---------------------------
                                                     OMB APPROVAL
                                                     ---------------------------
                                                     ---------------------------
                                                     OMB NUMBER:  3235-0070
                                                     Expires:  April 30, 2003
                                                     Estimated average burden
                                                     hours per response....34.00
                                                     ---------------------------

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

                                    FORM 10-Q

X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

                   For the period ending  September 30, 2000
                                          ------------------

                              Commission File No.


                           Milinx Business Group, Inc.
                         Suite 3226, 1001 Fourth Avenue
                            Seattle, Washington 98154
                            -------------------------
             (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 No.)

                         Suite 3226, 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
to be filed 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

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.

16,461,911 common shares issued and outstanding at October 31, 2000.


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                  MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                           Consolidated Balance Sheets


                                                                                                 September 30,            June 30,
                                                                                                     2000                   2000
                                                                                                  Unaudited
                                                                                                  ------------         -------------
CURRENT ASSETS
<S>                                                                                               <C>                  <C>
  Cash                                                                                            $  1,814,366         $  2,162,430
  Receivables
       Trade                                                                                             9,227                9,334
       Subscriptions                                                                                      --                323,721
       General Sales Tax                                                                               452,655              327,149
       Employee and stockholders                                                                        45,731               20,692
                                                                                                  ------------          ------------
          Total accounts receivable                                                                    507,613              680,896

       Due from Milinx Marketing Group                                                                  81,701               82,644

       Security deposits                                                                               121,837              209,362
       Prepaid rent and other                                                                          215,100               43,549
                                                                                                  ------------          ------------
          Total current assets                                                                       2,740,617            3,178,881

PROPERTY AND EQUIPMENT-AT COST, net of accumulated depreciation                                      4,413,658            3,572,168

OTHER ASSETS
       Licenses                                                                                      2,254,717            2,036,985
       Capital lease deposits                                                                           97,716              203,915
       Security deposits                                                                                  --                  1,300
                                                                                                  ------------          ------------
                                                                                                  $  9,506,708         $  8,993,249
                                                                                                  ============         ============
                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
       Accounts payable                                                                           $  1,053,338         $    981,233
       Accrued liabilities                                                                             209,789              279,758
       Due to Milinx Management Corporation                                                              3,586                3,586
       Capital lease obligations - current portion                                                     787,033              536,061
       Customer deposits                                                                                  --                  2,529
                                                                                                  ------------          ------------
          Total current liabilities                                                                  2,053,746            1,803,167

CAPITAL LEASE OBLIGATIONS, net of current portion                                                      792,305              927,808

COMMITMENTS AND CONTIGENCIES                                                                              --                   --

STOCKHOLDERS EQUITY
       Series A 10% non-cumulative, voting convertible preferred stock,                                  3,675                3,675
          liquidation value of $1,176,000
       Series B 10% non-cumulative, voting convertible preferred stock                                    --                  1,681
       Series C 10% non-cumulative, voting convertible preferred stock,
          liquidation value of $1,594,511                                                                1,595                2,207
       Common stock                                                                                     16,303                9,671
       Additional paid in capital                                                                   18,431,594           14,908,291
       Unearned compensation                                                                          (680,549)          (1,102,626)
       Accumulated deficit                                                                         (10,965,290)          (7,480,702)
       Accumulated other comprehensive deficit                                                        (146,671)             (79,923)
                                                                                                  ------------          ------------
                                                                                                     6,660,657            6,262,274
                                                                                                  ------------          ------------
                                                                                                  $  9,506,708         $  8,993,249
                                                                                                  ============         ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       2
<PAGE>
                  MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                      Consolidated Statements of Operations

                                                      For the three months ended
                                                            September 30,
                                                          2000           1999
                                                      -----------     ----------
Net sales                                              $   87,689    $   45,971

Cost of sales                                             148,237       100,657
                                                      -----------    -----------
Gross profit (loss)                                       (60,548)      (54,686)
                                                      -----------    -----------
Selling, general and administrative expenses            3,373,528     1,069,329

