U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 AMENDMENT NO.1
                                       TO
                                   FORM 10-QSB

     [X] Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934

     For the quarterly period ended September 30, 2001
                                    ------------------

     [ ] Transition report under Section 13 or 15(d) of the Exchange Act

     For the transition period from __________ to __________

                         Commission File Number 0-26325

                            UPSIDE DEVELOPMENT, INC.
                            ------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

          DELAWARE                                          39-1765590
          --------                                          ----------
(State or Other Jurisdiction of                         (I.R.S. Employer
 Incorporation or Organization)                        Identification No.)

            141 N. Main Street, Suite 207, West Bend, Wisconsin 53095
            ---------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (262) 334-4500
                                  -------------
                           (Issuer's Telephone Number)


         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such a
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

Yes        No  X
     ---      ---

         The number of shares outstanding of the Issuer's Common Stock, $.01 Par
Value, as of September 30, 2001 was 42,970,537.

         Transitional Small Business Disclosure Format:

Yes  __   No  X
             ---

<PAGE>

                            UPSIDE DEVELOPMENT, INC.



                                      Index



                                                                         Page
Part I - Financial Information                                           ----

Item 1.  Financial Statements

         Balance Sheet -
           September 30, 2001.........................................    1

         Statements of Operations -
           Three and nine months ended September 30, 2001 and 2000....    2

         Statements of Changes in Stockholders' Deficit -
           Nine months and ended September 30, 2001...................    3

         Statements of Cash Flows -
           Nine months ended September 30, 2001 and 2000..............    4

         Notes to Financial Statements................................  5 - 6

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations........................  7 - 10

Part II - Other Information

Item 1. Legal Proceedings.............................................   10

Item 2. Change in Securities and Use of Proceeds......................   11

Item 3. Defaults Upon Senior Securities...............................   11

Signatures............................................................   12



<PAGE>

                             Upside Development, Inc.

                                  Balance Sheet

                                September 30, 2001
                                   (unaudited)
<TABLE>
<CAPTION>

Assets
Current assets:
<S>                                                                             <C>
Cash                                                                                           $ 29,456
                                                                                   ---------------------

Property and equipment, net of  accumulated depreciation                                         14,386
                                                                                   ---------------------

Other assets:
Deposit on acquisition                                                                          100,000
Advances to Stockholder                                                                           7,500
Other                                                                                             5,000
                                                                                   ---------------------
Total other assets                                                                              112,500
                                                                                   ---------------------

                                                                                              $ 156,342
                                                                                   =====================

Liabilities and Stockholders' Deficit
Current liabilities:
      Bank overdrafts                                                                            15,865
      Notes payable, net of discounts                                                           513,444
      Accounts payable                                                                          453,989
      Accrued expenses                                                                          396,276
                                                                                   ---------------------
Total current liabilities                                                                     1,379,574
                                                                                   ---------------------

Stockholders' deficit:
      Preferred stock; par value of $.0001; 5,000,000 shares
      authorized; 5,000,000 shares issued and outstanding.                                          500

      Common stock; par value of $.01 per share; 200,000,000 shares
      authorized; 42,970,537 shares issued and outstanding.                                     429,705

      Additional paid-in capital                                                              7,265,413
      Accumulated deficit                                                                    (8,918,850)
                                                                                   ---------------------
Total stockholders' deficit                                                                  (1,223,232)
                                                                                   ---------------------

                                                                                              $ 156,342
                                                                                   =====================

</TABLE>


The accompanying notes are an integral part of the financial statements.

                                       1
<PAGE>

<TABLE>
<CAPTION>


                                                          Upside Development, Inc.

                                                          Statements of Operations
                                                                 (unaudited)


                                                      Three Months Ended September 30,         Nine Months Ended September 30,
                                                   --------------------------------------   --------------------------------------
                                                          2001               2000                  2001               2000
                                                   --------------------------------------   --------------------------------------

<S>                                                <C>              <C>                     <C>                <C>
Sales, net of allowance and discounts                    $ (133)          $ 92,031              $ 66,310           $ 92,441

Cost of sales                                                 -             49,428                26,659             52,369
                                                   --------------------------------------   --------------------------------------

Gross profit                                               (133)            42,603                39,651             40,072
                                                   --------------------------------------   --------------------------------------

