United States
                       Securities and Exchange Commission

                              Washington, DC 20549
(Mark One)

                                   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  December 31, 2002
                                -----------------
                                       or

|_| 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 - 30927

                              Garuda Capital Corp.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Nevada                                          980209053
--------------------------------------------             ----------------------
State or other jurisdiction of incorporation                (I.R.S. Employer
            or organization                                Identification No.)

502-1978 Vine Street, Vancouver, BC                              V6K 4S1
--------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)

                                  604-837-0260
-------------------------------------------------------------------------------
               Registrant's telephone number, including area code:

--------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
require  to file  such  reports),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. |x| Yes |_| No

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                             PRECEDING FIVE YEARS:

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. |_| Yes |_| No

                       APPLICABLE ONLY TO CORPORATE USERS

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

Common Stock, $0.001 par value, 6,169,575 shares as February 14, 2003.





<PAGE>


                         PART I - FINANCIAL INFORMATION
                       _________________________________

                          ITEM 1. FINANCIAL STATEMENTS

                       _________________________________



The accompanying financial statements of Garuda Capital Corp. at December 31,
2002 and December 31, 2001 have been prepared by the Company's management and
they do not include all information and notes to the financial statements
necessary for a complete presentation of the financial position, results of
operations, and cash flows in conformity with accounting principles generally
accepted in the United States of America. In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature.

Operating results for the quarter ended December 31, 2002, are not necessarily
indicative of the results that can be expected for the year ending June 30,
2003.



<PAGE>













                           CONSOLIDATED FINANCIAL STATEMENTS


                           GARUDA CAPITAL CORP.
                           (FORMERLY VANSTAR FILMS, INC.)

                           VANCOUVER, BRITISH COLUMBIA, CANADA

                           December 31, 2002 AND 2001













                  1. CONSOLIDATED BALANCE SHEETS

                  2. CONSOLIDATED STATEMENTS OF OPERATIONS

                  3. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  4. CONSOLIDATED STATEMENTS OF CASH FLOWS

                  5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<PAGE>
<TABLE>
<CAPTION>


                                                                                           1

Garuda Capital Corp.

CONSOLIDATED BALANCE SHEETS
UNAUDITED

December 31, 2002 and June 30, 2002                                              (US Dollars)

                                                               December 31,      June 30,
                                                                  2002             2002
--------------------------------------------------------------------------------------------
<S>                                                         <C>               <C>
ASSETS

Current
    Cash                                                    $       11,974    $         --
    Subscriptions receivable                                          --             100,000
    Accounts receivable                                            298,666           210,834
    Available-for-sale securities                                  245,589           204,186
    Inventory, net                                                 325,182           365,989
    Prepaid expenses                                                20,823            20,523
--------------------------------------------------------------------------------------------
    Current assets                                                 902,234           901,532

Property and equipment, net                                        396,835           401,826
Goodwill                                                           661,524           661,524
--------------------------------------------------------------------------------------------
                                                            $    1,960,593    $    1,964,882
============================================================================================

LIABILITIES
Current
    Bank indebtedness                                       $      228,193    $       10,624
    Bank loan                                                      186,400              --
    Accounts payable and accrued expenses                          394,000           363,563
    Accounts payable - related parties                              19,293              --
    Unearned revenue                                                17,649            35,297
    Current portion of long term debt                                3,113             3,951
--------------------------------------------------------------------------------------------

    Current liabilities                                            848,648           413,435

Long term debt                                                      11,427             6,166
Amounts due to shareholders                                           --             432,504
--------------------------------------------------------------------------------------------

                                                                   860,075           852,105
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value; authorized 10,000,000;
     Issued: None                                                     --                --
Common stock, $0.001 par value; authorized 50,000,000;
     Issued: 6,049,575;                                              6,050             6,050
Capital in excess of par value                                   2,359,801         2,359,801
Translation adjustment                                               5,866             3,340
Deficit                                                         (1,271,199)       (1,256,414)
--------------------------------------------------------------------------------------------

                                                                 1,100,518         1,112,777
--------------------------------------------------------------------------------------------
                                                            $    1,960,593    $    1,964,882
============================================================================================


The accompanying notes are an integral part of these statements.

