product mix and a phase out of the original  product.
The new  products are now showing  rapid  growth.  Cost of goods sold  increased
$69,489  over the same period  last year  primarily  due to expenses  related to
promotions and telecommunication lines.

Selling, General and Administrative Expenses

Due to the significant growth that the Company has experienced  between December
31, 1999 and December 31, 2000, a comparison of operating results between fiscal
1999 and 2000 would not be meaningful  and thus has been  omitted,  for the most
part, from the discussion that follows.
<PAGE>

Selling,  general and administrative  expenses increased in the six months ended
December 31, 2000, to $6,307,972.  This increase was principally a result of the
increases to the following expenditures:

>>       Wages  and  salaries  for the  six  months  ended  December  31,  2000,
         increased to $2,958,171 as a result of hiring additional  personnel the
         Company  anticipated  would be necessary to develop and  integrate  our
         applications and to service projected clientele. However, slower growth
         in  revenues  than  anticipated  resulted  in  a  November  2000  staff
         reduction.  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.   Approximately   $112,000   was  spent  on   campaign
         advertising, $291,000 on the production and execution of the shows, and
         $55,000 for transportation, accommodation and other expenses.

>>       General  advertising  expenses  were  $192,226 for the six months ended
         December 31, 2000, with majority of the expenses  incurred in the first
         three months.  This expense was sharply curtailed in the second quarter
         and $39,693 was spent.

>>       During  the six  months  ended  December  31,  2000,  depreciation  and
         amortization  expenses increased to $826,771. It is likely this expense
         will  continue  to increase as new assets are  purchased  or  developed
         internally.

>>       Consulting  fees  increased to $569,791.  As part of the Company's cost
         reductions,  the spending in this area has decreased by 55% compared to
         the first quarter of 2001. These reductions were due to the data center
         completion  (decrease  of  $153,000)  and $74,000 of  non-recurring  Q1
         expenses related to the development of multimedia presentations and the
         implementation of a new internal accounting software package.

>>       Telephone  expenses  increased  to  $209,400.  The  majority  of  these
         expenses relate to leasing and maintaining  access lines for customers;
         therefore, these expenses are expected to increase in the future.

>>       Travel and entertainment expenses for the six months ended December 31,
         2000 were  $174,465.  Second   quarter   expenses   were  41%  of  the
         first  quarter  spending  and  will  continue to decrease in the third
         quarter as part of  the Company's cost reduction initiative.

>>       For the six months  ended  December  31,  2000,  the  Company  recorded
         $304,528 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.



<PAGE>


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.  We are seeking  equity  financing  which may not be  available on
acceptable on terms and conditions to us, if at all.

The Company has reduced its  payroll,  which  resulted in the payment of accrued
vacation and severance mandated by the Province of British Columbia.

We are  operating at a  significant  loss,  which will further erode our already
limited  resources.  As well,  our monthly  cash flow  deficit is  approximately
$600,000  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.

Due at least to all of the aforementioned  variables,  forecasting positive cash
flow and profitability is difficult and neither might ever be achieved.

The  trading  price  of  our  common  stock  could  be  subject  to  significant
fluctuations.  On a fully  diluted  basis,  we would have  35,500,000  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.



<PAGE>


ITEM 3.  QUANTITIVE AND QUALATIVE DISCLOSURES ABOUT MARKET RISK.

At December 31, 2000 we had $1,631,048 of accounts  payable  outstanding,  which
was an increase of 55% from  $1,053,338 at September  30, 2000.  The Company had
$425,832  of  convertible  debt,  net  of  discount,  bearing  interest  at  12%
outstanding  at December 31, 2000.  At December  31, 2000,  $1,502,958  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 January 12, 2001,  Tantalus  Communications  Inc.  commenced  action  against
Milinx  Business  Services,  Inc.  in the  Supreme  Court of  British  Columbia,
claiming  damages for unpaid invoices for services  performed,  in the amount of
$65,092 plus legal fees incurred. Milinx Business Services, Inc. has commenced a
counterclaim against Tantalus Communications Inc. and the parties settled out of
court on February 17, 2001.

On January 5, 2000, Milinx filed a Writ of Summons and Endorsement against Brian
Foster,  who was retained by Milinx to act as agent in securing future financing
for a $25,000 fee.  Milinx paid $25,000 and claims that Foster did not, in fact,
perform his duties. The case is now set for a brief examination for discovery.

On October 4, 2000,  three  former  employees  of  Milinx's  subsidiary,  Milinx
Business  Services,  Inc.  ("Services"),  advanced  separate  actions in British
Columbia  Supreme Court against  Services  alleging  breach of their  employment
severance agreements and claiming unspecified damages. 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.