Operating expenses:
         Selling                                         11,786             13,958                33,898             35,800
         General and administrative                     193,101            628,648             1,458,932          1,129,741
         Depreciation and amortization                    4,972              8,660                36,469             25,980
                                                   --------------------------------------   --------------------------------------
                                                        209,859            651,266             1,529,299          1,191,521
                                                   --------------------------------------   --------------------------------------

Loss from operations                                   (209,992)          (608,663)           (1,489,648)        (1,151,449)
                                                   --------------------------------------   --------------------------------------

Other income (expenses):
         Loss on acquisition deposits                  (135,864)                 -              (135,864)                 -
         Net realized gain on sale of
          securities trading                                  -                  -                     -              5,344
         Interest expense                               (44,499)           (12,455)             (246,898)           (35,774)
         Other income                                     4,434                  -                 4,434
                                                   --------------------------------------   --------------------------------------
Total other expenses                                   (175,929)           (12,455)             (378,328)           (30,430)
                                                   --------------------------------------   --------------------------------------

Net loss before extraordinary gain                     (385,921)          (621,118)           (1,867,976)        (1,181,879)

Extraordinary gain on forgiveness of debt                    -                  -                  8,910             64,316
                                                   --------------------------------------   --------------------------------------

                                                   --------------------------------------   --------------------------------------
Net loss                                             $ (385,921)        $ (621,118)         $ (1,859,066)      $ (1,117,563)
                                                   ======================================   ======================================

Loss per common share:
         Loss before extraordinary gain                   (0.01)             (0.05)                (0.06)             (0.10)
         Extraordinary gain                                   -                  -                     -                  -
                                                   --------------------------------------   --------------------------------------
Net loss per common share                               $ (0.01)           $ (0.05)              $ (0.06)           $ (0.10)
                                                   ======================================   ======================================

                                                   --------------------------------------   --------------------------------------
Weighted average shares outstanding                  41,523,798         12,932,163            29,787,173         11,499,248
                                                   ======================================   ======================================
</TABLE>


The accompanying notes are an integral part of the financial statements.

                                       2
<PAGE>

                            Upside Development, Inc.

                 Statements of Changes in Stockholders' Deficit
                                   (unaudited)
<TABLE>
<CAPTION>

                                                Preferred Stock      Common Stock
                                             -------------------  ------------------
                                              Shares   $.0001 Par Shares   $.01 Par
                                              Issued     Value    Issued     Value
                                             ---------  --------  --------  --------
<S>                                          <C>        <C>      <C>        <C>
Balance, December 31, 2000                   2,000,000  $   200  16,360,437 163,604
Issuance of common stock for cash                   -         -   2,087,000  20,870
Issuance of common stock for offering costs         -         -   2,482,000  24,820
Issuance of common stock for services               -         -  11,703,750 117,037
Issuance of preferred stock for services     4,000,000      400         -         -
Cancellation of preferred stock             (1,000,000)    (100)        -         -
Issuance of common stock to settle debt             -         -   8,301,850  83,018
Common stock and warrants issued in
 connection with debt                               -         -   2,035,500  20,356
Issuance of stock options for services              -         -         -         -
Amortization of prepaid consulting services         -         -         -         -
Write off of stock subscription receivable          -         -         -         -
Net loss for the nine months ended
 September 30, 2001                                 -         -         -         -
                                             ---------  --------  --------  --------
Balance, September 30, 2001                  5,000,000  $   500  42,970,537 429,705
                                             =========  ========  ========  ========
</TABLE>

<TABLE>
<CAPTION>

     Additional             Prepaid    Stock
     Paid-in    Accumulated Consulting Subscription
     Capital    Deficit     Services   Receivable   Total
    ---------  ----------  ----------- ---------  ---------
<S>            <C>         <C>         <C>       <C>
 $ 6,270,387  $(7,059,784)  $ (50,375) $(123,500)  $(799,468)
      81,755           -            -          -     102,625
     (24,820)          -            -          -           -
     684,280           -            -          -     801,317
           -           -            -          -         400
           -           -            -          -        (100)
     259,847           -            -          -     342,865
      87,464           -            -          -     107,820
      30,000           -            -          -      30,000
           -           -       50,375          -      50,375
    (123,500)          -            -    123,500           -
           -   (1,859,066)          -          -  (1,859,066)
    ---------  ----------  -----------  --------   ---------
 $ 7,265,413  $(8,918,850) $        -  $       - $(1,223,232)
    =========  ==========  ===========  ========   =========

</TABLE>

The accompanying notes are an integral part of the financial statements.