                                                                                          4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


Garuda Capital Corp.

CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

Three Months ended December 31, 2002 and 2001
Six Months ended December 31, 2002 and 2001                                                               (US Dollars)


                                                       Three Months ended                      Six Months ended
                                                           December 31,                          December 31,
                                                     2002                2001              2002                2001
----------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                 <C>               <C>
REVENUE
Sales                                          $      846,835      $           -       $ 1,544,540       $          -
Cost of goods sold                                    546,928                  -         1,005,392

----------------------------------------------------------------------------------------------------------------------
                                                      299,907                  -           539,148
EXPENSES
General and administrative                            302,595              7,723           548,034             10,232
Depreciation                                           13,538                               24,661
Advertising and promotion                                   -                                3,354
Equipment, Premises Leases                             31,193                               31,193
----------------------------------------------------------------------------------------------------------------------

                                                      347,326              7,723           607,242             10,232
Loss before other items                               (47,419)            (7,723)          (68,094)           (10,232)
Gain/loss on sale of marketable securities             17,138                              13,863
----------------------------------------------------------------------------------------------------------------------

NET LOSS                                              (30,281)            (7,723)          (54,231)           (10,232)

COMPREHENSIVE INCOME (LOSS)
Unrealized loss/gain on marketable                    114,484                               37,198
securities
Gain from foreign currency translation                  2,248              2,850             2,248              4,942
----------------------------------------------------------------------------------------------------------------------

NET COMPREHENSIVE INCOME (LOSS)                   $     86,451      $     (4,873)       $  (14,785)       $    (5,290)
=====================================================================================================================

NET INCOME (LOSS) PER COMMON SHARE - BASIC AND          0.015                  0                 0                  0
FULLY DILUTED
----------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES            6,049,575          4,951,500         6,049,575          4,951,500
OUTSTANDING
----------------------------------------------------------------------------------------------------------------------





The accompanying notes are an integral part of these statements.


                                                                                                                    5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


Garuda Capital Corp.

CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

Six Months ended December 31, 2002 and 2001                                 (US Dollars)



                                                                    2002          2001
----------------------------------------------------------------------------------------
<S>                                                              <C>          <C>
OPERATIONS
Net loss                                                         $ (14,785)   $  (5,290)
Items not involving cash:
    Depreciation                                                    24,661         --
    Gain/Loss on foreign currency translations                       2,526         --
    Gain/Loss on sale of marketable securities                     (13,863)        --
    Unrealized gain/loss on marketable securities                  (37,198)        --
Changes in operating assets and liabilities:
    Increase/Decrease in accounts receivable                       (87,832)        --
    Increase/Decrease in prepaid expenses                             (300)        --
    Increase/Decrease in accounts payable and accrued expenses      30,437       29,369
    Increase/Decrease in inventory                                  40,807         --
    Increase/Decrease in unearned revenue                          (17,648)     (24,418)
    Increase/Decrease in accounts payable - related party           19,293
----------------------------------------------------------------------------------------
          Net cash provided by used by operating activities        (53,902)        (339)

FINANCING
Increase in bank indebtedness                                      217,569         --
Decrease in subscription receivable                                100,000         --
Draws on bank loan                                                 186,400         --
Draw on long term debt                                               4,423         --
Cash paid to shareholders                                         (432,504)        --
----------------------------------------------------------------------------------------
          Net cash provided by financing activities                 75,888            0

INVESTING
Sale of marketable securities                                      226,151         --
Purchase of marketable securities                                 (216,493)        --
Cash paid for purchase of property and equipment                   (19,670)        --
----------------------------------------------------------------------------------------
          Net cash used by investing activities                    (10,012)           0

Net increase (decrease) in cash                                     11,974         (339)

Cash, beginning of period                                             --            520
----------------------------------------------------------------------------------------
CASH, end of period                                              $  11,974    $     181
========================================================================================




The accompanying notes are an integral part of these statements.
                                                                                     6
</TABLE>


<PAGE>


Garuda Capital Corp.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months ended December 31, 2002 and 2001                       (US Dollars)


1.  NATURE OF OPERATIONS AND BASIS OF PRESENTATION
--------------------------------------------------------------------------------

Organization - The Company was  incorporated  in Nevada on July 8, 1997 and is a
public  company traded on the NASDAQ OTC bulletin  board.  On February 14, 2002,
the Company changed its name from Vanstar Films, Inc. to Garuda Capital Corp.

