SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                  FORM 10-QSB/A

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

                  For the quarterly period ended March 31, 2004

[ ] TRANSITION REPORT UNDER SECTION 14 OR 15(D) OF THE EXCHANGE ACT

                  For the transition period from__________ to ___________


                          XSTREAM BEVERAGE GROUP, INC.
                          ----------------------------
                (Name of Registrant as specified in its charter)


           NEVADA                       33-30158-A             05-0547629
          --------                     ------------            -----------
(State or other jurisdiction of     (Commission File          (IRS Employer
incorporation or organization)             No.)             Identification No.)


   4800 NW 15th Avenue Bay A Fort Lauderdale, Florida 33309       (954)598-7997
--------------------------------------------------------------------------------
          (Address and telephone number of principal executive offices)

Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, (or such
shorter period that the Registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.

         Yes  [X]                   No   [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

           CLASS                                  Outstanding at May 14, 2004
----------------------------                      ---------------------------
Common Stock $.001 par value                               42,376,618




<PAGE>




                          XSTREAM BEVERAGE GROUP, INC.



PART I:   FINANCIAL INFORMATION                                             PAGE
                                                                            ----

          Balance Sheet as of March 31, 2004 (Unaudited)                     3
          Restated - Note 1 (B)

          Statement of Operations for the three months ended
             March 31, 2004
          (Unaudited) Restated - Note 1 (B)
             and March 31, 2003                                              4

          Statement of Cash Flows for the Three Months
          Ended March 31, 2004; Restated - Note 1 (B)
          (Unaudited) and Three Months Ended March 31, 2003                  5

          Notes to Consolidated Financial Statements
          (Unaudited) as of March 31, 2004                                   6

          Management Discussion and Analysis of Financial
          Condition and Results of Operations                                17



PART II: OTHER INFORMATION                                                   21


                                        2



<PAGE>

                      XSTREAM BEVERAGE GROUP INC. and SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEET
                                     MARCH 31, 2004
                                 RESTATED - NOTE 1 (B)
                                      (Unaudited)

<TABLE>
<CAPTION>

 <S>                                                                       <C>
ASSETS
     Current Assets:
        Cash                                                               $     53,642
        Accounts Receivable, net                                                175,652
        Inventory                                                               207,448
        Notes Receivable - Current                                                   --
        Other Current Assets                                                     12,137
                                                                           ------------
            Total Current Assets                                           $    448,879
                                                                           ------------
     Property and Equipment, Net                                                104,805
     Investment in Subsidiaries                                                      --
     Deferred Compensation                                                           --
     Trademarks                                                                 348,000
     Customer Lists, net                                                        186,124
     Goodwill                                                                   216,315
     Other Assets                                                                 8,750
                                                                           ------------
TOTAL ASSETS                                                               $  1,312,873
                                                                           ============
LIABILITIES &SHAREHOLDER'S DEFICIENCY
     Liabilities:
        Current Liabilities:
            Accounts Payable                                               $    740,885
            Accrued Expenses                                                    569,282
            Cash Overdraft                                                           --
            Loans - related parties
            Loans                                                               840,405
            Convertible Debenture
            Other Current Liabilities                                            36,086
                                                                           ------------
               Total Current Liabilities                                      2,186,658
                                                                           ------------


        Long Term Liabilities:
            Loans                                                                52,305
                                                                           ------------
               Total Long Term Liabilities                                       52,305
                                                                           ------------
     Shareholder's Deficiency:
        Preferred Stock, $0.001 par value, 10,000,000 shares authorized,            200
            Series A, 200,000 shares issued and outstanding
        Common Stock, $0.001 par value, 50,000,000 shares authorized,            36,303
            36,301,802 shares issued and outstanding
        Common Stock Issuable (1,514,227 shares)                                  1,514
        Paid in Capital                                                      18,907,507
        Accumulated Deficit                                                 (19,609,164)

            Less: Stock subscription receivable
            Less: Deferred consulting                                           (75,700)
            Less: Deferred Fees                                                (186,750)
                                                                           ------------
               Total Shareholder's Deficiency                                  (926,090)
                                                                           ------------
TOTAL LIABILITIES &SHAREHOLDER'S DEFICIENCY                                $  1,312,873
                                                                           ============
</TABLE>

                 See accompanying notes to financial statements.

                                        3

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. and SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                              RESTATED - NOTE 1 (B)
                                   (Unaudited)


                                             Three Months Ended
                                                  March 31,
                                         ----------------------------
                                             2004            2003
                                         ------------    ------------

Sales                                    $    604,560    $     10,304

Cost of Goods Sold                            517,639           4,612
                                         ------------    ------------
Gross Profit                                   86,921           5,692

Expense
  Marketing & Selling                         186,719              --
  Warehouse & Delivery                         41,474              --
  Compensation                              1,722,901         127,985
  Rent                                         39,973           7,791
  Consulting Fees                             169,096         617,941
  Professional Fees                            69,956          53,283
  Guarantee Fee                               125,250              --
  Other General & Administrative              158,804          76,942
                                         ------------    ------------
     Total Operating Expense                2,514,172         883,942
                                         ------------    ------------
Loss From Operations                       (2,427,252)       (878,250)

Other Income/(Expense)

  Other Income                                 29,375              --
  Settlement gain                                  --              --
  Interest Income                            (299,042)         42,118
  Interest Expense                             (4,634)        (51,667)
  Settlement loss                             (20,921)             --
  Other expense                               (18,021)             --
                                         ------------    ------------
     Total Other Income/(Expense)            (313,243)         (9,549)
                                         ------------    ------------
Net Loss                                 $ (2,740,495)   $   (887,799)
                                         ============    ============

Net Loss per share - Basic and diluted   $      (0.10)   $      (0.09)
                                         ============    ============

Weighted Average Shares Outstanding -
  Basic and diluted                        27,238,945      10,218,110
                                         ============    ============

                  See accompanying notes to financial statements.

