U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10K-SB
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

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

                       FOR THE PERIOD ENDED MARCH 31, 2000

                        COMMISSION FILE NUMBER 000-28595

                              PEABODYS COFFEE, INC.
                 (Name of Small Business Issuer in its Charter)

     Nevada                                             98-0209293
     (State or other jurisdiction of                    (I.R.S. Employer
     Incorporation or organization)                     Identification No.)

     3845 Atherton Road, Suite 9
     Rocklin, California                                95765
     (Address of Principal Executive Office)            (ZipCode)

                                 (916) 632-6090
                           (Issuer's Telephone Number)

              Securities registered under Section 12(b) of the Act:
                                      None

              Securities registered under Section 12(g) of the Act:
                         Common Stock, $0.001 Par Value
                                (Title of Class)

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to the Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:   $2,124,395.

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates, based upon the average bid and asked price of such common equity
as of May 4, 2000, [in the past 60 days], was approximately $9,217,722.

<PAGE>

                                TABLE OF CONTENTS

PART I  (Alternative 2)

Item 1   Description of Business                                               3
Item 2   Description of Property                                              20
Item 3   Directors, Executive Officers and Significant Employees              21
Item 4   Remuneration of Directors and Officers                               22
Item 5   Security Ownership of Management and Certain Securityholders         22
Item 6   Interest of Management and Others in Certain Transactions            23

PART II

Item 1   Market Price of and Dividends on the Registrant's Common
         Equity and Other Shareholder Matters                                 25
Item 2   Legal Proceedings                                                    26
Item 3   Changes in and Disagreements with Accountants                        26
Item 4   Submission of Matters to a Vote of Security Holders                  27
Item 5   Compliance with Section 16(a) of the Exchange Act                    27
Item 6   Reports on Form 8-K                                                  27

PART F/S

PART III

Index to Exhibits                                                             29

SIGNATURES                                                                    30

                                       2
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                    INFORMATION REQUIRED IN ANNUAL REPORTS OF
                       TRANSITIONAL SMALL BUSINESS ISSUERS

                             PART I (ALTERNATIVE 2)

ITEM 1.   DESCRIPTION OF BUSINESS
          (FORM 1-A  MODEL B  ITEM 6)

OVERVIEW

     Peabodys Coffee,  Inc., a Nevada corporation (the "Company" or "Peabodys"),
is in the business of selling specialty coffee drinks. Peabodys sells its coffee
drinks by the use of coffee espresso bars (kiosks),  positioned in corporate and
institutional  locations.  Peabodys  believes  that the highest level of growth,
stability and return on  investment in the specialty  coffee market is available
through  targeting a "captive" market niche, and by avoiding direct  competition
with "retail" companies such as Starbucks,  Diedrich Coffee,  Seattle's Best and
others located in fixed,  store-front  locations.  As described in detail below,
Peabodys'  kiosks  require  comparatively  lower  levels of capital  investment,
overhead and advertising, and are simple to operate.

     Peabodys' kiosks, while usually appearing permanent, are portable and often
completely  self-contained,  with the  exception  of power.  They are  generally
located in commercial and educational  facilities,  including corporate offices,
industrial facilities, office buildings,  universities,  colleges, hospitals and
entertainment venues. Peabodys' marketing strategy is to enter into subcontracts
with companies  having general  contracts for food services for the above sites,
which allow  Peabodys to locate its coffee kiosks in the sites in exchange for a
percentage  of the gross  revenue  generated  by the kiosks.  Three of Peabodys'
foodservice  provider clients,  Sodexho-Marriot,  The Compass Group and ARAMARK,
control  more than 8,500  institutional  foodservice  sites  across the  country
(Nations Restaurant News Special Report-Top 100 Contract Chains 1999), providing
the Company with the  opportunity  for growth,  although the Company  recognizes
that not all of these sites are suitable locations for the Company's kiosks.

     The  Company is  currently  operating  26 kiosk  outlets  and has  achieved
profitability  at  the  "unit  level"  at 24 of  these  locations.  The  Company
designates a kiosk to be profitable at the "unit level" when the kiosk generates
net income after  accounting for all expenses  directly  related to the specific
unit.  These direct expenses  consist of: cost of goods sold,  occupancy  costs,
operating   expenses  and  fully  loaded  labor  costs  which  include  employer
contributions, benefits and workers compensation.

     Despite the "unit level" profitability described above, the Company has not
been  profitable.  As the  accompanying  financial  statements show, in its last
fiscal year which ended on March 31, 2000,  the Company had a net operating loss
of $774,223, and an overall net loss of $372,608. These losses indicate that any
profits at the unit level are  overshadowed  by the  Company's  expenses  at the
corporate  level.  These  corporate  level  expenses  consist of: (i)  corporate
salaries;  (ii)  professional  fees  (primarily  legal  and  accounting);  (iii)
consultant fees; (iv) lease payments and related expenses to maintain  corporate
offices;  (v) insurance  premiums;  (vi) interest  expense on Company debt;  and
(vii)  depreciation  expense on the  Company's  capital  assets,  which  consist
primarily of the kiosks. The Company's balance sheet as of March 31, 2000 showed
a shareholders'  deficit of $399,335,  and current liabilities exceeding current
assets by $926,443.

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<PAGE>

     Because of the Company's operating losses and financial  situation,  note 3
of the accompanying financial statements expresses a "going concern opinion:"

     These statements are presented on the basis that the Company is an on-going
     concern.  Going  concern  contemplates  the  realization  of assets and the
     satisfaction  of  liabilities  in the  normal  course  of  business  over a
     reasonable  length of time. The  accompanying  financial  statements show a
     loss from the results of operations  of  $774,4223,  that the Company has a
     shareholders'  deficit of $399,335,  and current liabilities exceed current
     assets  by  $926,443.  Without  an  infusion  of  additional  capital,  the
     Company's ability to continue operations is doubtful.

     In order to  address  the issue of the  Company's  continuation  as a going
concern, the Company has taken the following actions:

     First,  the Company  launched its plan to eliminate $1 million of debt from
its  balance  sheet.  As of March  31,  2000,  this  plan has  resulted  in debt
conversion and/or debt forgiveness  totaling  approximately  $979,000.  The debt
conversion/debt  forgiveness  transactions  consist  of the  following:  (i) the
conversion  into common stock of $307,500 of bridge  notes in default,  and debt
forgiveness of $205,000 of accrued interest on the bridge notes; (ii) $31,900 of
trade debt  converted into common stock,  and debt  forgiveness of an additional
$26,700 of trade  obligations;  (iii) short term notes,  with  principal  values
totaling $167,000,  were converted into common stock by the noteholders who used
their  debt  to  exercise  options  held  by  the  noteholders;  and  (iv)  debt
forgiveness of $240,900 related to the settlement of accrued  professional fees.
These  transactions  were  effected  in the third  and  fourth  quarters  of the
Company's  fiscal  year ending  March 31, 2000  ("fiscal  2000").  Although  the
success  of this debt  conversion/forgiveness  improves  the  appearance  of the
Company's  balance sheet, it does not directly improve the  profitability of the
Company's  operations.  Based on the  success of the debt  reduction  plan,  the
Company intends to continue with efforts to further reduce its debt by using the
same or similar approach. In addition,  the Company believes that a consistently
improving balance sheet will enhance the Company's ability to attract investment
capital.

     Second,  the  Company  recognizes  that it  must  continue  to  grow  while
exploring  opportunities  in  additional  channels of trade within the specialty
coffee industry. The Company believes that drive-thru and wholesaling offer both
synergy with the Company's core  operations  and high growth  potential on their
own.  As such,  the  Company  has  recently  engaged  the  services  of  various
consultants to enhance M & A activity within the industry by locating  potential
acquisition  targets,  and to further  develop the Company's core  institutional
operations.

     Third,  on June 19, 2000,  the Company  acquired  certain assets of Arrosto
Coffee  Company,  LLC.  Included  in the  acquired  assets is a coffee  roasting
facility  in  southern  California  which  has  the  capacity  to  meet  current
production  demands and could  potentially  lower the Company's  cost of roasted
coffee by as much as 35%. In addition,  the acquired assets bring to the Company
existing   wholesale  trade  and  the  potential  for  further  wholesale  trade
development  which  opens a new  channel of  distribution  for  growth  into the
specialty coffee market.

     Fourth,   the  Company  believes  that  its  "fully  reporting"  status  in
conjunction with an improving balance sheet and defined M & A opportunities will
enhance the  Company's  goal of  attracting  new  capital.  The Company  clearly
realizes the importance of attracting  new investment  capital and, as such, has
engaged the  services of various  consultants  to assist in  accomplishing  this
goal.

                                       4
<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITIONS  AND RESULTS OF
OPERATIONS

     The preparation of this section  requires  management to make estimates and
assumptions about the past, current and future activities,  business  practices,
and  financial  records of the  Company.  Actual  results  may differ from these
estimates and assumptions.  Foreseeable  risks and  uncertainties  are described
elsewhere  in this  report  and in detail  under  "Risk  Factors  Affecting  the
Company".

     The Statements of Loss and Accumulated Deficit show a substantial  increase
in Sales and Gross Profit,  and a  substantial  decrease in the Net Loss for the
year  ended  March 31,  2000 over the  prior  year.  The  Company  also  shows a
significant  ongoing increase in the Accumulated  Deficit at year-end.  Although
the Net Loss is reduced in 2000,  the loss is  substantial  and  indicates  poor
operating performance.

     REVENUES

     Net revenues for the twelve months ended March 31, 2000 increased  18.4% to
$2,124,395 from $1,794,838 for the corresponding period in fiscal 1999. This was
due  primarily to an increase in the number of  operating  kiosks from 23 to 26.
Retail kiosk and cart sales accounted for 100% of revenues for both periods. For
the twelve  months  ended March 31,  2000,  net revenue  was  generated  from 11
different clients and special events,  with the largest client being The Compass
Group, representing 28.2% of total net revenue.

     COSTS AND EXPENSES

     Cost of goods sold for the twelve months ended March 31, 2000  increased to
$877,074  from  $685,176 for the same period in fiscal 1999.  As a percentage of
net revenues,  cost of goods sold increased to 41.3% for the twelve months ended
March 31, 2000 from 38.2% for the comparable period in fiscal 1999. The increase
as a  percentage  of net revenues was  primarily  due to a slow payment  history
resulting  in a decrease in  purchasing  power.  During the twelve  months ended
March 31,  2000,  6 units were closed  because of unit level  operating  losses.
These units accounted for $90,400 of the Company's net revenue,  $46,900 of cost
of goods sold (51.9%), and $40,500 of the total operating loss.

     Employee  compensation  and benefits for the twelve  months ended March 31,
2000  increased to $1,107,772  from $929,879 for the same period in fiscal 1999.
As a percentage  of net  revenues,  employee  compensation  and benefits for the
twelve  months  ended March 31, 2000  remained  consistent  with the  comparable
period in fiscal 1999.

     General and  administrative  expenses for the twelve months ended March 31,
2000  increased to $287,122 from $257,059 for the same period in fiscal 1999. As
a percentage of net revenues,  general and administrative  expenses decreased to
13.5% for the twelve  months ended March 31, 2000 from 14.3% for the  comparable
period in fiscal 1999.

     Occupancy  costs for the twelve  months  ended March 31, 2000  increased to
$311,370  from  $303,101 for the same period in fiscal 1999.  As a percentage of
net revenues, occupancy costs

                                       5
<PAGE>

decreased to 14.7% for the twelve months ended March 31, 2000 from 16.9% for the
comparable  period in fiscal 1999.  The decrease as a percentage of net revenues
was  primarily  due  to  lower  revenue   sharing  rates   resulting  from  both
renegotiated contracts and new client contracts at lower revenue sharing rates.

     Director and  professional  fees for the twelve months ended March 31, 2000
increased to $200,106  from  $110,325  for the same period in fiscal 1999.  As a
percentage of net revenues, director and professional fees increased to 9.4% for
the twelve  months ended March 31, 2000 from 6.1% for the  comparable  period in
fiscal 1999.  The increase as a percentage  of net revenues was primarily due to
the engagement of an investor  relations firm and increased legal and accounting
fees associated with filing the Company's Form 10-SB registration statement.

     Depreciation and amortization expense for the twelve months ended March 31,
2000 increased to $113,503 from $101,657 for the same period in fiscal 1999. The
increase  was  primarily  due to  the  acquisition  of  property  and  equipment
associated with the Northern Lights Coffee purchase in April 1999.

     Interest  expense for the twelve  months ended March 31, 2000  decreased to
$66,372 from $105,727 for the same period in fiscal 1999. As a percentage of net
revenues,  interest expense  decreased to 3.1% for the twelve months ended March
31, 2000 from 5.9% for the  comparable  period in fiscal 1999.  The decrease was
primarily  due to savings  from the  conversion  of interest  bearing  debt into
shares  of common  stock.  $312,000  of debt was  converted  to common  stock in
December 1999, $4,500 in April 1999 and $77,000 in March 1999.

     Operating  losses for the twelve  months ended March 31, 2000  increased to
$774,223  from  $632,359 for the same period in fiscal 1999.  As a percentage of
net revenues,  operating  losses  increased to 36.4% for the twelve months ended
March 31, 2000 from 35.2% for the comparable period in fiscal 1999. The increase
as a percentage  of net  revenues  was  primarily  due to the  engagement  of an
investor  relations firm and increased legal and accounting fees associated with
filing the Company's Form 10-SB registration statement.

     Net loss for the twelve  months ended March 31, 2000  decreased to $372,608
from  $738,086  for the same  period  in fiscal  1999.  As a  percentage  of net
revenues,  net losses  decreased to 17.5% for the twelve  months ended March 31,
2000 from 41.1% for the  comparable  period in fiscal  1999.  The  decrease  was
primarily  due to  extraordinary  income  resulting  from  debt  forgiveness  of
$205,000  of  accrued  interest  payable  on notes,  and  $260,000  on  creditor
obligations.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2000, the Company ended its fiscal year with a working capital
deficit of $926,443.  Cash and cash  equivalents  increased  $22,835  during the
twelve  months  ended March 31,  2000.  Cash  utilized by  operating  activities
totaled $401,194 during the fiscal year 2000, primarily due to an operating loss
of  $774,223  offset by a combined  increase  in  accounts  payable  and accrued
expenses of $317,002.

     Cash  utilized for investing  activities  for the twelve months ended March
31, 2000  included  capital  additions  to property  and  equipment  of $144,479
primarily  related to the  acquisition of Northern Lights Coffee and the opening
of the South Lake Tahoe retail unit.

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<PAGE>

     The Company had net cash provided from financing  activities for the twelve
months ended March 31, 2000 totaling  $606,648.  Cash from financing  activities
primarily  consists of $59,995 from net  short-term  borrowing  and $556,027 net
proceeds  from the sale of Company  stock.  These  amounts were  utilized in the
day-to-day operations of the Company.