                                       3
<PAGE>


                            Upside Development, Inc.

                            Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>


                                                   Nine Months Ended September 30,
                                                   -------------------------------
                                                          2001           2000
                                                   -------------------------------

Operating activities
<S>                                                <C>             <C>
    Net loss                                         $ (1,859,066)   $ (1,117,563)
                                                   -------------------------------

    Adjustments to reconcile net loss to net
      cash used by operating activities:
       Depreciation and amortization                       36,469          25,980
       Amortization of discount on notes payable          193,754               -
       Amortization of prepaid consulting services         50,375               -
       Common stock and options issued for services
         and other expenses                               831,717         542,662
       Cancellation of preferred stock                       (100)              -
       Loss on acquisition deposits                       135,864               -
       (Increase) decrease in:
         Accounts receivable                               13,594         (85,321)
         Inventory                                            593            (593)
         Other assets                                      (5,000)           (575)
       Increase (decrease) in:                                                  -
         Accounts payable                                 145,842             658
         Accrued expenses                                 213,968          38,836
                                                   -------------------------------
    Total adjustments                                   1,617,076         521,647
                                                   -------------------------------
    Net cash used by operating activities                (241,990)       (595,916)
                                                   -------------------------------

Investing activities
    Deposit on acquisitions                              (235,864)              -
    Advances to stockholders                               (7,500)              -
    Acquisition of equipment and intangible assets              -         (82,759)
                                                   -------------------------------
    Net cash used by investing activities                (243,364)        (82,759)
                                                   -------------------------------

Financing activities
    Increase in bank overdraft                              6,654           9,675
    Proceeds from notes payable                           435,000          15,000
    Payments on notes payable                             (30,000)              -
    Proceeds from common stock and
     related paid-in capital                              102,625         676,897
    Net proceeds/payments on credit line                                  (27,613)
                                                   -------------------------------
    Net cash provided by financing activities             514,279         673,959
                                                   -------------------------------
Net increase in cash                                       28,925          (4,716)
Cash at beginning of period                                   531           5,310
                                                   -------------------------------
Cash at end of period                                    $ 29,456           $ 594
                                                   ===============================


Supplemental disclosures of cash flow information
    and noncash financing activities
     Cash paid during the period for interest                 $ -         $ 7,566

</TABLE>


During the nine month  period  ended  September  30,  2001,  the Company  issued
5,676,850 shares of restricted  common stock in satisfaction of notes payable of
$170,543, including interest, of $24,992.

During the nine month period ended  September  30, 2001,  the Company  converted
$51,009 of accounts payable into notes payable.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,625,000 shares of restricted common stock in satisfaction of debt of $147,330.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,482,000 shares of restricted common stock for the payment of offering costs.

During the nine month  period  ended  September  30,  2001,  the Company  issued
$435,000 of notes  payable.  In connection  with the notes,  the Company  issued
2,035,500  shares of  restricted  common stock valued at $65,525 and  detachable
warrants to purchase  1,312,500  shares of  restricted  common  stock  valued at
$42,295.  These  amounts  have been  recorded as a discount on the notes and are
being amortized over the life of the note.

During the nine month  period  ended  September  30,  2001,  the Company  issued
11,703,750 shares of restricted common stock for services valued at $801,317.

During the nine month period ended  September 30, 2001,  the Company  deemed the
subscription receivable in the amount of $123,500 uncollectable. The balance was
written off against  additional  paid-in capital in the  accompanying  financial
statements.

During the nine month  period  ended  September  30,  2001,  the Company  issued
4,000,000 shares of preferred stock for services valued at $400.

During the nine month period ended  September  30, 2001,  the Company  cancelled
1,000,000 shares of preferred stock valued at $100.

The accompanying notes are an integral part of the financial statements.

                                       4
<PAGE>

                            UPSIDE DEVELOPMENT, INC.

                          Notes to Financial Statements

Note 1 - Basis of presentation

In the opinion of the Company,  the accompanying  unaudited financial statements
contain all adjustments  (which are of a normal and recurring  nature) necessary
for a fair presentation of the financial  statements.  The results of operations
for the three and nine month periods  ended  September 30, 2001 and 2000 are not
necessarily indicative of the results to be expected for the full year.