                                        4



<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              RESTATED - NOTE 1 (B)
                                   (Unaudited)


                                             For the Three Months Ended
                                                      March 31,
                                              ------------------------
                                                 2004           2003
                                              -----------    ---------
   CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Loss                                 $(2,740,495)   $(887,799)
     Adjustments to reconcile net cash
       used in operations:
       Depreciation                                 1,983          236
       Amortization of Deferred Expenses          216,800       51,667
       Gain on Conversion of Debt                  (3,000)          --
       Interest Income on
         subscription receivable                  299,042      (42,090)
       Stock issued for debt conversion             6,809           --
       Stock based expenses                     1,567,265      465,025
       Stock based settlement                      23,921      193,000

     Changes in operating assets and liabilities:
       Accounts receivable                        (48,894)     (10,304)
       Inventory                                    3,526      (28,203)
       Prepaids and other current assets           (4,731)          --
       Other assets and deposits                   30,885           --
       Accounts payable                           (55,027)       8,056
       Accrued expenses                            48,655       84,818
       Other current liabilities                    4,749           --
                                              -----------    ---------
  Net cash used in operating activities          (648,512)    (165,594)
  CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisitions                                (140,500)          --
     Proceeds from return of deposit                   --       25,000
     Advance to pending acquiree                       --      (25,000)
                                              -----------    ---------
  Net cash used in investing activities          (140,500)          --

  CASH FLOWS FROM FINANCING ACTIVITIES:
     Loan proceeds                                 12,499       70,514
     Proceeds from sale of common stock           930,696       17,200
     Cash overdraft (repayment)                   (27,898)          --
     Proceeds from related party loans             25,000       36,500
     Offering costs                              (108,370)      (1,950)
     Repayments of non-related party loans         (9,077)          --
     Repayments of related party loans            (31,960)          --
                                              -----------    ---------
Net cash provided by financing activities         790,890      122,264
                                              -----------    ---------
Net cash increase (decrease)                        1,878      (43,330)
Cash at beginning of period                        51,764       46,298
                                              -----------    ---------
Cash at end of period                         $    53,642    $   2,968
                                              ===========    =========

Supplemental Disclosure of
  Non-cash Investing and
  Financing Activities:

       Interest Paid                          $     4,634    $      --
       Common stock issued for acquisitions   $   126,000    $      --
       Common stock issued for services       $ 1,567,265    $ 465,025
       Common stock issued for settlements    $    23,921    $ 193,000
                                              -----------    ---------
                                              $ 1,721,820    $ 658,025
                                              ===========    =========

                 See accompanying notes to financial statements.

                                        5

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 1 - STATEMENT OF ACCOUNTING PRESENTATION AND OTHER INFORMATION:
-------------------------------------------------------------------

(A) BASIS OF PREPARATION AND SUMMARY OF ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements of XStream Beverage
Group, Inc and its subsidiaries (XStream) have been prepared in accordance with
generally accepted accounting principles for interim consolidated financial
information. Accordingly, they do not include all the information and notes
necessary for comprehensive consolidated financial statements.

It is management's opinion, all material adjustments (consisting of normal
recurring adjustments) that are considered necessary for a fair presentation
have been included. Results for the interim periods presented are not
necessarily indicative of the results that might be expected for the entire
fiscal year.

XStream completed the first four acquisitions anticipated in its business
strategy as follows, Beverage Network of South Florida, ("BNSF) on April 9,
2003; Beverage Network of Connecticut, Inc. ("BNCT") on May 1, 2003; Beverage
Network of Hawaii ("BNHI") on March 1, 2004; Beverage Network of Massachusetts
("BNMA") on March 15, 2004. These acquisitions were accounted for under the
purchase method. (See Note 2 for details.) XStream is now an operating brand
development and distribution company.

The accompanying consolidated financial statements include the accounts of
XStream and its subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.

The Company follows the general criteria of the Securities and Exchange
Commission Staff Accounting Bulletin 104 for revenue recognition. In general,
the Company recognizes revenue when persuasive evidence of an arrangement
exists, delivery of product has occurred, the sales price is fixed or
determinable, and collectibility is reasonably assured. The Company recognizes
revenue upon acceptance of delivery of its product by its customers at agreed
prices. Based on market conditions, the Company or its suppliers may choose to
promote certain brands by offering free product or case volume discounts. The
cost of any supplier sponsored promotion is recoverable in whole or in part from
the supplier. The Company follows the guidance of Emerging Issues Task Force
(EITF) Issue 01-9 "Accounting for Consideration Given by a Vendor to a
Customer". Accordingly, the Company does not recognize revenue on free
promotional product or discounts. Further, the Company recognizes as a cost of
sale, the cost of free promotional product net of any available charge-backs to
the suppliers.

Acquired goodwill is considered to have an indefinite life pursuant to SFAS 142
and accordingly is not amortized but subject to periodic impairment tests.
Acquired customer lists are considered to have a finite life pursuant to SFAS
142 to be amortized over the period the asset is expected to contribute to the
future cash flows. XStream expects the period to be five years. The customer
lists will also be subject to periodic impairment tests. Since the goodwill was
recently acquired in the quarter ended June 30, 2003 and the Company is in
process of completing its allocation of intangibles, impairment testing will be
performed at or before year-end. (See Note 5)

(B) Restatement Of 2004

The Company originally reversed interest income on a subscription receivable
through additional paid-in capital, (See Note 14 (B) - Common Stock), instead of
reversing it through interest income. The adjustment was a reclassification in
the amount of $313,072 which effected the financials as follows:

1. Balance Sheet: Additional paid-in capital increased from $18,594,435 to
$18,907,507. Accumulated deficit increased from $19,296,092 to $19,609,164.

2. Statement of Operations: Interest income decreased from $14,030 to -$299,042.
The net loss increased from $2,427,423 to $2,740,495.


For further information, refer to the audited consolidated financial statements
and footnotes for the year ended December 31, 2003 included in XStream's Form
10-KSB.

                                        6

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 2 - NET LOSS PER COMMON SHARE:
-----------------------------------

Basic net income (loss) per common share (Basic EPS) excludes dilution and is
computed by dividing net income (loss) available to common stockholder by the
weighted-average number of common shares outstanding for the period. Diluted net
income per share (Diluted EPS) reflects the potential dilution that could occur
if stock options or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of XStream. For the three months ended March 31,
2004 and 2003, the diluted loss per share is the same as basic loss per shares
since the effect of all common stock equivalents was antidilutive due to the net
loss. At March 31, 2004 there were 300,000 common stock warrants outstanding,
which may dilute future earnings per share.

NOTE 3 - ACQUISITIONS:
----------------------

Squeeze Transaction - On January 14th, 2004, our wholly owned subsidiary,
Xstream Brands, Inc., a Florida Corporation, entered into an Assignment of
Trademark with Squeeze Beverage, Inc., for the assignment of all of its rights
and interests in the Mark "SQUEEZE" for carbonated flavored soft drinks and
seltzer water, including all variations thereof such any spelling, formatives,
phonetic variations and stylized designs of the same and all goodwill associated
therewith. We delivered 400,000 shares of our restricted common stock to Squeeze
Beverages, Inc. in exchange for the assignment of the Mark. Based upon the
contemporaneous private placement offering price of $0.12, we valued he
acquisition at $48,000.

Maui Juice Transaction - On March 1, 2004, our wholly owned subsidiary, Xstream
Brands, Inc., a Florida Corporation, ("Xstream Brands"), entered into an
Assignment of Trademark with The Maui Juice Company, Inc. ("Maui"), for the
assignment of all of its rights and interests in the Mark "Maui Juice Company",
including all variations thereof such any spelling, formatives, phonetic
variations and stylized designs of the same and all goodwill associated
therewith. The purchase price for the assignment of the Mark was $300,000 in
cash, with $25,000 paid at the acquisition date and $275,000 to be paid under
the terms of the agreement.