     Management  has  instituted  a plan to eliminate a minimum of $1 million of
debt from its balance  sheet.  Currently,  this ongoing  program has resulted in
debt  conversion  and/or  debt  forgiveness  totaling  approximately   $979,000.
Management is confident that it will meet its debt reduction objective. Although
this debt  conversion/forgiveness  will improve the  appearance of the Company's
balance sheet, and therefore assist the Company in raising  investment  capital,
it will not directly improve the profitability of the Company's  operations.  In
conjunction  with the debt  reduction  program,  the  Company  has  successfully
secured  $300,000 of private equity capital in January 2000,  from a source that
the Company  feels may represent  the  potential  for  additional  future equity
investments.  In addition, the Company believes that it has the means to attract
other  sources  of  equity  capital  based on the  current  success  of its plan
addressing the "Going Concern" issue.

     Management estimates that the number of Company-operated units will need to
grow to at least 40 with  comparable  or slightly  improved  performance  to the
existing units in order to reach break even with operational  costs. The Company
estimates  that this growth to 40 units will require  approximately  $500,000 of
additional investment capital (in addition to the investment capital required to
address the current working  capital  deficit) and  approximately  six months to
achieve. In anticipation of this growth and the need for additional capital, the
Company is currently  negotiating with several  alternative  sources of capital.
Management  believes  that  one or more of  these  sources  could be in place in
fiscal year 2001. However,  there can be no assurances that such capital will be
in place.

INDUSTRY OVERVIEW

     According  to the  National  Coffee  Association's  1999  study,  cited the
Specialty  Coffee  Association of America's 1999 Coffee Market Survey,  48.5% of
Americans consider  themselves to be coffee drinkers.  On average they drink 1.4
cups  per  day.  The  U.S.  coffee  market  consists  of  two  distinct  product
categories: (1) commercial ground roast, mass-merchandised regular brewed coffee
and (2) specialty  coffees (premium grade arabica coffees sold in whole bean and
ground form) and other premium coffees.

     The  National  Coffee  Association  estimates  that 47% of  Americans - 108
million  people - drank  specialty  coffee  beverages in 1998,  up from 35% - 80
million people - in 1997. The U. S. specialty coffee industry now purchases over
2.7 million bags of arabica coffees, which represents $396 million, or 5% of the
world's output. U. S. retail coffee bean sales exceed $2.1 billion, and beverage
retail sales exceed $3.1 billion, annually.

     Within the specialty  coffee  category,  specialty coffee retail sales have
become the fastest-growing  segment. As reported in Specialty Coffee Association
of America's 1999 Coffee Market Survey:

     During the past five years, specialty coffee beverage retailers have become
     the fastest growing  distribution channel in the specialty coffee industry.
     The number of these  retail  beverage  outlets is expected to reach  12,000
     locations by the end of 1999.  This

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     number will include 3,500 coffee cafes, 2,700 coffee bars and kiosks, 2,100
     espresso carts,  and 1,200  Roaster-Retailers.  . . . Although current U.S.
     consumption is flat,  consumers are purchasing  more  value-added  products
     through  the  specialty  coffee  industry,  which is driving up the overall
     market value.  In short,  consumers are not drinking more coffee,  but they
     are just choosing to drink better coffee. Coffee consumers have been moving
     away from  priced-based  purchasing  to a purchasing  trend that focuses on
     product variety and quality.  This  quality-conscious  purchasing trend has
     evolved coffee from a beverage of  pseudo-commodity  characteristics to one
     with cultural and sensory ties.

     The Company  believes that several factors have contributed to the increase
in demand for specialty coffee including:

     o    Greater  consumer  awareness  of  specialty  coffee as a result of its
          increasing availability;

     o    Increased  quality  differentiation  over commercial  grade coffees by
          consumers;

     o    Increased  demand for all premium food products,  including  specialty
          coffee,  where the differential in price from the commercial brands is
          small  compared to the perceived  improvement  in product  quality and
          taste; and

     o    Ease of preparation of specialty  coffees resulting from the increased
          use of automatic drip coffee makers and home espresso machines.

COMPANY BACKGROUND

PEABODYS CA

     The current  business of the Company  began with the  formation of Peabodys
Coffee, Inc., a California corporation ("Peabodys CA"), in 1995. Co-founder Todd
Tkachuk (who is currently an officer and director with the Company) conceived of
a company which would  contract with an  institutional  food service vendor (the
"client"),  such as Sodexho Marriott,  The Compass Group, or ARAMARK,  that held
the  food   service   contract   for  an   institutional   setting   (the  "host
organization"),  such as a corporate facility, college, university, or hospital.
As with the Company today,  Peabodys CA would enter into a subcontract  with the
client  (which had a general  contract  to  provide  food  services  to the host
facility) to install coffee kiosks at the host organization. In return, Peabodys
CA paid the client a percentage of the gross revenues generated by each kiosk.

     As  with  the  Company  today,  Peabodys  CA  would  open  a  new  site  in
approximately  three weeks, at an all-in cost,  including  initial inventory and
pre-opening expenses, of less than $30,000.  Because physical plant consisted of
a self-contained kiosk that required minimal, if any, tenant  improvements,  the
Company would relocate to a new site, if necessary,  without  abandoning a large
fixed  investment.  As  mentioned  above,  in return  for its  right to  provide
turn-key specialty coffee service, Peabodys CA would compensate the food service
vendors through revenue-sharing, typically averaging about 15% of total revenues
generated at the site.

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     The Peabodys CA model, which is now the model of the Company today, differs
from traditional specialty coffee retailers in the following significant ways:

     o    No direct competition with Starbucks and other retail specialty coffee
          sellers operating from fixed, "store-front" locations.

     o    Access to large numbers of sites through food service clients who have
          relationships already in place with such sites.

     o    Captive customer  populations at such sites, such as office buildings,
          hospitals and schools,  resulting in no direct competition at the site
          itself, and therefore no need for significant advertising expenses.

     o    Low initial  investment  and short time  periods  required to open new
          sites.

     o    No expenses for utilities or common area  maintenance  charges,  since
          these are generally provided for in the foodservice provider's general
          contract.

     o    Kiosks can be relocated easily if necessary

THE COMPANY

     Concurrent with Peabodys CA's development of its specialty coffee business,
as described  above,  the Company was existing as a  development  stage  company
formed for the purpose of mineral exploration and mine development.  The Company
was incorporated under the laws of the State of Nevada on July 26, 1989 with the
name Kimberly  Mines,  Inc.  Several  months later the Company was the surviving
company  in  a  merger  with  Blue  Ute  Mining  &  Exploration,  Inc.,  a  Utah
corporation.  On August 15,  1997 the  Company  changed  its name to  Mine-A-Max
Corporation.  The  Company  continued  to exist as a  development  stage  mining
company until its merger with Peabodys CA in 1999.

THE MERGER

     On March  12,  1999,  Peabodys  CA  entered  into a Plan and  Agreement  of
Reorganization (the "Agreement") with the Company.  The Agreement provided for a
share exchange in which the Company offered  shareholders of Peabodys CA one (1)
share of the Company's common stock in exchange for one (1) share of Peabodys CA
common  stock.  The shares  were  offered  by the  Company  in  reliance  on the
exemption from registration  provided by Rule 506 of Regulation D. The Agreement
provided  further  that,  after the  Company  had  acquired  a  majority  of the
outstanding  stock of Peabodys CA, the Company  would:  (i) elect a new board of
directors for the Company composed of the former management of Peabodys CA; (ii)
amend the Company's  articles of  incorporation  to change its name to "Peabodys
Coffee,  Inc.;" (iii) amend and restate the Company's bylaws;  and (iv) effect a
merger of Peabodys CA into the Company.

     On  March  15,  1999  the  Company   filed  an  Amendment  to  Articles  of
Incorporation  with the  State of  Nevada  changing  its  name  from  Mine-A-Max
Corporation to Peabodys  Coffee,  Inc. On June 30, 1999, the Company  effected a
merger  ("Merger")  by filing  Articles  of Merger in the State of Nevada,  with
Peabodys CA as the  disappearing  corporation  and the Company as the  surviving
corporation, with the outstanding shares of Peabodys CA converted into shares of
the Company on a one-to-one basis.

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<PAGE>

     In effecting  the Merger,  the Company did not send a notice of approval of
the Merger and  appraisal  price of the shares to  Peabodys CA  shareholders  in
accordance  with Corp. C. ss.  1301(a) for the exercise of  dissenters'  rights.
This notice is required to be sent to shareholders  within 10 days following the
approval of the reorganization by the outstanding shares.  Within 30 days of the
mailing of such notice, any shareholder who wishes to require the corporation to
purchase their shares for cash must make a demand on the  corporation and submit
the certificates  representing their shares. The demand must contain a statement
as to what the  shareholder  claims to be the fair market value of the shares as
of the day  before  the  announcement  of the  proposed  merger  (Corp.  C.  ss.
1301(c)).  If the  corporation  agrees  with the  shareholders  claim as to fair
market  value,  the  shareholder  is entitled to the agreed price with  interest
thereon at the legal rate  applied to  judgments;  if the  corporation  does not
agree with the shareholder's  claim as to fair market value, the shareholder may
file an action in the proper  superior  court to determine the fair market value
(Corp. C. ss. 1303(a), 1304(a)).

     The Company  did not send a notice of approval of the Merger and  appraisal
price of the shares to Peabodys CA  shareholders.  Consequently,  no Peabodys CA
shareholders  delivered a demand to exercise  dissenters'  rights under Corp. C.
ss.  1301(b)  in  connection  with the  Merger,  and there  were no  "dissenting
shares," as defined in Corp. C. ss. 1300(b).  Peabodys CA did,  however,  send a
Confidential  Offering  Circular and Term Sheet and a subscription  agreement to
all of its shareholders to allow each shareholder to participate in the exchange
of shares  immediately  preceding  the Merger.  Peabodys  CA  received  executed
subscription  agreements from  shareholders  holding over 90% of its outstanding
common stock. On June 30, 1999, in effecting the Merger,  all shares of Peabodys
CA  common  stock  were  converted  to  shares of the  Company's  common  stock,
including those of shareholders who did not execute the subscription agreement.

     It is possible that former Peabodys CA shareholders who did not execute the
above-mentioned  subscription  agreement may seek to exercise  their  dissenters
rights.  Although Peabodys CA did not meet the technical notice  requirement set
forth in Corp. C. ss. 1301, all Peabodys CA shareholders  received notice of the
Merger through the distribution of the  above-described  disclosure document and
subscription  agreement  in  connection  with  the  share  exchange  immediately
preceding the Merger.  If any former Peabodys CA shareholder  wishes to exercise
dissenters  rights,  the Company,  as the  successor in interest to Peabodys CA,
would  seek to settle  the  action  by  allowing  the  retroactive  exercise  of
dissenters  rights on terms  negotiated  between the parties.  At this time, one
former Peabodys CA shareholder,  holding 5,000 shares of common stock,  has sent
the Company a letter  requesting  that he be  entitled  to exercise  dissenters'
rights. The Company is in the process of settling this request.

     It is  difficult  to  accurately  quantify  the  potential  exposure to the
Company  with  respect to the  Merger.  Of the  5,902,736  shares of Peabodys CA
common stock  outstanding  prior to the Merger,  approximately  5,279,871 shares
have given their written approval of the Merger,  leaving  approximately 550,000
shares which presumably could seek to exercise  dissenters' rights.  Pursuant to
applicable law, the fair market value for dissenting  shares is determined as of
the  day  before   the  first   announcement   of  the  term  of  the   proposed
reorganization. Corp. C. ss. 1300(a). In the case of the Merger, that date would
be March 12, 1999.  On that date,  the most recently  prepared  balance sheet of
Peabodys CA (dated December 31, 1998, approximately 75 days earlier) showed that
Peabodys CA's liabilities exceeded its assets, for a total shareholders' deficit
of $1,043,669, which meant that Peabodys CA's shares had a book value negative $
 .18 per share.  Peabodys CA's financial condition had not changed  substantially
on March 12,  1999 when the  reorganization  was  announced.  Book  value is one
method used to determine fair market value.  Given the insolvency of Peabodys CA
at the time

                                       10
<PAGE>

of the announcement of the Merger,  the Company estimates that the most it would
possibly  pay  to  former  Peabodys  CA  shareholders  in  settlement  would  be
approximately  $ .10 per share.  This would lead to an estimated  maximum  total
exposure of approximately $55,000. This is an estimate only, and in this context
such estimate may prove inaccurate.

     The Company is in the midst of completing  formalities  in connection  with
the Merger,  such as issuing  new share  certificates  to the former  holders of
Peabodys CA shares.  The Company has not filed the proper document to effect the
Merger in the State of California,  as set forth in Corp. C. ss.  1108(d).  When
this  document  is filed,  because  more than six (6) months  will have  elapsed
between  the  filing of the  Articles  of Merger in the State of Nevada  and the
filing of the proper  document in  California,  the Merger will be  effective in
California as of the date of the later filing,  all in accordance  with Corp. C.
ss. 1108(e). The effect on the Company of this later effective date is not clear
at this time.

BUSINESS STRATEGY AND OPERATION

     In order to take  advantage of the growing  market for specialty  coffee as
described  in the  "Industry  Overview,"  above,  the  Company  has  developed a
business strategy based on the following concepts:

     Business and Institutional  Locations.  The Company focuses on locating its
coffee kiosks in business and  institutional  areas. The Company has experienced
both lower  competition  and  reduced  advertising  and  marketing  expenses  by
installing kiosks in such areas, since the kiosks have a nearby captive audience
of employees and students at business and institutional sites.

     Quality Coffee. Peabodys strives to use coffees of a very high quality. The
product  mix  offered  by each  kiosk  can be  tailored  to meet the  taste  and
preferences of each locale.

     Low Cost  Operations.  The cost of opening and operating each kiosk is less
than the cost of opening and operating the fixed, retail stores operated by many
other specialty  coffee  retailers.  Each kiosk can achieve  profitability  with
sales as low as $300 per day.  Currently,  Peabodys  per-unit  revenue  averages
approximately $450 per operating day.

SITE FORMAT AND OPERATIONS

     Each existing Peabodys site consists of a kiosk that measures approximately
six feet long, three feet deep, and four feet high (counter level), with related
equipment  and  display  space.  Standard  equipment  on the  kiosk  includes  a
two-group espresso machine, two espresso grinders, a coffee brewer, blender, and
cash register, and display racks for baked goods and other non-coffee items. All
kiosks are equipped  with wheels for unit  mobility,  although at most sites the
kiosk  remains  in  the  same  location  permanently.  Under  the  terms  of its
contracts,  Peabodys is usually  allotted both dry and cold storage space within
the host's commissary facilities, at no charge to the Company.

     Peabodys utilizes a client-host/captive-consumer  model. This model has two
distinctive   components.   The   client-host   component  means  that  Peabodys
establishes  relationships  with  its  "clients"  (large  institutions  and food
service  providers) with the intention of multiple kiosk  placements  within the
client's area of operation. In lieu of rent, Peabodys normally pays the client a
percentage of the revenues  generated by each kiosk,  thereby  giving the client
incentive to assist Peabodys in a

                                       11
<PAGE>

successful  kiosk  placement.  Clients with widespread  operations  provide many
opportunities for Peabodys to place its kiosks.

