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

                                    Form 10-Q

 [x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                  For the quarterly period ended March 31, 2002

 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934



For the transition period from  July 1, 2001 to March 31, 2002
                               -------------   ---------------

Commission file number:  000-26421
                        ------------


                           Milinx Business Group, Inc.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)



             Delaware                                      91-1954074
        -------------------                              --------------
   (State or other jurisdiction of                      (I.R.S. Employer
           organization)                               Identification No.)


     P.O. Box 2156
     Danville, California                                      94526
 --------------------------------------                ----------------------
(Address of principal executive offices)                     (Zip Code)

                              (925) 736-3413
                          ------------------------
                        (Issuer's telephone number)


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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date: As of May 28, 2002, the Issuer
had 30,728,979 shares of common stock, par value $0.001, issued and outstanding.


<PAGE>


                                  TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

      ITEM 1.  FINANCIAL STATEMENTS
               Balance Sheets................................................ 3
               Statements of Operations...................................... 4
               Statements of Cash Flows...................................... 5
               Notes to Financial Statements................................. 6

      ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS..................................... 9

      ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....13


PART II - OTHER INFORMATION

      ITEM 1.  LEGAL PROCEEDINGS.............................................13

      ITEM 2(C).  CHANGES IN SECURITIES AND USE OF PROCEEDS..................13

      ITEM 3.  DEFAULTS UPON SENIOR SECURITIES...............................13

      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.........14

      ITEM 5.  OTHER INFORMATION.............................................14

      ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..............................14

SIGNATURES ..................................................................15





                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                  MILINX BUSINESS GROUP, INC. and SUBSIDIARIES
                           Consolidated Balance Sheets



                                                March 31, 2002    June 30, 2001
         ASSETS                                   (Unaudited)

CURRENT ASSETS
Cash                                              $     45,359     $     33,680
Receivables and services tax                            33,629           35,039
Security deposits                                         --                 75
Prepaid rent and other                                  62,591            5,355
                                                  ------------     ------------
         Total current assets                          141,579           74,149

PROPERTY AND EQUIPMENT, net                            544,904        1,100,226

OTHER ASSETS
         Capital lease deposits                         10,146           10,571
                                                  ------------     ------------
                                                  $    696,629     $  1,184,946
                                                  ============     ============
         LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable                                  $    236,812     $  1,582,188
Accrued liabilities                                    840,800        1,456,368
Due to Milinx Management Corporation                     3,586            3,586
Due to secured creditors                             1,568,586            --
Due to unsecured creditors                             319,114
Deferred revenue                                       146,730            --
Capital lease obligations                                 --          1,588,678
Notes payable, net of unamortized discount             667,532          444,444
                                                  ------------     ------------
         Total current liabilities                   3,783,160        5,075,264

COMMITMENTS AND CONTINGENCIES                            --                --

REDEEMABLE COMMON SHARES                               480,551             --

STOCKHOLDERS' DEFICIT

Series A preferred stock                                 3,675            3,675
Series C preferred stock                                   117            1,016
Common stock                                            23,977           23,078
Shares subscribed                                      641,669           10,000
Additional paid in capital                          21,967,863       21,803,465
Unearned compensation                                  (36,198)           --
Accumulated deficit                                (26,123,940)     (25,492,701)
Accumulated other comprehensive deficit                (44,245)        (238,851)
                                                  ------------     ------------
                                                    (3,567,082)      (3,890,318)
                                                  ------------     ------------
                                                  $    696,629     $  1,184,946
                                                  ============     ============


The accompanying notes are an integral part of these statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>

                                  MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                                     Consolidated Statements of Operations
                                                  (unaudited)



                                                       Nine months ended             Three months ended
                                                            March 31                       March 31
                                                  ----------------------------    ----------------------------
                                                      2002             2001           2002            2001
<S>                                               <C>             <C>             <C>             <C>

Net Sales                                         $       --      $    276,514    $       --      $    165,031

Cost of Sales                                             --           390,169            --           112,669
                                                  ------------    ------------    ------------    ------------
Gross Profit (loss)                                       --          (113,655)           --            52,362

Selling, General and Administrative expense          2,014,205       9,192,389         641,514       2,535,479

Other expenses (income)
         Interest                                      393,149         178,586         176,144          57,548
         Miscellaneous                                    --           (72,973)           --          (179,040)
         Impairment loss                                  --           468,403            --           468,403
         Gain on sale of property and equipment        (49,954)           --              --              --
         Gain on settlement of liabilities            (351,244)           --           (26,262)           --
         Expenses as a result of bankruptcy
         proceedings                                   125,760            --           125,760            --
         Gain on settlement of liabilities
         from bankruptcy                            (1,500,677)           --        (1,500,677)           --
                                                  ------------    ------------    ------------    ------------
                                                    (1,382,966)        574,016      (1,225,035)        346,911
                                                  ------------    ------------    ------------    ------------
Net Loss from operations before minority
interest and cumulative effect of change
in accounting principle                                631,239       9,880,060        (583,521)      2,830,028

Cumulative effect of change in accounting
principle                                                 --           705,133            --           705,133
                                                  ------------    ------------    ------------    ------------
Net Loss from operations before minority
Interest                                               631,239      10,585,193        (583,521)      3,535,161
                                                  ------------    ------------    ------------    ------------
Minority interest share in net loss of a
Subsidiary                                                --            (5,291)           --            (5,291)

                                                  ------------    ------------    ------------    ------------
Net Loss (Income)                                 $    631,239    $ 10,579,902    $   (583,521)   $  3,529,870
                                                  ============    ============    ============    ============

Net Loss (Income) per Common Share-Basic
And Diluted                                       $       0.02    $       0.64    $      (0.02)   $       0.18
                                                  ============    ============    ============    ============

Weighted average common shares outstanding          29,565,054      16,531,096      34,211,873      19,610,388
                                                  ============    ============    ============    ============

</TABLE>



The accompanying notes are an integral part of these statements.

