SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10 QSB/A
                                   -------------

(Mark One)

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

                         For the quarterly period ended
                                January 31, 2002

[ ]            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                           For the transition period from
                                    to


                         Commission File Number 0-24801

               Delaware                                   82-0506425
(State or other Jurisdiction of incorporation) (IRS Employer Identification No.)

AQUA VIE BEVERAGE CORPORATION
(Exact Name of Registrant as Specified in its Charter)

P.O. Box 6759  333 South Main Street Ketchum, Idaho 83340
(Address of principal executive offices)

208/622-7792
(Registrant's telephone number)

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the last 12 months (or for such shorter  period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.

YES [ ]         NO [X]            As of the quarter ending October 31, 2001 the
                                  Registrant  has  been  subject  to the  filing
                                  requirements of the Securities Act of 1934 for
                                  less than 90 days.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date.

Class                                        Outstanding at January 31, 2002

Common Stock, Par value $0.001                       65,313,173


                                       1
<PAGE>

Item 1. Financial Statements:

<TABLE>
<CAPTION>

                         AQUA VIE BEVERAGE CORPORATION
                                 Balance Sheet

                                                                 January 31,   July 31,
                                                                   2002          2001
                                                                (Unaudited)
                                                                (Restated)
                                                               -----------    -----------

ASSETS

<S>                                                             <C>            <C>
    CURRENT ASSETS
      Cash                                                      $       370    $     3,608
      Accounts receivable                                           128,346         82,776
      Inventory                                                      41,050        155,372
      Prepaid and other assets                                       22,787         24,434
                                                                -----------    -----------
        Total Current Assets                                        192,553        266,190
                                                                -----------    -----------

    PROPERTY AND EQUIPMENT
      Equipment                                                     201,608        201,608
      Less accumulated depreciation                                (117,919)       (85,615)
                                                                -----------    -----------
        Total Property and Equipment                                 83,689        115,993
                                                                -----------    -----------

    OTHER ASSETS
      Intangibles                                                   338,253        305,040
      Less accumulated amortization                                (100,077)       (58,159)
                                                                -----------    -----------
        Total Other Assets                                          238,176        246,881
                                                                -----------    -----------

    TOTAL ASSETS                                                $   514,418    $   629,064
                                                                ===========    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

    CURRENT LIABILITIES
      Accounts payable                                          $   329,506    $   362,312
      Bank overdraft                                                 16,687         52,412
      Settlements payable                                            10,000         10,000
      Notes payable - current                                       455,135        455,135
      Accrued expenses                                              143,046         64,101
      Loan from related party                                       168,238        128,520
                                                                -----------    -----------
        Total Current Liabilities                                 1,122,612      1,072,480
                                                                -----------    -----------

    LONG-TERM DEBT
      Notes payable - net of current portion                          9,908         14,632
                                                                -----------    -----------

    COMMITMENTS AND CONTINGENCIES                                      --             --
                                                                -----------    -----------

    STOCKHOLDERS' DEFICIT
      Preferred stock, Series A, B, C, D, E and F, $0.001 par
        value, 1,000,000 shares authorized,15,074 and 15,074
        shares issued and outstanding, respectively                      15             15
      Common stock, $0.001 par value, 120,000,000 shares
        authorized, 65,313,173 and 58,253,173 shares
        issued and outstanding, respectively                         65,313         58,253
      Additional paid-in capital                                  5,933,607      5,562,162
      Subscriptions receivable                                     (176,977)      (176,977)
      Accumulated deficit                                        (6,440,060)    (5,901,501)
                                                                -----------    -----------
        Total Stockholders' Deficit                                (618,102)      (458,048)
                                                                -----------    -----------

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                 $   514,418    $   629,064
                                                                ===========    ===========
</TABLE>

                  See notes to interim financial statements.