     The  captive-consumer  component refers to the placement of kiosks in heavy
traffic areas where people  (potential  customers) have already  congregated for
other  reasons.  Examples  of  typical  placements  are  the  lobbies  of  large
buildings,  or school campuses.  Unlike a fixed store which relies on attracting
foot  traffic to its  location,  Peabodys  already  has a  customer  base at its
location.  Peabodys  locates its kiosks where the  customers  are, as opposed to
requiring the customer to come to Peabodys' location.

     The typical  Peabodys site, which includes the kiosk,  related  components,
and workspace for employees,  occupies a footprint of  approximately  100 square
feet. Due to the client-host/captive-consumer model described above, the Company
incurs no fixed  rental  expense for this real  estate.  Likewise,  there are no
common area maintenance charges, and all utilities,  such as electricity,  heat,
air  conditioning,  and water, are furnished by the host or client at no cost to
Peabodys.

     Each Peabodys location is staffed with a site manager and from two to eight
baristas  (the  Italian  term  for a  person  skilled  in the  art  of  espresso
preparation),  depending on the population of the site's captive  customer base,
the hours of operation, the mix of hours available from part-time employees, and
similar  factors.  To assure available  staffing at all times,  Peabodys is also
building a pool of on-call labor to work on an as-needed basis,  much as schools
draw from a pool of substitute teachers to fill in as needs arise.

     Most  baristas  work  part-time,  typically  in four-hour  intervals.  Site
managers,  all of whom are full-time  employees,  serve  customers  during their
shifts in addition to performing  supervisory and administrative  duties such as
recruiting,  hiring, and supervising staff,  assuring  compliance with corporate
procedures and the Company's key operating  imperatives,  taking inventory,  and
completing  daily  performance  reports  for  corporate  headquarters.  Specific
accountabilities  for  site  managers  include  quality  and  service,  employee
performance,  sales, and  profitability.  Site manager  compensation is strongly
performance-related,  with  execution  of the  four  operating  imperatives  and
over-budget profitability bringing open-ended gain-share rewards.

     Standout  site  managers,   known  as  "cell  leaders,"  oversee  strategic
groupings  of sites.  Cell  leaders  remain  accountable  for  their own  sites'
performance,  but take on additional  duties to support the cell, for which they
earn extra compensation.  In particular,  such duties include: (i) building peer
chemistry within the cell; (ii) participating in training and coaching projects;
(iii)  designing and executing  local  site-specific  marketing  programs;  (iv)
supporting  new site  openings;  and (v)  implementing  specific  initiatives to
support  the four  key  operating  imperatives  within  the  cell.  Given  these
additional  responsibilities,  cell leaders  receive  somewhat  higher  staffing
support at their own sites.

     Establishing   and  maintaining   Peabodys'   specialty  coffee  kiosks  is
relatively simple. The kiosk is compact,  modular in design, and self-contained.
No  significant  preparation is needed at the host location other than provision
for electrical power. The kiosk, while generally appearing permanent, is usually
portable  and can be  moved  from  location  to  location.  The cost of a kiosk,
including internal plumbing,  equipment,  inventory and signage is approximately
$30,000.  Turnaround time for  manufacturing  a complete kiosk is  approximately
four to six weeks. The Company currently  utilizes Michaelo Espresso of Seattle,
Washington as its kiosk manufacturer.

                                       12
<PAGE>

SITE EXPENSES

     In lieu of  rent or  lease  payments,  Peabodys  pays a  percentage  of the
revenue  generated by each kiosk to the  foodservice  provider or the host at an
average rate of approximately  12.9%. The Company  contracts its services either
directly with the host facility, or subcontracts its services indirectly through
the foodservice provider who is a party to a contract to provide food service to
the host  facility.  When the Company  contracts its services  directly with the
host, the Company pays the host facility the percentage of gross revenue that is
agreed  to in the  contract.  When  the  Company  contracts  with a  foodservice
provider,  such as ARAMARK,  Compass, or Sodexho Marriott,  the Company pays the
percentage of gross revenue to the foodservice provider,  and incurs no expenses
directly with the host facility.  Other nominal expenses such as water and power
are normally included in this above-described payment.

SITE LOCATIONS

<TABLE>
<CAPTION>
SITE; HOST                                    LOCATION                CLIENT                   DATE OPENED
------------------------------------------------------------------------------------------------------------
<S>                                           <C>                     <C>                      <C>
IBM Bldg 11; IBM                              San Jose, CA            The Compass Group        June 1995
IBM Bldg 55; IBM                              San Jose, CA            The Compass Group        October 1997
STL Labs; IBM                                 San Jose, CA            The Compass Group        April 1996
San Jose City College; SJCC                   San Jose, CA            The Compass Group        January 1996
Concord Airport Plaza                         Concord, CA             The Compass Group        February 1996
Web TV                                        Mountain View, CA       The Compass Group        October 1999
EM Building, UCSC                             Santa Cruz, CA          Sodexho-Marriot          November 1995
College 10; UCSC                              Santa Cruz, CA          Sodexho-Marriot          April 1997
Sinsheiner Labs; UCSC                         Santa Cruz, CA          Sodexho-Marriot          April 1997
Applied Science, UCSC                         Santa Cruz, CA          Sodexho-Marriot          March 1996
Sutter Memorial Hospital                      Sacramento, CA          Sutter Health            October 1995
Sutter General Hospital                       Sacramento, CA          Sutter Health            October 1995
California State Fair; Cal Expo               Sacramento, CA          Cal Expo                 August 1998
College of Education; UNR                     Reno, NV                The Compass Group        August 1998
Library; UNR                                  Reno, NV                The Compass Group        December 1997
Peabodys Lake Tahoe                           S. Lake Tahoe, CA       n/a                      June 1999
Convention Center-Location 1                  Reno, NV                ARAMARK                  April 1997
Convention Center-Location 2                  Reno, NV                ARAMARK                  April 1997
Convention Center-Location 3                  Reno, NV                ARAMARK                  January 2000
Livestock Center                              Reno, NV                ARAMARK                  April 1997
Center Hall, UCSD                             San Diego, CA           UCSD                     April 1999
Social Science Bldg.; UCSD                    San Diego, CA           UCSD                     April 1999
Warren Bldg.; UCSD                            San Diego, CA           UCSD                     April 1999
Nierenburg Hall; UCSD                         San Diego, CA           UCSD                     April 1999
SDSU-1; San Diego State University            San Diego, CA           Aztec Shops              August 1999
SDSU-2; San Diego State University            San Diego, CA           Aztec Shops              August 1999
</TABLE>

SUPPLIERS

     The  Company  procures  its  coffee  from  Terranova   Roasting  Co.,  Inc.
("Terranova") in Sacramento,  California.  Terranova is a coffee roaster serving
central  California,  and  Peabodys  is  Terranova's  largest  specialty  coffee
account.  The Company has no  contract in effect with  Terranova  other than the
purchase orders it places.  The Company  believes that Terranova will be able to
meet its  needs  for the  foreseeable  future,  but if the  relationship  should
terminate the Company  believes that other suppliers could fulfill the Company's
supply requirements. Any risk associated with having only

                                       13
<PAGE>

one supplier, therefore, appears to be minimal.

     As described below in "Expansion  Plans," subsequent to March 31, 2000, the
Company  has  completed  the  acquisition  of certain  assets of Arrosto  Coffee
Company  LLC.  The  acquired  assets  include a coffee  roasting  facility.  The
Company's  motivation  in doing this is to achieve  cost savings by roasting its
own coffee. In addition, the acquisition gives the Company complete control over
the brand  specifications  of its core coffee  products and opens new  wholesale
trade  channels.  The  acquisition is not in response to a risk perceived by the
Company  with  respect to having one  supplier.  As stated  above,  this risk is
minimal since there appear to be many potential  suppliers that could supply the
Company with its coffee on terms similar to those  existing  between the Company
and its current supplier, Terranova.

     The Company provides its proprietary  specifications for varietals,  roast,
and grind and  proportions  (for  brewed  coffees) to  Terranova,  which in turn
purchases green beans, and then roasts,  blends, and grinds (for brewed coffees)
to Peabodys' specifications.  Finished product is bagged, sealed, and shipped to
the Company as ordered.  The Company is currently  testing on-site  grinding for
its  brewed  coffee  to  increase  freshness  and  quality.   From  its  current
facilities,  Terranova has sufficient  capacity to support  Peabodys'  growth to
approximately 200 sites.

     For both its brewed  and  espresso  beverages,  the  Company  uses only the
"arabica"  species  of  coffee.  At  present,  the  Company  uses  predominantly
Colombian Supremo, which is a type of arabica coffee. This type was selected due
to its apparent  popularity  and ready  availability.  The Company is testing an
expanded  offering of brewed  coffee  varietals  to provide  customers a greater
choice of coffees. Growing regions for such additional varietals include Africa,
Indonesia, and South America. Peabodys' espresso is a blend of Colombian Supremo
and coffees from Sumatra and Ethiopia.  The Company generally uses a dark roast,
typical of the Pacific Northwest style.

     Because coffee in green bean form is a commodity,  and is therefore subject
to commodity price swings caused by weather conditions,  political climate,  and
similar  supply and demand  factors,  it is  sometimes  assumed that margins for
specialty  coffee  companies are  vulnerable to the same factors.  However,  the
price of green coffee  represents  only a relatively  small portion of Peabodys'
cost of goods sold for specialty coffee beverages.  As a result, if green coffee
prices were to double,  for example,  the Company's costs would increase by only
about 5 cents per drink.  Given  consumers'  price  inelasticity  for  specialty
coffee, an increase of such size can generally be passed along to the customer.

     Among other menu items offered by Peabodys'  kiosks,  baked goods and fruit
smoothies are the most  prominent.  Such products are sourced from local vendors
at each site.  The Company is analyzing  several  alternatives  to reduce costs,
increase     shelf     life,     and/or     increase     revenues,     including
lunch/afternoon-oriented  products.  Juice drinks, sodas, and bottled waters are
purchased at customary wholesale prices from distributors of such products,  who
deliver directly to the sites as ordered.

EXPANSION PLANS

     To date the  Company's  expansion has been  curtailed  primarily by capital
constraints.  For a complete  discussion of capital  constraints,  liquidity and
capital resources,  see "Overview" and "Management's  Discussion and Analysis of
Financial Conditions and Results of Operations," beginning on page 3.

                                       14
<PAGE>

     As described in more detail in the "Overview"  section of Item 1 above,  at
March 31, 2000,  the Company was  operating  26 kiosk  units,  most of which are
profitable at the unit level. The Company as a whole is not profitable, however,
since the profits at the unit level are  overshadowed by the Company's  expenses
at the corporate level. Management estimates that the number of Company operated
units will need to expand to at least 40 with  comparable  or slightly  improved
performance to the existing units in order to reach  break-even with operational
costs (although  management  estimates that such break-even could potentially be
reached  with less than 40 units if  locations  with  higher  profitability  are
opened or  acquired).  The Company  estimates  that this growth to 40 units will
require approximately  $500,000 of additional investment capital (in addition to
the investment  capital required to address the current working capital deficit)
and approximately six months to achieve.

     If the Company is able to raise the  capital  needed for  expansion  of its
operations, the Company anticipates that expansion will come from the following,
described  in detail  below:  (i)  adding  additional  locations  under  current
contracts;   (ii)  developing  new  relationships  with  additional  foodservice
providers and (iii)  developing  direct  contracts with host company  facilities
that control a  significant  number of  locations  such as large  retailers  and
property owners.

     The  Company  believes  that its most  significant  growth  will  come from
expansion of its current  contracts.  Three of the Company's  existing  clients,
Sodexho-Marriott,  The  Compass  Group and  ARAMARK,  control  more  than  8,500
institutional  foodservice  sites across the country  (Nations  Restaurant  News
Special Report-Top 100 Contract Chains 1999). Each of these sites is a potential
location  for a  Peabodys  kiosk.  Also,  the  Company  believes  that  there is
opportunity to acquire  existing  kiosks located in key locations.  To date, the
Company has  acquired  seven (7) kiosks from other  companies.  Six of the seven
have resulted in a positive cash flow at the unit level to the Company.

     In addition to the future  development of the Company's core  institutional
operations,  the Company is exploring  opportunities  in additional  channels of
trade within the specialty coffee industry. The Company believes that drive-thru
and  wholesaling  offer both synergy with the Company's core operations and high
growth  potential on their own. As such,  the Company has  recently  engaged the
services of various consultants to enhance M & A activity within the industry by
locating  potential  acquisition  targets,  and to further develop the Company's
core institutional operations.

     On June 19, 2000,  the Company  acquired  certain  assets of Arrosto Coffee
Company,  LLC.  Included in the acquired assets is a coffee roasting facility in
southern  California which has the capacity to meet current  production  demands
and  potentially  lower the Company's  cost of roasted coffee by as much as 35%.
The Arrosto  assets also bring  existing  wholesale  trade and the potential for
further  wholesale  expansion  which  represents  a new channel of trade for the
Company.

     On May 16, 2000, the Company entered into a non-binding letter of intent to
acquire the specialty coffee operating units of Sacramento based Capitol Coffee.
Capitol Coffee has contracts with the Los Rios Community  College District which
include two  profitable  coffee kiosks at American  River College in Sacramento.
The Company is currently in the process of conducting  its due diligence  review
of Capitol  Coffee and cannot assess the  likelihood  of a formal  agreement and
subsequent closing until the due diligence process is complete.

     On June 12, 2000, the Company  entered into a non-binding  letter of intent
to acquire the specialty coffee assets of Portland based Caffe Diva Group,  Ltd.
("Diva").  Diva is a  specialty  coffee  retailer  and roaster  with  twenty-two
drive-thru locations in six states. The Company is currently in the early stages
of  its  due  diligence  process,  therefore  no  meaningful  assessment  of the
likelihood of reaching a formal agreement and subsequent closing can be made.

                                       15
<PAGE>

MARKETING STRATEGY

     Peabodys' marketing strategy is based on its contractual relationships with
foodservice   providers  and  hosts.  These  foodservice   providers,   such  as
Sodexho-Marriott,  The Compass Group, and ARAMARK,  have general  contracts with
host  facilities  such  as  corporate  offices,  industrial  facilities,  office
buildings, universities,  colleges, hospitals and entertainment venues. Peabodys
contracts with the foodservice  providers to allow Peabodys to locate its kiosks
on the sites with which the  foodservice  provider  has a general  contract.  In
return,  Peabodys pays the foodservice  provider a percentage of gross revenues,
averaging  12.9% for the  twelve  months  ended  March 31,  2000.  Additionally,
Peabodys contracts directly with certain host facilities.

     The  foodservice  provider  or the host  facility  receives  the  following
benefits from entering into a contract with Peabodys:

     INCREMENTAL  REVENUE  STREAM.  Peabodys  provides  on average  12.9%  gross
          revenue sharing for the foodservice provider or the host.

     NO INVESTMENT  REQUIRED.  Peabodys  provides everything:  Plant, equipment,
          products, personnel, training, and management.

     NO OPERATIONAL INVOLVEMENT.  Peabodys  takes full responsibility  for kiosk
          operation.

     INCREASED CUSTOMER AND HOST SATISFACTION.  Peabodys brings specialty coffee
          to captive  customers at work,  hospital,  convention,  education,  or
          entertainment  locations providing  convenience for the customer at no
          cost to the host or foodservice provider.