Pacific Rim Transaction - On March 1, 2004 our wholly owned subsidiary, Beverage
Network or Hawaii, Inc. a Florida corporation ("BNHI"), acquired substantially
all of the assets and assumed certain liabilities of Pacific Rim Natural Juice
Company, Inc., a Hawaii corporation ("Pacific Rim"). This acquisition was
consummated pursuant to an Asset Purchase Agreement (the "Purchase Agreement")
dated March 1, 2004 by and among Beverage Network (the "Acquiror") and Pacific
Rim. Under the terms of the Purchase Agreement, the Acquiror purchased
substantially all of the assets of Pacific Rim and assumed certain liabilities
for 250,000 shares of Xstream's restricted common stock which, based upon the
contemporaneous offering price of $0.12, had a value of $30,000. In addition,
prior to the closing, we advanced Pacific Rim, $15,500 resulting in a total
purchase price of $45,000.

Simultaneously with the Asset Purchase agreement, Beverage Network of Hawaii,
Inc. entered in to a one-year consulting agreement (with the option for annual
renewals as agreed upon by both parties) with the owner of Pacific Rim Natural
Juices. The consulting fee (to be paid quarterly) is a calculation based on 1%
of adjusted gross profit with a minimum guaranteed payment of $1,250 per
quarter.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition of Pacific Rim Natural Juice
Company. Subject to BNHI's performance and third-party valuations, the
allocation of purchases price is subject to refinement.

                                        7

<PAGE>
                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


                                                      March 1, 2004
                                                      -------------

         Aggregate purchase price                        $ 45,500
                                                         ========
         Current assets                                  $ 12,311
         Fixed assets                                      16,250
         Customer list                                     38,350
         Goodwill                                          44,695
                                                         --------
                            Total assets acquired         111,606
                                                         --------
         Current liabilities assumed                       66,106
                                                         --------
                                   Net assets acquired   $ 45,500
                                                         ========

Goodwill recognized is expected to be deducted over a 15 year period for tax
purposes.

The table below summarizes the pro forma information of the results of
operations from inception to date and three months ended March 31, 2004 as
though the business combinations had been completed as of the beginning of the
period being reported on:

                                     Inception          Three Months Ended
                              (March 2) -- March 31,        March 31,
                              --------------------    ---------------------
                                2004         2003       2004        2003
                              --------    --------    --------    ---------
         Sales                $ 15,758    $ 13,599    $ 46,257    $  39,920
         Cost of Goods          12,554      11,895      36,852       34,917
                              --------    --------    --------    ---------

         Gross Profit            3,204       1,704       9,405        5,003
         Operating Expenses     32,448      44,729      95,251      131,303
                              --------    --------    --------    ---------
         Net Ordinary Loss     (29,244)    (43,025)    (85,845)    (126,300)

         Other Expenses         (1,650)     (4,945)     (4,844)     (13,569)
                              --------    --------    --------    ---------

         Net Loss             $(30,894)   $(47,970)   $(90,689)   $(139,869)
                              ========    ========    ========    =========

         Net Loss per Share   $  (0.00)   $  (0.00)   $  (0.00)   $   (0.01)
                              ========    ========    ========    =========

Ayer Beverage Transaction - On March 15, 2004 our wholly owned subsidiary,
Beverage Network of Massachusetts, Inc., a Florida Corporation ("BNMA") acquired
substantially all of the assets and assumed certain liabilities of Ayer
Beverages, Inc., a Massachusetts corporation ("Ayer Beverage"). This acquisition
was consummated pursuant to an Asset Purchase agreement (the "Purchase
Agreement") dated March 15, 2004, by and among Beverage Network of Massachusetts
(the "Acquiror") and Ayer Beverage. Under the terms of the purchase Agreement,
the Acquiror purchased substantially all of the assets of Ayer Beverage and


                                        8



<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


assumed certain of its liabilities for 400,000 shares of Xstream's restricted
common stock which, based upon the contemporaneous private placement offering
price of $0.12 had a value of $48,000 and $200,000 cash pursuant to the terms of
the agreement. This resulted in a total purchase price of $248,000.

Beverage Network of Massachusetts has also entered into an employment agreement
with existing key management of Ayer Beverage, Inc. The agreement is for a
period of thirty-six months, commencing March 15, 2004, at a base salary of
$80,000 per year. The employee is also entitled to receive an issue of 15,000
shares of Xstream Beverage Group, Inc. ("XSBG") restricted stock upon completion
of the first and second anniversary of the agreement and 30,000 shares upon
completion of the third anniversary of the agreement. The agreement also
stipulates for an employee bonus to be calculated on the quarterly gross profit
(from 2% - 3%) based upon performance as mandated by management's profit
targets.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition of Ayer Beverages, Inc.
Subject to BNMA's performance and third-party valuations, the allocation of
purchases price is subject to refinement.

                                                      March 15, 2004
                                                      --------------

         Aggregate purchase price                        $248,000
                                                         ========

         Current assets                                  $ 39,041
         Fixed assets                                      44,450
         Customer list                                    147,773
         Goodwill                                         171,620
                                                         --------
                            Total assets acquired         402,884
                                                         --------

         Current liabilities assumed                      154,884
                                                         --------
                                   Net assets acquired   $248,000
                                                         ========

Goodwill recognized is expected to be deducted over a 15 year period for tax
purposes.

The table below summarizes the pro forma information of the results of
operations from inception to date and three months ended March 31, 2004 as
though the business combinations had been completed as of the beginning of the
period being reported on:

                                    Inception            Three Months Ended
                              (March 16) -- March 31,         March 31,
                               --------------------    ----------------------
                                 2004        2003         2004         2003
                               --------    --------    ---------    ---------
         Sales                 $ 37,068    $ 31,990    $ 210,824    $ 181,941
         Cost of Goods           48,230      45,698      274,308      259,907
                               --------    --------    ---------    ---------
         Gross Profit           (11,162)    (13,708)     (63,484)     (77,966)
         Operating Expenses      12,495      17,224       71,065       97,964
                               --------    --------    ---------    ---------
         Net Ordinary Income    (23,657)    (30,932)    (134,549)    (175,730)
         Other Expenses            (162)       (454)        (921)      (2,581)
                               --------    --------    ---------    ---------
         Net Income            $(23,819)   $(31,386)   $(135,470)   $(178,311)
                               ========    ========    =========    =========
         Net Loss per Share    $  (0.00)   $  (0.00)   $   (0.00)   $   (0.02)
                               ========    ========    =========    =========

                                        9

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 4 - ACCOUNTS RECEIVABLE:
-----------------------------

Accounts Receivable for the three months ending March 31, 2004 is $227,439 with
an allowance for bad debt of $52,787 compared to $10,304 (with no allowance for
bad debt) as of March 31, 2003.