Milinx Business  Services,  Inc., Milinx Business Group, Inc. and Maynard Dokken
served Jason and Pamela Franklin with an Alberta Supreme Court order setting out
the claims of the Company against these parties including damages claimed in the
amount of $150,000 per posting. Milinx Business Services,  Inc., Milinx Business
Group,  Inc.  and Maynard  Dokken  commenced  an action in October  2000 against
Raging Bull Inc., John Doe Services  Provider,  John Doe I, II, and III and Jane
Doe I, II and III. Raging Bull is an Internet  Bulletin Board that permits users
to post  inquiries  and opinions  with respect to various  securities.  John Doe
Services  Provider is an Internet Service Provider or Providers  ("ISPs").  John
Doe I, II, and III and Jane Doe I, II, and III, all individuals whose identities
are unknown to the Plaintiffs,  have undertaken  various postings on Raging Bull
Inc. that are defamatory to the Plaintiffs. The Plaintiffs were granted an Order
that,  amongst other  things,  Raging Bull Inc. must either defend the action or
provide all information in its possession to assist in identifying the remaining
Defendants.
<PAGE>

Raging Bull Inc.  has  provided  the  information  identifying  the ISPs and the
pleadings have been amended naming Netcom Canada Inc., UUNet Canada Inc., Future
Shop Ltd., Telus Advanced Communications and MTS Advanced Inc. as Defendants.

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, the Company sold 299,273 Millennium units at $2.00 per share
for total  gross cash  proceeds  of  $573,546  in a joint  offering  with Milinx
Wireless, Inc. Each unit consists of 4 shares of Milinx Business Group, Inc. and
8 shares of Milinx  Wireless,  Inc. The Company  collected a further  $25,000 in
outstanding receivables related to this offering in January 2001.

The Company sold 54,222  common stock  shares at $4.50  through a small  private
placement for total net proceeds of $219,599.

The Company received $130,000 from exercises of 65,000 Class D warrants by their
holders.

In addition to the above,  during the three months ending  December 31, 2000 the
Company issued 43,500 common shares in connection  with the exercise of employee
stock options, for total cash proceeds of $5,125.

The Company  chose to abort the  acquisition  of Big Online  Systems  Corp.  and
Bigdatabase Corp. On December 22, 2000, Milinx Business Group, Inc., in a letter
to Trevor  Skillen of Metasoft,  agreed to issue  50,000  common stock shares to
satisfy the $100,000 breakout fee.  Metasoft will use all reasonable  efforts to
set up their  client  list as  agents  /  subscribers  of  Milinx  services  and
products.  The  shares are  subject  to  registration  with the  Securities  and
Exchange Commission.

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 ASP products.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

                  None.

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

                  None.



<PAGE>


ITEM 5.  OTHER INFORMATION.

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.

On December 5, 2000, James W. Summers resigned as Chief Financial Officer of the
Company.

Also on December 5, 2000 the Board of  Directors  of the  Company  approved  the
registration   of  500,000  common  shares  with  the  Securities  and  Exchange
Commission.

Milinx  Wireless,  Inc.  was  formed  on  December  6,  2000 as a  wholly  owned
subsidiary of the Company. Milinx Wireless, Inc. is structured to facilitate the
advancement of proprietary  technology into global wireless development.  Milinx
Business Group,  Inc.  received  50,000,000 common shares in consideration for a
patent pending in wireless technology. On February 5, 2001 Milinx Wireless, Inc.
paid  35,000,000  common  shares  for  a  new  wireless  technology  that  could
potentially deliver a downstream bandwidth of 6.4 MBs.

On December 18, 2000, the Company entered into a preliminary  agreement to issue
common  stock  shares to Bema Gold  Corp.,  a  landlord,  for a total  amount of
$166,900  in  exchange  for  additional  office  space  at 595  Burrard  Street,
Vancouver, BC. Bema Gold Corp. has not yet notified the Company of its agreement
with these terms.

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  calls for a deposit of $350,000  and
requires a formal signing of a comprehensive arrangement before the end of March
2001. In this agreement,  licensing fees in the amount of $1,550,000 are payable
in the first 6 months for the right to distribute thorough our S/MAP Application
Data Center products to these markets. These parties will be responsible for any
cost  associated  with the  customization  of these products to deliver a usable
interface  in the local  language  and any other  customization.  The  agreement
further  provides  for a  15%  gross  royalty  on  all  revenue  generated  from
subscriptions of these products.  The agreement further  contemplates  licensing
fees generated by the implementation of a wireless network using Milinx wireless
technology.  In this agreement there is an option by the licensee to buy out the
rights to the original wireless  technology for an additional  $25,000,000.  The
master agreement has not been signed.

On December 12, 2000 Milinx  signed a Consulting  Agreement  to  facilitate  the
signing of a licensing  contract with Hungary Moda and Ilingfor.  The consulting
agreement  called for a  commission  equal to $350,000  plus 50,000  shares upon
receipt of the signed license agreement and the first payment, and an additional
payment of$10,000.

Upon receipt of the payment  order in the amount  $350,000 from Hungary Moda and
Ilingfor,  the  Company  assigned  it  to  the  agent  in  satisfaction  of  the
aforementioned $350,000 commission.

<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

Form 8K filed on December 15, 2000  reporting  December 5, 2000  resignation  of
Milinx Business Group, Inc. Chief Financial Officer, Mr. James W. Summers.

SIGNATURES

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

MILINX BUSINESS GROUP, INC.                         February 20, 2001



/s/ Mikiko Fujisawa                                 February 20, 2001
-----------------------------------         ---------------------------------
Mikiko Fujisawa,                                           Date
Treasurer