SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                  FORM 10 QSB
                                  -----------

(Mark One)

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

                         For the quarterly period ended
                                October 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                            (IRS Employer
    of incorporation)                                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 [X]        NO [ ]

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 November 30, 2002
------------------------------               -------------------------------
Common Stock, Par value $0.001                          7,732,223


                                        1
<PAGE>

Item 1. Financial Statements:

<TABLE>
<CAPTION>

                          AQUA VIE BEVERAGE CORPORATION
                                  Balance Sheet
                             As of October 31, 2002


                                                                       October 31,            July 31,
                                                                           2002                 2002
                                                                       (Unaudited)
                                                                     ----------------        --------------
ASSETS
      Current Assets
<S>                                                                  <C>                     <C>
              Cash                                                   $         1,642         $       2,179
              Accounts Receivable                                             15,707                 6,471
              Inventory                                                      106,425               120,006
              Prepaid & Other Assets                                           6,737                 6,737
                                                                     ----------------        --------------
                   Total Current Assets                                      130,511               135,393
                                                                     ----------------        --------------
      Property & Equipment
          Equipment                                                          201,608               201,608
          Less Accumulated Depreciation                                     (170,432)             (150,222)
                                                                     ----------------        --------------
               Total Property and Equipment                                   31,176                51,386
                                                                     ----------------        --------------
      Other Assets
          Intangibles                                                        281,164               281,164
          Less Accumulated Amortization                                     (125,583)             (105,433)
               Total Other Assets                                            155,581               175,731
                                                                     ----------------        --------------
      Total Assets                                                   $       317,268         $     362,510
                                                                     ================        ==============

LIABILITIES AND STOCKHOLDERS' DEFICIT
      Current Liabilities
          Accounts Payable                                           $       378,854         $     374,322
          Bank Overdraft                                                      36,203                16,388
          Settlements Payable                                                 36,000                36,000
          Notes Payable - Current                                            417,824               218,422
          Accrued Expenses                                                    60,277                87,367
          Accrued Compensation, related party                                240,000               180,000
          Loan from related party                                             97,451               156,325
                                                                     ----------------        --------------
              Total Current Liabilities                                    1,266,609             1,068,824
                                                                     ----------------        --------------
          LONG-TERM DEBT
                  Notes payable - net of current portion                      10,047                10,928
                                                                     ----------------        --------------

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

          STOCKHOLDER'S DEFICIT
             Preferred stock, Series A, B, C, D, E and F, $0.001 par
                value, 1,001,000 shares authorized, 12886 and 12,941
                shares issued and outstanding, respectively                       13                    13
             Common stock, $0.001 par value, 120,000,000 shares
                authorized, 7,112,065 and 5,337,461 shares
                issued and outstanding, respectively                           7,112                 5,337
             Additional paid-in capital                                    7,172,407             7,008,584
             Subscriptions receivable                                           --                    --
             Accumulated deficit                                          (8,138,920)           (7,731,176)
                                                                     ----------------        --------------
                  Total Stockholders' Deficit                               (959,388)             (717,24@)
                                                                     ----------------        --------------
          TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                $       317,268         $     362,510
                                                                     ================        ==============
</TABLE>

                   See notes to interim financial statements.


                                       2
<PAGE>

<TABLE>
<CAPTION>
                          AQUA VIE BEVERAGE CORPORATION
                             Statement of Operations

                                                                                       Three Months Ended
                                                                                          October 31,
                                                                           ------------------------------------------
                                                                                    2002                  2001
                                                                           --------------------  --------------------
<S>                                                                        <C>                   <C>
NET REVENUES                                                               $            26,420   $            46,858

COST OF GOODS SOLD                                                                      26,080                81,700
                                                                           --------------------  --------------------

GROSS PROFIT (LOSS)                                                                        340               (34,842)
                                                                           --------------------  --------------------

GENERAL AND ADMINISTRATIVE EXPENSES
      Depreciation and amortization                                                     40,359                18,590
      Officer's compensation                                                            60,000                60,000
      Promotion and advertising                                                        125,168                68,156
      Legal and accounting                                                              39,545                46,597
      Other general and administrative expenses                                         75,208               167,423
                                                                           --------------------  --------------------
           Total General and Administrative Expenses                                   340,280               360,766
                                                                           --------------------  --------------------

LOSS FROM OPERATIONS                                                                  (339,940)             (395,608)

OTHER EXPENSES
      Interest expense                                                                 (67,804)              (10,656)
                                                                           --------------------  --------------------

LOSS BEFORE TAXES                                                                     (407,744)             (406,264)

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


NET LOSS                                                                   $          (407,744)  $          (406,264)
                                                                           ====================  ====================

NET LOSS PER COMMON SHARE
      BASIC AND DILUTED                                                    $             (0.07)  $             (0.13)
                                                                           ====================  ====================

WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING, BASIC AND DILUTED                                          5,916,831             3,184,989
                                                                           ====================  ====================
</TABLE>

                   See notes to interim financial statements.