The unaudited financial  statements and notes are presented as permitted by Form
10-QSB. Accordingly,  certain information and note disclosures that are normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States  have been  omitted.  The
accompanying  financial  statements and notes should be read in conjunction with
the audited  financial  statements and notes for the Company for the fiscal year
ended  December  31,  2000.  The  operating  results for the nine  months  ended
September  30, 2001 are not  necessarily  indicative of those to be expected for
the year ended December 31, 2001.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  However,  the Company has sustained
substantial losses since inception that total  approximately  $8,919,000 and has
used cash in  operations  of  approximately  $242,000  and $596,000 for the nine
month periods ended September 30, 2001 and 2000, respectively. The Company has a
negative working capital of  approximately  $1,350,000 at September 30, 2001 and
has negative net worth of  approximately  $1,223,000  at September  30, 2001. In
addition, the Company is currently in default on approximately $432,000 of notes
payable.  Additionally,  the Company has not had  significant  revenues over the
past two years. These issues indicate that the Company may be unable to continue
as a going concern.  Realization  of the Company's  assets is dependent upon the
Company's  ability to raise  additional  capital,  as well as generate  revenues
sufficient to result in future profitable operations. The accompanying financial
statements  do not include any  adjustments  that might be necessary  should the
Company be unable to continue as a going concern.

Note 2 - Per share calculations

Per share data was computed by dividing net loss by the weighted  average number
of shares  outstanding  during the three and nine month periods ended  September
30, 2001 and 2000. The weighted  average shares  outstanding for the three month
period ended September 30, 2001 was 41,523,798 as compared to 12,932,163 for the
three month  period  ended  September  30, 2000.  The  weighted  average  shares
outstanding for the nine month period ended September 30, 2001 was 29,787,173 as
compared to 11,499,248 for the nine month period ended September 30, 2000.

Note 3 - Equity Transactions

Please refer to Audited Financial Statements consisting of the Company's balance
sheet as of December 31, 2000, and related statements of operations,  changes in
stockholders'  equity,  and cash flows ended  December 31,  2000,  as audited by
Pender, Newkirk & Company, Certified Public Accountant.

During the nine month  period  ended  September  30,  2001,  the Company  issued
5,676,850 shares of restricted  common stock in satisfaction of notes payable of
$170,543, including interest of $24,992.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,625,000 shares of restricted common stock in satisfaction of debt of $147,330.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,482,000  shares of restricted  common stock valued at $134,100 for the payment
of offering costs.

During the nine month  period  ended  September  30,  2001,  the Company  issued
$435,000 of notes  payable.  In connection  with the notes,  the Company  issued
2,035,500  shares of  restricted  common stock valued at $65,525 and  detachable
warrants to purchase  1,312,500  shares of  restricted  common  stock  valued at
$42,295.  These  amounts  have been  recorded as a discount on the notes and are
being amortized over the life of the note.

                                       5
<PAGE>

                            UPSIDE DEVELOPMENT, INC.

                    Notes to Financial Statements (continued)


During the nine month  period  ended  September  30,  2001,  the Company  issued
11,703,750 shares of restricted common stock for services valued at $801,317.

During the nine month period ended  September 30, 2001,  the Company  deemed the
subscription receivable in the amount of $123,500 uncollectable. The balance was
written off against  additional  paid-in capital in the  accompanying  financial
statements.

During the nine month  period  ended  September  30,  2001,  the Company  issued
4,000,000 shares of preferred stock for services valued at $400.

During the nine month period ended September 30, 2001, David Bezalel resigned as
the Company's Director and Chief Operating Officer.  Mr. Bezalel returned to the
Company options to purchase 2,500,000 shares of the Company's Common Stock at an
exercise price of $.15 per share. In exchange,  Mr. Bezalel was issued an option
to purchase  1,000,000  shares of the  Company's  Common Stock which the Company
expects to be exercised  within one year at a price of -0-.  The Company  valued
the options at $30,000.  In addition,  the 1,000,000  shares of preferred  stock
issued  to Mr.  Bezalel  were  cancelled  during  the nine  month  period  ended
September 30, 2001.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,087,000 shares of restricted common stock for cash of $102,625.