Nature of Operations - The Company, through it subsidiaries, sells and processes
specialty food products and herbal  medication to wholesale and retail customers
in North America.

For the period  ended  December  30,  2002,  the Company  incurred a net loss of
$30,281.  The Company's ability to continue its operations and to realize assets
at their  carrying  values  is  dependent  upon  the  continued  support  of its
shareholders,  obtaining additional financing and generating revenues sufficient
to cover its operating costs.  Management's plans in regard to these matters are
to raise additional equity funds as needed to meet any operating needs.

The financial  statements do not give effect to any  adjustments  which would be
necessary  should  the  Company be unable to  continue  as a going  concern  and
therefore be required to realize its assets and  discharge  its  liabilities  at
amounts  different  from  those  reflected  in  these   consolidated   financial
statements.

2.  SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------
Principles of consolidation and basis of accounting - The consolidated financial
statements   include  the   accounts  of  the  Company  and  its  wholly   owned
subsidiaries, as follows:

Garuda  Ventures  Canada Inc. and Garuda Gold Corp.  are companies  holding idle
working capital as investments in marketable  securities.  Hagensborg Foods Ltd.
processes and sells specialty food products to wholesale and retail customers in
North America. Hagensborg Seafoods Ltd. processes and sells high-quality seafood
products  throughout  North America.  Natural  Program Inc. sells natural herbal
products to wholesale and retail  customers in North  America.  Natural  Program
Ltd.  provides  natural herbal  medication to wholesale and retail  customers in
North America.

Approximately  90% of  Hagensborg  Foods  revenues  are derived  from the United
States with the remaining 10%  originating in Canada.  100% of the of Hagensborg
Foods  assets  and  liabilities   originate  in  Canada.  100%  of  the  assets,
liabilities,  and revenues of Natural  Program,  Inc.  originate in Canada.  The
other entities included in the  consolidation are located 100% in Canada.  Their
assets and operations are maintained solely in Canada.

Available-for-sale  securities - The Company has invested in various  securities
classified as  available-for-sale  at December 30, 2002.  These  securities  are
carried  at market  value on the  balance  sheet,  with the change in fair value
reported as a component of other comprehensive income.

Inventory - Inventory is recorded at the lower of average  cost or market.  Cost
includes  materials,   labor  and  applicable  warehouse  overhead.   Market  is
replacement  cost for raw  materials and supplies and net  realizable  value for
finished  goods.  The Company has  recorded an allowance of $25,000 for the year
ended June 30, 2002 for inventory obsolescence.


                                                                               7
<PAGE>


Garuda Capital Corp.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued


Three Months ended December 31, 2002 and 2001                       (US Dollars)


Goodwill - Goodwill  represents the excess of the cost of the  acquisition  over
the fair value of the net  identifiable  assets  acquired.  Under  Statement  of
Financial Accounting Standards No. 142, on an ongoing basis,  management reviews
the valuation of goodwill, including any events and circumstances which may have
impaired its fair value. If impairment exists, the amount is written off, rather
than being  amortized  as previous  standards  required.  The amount of goodwill
impairment,  if any, is determined by assessing recoverability based on expected
future cash flows and market conditions.  Any impairment,  other than temporary,
in the carrying value is charged to earnings in the year incurred.


2.  SIGNIFICANT ACCOUNTING POLICIES (continued)
--------------------------------------------------------------------------------

Revenue  recognition  -  Revenue  from  the sale of  products  to  customers  is
recognized at the time goods are shipped.