Other expenses
    Interest                                               50,173           --
    Miscellaneous                                             339         2,544
                                                      -----------    -----------
                                                           50,512         2,544
                                                      -----------    -----------
Net loss                                               $3,484,588    $1,126,559
                                                      ===========    ===========
Net loss per common share - basic and diluted          $     0.27    $     0.13
                                                      ===========    ===========
        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                  MILINX BUSINESS GROUP, INC. and SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                  (Unaudited)
                                                                                           For the three months ended
                                                                                                  September 30,
                                                                                              2000            1999
                                                                                           ----------       ----------
Increase (Decrease) in cash
<S>                                                                                       <C>              <C>
Cash flows from operating activities

      Net loss                                                                            ($3,484,588)     ($1,126,559)
      Adjustments to reconcile net loss to net cash used in operating activities:
          Depreciation and amortization                                                       388,660           83,285
          Write off of license and trademark costs                                               --            100,000
          Employee stock and stock option compensation                                        263,136             --
            Changes in assets and liabilities
                   Receivables                                                               (150,545)         (37,862)
                   Security deposits and prepaid expenses                                     (84,026)            --
                   Accounts payable, accrued liabilities and customer deposits                  1,850             --
                                                                                           ----------       ----------
                   Net cash used in operating activities                                   (3,065,513)        (981,136)

Cash flows from investing activities
       Acquisition of fixed assets                                                           (788,961)        (435,740)
       Acquisition of intangible assets                                                      (217,752)        (156,823)
       Equipment deposits                                                                        --             (3,759)
                                                                                           ----------       ----------
                   Net cash used in investing activities                                   (1,006,713)        (596,322)
                                                                                           ----------       ----------

Cash flows from financing activities
       Proceeds from issuance of common stock                                                 181,788             --
       Proceeds from conversion of D warrants                                               3,499,748             --
       Proceeds from issuance of Class A Units                                                  --          1,227,500
       Proceeds from conversion of Class D Units                                              325,970             --
       Proceeds from exercise of stock options                                                  2,798             --
       Payments on capital lease obligations                                                 (219,394)            --
       Proceeds from sale of common stock to employees                                          --             13,606
                                                                                           ----------       ----------
                   Net cash provided by financing activities                                3,790,910        1,241,106
                                                                                           ----------       ----------
Effect of the exchange rate changes on cash                                                   (66,748)          7,492

Net decrease in cash                                                                         (348,064)        (328,860)

Cash at beginning of year                                                                   2,162,430            4,522
                                                                                           ----------       ----------
Cash at end of year                                                                       $ 1,814,366      ($  324,338)
                                                                                          ===========       ==========

SUPPLEMENTAL DISCLOSURES
                         Cash paid for interest                                           $    50,173       $     --
                         Property acquired under capital lease                                334,863             --
                                                                                           ----------       ----------
                                                                                          $   385,036       $     --
                                                                                          ===========       ==========
</TABLE>



            The accompanying notes are an integral part of these stat


                                       4


<PAGE>







                  MILINX BUSINESS GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1.  FINANCIAL STATEMENTS

The  unaudited   consolidated  financial  statements  of  the  Company  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 three months ended September 30, 2000 and
September 30, 1999 was 12,801,315 and 8,470,000,  respectively. Diluted loss per
share includes the effect of all potentially  dilutive common stock equivalents.
Diluted  loss per  share for the  three  months  ended  September  30,  2000 and
September 30,1999 equaled basic loss per share due to the  anti-dilutive  effect
of the common stock equivalents.

NOTE 3.  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  September  30, 2000,  the Company  raised  $3,686,583 in
equity  capital  without the benefit of an operating Data Center prior to August
2000, software applications or an ability to market any of its ASP services.

The Company is  currently in the process of  completing  a private  placement of
3,111,111  shares of common  stock at a price of $4.50 per share.  For the first
$7,000,000 in gross proceeds received, an additional one (1) bonus share will be
issued  for each two (2)  shares  purchased.  $201,987  in  gross  proceeds  was
received  during the quarter ended  September 30, 2000.  Subsequent to September
30, 2000 and through the date of this filing, the Company received an additional
$244,000 in gross proceeds from this offering.