During the nine month period ended September 30,2001, the Company entered into a
Preferred  Stockholder's  Agreement  dated  August  1,  2001  and  a  Consulting
Agreement  dated June 1, 2001 with  Khashayer  Santi  Mehdi  Pashakan  that were
terminated on August 30, 2001. Accordingly, the Company has issued stop transfer
instructions on the shares issued pursuant to these agreements.

Note 4 - Deposits on Acquisitions

During the nine month  period  ended  September  30,  2001,  the Company  signed
letters of intent to acquire  three tire  recycling  companies  and a  logistics
company.   To-date  the   Company  has  made   deposits  of  $235,864  on  these
acquisitions. During the three-month period ended September 30, 2001, letters of
intent for two of these tire recycling  companies and the logistics company were
terminated and accordingly $135,864 of deposits were written off.

                                       6
<PAGE>

                            UPSIDE DEVELOPMENT, INC.


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

The  statements  contained  in this Report on Form  10-QSB,  that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange  Act  of  1934.  These  include  statements   regarding  the  Company's
expectations,   intentions,   or  strategies   regarding  future  matters.   All
forward-looking  statements  included in this document are based on  information
available  to the Company on the date  hereof.  It is important to note that the
Company's  actual results could differ  materially  from those projected in such
forward-looking  statements  contained in this Form 10-QSB. The  forward-looking
statements  contained  here-in are based on current  expectations  that  involve
numerous risks and uncertainties.  Assumptions relating to the foregoing involve
judgments  regarding,  among  other  things,  the  Company's  ability  to secure
financing  or  investment  for  capital   expenditures,   future   economic  and
competitive market conditions,  and future business decisions. All these matters
are  difficult  or  impossible  to predict  accurately  and many of which may be
beyond the  control of the  Company.  Although  the  Company  believes  that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in this form 10-QSB will prove to be
accurate.


GENERAL

We were founded in August 1993. Until we generated significant revenues in 1996,
we were a development stage enterprise.  During the development stage period, we
devoted the majority of our efforts to  development  of a viable  product  line,
testing of product concepts, developing channels of distribution,  financing and
marketing.  These  activities were funded by investments  from  stockholders and
borrowings from unrelated third parties.

We have not, through the present time, been in a position to generate sufficient
revenues  during  our  limited  operating  history  to fund  on-going  operating
expenses or product development activities.  As a result, we resorted to raising
capital  through  equity  fundings  and from  borrowings.  In June of  1998,  we
acquired  inventory,  equipment,  and goodwill of the Mother Hubbard's Creations
toy  line.  We  renamed  the  Mother  Hubbard's  Creations  toy line  Hearthside
Treasures.

In May 1999, Alottafun!  joint ventured with E-Commerce Fulfillment,  LLC. which
contracted with M.W Kasch,  an independent  U.S. toy  distributor,  to launch an
e-commerce Internet portal called TOYPOP.COM.  The Joint venture was owned 33.3%
by E-Commerce  Fulfillment and 67.7% by Alottafun!,  Inc. E-Commerce Fulfillment
(ECF) was a wholly owned by Jeffrey C. Kasch,  President of M.W.  Kasch Company.
On  February  28,  2000,  the  M.  W.  Kasch  and us  agreed  to  terminate  our
relationship and thereupon,  M.W. Kasch Co. gave notice that effective March 28,
2000 our agreement with them was terminated.

We announced our  business-to-business  Internet  strategy on February 22, 2000.
Our e-commerce site was originally  launched on September 21, 1999. The Web-site
e-commerce  development  program cost  approximately  $235,000  during 1999.  In
comparison with other retailers of toys, our expenditures were relatively small.
Marketing  expenditures  included  limited  newspapers,   radio,  magazine,  and
internet  advertisements.  Our expected marketing program was not funded for the
1999 holiday selling season. Our lack of marketing  resources has had a negative
impact  on our  sales  and  our  ability  to meet  our  sales  projections.  Our
Toypop.com  site was  processing  orders  through  February 10, 2000 when it was
closed.

We announced our business-to-business internet strategy on February 22, 2000. In
May,  2000,  we launched  MRABA.COM;  a B2B site  devoted to the toy,  candy and
related  children  products  industry.  In  August  of  2001,  we shut  down our
MRABA.COM site.