                                       2

<PAGE>

<TABLE>
<CAPTION>

                          AQUA VIE BEVERAGE CORPORATION
                             Statement of Operations
                                  (Unaudited)
                                                       Three Months Ended             Six Months Ended
                                                          January 31,                    January 31,
                                                  --------------------------    --------------------------
                                                      2002           2001          2002            2001
                                                    (Restated)                  (Restated)
                                                  -----------    -----------    -----------    -----------

<S>                                               <C>            <C>            <C>            <C>
NET REVENUES                                      $    76,064    $   563,133    $   122,922    $   725,361

COST OF GOODS SOLD                                     90,942        418,986        172,642        556,386
                                                  -----------    -----------    -----------    -----------

GROSS PROFIT (LOSS)                                   (14,878)       144,147        (49,720)       168,975
                                                  -----------    -----------    -----------    -----------

GENERAL AND ADMINISTRATIVE EXPENSES
      Promotion and advertising                         9,132         64,900         77,288        325,455
      Legal and accounting                             12,900        714,539         59,497      1,254,628
      Other general and administrative expenses        85,504         18,590        331,517         38,426
                                                  -----------    -----------    -----------    -----------
           Total expenses                             107,536        798,029        468,302      1,618,509
                                                  -----------    -----------    -----------    -----------

LOSS FROM OPERATIONS                                 (122,414)      (653,882)      (518,022)    (1,449,534)

OTHER EXPENSES
      Interest expense                                 (9,881)       (17,433)       (20,537)       (35,028)
                                                  -----------    -----------    -----------    -----------

LOSS BEFORE EXTRAORDINARY ITEMS                      (132,295)      (671,315)      (538,559)    (1,484,562)

EXTRAORDINARY ITEMS
      Forgiveness of debt and accrued payroll            --          499,968           --          499,968
                                                  -----------    -----------    -----------    -----------

LOSS BEFORE TAXES                                    (132,295)      (171,347)      (538,559)      (984,594)

INCOME TAXES                                             --             --             --             --
                                                  -----------    -----------    -----------    -----------

NET LOSS                                          $  (132,295)   $  (171,347)   $  (538,559)   $  (984,594)
                                                  ===========    ===========    ===========    ===========

NET LOSS PER COMMON SHARE
      BASIC AND DILUTED                           $      Nil     $       Nil    $     (0.01)  $      (0.03)
                                                  ===========    ===========    ===========    ===========

WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING, BASIC AND DILUTED        65,313,173     35,441,851     64,500,456     33,948,836
                                                  ===========    ===========    ===========    ===========
</TABLE>

                  See notes to interim financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>
                          AQAU VIE BEVERAGE CORPORATION
                       Statement of stockholders' Deficit
                                 (SPLIT TABLE)

                              Preferred, series A,B,C, D, E and F       Common Stock         Additional
                                      Number                       Number                      Paid-in     Subsctiption
                                    of shares       Amount        of shares     Amount         Capital      Receivable
                                   -----------    -----------    -----------   -----------   -----------    -----------
<S>                                     <C>      <C>             <C>          <C>            <C>           <C>
Balance, July 31, 2000                   7,410    $         7     30,811,408   $    30,811   $ 2,422,236    $      --
Issuance of common stock
     for services at prices
     ranging from $0.02
      to $0.42                            --             --        5,335,000         5,335       640,783           --
Issuance of common stock
     for debt conversion at
     $0.40 per share                      --             --          850,000           850       340,000           --
Conversion of preferred
     Series A to common
     stock                              (1,368)            (2)     4,489,123         4,489        (4,487)          --
Conversion of preferred
     Series B to common
     stock                              (4,608)            (4)    16,567,642        16,568       (16,564)          --
Conversion of preferred
     Series C to common
     stock                                (200)          --          200,000           200          (200)          --
Issuance of preferred Series
     D for cash and receivable
     at $100 per share                  12,000             12           --            --       1,199,988       (176,952)
Issuance of preferred Series
     E for cash at $100
     per share                             600              1           --            --          59,999            (25)
Issuance of preferred Series
     F for cash at $100
     per share                           1,240              1           --            --         123,999           --
Forgiveness of debt and
     accrued payroll by
     officer                              --             --             --            --         796,408           --
Net loss for the year ended
     July 31, 2001                        --             --             --            --            --             --
                                   -----------    -----------    -----------   -----------   -----------    -----------
Balance, July 31, 2001                  15,074             15     58,253,173        58,253     5,562,162       (176,977)
Issuance of common stock                  --             --        6,250,000         6,250       247,645           --
     for cash at $0.04 per share
Stock issued for services
     at $0.08 per share                   --             --          810,000           810        63,800           --
Forgiveness of payroll by
     officer                              --             --             --            --          60,000           --
Net loss for the six months
     ended January 31, 2002
     (Restated)                           --             --             --            --            --             --
                                   -----------    -----------    -----------   -----------   -----------    -----------
Balance, January 31, 2002
     (Unaudited) (Restated)             15,074    $        15     65,313,173   $    65,313   $ 5,933,607    $  (176,977)
                                   ===========    ===========    ===========   ===========   ===========    ===========
</TABLE>