                                       5
<PAGE>



NOTE 4.  NEW SUBSIDIARIES

Milinx  Business  Systems,  Inc., a wholly owned  subsidiary of Milinx  Business
Group,  Inc., was incorporated in the State of Nevada on June 22, 2000.  Payroll
expenses for the CFO and two employees  working in California  were paid through
this company.

NOTE 5.  CONTINGENCIES

On October 4, 2000, two 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.  Services  will  be  vigorously
defending these actions and counterclaiming  against the respective  individuals
for breach of employment and severance  agreements and claiming  return of funds
paid out under their  respective  severance  agreements and damages for wrongful
breach.

Milinx Business  Services,  Inc.,  Milinx  Business  Group,  Inc. and Maynard L.
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,  among
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 were filed and served.

NOTE 6.  OTHER

Milinx Business Services,  Inc. entered into an Offer to Sublease with Bema Gold
Corporation  to sublease floor space located at 595 Burrard Street in Vancouver,
BC on August 8,  2000.  A deposit  of  $34,658  was paid at the  signing  of the
agreement and a further  $103,974  (first 3 months of rent) was paid at the time
of acceptance by the Lessor. On December 1, 2000 a payment of $103,974 (rent for
3 more  months),  plus the first  month rent of $34,658  are due.  The  sublease
expires on April 21, 2002.  Milinx has also  extended the master lease to expire
in 2004.

                                       6
<PAGE>


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

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ TOGETHER WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES OF MILINX BUSINESS GROUP, INC. AND ITS WHOLLY OWNED
SUBSIDIARIES (MILINX) INCLUDED IN THIS FILING FOR THE FIRST FISCAL QUARTER ENDED
SEPTEMBER 30, 2000.THE DISCUSSION CONTAINS FORWARD-LOOKING  STATEMENTS INVOLVING
RISKS AND  UNCERTAINTIES,  SUCH AS OUR FUTURE PLANS,  ABILITY TO  SIGNIFICANTLY,
MEETING REVENUE GOALS, OBJECTIVES,  EXPECTATIONS,  PROJECTIONS,  AND INTENTIONS.
OUR ACTUAL  RESULTS 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 SET FORTH IN THIS
DOCUMENT 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 AND WE ASSUME
NO OBLIGATION TO UPDATE THE REASONS ACTUAL RESULTS COULD DIFFER  MATERIALLY FROM
THOSE  ANTICIPATED  IN  THESE  FORWARD-LOOKING   STATEMENTS.   UNLESS  SPECIFIED
OTHERWISE  AS USED  HEREIN,  THE  TERMS  "WE",  "US",  OR "OUR"  REFER TO MILINX
BUSINESS GROUP, INC. AND ITS WHOLLY OWNED SUBSIDIARIES.

The Economy

The United States economic expansion is now demonstrably slowing after its tenth
year of record economic  expansion.  But there is some fragmented  evidence that
inflationary  pressures on both prices and wages are increasing,  placing the US
Federal  Reserve Bank in a conundrum.  Historically,  the Bank would most likely
move to lower  interest rates to stimulate the economy but that action has to be
done with extreme caution so as not to further exacerbate inflation. However, we
expect  that the US  economy  will  continue  to grow at a rate of 3.5% to 4% of
Gross  Domestic  Product  (GDP),  which is still  regarded  as healthy  economic
growth.  Canada just began its recovery in 1995 and current projections indicate
that its rate of GDP  growth  in the year 2000 will  exceed  that of the  United
States.

As of the date of this  filing,  the US  equity  markets  are in a state of some
turmoil and many uncertainties. Earnings reports of firms for the third calendar
quarter for many companies have not met projections and the performance of their
share price has been adversely  affected.  In that the Technology Sector has, in
recent years, been richly valued,  the downward  adjustment in the common shares
of those businesses has been more pronounced.  To further increase  uncertainty,
the United  States  has,  as of now,  not  completed  the  election  of its 43rd
President.  In our opinion, these factors,  either singularly or taken together,
make it considerably more difficult for firms to raise additional debt or equity
capital.

