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, 2001

                        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 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.  [X]

State issuer's revenues for its most recent fiscal year:  $2,141,946.

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 June 27, 2001, [in the past 60 days], was approximately $833,093.

<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             20
Item 4    Remuneration of Directors and Officers                              21
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                                24
Item 2    Legal Proceedings                                                   25
Item 3    Changes in and Disagreements with Accountants                       25
Item 4    Submission of Matters to a Vote of Security Holders                 26
Item 5    Compliance with Section 16(a) of the Exchange Act                   26
Item 6    Reports on Form 8-K                                                 26

PART F/S

PART III

Index to Exhibits                                                             28

SIGNATURES                                                                    29

<PAGE>

                    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  primarily 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,  Peet's, Diedrich Coffee,
Seattle's Best and others located in fixed, traditional,  store-front locations.
As described in detail  below,  Peabodys'  kiosks  require  comparatively  lower
levels of capital  investment,  overhead  and  advertising,  and are  relatively
simple to operate.

     Peabodys' kiosks, while usually appearing permanent, are portable and often
completely  self-contained,  with the exception of electrical  supply.  They are
generally located in commercial and educational facilities,  including corporate
office  buildings,  universities,  and hospitals.  The Company also operates one
fixed store-front location in South Lake Tahoe which occupies  approximately 300
square feet and offers "to go" products only. Peabodys' marketing strategy is to
enter into  subcontracts  with companies  having general  contracts for food and
beverage  services for the above sites,  and to enter into direct contracts with
the host  facility.  Both  subcontracts  and direct  contacts  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'  existing  foodservice
provider  clients,  Sodexho-America,  The  Compass  Group and  ARAMARK,  control
several  thousand  institutional  foodservice  sites across the country (Nations
Restaurant  News Special  Report-Top  100  Contract  Chains  1999),  potentially
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.

     As of March 31, 2001,  the Company was  operating 23 kiosk  outlets and had
achieved  profitability at the "unit level" at 19 of these  locations.  Of the 4
non-profitable  locations,  2 were  opened in the  first  quarter  of 2001.  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, 2001,  the Company had a net operating loss
of $890,879, and an overall net loss of $821,376. 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

<PAGE>

Company's capital assets,  which consist primarily of the kiosks.  The Company's
balance sheet as of March 31, 2001 showed a  shareholders'  deficit of $197,834,
and current liabilities exceeding current assets by $721,624.

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

          The accompanying  financial statements have been prepared in
          conformity with generally  accepted  accounting  principles,
          which  contemplates  continuation  of the Company as a 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.
          However,  the Company has sustained  operating  losses since
          its inception  and has a net capital  deficiency of $197,834
          as of March 31, 2001.

          In view of these  matters,  realization of certain assets in
          the  accompanying  financial  statements  is dependent  upon
          continued  operations  of the  Company,  which  in  turn  is
          dependent  upon the Company's  ability to meet its financial
          requirements  through  raising  additional  capital  and the
          success of its future operations.

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

     The Company has launched its plan to eliminate  debt from its balance sheet
through a combination of converting debt to equity and  negotiating  settlements
at less than full value.  For the combined fiscal years ended March 31, 2001 and
March 31, 2000,  this plan has resulted in debt  conversion/debt  forgiveness of
approximately    $1.5    million.    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.
However,  the Company believes that a consistently  improving balance sheet will
enhance  the  Company's  ability to  attract  investment  capital.  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.

     Second,  due to a challenging  economic  climate that has hampered  capital
raising efforts, the Company has adjusted its game plan by refocusing on organic
growth.  The Company has  implemented  a program for  eliminating  all non-value
adding  overhead at both the  corporate and field  levels.  Marginal  sites have
either been closed or relocated and all existing sites are continually evaluated
to ensure that they meet acceptable performance standards.

     Third,  the  Company  has  focused  its  operating  plan on  improving  the
economics of existing sites and increasing brand  awareness.  The operating plan
is targeted to increase  revenue by educating  the  customer,  providing  higher
levels of service through  enhanced  training  programs,  and improving  product
quality by  implementing  whole bean coffees and grinders at the site level.  In
addition, the Company has overhauled its distribution system whereby all vendors
now direct-ship all products to the operating unit. The Company has re-evaluated
its retail  pricing  policies,  resulting in a new menu  rollout with  increased
prices that are supported by a higher quality product.  The Company  anticipates
improvements to average unit revenues,  comparable store sales results, and cost
of goods sold.

<PAGE>

     Fourth,  the Company has  redirected  its  efforts  away from  conventional
equity  capital  markets,  and has  begun  exploring  potential  alliances  with
strategic partners,  and merger/acquisition  candidates.  The Company is seeking
potential  partners who can add value to its brand and  operating  strength with
financial  resources  and/or  market  access.  The  Company  is  in  preliminary
discussions with a number of possible  candidates who meet the desired criteria.
It is the  Company's  intention to solidify  one or more of these  possibilities
within the next three months.

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  consistent  sales and
gross profit,  and an increase in the net loss for the year ended March 31, 2001
over the  prior  year.  However,  the  stockholder's  deficit  decreased  due to
infusion of capital.  Although net losses  increased  for fiscal year 2001,  the
operating  loss  is  less  after  consideration  of a  significant  increase  in
professional fees.

     REVENUES

     Net revenues for the twelve months ended March 31, 2001  increased  0.8% to
$2,141,946 from $2,124,395 for the corresponding period in fiscal 2000. This was
due  primarily  to an  increase in the  average  kiosk  revenue as the number of
operating  kiosks  declined from 26 to 23. Retail kiosk and cart sales accounted
for 100% of revenues  for both  periods.  For the twelve  months ended March 31,
2001,  net revenue was generated  from 8 different  clients and special  events,
with the largest client being Sodexho America,  representing  23.3% of total net
revenue.

     COSTS AND EXPENSES

     Cost of goods sold for the twelve months ended March 31, 2001  decreased to
$876,738  from  $877,074 for the same period in fiscal 2000.  As a percentage of
net revenues,  cost of goods sold decreased to 40.9% for the twelve months ended
March 31, 2001 from 41.3% for the comparable period in fiscal 2000. The decrease
as a percentage of net revenues was primarily due to a reduction in distribution
costs resulting from the  implementation of direct shipments from vendors to the
Company's retail operating units. During the twelve months ended March 31, 2001,
5 units were  closed or  relocated  due to  unacceptable  unit  level  operating
performance. For the twelve months ended March 31, 2001, these 5 units accounted
for $135,825 of the  Company's net revenue,  and $83,797 of the total  operating
loss.