                                       3
<PAGE>



<TABLE>
<CAPTION>
                         AQUA VIE BEVERAGE CORPORATION
                       STATEMENT OF STOCKHOLDERS' DEFICIT


                                   Preferred Series A - H     Common Stock         Additional
                                  ---------------------- -----------------------
                                   Number                   Number                 Paid-in     Subscriptions Accumulated
                                   of Shares   Amount     of Shares    Amount      Capital      Receivable     Deficit        Total
                                  ---------  ----------- ------------ ---------- ------------- ------------- ------------  ---------
<S>                                 <C>      <C>           <C>        <C>        <C>           <C>           <C>           <C>
Balance, July 31, 2001              15,074  $       15    2,912,749  $   2,912  $  5,617,502  $ (176,977) $ (5,901,501) $  (458,049)

Issuance of common stock
    for cash at $0.81 per share          -           -      312,500        312       253,583           -            -       253,895

Issuance of common stock for
    services at an average of
    $0.68 per share                      -           -      769,667        770       521,613           -            -       522,383

Issuance of common stock
    for debt at $1.04 per share          -           -      265,000        265       275,762           -            -       276,027

Issuance of common stock for
    settlement at $0.10 per share        -           -       12,000         12         1,188           -            -         1,200

Conversion of preferred Series A
    to common stock                   (376)          -       80,080         80           (80)          -            -              -

Conversion of preferred Series B
    to common stock                    (45)          -        9,562         10           (10)          -            -              -

Conversion of preferred Series D
    to common stock                (11,112)        (11)     925,993        926          (915)          -            -              -

Conversion of preferred Series E
    to common stock                   (600)         (1)      50,000         50           (49)          -            -              -

Forgiveness of payroll by officer        -           -            -          -        60,000           -            -        60,000

Issuance of preferred Series G for
    waiver from officer             10,000          10            -          -       279,990           -            -       280,000

Payment of stock subscriptions
    receivable                           -           -            -          -             -     176,977            -       176,977

Net loss for the year ended
    July 31, 2002                        -           -            -          -             -           -    (1,829,675)  (1,829,675)
                                  --------- ----------- ------------ ---------- ------------- ----------- ------------  ------------
Balance, July 31, 2002              12,941          13    5,337,551      5,337     7,008,584           -    (7,731,176)    (717,242)

Conversion of preferred Series D
    to common stock                   (180)          -       15,000         15           (15)          -            -              -

Issuance of common stock at $0.05
    per share for debt conversion        -           -    1,699,500      1,700        83,275           -            -         84,975

Issuance of common stock at $0.30
    per share for settlement             -           -        4,000          4         1,196           -            -          1,200

Issuance of common stock for
    for fractional shares                -           -           14          -             -           -            -              -

Issuance of common stock for services
    at $0.30 per share                   -           -        6,000          6         1,794                                   1,800
                                                                                                       -            -
Issuance of Series H preferred stock
    at $480.00 per share
    for loan settleme                  125           -            -          -        60,000           -            -         60,000

Issuance of common stock at $0.35 per
    share for debt conversion            -           -       50,000         50        17,573           -            -         17,623

Net loss for the three months ended
    October 31, 2002 (unaudited)         -           -            -          -             -           -     (407,744)     (407,744)
                                  --------- ----------- ------------ ---------- ------------- ----------- ------------  ------------
Balance, October 31, 2002
    (unaudited)                     12,886  $       13    7,112,065  $   7,112  $  7,172,407  $        -  $ (8,138,920) $  (959,388)
                                  ========= =========== ============ ========== ============= =========== ============  ============

</TABLE>
                   See notes to interim financial statements.


                                       4
<PAGE>



<TABLE>
<CAPTION>
                          AQUA VIE BEVERAGE CORPORATION
                             Statement of Cash Flows

                                                                                              Three Months Ended
                                                                                                 October 31,
                                                                                 ------------------------------------------
                                                                                          2002                  2001
                                                                                 --------------------  --------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>                   <C>
      Net loss                                                                   $          (407,744)  $          (406,264)
      Adjustments to reconcile net loss to net cash
           used by operating activities:
                Depreciation and amortization                                                 40,359                32,277
                Stock issued for services                                                      1,800                64,610
                Stock issued for settlement                                                    1,200                  --
                Stock issued for loan incentive                                               60,000                  --
                Stock issued for debt conversion                                              70,598                  --
                Stock issued for interest on debt                                             32,000                  --
                Services charged to additional paid-in capital                                  --                  60,000
      Changes in assets and liabilities:
                Accounts receivable                                                           (9,236)               26,944
                Inventory                                                                     13,581                65,738
                Prepaid expenses                                                                --                   1,648
                Accounts payable                                                               4,532               (65,178)
                Accrued expenses                                                               5,610                20,300
                Accrued compensation                                                          60,000                  --
                                                                                 --------------------  --------------------
           Net cash used by operating activities                                            (127,300)             (199,925)
                                                                                 --------------------  --------------------

CASH USED BY INVESTING ACTIVITIES:
      Increase in intangible assets for slotting                                                --                  (8,296)
                                                                                 --------------------  --------------------
           Net cash used by investing activities                                                --                  (8,296)
                                                                                 --------------------  --------------------