As a process of  developing  the MRABA.com  site,  we developed a  sophisticated
software  system called e-Logic.  The e-Logic system is a web-based  application
developed for companies to provide  integrated,  real-time  information  for all
aspects of a companies back office operations,  including  everything from order

                                       7
<PAGE>

                            UPSIDE DEVELOPMENT, INC.

entry and processing  through  inventory  tracking and cost accounting.  We have
transferred   ownership  of  the  E-logic  system  to  Overit   Multimedia,   in
consideration for various free and heavily discounted software services.

Our operating results may hinder our ability to raise additional capital to fund
our operations  going forward.  To date, we have funded our Web-site  e-commerce
development  with working  capital  provided by the sales of our  securities and
borrowings.  However,  there is no assurance that these working capital reserves
will be  sufficient  to  complete,  launch,  and  market  our  e-commerce  site.
Furthermore,  there is no  assurance  that we will be able to  raise  additional
funds through securities sales and borrowings in the future.

We have sustained  significant  operating losses since inception resulting in an
accumulated deficit of approximately $8,919,000 at September 30, 2001.

Because of the need for capital and the diminishing  prospects for obtaining new
monies,  we have  reduced our focus on the toy  industry  and  concentrated  our
efforts on the scrap  tire  market.  In an effort to  develop a viable  business
model to realize value for our  shareholders  we were  presented  with "roll-up"
opportunities with the scrap tire industry.  This strategy utilizes  proprietary
experience that we developed in our  business-to-business  Internet initiatives.
We have  identified  a strategy to focus all our future  resources  to develop a
business  model that  focuses on the  acquisition  of  smaller  privately  owned
regional operations in the scrap tire recycling industry.

In January  2001, we signed  letters of intent to acquire  three tire  recycling
companies  and a  logistics  company,  allowing  us  to  expand  our  technology
expertise  into a fast growth  industry.  During the  three-month  period  ended
September 30, 2001, letters of intent for two of these tire recycling  companies
and the logistics  company were terminated and accordingly  $135,864 of deposits
were  written  off. We are  currently  focusing  our efforts on  completing  the
acquisition  of one  remaining  tire  recycling  company  which we have advanced
$100,000  as a deposit.  There is no  assurance  that we will be  successful  in
securing the funding to complete this potential acquisition.

We will  continue  to incur  losses  until we are able to  complete  acquisition
within the tire  recycling  industry  that will  increase  sales to a sufficient
level to offset ongoing operating and administrative costs.

RESULTS OF OPERATIONS

Three months ended  September 30, 2001 compared to three months ended  September
30, 2000

Total revenue for the three months ended  September 30, 2001 was $(133) compared
to $92,031 for the same period of 2000,  which represents a decrease of $92,164.
We focused our efforts primarily on completing a tire recycling  acquisition and
securing financing which is the primary reason for our decrease in revenues from
the period ended September 30, 2001 as compared to the prior year period.

Gross  profit was $(133) and $42,603,  respectively,  for the three month period
ended  September 30, 2001,  as compared to the prior period ended  September 30,
2000, a decrease of $42,736. This decrease is primarily attributable the lack of
revenues during the three month period ended September 30, 2001.

For the three months ended  September  30, 2001,  total  selling  expenses  were
$11,786 as  compared  to $13,958 for the same  period of the  previous  year,  a
decrease  of $2,172.  This  decrease is the result of lower  marketing  expenses
relating to our logistic  supply  business as we focus more on entering the tire
recycling  business.  Total  general  and  administrative  expense for the three
months ended  September  30, 2001,  was $193,101 as compared to $628,648 for the
same period of the  previous  year,  a decrease of  $435,547.  This  decrease is
primarily due to the reduction of office  expenses during the three month period
ended September 30, 2001.

During the three-month  period ended  September 30, 2001,  letters of intent for
two tire  recycling  companies and the  logistics  company were  terminated  and
accordingly $135,864 of deposits were written off.

                                       8
<PAGE>

                            UPSIDE DEVELOPMENT, INC.

Interest  expense was $44,499 for the three month  period  ended  September  30,
2001,  as compared to $12,455 for the prior period ended  September 30, 2000, an
increase of $32,044.  This  increase is primarily  attributable  our increase in
notes payable during the three month period ended September 30, 2001.

We had a net  loss of  $385,921  for the  period  ended  September  30,  2001 as
compared to a loss of $621,118 for the same prior year period.  This decrease in
the operating loss over that of the preceding year period is the result of lower
general and administrative expenses.