                                                       4

<PAGE>
<TABLE>
<CAPTION>



                                 MILINX BUSINESS GROUP, INC. and SUBSIDIARIES
                                     Consolidated Statements of Cash Flows
                                                  (unaudited)

                                                                                       Nine months ended
                                                                                            March 31
                                                                                -----------------------------
                                                                                     2002              2001
<S>                                                                             <C>             <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                                                      $   (631,239)   $(10,579,902)
  Adjustments to reconcile net loss to net cash used
    in operating activities
         Depreciation and amortization                                               454,954       1,560,205
         Gain on debt settlements                                                 (1,500,677)           --
         Stock options issued for employee and consulting services                   123,700            --
         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 related party balances                                            --            32,705
         Amortization of convertible debt discount                                   102,480          44,444
         Shares issued in lieu of cancellation fees                                     --            80,000
         Loss on property and equipment disposal                                      49,954            --
         Millennium units issued for services                                           --           100,000
         Shares issued for services                                                   31,377            --
         Employee stock option compensation                                             --           483,178
         Changes in assets and liabilities
                  Receivables                                                          1,410         112,471
                  Security deposits and prepaid expenses                             (16,113)        (10,628)
                  Accounts payable, accrued liabilities and customer deposits        529,436         555,963
                  Related party receivables                                             --            16,024
                                                                                ------------    ------------
                  Net cash used in operating activities                             (854,718)     (6,615,800)


CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of property and equipment                                                 --        (1,170,755)
  Disposal (purchase) of property and equipment, net                                   5,002            --
  Acquisition of licenses and trademarks                                                --          (218,507)
                                                                                ------------    ------------
                  Net cash provided by (used in) investing activities                  5,002      (1,389,262)


CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of stock subscriptions                                      427,000            --
  Proceeds from conversion of D warrants                                                --         3,629,748
  Proceeds from issuance of notes payable                                            235,500            --
  Proceeds from conversion of Class D units                                             --           325,970
  Proceeds from issuance of common to employees                                         --             8,010
  Proceeds from conversion of Millinium units                                           --         2,132,860
  Payments on capital lease obligations                                                 --          (543,762)
  Borrowings                                                                            --            19,038
  Issuance of convertible debentures                                                    --           400,000
                                                                                ------------    ------------
                  Net cash provided by financing activities                          662,500      5,971,864

Effect of the exchange rate changes on cash                                          198,895         (88,240)
                                                                                ------------    ------------
Net increase (decrease) in cash                                                       11,679      (2,121,438)

Cash at beginning of the period                                                       33,680       2,162,430
                                                                                ------------    ------------
Cash at end of the period                                                       $     45,359    $     40,992
                                                                                ============    ============

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


</TABLE>


The accompanying notes are an integral part of these statements.


                                                      5


<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 unaudited consolidated financial statements of the Company
reflect all adjustments that are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented. 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, 2002. 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, as
amended, that includes consolidated financial statements for the year ended June
30, 2001, 2000 and the six months ended 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 three and nine months ended March 31, 2002
and 2001, was 34,211,873, 29,565,054, and 19,610,388, 16,531,096, respectively.
Diluted loss per share includes the effect of all potentially issue-able common
stock. Diluted loss per share for the three and nine months ended March 31, 2002
and 2001, equaled basic loss per share due to the anti-dilutive effect of the
potentially issue-able common stock.

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 (income) for the three and nine months ended March 31, 2002
and 2001 was $(599,185), $432,344, and $3,536,704, and $10,668,142,
respectively.

NOTE 4. MANAGEMENT PLANS

The Company's negative cash flow from operations is expected to continue through
at least through the 2002 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. Management began
its fund-raising effort in mid-March with the intention of raising $3,000,000 to
$5,000,000. There is no assurance the Company will successfully raise any funds.

For the quarter ended March 31, 2002, the Company sold, in two private debt
offerings, a total of $26,500 in debt that included the promise to issue 67,500
shares of the Company's common stock. One offering provided 5000 shares of
restricted common stock for every $1,000 loaned under the terms of the note. The
terms of the note are: i) the note bears interest for the first 120 days at the
rate of 12% per annum, the Company has the option to retire this note during
this period and the note holder has the option of converting the note during
this 120 day period into an additional 5000 shares per $1,000 loaned, ii) should
the Company not retire the note nor the shareholders convert the note during the
first 120 day period, the note automatically extends to a term of 300 days and
accrues interest at the rate of 15% for the entirety of the period.

The Company has closed all of the previous offerings.

On February 8, 2002 the Company extended an Exempt Private Offering, to
accredited investors only, in the amount of $500,000 to provide funding for
operations. This offering has two parts:
     Part 1.) In exchange  for a minimum  investment  of $5,000 but  investments
     less than  $100,000 the Company  granted  common  restricted  shares at the
     price of $0.06 per share plus  warrants to purchase up to 50% of the number
     of shares at an exercise price of $0.08 per share. The warrants have a term
     of 2 years.
     Part 2.) In  exchange  for a minimum  investment  of  $100,000  the company
     granted  common  restricted  shares at the  price of $0.04  per share  plus
     warrants to purchase up to 25% of the number of shares at an exercise price
     of $0.08 per share. The warrants have a term of 2 years.
The Company has raised $244,000 under this offering.