Property  and  equipment  - Property  and  equipment  is  recorded  at cost less
accumulated depreciation. Depreciation is provided for over the estimated useful
lives of the assets on the following basis and annual rates:

Asset                                       Basis                          Rate
--------------------------------------------------------------------------------
Manufacturing equipment                     Straight-line               15 years
Manufacturing tools                         Straight-line               15 years
Furniture and fixtures                      Straight-line               15 years
Leasehold improvements                      Straight-line                    20%
Computer hardware and software              Straight-line               15 years
Trademarks                                  Declining balance                20%

Foreign currency  translation - As the majority of the Company's  operations are
in Canada,  the  Canadian  dollar has been  chosen as the  Company's  functional
currency.  All Canadian dollar  denominated  balances and transactions have been
translated  into US  funds as  follows:  monetary  assets  and  liabilities  are
translated  at current  rates of exchange and other assets and  liabilities  are
translated at historical rates of exchange.  Revenue and expenses are translated
at  average  rates  of  exchange  for the  year,  except  for  depreciation  and
amortization that are translated at rates in effect when the related assets were
acquired.  All exchange gains and losses are recorded as a separate component of
shareholders' equity.

Leases - Leases are  classified  as capital or  operating  leases.  Leases which
transfer  substantially  the entire  benefits and risks incident to ownership of
property are accounted for as capital leases. All other leases are accounted for
as  operating  leases and the related  lease  payments are charged to expense as
incurred.

Fair value of financial  instruments - Substantially all of the Company's assets
and liabilities are carried at fair value or contracted amounts that approximate
fair value.  Estimates of fair value are made at a specific point in time, based
on relative market  information and information about the financial  instrument,
specifically,  the value of the underlying financial instrument. Assets that are
recorded at fair value consist largely of short-term  receivables and marketable
securities, which are carried at contracted amounts that approximate fair value.
Similarly,  the  Company's  liabilities  consist of short term  liabilities  and
shareholder loans recorded at contracted amounts that approximate fair value.

                                                                               8

<PAGE>

Garuda Capital Corp.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued


Three Months ended December 31, 2002 and 2001                       (US Dollars)

Income  taxes - Income  taxes are  accounted  for under the asset and  liability
method.  Deferred tax assets and  liabilities  are  recognized for future timing
differences   between  the  financial   statement  carrying  amounts  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary differences are expected to be recovered.

Use of estimates - The  preparation of financial  statements in conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Long-lived  assets - The Company  reviews its  long-lived  assets for impairment
whenever changes in circumstances  indicate that the carrying amount of an asset
may not be  recoverable.  For  purposes  of  evaluating  the  recoverability  of
long-lived assets,  the recoverability  test is performed using undiscounted net
cash flows estimated to be generated by the asset.


3.  BANK INDEBTEDNESS
--------------------------------------------------------------------------------
The Company has a demand  credit  facility.  It is  personally  guaranteed  by a
shareholder of the Company. Outstanding advances bear interest at prime plus 2%.


4.  CAPITAL LEASE OBLIGATIONS
--------------------------------------------------------------------------------
Future  minimum  payments and the  obligations  due under capital  leases are as
follows as of June 30, 2002:
--------------------------------------------------------------------------------

                                                  2002           2001

-------------------------------------------------------------------------------
    2003                                   $    5,164              -
    2004                                        5,164              -
    2005                                        2,128              -
--------------------------------------------------------------------------------
                                               12,456              -
Less amount representing interest              (2,339)             -
--------------------------------------------------------------------------------
                                               10,117              -
Less current portion                           (3,951)             -
--------------------------------------------------------------------------------
                                           $    6,166              -
================================================================================

Interest of $502 was imputed on the capital leases, at a rate of 1.88%.


5.  AMOUNTS DUE TO SHAREHOLDERS
--------------------------------------------------------------------------------

Advances due to  shareholders  are unsecured,  non-interest  bearing and have no
specific terms of repayment. Garuda Capital Corp.