CASH PROVIDED BY FINANCING ACTIVITIES
      Stock conversion subscriptions                                                            --                 253,895
      Bank overdraft                                                                          19,815                (2,555)
      Payments on debt                                                                          (864)                  --
      Advances from affiliate                                                                   --                   223,961
      Payments to affiliate                                                                     --                  (265,923)
      Proceeds from notes payable                                                            169,378                    --
      Advances from stockholders                                                             (61,566)                   --
                                                                                 --------------------  --------------------
           Net cash provided by financing activities                                         126,763               209,378
                                                                                 --------------------  --------------------

INCREASE (DECREASE) IN CASH                                                                     (537)                1,157

BEGINNING BALANCE                                                                              2,179                 3,608
                                                                                 --------------------  --------------------

ENDING BALANCE                                                                   $             1,642   $             4,765
                                                                                 ====================  ====================

SUPPLEMENTAL CASH FLOW DISCLOSURES:
      Income taxes paid                                                          $              --     $              --
      Interest paid                                                              $              --     $              --

NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Issuance of common stock for services                                      $             1,800   $            64,610
      Forgiveness of payroll by officer and majority stockholder                 $              --     $            60,000
      Issuance of common stock for debt and interest                             $           102,598   $              --
      Issuance of common stock for settlement                                    $             1,200   $              --
      Issuance of preferred stock for loan incentive                             $            60,000   $              --

</TABLE>

                   See notes to interim financial statements.



                                       5
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                October 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 year ended July 31, 2002. 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  months  ended  October  31,  2002  are  not
necessarily  indicative  of the results that may be expected for the year ending
July 31, 2003.


NOTE 2 - COMMON STOCK
Reverse Stock Split
On September 3, 2002, the Company's board of directors authorized a 1:20 reverse
stock  split of its  $0.001  par  value  common  stock.  All  references  in the
accompanying financial statements to the number of common shares outstanding and
per share amounts have been restated to reflect the reverse stock split.

Common Stock Issuances
A disputed  liability was settled in September 2002 by the Company's issuance of
4,000 shares of common  stock to a vendor.  The stock was valued at $1,200 which
represented the fair market value of the stock on the dates of issuance.

During the three months ended October 31, 2002,  the Company  converted debt and
accrued  interest to 1,749,500  shares of common  stock valued at $102,598.  The
stock was valued at its fair market value on the dates of issuance.



                                       6
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                October 31, 2002



NOTE 2 - COMMON STOCK

Common Stock Issuances
During the quarter  ended October 31, 2002,  the Company  issued 6,000 shares of
common  stock for  services  valued at $1,800,  or $0.30 per  share,  and 15,000
shares  of common  stock  for the  conversion  of 180  shares  of the  Company's
preferred Series D stock.

NOTE 3 - PREFERRED STOCK

During the three months ended October 31, 2002, the Company converted 180 shares
of its Series D preferred stock into 15,000 shares of common stock.

In  addition,  the Company  issued 125 shares of preferred  Series H stock.  The
Series H preferred stock was issued for loan incentive  value at $60,000.  Other
information regarding preferred Series H stock follows:

The Company is  authorized  to issue a total of  5,000,000  shares of  preferred
stock,  par value at $0.001.  At October 31, 2002, the Company had seven classes
of preferred stock  outstanding with an aggregate of 465,000 shares  authorized.
The  Company has been  authorized  to issue  200,000  shares of $0.001 par value
Series A preferred stock,  200,000 shares of $0.001 par value Series B preferred
stock, 10,000 shares of $0.001 par value Series C preferred stock, 20,000 shares
of $0.001 par value Series D preferred  stock,  5,000 shares of $0.001 par value
Series E preferred  stock,  5,000  shares of $0.001 par value Series F preferred
stock,  25,000  shares of $0.001 par value  Series G  preferred  stock and 1,000
shares of $0.001 par value Series H preferred  stock.  The board of directors of
the Company has the  authority to issue  shares of preferred  stock from time to
time in one or more classes or series, which may have such voting power, full or
limited  as fixed by the board of  directors.  The board of  directors  may also
determine  the terms of any such  series or class,  including  dividend  rights,
dividend rates, conversion, exchange, voting rights and terms of redemption, the
redemption price and the liquidation preference of such class or series.

The number of shares outstanding of preferred stock, Series A, B, C, D, E, F and
G and amounts were as follows:

                              July 31, 2002
                 -----------------------------------------
                 Number of Shares             Amount
                 ------------------------     ------------
Series A                             813   $            1
Series B                               -                -
Series C                               -                -
Series D                             888                1
Series E                               -                -
Series F                           1,240                1
Series G                          10,000               10
                 ------------------------     ------------
  Total                           12,941   $           13
                 ========================     ============


                                       7
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                October 31, 2002


NOTE 3 - PREFERRED STOCK (Continued)

                               October 31, 2002
                    ----------------------------------------
                    Number of Shares            Amount
                    --------------------------  ------------
Series A                                  813  $          1
Series B                                    -             -
Series C                                    -             -
Series D                                  708             1
Series E                                    -             -
Series F                                1,240             1
Series G                               10,000            10
Series H                                  125             -
                    --------------------------  ------------
  Total                                12,886  $         13
                    ==========================  ============