     Employee  compensation  and benefits for the twelve  months ended March 31,
2001 decreased to $1,102,508 from $1,107,772 for the same period in fiscal 2000.
As a percentage  of net  revenues,  employee  compensation  and benefits for the
twelve  months  ended March 31, 2001  remained  consistent  with the  comparable
period in fiscal 2000.

     General and  administrative  expenses for the twelve months ended March 31,
2001  decreased to $256,717 from $287,122 for the same period in fiscal 2000. As
a percentage of net revenues,  general and administrative  expenses decreased to
12.0% for the twelve months ended March 31, 2001 from 13.5% for

<PAGE>

the  comparable  period in fiscal  2000.  The  decrease as a  percentage  of net
revenues was primarily due to reduced travel  expenditures and reduced telephone
expenses resulting from budget cuts in travel and an improved  telecommunication
service provider arrangement.

     Occupancy  costs for the twelve  months  ended March 31, 2001  decreased to
$276,382  from  $311,370 for the same period in fiscal 2000.  As a percentage of
net  revenues,  occupancy  costs  decreased to 12.9% for the twelve months ended
March 31, 2001 from 14.7% for the comparable period in fiscal 2000. 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, 2001
increased to $372,662  from  $200,106  for the same period in fiscal 2000.  As a
percentage of net revenues,  director and  professional  fees increased to 17.4%
for the twelve months ended March 31, 2001 from 9.4% for the  comparable  period
in fiscal 2000.  The increase as a percentage  of net revenues was primarily due
to the  engagement  of various  consultants  for  business  development,  public
relations, and other services for assisting the Company with its capital raising
efforts.

     Depreciation and amortization expense for the twelve months ended March 31,
2001 increased to $126,959 from $113,503 for the same period in fiscal 2000. The
increase  was  primarily  due to the  purchase of  equipment in fiscal year 2000
generating a full year of depreciation in fiscal year 2001.

     Interest  expense for the twelve  months ended March 31, 2001  decreased to
$18,877 from $66,372 for the same period in fiscal 2000.  As a percentage of net
revenues,  interest expense  decreased to 0.9% for the twelve months ended March
31, 2001 from 3.1% for the  comparable  period in fiscal 2000.  The decrease was
primarily  due to savings  from the  conversion  of interest  bearing  debt into
shares of common stock.

     Operating  losses for the twelve  months ended March 31, 2001  increased to
$890,879  from  $774,223 for the same period in fiscal 2000.  As a percentage of
net revenues,  operating  losses  increased to 41.6% for the twelve months ended
March 31, 2001 from 36.4% for the comparable period in fiscal 2000. The increase
as a  percentage  of net  revenues was  primarily  due to  increased  director &
professional fees related to the engagement of various  consultants for business
development, public relations, and other services for assisting the Company with
its capital raising efforts.

     Net loss for the twelve  months ended March 31, 2001  increased to $821,376
from  $372,608  for the same  period  in fiscal  2000.  As a  percentage  of net
revenues,  net losses  increased to 38.3% for the twelve  months ended March 31,
2001 from 17.5% for the comparable  period in fiscal 2000. The net loss increase
was  primarily  due to a decrease  in  extraordinary  income and an  increase in
director and professional fees. Extraordinary income for the twelve months ended
March 31, 2001  decreased to $88,380 from $467,987 for the same period in fiscal
2000. As a percentage of net revenues,  extraordinary  income  decreased to 4.1%
for the twelve months ended March 31, 2001 from 22.0% for the comparable  period
in fiscal 2000.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2001, the Company ended its fiscal year with a working capital
deficit of  $721,624.  Cash and cash  equivalents  increased  $4,987  during the
twelve  months  ended March 31,  2001.  Cash  utilized by  operating  activities
totaled $334,138 during the fiscal year 2001, primarily due to a net loss of

<PAGE>

$821,376  offset by non-cash  items of  depreciation  and  forgiveness  of debt,
combined  with  changes in current  assets and  liabilities  as  detailed in the
Statements of Cash Flows.

     The Company had net cash  applied to  investing  activities  for the twelve
months ended March 31, 2001 totaling $55,494. This included capital additions to
property and equipment of $68,100  primarily  related to the equipment  purchase
for  the  opening  of the  two  Kaiser  Hospitals,  and  costs  associated  with
refurbishing  and  relocating  existing  kiosks.  The Company  also  disposed of
equipment for $22,500.

     The Company had net cash provided from financing  activities for the twelve
months ended March 31, 2001 totaling  $394,619.  Cash from financing  activities
primarily  consists of $110,200 from net  short-term  borrowing and $285,532 net
proceeds  from the sale of Company  stock.  These  amounts were  utilized in the
day-to-day operations of the Company.

     Management has been  successful in eliminating  debt from its balance sheet
through a combination of converting debt to equity and  negotiating  settlements
at less  than  full  value.  This  plan  has  resulted  in debt  conversion/debt
forgiveness of  approximately  $1.5 million over the past two fiscal years.  The
Company intends to continue with efforts to further reduce its debt by using the
same or similar approach.

     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.  However,  the Company believes that
operating results subsequent to March 31, 2001 will indicate substantial overall
operating improvements that in conjunction with a consistently improving balance
sheet will  provide  the means to attract  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 30 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 30 units will require  approximately  $300,000 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 planning to release a private placement  offering  memorandum in July
2001.  The details of the private  placement  are still being  contemplated  and
there can be no assurance  that the Company  will be  successful  in  attracting
investors.

INDUSTRY OVERVIEW

     According to the National Coffee  Association's  ("NCA") 2000 study, citing
an article titled "Java's Jumpin' and Jivin"  published in CafeCuisine  Magazine
in September 2000, 79% of the adult population in the U.S. drinks coffee.  These
coffee  drinkers  will spend about $18.5  billion  dollars on their  beverage of
choice,  compared  with $13  billion  in 1993.  The NCA's 2000  National  Coffee
Drinking  Trends study found that much of the recent  growth in coffee  drinking
came from the 18-to-24-year-old consumers.

