SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-QSB

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

                  For the quarterly period ended June 30, 2002

[ ]   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         62-1386351
       --------                          ------------        -----------
  (State or other jurisdiction of      (Commission File      (IRS Employer
 incorporation or organization)           No.)               Identification No.)


      621 NW 53rd Street, Suite 145 Boca Raton, Florida 33487 (561)998-4199
--------------------------------------------------------------------------------
          (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   (  )


<PAGE>

                      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: June 30, 2002
                                            -------------


           CLASS                                  Outstanding at June 30, 2002
----------------------------                      ----------------------------
Common Stock $.001 par value                              7,638,464


                           XSTREAM BEVERAGE GROUP, INC.

PART I:   FINANCIAL INFORMATION                                       PAGE
                                                                      ----

           Balance Sheet as of June 30, 2002 (Unaudited)
           and December 31, 2001                                       3

           Statement of Operations for the six and three
           months ended June 30, 2002 and From September 9,
           2001 (inception) to June 30, 2002 (unaudited)               4

           Statement of Cash Flows for the Six Months Ended
           June 30, 2002 and from September 9, 2001
           (inception) to June 30, 2002 (unaudited)                    5

           Notes to Consolidated Financial Statements
           (Unaudited) as of June 30, 2002                             6

           Management Discussion and Analysis of Financial
           Condition and Results of Operations                         8-9

PART II: OTHER INFORMATION                                             10

                                       2
<PAGE>

                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                           CONDOLIDATED BALANCE SHEETS
                                 --------------

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                        June 30, 2002
                                                                         (Unaudited)        December 31, 2001
                                                                       -----------------  ----------------------
<S>                                                                    <C>                <C>
CURRENT ASSETS
Cash                                                                   $         65,643   $                  -
Due from principal stockholder                                                      403                     343
                                                                       -----------------  ----------------------
TOTAL CURRENT ASSETS                                                             66,046                     343
                                                                       -----------------  ----------------------

Deposits                                                                          2,585                      -
                                                                       -----------------  ----------------------

TOTAL ASSETS                                                           $         68,631   $                 343
                                                                       =================  ======================

                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                        ----------------------------------------

CURRENT LIABILITIES
Put option liability                                                   $             -    $             400,000
Cash overdraft                                                                       -                      453
Due to affiliate                                                                  1,750                      -
Loans payable - related parties                                                  91,785                  24,031
Accounts payable                                                                 85,066                  39,722
Accrued expenses                                                                  1,351                      -
Accrued compensation                                                            187,500                      -
                                                                       -----------------  ----------------------
TOTAL CURRENT LIABILITIES                                                       367,452                 464,206
                                                                       -----------------  ----------------------

STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
  Series A, 200,000 shares issuable                                                 200                     200
Common stock, $0.001 par value, 50,000,000 shares authorized,
  7,638,464 and 1,740,145 shares issued and outstanding, respectively             7,638                   1,740
Common stock issuable (175,000 shares)                                              175                     -
Additional paid-in capital                                                   13,292,344               4,309,987
Deficit accumulated during development stage                                 (9,187,634)             (4,680,398)
                                                                       -----------------  ----------------------
                                                                              4,112,723                (368,471)
Less: subscription promissory note receivable                                (2,133,750)                    -
Less: deferred consulting expense                                              (627,794)                (95,392)
Less: deferred legal fees                                                    (1,650,000)                    -
                                                                       -----------------  ----------------------
TOTAL STOCKHOLDERS' DEFICIENCY                                                 (298,821)               (463,863)
                                                                       -----------------  ----------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                         $         68,631   $                 343
                                                                       =================  ======================
</TABLE>