General Terms
All Series A, B, C, D, E, F, G and H preferred  stock  shares  contain  standard
terms relative to adjustment for stock splits and combinations, reorganizations,
mergers,  and  consolidations  or sales of assets,  registration of stock issued
upon conversion, and registration rights. For dividend, liquidation, mergers and
consolidations,  the respective  rights of each series are  different.  Series A
preferred  stock is  limited  to $300 per share in  non-cumulative  preferential
dividends  before common stock.  Each Series A preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series B
preferred  stock  is  limited  to $6 per  share in  non-cumulative  preferential
dividends  before common stock.  Each Series B preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series C
preferred  stock is  limited to $0.25 per share in  non-cumulative  preferential
dividends  before common stock.  Each Series C preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series D
preferred  stock is  limited  to $100 per share in  non-cumulative  preferential
dividends  before common stock.  Each Series D preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series E
preferred  stock is  limited  to $100 per share in  non-cumulative  preferential
dividends  before common stock.  Each Series E preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series F
preferred  stock is  limited  to $100 per share in  non-cumulative  preferential
dividends  before common stock.  Each Series F preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series G
preferred  stock is  limited  to $80 per  share in  non-cumulative  preferential
dividends  before common stock.  Each Series G preferred  share has  liquidation
rights  and  merger  or  consolidation  rights  before  common  stock.  Series H
preferred  stock is  limited to $1.00 per share in  non-cumulative  preferential
dividends  before  common  stock Each Series H preferred  share has  liquidation
rights and merger or consolidation rights before common stock.

As of the date of these  financial  statements,  no dividends have been declared
due to the Company's accumulated deficit.



                                       8
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                October 31, 2002

NOTE 3 - PREFERRED STOCK (Continued)

Voting Rights
All Series A, B, C, E, F, G, and H preferred shares have the right to vote based
on their conversion rights to common shares.  Series D preferred shares have the
right to vote based on five and a half times their  conversion  rights to common
shares.  Series G  preferred  shares  have the right to vote based on four times
their conversion rights to common shares.

Conversion to Common Shares
The  Series  A and B  preferred  provide  that  each  share  is  entitled  to an
additional  conversion  share to common stock based on a formula  that  reflects
increased  market value of the common stock when the common shares have a market
price in excess of $2 but not greater than $12 per share.

Preferred  Series A, B, and C stock have a basic conversion rate of 1,000 shares
of common  stock for every share of preferred  stock.  The  conversion  ratio to
common for Series A and B preferred stock is adjusted  upwards  depending on any
future issue of common shares at below $1.65 per share. The conversion rates for
Series A and B preferred  stock were 1:4,259 and 1:3,721  preferred to common as
of July 31, 2002 and 2001,  respectively.  Preferred Series D and E have a basic
conversion  rate of 1,667  shares of common  stock for every share of  preferred
stock. Preferred Series F have a basic conversion rate of 2,000 shares of common
stock  for  every  share of  preferred  stock.  Preferred  Series G have a basic
conversion  rate of 8,000  shares of common  stock for every share of  preferred
stock. Preferred Series H have a basic conversion rate of 5,000 shares of common
stock for every share of preferred stock.


NOTE 4 - NOTES PAYABLE

Current  notes  payable  at  October  31 and  July  31,  2002  consisted  of the
following:
<TABLE>
<CAPTION>

                                                        October 31,                 July 31,
Creditor and Conditions                                    2002                       2002
-----------------------                              ----------------           ----------------
<S>                                                 <C>                        <C>
Note  payable to GMAC,  interest
at 13.99%, secured by 2000 Plymouth
Voyager, payable in monthly installments
of $452.07 through April 28, 2006.                   $     13,486               $      14,350

Bruce Butcher, unsecured, interest at
8%, convertible to one share of common
stock per $0.80 of debt, due on demand.                     73,377                      75,000
                                                     -------------              --------------

Subtotal, carried forward                            $     88,683               $      89,350
</TABLE>




                                       9
<PAGE>


                          AQUA VIE BEVERAGE CORPORATION
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                October 31, 2002



NOTE 4 - NOTES PAYABLE (Continued)

<TABLE>
<CAPTION>
                                                        October 31,                 July 31,
Creditor and Conditions                                    2002                       2002
-----------------------                              ----------------           ----------------

<S>                                                  <C>                        <C>
Subtotal, brought forward                            $     88,683               $      89,350

Joe Wozniak, unsecured, interest at
8%, convertible to one share of common
stock per $0.80 of debt, due on demand.                    11,025                      80,000

Keely Smith, secured by product
inventory of subsidiary, interest at
24%, due on September 25, 1998. Delinquent.                60,000                      60,000

Joe Wozniak, secured by product inventory
and accounts receivable, interest at 8%,
due on June 30, 2003.                                     169,983                        --

Edwin Hamlin, Sr., secured by product
inventory, interest at 12%,  due on
February 24, 2003                                         100,000                        --
                                                     ------------               -------------

Total notes payable                                       427,871                     229,350

Less current portion                                      417,824                     218,422
                                                     ------------               -------------

Net long-term debt                                   $     10,047               $      10,928
                                                     ============               ==============

</TABLE>

NOTE 5 - RELCLASSIFICATION

Certain  amounts  from prior  periods have been  reclassified  to conform to the
current period presentation. This reclassification has resulted in no changes to
the Company's  accumulated  deficit or net losses presented.  A portion of notes
payable, $5,220, was reclassified as an affiliate loan.