Milinx Overview

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

                                       7
<PAGE>

An Application  Service Provider (ASP) is broadly defined as a firm that that is
remotely  hosting  software  applications  and  providing  access and use of its
services for a recurring monthly fee on a subscription  basis. Milinx intends to
become a full-service ASP with market focus oriented to Small Office/Home Office
(SOHO) customer and, as  applications  are added to our customer suite, to Small
and Medium Enterprises (SME).

We believe that the ASP delivery model of Information  Technology  (IT) Services
is well  positioned to become the 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 ASP delivery model offers at least the following  distinct
advantages:

o    Lower total cost of ownership.

o    The latest software is readily available and more affordable.

o    New applications can be deployed much more expeditiously.

o    The focus and capital of the customer can be shifted to its core competency
     rather than supporting and implementing expensive IT applications.

In August 2000,  we opened our first Data Center  occupying a floor of an office
building in Vancouver, BC. Although our Data Center can currently accommodate up
to 1,000,000  subscribers,  our plan has been to  supplement it with "mini" data
centers or co-located facilities with other companies to penetrate the market in
the United States.

With the completion of our first Data Center in August 2000, the  implementation
of our Marketing  Plan began in earnest.  We researched  our known and perceived
competitors  along with identifying the initial suite of offerings that would be
most appealing to the marketplace.

Marketing and Sales Channels

Initially,   we  are  offering  our  products   through  three   distinct,   but
complementary, sales channels:

o    Direct Corporate Sales Force:  Targeting  businesses of sufficient existing
     or potential  size to justify the  deployment  of Milinx  Sales  Personnel,
     supplemented  by IT  Professionals,  to address  technical  challenges  and
     issues.  Usually,  this is a firm  of 100+  employees  that  would  greatly
     benefit from outsourcing some or all of its applications.

o    Direct Sales  Network:  An  independent  targeted  group of 5,000  business
     professionals who contract with our wholly owned subsidiary, ASP Technology
     One,  Inc.,  to  resell  Milinx  products  for a  commission,  specifically
     oriented to the SOHO and SME markets.

                                       8
<PAGE>

o    Internet  Service  Providers  ("ISPs")  and  Telecommunications   Companies
     ("Telcos"): Offering Milinx Products to the existing customer base of these
     firms in a revenue  sharing  model.  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.

o    Purchase of Internet  Service  Providers  (ISPs):  The Company has embarked
     upon a strategy to purchase  smaller ISPs (under  25,000  subscribers)  and
     market its enhanced services to the business base of subscribers.  Consumer
     clients of the ISPs  purchased  will be sold in bulk to other firms serving
     that niche of the market.

o    In that regard, 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)  which  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.

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

o    Rapidly   increasing   awareness  and  acceptance  of  web  based  software
     solutions.

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

o    The availability of web based software products.

o    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 ASP market  represent a suite of
products  encompassing depth,  functionality and  comprehensiveness  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 and will be making  our  initial  offering  to  customers  in four
increments that began in June 2000 and will conclude in June 2001.  However,  as
market  conditions  dictate  and the  results of our  Research  and  Development
efforts  come to  fruition,  new  services  may be added 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 (under 10 employees) and the Small to Medium Enterprises (SME) market.



                                       9
<PAGE>






Already available are the following services:

miOFFICE:                      Servicing  both the SOHO  and SME  markets,  this
                               suite   of   applications    currently   includes
                               collaboration  and  file-sharing  applications as
                               well as e-mail and calendaring solutions.

miMESSAGING:                   This  Unified  Messaging  solution  includes  the
                               ability to have all voice, paging, fax and e-mail
                               messages sent to one mailbox for dissemination to
                               the  customer,  as well as expanded  functions to
                               include "follow-me messaging",  voice recognition
                               and text-to speech conversion.