<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued


Three Months ended December 31, 2002 and 2001                       (US Dollars)



6. COMMITMENTS
--------------------------------------------------------------------------------

The Company leases certain premises and equipment. Annual minimum lease payments
are due as of June 30, 2002 :

         2003                                           $      108,018
         2004                                                   15,408
         2005                                                    9,209
         2006                                                        -
         2007                                                        -
--------------------------------------------------------------------------------
                                                        $      132,635
================================================================================



7. OFF-BALANCE SHEET RISKS
--------------------------------------------------------------------------------

The Company has purchased  securities as investments and may incur losses if the
market value of these securities decline subsequent to December 30, 2002.

During the three  Months ended  December 30, 2002,  the Company had sales to two
customers representing 25% and 12% of the Company's total revenue.




                                                                              10
<PAGE>


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

Our original goal from  inception in July 1997 was to develop a film  production
business.  These efforts were abandoned in September  2001. On September 7, 2001
all existing officers and directors resigned and new officers and directors were
appointed to evaluate new business opportunities.  By two agreements dated April
1, 2002, we acquired  Hagensborg Foods Ltd., a Vancouver-based  manufacturer and
marketer of fine  chocolates and other gourmet foods and Natural Program Inc., a
manufacturer and distributor of natural medicine.

We have incorporated two further  subsidiaries,  Garuda Ventures Canada Inc. and
Garuda Gold  Corporation.  Both  companies  are  incorporated  under the laws of
British  Columbia,  Canada.  Both  companies  hold idle  working  capital  to be
invested in marketable securities. The companies have no other assets.


Results of Operations Three Months ended December 2002 vs. 2001 - Garuda Capital
Corp. on Consolidated Basis

During the second quarter of fiscal 2003, we realized total revenues of $846,835
and the net loss for the quarter ended December 31, 2002 was $30,281.


Liquidity  and Capital  Resources  Three Months ended  December  2002 vs. 2001 -
Garuda Capital Corp. on Consolidated Basis

We believe  that sales from our new  subsidiaries  will not  provide  sufficient
capital  resources  to sustain  operations  and fund product  development  until
fiscal year 2003/2004. While we have received a "going concern" opinion from our
auditors,  we expect to raise  capital  through the  conversion  of  outstanding
warrants and equity  sales as  necessary to fund future  growth until we operate
above the  break-even  point.  We  continually  evaluate  opportunities  to sell
additional  equity or debt securities,  or obtain credit facilities from lenders
to  strengthen  our  financial  position.  The  sale  of  additional  equity  or
convertible  debt  securities  could  result  in  additional   dilution  to  our
stockholders.

In order to be more  informative  regarding  the results of  operations  and the
liquidity and capital  resources,  discussion  thereof will be separated between
Hagensborg Foods Ltd. and Natural Program Inc.


Results of  Operations  for the Three  Months  ended  December  2002 vs.  2001 -
Hagensborg Foods Ltd.

Revenues of  $815,175 in the three  months  ended  December  31, 2002 were 56.7%
higher than the $520,111 in revenues  reported for the three months period ended
December 31, 2001.  The increase was due to the  additional  revenue gained from
the recently acquired Seafood Pates product line.


                                                                              11
<PAGE>

Gross profit for the three months  ended  December 31, 2002 was $276,853  versus
$171,946 in 2001.  Gross profit  percentage of 34% in 2002 was higher versus 33%
in 2001.  The  increase  in gross  profit  percentage  was largely due to higher
margins associated with the Seafood pate product line.

Net income for the three  months  ended  December  31, 2002 was  $19,067  versus
$24,835 for the same period in 2001,  representing a 23% decrease in net income.
The  decrease  in net  income  was  primarily  due to the  additional  sales and
marketing expenses associated with new product development.

Our sales and marketing costs consist primarily of personnel costs, advertising,
promotions,  and  tradeshows.  Total costs were  $257,786 and $147,111 for three
months ended December 31, 2002 and 2001  respectively.  The increase of $110,675
is largely due to  additional  marketing  costs of the new Seafood pate line and
product  development  costs.  We anticipate  that sales and marketing costs will
continue to grow over the foreseeable future as we implement our business growth
strategies.