                                   Accumulated
                                    Deficit          Total
                                   -----------    -----------
Balance, July 31, 2000            $(3,654,081)   $(1,201,027)
Issuance of common stock
     for services at prices
     ranging from $0.02
      to $0.42                           --          646,118
Issuance of common stock
     for debt conversion at
     $0.40 per share                     --          340,850
Conversion of preferred
     Series A to common
     stock                               --             --
Conversion of preferred
     Series B to common
     stock                               --             --
Conversion of preferred
     Series C to common
     stock                               --             --
Issuance of preferred Series
     D for cash and receivabl
     at $100 per share                   --        1,023,048
Issuance of preferred Series
     E for cash at $100
     per share                           --           59,975
Issuance of preferred Series
     F for cash at $100
     per share                           --          124,000
Forgiveness of debt and
     accrued payroll by
     officer                             --          796,408
Net loss for the year ended
     July 31, 2001                 (2,247,420)    (2,247,420)
                                    -----------    -----------
Balance, July 31, 2001             (5,901,501)      (458,048)
Issuance of common stock
     for cash at $0.04 per share         --          253,895
Stock issued for services
     at $0.08 per share                  --           64,610
Forgiveness of payroll by
     officer                             --           60,000
Net loss for the six months
     ended January 31, 2002
     (Restated)                      (538,559)      (538,559)
                                   -----------    -----------
Balance, January 31, 2002
     (Unaudited) (Restated)       $(6,440,060)   $  (618,102)
                                    ===========    ===========
                                       4
<PAGE>

<TABLE>
<CAPTION>

                          AQUA VIE BEVERAGE CORPORATION
                                   Cash Flows
                                  (Unaudited)
                                                                      Six Months Ended
                                                                        January 31,
                                                                  -----------------------
                                                                     2002         2001
                                                                  (Restated)
                                                                  ---------    ---------

<S>                                                              <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                   $(538,559)   $(984,594)
      Adjustments to reconcile net loss to net cash
           used by operating activities:
                Depreciation and amortization                       74,222       59,286
                Stock issued for services                           64,610      344,578
                Forgiveness of debt                                   --        499,998
                Services charged to additional paid-in capital      60,000         --
                Prior year expense in retained earnings               --         11,400
      Changes in assets and liabilities:
                Accounts receivable                                (45,570)     (73,923)
                Note receivable                                       --       (442,938)
                Inventory                                          114,322      149,629
                Prepaid expenses                                     1,647       69,392
                Accounts payable                                   (32,806)     187,658
                Shareholder loans payable                             --        324,000
                Accrued expenses                                    78,945     (416,009)
                Loans from related parties                          39,718      135,254
                                                                 ---------    ---------
           Net cash used by operating activities                  (183,471)    (136,269)
                                                                 ---------    ---------

CASH USED BY INVESTING ACTIVITIES:
      Purchase of intangibles                                      (33,213)      (7,312)
      Increase in intangible assets for slotting                      --        (67,907)
                                                                 ---------    ---------
           Net cash used by investing activities                   (33,213)     (75,219)
                                                                 ---------    ---------

CASH PROVIDED BY FINANCING ACTIVITIES
      Sale of common stock                                         253,895         --
      Sale of preferred stock                                         --        296,685
      Debt converted to stock                                         --        340,850
      Bank overdraft                                               (35,725)      55,688
      Net payments on long-term debt                                (4,724)     (18,362)
      Payments to notes payable                                       --       (474,500)
                                                                 ---------    ---------
           Net cash provided by financing activities               213,446      200,361
                                                                 ---------    ---------

INCREASE (DECREASE) IN CASH                                         (3,238)     (11,127)

BEGINNING BALANCE                                                    3,608       11,127
                                                                 ---------    ---------

ENDING BALANCE                                                   $     370    $    --
                                                                 =========    =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
      Income taxes paid                                          $    --      $    --
      Interest paid                                              $   1,513    $  35,028

NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Debt converted to stock                                    $    --      $ 340,850
      Common stock issued for services                           $  64,610    $ 344,578
      Forgiveness of debt and accrued payroll                    $  60,000    $ 499,998
</TABLE>