     In 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.

     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 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, evolving coffee from a staple drink to a gourmet
beverage, including:

     o    Greater  consumer  awareness  of  specialty  coffee as a result of its
          increasing availability and expanded coffee menus which market coffees
          in a multitude of roasts, blends and varieties;

     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 America, 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.

<PAGE>

     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  foodservice 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 usually 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 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"),  with Peabodys CA as the disappearing  corporation
and the Company as the surviving corporation.

     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).  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.

<PAGE>

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.  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. It is difficult to accurately quantify the
potential  exposure  to the  Company  with  respect  to the  Merger.  Given  the
insolvency  of Peabodys CA at the time 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  has yet to compete  the  formalities  in  connection  with the
Merger.  However,  the Company has issued 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  facilities.  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 offer 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.

SITE FORMAT AND OPERATIONS

     Each existing Peabodys site consists of a kiosk that measures approximately
ten 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.

<PAGE>

     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  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

<PAGE>

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.

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 America,  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

     As of March 31,  2001,  the Company  operated 23 coffee  kiosks  throughout
California  and Nevada as  follows:  In  California,  21 units in the  following
geographic  markets:  5 in San Diego; 2 in the San Bernardino  Valley;  3 in San
Jose; 5 in Santa Cruz; 4 in Sacramento;  and, 1 in South Lake Tahoe.  In Nevada,
the Company  operated 2 units in Reno.  The  Company's 23  operating  units were
located in the  following  venues:  13 were located at  educational  sites (i.e.
colleges and  universities);  5 were located at corporate office  facilities;  4
were  located at  hospitals;  and, 1 was a 300 square  foot  store-front  retail
location serving "to-go" products only.

SUPPLIERS

     The Company procures its coffee from Grounds For Enjoyment, Inc. ("GFE") in
Redlands,  California. GFE is a specialty coffee roaster serving California, and
Peabodys is GFE's largest specialty coffee account.  The Company has no contract
in effect  with GFE  other  than the  purchase  orders it  places.  The  Company
believes that GFE's current roasting  capacity may not be sufficient to meet its
needs for the  foreseeable  future,  but the Company  believes  that there is an
abundance of other suppliers who could fulfill the Company's supply requirements
if necessary.  Any risk  associated  with having only one  supplier,  therefore,
appears to be minimal.

     The Company provides its proprietary  specifications for varietals,  roast,
and grind and  proportions  (for brewed coffees) to GFE, 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.  In April  and May of 2001,  the  Company  tested  on-site
grinding  of fresh  roasted  whole  beans  for its  brewed  coffee  to  increase
freshness and quality.  The results of the test were encouraging and the Company
is in the process of installing  grinders at all of its  locations.  The Company
believes that GFE's current roasting  capacity may not be sufficient to meet its
needs for the  foreseeable  future,  but the Company  believes  that there is an
abundance  of  other   suppliers   whom  could  fulfill  the  Company's   supply
requirements if necessary.

     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

<PAGE>

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.

     As described in more detail in the "Overview"  section of Item 1 above,  at
March 31, 2001,  the Company was  operating  23 kiosk  units,  most of which are
profitable at the unit level. The Company as a whole is not profitable  however,
since the profits  generated 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 30 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 30 units  if  locations  with  higher
profitability are opened or acquired). The Company estimates that this growth to
30 units will require  approximately  $300,000 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,
healthcare organizations and property owners.

<PAGE>

     The  Company  believes  that its most  significant  growth  will  come from
expanded  relationships  with its  current  clients.  In an effort to lessen the
seasonal  impact  on  revenues  that the  Company  has  experienced  from a high
concentration  of  university  and college  locations,  the Company is targeting
healthcare  (i.e.  hospitals)  and  large  retailers  for  its  primary  growth.
Hospitals and retailers offer  considerably  more operating days and consistency
throughout the course of a year. Also, three of the Company's  existing clients,
Sodexho-America,  The  Compass  Group  and  ARAMARK,  control  several  thousand
institutional  foodservice  sites across the country  (Nations  Restaurant  News
Special  Report-Top  100  Contract  Chains  1999).  Many of  these  sites  are a
potential  location for a Peabodys kiosk.  Also, the Company believes that there
is opportunity to acquire existing kiosks located in key locations.

     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.

     On March 12, 2001,  the Company  entered into  contracts to provide  coffee
kiosk services at two large Kaiser Permanente  hospitals in southern California.
Kaiser Permanente is the largest HMO healthcare provider in the U.S. The Company
believes  that the new  relationship  with Kaiser has the  potential of creating
substantive  growth  opportunities  in the Company's most desirable growth venue
i.e. hospitals,  which offer solid consistent revenue  opportunities  throughout
the entire year.

MARKETING STRATEGY

     Peabodys' marketing strategy is based on its contractual relationships with
foodservice  providers and other direct clients with multiple  facilities  (i.e.
Kaiser).  These  foodservice  providers,  such as  Sodexho-America,  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, 2001.  Additionally,  Peabodys  contracts directly
with certain  multi-unit  clients who control their own facilities and in return
Peabodys pays the host (client) a percentage of gross revenues directly.

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

<PAGE>

     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.

<PAGE>

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 coffee kiosks 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 coffee kiosks 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-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 92 employees of which 20 are full-time  employees
and 6 of which are administrative.

<PAGE>

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").  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 has yet to complete  formalities in connection with the Merger,
and as of the date of this filing,  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.

     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, 2001, the
Company is in  default on the  principal  balance  of the  Secured  Notes in the
amount of $40,000  and is  approximately  $29,376  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.  For the fiscal year ended March 31, 2000,
the  Company's  operating  loss was $774,223 and its  shareholders'  deficit was
$399,335.  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 $890,879 for the fiscal year ending March 31,
2001, and its shareholders'  deficit was $197,834 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

<PAGE>

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
44.2% of its gross  revenue  for the year  ended  March 31,  2001.  The same two
clients  represented  54.7% of the gross  revenue  for the year ended  March 31,
2000. Although this indicates a trend toward 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.

     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-America,  The Compass Group, and ARAMARK, each of whom
has  significantly  greater  financial,  marketing,  distribution and management
resources than the Company.

<PAGE>

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
significant  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 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.