                                       10
<PAGE>

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

During its first four years of existence (from inception to July 31, 2002),  the
Company  accumulated a deficit of  $7,731,177.  In the  subsequent  three months
ended October 31, 2002, the Company's  accumulated deficit grew to $8,138,920 as
the Company's marketing and executive expenses  increased,  creating a quarterly
operating loss of $407,744.

At October 31, 2002, the Company's  total assets of $317,268 were lower than the
$362,510 reported at its July 31, 2002 year-end.  The decrease was due primarily
to  a  small  reduction  in  inventory  and  the  effects  of  depreciation  and
amortization.  The Company's  current  liabilities  increased from $1,068,824 at
July 31, 2002 to $1,266,609 at October 31, 2002.

FORWARD-LOOKING STATEMENTS

Matters discussed herein, contain  forward-looking  statements that involve risk
and uncertainties. This is particularly true as it relates to comments about the
development and funding of Aqua Vie's future production capability, expectations
about  profitability,   and  new  product   introduction.   Results  may  differ
significantly from results indicated by forward-looking statements.

Factors that might cause some differences,  include, but are not limited to: (1)
changes in general economic  conditions,  including but not limited to increases
in interest  rates;  (2)  government  regulations  affecting  customers  and the
bottling process for products;  (3) the potential for product recall and related
non-compliance issues by third parties; (4) similar products competing for shelf
space and market share in the bottled  water  industry;  (5) the ability of Aqua
Vie to successfully  bring new products from their  development  stage into full
and profitable  production and sales; (6) Aqua Vie's ability to raise sufficient
debt and/or equity capital to implement its business plans;  (7) the occurrences
of incidents that could subject Aqua Vie to liability or fines;  (8) the ability
of Aqua Vie to attract the needed networks for product distribution,  and secure
the shelf space in stores necessary to achieve sales forecasts.

INTRODUCTION

The financial situation of the Company at quarter-end was substantially the same

as reported in our recently  filed 10-KSB.  In fiscal year 2002,  ended July 31,
2002,  the  Company  initiated a targeted  supermarket  sales  program  with the
Albertsons divisions of Northern and Southern  California,  Arizona, and Nevada.
These arrangements required substantial slotting fees (one time fees to stores),
to be paid in order  to  secure  shelf  space  and  provided  for the  Company's
products being featured in approximately  1,200 Albertsons  stores in California
and  adjacent  states.  The Company  also  negotiated  supermarket  sales in the
Raleys,  Knob Hill,  Savemart and other chains in the same general  regions.  At


                                       11
<PAGE>

that time the Company  focused on mass  markets and chain  grocery  sales in the
limited  geography  of greater  California,  intending  to utilize such sales to
penetrate additional regions,  such as Texas, where Albertsons also had a strong
presence.  As the Company's available capital was limited and the public capital
markets  continued  their  steep  decline,   the  Company  attempted  to  secure
additional financing for working capital and increased inventory production, and
focused  on  the  development  of  two  additional  products  lines,  and  a new
zero-calorie,  carbohydrate-free  line  extension to the  existing  Hydrator(TM)
product line for  test-marketing in January 2003, with anticipated  introduction
into the all-natural market in early 2003, following the test markets.

In March, 2002, the Company secured a financing  arrangement with its co-packer,
Lyons  Magnus of Fresno CA.,  whereby the cost of bottling  production  could be
secured by the finished inventory. This financing was to be additionally secured
by a  personal  guarantee  of one  of the  Company's  larger  shareholders  (not
affiliated  with  management),  who also had a  personal  relationship  with the
management  of Lyons.  The Company's  sales and marketing  plan depended on this
financing  arrangement.  This financing arrangement funded only a limited amount
of production and product development,  as Lyons and the guaranteeing party were
unable,  after several months, to come to a long-term agreement over the form of
the guarantee.

In the second  quarter of 2002,  the Company  began the execution of a marketing
initiative  that  provided  for its  products  to be  available  exclusively  in
"all-natural"  markets, and initiated a transition of its sales from the general
beverage/ bottled water retail grocery market into the  "all-natural"  divisions
of grocery,  general retail, and the "health food"  marketplace.  This marketing
initiative    included   the   planned    introduction    of   a   zero-calorie,
carbohydrate-free   Hydrator   product   line  in  early  2003  with   follow-up
participation in "all natural" retail  advertising,  marketing events, and trade
shows throughout the year.

During the second half of 2002, and continuing  into the first quarter of fiscal
2003,   the   Company   accelerated   the   development   of  a  zero   calorie,
carbohydrate-free  Hydrator product line for  introduction  into the all-natural
market,  and continued to expand opening  distribution of its present  Hydrators
line to the all-natural market domestically, including approximately 500 grocery
chain stores with  "all-natural  stores within  stores" in 17 states and the two
largest  all-natural  distributors  in the  U.S..  Additionally,  the  Company's
products began to enter the  "all-natural"  health food retail  markets  (health
food stores).