                                       5
<PAGE>


CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (Restated)
                                January 31, 2002


NOTE 1 - BASIS OF PRESENTATION

The  foregoing  unaudited  interim  financial  statements  have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim  financial  information  and with the  instructions  to Form
10-QSB  and  Regulation  S-B as  promulgated  by  the  Securities  and  Exchange
Commission.  Accordingly,  these financial  statements do not include all of the
disclosures  required by accounting  principles generally accepted in the United
States of America for complete  financial  statements.  These unaudited  interim
financial  statements  should be read in conjunction with the audited  financial
statements for the period ended July 31, 2001. In the opinion of management, the
unaudited interim financial statements furnished herein include all adjustments,
all of which are of a normal recurring nature, necessary for a fair statement of
the results for the interim period presented.

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires the use of estimates
and  assumptions  that affect the  reported  amounts of assets and  liabilities,
disclosure of contingent  assets and  liabilities  known to exist as of the date
the financial statements are published, and the reported amounts of revenues and
expenses  during  the  reporting  period.  Uncertainties  with  respect  to such
estimates  and  assumptions  are inherent in the  preparation  of the  Company's
financial statements;  accordingly, it is possible that the actual results could
differ from these estimates and assumptions that could have a material effect on
the  reported  amounts  of the  Company's  financial  position  and  results  of
operations.

Operating  results for the three-month  and six-month  periods ended January 31,
2002 are not necessarily  indicative of the results that may be expected for the
year ending July 31, 2002.


NOTE 2 - RESTATEMENT AND CORRECTION OF AN ERROR

The Company's  financial  statements  for the year ended July 31, 2001 have been
restated to reflect the correction of errors as follows.

1.        Settlements   payable   have  been  accrued  to  reflect  an  expected
          settlement on a breach of contract claim for $10,000.

2.        Forgiveness of advances and payroll by the Company's  chief  executive
          officer is shown as a capital  contribution which increased additional
          paid-in  capital by $796,408  and  expenses by $120,000 for salary not
          recognized in the last six months of the Company's fiscal year.
                                       6
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (Restated)
                                January 31, 2002

NOTE 2 - RESTATEMENT AND CORRECTION OF AN ERROR

The effect of these corrections was restated financial statements, which thereby
increased  net loss for the year ended July 31, 2001 by $806,408,  and increased
liabilities by $10,000.

The Company's  financial  statements  for the period ended January 31, 2002 have
been  restated  to  reflect a  reduction  in cash in the  amount of  $15,787,  a
reduction  in  inventory  in the amount of $48,584,  a reduction  in prepaid and
other assets of $7,053 an increase in net  intangibles  in the amount of $3,999,
an increase in property and  equipment  in the amount of $16,152,  a decrease in
deposits in the amount of $22,737, accrual of $60,000 payroll during the quarter
ended  January 31, 2001 by the Company's  chief  executive  officer,  additional
accounts  payable in the amount of $30,785,  an increase in notes payable in the
amount of $3,469,  a bank overdraft in the amount of $16,687 and  forgiveness of
payroll by the Company's chief  executive  officer in the amount of $60,000 as a
capital contribution.

The effect of these corrections was restated financial statements, which thereby
increased net loss the six months ended  January 31, 2002 by $45,490,  decreased
total assets by $74,012 and increased liabilities by $103,530.


NOTE 3 - ADDITIONAL COMMENTS

During March 2001,  the Company  entered into a shipping and security  agreement
with a central California  contract  manufacturer.  The agreements  provided the
Company  with  production  financing  and  inventory  expansion  of its beverage
products,  interest-free  and  without a factoring  fee.  Under the terms of the
agreement,  the Company granted to the contract manufacturer a security interest
in the Company's inventory and receivables. Based on that agreement, the Company
began  an  aggressive   campaign  to  place  its  products  in  California-based
supermarket chains by paying and/or incurring slotting fees, supporting sampling
programs, and other marketing activities.