Our general and  administrative  costs  consist  primarily of  personnel  costs,
professional  and legal costs,  consulting  fees, and general office costs.  Our
general and  administrative  costs were $59,635 and $53,579 for the three months
ended  December  31, 2002 and 2001,  respectively.  The  increase in general and
administrative  costs  between  the two  periods  is  largely  the  result of an
increase in interest and bank  charges.  General and  administrative  costs as a
percentage of revenue increased between the two periods as a result of increases
in expenses over the same periods. We anticipate that general and administrative
costs will remain stable over the foreseeable future.

Our premise and  equipment  leases were $31,193 and $32,995 for the three months
ended December 31, 2002 and 2001, respectively. Our lease expires March 31, 2003
and the premise owner has offered to reduce the lease space to match our needs.


Liquidity  and Capital  Resources  for the Three Months ended  December 2002 vs.
2001 - Hagensborg Foods Ltd.

Since inception through April 1, 2002 when Hagensborg Foods Ltd. was acquired by
Garuda Capital Corp.,  we have financed our operations  partly through  revenues
for  operations and bank credit  facilities,  and partly through the issuance of
equity shares and convertible debentures. We have not been able to operate above
the break-even  point for the last four fiscal years and have had to rely on our
parent company for capital resources. We believe that sales from our new product
lines  will add new  capital  resources,  but may not be  sufficient  to sustain
operations and fund new product launches until fiscal 2003/2004.


                                                                              12
<PAGE>

During the three months ended  December 31, 2002,  our current assets to current
liabilities ratio increased from 0.74 to 1.12.  Current assets increased $23,373
from  $484,280  to  $608,899.  This  was  primarily  due to  increased  accounts
receivable levels during our busiest quarter of the year.

Noncurrent  assets  increased  by $45,178 net of  depreciation  during the three
months  ended  December  31,  2002 mainly due to the newly  acquired  production
equipment associated with our Seafood business.

Cash flows  provided from  operations  were $8,602 during the three months ended
December 31, 2002; cash flows used in financing  activities included the partial
repayment of a $200,000 bank loan in the amount of $13,600.



Results of Operations for the Three Months ended December 2002 vs. 2001- Natural
Program Inc.

Natural Program Inc. is a start-up  operation.  Its revenue for the three months
ended  December 31, 2002 was $22,924 and its gross profit was $14,237.  Net loss
for the three months ended December 31, 2002 was $11,696.

Currently,   our  sales  consist  mostly  of  Chinese  herbal   formulations  to
practitioners of traditional  Chinese medicine on a wholesale basis. We sell the
herbs to  practitioners  for a  wholesale  price and they in turn retail them to
their patients with a mark-up  (usually 100%). We collect the difference for the
practitioners  and balance their accounts at the end of every month. In addition
to our range of Chinese herbs, we are in the process of test marketing a line of
Western herbal remedies in the Vancouver  market.  As we implement our marketing
plan for this product  category in Western  Canada,  the Pacific  North West and
subsequently  the rest of  Canada  and the  United  States  we  expect  sales to
increase over the coming year.

During the three months ended  December 31, 2002,  our total  payroll  increased
from $5,429 in the three months  ended  December 31, 2001 to $7,156 in the three
months  ended  December  31,  2002.  This  increase  in mainly  due to the labor
intensity  of preparing  custom  formulation  and the  resulting  necessity  for
additional staff. In the future, as we implement our growth plans, we anticipate
to hire two new employees to take on sales,  marketing and accounting  functions
which will result in decreased consulting expenses.

Office and General  expenses  increased  from  $12,813 in the three months ended
December 31, 2001 to $18,777 in 2002. The higher  expenses in 2002 include added
costs  associated  with  administering  a public  company,  including  legal and
accounting fees.

We  anticipate  to incur sales and  marketing  costs,  including  hiring a sales
person,  broker fees and tradeshow  attendance fees as we implement our business
growth strategies.