                                       6
<PAGE>

In September 2001, Milinx's current management team took over as part of a
turnaround initiative. This management team assessed the business and financial
position of the Company and determined that the only viable alternative was to
attempt to reorganize through a voluntary reorganization filing in British
Columbia, Canada by its subsidiary, 580880BC Ltd., dba Milinx Business Services,
Inc. 580880BC Ltd.'s proposed plan of reorganization ultimately needed to
receive the support of its secured creditors and its unsecured creditors. On
February 22, 2002 the Court in Vancouver, British Columbia, Canada approved the
plan that had been previously approved on January 14, 2002 by the necessary
number of unsecured creditors. Pursuant to the reorganization plan the Board of
Directors approved a resolution to offer proven creditors 1 share of restricted
common stock for each Canadian dollar of the amount of approved debt remaining
after payment.

On October 12, 2001, Milinx's subsidiary, 580880BC Ltd., filed with the Office
of the Superintendent of Bankruptcy (OSOB) in British Columbia, Canada, a Notice
of Intention. 580880BC Ltd. and on December 24, 2001, filed a plan of
reorganization with the court.

On December 24, 2001 580880BC Ltd. filed a plan of reorganization with the
court.

580880BC Ltd.'s plan of reorganization ultimately addresses three discrete
groups of creditors: secured creditors, preferred creditors and general
unsecured creditors.

580880BC Ltd.'s two major secured creditors are Cisco Systems and Sun
Microsystems. These secured claims amounted to approximately $1,600,000. These
claims have been negotiated outside the formal plan filed with the court, as
secured creditors are not bound by a plan of reorganization approved by the
general unsecured creditors and the court. The basic terms for settlement of the
secured claims include forgiveness of $200,000 in outstanding liabilities, cash
payments to the Company of $42,000, return of certain equipment, a restructuring
of the leases resulting in monthly payments of approximately $50,000 starting
March 2002, and cash payments of $50,000 payable over six months starting
February 2002. Milinx has not yet performed on the terms of this structure and
is in the process of renegotiating the payment terms with the parties.

580880BC Ltd.'s preferred creditors include its landlord for the data center and
several former employees with wage claims. The amount of the preferred
creditors' claims that must be paid immediately upon court approval of the plan
is approximately $111,297 which is broken down into approximately $71,683 of
unpaid wage claims and $39,614 of rental arrears claims. Within six months after
court approval of the plan, 580880BC Ltd. must pay an additional $134,563 in
back withholding taxes. The amount of the preferred claims is not negotiable.

580880BC Ltd.'s general unsecured creditors have claims of approximately $1.8
million. This amount excludes any indebtedness of 580880BC Ltd. to its parent,
Milinx. The remaining amounts have been extinguished pursuant to the terms of
the approved plan.

The Court accepted the plan of reorganization, the OSOB and 580880BC Ltd.'s
notified unsecured creditors of a meeting to consider the plan of
reorganization.

At a meeting of the Creditors held in Vancouver BC on January 14, 2002, the
Company's plan was approved by a sufficient number and dollar amount of the
creditors to proceed. The Court approved the plan of reorganization as proffered
by the Company on February 22, 2002.

The plan as approved calls for funding certain cash payments in the required
statutory amounts to satisfy the agreed amounts is satisfaction of all claims as
submitted. The plan's payment schedule falls in four parts; i) Payment
immediately upon approval of the sum of $111,297 in satisfaction of employee
wage claims and prior rent claims; ii) payment 30 days from approval of an
amount equal to $500.00CDN per creditor in satisfaction of all outstanding
claims, payment was due on March 22nd 2002 of $53,448.00USD; iii) issuance 60
days from the date of plan approval of one share per dollar of debt remaining to
acclaimed creditors after payments of all funds under the plan; iv) payment six
months from the date of approval of the plan of $134,563 to Revenue Canada.

The first payments of the claims of the employees and prior rent claims have
been made, as well as payment to Revenue Canada.

580880BC Ltd.'s general unsecured creditors have claims of approximately $1.8
million. This amount has been settled by the plan by way of paying $500 per
creditor and shares of common stock at the value of 1 share for each $1 Canadian
of approved claim. Subsequent to March 31, 2002, 1,742,455 shares have been
issued to acclaimed creditors.

During the course of the reorganization, Milinx has been and will continue to
pay expenses of approximately $15,000 per month for the lease of the data
center, in addition to other general and administrative costs. The landlord has
consented to a partial sublease of the space at 1045 Howe St, which reduces the
cost of the space by approximately 30%. Milinx will need to fund the balance of
the debt under the plan of reorganization. There can be no assurance that Milinx
will be able to fund the debt and failure to do so will force the subsidiary
into a deemed bankruptcy.



                                       7
<PAGE>

On January 12, 2002, the Company held a noticed annual shareholders meeting in
Burlingame, California. The purpose of this meeting was to elect a new Board of
Directors. The Board has been expanded with the addition of a new board member
chartered as the "Designated Shareholder Representative." A new Board of
Directors was elected consisting of Thomas Loker who was elected Chairman,
Maynard Dokken, Stanley Mazor, John Erickson (elected as the Designated
Shareholder Representative) and Jackson Brown. Mr. Erickson and Mr. Mazor are
not involved with the management of the Company. The Board passed a resolution
constituting a compensation committee chartered to be composed of three members.
Two members of the board sit on the committee one of those must be the
Designated Shareholder Representative, a third committee member must be a
non-board member selected from the shareholders. Shawn Wootton, as selected by
the Board to serve as the outside shareholder, and joined John Erickson and
Jackson Brown as the charter members of this committee.