October to December 2000:

Throughout the fourth quarter, we expect to see the following new services added
to the Milinx suite of offerings:

miTRAINING:                    Primarily  directed at the SOHO market,  this
                               Internet based application suite provides online
                               training for our clientele.

miBILLING:                     Expected to be  deployed by the end of  2000,this
                               application   is   targeted   at  SOHO   and  SME
                               organizations  that want to avail  themselves of,
                               web  centric  business  billing   techniques  and
                               procedures to properly  control and monitor their
                               accounts  receivables with the latest  technology
                               available.
miCOMMERCE
Express:                       This   solution   contains   all  the   essential
                               functionalities   in  the  miCOMMERCE   suite  of
                               services  and it is  aimed  at the  SOHO  and SME
                               businesses.  Merchants  can sell  their  products
                               securely  over the Internet  with instant  credit
                               card  billing and  transaction  remittances.  The
                               service expected to be ready by December 2000.

miCRM                          Express: This solution contains all the essential
                               functionalities  in the miCRM  suite of  services
                               and it is aimed  at the SOHO and SME  businesses.
                               The  product  integrates  information  related to
                               customers   and   company   partners  so  that  a
                               customer-centric view is available to support any
                               activities related to the maintenance of customer
                               relationships.  The service  expected to be ready
                               by December 2000.

January to March 2001:

miCOMMERCE:                    This  website-creation  solution  is aimed at the
                               SOHO and SME businesses that seek to establish an
                               online catalogue and sell their products securely
                               over  the  Internet  with  instant   credit  card
                               billing and transaction  remittances.  Currently,
                               in the final stage of development, it is expected
                               to be ready  for  deployment  during  the  fourth
                               quarter of 2000.

                                       10
<PAGE>

miOFFICE                       VO: Aimed at the SOHO and SME markets,  this next
                               stage of MiOffice  will include word  processing,
                               presentation  and  spreadsheet  solutions.   This
                               suite   of   products   is   currently   in   the
                               developmental  stage,  and with  integration into
                               our suite of services by March 2001.

miCRM                          Customer Relationship  Management (CRM) solutions
                               are by  definition  intended  to  centralize  and
                               organize   all  customer   information   for  any
                               company.  Milinx's  solution  is  expected  to be
                               available  in early  2001 to  service  a  primary
                               target  market  of SMEs  along  with a  secondary
                               market of SOHOs.

miPORTAL:                      This  application  creates a  secure,  customized
                               online  environment  that allows our customers to
                               bring   employees,    partners,   suppliers   and
                               customers  together  onto the  same  web  centric
                               environment.  This development-stage  solution is
                               expected to deploy  late in the first  quarter of
                               2001.

April to June 2001:

miCAST:                        This  application  increases the  versatility and
                               utility of e-mail,  allowing our customers to add
                               voiceover  functionality to their e-mails without
                               significantly  increasing  the size of the e-mail
                               file. In the development  stage, this solution is
                               expected to be  available  sometime in the fourth
                               quarter.

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  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

As of the date of this filing,  Milinx does not have  sufficient cash resources,
access to credit, equity capital, or working capital and may not be able to meet
ongoing obligations on a timely basis.

In the first fiscal quarter, the Company received $3,499,748 from the conversion
of D warrants from a prior  private  placement of equity  investments,  $325,970
from the conversion  and $181,788 from the placement of common shares  including
the collection of $323,721 of subscriptions receivable.

                                       11
<PAGE>

Since July 2000,  the Company has  attempted  to place  privately  2,500,000  in
common shares at a price of $4.50 per share but only $446,000 has been raised to
date.  We are  actively  soliciting  funding  from the  placement  of notes with
private  accredited  individuals  including  an  equity  conversion  option  and
continuing  to  solicit  the sale of common  stock.  To date,  we have  received
$400,000  from a private  investor from the proceeds of a Demand Note that prior
to  December  15,2000  can, in whole or in part,  be applied to the  purchase of
common shares at $4.50 per share plus receiving an additional 1/2 bonus share.