<PAGE>

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 $2,857 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  10 feet
long, 3 feet deep,  and 4 feet high (counter  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

--------------------------------------------------------------------------------
Todd N. Tkachuk       40       President, Chief Financial Officer, Secretary and
                               Chairman of the Board of Directors
Barry Gibbons         54       Director
Roman Kujath          67       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.

     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).

<PAGE>

     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.

     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, 2001.

Name of                         Capacities in which                 Aggregate
Individual or Group             Remuneration was received           Remuneration
--------------------------------------------------------------------------------

Todd N. Tkachuk                 Officer and Director                $  66,000.00
Barry Gibbons                   Consulting Agreement                $  24,000.00
Officers and Directors as                                           $  90,000.00
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.  Effective March 31, 2001, the monthly
compensation amount of $2,000 was eliminated.

     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.  All of these  options  had been  granted  however,  and  32,500 of these
options were either cancelled or forfeited. There are no plans to amend the Plan
or to grant any of the remaining 32,500 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  489,000  had been  granted.  Of the 489,000  options  granted,
297,000 were either cancelled or forfeited, leaving 308,000 options available to
the  Company  for future  use.  The  Company  anticipates  that it may grant the
remaining  options for the purchase of 308,000 shares to employees  hired in the
future.

<PAGE>

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

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

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

Todd N. Tkachuk                  Common Stock        516,269        3.7%
1717 Chelsea Way
Roseville, CA 95661

Barry Gibbons                    Common Stock      1,100,000        7.8%
6665 S. W. 69th Lane
Miami, FL 33143

Roman Kujath                     Common Stock        521,368        3.7%
8926 119th Street
Edmonton, Alberta
Canada T6G 1W9

All Officers and Directors       Common Stock      2,137,637       15.2%
As a Group (3 persons)
---------------------------------

     (1)  Percentage based on 14,120,217 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           146,000 Shares of Common Stock    $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.    267,429 Shares of Common Stock    $0.70 (127,429 shares)
As a Group (3 persons)                                      $0.80 ( 70,000 shares)
                                                            $1.00 ( 70,000 shares)
</TABLE>

(d)  The Company has no parents.

<PAGE>

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.

     The Company has currently  outstanding  70,000  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 and  50,000
options at an exercise price of $0.80 per share.  Todd Tkachuk has exercised all
112,500 of his options at an exercise price of $0.04 per share. Barry Gibbons, a
Director of the Company, 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  163,429  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.

<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 for the past two years,  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)(2)
                               ------------------

                              High               Low
                              ----               ---

          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
     Second Quarter           1.75               0.25
     Third Quarter            0.51               0.2188
     Fourth Quarter           0.25               0.065

          2001(3)
     First Quarter            0.1563             0.0625

     (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.

     (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.

<PAGE>

     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 490 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.

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.

<PAGE>

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

     The Company was  furnished  with no late  reports on Forms 3, 4 or 5 during
the period covered by this report.

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.

<PAGE>

                                    PART F/S

                              PEABODYS COFFEE, INC.
                             (A NEVADA CORPORATION)

                          INDEPENDENT AUDITOR'S REPORT
                                       AND
                              FINANCIAL STATEMENTS

                                   YEARS ENDED
                             MARCH 31, 2001 AND 2000

<PAGE>

                                TABLE OF CONTENTS

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

FINANCIAL STATEMENTS

         Balance Sheets ..................................................     2

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

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

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

         Notes to Financial Statements ...................................  6-19

<PAGE>


                                                                       NICHOLSON
                                                                         & OLSON

                          INDEPENDENT AUDITOR'S REPORT

                                                    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, 2001 and 2000, 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 audits.

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, 2001 and 2000,  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 both working capital and  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.

/s/ Nicholson & Olson

Certified Public Accountants
Roseville, California
June 25, 2001

<PAGE>

                              PEABODYS COFFEE, INC.
                                 BALANCE SHEETS
                             MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>
ASSETS                                                      2001             2000
                                                        ------------     ------------
Current Assets
<S>                                                     <C>              <C>
   Cash                                                 $      8,358     $      3,371
   Other receivables                                          21,505           22,866
   Inventories                                                50,383           28,786
   Prepaid expenses                                           84,133            8,701
                                                        ------------     ------------
         Total Current Assets                                164,379           63,724

Property and equipment (net)                                 421,414          456,269
Deposits and other assets                                    102,376           70,839
                                                        ------------     ------------
         Total Assets                                   $    688,169     $    590,832
                                                        ============     ============


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Cash overdraft                                       $     48,558     $         --
   Accounts payable                                          420,081          604,680
   Accrued expenses                                          310,544          236,809
   Other current liabilities                                  52,000               --
   Capital lease obligations                                      --            1,113
   Short-term borrowings                                      14,820           87,565
   Bridge note financing                                      40,000           60,000
                                                        ------------     ------------
         Total Current Liabilities                           886,003          990,167
                                                        ------------     ------------

Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 14,120,217 and 8,059,304,
   $.001 par value                                            14,120            8,059

   Paid-in capital                                         4,261,758        3,244,942
   Accumulated deficit                                    (4,473,712)      (3,652,336)
                                                        ------------     ------------
         Total Stockholders' Deficit                        (197,834)        (399,335)
                                                        ------------     ------------

         Total Liabilities and Stockholders' Deficit    $    688,169     $    590,832
                                                        ============     ============
</TABLE>

See accompanying notes to financial statements

<PAGE>

                              PEABODYS COFFEE, INC.
                               STATEMENTS OF LOSS
                       YEARS ENDED MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
Sales                                                   $  2,141,946     $  2,124,395

Cost of Sales                                                876,738          877,074
                                                        ------------     ------------

         Gross Profit                                      1,265,208        1,247,321

Operating Expenses
   Employee compensation and benefits                      1,102,508        1,107,772
   General and administrative expenses                       256,717          287,122
   Occupancy                                                 276,382          311,370
   Director and professional fees                            372,662          200,106
   Depreciation and amortization                             126,959          113,503
   Settlement costs and other                                 20,859            1,671
                                                        ------------     ------------
         Total Operating Expenses                          2,156,087        2,021,544
                                                        ------------     ------------

         Operating Loss                                     (890,879)        (774,223)

Interest expense                                             (18,877)         (66,372)
                                                        ------------     ------------

   Net loss before extraordinary item                       (909,756)        (840,595)
   Extraordinary item - forgiveness of debt                   88,380          467,987
                                                        ------------     ------------