NOTE 5 - INVENTORY:
-------------------

Inventories are stated at the lower of "first-in, first-out" cost or market. The
Company had $207,448 and $ 25,000 consisting primarily of resalable product as
of March 31, 2004, and March 31, 2003 respectively.

NOTE 6 - OTHER CURRENT ASSETS:
------------------------------

The balance of $12,136 as of March 31, 2004 consists primarily of prepaid
expenses.

NOTE 7 - FIXED ASSETS:
----------------------

Property and equipment at March 31, 2004 is as follows:

                  Delivery Trucks         $  55,399
                  Warehouse Equipment        34,395
                  Coolers                     7,977
                  Computers                   9,350
                  Office Equipment            4,261
                  Furniture & Fixtures        3,845
                                          ---------
                                            115,227
         Less: Accumulated Depreciation     (10,422)
                                          ---------

         Net:                             $ 104,805
                                          =========

Depreciation expense for the three months ended March 31, 2004, and March 31,
2003 was $1,982 and $236 respectively.

NOTE 8 - OTHER ASSETS:
----------------------

The balance of $8,750 reflected as of March 31, 2004 consisted of security
deposits.

                                       10

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 9 - ACCRUED EXPENSE-SALARIES, ACCRUED EXPENSE-OTHER:
---------------------------------------------------------

Effective April 9, 2003, concurrent with closing its first acquisition, XStream
entered into three-year employment agreements for President and CEO calling for
annual base compensation of $85,000 each. These employment agreements also
granted 2,000,000 options each at an exercise price of $1.40 per share, vesting
over the term of the agreement. Based on the contemporaneous offering price of
$0.50 per share there was no compensation expense computed under the intrinsic
value method of APB 25. On June 1, 2003, concurrent with the resignation of the
previous officers, the options were cancelled under amended employment
agreements with each officer.

Effective February 5, 2004, the company executed revised employment agreements
for its Chairman, President and Vice President stipulating an annual base
compensation of $130,000 each. Accrued compensation reflecting officers, new
hires and acquisitions, for the period ending March 31, 2004 was as follows:

         Accrued Salaries-Officers/Directors:   $423,993
         Accrued Salaries-Other:                  88,327
                                                --------
                  Total Salaries:               $512,320

The balance of $56,962 of accrued expenses reflected in the total amount of
$569,282 at March 31, 2004 consists of accounting/audit fees and payroll tax
liabilities.

NOTE 10 - LOANS PAYABLE AND LOANS PAYABLE, RELATED PARTY:
---------------------------------------------------------

In January, 2004, an agreement was made to convert a $15,000 third party,
non-interest bearing demand note to equity with the common shares valued at the
current PPM price of $0.12 per share. The transaction resulted in the company
recognizing a gain on conversion of $3,000.

In March, 2004, a principal shareholder advanced $25,000 to the company as a
non-interest bearing demand note with no specified term.


Loans payable at March 31, 2004 were as follows:

Loans Payable - Other:

      June 2003, non-interest bearing, due on demand                    $ 15,175
      September 2003, $12,000 plus 8% Interest (loan in default)          12,499
      November 2003, $125,000 plus 10% interest, due November 1, 2004    127,048
      Bank Line of Credit 6%, Interest                                    61,717
      Automotive equipment loan                                            3,405
      March 2003, non-interest bearing, due April, 2005                  100,000
      March 2003, non-interest bearing, due April, 2112                  275,000
      March 2003, $27,882 Plus 8%, due June, 2004                         27,882
                                                                        --------
Total Loans Payable - Other                                             $622,726

Loans Payable - Related Party                                            217,680
                                                                        --------
                                                                        $840,406
                                                                        ========


                                       11

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 11 - OTHER CURRENT LIABILITIES:
------------------------------------

The balance of $36,086 reflected as of March 31, 2004 consists of the following:

  Customer credit balances of $14,075, and customer deposits payable of $22,011.

NOTE 12 - TERM LOAN PAYABLE:
----------------------------

Term loans payable consists of the following at March 31, 2004:

  Bank term loan, 6% interest, due November 17, 2007                    $52,305


NOTE 13 - COMMITMENTS AND CONTINGENCIES:
----------------------------------------

     (A) FACILITY LEASES

         Effective December 1, 2003 XStream terminated its month-to-month lease
         at its corporate headquarters in Boca Raton and co-located with its
         subsidiary, Beverage Network of South Florida ("BNSF"). Effective June
         1, 2003, Beverage Network of South Florida entered into a 24-month
         lease for new distribution facilities. In November 2003, this lease was
         cancelled by the landlord and succeeded by another lease effective
         December 1, 2003 for a 12 month term ending November 30, 2004. The rent
         is $4,552 per month. Rent expense in for the period ending March 31,
         2004 for corporate headquarters and BNSF, was $12,790 while rent
         expense in 2003 was $7,791 for the same period.

         Effective November 1, 2003 Beverage Network of Connecticut (BNCT)
         entered into a 60-month lease for new distribution facilities. The rent
         is $5,108 for the 13,622 square foot facility, with annual increases of
         $0.50 per square foot, per year. Rent expense for the period ending
         March 31, 2004, was $17,825.

         Beverage Network of Hawaii, Inc. ("BNHI")assumed the current lease as
         part of acquiring the assets of Pacific Rim Natural Juice Company. The
         terms are month-to-month with the rent of $1,038 per month. Management
         is actively pursuing alternate space to accommodate current
         distribution and future growth. The former owner paid the rent before
         the acquisition, therefore, no rent expense was charged to operations
         during the period ending March 31, 2004.

         Beverage Network of Massachusetts, Inc. ("BNMA") assumed the lease from
         Ayer Beverage, Inc., consisting of 4,300 square foot facility at a cost
         of $1,425 monthly. The current lease expires on June 30, 2004 with an
         annual renewal option. The rent charged to operations was $1,425 as of
         March 31, 2004.

    (B) EMPLOYMENT AGREEMENTS

         See Note 8 for details regarding accrued compensation.

    (C) PRIVATE PLACEMENT

         Effective February 17, 2004, XStream retired and replaced its existing
         Private Placement Memorandum (PPM) with a new PPM offering of up to
         1,200,000 shares of common stock at $0.12 per unit.

                                       12



<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 14 - STOCKHOLDER'S EQUITY AND RECAPITALIZATION:
----------------------------------------------------

     (A) PREFERRED STOCK

         The Company has authorized 10,000,000 shares of preferred stock at
         $0.001 par value. The Board of directors is authorized to issue series
         of preferred stock and to fix the designation, powers, preferences, and
         rights of the shares of each series. In addition, the Company may pay
         dividends of common stock to preferred stockholders. In October 2001,
         the Board of Directors authorized Series A preferred stock, which is
         cumulative voting and convertible and does not have dividend rights.
         Each share of preferred stock is convertible to one share of common
         stock and each share of preferred stock is entitled to 100 votes on
         each matter submitted to a vote of the total capital stock of the
         Company.