COMPETITION

     The Company  competes with a growing number of specialty  coffee  retailers
including Starbucks,  Coffee Beanery, Caribou, Java City, Diedrich, Tully's, New
World Coffee-Manhattan  Bagel, Peet's Coffee and many others. The attractiveness
of  the  specialty   coffee  market  may  draw   additional   competitors   with
substantially   greater  financial,   marketing  and  operating  resources  than
Peabodys.  A number of nationwide  coffee  manufacturers,  such as Kraft General
Foods, Proctor & Gamble, and Nestle,  distribute coffee products in supermarkets
and  convenience  stores,  which may serve as  substitutes  for our  coffees and
provide additional competition.

     The performance of individual  coffeehouses may also be affected by factors
such as  traffic  patterns  and the type,  number  and  proximity  of  competing
coffeehouses.  In addition,  factors such as inflation,  increased  coffee bean,
food,  labor and employee  benefit  costs and the  availability  of  experienced
management and hourly  employees may also adversely  affect the specialty coffee
retail business in general and our coffeehouses in particular.

     The Company is aware of other  companies  which sell specialty  coffee from
kiosks and coffee carts, but these are all very small operations with only a few
kiosk locations each. The Company is not aware of any other company, on either a
regional or national level,  which specializes in sales of specialty coffee from
kiosks or coffee carts on the same scale as the  Company,  or which has a number
of units approaching that of the Company.  The Company acknowledges that several
large, well-

                                       16
<PAGE>

capitalized multi-unit retailers, such as Starbucks, Diedrich or the Second Cup,
are capable of entering the kiosk and coffee cart market. Currently, however, to
the  Company's  knowledge  none of these  retailers are focusing on the kiosk or
coffee cart market.

INTELLECTUAL PROPERTY

     The Company has a registered  service  mark for its  rhinoceros  logo.  The
Company is aware of another  entity in North Carolina that is utilizing the name
"Peabodys"  in the coffee  industry.  The North  Carolina  entity has received a
federal trademark registration of the name "Peabodys." The Company believes that
it has the right to use the name  "Peabodys" in the areas in which it is used by
the Company because of first use of the name in those areas. However, if it were
determined  that  the  Company  were  not able to  continue  utilizing  the name
"Peabodys,"  it could have a material  adverse effect on the Company in that the
Company  would have to select a different  name under which to do business,  and
the Company would have to re-establish  any lost goodwill and name  recognition.
Because of its speculative  nature,  such potential adverse effect is impossible
to quantify at this time.

EMPLOYEES

     The Company currently has 97 employees of which 26 are full-time  employees
and 5 of which are administrative.

SEASONALITY

     Because the Company  serves both hot and cold coffee  drinks,  the sales of
the Company's products at most kiosk locations do not appear to be significantly
affected by the seasons.  However, those kiosks which are located in educational
facilities   are   affected  by  the  seasons  to  the  extent  that  sales  are
significantly less when school is not in session.

RISK FACTORS AFFECTING THE COMPANY

     COMPLETION OF MERGER.  As described  above,  on June 30, 1999,  the Company
effected a merger with Peabodys CA as the  disappearing  company and the Company
as the surviving  company (the "Merger").  The Merger followed a share exchange,
which began on March 12, 1999,  through which the Company acquired more than 51%
of the  shares  of  Peabody  CA in  exchange  for  its  shares,  offered  to the
shareholders  of Peabodys CA on a one-to-one  exchange  basis.  In effecting the
Merger,  the  Company  did not send a  notice  of  approval  of the  Merger  and
appraisal  price of the shares to Peabodys CA  shareholders  in accordance  with
Corp. C. ss. 1301(a) for the exercise of dissenters'  rights.  Consequently,  no
Peabodys CA shareholders delivered a demand to exercise dissenters' rights under
Corp.  C.  ss.  1301(b)  in  connection  with  the  Merger,  and  there  were no
"dissenting shares," as defined in Corp. C. ss. 1300(b). It is not clear at this
time  whether any former  Peabodys CA  shareholders  will seek to enforce  their
dissenters' rights, and, if so, what the Company's liability will be.

     The Company is in the midst of completing  formalities  in connection  with
the  Merger  such as issuing  new share  certificates  to the former  holders of
Peabodys CA shares.  The Company,  as of the date of this filing,  has not filed
the proper document to effect the Merger in the State of California, as

                                       17
<PAGE>

set forth in Corp. C. ss.  1108(d).  When this  document is filed,  because more
than six (6) months  will have  elapsed  between  the filing of the  Articles of
Merger  in the  State  of  Nevada  and the  filing  of the  proper  document  in
California,  the Merger will be  effective in  California  as of the date of the
later filing,  all in accordance  with Corp. C. ss.  1108(e).  The effect on the
Company of this later effective date is not clear at this time.

     LATE  PAYMENTS  RELATING TO DEBT.  Pursuant  to the Merger,  the Company by
operation  of law assumed all of the  obligations  of Peabodys CA. In an earlier
private placement, Peabodys CA offered and sold units, with each unit consisting
of a secured  promissory  note ("Secured  Note") and warrants to purchase common
stock. The Company is now obligated to make quarterly  payments on the principal
balance  outstanding  and to repay such Secured Notes. As of March 31, 2000, the
Company is in  default on the  principal  balance  of the  Secured  Notes in the
amount of $60,000  and is  approximately  $32,700  in  arrears on such  interest
payments  relating  to the  Secured  Notes.  Under  the  terms  of the  Security
Agreement  relating  to the Secured  Notes,  a  noteholder  has the right to (i)
declare all principal and interest  immediately due and owing; (ii) exercise its
rights and remedies under the California  Commercial Code as a secured  creditor
having a security interest in the collateral, which includes, but is not limited
to,  equipment,   inventory,  accounts,  trademarks  and  tradenames  and  other
intellectual  property rights (the "Collateral"),  and, in particular,  sell any
part of the  Collateral  and (iii)  exercise  any other  rights or remedies of a
secured party under  California law. As of the date hereof,  the Company has not
received any notice of default relating to the Secured Notes.

     OPERATING LOSSES; LIMITED OPERATING HISTORY;  DEVELOPMENT STAGE OF COMPANY.
Prior to the Merger,  Peabodys CA had incurred  operating losses in each quarter
since its  inception and has a significant  accumulated  deficit.  Peabodys CA's
operating  loss for the fiscal year ended March 31, 1999 was  $632,359,  and its
shareholders'  deficit was  $929,526.  It is  anticipated  that the Company will
continue to incur losses,  until it is able to increase  revenues  sufficient to
support operations. The Company had an operating loss of $774,223 for the fiscal
year ending March 31, 2000,  and its  shareholders'  deficit was $399,335 at the
end of that  period.  The  Company's  possible  success  is  dependent  upon the
successful  development and marketing of its services and products,  as to which
there is no  assurance.  Any future  success  that the Company  might enjoy will
depend upon many factors,  including  factors out of its control or which cannot
be predicted  at this time.  These  factors may include  changes in or increased
levels  of  competition,  including  the  entry of  additional  competitors  and
increased  success  by  existing   competitors,   changes  in  general  economic
conditions, increases in operating costs, including costs of supplies, personnel
and  equipment,  reduced  margins  caused  by  competitive  pressures  and other
factors.  These conditions may have a materially adverse effect upon the Company
or may force the Company to reduce or curtail operations.

     NEED  FOR  ADDITIONAL  CAPITAL.  Additional  capital  will be  required  to
effectively  support the  operations  and to otherwise  implement  the Company's
overall  business  strategy,  including  rapid  growth  in  designated  regions.
However,  there can be no assurance that financing will be available when needed
on terms that are acceptable to the Company.  The inability to obtain additional
capital will restrict the Company's ability to grow and may reduce the Company's
ability to continue to conduct business operations.  If the Company is unable to
obtain additional financing, it will likely be required to curtail its marketing
and development  plans and possibly cease its operations.  Any additional equity
financing  may  involve  substantial  dilution  to the  Company's  then-existing
shareholders.

     RELIANCE ON MAJOR  CLIENTS.  The  Company's two largest  clients  represent
54.7% of its gross  revenue  for the year  ended  March 31,  2000.  The same two
clients  represented  74.7% of the gross  revenue of Peabodys  CA's for the year
ended March 31, 1999. Although this indicates a trend toward

                                       18
<PAGE>

less reliance on major clients,  the Company would experience a material decline
in revenues if it were to lose either of these major clients.

     GENERAL RISKS OF BUSINESS.  The Company has  formulated  its business plans
and strategies based on certain assumptions  regarding the size of the specialty
coffee markets, the Company's anticipated share of the market, and the estimated
price and acceptance of the Company's  products.  Although these assumptions are
based on the best  estimates of  management,  there can be no assurance that the
Company's  assessments  regarding  market  size,  potential  market share of the
Company,  the  price at which  the  Company  will be able to sell its  products,
market acceptance of the Company's  products and a variety of other factors will
prove to be correct.

     DEPENDENCE ON COFFEE  SUPPLIER;  FLUCTUATIONS IN  AVAILABILITY  AND COST OF
GREEN COFFEE. The Company largely depends upon a third-party  supplier for whole
bean coffee,  although the Company has no contract  currently in effect with the
supplier other than purchase orders placed from time to time by the Company. The
Company  believes  that its  relationship  with  such  supplier  is good and the
supplier will be able to meet the Company's  requirements  for coffee during the
foreseeable  future.  In the event such  relationship  terminates,  the  Company
believes  that  numerous  other  suppliers  can  fulfill  the  Company's  supply
requirements.  In addition,  the  Company's  supply of coffee may be affected by
fluctuations  in the cost and  availability  of high quality whole coffee beans.
Coffee supply and price are subject to volatility.  Coffee of the quality sought
by the Company  trades on a  negotiated  basis at a  substantial  premium  above
commodity  coffee  pricing,  dependent  upon  supply  and  demand at the time of
purchase.  Supply  and price  may be  affected  by  multiple  factors  including
weather,  politics, and economics in the producing countries. An increase in the
prices of  specialty  coffees  could  have an  adverse  effect on the  Company's
profitability.

As  described  above  in  "Expansion  Plans,"  the  Company  has  completed  the
acquisition of certain assets of Arrosto Coffee Company LLC. The acquired assets
include a coffee roasting facility. The Company's motivation in doing this is to
achieve cost savings by roasting its own coffee.  In addition,  the  acquisition
gives the Company complete control over brand  specification of its core product
and opens new wholesale trade channels.

     COMPETITION.  As described above, the Company competes  indirectly  against
specialty  coffee  retailers  (such as Starbucks,  Diedrich  Coffee and others),
restaurant and beverage  outlets that serve coffee,  and directly with a growing
number of espresso  stands,  carts,  and stores in the  Company's  markets.  The
Company's  coffee  beverages  compete  directly against all other coffees on the
market,  including those sold in  supermarkets.  The specialty coffee segment is
becoming  increasingly  competitive.  The coffee industry,  and particularly the
Company's market of commercial and industrial  locations,  is dominated by large
companies such as Sodexho-Marriott, The Compass Group, and ARAMARK, each of whom
has  significantly  greater  financial,  marketing,  distribution and management
resources than the Company.  Competitors with significant  economic resources in
both existing  nonspecialty  and specialty  coffee  businesses  and companies in
retail  foodservice  businesses  could at any time enter the Company's  proposed
market with competitive coffee products. The Company competes against both other
specialty  retailers  and  restaurants  for  store  sites,  and  there can be no
assurance that management will be able to continue to secure adequate sites.

     ABILITY TO MANAGE  RAPID  GROWTH.  The success of the Company  will require
rapid  expansion of its business.  Any such expansion  could place a significant
strain  on the  Company's  resources  and  would  require  the  Company  to hire
additional  personnel to implement  additional  operating and financial controls
and  improve   coordination   between  marketing,   administration  and  finance
functions. The

                                       19
<PAGE>

Company  would be  required  to  install  additional  reporting  and  management
information  systems  for sales  monitoring,  inventory  control  and  financial
reporting.  There can be no assurance  that the Company  would be able to manage
any substantial  expansion of its business,  and a failure to do so could have a
materially adverse effect on the Company's operating results.

     DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a significant
extent upon the continued  service of Todd Tkachuk.  Loss of the services of Mr.
Tkachuk could have a material adverse effect on the Company's growth,  revenues,
and prospective business. The Company does not maintain key-man insurance on the
life of Mr. Tkachuk. In addition, in order to successfully  implement and manage
its  business  plan,  the Company will be dependent  upon,  among other  things,
successfully   recruiting   qualified  managerial  and  sales  personnel  having
experience in business.  Competition for qualified individuals is intense. There
can be no assurance  that the Company  will be able to find,  attract and retain
existing employees or that it will be able to find, attract and retain qualified
personnel on acceptable terms.

     LACK OF  DIVIDENDS.  The  Company has not to date paid any  dividends  with
respect to its shares of Common  Stock and does not intend to pay  dividends  in
the foreseeable  future.  Instead,  the Company intends to apply any earnings to
the expansion and development of its business.

     THIN MARKET; POSSIBLE VOLATILITY OF STOCK PRICE. The Company's common stock
has been traded on the OTC  Bulletin  Board  since  November  1997.  The Company
believes  that  factors such as  announcements  of  developments  related to the
Company's business,  fluctuations in the Company's quarterly or annual operating
results,  failure to meet securities analysts' expectations,  general conditions
in the  marketplace  and the worldwide  economy,  developments  in  intellectual
property rights and developments in the Company's relationships with clients and
suppliers  could cause the price of the  Company's  common  stock to  fluctuate,
perhaps substantially.

     OTC ELIGIBILITY  RULE. Recent changes to the rules of the NASD require that
companies  trading  on the OTC  Bulletin  Board,  such as the  Company,  must be
reporting  issuers under Section 12 of the  Securities  Exchange Act of 1934, as
amended,  and must be current in their  reports  under  Section  13, in order to
maintain price quotation  privileges on the OTC Bulletin Board ("OTC Eligibility
Rule").  If the Company fails to remain  current on its reporting  requirements,
the Company  could be removed  from the OTC  Bulletin  Board.  As a result,  the
market  liquidity  for the  Company's  securities  could be  severely  adversely
affected  by  limiting  the  ability  of  broker-dealers  to sell the  Company's
securities  and  the  ability  of  shareholders  sell  their  securities  in the
secondary market.

ITEM 2.   DESCRIPTION OF PROPERTY
          (FORM 1-A  MODEL B  ITEM 7)

     The  Company's  principal  executive  offices are located at 3845  Atherton
Road,  Suite 9, Rocklin,  California,  95765,  and its telephone number is (916)
632-6090.  The facility is utilized in the following  manner:  a) administrative
offices,  b) professional  offices,  c) storage and warehousing,  and d) product
development.  The facility  consists of  approximately  three  thousand  (3,000)
square  feet of office and  warehouse  space,  leased for $2,480 per month.  The
lease  expires in  September,  2001.  The  Company  believes  that its  existing
facilities are adequate for its current use.