In October 2000, the offering was expanded to 3,111,111 common shares at a price
of $4.50 per share plus a bonus  share was added at no  additional  cost for the
first  $7,000,000  invested.  As of the  date  of  this  filing,  no  additional
subscriptions or funds have been received from this revised offering.

Projected  revenues  have not  materialized  as  anticipated  and the Company is
slightly  behind schedule in completing  proprietary  applications to supplement
its existing  suite of services.  Our marketing  program is being  substantially
changed to focus our efforts  significantly on Value Added Resellers (VARs) such
as Internet Service Providers (ISPs) and Telcos.

While the Company is  aggressively  exploring  new third  party  equity and debt
financing,  these  efforts to date have only been  somewhat  successful.  We are
currently negotiating debt or debt and equity financing in excess of $10,000,000
with several  investment firms  experienced in providing this type of funding to
technology and development companies such as Milinx.  Management is committed to
concluding these needed financing arrangements on a basis that meets our capital
requirements and is in the best interests of our shareholders.  As a consequence
and to conserve  capital,  Milinx (and many other companies in the IT sector) is
reducing  expenditures  significantly  by  staff  reductions,   eliminating  all
discretionary expenses, deferring capital expenditures, and postponing all plans
for geographic expansion.  Even with these measures,  there is no assurance that
the present liquidity difficulties can be overcome.

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 O2 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 in  Calendar  Q4 2001  and
profitable operations in calendar Q1 of 2002.

Results of Operations

Revenue,  Cost of Sales,  and Gross Loss:  For the first  quarter of fiscal 2001
increased  $41,718 or 91% to $87,689 in the comparable period in 2000 as our ASP
services had just begun to be sold to subscribers.  However,  cost of goods sold
increased  $47,580  or 47% to  $148,237  slightly  increasing  the Gross Loss to
$60,548.  As of the date of this  filing,  the Company  had over 1,200  reseller
agents/clients and over 2,500 subscribers for its miMessaging Service.

                                       12
<PAGE>

The Gross Loss from Operations for the first fiscal quarter was $3,484,588 which
was a $2,358,029  increase from the $1,126,559 Gross Loss from Operations in the
comparable period 2000. With the completion of its Data Center, the Company just
began  receiving  ASP  revenues in August 2000 has embarked  upon an  aggressive
effort to reduce all expenditures.

Selling,   General,  and  Administrative   Expenses:  These  quarterly  expenses
increased  in fiscal  2001,  $2,304,199  from  $1,069,329  to  $3,373,528.  This
increase  was   principally   a  result  of  the   increases  to  the  following
expenditures:

o    Wages and Salaries increased  $968,5000 to $1,486,682 as a result of hiring
     the staff we  anticipated  would be necessary to develop and  integrate our
     applications and service  projected  clientele.  In that these  projections
     proved to be too optimistic, the Company now is reducing staff.

o    Advertising was $152,533 while there were no funds expended on this item in
     the first quarter of fiscal 2000. To continue to solicit subscribers, it is
     doubtful this expense can be much reduced and may increase in the future.

o    Amortization  of  computer  hardware,   software,  and  licenses  increased
     $305,375 to $388,660.  It is likely this expense will  continue to increase
     as new software is developed or purchased.

o    Consulting  fees increased  $318,708 to $393,648.  As part of the Company's
     cost reductions, this rate of increase will be reduced considerably.

o    Office expenses increased $117,173 to $243,625. As our personnel expense is
     reduced, this expense will decline commensurately.

o    Telephone increased $95,396 to $115,019.  As most of this expense is due to
     access  lines for  customers,  this  expense is unlikely to decline and may
     well increase in the future.

o    Travel and entertainment  increased $92,339 to $124,108.  All discretionary
     expenditures in this category will be eliminated.

o    Amortization of Deferred  Compensation  was $263,136.  There was no expense
     for this item in 1999,  as the shares of Milinx were not publicly  trading.
     Presuming  the share price  increases  in the  future,  this  expense  will
     commensurately increase.