         There were 200,000 preferred Series A shares outstanding at March 31,
         2004.

     (B) COMMON STOCK

         In February 2002, the Company issued 4,267,500 of its common shares to
         its founder and principal stockholder, Xstream Beverage, Inc. ("XBI").
         XBI is controlled by an officer of the Company. For purposes of results
         of operations, the issuance was considered in substance, a compensation
         expense to be recognized during the service period pursuant to a verbal
         consulting agreement, which was effective April 1, 2002. Accordingly,
         the value of $10,668,750 had been recorded as a deferred compensation
         expense at March 31, 2002. In July 2002, effective April 1, 2002 the
         Company rescinded the consulting agreement and received a subscription
         for the 4,267,500 common shares, paid for in the form of a promissory
         note at the contemporaneous offering price of $0.50 per share resulting
         in a subscription promissory note receivable of $2,133,750. Under
         Delaware law, the promissory note is considered valid consideration for
         the issuance of capital stock. The note bears interest at 8% and is due
         August 13, 2003. Due to the rescission of the consulting agreements,
         the $10,668,750 deferred compensation and related $10,664,483
         additional paid-in capital were reversed. Interest income for 2004,
         2003 and 2002 was $14,030, $170,700 and $128,342, respectively. In
         February 2004 the Company forgave the subscription receivable
         promissory note and related accrued interest in exchange for the return
         of the 4,267,500 subscribed shares. The shares have been returned to
         our treasury but have not been cancelled. The reversal of the principal
         amount of the note, $2,133,750, was reflected against additional paid
         in capital. The balance of the accrued interest income in the amount of
         $313,072 was recognized in the statement of operations.

         On January 15, 2003, the Company issued 350,000 shares pursuant to a
         twelve-month consulting agreement. The 350,000 shares were vested at
         the grant date resulting in a value of $350,000 based on the trading
         price on the grant date to be recognized over the twelve-month service
         period. During the twelve months ended December 31, 2003, $321,450 was
         recognized as consulting expense $28,550 as deferred. The deferred
         balance of $28,550 was recognized as consulting expense as of March 31,
         2004.

                                       13

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


         In November 2003, the Company issued 500,000 shares as a loan fee in
         consideration of a one year note. The value of $250,000 based on the
         contemporaneous offering price of $0.50 per share is recognized over
         the one-year term with $42,000 expensed in 2003 and $208,000 deferred
         as a component of equity at December 31, 2003. The company recognized
         an expense of $63,000 with a deferred balance of $145,000 as of March
         31, 2004.

         In November of 2003, the Company issued 501,000 share of common stock
         in consideration of $109,000 of substituted collateral to secure a
         commercial line of credit for Beverage Network of Connecticut (BNCT). A
         guarantee fee computed as $250,500 based on the contemporaneous private
         placement offering of $0.50 per share is recognized over the 6 month
         term with $83,500 charged to loan and loan guarantee fees in 2003 and
         $167,000 deferred as a component of equity at December 31, 2003. The
         company recognized an expense of $125,250 with a deferred balance of
         $41,750 as of March 31, 2004.

         In December 2003, the company issued 300,000 shares to a consultant for
         services under a 9 month contract. The resulting expense of $36,000
         based on the new offering cost $0.12 per shares will be recognized over
         the 9 month term beginning in 2004. The company recognized an expense
         of $12,000 with a deferred balance of $24,000 as of March 31, 2004.

         In January, 2004, the company issued 1,295,927 shares, previously
         recorded as issuable as of December 31, 2003.

         In January, 2004 the company issued 110,000 shares of restricted common
         stock for legal services provided to the company. The shares were
         valued at the current PPM price of $0.12 per share with the expense of
         $13,200 recognized immediately.

         An agreement was made to convert a $15,000 third party, non-interest
         bearing demand note to 100,000 common shares valued at the current PPM
         price of $0.12 per share. The transaction resulted in the company
         recognizing a gain on conversion of $3,000.

         In January, 2004, the company issued 15,500 of restricted common stock
         to consultants for past services. The shares were valued at the
         contemporaneous offering price of $0.12 per share with the expense of
         $1,860.00 recognized immediately.

         In January 2004, our wholly owned subsidiary, Xstream Brands, Inc.
         entered into an Assignment of Trademark with Squeeze Beverage, Inc.,
         for the assignment of all of its rights and interests in the Mark of
         "SQUEEZE" for carbonated flavored soft drinks and seltzer water,
         including all variations thereof such any spelling, formatives,
         phonetic variations and stylized designs of the same an all goodwill
         associated therewith. The Company issued 400,000 restricted common
         shares based upon the PPM price of our common stock on the date of
         closing; ($0.12 per share) The acquisition was valued at $48,000.
         (See Note 3 - Acquisitions)

         The company also issued 75,000 common shares to a consultant valued at
         the contemporaneous PPM offering price of $0.12 per share. The services
         provided are for a period of six months, (01/01/04 -06/30/04) with
         $4,500 being recognized immediately and the balance of $4,500 being
         deferred over the remainder of the contract.

         In February, 2004 the company issued 10,000,000 shares in consideration
         of employment services provided to the company: 6,000,000 shares were
         issued to Theodore Farnsworth, Chairman; 2,000,000 shares each to
         Jerome Pearring, President/CEO and Barry Willson, Vice
         President/Secretary. The company retained


                                       14

<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


         the services of an independent accounting firm to perform a valuation
         analysis on this transaction; the results were as follows: The
         6,000,000 shares were valued at $0.125 per share, while the two
         issuances of 2,000,000 each were valued at $0.15 per share. As the
         shares were issued for past services, the expense of $1,350,000 was
         recognized immediately.

         In February 2004, the company entered into a Termination Agreement,
         Waiver and Release with two prior officers, terminating their
         consulting agreement of June 2003 by issuing 325,355 restricted common
         shares valued at the current offering price of $0.12 per share. A loss
         of $23,921 was recognized immediately as a result of the transaction.

         In March of 2004, the company issued 104,166 shares of restricted
         common stock for legal services provided to the company. The shares
         were valued at the current PPM price of $0.12 per share with the
         expense of $12,500 recognized immediately.

         The company also issued 2,941 shares to a consultant pursuant to the
         execution of a 12 month agreement which stipulates shares to be issued
         quarterly. Per the agreement, the shares were valued at $0.41 per share
         and an expense of $1,205.81 was recognized immediately.

         The company issued 600,000 shares to a broker for past services. The
         shares were valued at the current PPM price of $0.12, with the company
         recognizing an expense of $72,000.