The Company  continued the  development of two new lines of water  beverages:  a
line of flavored water beverages for children called PurePlay(TM), and a line of
non-alcoholic wines made from spring water called Eau Vin(TM). Both are expected
to  be  available  at  retail  in  late  calendar  2003.  Further,  the  Company
accelerated the development of a new calorie-free carbohydrate-free product line
extension  to  its  existing   Hydrator   product  line,   anticipating   retail
introduction in early 2003.

                                       12
<PAGE>

The Company projects that higher margins are available with its new products and
line extensions,  and within all-natural markets compared to the generally lower
priced retail grocery venues and their associated costs and fees.  However,  the
Company also anticipates a substantially  increased demand for its new Hydrators
line  extension,  which is believed  may be the only  all-natural,  calorie-free
carbohydrate-free  flavored  spring  water  beverage  of its  type.  It is  also
anticipated  that during the fiscal year the capital markets may improve,  which
could  further  enhance  the  Company's   ability  to  secure  funding  for  its
all-natural preservative-free, spring water beverage product line.

With proven sales in the natural foods  sections of large stores,  new products,
continuous product availability and additional distribution, management believes
that the caution  exercised in promoting  general  retail sales during late 2001
through  fiscal 2002 into the current  fiscal year 2003,  was  necessary  as the
Company  transitioned  into a less  competitive and more receptive  natural food
outlet marketplace, and completed a key development phase of the production of a
line of calorie-free, carbohydrate-free spring water beverages.

 The Company  recorded  gross  revenues of $151,924 in fiscal 2000,  $912,000 in
fiscal 2001, and $162,809 in fiscal 2002. Gross profit on sales was respectively
$(80,434),  $107,936,  and  $(19,204).  Management  believes that the experience
gained in fiscal 2001 and 2002,  which led to the market strategy of focusing on
the "all  natural"  niche market will enable the Company to attain  higher gross
profit margins in fiscal 2003. The Company's success in improving profit margins
will be realized through improved cost control and improved unit margins through
all natural sales

Management believes that the mechanisms are in place for improved margins as the
new products and sales strategy develops.

While maintaining  general sales and developing the introduction of the Hydrator
products into the  all-natural  market,  the Company  received a series of small
production and working capital financings from a shareholder not affiliated with
management.

The Company  continues  its effort to obtain  additional  capital in the form of
either secured debt, factoring, and/or equity funding. The Company seeks to

secure $2.2  million  for  inventory  growth,  working  capital  and  marketing.
Management  believes that  initially the relative  costs for such capital may be
high;  however  with  consistent  growth and the  development  of a proven track
record of sales,  it is anticipated the costs of such financing will become more
economical. While parties have shown interest in various financing arrangements,
the Company  presently does not have a firm commitment for the $2.2 million that
management believes will be required during early 2003.

PLAN OF  OPERATION:  During the first fiscal  quarter of 2003 Aqua Vie continued
establishing a market presence for its line of Hydrators,  the lightly  flavored
spring  water  beverages  by  concentrating  retail  sales  exclusively  on  the
all-natural   retailers  and  major  grocery  retailers  who  maintain  separate
all-natural departments within their stores.

                                       13
<PAGE>

The solution to increasing  revenue and  profitability  in this new market place
depends  upon the Company  obtaining  adequate  financing  to  increase  initial
production of its existing and new product lines, to meet the increased  product
demand for its products, and building brand awareness through consumer marketing
programs  within the all  natural  market.  It is believed  that such  increased
demand for the Company's new and existing products is presently available within
the Company's newly acquired account base.

Aqua Vie also expects that margins will improve through  economies of scale, and
the  introduction  of new products will support higher gross margins.  The first
new product line expected to be introduced in calendar 2003, is a line extension
of  zero  calorie,   carbohydrate-free   Hydrators.   Subsequently   a  line  of
calorie-free  Hydrators designed  specifically for children called PurePlay(TM),
and a multi-flavor line of non-alcoholic  wine made from spring water called Eau
Vin(TM), will be introduced.

Aqua Vie's product line contains no directly patented or patentable  features or
components.  Copyrighting,  trademark registration,  and the use of trade secret
techniques   and   formulations   are  utilized   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.

Aqua Vie  continues  to offer  information  about its  products  and a  beverage
subscription service on its Internet site (www.aquavie.com).  Aqua Vie's revenue
from Internet sales is a small portion of its gross revenue.  Management intends
to expand and develop the marketing of Aqua Vie beverages  through the Internet.
The means and ability to obtain meaningful sales volume is in place.

The past quality  assurance issue,  which was an ongoing situation during fiscal
year 2001 and into fiscal year 2002,  led to a new agreement with the co-packer.
In fiscal year 2002, the Company  engaged a quality  assurance  specialist and a
comprehensive  production line inspection  system and audit program and obtained
the services of parties that had been directly  involved in the Hydrator product
design and development, including the quality assurance standards, protocols and
procedures.

LIQUIDITY  AND  CAPITAL  RESOURCES:  Aqua Vie's  current  capitalization  is not
sufficient to  maintaining a company  presence and to fund the production of the
anticipated growth in orders and apparent market acceptance.