The loss and loss per share were $385,921 and $0.01 per share respectively,  for
the three  months  ended  September  30, 2001 as compared to a loss and loss per
share of $621,118 and $0.05 respectively, for the same period in 2000. This loss
represents a 38% decrease over the loss experienced in the year ago quarter. The
weighted average shares outstanding for the quarter ended September 30, 2001 was
41,523,798  as compared to  12,932,163  for the  preceding  year  quarter  ended
September 30, 2000.

Nine months ended September 30, 2001 compared to nine months ended September 30,
2000

Total revenue for the nine months ended September 30, 2001 was $66,310  compared
to $92,441 for the same period of 2000,  which represents a decrease of $26,131.
This decrease was  primarily the result of lower sales  relating to our logistic
product  supply  business  and the sale of crumb  rubber.  Revenue  for the nine
months ended September 30, 2000 represented toy sales.

Gross  profit was $39,651 and $40,072,  respectively,  for the nine month period
ended  September 30, 2001,  as compared to the prior period ended  September 30,
2000, a decrease of $421.

For the nine months  ended  September  30, 2001,  total  selling  expenses  were
$33,898 as  compared  to $35,800 for the same  period of the  previous  year,  a
decrease of $1,902. Total general and administrative expense for the nine months
ended  September 30, 2001, was $1,458,932 as compared to $1,129,741 for the same
period of the previous year, an increase of $329,191. This increase is primarily
due to legal and  consulting  expenses  paid during the nine month  period ended
September 30, 2001.

During the nine-month period ended September 30, 2001, letters of intent for two
tire  recycling   companies  and  the  logistics  company  were  terminated  and
accordingly $135,864 of deposits were written off.

Interest  expense was  $246,898 and  $35,774,  respectively,  for the nine month
period ended September 30, 2001, as compared to the prior period ended September
30, 2000, an increase of $211,124.  This increase is primarily  attributable our
increase in notes payable during the nine month period ended September 30, 2001.

We had a net loss of  $1,859,066  for the period  ended  September  30,  2001 as
compared to a loss of $1,117,563  for the same prior year period.  This increase
in the  operating  loss of  $741,503  over  that of the  preceding  year  period
primarily  reflects  higher  general and  administrative  expenses  and interest
expense associated with notes payable during the current nine month period.

The loss and loss per share were  $1,859,066  and $0.06 per share  respectively,
for the nine months ended  September 30, 2001 as compared to a loss and loss per
share of $1,117,563 and $0.10  respectively,  for the same period in 2000.  This
loss represents a 66% increase over the loss experienced in the year ago period.
The weighted average shares  outstanding for the nine months ended September 30,
2001 was  29,787,173  as compared to 11,499,248  for the  preceding  year period
ended September 30, 2000.

                                       9
<PAGE>

                            UPSIDE DEVELOPMENT, INC.

LIQUIDITY AND CAPITAL RESOURCES

To  date,  the  Company  has  largely  funded  its  operations  and its  product
development  activities  with  funds  provided  by issuing  securities  and from
borrowings.  During the nine months ended September 30, 2001, the Company issued
$486,000  in the form of notes  payable  and  convertible  debt.  This  includes
$435,000  of notes  payable  issued  for cash and  $51,000 of  accounts  payable
converted to notes payable.

Net cash used in operating  activities  for the nine months ended  September 30,
2001 was  $241,990  compared  to net cash used of  $595,916  for the nine months
ended September 30, 2000. This decrease in cash used by operating  activities is
primarily due to increases in accounts  payable and accrued  expenses as well as
the issuance of common stock for payment of legal and consulting fees.

Cash used in investing  activities for the nine months ended  September 30, 2001
and 2000 was $243,364 and $82,759, respectively. This increase reflects deposits
made  pursuant  to letters of intent  signed  with one tire  recycling  company.
Deposits  of $135,864  were  written  off during the three  month  period  ended
September 30, 2001 pursuant to terminated letters of intent.

Cash provided by financing  activities  for the nine months ended  September 30,
2001 was  $514,279 as  compared to cash  provided  by  financing  activities  of
$673,959 for the nine months ended September 30, 2000. During the recent period,
we issued notes payable that generated  proceeds of $435,000 to provide  working
capital  and to support  our  expenditures.  In the year ago  period,  we issued
common stock with an aggregate value of $676,897.