     The kiosks which the Company owns and uses for its day-to-day operations on
its sites vary from site to site,  but generally  measure  approximately  6 feet
long, 3 feet deep, and 4 feet high (counter

                                       20
<PAGE>

level) with related  equipment  and display  space.  Standard  equipment on each
kiosk includes a two-group  espresso machine,  two espresso  grinders,  a coffee
brewer,  blender, and cash register, and display racks for baked goods and other
non-coffee  items.  All  kiosks are  equipped  with  wheels  for unit  mobility,
although at most sites the kiosk remains in the same location  permanently.  The
cost of a kiosk, including internal plumbing,  equipment,  inventory and signage
is approximately  $30,000.  The Company currently  utilizes Michaelo Espresso of
Seattle, Washington as its kiosk manufacturer. Turnaround time for manufacturing
a complete  kiosk is  approximately  four to six weeks.  See,  "Site  Format and
Operations" on page 12 and "Site Locations" on page 14.

ITEM 3.   DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
          (FORM 1-A  MODEL B  ITEM 8)

     The following table sets forth certain  information  regarding the officers
and directors of Peabodys:

Name                            Age              Position
--------------------------------------------------------------------------------
Barry Gibbons                   53               Director
Todd N. Tkachuk                 39               President, Chief Financial
                                                 Officer, Secretary and Chairman
                                                 of the Board of Directors
Roman Kujath                    66               Director

     Directors   are  elected  to  serve  until  the  next  annual   meeting  of
stockholders  and until their  successors are elected and  qualified.  Currently
there are five seats on the  Company's  board of directors.  Two directors  have
resigned (E. Del Thachuk and William Bossung),  creating two vacancies which the
company has not yet filled.

     Directors  serve  without  cash   compensation   and  without  other  fixed
remuneration.  Officers  are elected by the Board of  Directors  and serve until
their successors are appointed by the Board of Directors.  Biographical  resumes
of each officer and director are set forth below.

     Barry J. Gibbons became a Director and Chairman of the Board of Peabodys CA
in October 1996,  and became a Director and Chairman of the Board of the Company
in connection with the Merger. In January of 2000, Mr. Gibbons stepped down from
being Chairman of the Board, but remains a director to the Company. From January
1989 to  December  1993,  Mr.  Gibbons  served as Chief  Executive  Officer  and
Chairman  of Burger  King  Corporation.  From 1984 to 1989,  Mr.  Gibbons was an
employee of Grand  Metropolitan,  the U.K.-based  international  food, drink and
retailing group. Mr. Gibbons graduated from Liverpool  University in 1969 with a
degree in Economics.

     Todd N. Tkachuk was President,  Chief Financial  Officer,  and Secretary of
Peabodys CA since  October  1996,  and was a Director of that company  since its
inception.  In connection with the Merger,  Mr. Tkachuk became President,  Chief
Financial Officer, and Secretary,  and a Director, of the Company. In January of
2000, Mr. Tkachuk became Chairman of the Board.  Prior to his  involvement  with
Peabodys, Mr. Tkachuk served as President of Tony's Coffee Company, a Vancouver,
Canada-based  specialty coffee company. From 1987 to 1991, Mr. Tkachuk served as
President and CEO of Skytech Data Supply,  a wholesale  distributor  of computer
consumables  and  peripherals.  Mr. Tkachuk holds a B.A. in Business  Management
from Western Washington University (1983).

                                       21
<PAGE>

     Roman Kujath has been a director of Peabodys CA since June 1998, and of the
Company  since the  Merger.  Mr.  Kujath has been  president  of Roman M. Kujath
Architects, Ltd. since 1975. Mr. Kujath has been responsible for over $1 billion
worth of  construction,  including the $100 million Place De Ville in Ottawa for
the  Campeau  Corporation.  Mr.  Kujath is a member  of the Royal  Architectural
Institute  of Canada,  a past  corporate  member of the  American  Institute  of
Architects,  a member of the Architectural Institute of British Columbia and the
Alberta Association of Architects.

ITEM 4.   REMUNERATION OF DIRECTORS AND OFFICERS
          (FORM 1-A  MODEL B  ITEM 9)

(a) The following table sets forth the aggregate annual  remuneration of each of
the three highest paid persons who are officers or directors for the fiscal year
ending March 31, 2000.

Name of                          Capacities in which              Aggregate
Individual or Group              Remuneration was received        Remuneration
--------------------------------------------------------------------------------
Todd N. Tkachuk                  Officer and Director             $ 67,000.00
Barry Gibbons                    Consulting Agreement             $ 37,500.00
Officers and Directors as                                         $104,500.00
a Group (2 persons)

(b) Mr.  Tkachuk does not have an  employment  agreement  with the  company.  He
serves in his  capacity as  President,  Secretary  and Chief  Financial  Officer
pursuant to his election to those positions by the board of directors.

     Mr.  Gibbons,  doing  business as Festina,  has entered  into a  consulting
agreement with the Company. The Executive Services Agreement,  as amended by the
Addendum to Executive Services  Agreement,  provides for compensation to be paid
to Festina in a monthly  amount of $2,000.  The Agreement  provides that it will
remain in effect until terminated by either party with 90 days prior notice.

     The  Company  adopted  its 1995 Stock  Option  Plan in 1995.  The 1995 Plan
provides for the granting of options to purchase up to 500,000  shares of common
stock,  and all of these options have been granted.  There are no plans to amend
the Plan or to grant any more options under this Plan.

     The  Company  adopted  its 1999 Stock  Option  Plan in 1999.  The 1999 Plan
provides for the granting of options to purchase up to 500,000  shares of common
stock, of which 444,000 have been granted.  The Company  anticipates that it may
grant the remaining options for the purchase of 56,000 shares to employees hired
in the future.

ITEM 5.   SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
          (FORM 1-A  MODEL B  ITEM 10)

(a)  Voting  Securities  (no other  person holds or shares the power to vote the
     securities described below.)

                                       22
<PAGE>

NAME AND ADDRESS                                   NUMBER OF       PERCENTAGE OF
OF OWNER                       TITLE OF CLASS     SHARES OWNED        CLASS(1)
--------------------------------------------------------------------------------

Todd N. Tkachuk                Common Stock          403,769           5.0%
1717 Chelsea Way
Roseville, CA 95661

Barry Gibbons                  Common Stock          680,000           8.4%
6665 S. W. 69th Lane
Miami, FL 33143

Roman Kujath                   Common Stock          396,368           4.9%
8926 119th Street
Edmonton, Alberta
Canada T6G 1W9

All Officers and Directors     Common Stock        1,480,137          18.3%
As a Group (3 persons)

---------------------------------
     (1)  Percentage based on 8,059,304 shares of Common Stock outstanding.

(b)  The Company currently has no non-voting securities outstanding.

(c)  Options, Warrants and Rights

<TABLE>
<CAPTION>
                           SECURITIES CALLED FOR BY            EXERCISE                  EXERCISE
NAME OF HOLDER             OPTIONS, WARRANTS AND RIGHTS        PRICE                     DATE
-----------------------------------------------------------------------------------------------------
<S>                        <C>                                 <C>                       <C>
Todd N. Tkachuk            258,500 Shares of Common Stock      $0.04 (112,500 shares)    fully vested
                                                               $0.70 (96,000 shares)     fully vested
                                                               $0.80 (50,000 shares)     fully vested

Roman Kujath               121,429 Shares of Common Stock      $0.80 (20,000 shares)     fully vested
                                                               $0.70 (31,429 shares)     fully vested
                                                               $1.00 (70,000 shares)     fully vested

All Officers and Dirs.     379,929 Shares of Common Stock      $0.04 (112,500 shares)
As a Group (3 persons)                                         $0.70 (127,429 shares)
                                                               $0.80 ( 70,000 shares)
                                                               $1.00 ( 70,000 shares)
</TABLE>

(d)  The Company has no parents.

ITEM 6.   INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
          (FORM 1-A  MODEL B  ITEM 11)

     The Company pays $2,000 per month to Barry J.  Gibbons,  doing  business as
Festina, for consulting services pursuant to an Executive Services Agreement.

                                       23
<PAGE>

     The Company has currently  outstanding  302,500  options to purchase common
stock under  Peabody  CA's 1995 Stock  Option  Plan,  which were  assumed by the
Company pursuant to the Merger. Todd Tkachuk, President of the Company, has been
issued 112,500  options at an exercise  price of $0.04 per share,  of which none
have been  exercised.  Barry  Gibbons,  Chairman  of the Board,  has been issued
100,000  options at an exercise price of $0.04 per share,  and has exercised all
100,000 options. Roman Kujath, a Director of the Company, has been issued 20,000
options  at an  exercise  price of $0.80  per  share,  none of which  have  been
exercised.

     The Company has currently  outstanding  444,000  options to purchase common
stock under  Peabody  CA's 1999 Stock  Option  Plan,  which were  assumed by the
Company pursuant to the Merger. Todd Tkachuk has been issued 96,000 such options
at an  exercise  price of $0.70 per share,  none of which  have been  exercised.
Roman  Kujath has been issued  60,000 at an  exercise  price of $0.70 per share,
28,571 of which have been  exercised.  Roman  Kujath  holds  warrants for 70,000
shares of common stock at an exercise price of $1.00 per share.

                                       24
<PAGE>

                                     PART II

ITEM 1.   MARKET PRICE OF AND  DIVIDENDS ON THE  REGISTRANT'S  COMMON EQUITY AND
          OTHER SHAREHOLDER MATTERS

MARKET INFORMATION

     The Common Stock is traded in the  over-the-counter  market with quotations
carried on the National  Association of Securities Dealers,  Inc's "OTC Bulletin
Board" under the trading  symbol "PBDY." Prior to the Merger of Peabodys CA into
the Company,  and the associated  amendment of the Articles of  Incorporation to
change the Company's name, the Company was called  Mine-A-Max  Corporation,  and
traded under the symbol  "MAMX" and, for a brief  period,  "MAMXD." The transfer
agent and registrar for the Company is Interwest Transfer Company, Inc., located
in Salt Lake City, Utah.

     The following  table sets forth for the periods  indicated the high and low
bid prices for  shares of the  Company's  common  stock as  reported  on the OTC
Bulletin Board. These quotations  reflect  inter-dealer  prices,  without retail
mark-up, mark-down or commission, and may not represent actual transactions.

                                            Sales Price (1)
                                            ---------------
                                   High                       Low
                                   ----                       ---
          1997
     Fourth Quarter(2)             0.5                        0.15625

          1998
     First Quarter                 0.1875                     0.04
     Second Quarter                0.1875                     0.03125
     Third Quarter                 0.125                      0.03
     Fourth Quarter                0.06                       0.02

          1999(3)
     First Quarter                 3.125(4)                   0.020
     Second Quarter                3.375                      1.000
     Third Quarter                 1.7188                     0.531
     Fourth Quarter                0.5313                     0.4375

          2000(3)
     First Quarter                 1.4063                     0.2813

     (1)  The source for data used in this chart is and OTC Quote Summary Report
          provided by NASDAQ Trading and Marketing Services.
     (2)  The Company began trading on the OTC Bulletin  Board in  approximately
          November of 1997.

                                       25
<PAGE>

     (3)  The  Company's  trading  symbol  during 1997 and 1998 was MAMX. In the
          first quarter of 1999 the Company changed its trading symbol to PBDY.
     (4)  On February  26, 1999 the  Company  effected a 100 to 1 reverse  stock
          split of its outstanding shares.

     The Company's  Common Stock is not listed on an exchange or NASDAQ,  but is
currently traded in the over-the-counter  market with price quotes listed on the
OTC Bulletin  Board of the  National  Association  of  Securities  Dealers,  Inc
("NASD").  Accordingly, an investor may find it more difficult to dispose of, or
obtain accurate quotations as to the market value of the common stock.

     Recent changes to the rules of the NASD require that  companies  trading on
the OTC Bulletin  Board,  such as the Company,  must be reporting  issuers under
Section 12 of the  Securities  Exchange  Act of 1934,  as  amended,  and must be
current in their reports under Section 13, in order to maintain price  quotation
privileges on the OTC Bulletin Board ("OTC  Eligibility  Rule").  If the Company
fails to remain  current on its  reporting  requirements,  the Company  could be
removed from the OTC Bulletin Board. As a result,  the market  liquidity for the
Company's  securities  could be severely  adversely  affected  by  limiting  the
ability of broker-dealers to sell our securities and the ability of shareholders
to sell their securities in the secondary market.

HOLDERS

     There are approximately 477 holders of the Company's common stock, which is
the only class of stock currently outstanding.

DIVIDENDS

     The  Company  has not paid any cash  dividends  on its common or  preferred
stock and does not anticipate  paying any such cash dividends in the foreseeable
future. Earnings, if any, will be retained to finance future growth. The Company
may issue  shares  of common  stock and  preferred  stock in  private  or public
offerings to obtain  financing,  capital or to acquire other businesses that can
improve its performance and growth. Issuance and or sales of substantial amounts
of common stock could adversely affect prevailing market prices of the Company's
common stock through dilution.

ITEM 2.   LEGAL PROCEEDINGS

     There are no legal  proceedings to which the Company is a party or to which
its  property  is subject,  nor to the best of  management's  knowledge  are any
material legal proceedings contemplated.

ITEM 3.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

     The Company's principal  accountant is Nicholson & Olson, LLP of Roseville,
California.  There have been no disagreements  between the Company's  management
and the Company's accountant.

                                       26
<PAGE>

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

     No matters were submitted to a vote of the  shareholders  during the fourth
quarter of the fiscal year covered by this report.


ITEM 5.   COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
     -------------------------------------------------------

     NAME                              POSITION
     ----                              --------
     Todd Tkachuk                      Director, Officer
     Roman Kujath                      Director
     Barry Gibbons                     Director

     The  Company's  Form  10-SB  Registration  Statement  became  effective  on
February  19,  2000,  making  the  Company  a  reporting  company.  Each  of the
above-named  individuals  failed to file a Form 3  reporting  the event by which
they became a reporting  person,  but each  individual  reported such event on a
timely filed Form 5.

ITEM 6.  REPORTS ON FORM 8-K

     No  reports on Form 8-K were  filed  during the last  quarter of the period
covered by this report.

                                       27
<PAGE>

                                    PART F/S
                              PEABODYS COFFEE, INC.
                             (A NEVADA CORPORATION)

                          INDEPENDENT AUDITOR'S REPORT
                                       AND
                              FINANCIAL STATEMENTS

                                   YEARS ENDED
                             MARCH 31, 2000 AND 1999

                                       28
<PAGE>

                                TABLE OF CONTENTS


INDEPENDENT AUDITOR'S REPORT...................................................1

FINANCIAL STATEMENTS

     Balance Sheet.............................................................2

     Statements of Loss........................................................3

     Statements of Stockholders' Deficit.......................................4

     Statements of Cash Flows..................................................5

     Notes to Financial Statements..........................................6-23

<PAGE>

                                                                       NICHOLSON
                                                                         & OLSON
                          INDEPENDENT AUDITOR'S REPORT

                                                   LIMITED LIABILITY PARTNERSHIP
                                                   -----------------------------
                                                    CERTIFIED PUBLIC ACCOUNTANTS
                                                   729 Sunrise Avenue, Suite 303
                                                     Roseville, California 95661
                                                                  (916) 786-7997
To the Board of Directors and
Shareholders of Peabodys Coffee, Inc.

