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, 2002

[ ]     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 May 13,2002 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, 2002
                                 --------------
                                   (Unaudited)


                                     ASSETS
                                     ------

Current Assets:

  Cash and Cash Equivalents                                           $  32,510
                                                                      ---------

Total Assets                                                          $  32,510
                                                                      =========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:

  Accounts Payable                                                    $  16,525

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             (198,568)
                                                          ---------

         Total Stockholders' Equity                                      15,985
                                                                      ---------

Total Liabilities and Stockholders' Equity                            $  32,510
                                                                      =========



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
                                                              Quarter Ended           August 1, 1996
                                                                March 31,              (Inception)
                                                       ----------------------------    To March 31,
                                                           2002            2001            2002
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues                                               $         --    $         --    $         --

Costs and Expenses:
  Selling, General and Administrative Expenses                2,792             421          60,232
                                                       ------------    ------------    ------------

Loss from Operations                                         (2,792)           (421)        (60,232)

Other Income:
  Interest Income                                                53             185           2,949
                                                       ------------    ------------    ------------

Loss from Continuing Operations                              (2,739)           (236)        (57,283)
                                                       ------------    ------------    ------------

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                                               $     (2,739)   $       (236)   $   (198,568)
                                                       ============    ============    ============

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
                                                                     Quarter Ended          August 1, 1996
                                                                        March 31,            (Inception)
                                                                -------------------------    To March 31,
                                                                   2002          2001           2002
                                                                -----------   -----------    -----------
<S>                                                             <C>           <C>            <C>
Cash Flows from Operating Activities:
  Net Loss                                                      $    (2,739)  $      (236)   $  (198,568)
  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                           (975)       (2,337)        16,525
                                                                -----------   -----------    -----------

Net Cash (Used) by Operating Activities                              (3,714)       (2,573)       (36,788)
                                                                -----------   -----------    -----------

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
                                                                -----------   -----------    -----------

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

Increase (Decrease) in Cash and Cash Equivalents                     (3,714)       (2,573)        32,510

Cash and Cash Equivalents - Beginning                                36,224        41,914             --
                                                                -----------   -----------    -----------

Cash and Cash Equivalents - Ending                              $    32,510   $    39,341    $    32,510
                                                                ===========   ===========    ===========

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
                                                                ===========   ===========    ===========
</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, 2002
                                   (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, 2002.

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, 2001 and 2002, were $2,739
and $ 236, respectively. The increase in the net loss resulted from an increase
in Selling, General and Administrative Expense (SG&A) from $421 to $2,729 and a
decrease in interest income ($185 in 2001 versus $53 in 2002). The increase in
SG&A reflects expenses incident to the Company's becoming a company required to
file reports under the Exchange Act of 1933. 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. Net loss increased during the
three month period ended March 31, 2002 over the net loss for the three month
period ended March 31, 2001 for the same reasons.


Liquidity and Capital Resources.

On March 31, 2002, the Company had $32,510 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 13, 2002                             ---------------------------------------
                                         Dr. Eugene Stricker,
                                         President and Principal Executive and
                                         Financial Officer


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

                                        8