On January 25, 2002 Mr. Maynard Dokken resigned from the Board and all
subsidiary companies and resigned all executive positions to pursue other
interests. The Company does not believe this will have a material adverse affect
on the Company and Mr. Dokken continues to make himself available to the Company
on an as needed basis. No new replacement director has yet been appointed.

The Company is in the process of a private equity offering to raise $3 to 5
million. Based on management's estimates this amount of funding could allow the
Company to conduct its operations, generate sales, and target positive cash flow
from operations within the calendar year 2003. There is no assurance, however,
that these funds will be available or will be available on terms acceptable to
the Company.

NOTE 5. CONTINGENCIES

On April 6, 2001 Milinx Business Group and Milinx Business Services 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
Microsystems letterhead) filed a Summons and Complaint in the State of
Minnesota, County of Hennepin against Milinx Business Group and Milinx Business
Services, for two Counts, Breach of Equipment Lease by Milinx Business Services:
in excess of $50,000 in damages and immediate possession of equipment and Breach
of Lease Guaranty by Milinx Business Group: in excess of $50,000 damages and
seizure of equipment. Milinx 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. All of these suits have now been settled with mutual releases
executed by all parties. In the matter of the Netergy Networks settlement the
company received the sum of $200,000 in cash. In the matter of Sun Microsystems,
Inc., Netscape Communications Canada, Inc., Intraware Canada, Inc. and
Burntsand, Inc. the company received a credit of $197,101 as a reduction in
liability due to renegotiated terms, a cash payment of approximately $27,000 and
a credit of $146,730 from Intraware applied to the provision of two years of Sun
Gold level service and maintenance.

On October 4, 2000, three former employees of Milinx Business Services advanced
separate actions in the British Columbia Supreme Court against Milinx Business
Services alleging breach of their employment severance agreements and claiming
unspecified damages. One of the claimants has since discontinued the action
against Milinx Business Services and Employment Standards has dismissed a
vacation wage claim of one of the two remaining employees. The plan of
reorganization addressed these claims and is now a binding settlement on all
employees.

There are numerous unsecured creditors of Milinx Business Services who have
filed suit or threatened actions against Milinx Business Services. These matters
were resolved in the reorganization plan approved by the court February 22, 2002
but certain sums remain to be paid pursuant to the plan.

On August 15, 2001, the Government of Canada, through the divisions of Revenue
Canada and Employment Standards filed super-priority liens against the Company
and certain directors and officers for unpaid employee wages, accrued vacation,
payroll taxes and severance pay. The Company had recorded these claims,
approximating $740,000, in accrued liabilities. The amount in question is in
dispute, and the Company has filed an appeal to determine the correct amount
owing. The claims were addressed in the pending reorganization, and the Company
has deposited with the Bankruptcy Trustee the necessary amounts to meet the
first of these obligations as confirmed by the plan. The necessary funds to meet
certain other obligations including the Revenue Canada obligations, due 6 months
from the date of approval of the plan, in the amount of $134,563 have not yet
been placed with the Trustee and failure to do so can result in the forced
liquidation of the subsidiary company in Canada.

To the knowledge of the officers and directors of Milinx, there are no other
pending legal proceedings or litigation and none of its property is the subject
of a pending legal proceeding. Further, except as discussed above, Milinx's
officers and directors know of no legal proceedings against Milinx or its
property contemplated by any governmental authority.

From December 2000 to June 2001, the Company conducted an offering of its
Millenium offering (see 2001 Form 10-K). Some of the sales of securities may
have been made in violation of the Act, creating liability under the Act. The
Company believed that the sales were exempt from registration under the Act, but
facts recently coming to its attention created uncertainty whether the exemption
was fully complied with. If a Court were to determine that the exemption had not
been fully complied with, the Company's maximum possible liability would be
$306,000, plus statutory interest. The Company would vigorously defend any
assertion by investors that it had not complied with the exemption and would
seek contribution from third parties the Company believes to be responsible for
the potential violations.



                                       8
<PAGE>

NOTE 6. OTHER

As of the date of this filing, Milinx Business Services, Inc. is not current on
its capital lease payments. The leases were all nearly twelve months past due as
of March 31, 2002. As of the date of this filing, due to restructuring of
certain leases and the return of certain unnecessary equipment the past due
amount reflected from nine to twelve months of past due payments in the prior
filing have been waived or deferred. Due to the aforementioned events of
default, the Company classified all capital lease liabilities as current for
financial statement presentation purposes. Adjustments were made in the
financials for the period ending March 31, 2002 to reflect the lease
renegotiations. Certain capital lease payments that were to be paid beginning
Jan 1, 2002 have not been made and the Company is in the process of
renegotiating the starting payment dates but there can be no assurance the
company will be successful and the equipment secured by the leases could be
forfeited. In such an event the Company would need to secure other equipment to
replace the forfeited equipment and there is no assurance the Company would be
able to do so.

For the period ended March 31, 2002, an accrual of $383,065 for employee and
management services was recorded, of which $116,425 related primarily to the
prior quarter. The agreement between Milinx Business Group, Inc. and Thomas
Loker, included bringing on a new management team to facilitate the Company
reorganization and debt restructure. Payments for reimbursable expenses were
made in the previous quarter however there were no payments or accruals for
compensation due the management team. The salary-related accrual was made in the
quarter ended March 31, 2002 to update retroactively the amounts due to the
management team.