Company  capital  resources have  traditionally  been used for promotion,  sales
support,  slotting fees,  inventory  support and general  administration as more
particularly  described in prior  filings.  The Company has devoted  substantial
resources  in the past  several  years and during the current  year to inventory
support and the development of new and improved products in the expectation that
sales would in part offset other  working  capital  requirements  and would thus
result in less dependence on additional capital resources.

                                       14
<PAGE>

The Company is currently engaged in seeking new sources of inventory and general
working capital  financing in the approximate  amount of $2.2 million to support
the sales and new products,  and product improvements that it believes it can be
introduced at retail in 2003, in the outlets in which has had product  presence.
The general financial market for developing  companies has been difficult in the
past two  years,  but  management  is  cautiously  optimistic  about  additional
financing possibilities.

In the quarter  ended  October 31,  2002,  the  Company's  principal  sources of
incoming  cash were  loans  from two  shareholders.  Revenues  of  approximately
$26,000 and loans serviced the operating loss, with the deficit in funding being
represented by the increase in liabilities

In fiscal 2002 the Company realized net cash of $418,891 in financing activities
compared with $1,368,473 in fiscal 2001. This reflected the extremely difficult

capital markets through fiscal 2002, which as previously discussed,  was a major
contributing  factor to the  timeliness  of  management's  decision  to  quickly
transition  from a retail  chain  sales  strategy to an  "all-natural"  and "new
product  strategy,  through  utilizing a non-growth  market  presence  requiring
minimum capital  expenditure during 2002. Please see the statement of Cash Flows
for additional information.

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
total income of $26,420 was less than three-month total income of $46,858 in the
same quarter of the prior  fiscal  year,  reflecting  primarily  the  short-term
fiscal  effect of making  the  complete  transition  from a chain  retail  sales
strategy to an exclusively "all-natural" long-term sales strategy. Sales to date
have not been  sufficient  to cover the costs of  operations;  profitability  is
believed  achievable  assuming  inventory levels are adequate to meet the demand
within the Company's new customer base.

For the three months ended October 31, 2002,  the Company's  total income before
expenses of $26,420 was less than the total  income  before  expenses of $46,858
for the  comparable  three months of the prior fiscal year.  Operating  expenses
were  $340,280 for the three months ended October 31, 2002 and were $360,766 for
the  comparable  period  of the  prior  year.  The  quarter  to  quarter  change
principally   reflects  the  short-term  effects  associated  with  Management's
execution of a transition  from the general  grocery  retail market into a niche
market and the  higher  cost of capital  in tight  markets.  It also  reflects a
proportional decrease in administrative expenses.

                                       15
<PAGE>

While Aqua Vie  continued  to operate at a loss during the most recent  quarter,
given increased  inventories to support its new 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 existing, and new flavored water products.

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 has had, and  anticipates in the future that it will have,  conflicts as
regards  certain  Accounts  Payable for  services  invoiced  but not  adequately
performed.

ITEM 2. CHANGE IN SECURITIES

(a),(b) The issuance of certain additional  Preferred Shares was proposed in the
Company's  recent  10-KSB/A,  please  see  item 5 for  discussion  of  Series  H
Preferred Shares issued for a financial accommodation by E. Hamlin. These shares
would not  directly  affect  the rights of any class of  registered  securities.
Please see ITEM 5 for more information. (c) 4,000 common shares were issued in a
settlement  with a long-term  creditor in reliance on  regulation  D.  1,699,500
shares were issued in exchange for a debenture in default  issued in March 2000;
pricing was at $.05 share (market was at $.07, see Certain  Transactions  in the
recent  10-KSB/A),  in reliance  with  Regulation D to an  accredited  investor.
50,000 shares were issued at market in settlement of a debt in default issued in
March 2000, at approximately  $17,000 to an accredited  investor;  15,000 common
shares were issued in exchange for Series D Preferred; said series was issued in
reliance on Regulation D; 125 shares of Series H was issued in consideration for
a production loan accommodation to E. Hamlin, an accredited  investor at minimal
cash consideration. (d) NA

ITEM 3  DEFAULTS ON SENIOR SECURITIES

NA

ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None

ITEM 5  OTHER INFORMATION


                                       16
<PAGE>

In  the  previously  filed10-KSB/A,   within  the  Item  "Certain  Transactions"
additional  information  respecting loan transactions with E. Hamlin,  deceased,
was not available,  although  information  was included with respect  thereto in
footnote  3,  Item  11(a),  and  in  the  discussion   respecting  issuances  of
unregistered securities, Item 5(b). E. Hamlin was a long-time shareholder of the
Company and its predecessors,  and had maintained a long-term  relationship with
the  management  of the  Company's  contract  packer,  Lyons  Magnus of  Fresno,
California.  E.  Hamlin was not  affiliated  with any member of  management.  E.
Hamlin previously  received Series H shares in exchange for a loan accommodation
of $100,000 for six months, see footnote 3 to Item 11(a) of the recent 10-KSB/A.
In 2002 he received 2,650,000 shares (all shares are pre-combination of 20-1) of
common  stock in  exchange  for a debt of  $118,000  plus  interest.  In 2001 he
converted  previously  acquired Series C Preferred Shares into 200,000 shares of
common stock  (pre-combination);  said preferred  stock was received in exchange
for an investment of $100,000 in fiscal 2000.