In April 2001, the contract manufacturer commenced production under the terms of
the shipping and security  agreement and began shipping product to major grocery
chain  accounts in  California,  Arizona and Nevada.  Subsequently,  the Company
increased its sales and marketing efforts, and slotting fee commitments intended
to support an expanded sales program. The packer, which was experiencing quality
assurance  problems,  failed to sustain  production  levels adequate to meet the
sales levels  projected by the Company  notwithstanding  the marketing  expenses
incurred by the Company, and the packer continued in its failure to resolve past
account  issues  arising over  defective  products.  This led to a demand by the
Company for an accounting resulting in a refusal


NOTE 3 - ADDITIONAL COMMENTS (Continued)

by the  packer of any  further  production  or  shipment  of  inventory  already
produced  until  the  Company  executed  an  indemnity  in the  packer's  favor.
Management  held steadfast in its belief that its product quality and purity are
critical and not subject to  compromise.  This dispute had a negative  impact on
the Company by creating uncertainty relative to the Company's ability to deliver
product to fill pending and projected  orders,  for which the slotting  payments
and marketing  efforts had already been undertaken.  In an effort to resolve the
dispute, the Company entered into a new production agreement, which provided for
payments to be made directly to the Company in settlement of the claims and also
effected a termination of the factoring agreement.
                                       7
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (Restated)
                                January 31, 2002

Subject to  third-party  quality  assurance  testing,  shipping  and  production
resumed in July  under the new  agreement.  Management  is  confident  that with
certain  modifications  having  been  made  to  the  manufacturing  process  and
production  line,  and with  strict  adherence  to the  quality  assurance,  the
aforementioned   issues  have  been  resolved  and  the  packer  is  capable  of
maintaining production levels and consistent quality.

Notwithstanding  the impact on the Company's sales and marketing  efforts by the
packer's  failure  to perform as agreed,  and the  consequent  loss of  saleable
inventory  under the  shipping  and  security  agreement  to satisfy  orders and
proposed  orders  during the  period  from June to August  2001 of the  dispute,
through  additional  slotting fee commitments and other arrangements made by the
Company,  the  Company  was able to place its  products on the shelves of retail
grocery chains, and to obtain additional approvals.

Management believes that these placements and approvals provide a major foothold
and a foundation  for  regional  expansion  into 2002 as the Company  expects to
begin a rapid expansion of its inventory  production and its sales and marketing
programs during the current fiscal year.
                                       8
<PAGE>
Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

During its first three years of existence (from inception to July 31, 2001), the
Company accumulated a deficit of $5,901,501.  In the subsequent six months ended
January 31, 2002,  the Company's  accumulated  deficit grew to $6,440,060 as the
Company's  marketing  and  executive  expenses  increased,  creating a quarterly
operating loss of $132,295.  At January 31, 2002, the Company's  total assets of
$514,418 were lower than the $629,064 reported at its July 31, 2001 year-end The
Company's  current  liabilities  increased  slightly from $1,072,480 at July 31,
2001 to $1,122,612 at January 31, 2002.

The Company entered into an aggressive marketing campaign in the Spring of 2001,
which substantially  increased its General and Administrative expenses for sales
personnel  and  marketing  expenses for slotting fees and related items based on
the  production  financing  agreement  made  with its  contract  packer  in late
February 2001 (see Note 3 to the  Financials).  These  expenses were incurred in
the  anticipation  of a rapid  increase  in sales and  revenues  to support  the
expenditures. The dispute which arose with the packer, although resolved in late
July, 2001, did not provide  compensation for the loss of revenues  projected by
management  for  that  period,  and  also  reduced  the  sales  activity  due to
uncertainties over supply.  Management had proposed to address these problems in
early  September 2001 but was unable to adequately  redress the issue due to the
September 11th event and its impact on retail sales.

 Aqua Vie continues to offer  information  about its products and a subscription
service on its Internet  site.  Aqua Vie's revenue from Internet  sales, a small
portion of current  revenue,  is  projected  to be an  important  part of future
revenue.  Management  intends  to  expand  and  develop  marketing  of Aqua  Vie
beverages through the Internet,  and redesign of the Company's  Internet site to
support the Company's  marketing  plan is currently  underway.  Given Aqua Vie's
market distribution  presence and order interest by major customers,  the funded
slotting fee arrangements with major grocery and convenience  store chains,  its
present relationship with its co-packer, and the present production and overhead
cost structure,  profitability  is believed  achievable in 2002,  given adequate
bridge financing.