NOTE 7. NEW AUTHORATIVE ACCOUNTING PRONOUNCEMENTS

In October 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS 121, Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of APB Opinion 30, Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
segments of a business to be disposed of. SFAS 144 is effective for fiscal years
beginning after December 15, 2001. The initial application of SFAS 144 did not
have an impact on the Company's consolidated financial statements.

NOTE 8. SUBSEQUENT EVENTS

Subsequent to March 31, 2002 the company continued to offer the February 8, 2002
Exempt Private Offering, to accredited investors only, in the amount of $500,000
to provide funding for operations. This offering has two parts:
     Part 1.) In exchange for a minimum investment of $5,000 but investments
     less than $100,000 the Company granted common restricted shares at the
     price of $0.06 per share plus warrants to purchase up to 50% of the number
     of shares at an exercise price of $0.08 per share. The warrants have a term
     of 2 years.
     Part 2.) In exchange for a minimum investment of $100,000 the Company
     granted common restricted shares at the price of $0.04 per share plus
     warrants to purchase up to 25% of the number of shares at an exercise price
     of $0.08 per share. The warrants have a term of 2 years.
The Company has raised $22,500 under this offering subsequent to March 31, 2002.


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

Except for the historical information presented in this document, the matters
discussed in this Form 10-Q, and specifically in Management's Discussion and
Analysis of Financial Condition and Results of Operations, or otherwise
incorporated by reference into this document contain forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995). These statements can be identified by the use of forward-looking
terminology such as believes, expects, may, will, should, or anticipates or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties. The safe harbor
provisions of Section 21E of the Securities Exchange Act of 1934, as amended,
and Section 27A of the Securities Act of 1933, as amended, apply to
forward-looking statements made by the Company. You should not place undue
reliance on forward-looking statements. Forward-looking statements involve risks
and uncertainties, including those identified within the section entitled
Outlook: Issues and Uncertainties contained in our Form 10-K, as amended, for
the year ended June 30, 2001. The actual results that the Company achieves may
differ materially from any forward-looking statements due to such risks and
uncertainties. These forward-looking statements are based on current
expectations, and the Company assumes no obligation to update this information.
Readers are urged to carefully review and consider the various disclosures made
by the Company in this Quarterly Report on Form 10-Q and in the Company's other
reports filed with the Securities and Exchange Commission that advise interested
parties of the risks and factors that may affect the Company's business.



                                       9
<PAGE>

The following discussion and analysis should be read in conjunction with the
financial information contained in Item 1 and the Company's audited financial
statements contained in its Form 10-K, as amended, for the year ended June 30,
2001.


Overview

Milinx Business Group, Inc. was incorporated under the laws of the State of
Delaware on December 10, 1998. On December 9, 1999, Milinx entered into a stock
exchange agreement with Forestay Corporation, a public company incorporated in
Delaware. Under the agreement, Forestay became a wholly owned subsidiary of
Milinx, and Milinx elected successor status under the Securities and Exchange
Act of 1934 Rule 12g-3.

Milinx started its life to ride the wave of Application Service Providers and
firmly become a participant in the Dot Com bonanza. Milinx is no longer a Dot
Com and no longer focused to develop itself as an ASP business. Milinx is now
focused on the internet only so far as it becomes a vehicle to enhance the sale
and distribution of the services and products Milinx will be bringing to market
through its acquisition, partnership and joint venture strategies.

Milinx is effectively a company trying to be reborn from the ashes of failure.
The major assets that form the basis for the Company's turnaround initiative are
owned by its subsidiary, 580880BC Ltd., a British Columbia corporation dba
Milinx Business Services, Inc., which is in the process of completing a
court-supervised reorganization proceeding in British Columbia, Canada. The
approved plan is conditioned upon satisfaction of the remaining payments
scheduled under the plan. The Company must raise additional capital to meet the
required schedule of payments under the plan.

During fiscal year 2000 and the first half of fiscal year 2001, Milinx was
engaged in developing and hosting proprietary business application software that
could be delivered over a network, such as the Internet. As a part of this
strategy, during fiscal year 2001 the Company placed in service a data center in
Vancouver, British Columbia. Due to economic conditions, funding constraints and
other factors, the Company was not able to effectively launch its application
software service during the second half of fiscal year 2001. By the end of
fiscal year 2001, the Company had lost all of its employees but two, and it
required substantial capital infusions merely to sustain the lease and other
financial commitments it had undertaken in anticipation of its product launch.

In September 2001, Milinx's current management team took over as part of a
turnaround initiative. This management team assessed the business and financial
position of the Company and determined that the only viable alternative was to
attempt to fundamentally reorganize through a voluntary reorganization filing in
British Columbia, Canada by 580880BC Ltd., and obtaining approval of a plan of
reorganization, because its business model contemplates using two material
assets of 580880BC Ltd. Additionally, the new management team determined that
the previous business model for the Company was no longer viable and required a
redirection of the Company from that of a developer of software and technologies
to that of a developer of markets and revenue streams.

Now that the plan for reorganization has been approved, Milinx is in the process
of reestablishing its operations, assuming it can continue to obtain adequate
capital. Milinx will begin to develop revenue streams and markets from some of
the prior intellectual property of the company. The Company intends to take some
of the previous components and begin to generate revenue from them.
Milinx intends to focus its offerings to the market in the general area of
Collaborative Business Services. The Company has developed a strategy to offer a
Collaborative Management Suite of products or CMS. CMS will provide the core of
applications that will allow customers to gain the same advantage of integrated
services typically only available through large scale integrated systems
available in Fortune 500-1000 companies. Milinx will ultimately offer a single,
unified collaborative system supporting the business enterprise.

