SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

FORM 10-QSB

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended March 31, 2001

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

                        Commission file number 000-30115

                            KUSHI NATURAL FOODS CORP.
       (Exact name of Small Business Issuer as specified in its charter.)

          DELAWARE                                           13-3912047
(State of other jurisdiction of                            (IRS Employer
incorporation or organization)                             Identification No.)

           c/o Madison Venture Capital II, Inc., 150 East 58th Street,
                            New York, New York 10022
          (Address of principal executive offices, including zip code.)

                                 (212) 583-1363
                (Issuer's telephone number, including area code.)


                 (Former Address, if changed since last report.)

     Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the preceding 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 [_]

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock par value per
share, at November 1, 2000 was 10,588,718 shares.


<PAGE>



                                     Part I
                              Financial Information

Item 1. Financial Statements

                            KUSHI NATURAL FOODS CORP.
                        (A Development Stage Enterprise)
                                  BALANCE SHEET
                                 MARCH 31, 2001
                                   (Unaudited)


ASSETS

Current Assets:

  Cash and Cash Equivalents                                           $  39,341
                                                                      ---------

Total Assets                                                          $  39,341
                                                                      =========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts Payable                                                    $  15,982

Commitments and Contingencies                                              --

Stockholders' Equity:

  Preferred Stock, $.0001 par value; 5,000,000 shares
    Authorized, none issued and outstanding                           $    --
  Common Stock, $.0001 par value; 35,000,000 shares
    Authorized, 10,588,718 shares issued and outstanding                  1,059
  Additional Paid-In Capital                                            213,494
  Deficit Accumulated in the Development Stage                         (191,194)
                                                                      ---------

         Total Stockholders' Equity                                      23,359
                                                                      ---------

Total Liabilities and Stockholders' Equity                            $  39,341
                                                                      =========


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


                                       2
<PAGE>



                            KUSHI NATURAL FOODS CORP.
                        (A Development Stage Enterprise)
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      Cumulative
                                                                                         From
                                                                                     August 1, 1996
                                                              Quarter Ended           (Inception)
                                                                 March 31,            To March 31,
                                                           2001            2000           2001
                                                       ------------    ------------    ---------
<S>                                                    <C>             <C>             <C>
Revenues                                               $       --      $       --      $    --

Costs and Expenses:
  Selling, General and Administrative Expenses                  421           1,716       51,921
                                                       ------------    ------------    ---------

Loss from Operations                                           (421)         (1,716)     (51,921)

Other Income:
  Interest Income                                               185             239        2,012
                                                       ------------    ------------    ---------

Loss from Continuing Operations                                (236)         (1,477)     (49,909)
                                                       ------------    ------------    ---------

Discontinued Operations:

  Loss from Operations of Discontinued Joint Venture           --              --        (99,143)
  Loss on Write-Off of Investment in Discontinued
    Joint Venture                                              --              --        (42,142)
                                                       ------------    ------------    ---------
                                                               --              --       (141,285)
                                                       ------------    ------------    ---------

Net Loss                                               $       (236)   $     (1,477)   $(191,194)
                                                       ============    ============    =========

Earnings Per Common Share - Basic

Weighted Average Common Shares Outstanding               10,588,718      10,588,718
                                                       ============    ============

Net Loss Per Common Share - Basic                      $       (.00)   $       (.00)
                                                       ============    ============
</TABLE>


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


                                        3

<PAGE>


                            KUSHI NATURAL FOODS CORP.
                        (A Development Stage Enterprise)
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                  Cumulative
                                                                                                     From
                                                                                                August 1, 1996
                                                                               Quarter Ended      (Inception)
                                                                                 March 31,        To March 31,
                                                                            2001        2000         2001
                                                                           --------    --------    ---------
<S>                                                                        <C>         <C>         <C>
Cash Flows from Operating Activities:
  Net Loss                                                                 $   (236)   $ (1,477)   $(191,194)
  Adjustments to Reconcile Net Loss to Net Cash
    (Used) by Operating Activities:
  Stock Compensation                                                           --          --          3,970
  Loss from Operations of Discontinued Joint Venture                           --          --         99,143
  Loss on Write-Off of Investment in Discontinued Joint
     Venture                                                                   --          --         42,142
  Changes in Operating Assets and Liabilities:

     Increase (Decrease) in Accounts Payable                                 (2,337)     (6,600)      15,982
                                                                           --------    --------    ---------

Net Cash (Used) by Operating Activities                                      (2,573)     (8,077)     (29,957)
                                                                           --------    --------    ---------

Cash Flows from Investing Activities:
  Investment in Joint Venture                                                  --          --        (47,854)
  Cash Acquired Pursuant to Spin-Off                                           --          --        115,167
                                                                           --------    --------    ---------

Net Cash Provided by Investing Activities                                      --          --         67,313
                                                                           --------    --------    ---------

Cash Flows from Financing Activities:
  Proceeds of Stock Subscriptions Receivable                                   --         1,985        1,985
                                                                           --------    --------    ---------

Net Cash Provided by Financing Activities                                      --          --          1,985
                                                                           --------    --------    ---------

Increase (Decrease) in Cash and Cash Equivalents                             (2,573)     (6,092)      39,341

Cash and Cash Equivalents - Beginning                                        41,914      50,647         --
                                                                           --------    --------    ---------