         In March 2004, our wholly owned subsidiary, Beverage Network of Hawaii,
         Inc. (a Florida corporation), acquired all assets and certain
         liabilities of a Hawaii beverage company for 250,000 shares of the
         company's restricted common stock. The transaction was valued at
         $30,000, based upon the contemporaneous private placement offering
         price of $0.12 per share. (See Note 3 - Acquisitions)

         In March 2004, our wholly owned subsidiary, Beverage Network of
         Massachusetts, Inc. (a Florida corporation), acquired substantially all
         assets and certain liabilities of a Massachusetts beverage company for
         cash and 400,000 shares of the company's restricted common stock valued
         at $48,000. This was based upon the contemporaneous offering price of
         $0.12 per share. (See Note 3 - Acquisitions)

         During the first quarter, 2004, the company issued 6,614,134 shares of
         restricted common stock in consideration of subscriptions for the
         current private placement memorandum at an offering price of $0.12 per
         share. As of March 31, 2004, there are currently 1,141,667 shares of
         common stock issuable for proceeds received for the private placement
         memorandum.

     (C) STOCK OPTIONS AND WARRANTS


        The following table summarizes information about employee stock options
        outstanding at March 31, 2004:

<TABLE>
<CAPTION>

                           Options Outstanding                 Options Exercisable
              -------------------------------------------  ---------------------------
                                 Weighted        Weighted                     Weighted
Range of      Number             Average         Average   Number             Average
Exercise      Outstanding at     Remaining       Exercise  Exercisable at     Exercise
Price         March 31, 2004     Contractual     Price     March 31, 2004     Price
--------      --------------     -----------     --------  --------------     --------
<S>               <C>            <C>              <C>          <C>             <C>
$3.00 - 5.00      300,000        3.41 Years       $4.00        300,000         $4.00
        1.80       42,500        2.89 Years        1.80         42,500          1.80
                  -------                         -----        -------         -----
                  342,500                         $3.73        342,500         $3.73
                  =======                         =====        =======         =====
</TABLE>

                                       15



<PAGE>

                  XSTREAM BEVERAGE GROUP INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL SATEMENTS
                                   (Unaudited)


NOTE 15 - RELATED PARTIES:
--------------------------

The balance due to a corporate principal stockholders controlled by a Director
at March  31, 2004 was $217,680. (See Note 9)

NOTE 16 - GOING CONCERN:
------------------------

As reflected in the accompanying consolidated financial statements, the Company
has a net loss in 2004 of $ 2,740,495, cash used in operations in 2004 of
$648,512, and an accumulated deficit of $19,609,164 at March 31, 2004; and
shareholders' deficiency of $926,090 and working capital deficit of $1,737,779
at March 31, 2004. The ability of the Company to continue as a going concern is
dependent on the Company's ability to further implement its business plan, raise
capital, and generate revenues. The Company continues to raise capital (see Note
19) and is continuing its acquisition plan. The Company believes that these
actions provide it the ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.

NOTE 17 - SUBSEQUENT EVENTS:
----------------------------

In April, 2004 the company issued 650,000 shares to employees for past services.
The company also issued 150,000 shares to consultants for past services.

As of May 13, 2004, the company has issued 1,072,223 shares, previously
reflected as issuable as of March , 2004, for subscriptions in the private
placement memorandum. New subscriptions as of May 12, 2004 have resulted in the
sale of 2,175,000 shares; 1,072,223 of which have been issued and 1,102,777 are
issuable.

On May 18, 2004, the company received financing per the agreement entered into
with Laurus Master Funds, Ltd. ("Laurus Funds"), a New York City- based
investment fund that specializes in providing financing to growing, small and
micro-capitalization companies.

The financing consists of a $3 million Senior Secured Convertible Note that
bears interest at the rate of prime plus two percent and has a term of three
years. Initially, $2.45 million of the proceeds of the Note will be held in a
restricted account controlled by Laurus Funds for the purpose of the Company
consummating an acquisition (which must be approved by Laurus) or until all or a
portion of the outstanding principal amount of the Note is converted into shares
of the Company's common stock.

The Note is convertible into shares of the Company's common stock at a fixed
price of $.23 per share for the first $50,000 with the remaining $2,950,000
convertible at a fixed price of $.26 per share, a premium to the 22-day average
closing share price as of May 14, 2004. In connection with the financing, Laurus
Funds was also issued a Warrant (the "Warrant") to purchase up to 4,500,000
shares of the Company's common stock. The warrants are exercisable as follows:
1,500,000 shares at $0.32 per share; 1,500,000 shares at $0.39 per share and the
balance at $0.45 per share.

                                       16

<PAGE>

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

The following discussion and analysis should be read in conjunction with our
financial statements and the accompanying notes. The following discussion and
analysis contains forward-looking statements, which involve risks and
uncertainties in the forward-looking statements. These forward-looking
statements may be impacted, either positively or negatively, by various factors
Our actual results may differ significantly from the results, expectations and
plans discussed. This Report contains "forward looking statements" relating to
our company's current expectations and beliefs. These include statements
concerning operations, performance, financial condition, anticipated
acquisitions and anticipated growth.

Without limiting the generality of the foregoing, words such as "may", "will",
"would", "expect", "believe", "anticipate", "intend", "could", "estimate", or
"continue", or the negative or other variation thereof or comparable terminology
are intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties which are beyond our
company's control. Should one or more of these risks or uncertainties
materialize or should our company's underlying assumptions prove incorrect,
actual outcomes and results could differ materially from those indicated in the
forward-looking statements.

We believe that we have established effective controls within our company to
accurately disclose our financial position.

Revenues for the three months ended March 31, 2004:

We are currently operating four beverage distribution subsidiaries. We have
operating facilities in Florida, Massachusetts, Connecticut and Hawaii. Revenues
are generated from the sale of our own proprietary products as well as from
sales of beverage products from other manufacturers. We did not acquire our
Hawaiian operation until March 1, 2004 and as a result, any revenues or expenses
(except those expenses incurred in connection with our due diligence and
professional fees) are minimal. Likewise, we did not acquire our Massachusetts
operations until March 15, 2004.

Our revenues for the three months ended March 31, 2004 were $604,560 as compared
to $10,304 for the comparative period in 2003. The significant increase in
revenues is directly attributable to the Company's implementation of its overall
business strategy. Specifically,to develop its own line of proprietary beverages
including Yohimbe Energy Drink, Squeeze and Maui Juice as well as acquiring
small to medium sized beverage distribution operations throughout the country.
The cost of goods sold for the three months ended March 31, 2004 was $517,639


                                       17

<PAGE>

which resulted in gross profits of $86,921 for the quarter ended March 31, 2004
as compared to costs of goods sold of $4,612 and gross profits of $5,692 for the
same period in 2003. Gross profits as a percentage of revenues were 14.4% in
2004 as compared to 55.2% during the comparative period in 2003. The significant
decline in our operating margins is attributable to the fact that during 2003,
we only carried our own product which generates greater margins whereas in 2004
we generated revenues from the sale of third party beverage brands sold through
our distributors. These products have lower margins but with increased volume,
management believes that the sale of these non proprietary beverages will in
time create better margins and contribute to profitability.