Due to current market conditions and the relative availability of significantly
valuable technologies at significant discount relative to development cost, the
Company expects to focus much of it's efforts at acquiring needed technologies
for integration into the CMS core rather than a much more costly, and time
consuming, proprietary development process.

CMS will provide the core integrated suite of functionality. Customers will be
able to share applications and information seamlessly across the enterprise,
each individual working within the applications they are skilled and trained in
while having access to information and data within their applications that is
actually resident to other users and other applications. This system will allow
for scalable, secure, seamless integration of information where ever and
whenever it resides.

Milinx intends to derive this application suite from both the completion of some
exiting Milinx technologies and through acquisition and/or licensing of market
available technologies. The Company is in various stages of negotiation with a
number of other companies and technologies to provide the required systems for
both the CMS core suite as well as enhancements to the offerings.

One principal enhancement to the CMS core is the Advanced Collaborative
Enterprise System or ACES. This technology is available to Milinx via an
acquisition. The Company has negotiated favorable terms and is awaiting
completion of sufficient funding to implement the transaction.


                                       10
<PAGE>

The Company has entered into an agreement whereby the Company can offer for
resale a collaborative discussion server technology both individually and as
part of our CMS suite. The Company expects to begin to generate revenue from the
sale of this product in the next quarter. The foregoing statement should be
noted as a forward-looking statement and should be treated as such under the
definition as described herein. Additionally, the Company has identified and is
in various stages of evaluation and negotiation for other valuable technologies
including a document exchange system, enterprise modeling and simulation tools,
streaming media and compression technologies, unified messaging and soft-switch
technologies and others.

Some of the planned benefits of CMS include:

     o    Single Message Interface (Unified Messaging)
     o    Seamlessly Exchange Documents Between Applications
     o    Establish Rules Based Project Management
     o    Completely Tailorable to Business Needs
     o    Powerful Web Based Data Management System for Full Accessibility
     o    Able to Support Any Business Enterprise
     o    Captures Company's Expertise within the System
     o    Transparently Integrates any Kind of Company Information into Dynamic
          Web Based Pages called CMS Documents
     o    Scalable Based on Needs and Budgets

The Company is in the process of raising the necessary capital to support
operations. A number of contacts have been made with the investment community
and some of these contacts have led to presentations of the company's business
plans. At this time the company continues to work through these initial contacts
as follow up and in many cases additional referrals have been forthcoming. While
the current financing market remains difficult, the company believes that it
plan is attractive to certain potential investors. The company's current cash
levels will not continue to support the company much longer during this process.
Management is concerned the company may run out of time due to lack of funds
before it can locate these potential investors.

Liquidity and Capital Resources

During the nine months ended March 31, 2002, the Company used approximately
$855,000 in its operating activities. The Company funded its operations
primarily through the sale of approximately $26,500 in notes payable, and
issuance of stock subscriptions of approximately $427,000. The Company's net
working capital shortfall at June 30, 2001, decreased to a deficit of $3,641,581
at March 31, 2002, due primarily to debt write-offs resulting from
Court-approved bankruptcy settlements.

During October 2001 the Company commenced a new private placement of convertible
debentures. The securities offered have not been and will not be registered
under the Act and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements. The
offering is based on $1,000 increments, with each increment entitling the
purchaser to a note for the full value of the increment, with 12% interest,
callable by the Company in 120 days, and 5,000 restricted common shares. If the
Company does not call the notes, they are due in 300 days but they bear 15%
interest from the date of issue. The offering has been extended until February
8, 2002, and it sought to raise up to $400,000. As of the filing of this report,
the Company had raised $235,500 in this offering. The proceeds have been used to
pay operating expenses and complete the Company's audit and Form 10-K filing.
This disclosure is not an offer of securities or a solicitation of an offer to
buy securities. Sales will be made only to investors with preexisting contacts
with the Company and its authorized representatives. This offering was
effectively closed on February 8, 2002.

In December 2001 the Company commenced an additional private equity placement.
The securities offered have not been and will not be registered under the Act
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. The offering is based on
minimum investments of $50,000. The offering consists of common stock at $.08
per share plus 50% warrant coverage with an exercise price of $.08 per share.
The offering was open until February 8, 2002. As of the filing of this report,
the Company had raised approximately $183,000 in this offering. The proceeds
will be used to pay operating expenses and complete the Company's first quarter
10-Q filing. This disclosure is not an offer of securities or a solicitation of
an offer to buy securities. Sales will be made only to investors with
preexisting contacts with the Company and its authorized representatives. This
offering was effectively closed on February 8th 2002.

In February 2002 the Company commenced an additional private equity placement.
The securities offered have not been and will not be registered under the Act
and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.

This offering has two parts:

       Part 1.) In exchange for a minimum investment of $5,000 but investments
       less than $100,000 the company granted common restricted shares at the
       price of $0.06 per share plus warrants to purchase up to 50% of the
       number of shares at an exercise price of $0.08 per share. The warrants
       have a term of 2 years.


                                       11
<PAGE>

       Part 2.) In exchange for a minimum investment of $100,000 the company
       granted common restricted shares at the price of $0.04 per share plus
       warrants to purchase up to 25% of the number of shares at an exercise
       price of $0.08 per share. The warrants have a term of 2 years.