The immediate solution to profitability in this early growth scenario rests with
the Company's ability to obtain bridge financing  adequate to meet the increased
product  demand  available  within the  account  base with which the Company has
already  secured  shelf space.  At the same time,  the company will  continue to
build brand awareness through immediate execution of consumer marketing programs
postponed  during 2001,  including  radio and  newspaper  advertising  in select
markets,  which is expected to  commence  during the first half of the  calendar
year.
                                       9
<PAGE>

The Company  began a program to seek  production  financing  shortly  before the
September  11th event but was unable to  finalize  commitments  with  interested
investors  at that time due to the market  uncertainties  which  arose.  In late
January, the company entered into an agreement in principle with a venture group
to provide  $1.2  million in bridge  capital for the  company's  operations  and
inventory  requirements for 2002; however,  to date,  arrangements have not been
finalized.  The  aforementioned  delay in finalization of financing  resulted in
lower  production and inventory  levels,  and a  postponement  of additional new
product shipments until early March 2002.

 In the future Aqua Vie expects to improve  margins  through  economies of scale
and by  introducing  new products that  management  believes will support higher
gross margins even in today's  competitive market  environment.  The first to be
introduced  will  be a line  of  Hydrators  especially  designed  for  children.
Subsequently,   the  Company  plans  to  follow  with  a  multi-flavor  line  of
nonalcoholic  wines made from spring water.  These  nonalcoholic wines have been
designed to provide all of the sensual  qualities of fine wines and  champagnes,
without the presence of alcohol or preservatives.

Aqua Vie's product line contains no directly patented or patentable  features or
components.  Copyrighting,  trade marking and the use of trade secret techniques
and     formulations    are    employed     extensively.     Aqua    Vie    uses
non-disclosure/non-compete  agreements with  employees,  suppliers and co-packer
bottlers.

At present  the Company has not issued any  licenses,  franchises,  concessions,
royalty  agreements or labor  contracts,  though future  development may include
such actions being incorporated into the corporate strategy.

 FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company's  revenues of  approximately  $76,000 for the quarter ended January
31, 2002 were a decrease  from the  $563,133  of  revenues in the  corresponding
second  quarter of the prior fiscal year, due to the time lost in the resolution
of the processor's  quality assurance problem,  the resultant  temporary lack of
inventory  available for sale, the consequent delay of advertising and marketing
programs,  and a postponement of final  arrangements  for additional  funding in
September,  delayed because of events of September 11th. Discussions are ongoing
with the same third parties concerning this additional funding.


Because it has sustained  recurring losses from  operations,  the Company cannot
assure  that it will be able to fully  carry out its plans as  budgeted  without
additional  operating  capital.  At January 31,  2002,  the Company had negative
working  capital of  $930,059,  although  this amount  represents  a decrease in
liquidity and capital  resources from its negative  working capital  position of
$806,290  at July 31,  2001.  The  decrease  is  principally  attributable  to a
decrease  in current  Assets.  In the six months  ended  January 31,  2002,  the
Company  funded a portion of its  operations  from the issuance of common stock,
valued at $253,895.

 The Company  anticipates a substantial use of cash for the foreseeable  future.
In particular,  management of the Company  intends  substantial  expenditures in
connection with production of additional  inventory for the planned  increase in
sales,  expansion of the Company's marketing  organization,  payment of slotting
fees to obtain  shelf  space  with new  retailers,  and  quality  assurance  and
distribution management.
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<PAGE>

 The  availability  of  sufficient  future  funds for Aqua Vie will  depend to a
significant  extent on the growth in market  acceptance of the Company's primary
product  line by retail  chains.  The Company does not expect to incur any major
capital  expenditures  in the next year.  Aqua  Vie's  management  expects  that
additional  funding  for  operating  expenditures  will be  available  from  the
issuance of debt and/or equity securities,  as needed. There can be no assurance
whether or not such financing will be available on satisfactory terms.

RESULTS OF OPERATIONS

Aqua Vie commenced  operations in 1998 and has a limited  history of operations,
which to date have not been profitable.  Its operations are subject to the risks
and  competition  inherent in the  establishment  of a  relatively  new business
enterprise. Aqua Vie is currently operating at a loss. The Company's three month
revenues of  approximately  $76,000  were less than the  comparable  three-month
period of the prior fiscal year.

Though sales to date have not been  sufficient to cover the costs of operations,
profitability is believed  achievable  assuming inventory levels are adequate to
meet demand within the Company's  existing  customer  base. For the three months
ended January 31, 2002, the Company's  sales  produced  negative gross profit of
($14,878)  which  compares with the gross profit of $144,147 for the  comparable
three months of the prior fiscal year.