We have audited the  accompanying  balance  sheets of Peabodys  Coffee,  Inc. (a
Nevada corporation) as of March 31, 2000 and 1999, and the related statements of
loss,  stockholders'  deficit,  and cash flows for the years then  ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Peabodys Coffee,  Inc. as of
March 31, 2000 and 1999,  and the results of its  operations  and its cash flows
for the years  then  ended in  conformity  with  generally  accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 3 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net deficit in stockholders'  equity,  which raise  substantial  doubt
about its ability to continue as a going concern.  Management's  plans regarding
those  matters are also  described in Note 3. The  financial  statements  do not
include any adjustments that might result from the outcome of this uncertainty.

Nicholson & Olson
Certified Public Accountants
Roseville, California
June 28, 2000

<PAGE>

                              PEABODYS COFFEE, INC.
                                 BALANCE SHEETS
                       YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
ASSETS                                                      2000             1999
                                                        ------------     ------------
Current Assets
<S>                                                     <C>              <C>
   Cash                                                 $      3,371     $      4,774
   Other receivables                                          22,866           18,198
   Inventories                                                28,786           41,191
   Prepaid expenses                                            8,701            9,041
                                                        ------------     ------------
         Total Current Assets                                 63,724           73,204

Property and equipment (net)                                 456,269          423,375
Deposits and other assets                                     70,839           57,976
                                                        ------------     ------------

         Total Assets                                   $    590,832     $    554,555
                                                        ============     ============
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Cash overdraft                                       $         --     $     24,238
   Accounts payable                                          604,680          724,944
   Accrued expenses                                          236,809          339,930
   Capital lease obligations                                   1,113            5,487
   Short-term borrowings                                      87,565           17,482
   Bridge note financing                                      60,000          372,000
                                                        ------------     ------------

         Total Current Liabilities                           990,167        1,484,081
                                                        ------------     ------------
Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 8,059,304 and 5,829,871
    $.001 par value                                            8,059            5,830

   Paid-in capital                                         3,244,942        2,344,372
   Accumulated deficit                                    (3,652,336)      (3,279,728)
                                                        ------------     ------------

         Total Stockholders' Deficit                        (399,335)        (929,526)
                                                        ------------     ------------

         Total Liabilities and Stockholders' Deficit    $    590,832     $    554,555
                                                        ============     ============
</TABLE>

See accompanying notes to financial statements

                                       -2-
<PAGE>

                              PEABODYS COFFEE, INC.
                               STATEMENTS OF LOSS
                       YEARS ENDED MARCH 31, 2000 AND 1999

                                                      2000             1999
                                                  ------------     ------------

Sales                                             $  2,124,395     $  1,794,838

Cost of Sales                                          877,074          685,176
                                                  ------------     ------------

         Gross Profit                                1,247,321        1,109,662

Operating expenses
   Employee compensation and benefits                1,107,772          929,879
   General and administrative expenses                 287,122          257,059
   Occupancy                                           311,370          303,101
   Director and professional fees                      200,106          110,325
   Depreciation and amortization                       113,503          101,657
   Settlement costs and other fees                       1,671           40,000
                                                  ------------     ------------
                                                     2,021,544        1,742,021
                                                  ------------     ------------

   Operating Loss                                     (774,223)        (632,359)

Interest expense                                       (66,372)        (105,727)
                                                  ------------     ------------

   Net loss before extraordinary item                 (840,595)        (738,086)
   Extraordinary item - forgiveness of debt            467,987               --
                                                  ------------     ------------

Net Loss                                          $   (372,608)    $   (738,086)
                                                  ============     ============

Earnings per common share:
   Net loss before extraordinary item             $      (0.15)    $      (0.18)
   Extraordinary item                                      .09               --
                                                  ------------     ------------
   Net loss                                       $      (0.06)    $      (0.18)
                                                  ============     ============

See accompanying notes to financial statements

                                       -3-
<PAGE>

                              PEABODYS COFFEE, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                       YEARS ENDED MARCH 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                              Preferred Stock          Common Stock        Additional                    Total
                                          ----------------------   --------------------     Paid-in     Accumulated   Stockholders'
                                            Shares       Amount      Shares      Amount     Capital       Deficit        Deficit
                                          ----------   ---------   ----------   -------   -----------   -----------   -----------
<S>                                       <C>          <C>         <C>          <C>       <C>           <C>           <C>
Balance, March 31, 1998                      925,000   $ 185,000    7,006,565   $ 7,007   $ 1,201,438   $(2,541,642)  $(1,148,197)
Sale of preferred stock                      325,000      65,000           --        --            --            --        65,000
Conversion of convertible debt
   into common stock                              --          --      180,000       180        49,320            --        49,500
Exercise of warrants                              --          --       60,000        60           540            --           600
Stock issued under services
   agreement                                      --          --       25,000        25         4,975            --         5,000
Exercise of options                               --          --      150,000       150         2,850            --         3,000
Sale of common stock, net                         --          --      150,000       150        29,850            --        30,000
Canceled                                          --          --       (5,000)       (5)       (4,995)           --        (5,000)
Additional shares issued per split                --          --           33        --            --            --            --
Reverse 1 for 2 split                             --          --   (3,783,299)   (3,783)           --            --        (3,783)
Conversion of preferred stock             (1,250,000)   (250,000)     625,000       625       249,375            --            --
Conversion of convertible debt
   into common stock                              --          --      140,000       140        76,860            --        77,000
Sale of common stock, net                         --          --      925,000       925       501,415            --       502,340
Exercise of stock options                         --          --       25,000        25           975            --         1,000
Stock issued under settlement
   agreement                                      --          --      331,572       331       231,769            --       232,100
Net loss                                          --          --           --        --            --      (738,086)     (738,086)
                                          ----------   ---------   ----------   -------   -----------   -----------   -----------

Balance, March 31, 1999                            0           0    5,829,871     5,830     2,344,372    (3,279,728)     (929,526)
                                          ----------   ---------   ----------   -------   -----------   -----------   -----------

Conversion of convertible debt                    --          --      310,835       311       313,526            --       313,837
   into common stock
Exercise of warrants                              --          --       65,000        65         1,235            --         1,300
Stock issued under settlement
   agreement                                      --          --       36,421        36        36,385            --        36,421
Sale of common stock, net                         --          --    1,231,000     1,231       428,996            --       430,227
Exercise of stock options                         --          --      297,571       297       166,203            --       166,500
Stock issued under services
   agreement                                      --          --       29,000        29        11,542            --        11,571
Stock issued for business acquisition             --          --        5,000         5         4,995            --         5,000
Mine-A-Max recapitalization, net of cost          --          --      254,606       255       (62,312)           --       (62,057)
Net loss                                          --          --           --        --            --      (372,608)     (372,608)
                                          ----------   ---------   ----------   -------   -----------   -----------   -----------

Balance, March 31, 2000                            0   $       0    8,059,304   $ 8,059   $ 3,244,942   $(3,652,336)  $  (399,335)
                                          ==========   =========   ==========   =======   ===========   ===========   ===========
</TABLE>

See accompanying notes to financial statements

                                       -4-
<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED MARCH 31, 2000 AND 1999

                                                         2000           1999
                                                      ----------     ----------
CASH FLOWS FROM OPERATING ACTIVITIES

Net Income (Loss)                                     $ (372,608)    $ (738,086)
Adjustments to reconcile net (loss) to net cash
provided by (applied to) operating activities:
   Depreciation and amortization                         113,503        101,057
   Gain on extraordinary item - forgiveness of debt     (467,987)            --
   Loss on disposal of property and equipment                819             --
Changes in operating assets and liabilities:
   Receivables                                            (4,668)        (7,723)
   Inventories                                            12,405         (1,078)
   Prepaid expenses                                          340          1,838
   Accounts payable                                      213,248       (106,176)
   Accrued expenses                                      103,754         41,237
                                                      ----------     ----------
         Net cash used by operating activities          (401,194)      (708,931)

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment                     (144,479)       (37,792)
Changes to deposits and other assets                       1,500         (3,404)
Acquisition of intangibles                               (39,640)            --
                                                      ----------     ----------
         Net cash used by investing activities          (182,619)       (41,196)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of notes payable                   67,695             --
Principal reductions of notes payable                    (12,700)       (78,312)
Net proceeds from sale of stock                          556,027        830,257
Payments on capital lease obligations                     (4,374)        (5,069)
                                                      ----------     ----------
         Net cash provided by financing activities       606,648        746,876

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                          22,835         (3,251)

CASH AND CASH EQUIVALENTS
Beginning of year                                        (19,464)       (16,213)
                                                      ----------     ----------
End of year                                           $    3,371     $  (19,464)
                                                      ==========     ==========

See accompanying notes to financial statements

                                       -5-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

The  notes  to  the  financial  statements  include  a  summary  of  significant
accounting  policies and other notes considered  essential to fully disclose and
fairly  present  the  transactions  and  financial  position  of the  company as
follows:

Note    1  -  Significant Accounting Policies

Note    2  -  Related Party Transactions

Note    3  -  Going Concern

Note    4  -  Inventories

Note    5  -  Acquisition

Note    6  -  Recapitalization

Note    7  -  Property and Equipment and Intangible Assets

Note    8  -  Accounts Payable

Note    9  -  Accrued Expenses

Note   10   -  Capital Lease Obligations

Note   11   -  Short-Term Borrowings

Note   12   -  Lease Information

Note   13   -  Income Taxes

Note   14   -  Bridge Note Financing (Due and Payable on December 31, 1998)

Note   15   -  Shareholders' Plans

Note   16   -  Stock Option Plans

Note   17   -  Warrants

Note   18   -  Earnings Per Common Share

Note   19   -  Supplemental Disclosures Non Cash Transactions

Note   20   -  Forgiveness of Debt

Note   21   -  Risk and Uncertainties

Note   22   -  Concentrations

Note   23   -  Fair Value of Financial Instruments

Note   24   -  Subsequent Events

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business
-----------------------
Peabodys  Coffee (the  "Company")  owns and operates  retail espresso coffee bar
kiosks  in  a  variety  of  corporate  and  institutional  locations  throughout
California  and Nevada.  The Company  has gained  access to this  segment of the
specialty coffee market by contracting with existing food service providers such
as Marriott,  Aramark,  and The Compass Group. The Company's  product  offerings
include: high quality coffee and espresso beverages, fruit smoothies,  pastries,
accompaniments, and coffee related accessories.

Estimates and Assumptions
-------------------------
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results may differ from these estimates.

Cash and Cash Equivalents
-------------------------
The Company  considers  all highly liquid  instruments  with a maturity of three
months or less at the time of purchase to be cash equivalents.

Property and Equipment
----------------------
Property and equipment are recorded at cost.  Depreciation  and amortization are
primarily  accounted for on the  straight-line  method over the estimated useful
lives  of  the  assets,   generally  ranging  from  five  to  seven  years.  The
amortization  of site  improvements is based on the shorter of the lease term or
the life of the improvement.

Intangible Assets
-----------------
Goodwill  represents  the  excess of  acquisition  costs  over the fair value of
assets acquired.  Amortization is recorded on a straight-line  basis over twenty
years.

It is the Company's policy to evaluate the ongoing profitability of the acquired
assets in order to determine  if any  impairment  of the net goodwill  value has
occurred.

Income Taxes
------------
The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial  Accounting  Standards No. 109,  "Accounting  for Income Taxes," which
requires the use of the asset and liability method of computing  deferred income
taxes.

                                       -6-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventory
---------
Inventories  are  stated at the lower of cost  (first-in,  first-out  method) or
market.

Compensated Absences
--------------------
Employees  of the  Company  are  entitled  to  paid  vacation  depending  on job
classification,  length of service and other  factors.  It is  impracticable  to
estimate the amount of compensation  for future absences,  and  accordingly,  no
liability  has been  recorded  in the  accompanying  financial  statements.  The
Company's policy is to recognize the costs of compensated absences when actually
paid to employees.

Reclassifications
-----------------
Certain  amounts  from  the  March  31,  1999  financial  statements  have  been
reclassified to conform with the current year presentation.

NOTE 2 - RELATED PARTY TRANSACTIONS

During  the time  period  April 1,  1998  through  June 29,  1998,  the  Company
purchased $30,088 of coffee beans from a supplier, Terranova Roasting Co., Inc.,
whose  president,  Stan Alfonso,  was also a board member during the stated time
period. These purchases represented 100% of the total coffee beans purchased for
the time period. At June 29, 1998,  $21,797 of purchases was accrued in accounts
payable.

A member of the  Company's  Board of  Directors  provided  management  and other
services to the Company on various business issues.  Fees paid for such services
by the  Company  during  the year ended  March 31,  2000 and 1999,  were  $3,500
monthly.  At March 31, 1999 and 2000,  $20,300 and  $19,821,  respectively,  was
accrued in accounts payable.

A member of the Company's Board of Directors elected on March 8, 1999 to convert
$43,000 of loans made to the Company into 61,429 shares of common stock at $0.70
per share.  On March 9, 1999, the member elected to convert his shares of Series
B preferred stock into 100,000 shares of common stock.

On May 29,1998,  a member of the Company's Board of Directors  purchased  75,000
shares of common stock at the purchase price of $.40 per share. In addition, the
director was granted an option to purchase  150,000  shares of common stock.  On
March 4, 1999 the  director  elected  to  convert  $5,000  of loans  made to the
Company into 7,143 shares of common stock at $0.70 per share.

                                       -7-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 2 - RELATED PARTY TRANSACTIONS (CONTINUED)

In February  1999,  the Company  granted  444,000  shares of common  stock at an
option price of $0.70 per share to various  members of Peabodys  management  and
employees.

On March 4, 1999, a member of the Board  converted  $105,000 of accrued fees and
loans  made to the  Company  into  150,000  shares of common  stock at $0.70 per
share.

As of March 31, 2000 and 1999,  the Company owed to its  President and employees
$158,723 and $14,625 in accrued wages, respectively.  Additionally, there was an
amount of $11,437 and $11,042 owed to the Company by its  employees at March 31,
2000 and 1999, respectively.

An officer  of  Mine-A-Max  corporation  was  related  to a board  member of the
Company.  Pursuant to the merger agreement, the Mine-A-Max corporate officer was
granted 35,000 stock options at an exercise price of $1.00.

In December 1999, members of the board of directors  exercised 88,571 options at
$0.70 per share of common  stock.  Additionally,  a related party to a member of
the board was issued 50,000 incentive options at $0.50 per share of common stock
and exercised 34,000 of these options in December of 1999.

As of March 31, 2000, board members held 309,929 options which represents 30% of
the  outstanding  options,  and  826,562  warrants  which  represent  8% of  the
outstanding  warrants.  A related  party to a member of the  board  held  51,000
options.

At March 31,  2000  there was a total of $45,695  in the  short-term  borrowings
related to members of the board of directors.