                                       13
<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.

o    Milinx is presently  experiencing  financial difficulties and may be unable
     to timely meet its financial obligations.

o    We do not have the cash, equity capital,  credit, or working capital to pay
     our current expenditures.

o    We are seeking both debt and equity financing which may not be available on
     acceptable on terms and  conditions to us, if at all.  Milinx is attempting
     to purchase  smaller ISPs but there is no assurance that the cash resources
     or financing will be available to pursue this strategy.

o    The  Company is  reducing  its  payroll  that will  involve  the payment of
     accrued  vacation  and  severance  mandated  by  the  Province  of  British
     Columbia.

o    We are  operating  at a  significant  loss,  which will  further  erode our
     already limited resources.

o    Our  monthly  cash flow  deficit is  approximately  $1,000,000  and must be
     reduced  significantly.  However,  there is no  assurance  that this can be
     accomplished before our limited cash resources are exhausted.

o    Our marketing  program is being revised and  retargeted to VARs and Telcos.
     We have not yet proven the new program to be economically viable.

o    Only our platform  proprietary  applications are available and none are yet
     to be commercially proven

o    The ASP Business Model has yet to be proven.

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

o    Additional IT personnel need to be hired.  However,  our present  financial
     difficulties may make that difficult to achieve.

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

o    The  trading  price of our common  stock  could be  subject to  significant
     fluctuations.

o    It is the  intention of the Company to list its shares on the Nasdaq "Small
     Cap" or National Board. Presently, we qualify for neither.

                                       14
<PAGE>

o    On a fully diluted basis, we would have  35,000,000  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.

                           PART II - OTHER INFORMATION

ITEM 1.              LEGAL PROCEEDINGS.

On October 4, 2000, two 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.  Services  will  be  vigorously
defending these actions and counterclaiming  against the respective  individuals
for breach of employment and severance  agreements and claiming  return of funds
paid out under their  respective  severance  agreements and 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
were filed and served today.

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 44,886 common shares at $4.50 per share for
total cash proceeds of $201,987.00. Subsequent to September 30, 2000 and through
the date of this filing,  the Company  received an additional  $244,000 in gross
proceeds from this offering.


1,749,874  Class D Warrant  were  converted  to  common  shares  for total  cash
proceeds to the Company of $3,499,748.

Investors  converted  2,247,511  D Units to Series C  Preferred  shares  raising
$2,249.  In addition,  the Company  collected  $323,721 for  outstanding  D Unit
subscriptions.  Since,  investors converted 906,912 Series C Preferred shares to
906,912 common shares.

                                       15
<PAGE>

In addition to the above, during the three months ending September 30, 2000, the
Company issued 296,000 common shares in connection with the exercise of employee
stock options, for total cash proceeds of $2,798.00 with an additional $5,037 in
outstanding receivables.

All above proceeds were used for general working capital and operating purposes,
including  the lease and rental of  equipment,  legal,  accounting  and transfer
agent fees,  construction  of the  Company's  data center,  as well  salaries to
employees, directors and officers of the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

On November 15,2000,  Milinx executed a non-binding Letter Agreement (Agreement)
to purchase the assets of the BIG Online division of Metasoft  Systems,  Inc. of
Vancouver, BC. The purchase price is $3,547,297 comprised of the following:

o    $2,094,595 cash on closing.

o    $777,027 in a convertible subordinate debenture secured by the assets being
     purchased  bearing an  interest  rate of 1% per annum and due one year from
     date of closing.

o    $675,675  in shares  of Milinx  common  stock.  The  number of shares to be
     issued will be computed based upon the average closing price for the shares
     for the five (5) days prior to closing.

The purchase of these assets is  contingent  upon a  definitive  asset  purchase
agreement  being  executed,  due diligence  being  conducted by Milinx,  and the
approval by its Board of Directors.

On November 15, 2000,  Douglas A. Hicks  resigned as Executive Vice President of
the Company.  He will continue as a consultant at a monthly fee of $15,203 until
January 31,2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Form 10K filed October 13, 2000.


                                       16
<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.               November 20, 2000


/s/ James W. Summers
---------------------------------
James W. Summers
Chief Financial Officer