The Company has raised $244,000 under this offering. The proceeds will be used
to pay operating expenses.

On October 12, 2001, Milinx's subsidiary, 580880BC Ltd., filed with the Office
of the Superintendent of Bankruptcy (OSOB) in British Columbia, Canada, a Notice
of Intention.

On December 24, 2001 580880BC Ltd. filed a plan of reorganization with the
court. The plan required to treat all claimants equally. In some instances equal
treatment consists of an equal per claim payment. In others, it consists of a
pro-rata payment based on the amount of a claim. The plan combines these
approaches. The plan also includes payments over time. The critical
consideration, however, was that the plan must be attractive enough to the
claimants that it secured the necessary votes for approval.

The court accepted the plan of reorganization, the OSOB and 580880BC Ltd.'s
notified unsecured creditors of a meeting to consider the plan of
reorganization. The meeting occurred January 14, 2002. The plan received
approval by the unsecured creditors (which occurred due to the requirement of
the plan receiving the vote of a majority in number of the creditors filing a
proof of claim and the vote of 66% of the dollar value of the claims), then the
plan was submitted to the court for its approval, which occurred February 22nd
2002. Effective upon the court approval, the plan became a contract between
580880BC Ltd. and its general unsecured creditors, and the balance of general
unsecured debt is extinguished conditioned upon 580880 BC Ltd. performing
according to the plan.

580880BC Ltd.'s plan of reorganization ultimately addresses three discrete
groups of creditors: secured creditors, preferred creditors and general
unsecured creditors.

580880BC Ltd.'s two major secured creditors are Cisco Systems and Sun
Microsystems. These secured claims amounted to approximately $1,600,000. These
claims have been negotiated outside the formal plan filed with the court, as
secured creditors are not bound by a plan of reorganization approved by the
general unsecured creditors and the court. The basic terms for settlement of the
secured claims include forgiveness of $200,000 in outstanding liabilities, cash
payments to the Company of $42,000, return of certain equipment, a restructuring
of the leases resulting in monthly payments of approximately $50,000 starting
March 2002, and cash payments of $50,000 payable over six months starting
February 2002. Milinx has not yet performed on the terms of this structure and
intends to renegotiate the payment terms with the parties.

580880BC Ltd.'s preferred creditors include its landlord for the data center and
several former employees with wage claims. The amount of the preferred
creditors' claims that must be paid immediately upon court approval of the plan
is approximately $111,297 which is broken down into approximately $71,683 of
unpaid wage claims and $39,614 of rental arrears claims. Within six months after
court approval of the plan, 580880BC Ltd. must pay an additional $134,563 in
back withholding taxes. The amount of the preferred claims is not negotiable.

580880BC Ltd.'s general unsecured creditors have claims of approximately $1.8
million. This amount excludes any indebtedness of 580880BC Ltd. to its parent,
Milinx. The remaining amounts have been extinguished pursuant to the terms of
the approved plan.

Milinx has funded the first payment required under the plan and will need to
fund the balance of the debt under the plan of reorganization. There is no
assurance that Milinx's will be able to fund the debt remaining under the plan.

While the Company proceeds with the plan of reorganization for 580880BC Ltd. it
has monthly expenses of approximately $200,000 that it must meet. In addition,
it has professional expenses associated with the reorganization and its public
company status that must be met from time to time.

The notes issued in an August and September 2001 offering in the amount of
$118,000 have completed the first 120 day window where by the option to convert
the note into shares of Milinx will expire. As of the filing of this report,
none of the shares have converted into restricted common stock. The Company
continues to offer an extension for conversion to the Note-Holders during this
quarter.

In addition to these reorganization-related cash requirements, management
believes that the Company will require a capital infusion of at least $1.7
million to launch the new Products and Services as planned. Additional working
capital will likely be necessary to sustain the unified messaging service until
break-even. The Company is in the process of raising additional equity in the
range of $3,000,000 to 5,000,000 that began in March 2002 through an
unregistered private placement as allowable under the Securities and Exchange
Act of 1944.

The Company is not committed to make any capital expenditures, although it may
need to acquire fixed assets from time to time.



                                       12
<PAGE>

There can be no assurance that adequate capital will be available on terms
acceptable to the Company, or at all. If the Company is unable to raise
additional capital, it may not be able to continue as a going concern, and it
might have to reorganize under bankruptcy laws, liquidate or enter into a
business combination. The Company has not presently identified any probable
business combination.

Results of Operations

The net loss (income) from operations, as reflected in the Consolidated
Statements of Operations, for the three months and nine months ended March 31,
2002 and 2001, was $(583,521), $631,239, $3,529,870 and $10,579,902. During the
quarter ended March 31, 2002, the Company recorded a gain from settlement of
liabilities under the plan of reorganization in the amount of $1,500,677.

Revenues decreased to zero for the three months and nine months ended March 31,
2002 from approximately $165,000 and $277,000 for the same periods in 2001, due
to the Company halting all operations of 580880 BC Ltd. in connection with the
pending reorganization proceeding. Assuming 580880BC Ltd. successfully
reorganizes and the Company subsequently succeeds in launching the unified
messaging service, management does not anticipate that the products and services
that provided revenues in fiscal years 2001 and 2000 will contribute to
post-reorganization revenues.