For the three months ended March 31, 2004, we incurred losses from operations of
$2,427,252 as compared to $878,250 for the three months ended March 31, 2003.
Our net loss was $2,740,495 as compared to a net loss of $887,799 during the
comparative period in 2003.

As we continue to expand our operations, we will continue to increase our
revenues. To the extent that we have sufficient revenues, operating expenses
will be paid primarily from our cash flow and we intend to reduce the amount of
non-cash expense items However, there can be no assurance that we will be
successful in increasing revenues or reducing costs.

Liquidity and Capital Resources

As of March 31, 2004, we had $53,642 in cash, $175,652 in accounts receivable
and $207,448 in inventory. Total current assets were $448,879. We also recorded
$348,000 in trademarks, $186,124 in customer lists, $216,315 in goodwill for
total assets of $1,312,873.

Our current liabilities total $2,186,658 which includes $740,885 in accounts
payable, $569,282 in accrued expenses and $840,405 in loans. We had a
shareholders deficit of $926,090 and a working capital deficiency of $1,737,779.

Unless we can significantly increase sales or raise additional capital, we will
not have sufficient assets to satisfy our existing obligations. Management is
currently in negotiation to secure additional financing in the form of a $3
million convertible debt instrument. Unless the company can close this
transaction and meet the conditions to closing, the company will face
operational cash flow problems.

SUBSEQUENT EVENTS:

         Management is in the process of implementing its new business plan and
generating revenues through the expansion of its distribution network and sales
of its own products. Significant working capital may also be generated from the
sale of the company's securities. In furtherance thereof, on May 14, 2004 we
entered into a financing arrangement with Laurus Master Fund, Ltd., a New York
City based investment fund ("Laurus"). The financing consists of a $3 million
Senior Secured Convertible Note that bears interest at the rate of prime plus
two percent and has a term of three years. Initially, $2.45 million of the
proceeds of the Note will be held in a restricted accounts controlled by Laurus


                                       18

<PAGE>

for the purpose of the Company consummating an acquisition (which must be
approved by Laurus) or until all or a portion of the outstanding principal
amount of the Note is converted into shares of the Company's common stock.

         The Note is convertible into shares of the Company's common stock at a
fixed price of $.23 per share for the first $55,000 with the remaining
$2,450,000 convertible at a fixed price of $.26 per share, a premium to the 22
day average closing share price as of May 14, 2004. In connection with the
financing, Laurus was also issue a Warrant (the "Warrant") to purchase up to 4.5
million shares of the Company's common stock. The warrants are exerciseable as
follows: 1.5 million shares at $0,32 per share, 1.5 million shares at $0.39 per
share and the balance at $0.45 per share.

          We have pledged all of our assets and the common stock of our
subsidiaries as security for this obligation. In connection with this financing,
we have also agreed to register with the Commission the shares of common stock
which are issuable upon both the conversion of the note and exercise of the
common stock purchase warrants..

         On May 12, 2004 we amended our articles of incorporation to increase
the number of authorized shares of stock. As a result of the amendment, we are
now authorized to issue 100 million shares of common stock and 10 million shares
of preferred stock. We took these steps so that we would have sufficient shares
of common stock to register in connection with the Laurus financing and for
future acquisitions. The action was approved by the written consent of the
holders of a majority of our common stock entitled to vote on this action.

RECENT ACCOUNTING PRONOUNCEMENTS

         In May 2003, the FASB issued SFAS No. 149; Amendment of Statement 133
on Derivative Instruments and Hedging Activities ("SFAS 149") which provides for
certain changes in the accounting treatment of derivative contacts. SFAS 149 is
effective for contracts entered into or modified after June 30, 2003, except for
certain provisions that relate to SFAS No. 133 Implementation Issues that have
been effective for fiscal quarters that began prior to June 15, 2003, which
should continue to be applied in accordance with their respective effective
dates. The guidance should be applied prospectively. The adoption of SFAS 149
did not have a material impact on the Company's financial position, results of
operations or liquidity.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective for the first interim
period beginning after June 15, 2003, with certain exceptions. The adoption of
SFAS No. 150 did not have a significant impact on our consolidated financial
position or results of operations.

         In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and disclosure Requirements for Guarantees, Including


                                       19

<PAGE>

Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that
upon issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The adoption of this pronouncement does not have a material effect on the
earnings or financial position of the Company.

         In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires that if an entity
has a controlling financial interest in a variable interest entity, the assets,
liabilities, and results of activities of the variable interest entity should be
included in the consolidated financial statements of the entity. FIN 46 requires
that its provisions are effective immediately for all arrangements entered into
after January 31, 2003. The Company does not have any variable interest entities
created after January 31, 2003. For those arrangements entered into prior to
January 31, 2003, the FIN 46 provisions are required to be adopted at the
beginning of the first interim or annual period beginning after June 15, 2003.
We have not identified any variable interest entities to date and will continue
to evaluate whether it has variable interest entities that will have a
significant impact on its consolidated balance sheet and results of operations.

CRITICAL ACCOUNTING POLICIES

                  A summary of significant accounting policies is included in
Note 1 to the audited consolidated financial statements included in Form 10-KSB
for the year ended December 31, 2003 as filed with the Securities and Exchange
Commission. Management believes that the application of these policies on a
consistent basis enables the Company to provide useful and reliable financial
information about the company's operating results and financial condition.

                  The preparation of financial statements in conformity with
generally accepted accounting principles 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 may differ from those estimates.


ITEM 3.  CONTROLS AND PROCEDURES

         Our Chief Executive Officer who also serves as our principal financial
officer, has conducted an evaluation of the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) promulgated under the
Securities and Exchange Act of 1934, as amended)as of a date (the "Evaluation
Date") as of the end of the period covered by this report. As set forth below
and in Note 1(B) to the Company's Consolidated Financial Statements (unaudited)
appearing elsewhere in this report, management determined that there was a
material weakness in the Company's internal control over financial reporting as
of March 31, 2004. Based upon that evaluation, the Company's Chief Executive
Officer has concluded that our disclosure controls and procedures were not
effective because of the material weakness described below.

                                       20



<PAGE>

        In this Quarterly Report on Form 10-QSB/A the Company is restating its
consolidated balance sheet (unaudited) at March 31, 2004 and its consolidated
statement of operations (unaudited) and consolidated statement of cash flows
(unaudited) for the three months ended March 31, 2004 which appeared in its
Quarterly Report on Form 10-QSB for the period ended March 31, 2004 as
previously filed with the Securities and Exchange Commission. These restatements
were made to reflect the correction of a prior reversal of interest income on a
subscription receivable to additional paid in capital instead of interest
income. The restatements resulted from comments from the staff of the Securities
and Exchange Commission to a pending Registration Statement on Form SB-2.