 Operating expenses were $107,536 for the three months January 31, 2002 and were
$798,029 for the comparable  period of the prior year. The  year-to-year  change
principally  reflects a decrease in  marketing  expenses  during the most recent
quarter  resulting  from the  Company's  decision to postpone  its  advertising,
marketing and promotional activities pending the development of higher inventory
levels.

 During this same  year-to-year  time frame, the decrease in operating  expenses
during the quarter ended  January 31, 2002 also reflects  reduction in legal and
professional expenses.  While Aqua Vie continued to operate at a loss during the
most  recent  quarter,  given  inventories  adequate  to support  its  marketing
efforts,  the  Company's  ability to generate  higher  revenue and realize a net
profit from operations remains primarily dependent upon the effectiveness of its
marketing  efforts in  generating  sales of its line of  flavored  spring  water
products.

 In the quarter  ending  January 31, 2002,  the Company's net loss of ($132,295)
for the three months ended  January 31, 2002 resulted in a net loss per share of
($0.002) for the quarter.  This  contrasts with a net loss of ($171,347) for the
three months ended January 31, 2001, which posted a per share loss of ($0.004).
                                       11
<PAGE>

PART II - - OTHER INFORMATION

ITEM  1.  LEGAL PROCEEDINGS

There are no substantial legal  proceedings  against the Company and the Company
is unaware  of any such  meaningful  proceedings  contemplated  against  it. The
Company anticipates that in the future it will have conflicts as regards certain
Accounts Payable for services invoiced but not adequately  performed and for the
use of selected names for products and product lines in selected market places.

ITEM 2.   CHANGES IN SECURITIES

Recent Sales of unregistered securities.

Sales  of   unregistered   securities   were  pursuant  to  the  exemption  from
registration  under the  Securities  Act of 1933  contained  in Section 4(2) and
Regulations  promulgated  thereunder.  During the three months ended January 31,
2001, the Company  issued 824,000 shares of common stock for services  valued at
$29,000.

ITEM 3.   DEFAULTS ON SENIOR SECURITIES

Not applicable.

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

Not applicable.
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<PAGE>

ITEM 5.   OTHER INFORMATION

Not applicable.

CAUTIONARY  STATEMENT FOR PURPOSES OF THE SAFE HARBOR  PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Statements in this discussion  which are not historical  facts may be considered
forward-looking  statements  within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. The words "believe",  "expect",  "anticipate",
"estimate" and similar  expressions  identify  forward looking  statements.  Any
forward  looking  statements  involve risks and  uncertainties  that could cause
actual  events or  results  to differ,  perhaps  materially,  from the events or
results  described in forward looking  statements.  Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
their dates.  The Company  undertakes no obligation to publicly update or revise
any forward looking statements,  whether as a result of new information,  future
events  or  otherwise.  Risks  associated  with the  Company's  forward  looking
statements include,  but are not limited to, risks associated with the Company's
history of losses and uncertain profitability, need for market acceptance of the
HYDRATROR(TM)  product  line,  the  Company's  reliance at this time on a single
product line,  reliance on the market  distribution  and retail system and risks
associated with the Company's international  operations,  currency fluctuations,
the risk of new and different  legal and regulatory  requirements,  governmental
approvals,  tariffs and trade barriers,  risks  associated with  competition and
technological and product  innovation by competitors,  dependence on proprietary
formulas,  general economic  conditions and conditions in the beverage industry,
reliance  on key  management,  limited  manufacturing  production  history  with
respect to the aseptic  bottling  system,  maintenance of quality control by the
contract  bottler,  dependence  on  key  suppliers,  future  capital  needs  and
uncertainty of additional  financing,  potential recalls and product  liability,
dilution,  effects of outstanding  convertible  debentures and preferred  stock,
limited public market,  liquidity,  possible volatility of stock price, recently
adopted new listing standards for NASDAQ securities and environmental matters.
                                       13
<PAGE>


                                    AQUA VIE BEVERAGE CORPORATION
                                              (Registrant)


Date  June 27, 2002               By: /s/ Thomas J. Gillespie
                                    ---------------------------
                                          Thomas J. Gillespie
                                          Chief Executive Officer
                                          & President


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