Cash and Cash Equivalents - Ending                                         $ 39,341    $ 44,555    $  39,341
                                                                           ========    ========    =========

Supplemental Disclosure of Cash Information:

  Cash Paid for Income Taxes                                               $   --      $   --      $    --
                                                                           ========    ========    =========

  Cash Paid for Interest                                                   $   --      $   --      $    --
                                                                           ========    ========    =========

Non-Cash Investing and Financing Activities:
  Contributed Capital by Officers Pursuant
    to Debt Cancellation                                                   $   --      $   --      $  69,250
                                                                           ========    ========    =========
  Issuance of Common Stock as Consideration for
    the Net Assets of Kushi Macrobiotics Corp.
  Increase in Stock Subscriptions Receivable Upon Sale of
    Common Stock                                                           $   --      $  1,985    $   1,985
                                                                           ========    ========    =========

</TABLE>

The accompanying notes are an integral part of the financial statements


                                        4

<PAGE>




                            KUSHI NATURAL FOODS CORP.
                        (A Development Stage Enterprise)
                          NOTES TO FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (Unaudited)


NOTE 1 -  Basis of Presentation

     In the  opinion  of  the  Company,  the  accompanying  unaudited  financial
statements   reflect  all  adjustments  (which  include  only  normal  recurring
adjustments)  necessary to present  fairly the  financial  position,  results of
operations  and cash flows for the  periods  presented.

     The results for interim periods are not necessary indicative of the results
to be obtained for a full fiscal year.


                                        5

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         PLAN OF OPERATION.

Results of Operations - Through March 31, 2001.

The Company was  incorporated  under the laws of the State of Delaware on August
1, 1996, and is in the early  developmental and promotional  stages. To date the
Company's only  activities  have been acquiring the "Kushi  Assets",  as defined
below,  liquidating  the same and activities  directed at developing its present
business plan and raising its initial capital. The Company has not commenced any
commercial  operations.  The Company has no full-time employees and neither owns
nor leases any real estate. The Company was formed in connection with the merger
acquisition of Kushi  Macrobiotics  Corp.  ("KMC") with American  Phoenix Group,
Inc. (APGI") in 1996. Prior to such acquisition,  KMC had operated a business of
marketing a line of natural foods (the "Kushi  Cuisine").  This business was not
successful  and  management  determined  that it would  be in the  shareholder's
interest for KMC to operate a different  business.  In the APGI reverse  merger,
the  shareholders  of APGI became the owners of 85% of the shares of KMC,  which
changed its name to American  Phoenix Group,  Inc. As a condition to the merger,
KMC was  required to divest  itself of all assets  related to the Kushi  Cuisine
business.  This  divestiture  was  effected  by  transferring  all of the assets
related to the Kushi Cuisine  business,  principally  inventory and receivables,
and approximately  $115,000 to a newly formed entity, the Company,  and spinning
off the shares of the Company to the KMC  shareholders  on a three for one basis
simultaneously  with the  consummation  of the KMC merger  with APGI.  The Kushi
Cuisine  assets and a portion of the cash were  contributed  to a joint  venture
which  failed and the  Company  lost its  investment  therein  of  approximately
$48,000.  Since  its loss of its  investment  in the joint  venture  in 1997 the
Company  has  been an  dormant  "shell  corporation"  with its  activities  only
activities being those relating to finding an acquisition  partner. The net loss
during the three month and periods  ended March 31, 2000 and 2001,  were $ 1,447
and $ 236,  respectively.  The decrease in the net loss resulted from a decrease
in Selling,  General and Administrative Expense (SG&A) from $1,716 to $421 which
was partially offset by an decrease in interest income ($239 in 2000 versus $185
in 1999).  The higher SG&A in 2000 reflects  expenses  incident to the Company's
becoming a company  required to file reports under the Exchange Act of 1934. The
decrease in interest income  reflects  interest rates paid on the Company's cash
accounts plus the application of cash balances to expenses in prior periods.

Liquidity and Capital Resources.

On March 31, 2001, the Company had $39,341 in cash and cash equivalents.  As the
Company does not have active  operations,  these funds should be sufficient  for
the Company's needs as a "blank check shell company" for the foreseeable future.


                                        6

<PAGE>



                                    PART II.
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

     There are no material  legal  proceedings  commenced or  maintained  by, or
against, the Company.

Item 2.  Changes in Securities.

     None

Item 3.  Defaults Upon Senior Securities.

     The Company has no debt securities outstanding.

Item 4.  Submission of Matters to a Vote of Security Holders.

     There were no matters  submitted for a vote of the security  holders during
the period covered by this report.

Item 5.  Other Information.

     None

Item 6.  Exhibits and Reports on Form 8-K.

(a)  Exhibits

     None

(b)  Reports on Form 8-K

     No reports were filed on Form 8-K during the quarter  ended  September  30,
2000.


                                        7

<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

                            KUSHI NATURAL FOODS CORP.




Dated: New York, New York           By:  /s/ Dr. Eugene Stricker
                                         ---------------------------------------
May 14, 2001                             Dr. Eugene Stricker,
                                         President and Principal Executive and
                                         Financial Officer


                                    By:  /s/ Daniel A. France
                                         ---------------------------------------
                                         Daniel A. France, Treasurer and
                                         Principal Accounting Officer


                                        8