         As a result of these restatements the amount of additional paid-in
capital on its balance sheet at March 31, 2004 (unaudited) as originally
reported was understated and the amount of its accumulated deficit was also
understated. These changes to the balance sheet did not result in any change in
total stockholders' deficiency or in total liabilities and stockholders' equity
as previously reported. In addition, the amount of its interest income on its
consolidated statement of income for the three months ended March 31, 2004
(unaudited) was overstated which resulted in an understatement of its total
other income/(expense) and net loss for the period. These changes resulted in an
increase in the Company's net loss for the period from $(2,427,423) to
$(2,740,495). Finally, the statement of cash flows (unaudited) for the three
months ended March 31, 2004 was restated to incorporate the foregoing changes
but did not effect the net cash used in operating activities, net cash used in
investing activities or net cash used in financing activities for the three
months ended March 31, 2004 as previously reported.

         Because of these accounting errors, the Company has determined that a
deficiency in internal controls existed related to the accounting for interest
income. Accordingly, management determined that this control deficiency
constituted a material weakness.

         Management has taken the remedial steps necessary to eliminate the
material weakness relating to financial disclosure controls that resulted in the
restatement discussed above. Other than the changes discussed above, there have
been no changes made in the Company's internal controls or in other factors that
could materially affect its internal controls subsequent to the end of the
period covered by this report based on such evaluation.


Part 11 Other Information



Item 1.   Legal Proceedings

There have been no legal proceedings filed against us since the filing of our
last quarterly report.



Item 2.   Change in Securities

During the quarter ended March 31, 2004 we issued the following securities:

Name                                     Date      No. of Shares
----                                     ----      -------------
Cardinal Capital Net, Inc.             01/06/04      300,000
Sweeney                                01/06/04      121,297
Arias                                  01/06/04       10,000
Smith                                  01/06/04      131,297
Klein                                  01/06/04       36,667


                                       21



<PAGE>

Name                                     Date      No. of Shares
----                                     ----      -------------
Pollock                                01/06/04       36,667
Newman                                 01/06/04       36,667
Klein                                  01/06/04       33,333
Pollock                                01/06/04       33,333
Newman                                 01/06/04       33,333
Mondblat                               01/06/04       12,500
Ludwick                                01/19/04        3,000
Squeeze Beverages, Inc.                01/19/04      400,000
Peter Nasca Associates, Inc.           01/19/04       75,000
Farnsworth, Ted                        02/06/04    6,000,000
Willson, Barry                         02/06/04    2,000,000
Pearring, Jerome                       02/06/04    2,000,000
Palda, Jay                             02/11/04      250,000
Kuhle                                  02/11/04       20,000
Bannon                                 02/11/04       41,667
Flynn                                  02/11/04       50,000
Flynn                                  02/11/04       50,000
Gabriel                                02/11/04      100,000
Ravano SEP-IRA                         02/11/04       15,800
Ravano TTEE                            02/11/04       16,000
Ravano                                 02/11/04        2,000
Ravano-Thompson                        02/11/04        2,000
Hill, M. Gayle                         02/11/04      208,333
Blatt, Ira                             02/11/04      100,000
Giamalvo                               02/11/04      250,000
Zepp                                   02/11/04       50,000
Hossenlopp                             02/11/04       50,000
Sooy                                   02/13/04      100,000
Tuck                                   02/13/04      100,000
Volker                                 02/25/04      100,000
Tsia, Anthony                          02/25/04      200,000
Palda, Jay                             02/25/04    1,000,000
Edwards                                02/26/04      850,000
Vance                                  02/26/04      500,000
Neal                                   02/26/04      100,000
Palda, Jay                             02/26/04      250,000
Cammarata, Paul                        02/26/04       83,333
Haglund, Steve                         02/26/04      171,279
Arioli, Edward                         02/26/04      154,076
Gabriel                                03/09/04      100,000
Landers                                03/09/04       41,667
Palda, Jay                             03/09/04      500,000
Volker                                 03/09/04      100,000


                                       22



<PAGE>




Name                                     Date      No. of Shares
----                                     ----      -------------
Ravano SEP-IRA                         03/09/04       15,000
Ravano Trustee                         03/09/04       15,000
Ravano                                 03/09/04       10,000
Ravano-Thompson                        03/09/04       10,000
Blatt, Ira                             03/09/04      250,000
Robertson & Sandra A                   03/09/04      166,667
Pacific Rim Natural Juice Company      03/09/04      250,000
Giordano                               03/11/04        2,941
Klein, Jeffrey                         03/15/04       34,722
Pollock, Kenneth                       03/15/04       34,722
Newman, Irwin                          03/15/04       34,722
Cardinal Capital Net, Inc.             03/15/04      100,000
Circulatory Assist                     03/16/04      250,000
Ayer Beverages, Inc.                   03/16/04      400,000
Schwann                                03/23/04      125,000
Morelli                                03/23/04       83,333
Lee                                    03/23/04       41,667
Bannon                                 03/23/04       75,000
Flynn                                  03/23/04      100,000
Hill, M. Gayle                         03/23/04      250,000
Vanguard Fiduciary Trust Company C/F   03/23/04      125,000
Giamalvo                               03/23/04      200,000
Zepp                                   03/23/04      400,000
Cardinal Capital Net, Inc.             03/24/04      500,000


          All of the shares set forth above were issued pursuant to an exemption
from registration under Section 4(2) of the Securities Act or pursuant to Rule
506 of Regulation D.



Item 3.  Defaults Upon Senior Securities

We have not issued any senior securities and as such there have been no
defaults.



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

We have not submitted any matters to a vote of our security holders, whether
through proxy or otherwise, during the quarter ended March 31, 2004.



Item 5.  Other Information

         None.



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<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits.

          3.1  Amended Articles of Incorporation*
         31.1  Certification by Chief Executive Officer Pursuant to Section 302
         31.2  Certification by Chief Financial Officer Pursuant to Section 302
         32.1  Certification by Chief Executive/Financial Officer Pursuant to
               Section 906


-----------
*  Previously filed.

(b) Reports on Form 8-K

         On March 10, 2004 we filed a report on Form 8-k discussing the
acqusition of substantially all of the assets and the assumption of certain
designated liablities from the Pacific Rim Natural Juice Company, Inc. in
connection with a distributorship located in Hawaii and the acquisition of the
Squeeze and Maui Juice trademarks.

         Also on March 30, 2004 we filed a report on Form 8-k discussing the
acquisition of substantially all of the assets and the assumption of certain
designated liabilities of Ayer Beverages, Inc. in connection with a
distributorship located in Massachusetts.










                                       24

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                         Xstream Beverage Network, Inc.

                                         By: /s/ Theodore Farnsworth
                                             -----------------------
                                         Theodore Farnsworth, CEO,
                                         principal executive officer and
                                         principal financial officer
October 7, 2005



















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