         Net Loss                                       $   (821,376)    $   (372,608)
                                                        ============     ============

Earnings Per Common Share:
   Net loss before extraordinary item                   $      (0.09)    $      (0.13)
   Extraordinary item                                            .01              .07
                                                        ------------     ------------
   Net loss                                             $      (0.08)    $      (0.06)
                                                        ============     ============
</TABLE>

See accompanying notes to financial statements

<PAGE>

                              PEABODYS COFFEE, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                       YEARS ENDED MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                         Common Stock            Additional                           Total
                                ----------------------------       Paid-in           Accum.       Stockholders'
                                   Shares          Amount          Capital          Deficit          Deficit
                                ------------    ------------    ------------     ------------     ------------

<S>                                <C>          <C>             <C>              <C>              <C>
Balance at March 31, 1999          5,829,871    $      5,830    $  2,344,372     $ (3,279,728)    $   (929,526)

Conversion of convertible
   debt into common stock            310,835             311         313,526               --          313,837
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               1,231,000           1,231         428,996               --          430,227
Exercise of stock options            297,571             297         166,203               --          166,500
Stock issued under service
   agreements                         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 at March 31, 2000          8,059,304           8,059       3,244,942       (3,652,336)        (399,335)

Conversion of convertible
   debt into common stock             20,000              20          19,980               --           20,000
Exercise of warrants                  27,250              27           2,698               --            2,725
Stock issued under
   settlement agreements           1,243,055           1,244         238,264               --          239,508
Sale of common stock               3,288,333           3,288         350,219               --          353,507
Exercise of stock options            312,275             312          67,825               --           68,137
Stock issued under service
   agreements                        670,000             670         313,330               --          314,000
Stock issued under
   non-compete agreement             500,000             500          24,500               --           25,000
Net Loss                                  --              --              --         (821,376)        (821,376)
                                ------------    ------------    ------------     ------------     ------------

Balance at March 31, 2001         14,120,217    $     14,120    $  4,261,758     $ (4,473,712)    $   (197,834)
                                ============    ============    ============     ============     ============
</TABLE>

See accompanying notes to financial statements

<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED MARCH 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>              <C>
Net Loss                                                $   (821,376)    $   (372,608)
Adjustments to reconcile net loss to net cash
provided by (applied to) operating activities:
   Depreciation and amortization                             126,959          113,503
   Gain on extraordinary item - forgiveness of debt          (88,380)        (467,987)
   Loss on disposal of property and equipment                  2,481              819
Changes in operating assets and liabilities:
   Receivables                                                 6,361           (4,668)
   Inventories                                                (9,935)          12,405
   Prepaid expenses                                          233,278              340
   Cash overdraft                                             48,558               --
   Accounts payable                                           38,931          213,248
   Accrued expenses                                          128,985          103,754
                                                        ------------     ------------
         Net cash applied to operating activities           (334,138)        (401,194)
                                                        ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds on sale and transfer of equipment                    22,500               --
Additions to property and equipment                          (68,100)        (144,479)
Changes to deposits and other assets                          (9,894)           1,500
Acquisition of intangibles                                        --          (39,640)
                                                        ------------     ------------
         Net cash applied to investing activities            (55,494)        (182,619)
                                                        ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of short-term borrowings              225,200           67,695
Principal reductions of short-term borrowings               (115,000)         (12,700)
Net proceeds from sale of stock                              285,532          556,027
Payments on capital lease obligations                         (1,113)          (4,374)
                                                        ------------     ------------
         Net cash provided by financing activities           394,619          606,648
                                                        ------------     ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                      4,987           22,835

CASH AND CASH EQUIVALENTS
Beginning of year                                              3,371          (19,464)
                                                        ------------     ------------
End of year                                             $      8,358     $      3,371
                                                        ============     ============
</TABLE>

See accompanying notes to financial statements

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

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 - Acquisitions

Note  6 - Recapitalization

Note  7 - Property and Equipment, and Intangible Assets

Note  8 - Accounts Payable

Note  9 - Accrued Expenses

Note 10 - Lease Obligations

Note 11 - Short-Term Borrowings

Note 12 - Income Taxes

Note 13 - Bridge Note Financing

Note 14 - Stockholders' Deficit

Note 15 - Stock Option Plans

Note 16 - Warrants

Note 17 - Earnings Per Common Share

Note 18 - Supplemental   Disclosures   of  Non-Cash   Investing   and  Financing
          Transactions

Note 19 - Forgiveness of Debt

Note 20 - Risks and Uncertainties

Note 21 - Concentrations

Note 22 - Commitments and Contingencies

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business
-----------------------
Peabodys  Coffee,  Inc. (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 Sodexho America,  Aramark, and The Compass Group, and by contracting directly
with host facilities.  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 accounting principles
generally  accepted in the United States of America 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.  Amortization expense related to any capital leases
is included in depreciation expense.

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.

Non compete  agreements  are amortized on a straight line basis over the term of
the agreement.

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

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

Stock Transaction Costs
-----------------------
Transaction  costs  related  to the sale of  common  shares  are  recorded  as a
reduction to capital raised by the Company.

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.

Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash and cash equivalents  approximates fair value because
of the short-term maturity of those instruments. The carrying value of long-term
debt approximates fair value.

Reclassifications
-----------------
Certain  amounts  from  the  March  31,  2000  financial  statements  have  been
reclassified to conform with the current year presentation.

NOTE 2 - RELATED PARTY TRANSACTIONS

A member of the  Company's  Board of  Directors  provided  management  and other
services to the  Company on various  business  issues.  Fees  incurred  for such
services during the years ended March 31, 2001 and 2000, amounted to $24,000 and
$37,500,  respectively.  At March 31, 2001 and 2000, $-0- and $20,300 of accrued
fees, respectively, were included in accounts payable.

At March 31,  2001 and 2000,  shareholders  and/or  employees  owed the  Company
$12,137 and $11,437, respectively.