                                                                              13
<PAGE>

Liquidity  and Capital  Resources  for the Three Months ended  December 2002 vs.
2001 - Natural Program Inc.

Since inception  through April 1, 2002 when Natural Program Inc. was acquired by
Garuda Capital Corp. we have financed our operations partly through revenues and
bank credit facilities, and partly through the issuance of equity shares. We are
not yet able to  operate  above  the  break-even  point  and have to rely on our
parent company for capital resources. We believe that additional sales resulting
from our increased marketing efforts will add new capital resources, but may not
be sufficient to sustain  operations and fund new product  launches until fiscal
2003/2004.

In the three months ended  December 31, 2002,  our current assets to liabilities
ratio  decreased  from 1.29 to 0.27.  Current  assets  increased from $14,250 to
$21,826  was  primarily  due to  increased  inventory  levels to support  sales.
Noncurrent  assets increased from $35,767 to $43,692 net of depreciation  during
the three months ended December 31, 2002.

Total liabilities  increased from $24,236 in the three months ended December 31,
2001 to $90,681 in 2002.  This  includes  $80,447  in  current  liabilities  and
$10,233 in long-term debt.  Current  liabilities  include and inter-company loan
from our parent company of $32,862.



Item 3. Controls and procedures

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information  required to be disclosed in the Company's  Exchange Act
reports is recorded, processed,  summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and  communicated  to the Company's  management,  including its Chief  Executive
Officer and Chief Financial Officer,  as appropriate,  to allow timely decisions
regarding  required  disclosure  based closely on the  definition of "disclosure
controls and  procedures"  in Rule  13a-14(c).  In designing and  evaluating the
disclosure controls and procedures,  management recognized that any controls and
procedures,  no  matter  how  well  designed  and  operated,  can  provide  only
reasonable assurance of achieving the desired control objectives, and management
necessarily  was required to apply its judgment in evaluating  the  cost-benefit
relationship of possible controls and procedures.

Within 90 days prior to the date of this  report,  the  Company  carried  out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls  and  procedures.  Based on the  foregoing,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.

There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect the internal controls subsequent
to the date the Company completed its evaluation.


                                                                              14
<PAGE>

PART II     OTHER INFORMATION

Item 1.   Legal Proceedings.      None.


Item 2.   Change in Securities for the recent issuance of shares

In January 2003, we issued the following common shares:

40,000  shares to John  Curry,  a former  director  in  consideration  of and as
payment of the Corporation's debt to Mr. Curry in the amount of $12,000.

25,000  shares to Birgit Troy,  our  Secretary as a bonus for  recruiting  Joyce
Groote.

25,000 shares to BCG Inc., a company  controlled  by Joyce Groote,  as a signing
bonus for the  services  of Joyce  Groote  and  30,000  shares  to BCG Inc.,  as
consideration  for the future  services of Joyce  Groote.  The shares shall vest
with BCG Inc., in twelve month  instalments  of 2,500 shares  beginning  January
2003.

With respect to the sales made, we relied on Section 4(2) of the  Securities Act
of 1933, as amended.  No  advertising  or general  solicitation  was employed in
offering the  securities.  The  securities  were offered solely to accredited or
sophisticated  investors who were provided all of the current public information
available on Garuda Capital Corp.


Item 3.   Defaults Upon Senior Securities.  None.

Item 4.   Submission  of  Matters  to  a  Vote  of  Security Holders.  None.

Item 5.   Other Information.

John Curry, a member of the Board of Directors and Garuda's CFO has resigned his
positions and Juergen Wolf has been appointed an independent director, effective
October  10,  2002.  Mr.  Wolf  brings  his  entrepreneurial  spirit  as well as
extensive manufacturing expertise to Garuda Capital. He has enjoyed a successful
career as both an owner and operator of several  businesses in construction  and
manufacturing.  As a key member of Hagensborg Foods Ltd.'s Board of Directors he
played a critical role in planning and executing the  acquisition  of Hagensborg
by Garuda Capital.  Mr. Wolf is currently a Director of several public companies
including  US Oil and Gas  (TSX:  USR),  Tasty  Fries  Inc.  (OTC BB:  TFRY) and
Shoreham Resources (TSX: SMH).