Selling, general and administrative expenses decreased to approximately $642,000
for the three months ended March 31, 2002 from approximately $2,535,000 for the
same period in 2001. This decrease is due to the layoff of the Company's
employees in June 2001 offset by the hiring of a new management team in August
2001. Assuming 580880BC Ltd. successfully reorganizes and the Company
subsequently succeeds in launching its new products and services, management
expects that selling, general and administrative expenses will become
significant, but not nearly of the magnitude seen in prior periods. Significant
reductions will continue to be derived due to the reduction in required
headcount and lower marketing costs achievable through the new strategy of
focusing away from software development and towards developing revenue markets
and distribution of acquired technologies and products. An accrual of $383,065
for employee and management services was recorded in the three months ended
March 31,2002, of which $116,425 relates to prior quarters.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes its exposure to overall foreign currency risk is
immaterial. The Company does not manage or maintain market risk sensitive
instruments for trading or other purposes and is, therefore, not subject to
multiple foreign exchange rate exposures. The Company has no outstanding
long-term indebtedness for which the Company is subject to the risk of interest
rate fluctuations.

The Company reports its operations in US dollars and its currency exposure,
although considered by the Company as immaterial, is primarily between the US
and Canadian dollars. Exposure to the currencies of other countries is also
immaterial as international transactions are settled in US dollars. Any future
financing undertaken by the Company will be denominated in US dollars.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


On August 15, 2001, the Government of Canada, through the divisions of Revenue
Canada and Employment Standards filed super-priority liens against the Company
and certain directors and officers for unpaid employee wages, accrued vacation,
payroll taxes and severance pay. The Company had recorded these claims, totaling
$740,000, in accrued liabilities. The amount in question is in dispute, and the
Company has filed an appeal to determine the correct amount owing. The claims
were addressed in the pending reorganization, and the Company has lodged with
the Bankruptcy Trustee the necessary amounts to meet these obligations as
confirmed by the plan. The necessary funds to meet certain other Revenue Canada
obligations, due 6 months from the date of approval of the plan, in the amount
of $134,563USD have not yet been placed with the Trustee and failure to do so
can result in the forced liquidation of the subsidiary company in Canada. The
Company has already made payments of $125,760 against these claims.

To the knowledge of the officers and directors of Milinx, there are no other
pending legal proceedings or litigation and none of its property is the subject
of a pending legal proceeding. Further, except as discussed above, Milinx's
officers and directors know of no legal proceedings against Milinx or its
property contemplated by any governmental authority.


ITEM 2 (C). CHANGES IN SECURITIES AND USE OF PROCEEDS

Set forth below is information regarding the issuance and sales of our
securities without registration during the quarter ending March 31, 2002. No
such sales involved the use of an underwriter, and no commissions were paid in
connection with the sale of any securities.



                                       13
<PAGE>

During nine months ended March 31, 2002 the Company issued $235,500 in notes and
convertible debentures and 5,582,000 shares of its voting common stock to
accredited investors. The issuance of the notes and convertible debentures and
shares was exempt from registration under Rule 506 of Regulation D under the
Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

On November 9, 2000, the Company sold a $444,4444 convertible debenture to an
unrelated third party for net proceeds of $400,000. The debenture was to mature
on March 31, 2001, with 12% interest and was convertible upon demand into shares
of the Company's common stock at $3.00 per share. Based on the November 9, 2001
opening price of the Company's stock, there was no value to the beneficial
conversion feature associated with the debenture. The $44,000 premium paid on
the debenture was amortized as an additional interest expense.

On December 29, 2000 the holder of convertible debentures called the outstanding
principal balance by providing the Company with a thirty-day notice. The Company
is currently in a default on the debenture. As of June 30, 2001, the outstanding
principal balance was $444,444. In addition, accrued interest expenses include
$60,361 of unpaid interest. The Company intends to negotiate a conversion of the
debt into equity.

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

None

ITEM 5. OTHER INFORMATION

Effective April 2002 Mr. Stan Mazor resigned as a director due to personal
reasons.

Effective February 2002 Mr. Steve Price resigned as acting Chief Financial
Officer to pursue other interests.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS



Exhibit Number             Description
--------------             ------------
3.1*                       Certificate of Incorporation

3.3*                       By-laws

4.1*                       Specimen Stock Certificate



*    Incorporated by reference from the Form 10-K of the Company filed with the
     Securities and Exchange Commission on October 13, 2000.



REPORTS ON FORM 8-K

On October 15, 2001, the Company filed a report on Form 8-K dated October 12,
2001, which included an Item 3 disclosing Other Events.

On January 12, 2002, the Company filed a report on Form 8-K dated January 12,
2001, which included an Item 3 disclosing Other Events.

On January 25, 2002, the Company filed a report on Form 8-K dated April 11,
2001, which included an Item 6 disclosing Resignation of Registrant's Directors.

On April 11, 2002, the Company filed a report on Form 8-K dated April 11, 2001,
which included an Item 6 disclosing Resignation of Registrant's Directors.


                                       14
<PAGE>

REPORTS ON FORM 10-K

On November 16, 2001, the Company filed a report on Form 10-K for fiscal year
ending June 30, 2001.

On December 24, 2001, the Company filed a report on Form 10-K/A for fiscal year
ending June 30, 2001.

REPORTS ON FORM 10-Q

On December 21, 2001, the Company filed a report on Form 10-Q for the quarter
ending September 30, 2001.

On March 22, 2002, the Company filed a report on Form 10-Q for the quarter
ending December 31, 2001.



<PAGE>



                                   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.




Date:  June 18, 2002             By:      /s/ Thomas W. Loker
      ---------------------          ----------------------------------------
                                 Name:  Thomas W. Loker
                                 Title: Chairman







                                       16