NOTE 3 - GOING CONCERN

These  statements  are  presented  on the basis that the  Company is an on-going
concern.   Going  concern   contemplates  the  realization  of  assets  and  the
satisfaction  of  liabilities in the normal course of business over a reasonable
length of time. The accompanying  financial statements show an operating loss of
$774,223,  and that the Company has a  stockholders'  deficit of  $399,335,  and
current  liabilities  exceed current assets by $926,443.  Without an infusion of
additional capital, the Company's ability to continue operations is doubtful. No
adjustment has been made to the financial statements relating to the uncertainty
of continuing as a going concern.

                                       -8-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 3 - GOING CONCERN (CONTINUED)

Management's Plan
-----------------
The Board and management  acknowledge  the issues raised as to the future of the
Company. As such, the Company has recently eliminated $1 million of debt through
a combination of debt forgiveness and conversion of debt to equity,  and intends
to further  reduce debt via the same approach.  The Company also  anticipates an
immediate  reduction  in cost of goods  sold from the  recent  acquisition  of a
coffee roasting  facility as well as a new supply agreement with a national food
and beverage distributor.  In addition,  the Company has engaged the services of
various  consultants  to enhance  merger and  acquisition  activity  and capital
raising  efforts.  The  board  and  management  believe  that  attaining  "Fully
Reporting"  status  along  with  improving  financial  conditions  will  attract
investment and create opportunities for the Company.

NOTE 4 - INVENTORIES

At March 31, 2000 and 1999, inventories were comprised of the following:

                                                        2000          1999
                                                      -------       -------
     Coffee                                           $ 7,712       $12,340
     Other merchandise held for sale                   13,584        15,364
     Packaging and other supplies                       7,490        13,487
                                                      -------       -------
                                                      $28,786       $41,191
                                                      =======       =======

NOTE 5 - ACQUISITION

In April  1999,  the  Company  purchased  the assets of a coffee  company in San
Diego,  California,  an unrelated party, for $120,000 and 5,000 shares of common
stock of the  Company.  The  purchase  price has been  allocated to the acquired
assets on the basis of their  estimated  fair value on the date of  acquisition.
The fair value of the assets acquired is summarized as follows:

     Inventory                                                     $  5,125
     Carts, kiosks and equipment                                     73,945
     Intangibles                                                     40,930
                                                                   --------
                                                                   $120,000

                                       -9-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 6 - RECAPITALIZATION

On June 30, 1999, Mine-A-Max Corporation,  a public shell corporation,  acquired
88% of the outstanding  stock of Peabodys  Coffee,  Inc., at which time Peabodys
was merged into Mine-A Max. Twelve percent of Peabodys  California  shareholders
have dissenter  rights,  which could be exercised.  For accounting  purposes the
acquisition will be treated as a recapitalization of Peabodys,  with Peabodys as
the acquirer (reverse acquisition).  Pro-forma statements are not provided given
the  merger  is to be  considered  a  reverse  acquisition  and  not a  business
combination.  Subsequent to the merger,  Peabodys stockholders own 95.82% of the
recapitalized  company.  The pre-merger  balance sheet of Mine-A-Max at June 30,
1999 was as follows:

     Cash                                                        $     157
     Accounts payable                                               (4,041)
     Due to officers                                               (18,838)
     Common Stock par
       (authorized 50,000,000, issued 254,606 at $0.01)               (128)
     Paid in capital                                              (319,502)
     Accumulated Deficit                                           342,352

NOTE 7 - PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

At March  31,  2000 and 1999,  property  and  equipment  were  comprised  of the
following:

                                                    2000            1999
                                                 ---------       ---------
     Kiosk carts                                 $ 255,023       $ 220,773
     Kiosk equipment                               233,327         202,527
     Equipment and furniture                       229,487         181,459
     Signage                                        39,280          32,650
     Site improvements                              74,568          50,624
                                                 ---------       ---------
                                                   831,685         688,033
     Less: accumulated depreciation               (375,416)       (264,658)
                                                 ---------       ---------
                                                 $ 456,269       $ 423,375
                                                 =========       =========

At March 31, 2000, goodwill was comprised of the following:

                                                        2000         1999
                                                      --------     --------
     Goodwill associated with purchase of business
          (Northern Lights)                           $ 40,930     $     --
     Other identifiable intangibles                      3,000        3,000
     Less: accumulated amortization                     (5,045)      (2,300)
                                                      --------     --------
                                                      $ 38,885     $    700
                                                      ========     ========

                                      -10-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 7 - PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS (CONTINUED)

The company recognized depreciation and amortization expense for the years ended
March 31, 2000 and 1999 as follows:

                                                  2000               1999
                                                --------           --------
     Depreciation                               $110,758           $101,057
     Amortization                                  2,745                600
                                                --------           --------
                                                $113,503           $101,657
                                                ========           ========

NOTE 8 - ACCOUNTS PAYABLE

Of the  $604,680  and  $724,944 in accounts  payable at March 31, 2000 and 1999,
respectively,  approximately  80% and 68% have been outstanding for more than 90
days at March 31, 2000 and 1999, respectively.


NOTE 9 - ACCRUED EXPENSES

At March 31, 2000 and 1999, accrued expenses were comprised of the following:

                                                   2000              1999
                                                 --------          --------
     Accrued interest                            $ 44,168          $198,043
     Accrued wages                                158,723            97,727
     Estimated use tax                             29,959            29,959
     Other                                          3,959            14,201
                                                 --------          --------
                                                 $236,809          $339,930
                                                 ========          ========

NOTE 10 - CAPITAL LEASE OBLIGATIONS

The Company leases  certain  office  equipment  under  agreements  classified as
capital  leases,  with original  terms ranging from three to four years.  Assets
recorded under capital leases are included in Property and Equipment.

Minimum future payments under non-cancelable lease obligations at March 31, 2000
are as follows:

     Fiscal Year ending:
     ------------------
     March 31, 2001                                                $  1,006

                                      -11-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 11 - SHORT-TERM BORROWINGS

During  fiscal  year  1999 and  2000,  the  Company  borrowed  funds to  provide
short-term   working  capital.   These  working  capital  loans  are  unsecured,
non-interest  bearing,  and had a March 31, 2000 and 1999 balance of $87,565 and
$17,482, respectively.

NOTE 12 - LEASE INFORMATION

The  Company  entered  into a lease  agreement  on August  25,  1998 for  office
facilities  through  October 2001.  Total future  minimum lease  payments are as
follows:

     Fiscal Year Ending:
     ------------------
     March 31, 2000                                                $ 19,621

NOTE 13 - INCOME TAXES

The Company has recorded a valuation  allowances  as an offset to the income tax
benefits  of its net  operating  losses for the years  ended  March 31, 2000 and
1999. This allowance is due to the uncertainty of realizing the necessary income
to utilize the loss carry forwards.

In addition to future income consideration,  there is additional  uncertainty as
to the ultimate  availability of some or all of the net operating  losses due to
past and potential future ownership changes.  Income tax laws can severely limit
the  availability of losses after a certain level of ownership  changes.  Due to
the  complexity of these rules  coupled with ongoing  losses the company has not
determined any potential limitation.

The details of deferred tax assets and liabilities are as follows:

                                    Assets        Liabilities        Total
                                 ------------     ------------    ------------
     March 31, 1999
         Net Operating Losses    $  1,010,000     $         --    $         --
         Valuation Allowance       (1,010,000)              --              --
                                 ------------     ------------    ------------
         Net Deferred Tax        $         --     $         --    $         --
                                 ============     ============    ============


     March 31, 2000
         Net Operating Losses    $  1,170,000     $         --    $         --
         Valuation Allowance       (1,170,000               --              --
                                 ------------     ------------    ------------
         Net Deferred Tax        $         --     $         --    $         --
                                 ============     ============    ============

                                      -12-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 13 - INCOME TAXES (CONTINUED)

The Company's net operating loss carryovers and related  expiration dates are as
follows:

     March 31, 2011                                            $    480,000
     March 31, 2012                                               1,014,000
     March 31, 2013                                               1,034,000
     March 31, 2014                                                 738,000
                                                               ------------
                                                               $  3,266,000
                                                               ============

NOTE 14 - BRIDGE NOTE FINANCING (DUE AND PAYABLE ON DECEMBER 31,1998)

In May 1996,  the  Company  issued  "units"  consisting  of secured  convertible
promissory  notes and  warrants to purchase  the  Company's  common  stock.  The
offering  closed August 1996 with $760,000 of notes and warrants  sold. At March
31, 1999,  $390,000 of principal notes had been converted to common stock,  with
an outstanding  principal  balance of $372,000.  At March 31, 2000 an additional
$312,000  of  principal  notes  had been  converted  to  common  stock,  with an
outstanding balance of $60,000.

In addition, the Company is obligated to make quarterly interest payments on the
principal balance outstanding,  at nine percent (9%) per annum and to repay such
principal  balance in full on  December  31,  1998.  As of March 31,  1999,  the
Company was  approximately  $198,043 in arrears on interest payments relating to
the Secured Notes.  On December 31, 1999 certain note holders elected to forgive
all accrued  interest in exchange for warrants to purchase  common  stock.  This
transaction is discussed in detail in Note 20. As of March 31, 2000, the Company
is approximately $32,684 in arrears on interest payments relating to the Secured
Notes.  Under the terms of the Security Agreement relating to the Secured Notes,
a note  holder  has the  right  to:  (a)  declare  all  principal  and  interest
immediately  due and owing,  (b)  exercise  its rights  and  remedies  under the
California  Commercial Code as a secured creditor having a security  interest in
the  collateral,  which  includes,  but is not limited to equipment,  inventory,
accounts,  trademarks,  and trade names and other  intellectual  property rights
(the "Collateral"),  and, in particular,  sell, any part of the Collateral,  and
(c) exercise any other  rights or remedies of a secured  party under  California
Law. As of March 31,  2000,  the Company has not  received any notice of default
relating to the Secured Notes.

                                      -13-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 15 - STOCKHOLDERS' DEFICIT

COMMON STOCK
On August 18, 1998, the board of directors approved and the common  stockholders
consented to a one-for-two reverse split of the Company's issued and outstanding
common  stock.  All common  stock data has been  restated to give effect to this
reverse stock split.

The  Company  is  authorized  to issue up to  35,000,000  at March 31,  1999 and
50,000,000 at March 31, 2000, shares of common stock, par value,  $.001 at March
31,  1999 and 2000,  respectively.  As of March 31,  1999 there  were  5,829,871
shares  of common  stock  outstanding  and  8,059,304  shares  of  common  stock
outstanding at March 31, 2000.

Pursuant to the reverse acquisition with Mine-A-Max Corporation,  254,606 shares
of common stock were issued. Concurrent with the reverse acquisition, Mine-A-Max
changed its name to Peabodys  Coffee and  authorization  to issue common  shares
increased to 50,000,000 shares.

As of March 31, 2000 and 1999 Peabodys had not paid any  dividends  with respect
to its shares of common stock.

Transaction costs are recorded as a reduction to capital raised by the Company.

PREFERRED STOCK
The Company is authorized to issue  15,000,000  shares of preferred  stock,  par
value  $.001.  In May  1998,  the  Company  issued  325,000  shares  of Series B
preferred  stock for  $65,000  cash.  In March 1999,  those  holders of Series B
preferred  stock  elected to  convert  all  preferred  stock to shares of common
stock.  There were no shares of Series A or B  preferred  stock  outstanding  at
March 31, 1999 or 2000.

In the event the Company  issues  Series A Preferred  Stock,  Series A Preferred
stockholder  will be entitled to a  liquidation  preference  of $1.73 per share,
voting  rights  equal to the number of shares of common  stock the holder  would
receive on conversion and a preemptive right to maintain ownership, with certain
conditions. The Series A Preferred stockholders are not entitled to any dividend
preference, and share proportionally with the holders of common stock and Series
B Preferred, any dividend that may be issued.

                                      -14-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 15 - STOCKHOLDERS' DEFICIT (CONTINUED)

PREFERRED STOCK (CONTINUED)
The Series A Preferred Stock are convertible into shares of common stock, at the
option of the  holder,  on a one-for  one basis,  unless  adjusted  pursuant  to
standard antidilution  provisions.  The Series A and B are identical except that
Series B  stockholders  are entitled to a  liquidation  preference  of $0.40 per
share and have no preemptive rights.

Pursuant to the reverse  acquisition with  Mine-A-Max,  there were no longer any
shares of Preferred Stock authorized at March 31,2000.

NOTE 16 - STOCK OPTION PLANS

Executives and other key employees have been granted  options to purchase common
shares,  up to an aggregate of 500,000 shares,  of the Company's stock under the
1995 Stock Option Plan (the Plan), which was adopted in 1995. In accordance with
the terms of the Plan,  the  option's  the  maximum  term of the  options is ten
years.  Options  granted vest ratably  over various time  periods.  If an option
granted  under the 1995 Plan expires or  terminates,  the shares  subject to any
unexercised  portion of that option will again become available for the issuance
of further options under the applicable plan. The Board or committee  designated
by the Board is empowered to determine  the terms and  conditions of each option
granted  under the 1995 Plan.  The exercise  price for any option cannot be less
than the fair market value of the common stock on the date of the grant (110% if
granted  to an  employee  who owns  10% or more of the  common  stock),  and the
exercise  price of a  non-statutory  option  cannot be less than 85% of the fair
market  value of the  common  stock on the grant  date.  As of March  31,  2000,
options to purchase  492,500  shares of common stock have been granted under the
1995 Plan at an exercise price ranging from $0.04 to $0.80 per share.

                                      -15-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 16 - STOCK OPTION PLANS (CONTINUED)

The Board of  Directors  of the Company has adopted and  approved the 1999 Stock
Option Plan, pursuant to which options to purchase up to an aggregate of 500,000
shares of the  Company's  common  stock can be granted to  officers,  directors,
employees,  consultants,  vendors,  customers,  and others  expected  to provide
significant services to the Company or its subsidiaries.  If an option under the
1999 Plan expires or terminates,  the shares subject to any unexercised  portion
of that option will again become  available for the issuance of further  options
under the plan. The plan will terminate on February 8, 2009, and no more options
may be  granted  under the 1999 Plan once it has been  terminated.  The Board or
designated  committee is empowered to determine the terms and conditions of each
option  granted under the 1999 Plan. The exercise price for any option cannot be
less than the fair  market  value of the  common  stock on the date of the grant
(110% if granted to an employee who owns 10% or more of the common  stock),  and
the exercise price of a non-statutory option cannot be less than 85% of the fair
market  value of the common  stock on the date of grant.  As of March 31,  1999,
options to purchase  444,000  shares of common stock have been granted under the
1999 Plan at an exercise price of $0.70 per share.

In accordance  with the  provisions of SFAS 123, the Company  applies APB 25 and
related   interpretations   in  accounting  for  its  stock  option  plans  and,
accordingly,  does not recognize  compensation costs. If the Company had elected
to recognize  compensation costs based on the fair value of the options at grant
date the  Company's  net income  would not have changed for the year ended March
31, 2000.

The fair value of each option  grant is  estimated  on the grant date to have no
current  value,  based  upon the facts  that the  options  are  restricted,  not
transferable  nor  assignable,  and  the  uncertain  financial  position  of the
Company.  Pro-forma  information regarding net income and pro-forma earnings per
share,  as provided in SFAS 123,  has not been  included  and is not  considered
meaningful due to the lack of value.