E. Hamlin received Series H shares which would entitle him at no additional cost
to convert to 625,000  restricted  shares (post  combination).  Said shares have
piggyback  registration  rights and may be eligible for S-8  registration.  Said
registrations have not been requested. Said shares had a preference of $85/share
and also had an anti-dilution clause for sales under $.10/(post split). Based on
a request  made after Dr.  Hamlin's  death,  the  Company  considers  the shares
converted,  but has not as yet issued the common  shares,  estimated  at 625,000
common shares.

After the end of the period,  and  immediately  prior to or coincident  with the
filing of this  Report,  the  Company  effected  the  filing  of a new  Series I
Preferred Stock, which was mentioned as proposed in the recently filed 10-KSB/A.
The new Series I was offered in exchange for all Series A and F Shares at a rate
of 1.5 Series I shares for Each Series A Share, and 1.5 Series I Shares for each
10 Series F Shares.  The Series I Shares eliminate the anti-dilution  provisions
of Series A Shares ( Series A shares have had the conversion rate increased from
1000/1 to 10,000/1 from inception in 1998 pre-combination  conversion rate), and
further  reduce the  preference to $80/Share  from  $300/Share for Series A, and
$100/Share in Series F. The  conversion  rate is set at 10,000 to one to common;
however a conversion cap of 4.95% is  established  until December 2003 or in the
event of a sale or similar  corporate  event  (extendable by  agreement),  total
holdings including beneficial holdings at any one time; and the voting rights of
the new  Series is only to the  extent  they may be  converted  at any  time.  A
provision  for a conversion  adjustment is provided in the event that the market
for the Company's common stock drops below  $.30/share for a period  immediately
prior to a conversion request, with the adjustment eliminated if a later request
is received after the $.30 thresh hold is reached.  The upward share  adjustment
is made proportionally to the decrease below $.30/share.

Series G Preferred (issued in May, 2002) has varying  conversion rates depending
upon market  performance and other factors,  and voting rights vary accordingly.
In  addition,  in the event  that the  Company  issues  either  common  stock or
instruments  convertible  into  common  stock in a  transaction  valued  at over
$200,000 where the effective price of common stock for the  consideration  given
is less than  $.40/share,  the conversion rate of Series G preferred is adjusted


                                       17
<PAGE>

upward accordingly ($.40/share post-combination was the approximate market price
of common  underlying  the  Series G when  issued).  The  recent  Series I share
issuance will trigger this adjustment;  however, a valuation has not been placed
on said  transaction  for this  purposes  as yet by the Board of  Directors.  No
Series G shares have been converted,  and there have been no shareholder actions
since  the  consent  actions  in  June,  2002  (Please  see the two  Information
Statements  sent to  shareholders  and filed  with the SEC in June 2002 for more
information).

ITEM 6: Exhibits

4.1 Series I Preferred Designation of Rights (attached)

Incorporated by reference: 10-ksb/a filed 12/03/02

99. Title 18 Certification


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 has  undertaken 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
HYDRATOR(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 risks 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, availability of loan funds or other sources
of  capital,  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.


                                       18
<PAGE>




                                   SIGNATURES
                                   ----------


                                AQUA VIE BEVERAGE CORPORATION
                                (Registrant)


                               By:  /s/ Thomas Gillespie
                                    ---------------------------------------
                                        Thomas Gillespie
                                        Chief Executive Officer & President

Date: December 18, 2002


                                       19
<PAGE>



CERTIFICATION

I, Thomas Gillespie certify that:

1.  I have  reviewed this  quarterly  report on Form 10-QSB of Aqua Vie Beverage
    Corporation;

2.  Based on my knowledge,  this report does not contain any untrue statement of
    a  material  fact or omit to state a  material  fact  necessary  to make the
    statements made, in light of the  circumstances  under which such statements
    were  made,  not  misleading  with  respect  to the  period  covered by this
    quarterly report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information included in this report, fairly present in all material respects
    the  financial  condition,  results  of  operations  and  cash  flows of the
    registrant as of, and for, the periods presented in this report;

4.  I am responsible for  establishing and maintaining  disclosure  controls and
    procedures  (as  defined in  Exchange  Act Rules  13a-14 and 15d-14) for the
    registrant and I have:

              a)  designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this quarterly report is being prepared;

              b)  evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and

              c)  presented   in  this   report   our   conclusions   about  the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.  I have disclosed,  based on our most recent evaluation,  to the registrant's
    auditors and the audit  committee  of  registrant's  board of directors  (or
    persons performing the equivalent function):

              a) all  significant  deficiencies  in the design or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weaknesses in internal controls; and

              b) any fraud, whether or not material, that involves management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

6.  I have  indicated  in this  report  whether  or not there  were  significant
    changes in internal  controls or in other  factors that could  significantly
    affect  internal  controls  subsequent  to  the  date  of  our  most  recent
    evaluation,  including  any  corrective  actions with regard to  significant
    deficiencies and material weaknesses.



                                   Signature




/s/ Thomas Gillespie                 Title                         Date
---------------------        ------------------------       ------------------
    Thomas Gillespie         CEO, President, Director       December 18, 2002




                                       20