At  March  31,  2001  and  2000,  there  was a  total  of  $4,820  and  $45,695,
respectively,  in  short-term  borrowings  related  to  members  of the Board of
Directors.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 2 - RELATED PARTY TRANSACTIONS (CONTINUED)

During  the  years  ended  March  31,  2001 and  2000,  members  of the Board of
Directors exercised 112,500 and 88,571 options,  respectively, at prices ranging
from $0.04 to $0.70 per share of common stock. In addition, a related party to a
member of the Board was issued  50,000  incentive  options at $0.50 per share of
common  stock  during the year ended  March 31,  2000 and  exercised  12,275 and
34,000  of these  options  during  the  years  ended  March  31,  2001 and 2000,
respectively.  The remaining  3,725 of the options expired during the year ended
March 31, 2001.

As of March 31, 2001 and 2000,  board members held 197,429 and 309,929  options,
respectively,  which represented 29% and 34% of the outstanding  options.  Board
members held 70,000 warrants as of March 31, 2001 and 2000 which  represented 5%
and 6% of the outstanding warrants.

An officer  of  Mine-A-Max  Corporation  was  related  to a board  member of the
Company.  Pursuant to the merger  agreement  on June 30,  1999,  the  Mine-A-Max
corporate officer was granted 35,000 stock options at an exercise price of $1.00
per share. These options expired during the year ended March 31, 2001.

NOTE 3 - GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles, which contemplates continuation of the
Company as a 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.  However,  the Company has sustained operating losses
since its  inception and has deficits in both working  capital and  stockholders
equity of $721,624 and $197,834, respectively, as of March 31, 2001.

In  view  of  these  matters,  realization  of  certain  of  the  assets  in the
accompanying  financial statements is dependent upon continued operations of the
Company,  which in turn is  dependent  upon the  Company's  ability  to meet its
financial requirements through raising additional capital and the success of its
future operations.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 3 - GOING CONCERN (CONTINUED)

The Board of Directors and  management  acknowledge  the issues raised as to the
future of the Company.  Over the past several years,  the Company has eliminated
over  $1.5  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. Also, a concerted effort is to be placed on evaluation of how business
is being done,  including site locations,  product  quality,  menu selection and
pricing policy with the goal of achieving positive cash flow from operations. In
addition, the Company has engaged the services of various consultants to enhance
merger and acquisition activity and capital raising efforts. Management believes
the  combination  of the above  efforts  will allow the Company to continue as a
going concern.

NOTE 4 - INVENTORIES

At March 31, 2001 and 2000, inventories were comprised of the following:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Coffee                                             $     13,587     $      7,712
     Other merchandise held for sale                          21,419           13,584
     Packaging and other supplies                             15,377            7,490
                                                        ------------     ------------
                                                        $     50,383     $     28,786
                                                        ============     ============
</TABLE>

NOTE 5 - ACQUISITIONS

During the year ended March 31, 2001, the Company  purchased certain assets of a
coffee roasting company in Van Nuys, California,  in exchange for the promise to
issue up to  320,000  shares of common  stock at $0.20 per share.  The  ultimate
shares to be issued is contingent  upon to the sellers ability to remove certain
liens.  The seller has thus far been unable to remove the liens from the assets;
therefore, under the terms of the agreement the maximum consideration to be paid
is reduced by 40,000  shares per month  through July 31,  2001.  As of March 31,
2001 the maximum  consideration to be paid is 160,000 shares at $0.20 per share;
therefore,  $32,000 is included in other current liabilities in the accompanying
financial statements.

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                                              $   11,662
     Roasting equipment                                         52,338
                                                            ----------
                                                            $   64,000

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 5 - ACQUISITIONS (CONTINUED)

Effective December 12, 2000, the Company transferred  possession of the roasting
equipment  for $20,000.  The Company has recorded this transfer in other current
liabilities until such time as clear title has been acquired.  The book value of
the equipment has been adjusted to its net realizable value.

In April  1999,  the  Company  purchased  the assets of a coffee  company in San
Diego, California, 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

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 was 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 $0.001)           (128)
     Paid in capital                                          (319,502)
     Accumulated Deficit                                       342,352

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 7 - PROPERTY AND EQUIPMENT, AND INTANGIBLE ASSETS

At March  31,  2001 and 2000,  property  and  equipment  were  comprised  of the
following:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Kiosk carts                                        $    276,133     $    255,023
     Kiosk equipment                                         263,345          233,327
     Equipment and furniture                                 245,443          229,487
     Signage                                                  48,598           39,280
     Site improvements                                        81,266           74,568
                                                        ------------     ------------
                                                             914,785          831,685
     Less: accumulated depreciation                         (493,371)        (375,416)
                                                        ------------     ------------
                                                        $    421,414     $    456,269
                                                        ============     ============
</TABLE>

          Included in other assets at March 31, 2001 and 2000,  were  intangible
          assets comprised of the following:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Goodwill                                           $     40,930     $     40,930
     Non competition agreement                                25,000               --
     Other identifiable intangibles                           14,600           14,600
                                                        ------------     ------------
                                                              80,530           55,530
     Less: accumulated amortization                          (13,692)          (5,045)
                                                        ------------     ------------
                                                        $     66,838     $     50,485
                                                        ============     ============
</TABLE>

The Company recognized depreciation and amortization expense for the years ended
March 31, 2001 and 2000 as follows:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Depreciation                                       $    118,312     $    110,758
     Amortization                                              8,647            2,745
                                                        ------------     ------------
                                                        $    126,959     $    113,503
                                                        ============     ============
</TABLE>

NOTE 8 - ACCOUNTS PAYABLE

Of the  $420,081  and  $604,680 in accounts  payable at March 31, 2001 and 2000,
respectively,  approximately  60% and 80% have been outstanding for more than 90
days at March 31, 2001 and 2000, respectively.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 9 - ACCRUED EXPENSES

At March 31, 2001 and 2000, accrued expenses were comprised of the following:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Accrued interest                                   $     29,320     $     44,168
     Accrued wages                                            49,739          135,723
     Estimated use tax                                        29,959           29,959
     Accrued payroll taxes                                   197,231           23,000
     Other                                                     4,295            3,959
                                                        ------------     ------------
                                                        $    310,544     $    236,809
                                                        ============     ============
</TABLE>

NOTE 10 - LEASE OBLIGATIONS

The Company  leases office space under an operating  lease expiring in September
2001. The lease agreement  contains a renewal option.  Rental expense under this
lease  agreement  amounted to $33,600 and $31,800 for the years ending March 31,
2001 and 2000, respectively.