An additional 72,500 options were issued during the year ended March 31, 1999 to
various  individuals  who provided  significant  services to the Company.  These
options were not issued in conjunction with either stock option plan.

Options  exercised  under the 1995 Plan  during  the year ended  March 31,  1999
totaled 100,000 shares at $0.04 per share.

                                      -16-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 16 - STOCK OPTION PLANS (CONTINUED)

An additional  500,000  options were issued during the year ended March 31, 2000
to various individuals who provided significant services to the Company at $0.50
per share.  These  options were issued in  conjunction  with either stock option
plan.  Additionally,  50,000 options were issued in conjunction with the reverse
acquisition at $0.50 per share.

Options  exercised  under the 1995 Plan  during  the year ended  March 31,  2000
totaled 28,571 options  exercised at $0.70 per share.  Options  exercised  under
non-plan options were 60,000 at $0.70 per share and 209,000 options at $0.50 per
share.

Options  forfeited due to employee  termination of employment was 115,500 during
the year ended March 31, 2000.

A summary of the status of the Company's employee stock option plans as of March
31, 2000, and changes during the year, is presented below:

                                                      Year 2000      Year 1999
                                                       Options        Options
                                                     ----------     ----------
     Outstanding at beginning of year                   844,000        427,500
     Granted                                            550,000        516,500
     Exercised                                         (297,571)      (100,000)
     Canceled                                           (60,000)            --
     Forfeited                                         (115,500)            --
                                                     ----------     ----------
     Outstanding at end of year                         920,929        844,000
                                                     ==========     ==========

NOTE 17 - WARRANTS

A summary  of the  status of the  Company's  warrants  as of March 31,  2000 and
changes during the year is presented below:

                                                 Year 2000       Year 1999
                                                 Warrants        Warrants
                                                ----------      ----------
     Outstanding at beginning of year
       (restated in 1999)                          667,500         460,000
     Granted                                       766,823         467,500
     Exercised                                     (65,000)       (260,000)
     Canceled                                     (232,500)             --
                                                ----------      ----------
     Outstanding at end of year                  1,136,823         667,500
                                                ==========      ==========

                                      -17-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 18 - EARNINGS PER COMMON SHARE

Earnings  per common  share are  computed by dividing  net income by the average
number of common  shares and common  stock  equivalents  outstanding  during the
year. The weighted average number of common shares  outstanding  during the year
ended March 31,  2000 and 1999,  were  approximately  4,120,163  and  5,019,164,
respectively.

Common stock  equivalents are the net additional number of shares which would be
issuable upon the exercise of the outstanding common stock options and warrants.
For the year ended March 31, 2000  earnings  per common  share is equal to basic
earnings per common share because the effect of potentially  dilutive securities
under the stock option plans and warrants  were  antidilutive  and therefore not
included.


NOTE 19 - SUPPLEMENTAL DISCLOSURES NON CASH TRANSACTIONS

Non-cash transactions for the year ended March 31, 2000 are as follows:

     Accounts payable forgiven in exchange for
       warrants to purchase common stock                           $240,648

     Accrued interest on bridge note obligations
       forgiven in exchange for warrants to
       purchase common stock                                        205,038

     Conversion of obligations on bridge financing
       notes into shares of common stock                            313,837

     Increase in stockholders' deficit resulting from
       recapitalization with Mine-A-Max                              62,085

     Conversion of accounts payable into shares
       of common stock                                               36,421

     Issuance of common stock in exchange for
       services provided                                             53,600

     Note payable exchanged for account payable                       3,750

     Exchange of property and equipment for payable                   5,000

     Issuance of common stock in exchange for
       property and equipment                                         5,000

                                      -18-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 20 - FORGIVENESS OF DEBT

This income represents the forgiveness of accrued expenses, recorded as expenses
in prior years and in the nine months ended December 31, 1999.

     Forgiveness of accrued interest payable (1)                   $205,038
     Forgiveness of accrued attorney fees (2)                       240,865
                                                                   --------
                                                                    445,903
     Other miscellaneous debt forgiveness                            22,084
                                                                   --------
                                                                   $467,987
                                                                   ========

(1)  In 1995 and 1996 the Company issued bearing  convertible secured promissory
     notes ("Bridge  Notes").  Effective  December 31, 1999, the majority of the
     Bridge Note holders elected to convert their outstanding  principal balance
     into common  stock at a conversion  price of $1.00 per share.  In addition,
     the Bridge Note holders who elected to convert their outstanding principal,
     agreed to forgive the Company of its debt  obligations  related to $205,038
     of accrued interest associated with their Bridge Notes. In exchange for the
     debt  forgiveness  of  $205,038,  the  Company  issued  these note  holders
     warrants to purchase  205,038  shares of the  Company's  common  stock at a
     price per share of $1.00.

(2)  On November 3, 1999,  the Company's  former legal counsel  agreed to accept
     $20,000 and warrants to purchase  240,000  shares of the  Company's  common
     stock at a price  per  share of  $1.00,  as full and  final  settlement  of
     accrued legal fees totaling $260,865.

A tax  effect  was not  attributed  to the  gain as the  gain  will  reduce  the
Company's prior net operating loss.

NOTE 21 - RISKS AND UNCERTAINTIES

The Company  largely  depends upon a third party  supplier for the supply of its
whole bean coffee. The Company believes that its relationship with such supplier
is good and the supplier  will be able to meet the  Company's  requirements  for
coffee  during the  foreseeable  future.  While the Company  seeks to  carefully
anticipate its coffee needs,  there can be no assurance that supplies and prices
will not be affected by political and social  events,  the weather in the coffee
growing regions of the world,  unexpected  demand or other market forces.  Green
coffee is an international agriculture commodity product subject to considerable
price  fluctuations.  The Company's ability to raise sales prices in response to
rising  coffee prices may be limited and the  Company's  profitability  could be
adversely affected if coffee prices were to rise substantially.

                                      -19-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 21 - RISKS AND UNCERTAINTIES (CONTINUED)

The Company's success depends to a significant extent upon the continued service
of its  President.  Loss of the services of the President  could have a material
adverse effect on the Company's growth,  revenues, and prospective business. The
Company does not maintain key-man life insurance on the President.  In addition,
in order to  successfully  implement and manage its business  plan,  the Company
will be dependent upon, among other things,  successfully  recruiting  qualified
managerial  and  sales  personnel  having  experience  in  business  activities.
Competition for qualified individuals is intense. There can be no assurance that
the Company will be able to find,  attract and retain existing employees or that
it will be able to find,  attract and retain  qualified  personnel on acceptable
terms.

The success of the Company will require  rapid  expansion of its  business.  Any
such expansion could place a significant  strain on the Company's  resources and
would require the Company to hire  additional  personnel,  implement  additional
operating and financial controls and to improve  coordination between marketing,
administration and finance  functions.  The Company would be required to install
additional reporting and management  information systems for sales and inventory
monitoring.  There can be no assurance  that the Company would be able to manage
any  substantial  increase in its business,  and a failure to do so could have a
materially adverse effect on the Company's operating results.

The Company has a registered  service mark for its rhinoceros  logo. The Company
is  aware of  another  entity  in  North  Carolina  that is  utilizing  the name
"Peabodys"  in the coffee  industry.  The North  Carolina  entity has received a
federal  trademark  registration  of the  name  "Peabodys".  While  the  Company
believes that it has the right to use the name "Peabodys", if it were determined
that the Company were not able to continue  utilizing  the name  "Peabodys",  it
could have a material  adverse  effect on the Company and the Company would have
to re-establish any lost goodwill and name recognition.

In the normal course of business, the Company has various legal claims and other
contingent matters outstanding.  Management believes that any ultimate liability
arising from these contingencies would not have a material adverse effect on the
Company's results of operations or financial condition at March 31, 2000.

                                      -20-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 22 - CONCENTRATIONS

As mentioned  above,  for the year ended March 31, 2000,  the Company  purchases
100% of its coffee bean inventory from one supplier.  The Company  believes that
the  relationship  with such  supplier is good and the supplier  will be able to
meet the Company's requirements for coffee during the foreseeable future. In the
event such  relationship  terminates,  the Company  believes that numerous other
suppliers can fulfill the Company's inventory requirements.

In addition, at March 31, 2000 the Company had twenty-six kiosks in a variety of
locations  throughout  California and Nevada.  The Company had four contracts on
these  locations  with  Sodexho-Mariott,  four  contracts  with  Aramark,  eight
contracts with The Compass Group and four locations with UCSD. Peabodys competes
indirectly  against specialty  retailers,  restaurants and beverage outlets that
serve coffee, and directly, with a growing number of espresso stands, carts, and
stores in Northern America metropolitan markets. The specialty coffee segment is
becoming  increasingly   competitive.   Competitors  with  significant  economic
resources in both existing nonspecialty and specialty coffee businesses could at
any time enter the Company's market with competitive coffee products.  There can
be no assurance that  management will be able to continue to secure and maintain
these retail sites.

The Company's  officers and directors own  approximately  18% of the outstanding
shares of Common Stock. The Company's  dividend  policy,  as well as other major
decisions  such as wages,  acquisitions  and  financing  by the Company  will be
significantly influenced and controlled by such officers and directors.

The Company's  four major clients  represent  80.2% of its gross revenue for the
year ended March 31, 2000. Two of these clients  represented  74.7% of the gross
revenue for the year ended March 31, 1999.

                                      -21-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 23 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
financial instruments:

     Cash and cash  equivalents  - The carrying  amount  reported in the balance
     sheet for cash and cash equivalents approximates its fair value.

     Accounts  receivable and accounts payable - The carrying amount of accounts
     receivable  and accounts  payable in the balance  sheet  approximates  fair
     value.

     Short-term  borrowings and bridge notes  financing - The carrying amount of
     short-term  borrowings  and bridge  note  financing  in the  balance  sheet
     approximates fair value.

NOTE 24 - SUBSEQUENT EVENTS

On  April  3,  2000 the  Company  entered  into a  consulting  agreement  with a
"Consultant"  to provide  consulting  services,  which shall  consist of raising
capital for Peabodys  operations and growth and  maintaining  positive  investor
relations in the European market.  The initial term of the agreement was for one
year,  with a 30 day revocation  clause.  Compensation  included the issuance of
200,000 restricted shares of the Company's stock and the grant to the consultant
of 300,000  options for the  purchase of 300,000  shares of common stock with an
exercise price range of $1.00 to $2.00 and a term of five years.

On April 20, 2000,  the Company  entered into an agreement with a stock profiler
in New York for services.  The Company issued 100,000 shares of it's  restricted
common stock at various dates, 50,000 warrants  exercisable at a price of $2.00,
and 150,000  warrants  exercisable at $2.50 per share.  These warrants expire on
December 31, 2003 and have various exercisable dates.

On April 27, 2000 the Company  entered into an asset  purchase  agreement with a
company  in  North  Carolina  to  purchase  the  Trade  Name,  the  Marks,   the
Registration and the Domain name of Peabodys Coffee Company.  The Company agreed
to a purchase price of $25,000 for the sale, assignment, transfer and conveyance
of the assets. As of the date of this audit report,  the purchase  agreement had
not been finalized.

On May 16, 2000,  the Company  entered into a non-binding  letter of intent,  to
acquire  certain assets of a coffee company  related to specific site operations
on a college campus.  As of the date of this audit report, a final agreement had
not been reached.

                                      -22-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

NOTE 24 - SUBSEQUENT EVENTS (CONTINUED)

On June 12, 2000, the Company entered into a non-binding letter of intent with a
coffee  company  located in Oregon to acquire  certain  operating  assets of the
Oregon company in exchange for shares of common stock in the Company.  As of the
date of this audit report, a final agreement had not been reached.

Effective June 19, 2000, the Company  completed the acquisition of substantially
all of the assets and  business of the  Arrosto  Coffee  Company  located in Van
Nuys,  California.  The acquired company consisted  primarily of fixed assets in
the  amount  of  $147,910,  inventory  in the  amount  of  $11,662  and  certain
intangibles  in  the  amount  of  $37,995.  The  Company  also  assumed  certain
liabilities  related to the acquired  company,  inclusive of accounts payable in
the amount of $37,568 and certain  lease  contracts  with  definitive  terms and
payments. The purchase price for the assets consisted of the issuance of 320,000
shares of Peabodys common stock, which are deemed to be "restricted  securities"
as that term is  defined in Rule 144  promulgated  under the  Securities  Act of
1933, as amended ("Securities Act"). The shares were valued, by both parties, at
$0.50 per share,  for an aggregate  valuation of $160,000,  purchase  price.  As
further  inducement  for the  Company to enter into the  agreement,  the Company
entered into a subscription agreement,  pursuant to which Arrosto purchased from
Peabodys 220,000 units with each unit consisting of one share of Peabodys common
stock and one warrant for the purchase of a share of common stock at an exercise
price of $1.00 for a term of three years. The units were purchased for $0.50 per
unit,  for a total  purchase  price of $110,000.  Additional  purchase costs are
recorded  costs  related to the  transaction,  such as expenses  incurred in the
negotiating  and  preparing of the agreement and the closing and carrying out of
the  transactions.  The  acquisition was accounted for under the purchase method
and the purchase price has been allocated to the acquired assets and liabilities
on the basis of their estimated fair value on the date of acquisition.

In May 2000, 100,000 options were exercised at $0.50 for proceeds of $50,000.

                                      -23-
<PAGE>

                                    PART III

ITEM 1.   INDEX TO EXHIBITS

Exhibit No.    Description
-----------    -----------

2.1*           Articles of Incorporation of Kimberley Mines, Inc.

2.2*           Certificate of Amendment of Articles of Incorporation (Mine-A-Max
               Corp.)

2.3*           Certificate of Amendment of Articles of  Incorporation  (Peabodys
               Coffee, Inc.)

2.4*           Amended and Restated Bylaws of Peabodys Coffee, Inc.

3.1*           Peabodys Coffee, Inc. 1995 Stock Option Plan

3.2*           Peabodys Coffee, Inc. 1999 Stock Option Plan

6.1*           Executive Services Agreement with Barry J. Gibbons

6.2            Arrosto Asset Purchase Agreement

6.3            Consulting Agreement--Ward

6.4            Consulting Agreement--Lyman

*Incorporated  by  reference  to the  Company's  Registration  Statement on Form
10-SB, as amended,  originally  filed with the Commission under the Exchange Act
on December 21, 1999.

                                       29
<PAGE>

                                   SIGNATURES

     In accordance  with Section 13 of the Securities  Exchange Act of 1934, the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                        PEABODYS COFFEE, INC.,
                                        A Nevada Corporation



                                        By: ___________/S/_____________
                                            Todd Tkachuk, President

                                        Date: June 29, 2000

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

Signature                   Title                                  Date
---------                   -----                                  ----

________/S/____________     President, Chief Financial Officer,    June 29, 2000
Todd N. Tkachuk             and Director (Principal Executive
                            Officer and Principal Financial
                            Officer)

________/S/____________     Controller                             June 29, 2000
Rolf Mandich


________/S/____________     Director                               June 29, 2000
Roman Kujath



________/S/____________     Director                               June 29, 2000
Barry Gibbons

                                       30