Pascal  Roy,  President  and  director  of our  subsidiary  Natural  Program has
resigned his  positions  effective  September  30, 2002.  To replace him,  Joyce
Groote was appointed as the new President and CEO of Natural  Program  effective
January 3, 2003.  Mrs.  Groote's first priority will be to develop an aggressive
business strategy with the initial focus on increasing sales. She comes with the
necessary  science  and  business  background  to  develop  and  implement  this
strategy.



                                                                              15
<PAGE>

Mrs.  Groote holds an MSc degree in Genetics from the  University of Alberta and
MBA from the  University of Ottawa.  Throughout her career she has been involved
with  many  sectors  ranging  from   biotechnology   to  functional   foods  and
nutraceuticals.  She has in depth  knowledge and experience  with the regulatory
system  as  well  as  the  business   community   and  has  developed  a  strong
national/international network with companies involved in life sciences.


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

     (a)  Exhibits:

2.1 (1)     --         Hagensborg Foods Ltd. Acquisition Agreement
2.2 (1)     --         Natural Program Inc. Acquisition Agreement
3.1 (2)     --         Articles of Incorporation
3.2 (1)     --         Bylaws
3.3 (1)     --         Articles of Amendment
11          --         Statement RE: Computation of Per Share Earnings
99.1        --         Section 906 Certification



1.   Incorporated  by reference from Form 10-kSB Annual Report filed on or about
     October 15, 2002

2.   Incorporated by reference from Form 10-SB registration statement SEC File #
     filed on or about June 29, 2000

         (b)      Reports on Form 8-K:      None

--------------------------------------------------------------------------------
                                   SIGNATURES
--------------------------------------------------------------------------------

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                                GARUDA CAPITAL CORP.
                                    [Registrant]


                                /s/ C. Robin Relph
                                -----------------------------
Date February 14, 2003          C. Robin Relph, CEO/CFO




Certification of Principal  Executive  Officer and Principal  Financial  Officer
Regarding Facts and Circumstances Relating to Exchange Act Filings



                                                                              16
<PAGE>

I, C. Robin Relph, certify that:

1.   I have read this quarterly report on Form 10-QSB of Garuda Capital Corp.;

2.   Based on my knowledge,  the 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 the report.

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

4.   I am the only certifying officer and I:

     (a)  am responsible for  establishing and maintaining  internal  disclosure
          controls and procedures for the company;
     (b)  have designed such  disclosure  controls and procedures to ensure that
          material  information  relating  to the company is made known to me by
          others within the company, particularly during the period in which the
          periodic reports are being prepared;
     (c)  have evaluated the effectiveness of the issuer's  disclosure  controls
          and procedures as of a date within 90 days prior to the report; and
     (d)  have presented in the report my conclusions about the effectiveness of
          their disclosure  controls and procedures based on my evaluation as of
          that date;

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

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


                                                                              17
<PAGE>

6.   I have  indicated  in the  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  their  evaluation,
     including any corrective  actions with regard to  significant  deficiencies
     and material weaknesses.

BY:  /s/ C. Robin Relph
     ------------------------
     President and CEO
     (Principal Executive Officer and
     Principal Financial Officer)

DATE:  February 14, 2003                  Subscribed and sworn to before me this
                                          14th day of February 2003

                                          /s/ G. Arnold Armstrong
                                          -----------------------
                                          Notary Public

                                          My Commission Expires: At the pleasure
                                          of the queen of England.




                                                                              18
<PAGE>


Exhibit 99.1



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly  Report of Garuda Capital Corp. (the "Company")
on Form 10-QSB for the six month period  ending  December 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"),  I, C.
Robin Relph,  Chief  Executive  Officer and Chief  Financial  Officer,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

         (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.



February  12, 2003               /s/ C. Robin Relph
-------------------              --------------------------------------------
                                  C. Robin Relph
                                  Chief Executive Officer
                                  Chief Financial Officer





                                                                              19