NOTE 11 - SHORT-TERM BORROWINGS

During  fiscal  year  2001 and  2000,  the  Company  borrowed  funds to  provide
short-term   working  capital.   These  working  capital  loans  are  unsecured,
non-interest  bearing,  and amounted to $14,820 and $87,565 as of March 31, 2001
and 2000 respectively.

NOTE 12 - INCOME TAXES

The Company has  recorded a valuation  allowance  as an offset to the income tax
benefits  of its net  operating  losses for the years  ended  March 31, 2001 and
2000. 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.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 12 - INCOME TAXES (CONTINUED)

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

Fiscal Year End                                   Expires                Expires
   March 31,                          Federal      3/31    California     3/31
---------------                      ----------    ----    ----------    -------
     1996                            $  480,000    2011    $       --    Expired
     1997                             1,014,000    2012       507,000       2002
     1998                             1,034,000    2013       517,000       2003
     1999                               738,000    2019       369,000       2004
     2000                               372,000    2020       186,000       2005
     2001                               821,000    2021       410,000       2011
                                     ----------            ----------
                                     $4,459,000            $1,989,000
                                     ==========            ==========

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

<TABLE>
<CAPTION>
                                                          March 31         March 31
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
Deferred tax liabilities                                $         --     $         --
Deferred tax assets                                        1,290,000        1,170,000
Valuation Allowance                                       (1,290,000)      (1,170,000)
                                                        ------------     ------------
Net deferred tax asset                                  $         --     $         --
                                                        ============     ============
</TABLE>

NOTE 13 - BRIDGE NOTE FINANCING

In May 1996,  the  Company  issued  "units"  consisting  of secured  convertible
promissory  notes and warrants to purchase the  Company's  common  stock.  As of
March 31, 2001 and 2000, there were $40,000 and $60,000 respectively,  of bridge
notes outstanding.

Interest payments on the principal  balance  outstanding is at nine percent (9%)
per annum due in full on December 31, 1998.  As of March 31, 2001 and 2000,  the
Company has accrued $29,320 and $32,684 of interest  payable on these notes. The
Notes are  secured  by all  assets of the  Company.  As of March 31,  2001,  the
Company has not received any notice of default relating to the Secured Notes.

NOTE 14 - STOCKHOLDERS' DEFICIT

The Company is authorized to issue up to 50,000,000  shares of common stock, par
value,  $.001 at March 31,  2001 and 2000.  As of March 31,  2001 and 2000 there
were 14,120,217 and 8,059,304 shares of common stock outstanding.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 14 - STOCKHOLDERS' DEFICIT (CONTINUED)

Pursuant  to  the  reverse   acquisition  on  June  30,  1999  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,  Inc. and
authorization to issue common shares increased to 50,000,000 shares.

As of  March  31,  2001 and 2000 the  Company  had not paid any  dividends  with
respect to its shares of common stock.

NOTE 15 - STOCK OPTION PLANS

The  Company  maintains  stock  option  plans  under which the Company may grant
incentive   stock  options  and   non-qualified   stock  options  to  employees,
consultants and non-employee directors.

Under the 1995 and 1999 Stock  Option  Plans,  the Company can grant  options to
purchase common shares,  up to an aggregate of 500,000 shares for each plan. The
maximum term of the options is ten years.  Options vest and expire  according to
the terms established at the grant date.

Options to purchase  70,000 and 295,000 shares of common stock were  outstanding
as of March 31, 2001 and 2000, respectively,  under the 1995 Plan at an exercise
price ranging from $0.04 to $0.80 per share.

Options to purchase  163,429 and 247,429 shares of common stock were outstanding
as of March 31, 2001 and 2000,  respectively  under the 1999 Plan at an exercise
price ranging from $0.70 to $1.00 per share.

Non plan  options to purchase  450,000 and 378,500  shares of common  stock were
outstanding  as of March 31, 2001 and 2000,  respectively,  at an exercise price
ranging from $0.10 to $2.00 per share.

The Company applies APB Opinion 25 and related interpretations in accounting for
its plans.  Accordingly,  compensation  costs are  recognized as the  difference
between the exercise  price of each option and the market price of the Company's
stock at the date each grant becomes further vested. No compensation  costs were
charged to income in the years ending March 31, 2001 and 2000. Had  compensation
for the Company's stock option plans been determined  based on the fair value at
the grant dates using the Black-Scholes model consistent with the method of FASB
Statement  123,  the  Company's  net income would not have changed for the years
ending March 31, 2001 and 2000.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 15 - STOCK OPTION PLANS (CONCLUDED)

A summary of the status of the Company's employee stock option plans as of March
31, 2001, and 2000 is presented below:

     Number of Options:                           2001             2000
     -----------------                        ------------     ------------
     Outstanding at beginning of year              920,929          844,000
     Granted                                       495,000          550,000
     Exercised                                    (312,275)        (297,571)
     Canceled                                      (68,000)         (60,000)
     Forfeited                                    (352,225)        (115,500)
                                              ------------     ------------
     Outstanding at end of year                    683,429          920,929
                                              ============     ============

Additional  information  regarding options  outstanding as of March 31, 2001 and
2000 is as follows:

                                               Number of             Number of
                                              2001 Options          2000 Options
      Exercise Price                          Outstanding           Outstanding
      --------------                          -----------           -----------
          $0.04                                      --               175,000
          $0.10                                      --                12,500
          $0.20                                 150,000                25,000
          $0.50                                      --               291,000
          $0.60                                      --                25,000
          $0.70                                 127,429               247,429
          $0.80                                  70,000                95,000
          $1.00                                 136,000                50,000
          $1.50                                 100,000                    --
          $2.00                                 100,000                    --
                                                -------               -------
                                                683,429               920,929
                                                =======               =======

NOTE 16 - WARRANTS

A summary of the status of the Company's  warrants as of March 31, 2001 and 2000
is presented below:

     Number of Warrants:                          2001             2000
     -------------------                      ------------     ------------
     Outstanding at beginning of year            1,136,823          667,500
     Granted                                       359,315          766,823
     Exercised                                     (27,250)         (65,000)
     Canceled                                           --         (232,500)
     Forfeited                                     (40,250)              --
                                              ------------     ------------
     Outstanding at end of year                  1,428,638        1,136,823
                                              ============     ============

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 16 - WARRANTS (CONTINUED)

Additional  information  regarding warrants outstanding as of March 31, 2001 and
2000 is as follows:

                                               Number of             Number of
                                              2001 Options          2000 Options
      Exercise Price                          Outstanding           Outstanding
      --------------                          -----------           -----------
          $0.10                                 150,000                    --
          $0.35                                 100,000                    --
          $0.70                                 641,231               708,731
          $1.00                                 337,407               428,092
          $2.00                                 100,000                    --
          $2.50                                 100,000                    --
                                              ---------             ---------
                                              1,428,638             1,136,823
                                              =========             =========

NOTE 17 - 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 years
ended March 31, 2001 and 2000,  were  approximately  10,005,796  and  6,728,672,
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 years ended March 31, 2001 and 2000 fully  diluted  earnings  per common
share are  equal to basic  earnings  per  common  share  because  the  effect of
potentially  dilutive  securities  under the stock option plans and warrants are
anti-dilutive and therefore not included.