As of  September  30,  2001,  the Company had a net working  capital  deficit of
approximately $1,350,000.  The Company is not presently profitable and continues
to fund itself from the proceeds of securities  placements,  notes payable,  and
convertible debt.

We do not presently  have  sufficient  cash to operate for more than the next 90
days. We will need capital to development our scrap tire recycling business.  We
will need this capital to provide for our anticipated working capital needs over
the next twelve months.  We are presently seeking $500,000 in equity to allow us
to sustain ourselves.

 We cannot  provide any  assurance  that we will be  successful  in raising such
capital as such  undertakings are difficult to complete.  We are optimistic that
we will be successful in obtaining future financing.


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.
         -----------------

The Company has potential  litigation  with Kashayar Santi Mehdi  Pashakan.  The
potential  legal  action  results from Mr.  Pashakan  failure to comply with the
Preferred   Stockholder's   Agreement  entered  into  by  the  parties.   Upside
Development has advised Mr. Pashakan that the agreement has been voided,  due to
his failure to fulfill the obligations contained in the agreement,  and that all
shares issued pursuant to the agreement have been canceled. If the matter is not
amicably resolved shortly, Upside Development intends to commence a legal action
against Mr. Pashakan.

                                       10

<PAGE>

                            UPSIDE DEVELOPMENT, INC.


Item 2.  Change in Securities and Use of Proceeds.
         -----------------------------------------

During the nine month  period  ended  September  30,  2001,  the Company  issued
5,676,850 shares of restricted  common stock in satisfaction of notes payable of
$170,543, including interest of $24,992.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,625,000 shares of restricted common stock in satisfaction of debt of $147,330.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,482,000  shares of restricted  common stock valued at $134,100 for the payment
of offering costs.

During the nine month  period  ended  September  30,  2001,  the Company  issued
$435,000 of notes  payable.  In connection  with the notes,  the Company  issued
2,035,500  shares of  restricted  common stock valued at $65,525 and  detachable
warrants to purchase  1,312,500  shares of  restricted  common  stock  valued at
$42,295.  These  amounts  have been  recorded as a discount on the notes and are
being amortized over the life of the note.

During the nine month  period  ended  September  30,  2001,  the Company  issued
11,703,750 shares of restricted common stock for services valued at $801,317.

During the nine month period ended  September 30, 2001,  the Company  deemed the
subscription receivable in the amount of $123,500 uncollectable. The balance was
written off against  additional  paid-in capital in the  accompanying  financial
statements.

During the nine month  period  ended  September  30,  2001,  the Company  issued
4,000,000 shares of preferred stock for services valued at $400.

During the nine month period ended September 30, 2001, David Bezalel resigned as
the Company's Director and Chief Operating Officer.  Mr. Bezalel returned to the
Company options to purchase 2,500,000 shares of the Company's Common Stock at an
exercise price of $.15 per share. In exchange,  Mr. Bezalel was issued an option
to purchase  1,000,000  shares of the  Company's  Common Stock which the Company
expects to be exercised  within one year at a price of -0-.  The Company  valued
the options at $30,000.  In addition,  the 1,000,000  shares of preferred  stock
issued  to Mr.  Bezalel  were  cancelled  during  the nine  month  period  ended
September 30, 2001.

During the nine month  period  ended  September  30,  2001,  the Company  issued
2,087,000 shares of restricted common stock for cash of $102,625.

During the nine month period ended September 30,2001, the Company entered into a
Preferred  Stockholder's  Agreement  dated  August  1,  2001  and  a  Consulting
Agreement  dated June 1, 2001 with  Khashayer  Santi  Mehdi  Pashakan  that were
terminated on August 30, 2001. Accordingly, the Company has issued stop transfer
instructions on the shares issued pursuant to these agreements.


Item 3.  Defaults Upon Senior Securities.
         --------------------------------

The Company is currently in default on  approximately  $432,000 of notes payable
principal and $188,000 in interest in arrears on these notes.

                                       11
<PAGE>


                            UPSIDE DEVELOPMENT, INC.

SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1934, the Registrant had
duly caused the report to be signed on its behalf by the  undersigned  thereunto
duly authorized.


                                                    Upside Development, Inc.

Dated    1/11/2002

                                                    /s/ Michael Porter
                                                   -----------------------------
                                                    Michael Porter, President,
                                                    Chief Executive Officer,
                                                    Chief Financial Officer,
                                                    Chief Accounting Officer