NOTE  18  -  SUPPLEMENTAL  DISCLOSURES  OF  NON  CASH  INVESTING  AND  FINANCING
TRANSACTIONS

Non-cash investing and financing transactions for the years ended March 31, 2001
and 2000 are as follows:

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Accounts payable forgiven in exchange for
          warrants granted to purchase common stock     $      8,734     $    240,648

     Accrued expenses forgiven in exchange for
          warrants granted to purchase common stock           43,750          205,038
</TABLE>

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE  18  -  SUPPLEMENTAL  DISCLOSURES  OF  NON  CASH  INVESTING  AND  FINANCING
TRANSACTIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                            2001             2000
                                                        ------------     ------------
<S>                                                     <C>              <C>
     Accounts payable forgiven in exchange for options
          granted to purchase common stock                    19,370               --

     Trade payables forgiven                                  16,526           22,301

     Conversion of accounts payable and accrued
          expenses into shares of common stock               190,400           36,421

     Conversion of short-term borrowings into shares
          of common stock                                    182,945          124,500

     Conversion of obligations on bridge financing
          notes into shares of common stock                   20,000          313,837

     Issuance of common stock for a note receivable            5,000               --

     Issuance of common stock in exchange for
          services provided                                  314,000           53,600

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

     Issuance of common stock in exchange for a
          non-compete agreement                               25,000               --

     Acquisition of equipment and inventory financed with
          an obligation to issue common stock                 64,000               --

     Write-down of equipment to net realizable value          32,000               --

     Exchange of property and equipment for payable               --            5,000

     Note payable exchanged for account payable                   --            3,750

     Reclassification of current prepaid expenses to
          other long-term assets                               5,290               --

     Increase in stockholders' deficit resulting from
          recapitalization with Mine-A-Max Corporation            --           62,085
</TABLE>

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 19 - FORGIVENESS OF DEBT

Forgiveness  of debt amounted to $88,380 and $467,987 for the years ending March
31, 2001 and 2000, respectively. This income represents the forgiveness of trade
payables  and  accrued  expenses  recorded  as expenses in the current and prior
years. Significant transactions relating to forgiveness of debt are explained in
the following paragraphs.

In 1996 the Company issued interest  bearing,  convertible,  secured  promissory
notes ("Bridge Notes").  The majority of the Bridge Note holders have 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 accrued  interest on their Bridge  Notes.  For the years
ended March 31, 2001 and 2000,  in exchange for the debt  forgiveness  of $9,266
and $205,038,  respectively,  the Company issued  warrants to purchase 9,266 and
205,038 shares of the Company's common stock at a price per share of $1.00.

On  September  30,  2000,  the  Company's  legal  counsel  agreed  to  accept  a
non-statutory option for the purchase of 150,000 shares of common stock, with an
exercise price of $0.20 per share as full and final settlement for accrued legal
fees totaling $20,000.

On December 31, 2000, a former employee of the Company agreed to forgive $34,484
of accrued  expenses in exchange for warrants to purchase  100,000 shares of the
Company's common stock at a price per share of $0.10.

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 20 - RISKS AND UNCERTAINTIES

The Company's  success depends  significantly  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.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000

NOTE 20 - RISKS AND UNCERTAINTIES (CONTINUED)

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.

NOTE 21 - CONCENTRATIONS

The Company  purchases 100% of its coffee bean inventory from one supplier.  The
Company believes the supplier's  current roasting capacity may not be sufficient
to meet its needs for the  foreseeable  future.  In the event such  relationship
terminates or the supplier's capacity is insufficient, the Company believes that
numerous other suppliers can fulfill the Company's inventory requirements.

The  Company  had  approximately  twenty-four  kiosks in a variety of  locations
throughout  California  and Nevada.  The Company had sixteen  contracts on these
locations  with four major clients.  The Company's four major clients  represent
66% and 80% of its gross  revenues  for the years ended March 31, 2001 and 2000,
respectively, with the largest client representing 23% and 28%, respectively, of
gross revenues.

As of March  31,  2001 and  2000,  the  Company's  officers  and  directors  own
approximately  15% and 18%,  respectively,  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.

NOTE 22 - COMMITMENTS AND CONTINGENCIES

As of March 31,  2001,  the Company has  accrued  $182,231 of payroll  taxes and
$15,000 of penalties  and interest due to the Internal  Revenue  Service and the
State of California. Management has met with the Internal Revenue Service and is
in the process of negotiating a payment plan. The Company has paid payroll taxes
for the month of June 2001 and intends to make current  payments from this point
on.

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, 2001 and
2000.

<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**               Asset Purchase Agreement with Arrosto Coffee Company, LLC

6.3***              Amendment No. 1--Arrosto Asset Purchase Agreement

6.4***              Amendment No. 2--Arrosto Asset Purchase Agreement

*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.

**Incorporated by reference to the Company's Annual Report on Form 10-KSB, filed
with the Commission on June 29, 2000.

***Incorporated  by reference to the Company's  Amended Quarterly Report for the
Period  Ending  September 30, 2000,  filed on Form 10-QSB/A with the  Commission
under the Exchange Act on February 1, 2001.

<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, 2001

     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, 2001
Todd N. Tkachuk       and Director (Principal Executive
                      Officer  and Principal Financial Officer)


/s/
-----------------     Director                                     June 29, 2001
Roman Kujath


/s/
-----------------     Director                                     June 29, 2001
Barry Gibbons