              See accompanying notes to consolidated financial statements

                                       3
<PAGE>



                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONDOLIDATED STATEMENTS OF OPERATIONS
                            ------------------------
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      From
                                                       Three Months          Six Months         September 9, 2001
                                                          Ended                Ended             (inception) to
                                                      June 30, 2002        June 30, 2002          June 30, 2002
                                                   -------------------   ------------------  ------------------------
<S>                                                <C>                   <C>                 <C>
OPERATING EXPENSES
Compensation                                       $           93,750    $         187,500   $             2,215,040
Consulting                                                    857,330            2,806,158                 5,416,397
Loan fee                                                       50,000               50,000                    50,000
Professional fees                                             853,085            1,685,404                 1,716,489
General and administrative                                     23,658               40,674                    52,208
                                                   -------------------   ------------------  ------------------------
TOTAL OPERATING EXPENSES                                    1,877,823            4,769,736                 9,450,134
                                                   -------------------   ------------------  ------------------------

LOSS FROM OPERATIONS                                       (1,877,823)          (4,769,736)               (9,450,134)

OTHER INCOME
Settlement gain                                               262,500              262,500                   262,500
                                                   -------------------   ------------------  ------------------------
TOTAL OTHER INCOME                                            262,500              262,500                   262,500
                                                   -------------------   ------------------  ------------------------

NET LOSS                                           $       (1,615,323)   $      (4,507,236)  $            (9,187,634)
                                                   ===================   ==================  ========================

Net loss per share - basic and diluted             $            (0.23)   $           (0.78)  $                 (2.12)
                                                   ===================   ==================  ========================

Weighted average number of shares outstanding
   during the period - basic and diluted                    6,881,053            5,800,596                 4,166,398
                                                   ===================   ==================  ========================
</TABLE>

              See accompanying notes to consolidated financial statements

                                       4
<PAGE>



                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            ------------------------
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                     From
                                                                          Six Months           September 9, 2001
                                                                            Ended                (Inception) to
                                                                        June 30, 2002            June 30, 2002
                                                                     -------------------   -------------------------
<S>                                                                  <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                             $       (4,507,236)   $             (9,187,634)
Adjustments to reconcile net loss to net cash used in operating
  activities:
Stock based expenses                                                          4,488,778                   9,124,990
Gain on settlement                                                             (262,500)                   (262,500)
Changes in operating assets and liabilities:
(Increase) decrease in:
Deposits                                                                         (2,585)                     (2,585)
Increase (decrease) in:
Accounts payable                                                                 45,344                      73,970
Accrued expenses                                                                  1,351                       1,351
Accrued compensation                                                            187,500                     187,500
Due to affiliate                                                                  1,750                       1,750
                                                                     -------------------   -------------------------
NET CASH USED IN OPERATING ACTIVITIES                                           (47,598)                    (63,158)
                                                                     -------------------   -------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to principal stockholder                                                      (60)                       (403)
Cash acquired in recapitalization                                                    -                          108
                                                                     -------------------   -------------------------
NET CASH USED IN INVESTING ACTIVITIES                                               (60)                       (295)
                                                                     -------------------   -------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Settlement payment                                                              (50,000)                    (50,000)
Proceeds from sale of common stock                                              110,000                     110,086
Offering costs                                                                  (14,000)                    (14,000)
Cash overdraft (repayment)                                                         (453)                       -
Proceeds from related party loans                                                93,856                     109,112
Repayments of related party loans                                               (26,102)                    (26,102)
                                                                     -------------------   -------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                       113,301                     129,096
                                                                     -------------------   -------------------------

Net Increase in Cash                                                             65,643                      65,643

Cash at Beginning of Period                                                          -                          -
                                                                     -------------------   -------------------------

CASH AT END OF PERIOD                                                $           65,643    $                 65,643
                                                                     ===================   =========================
</TABLE>

              See accompanying notes to consolidated financial statements

                                       5
<PAGE>

                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

NOTE 1   BASIS OF PRESENTATION
------------------------------

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
of America and the rules and regulations of the United States Securities and
Exchange Commission for interim consolidated financial information. Accordingly,
they do not include all the information and footnotes necessary for a
comprehensive presentation of consolidated financial position and consolidated
results of operations.

It is management's opinion, however, that all material adjustments (consisting
of normal recurring adjustments) have been made which are necessary for a fair
consolidated financial statement presentation. The results for the interim
period are not necessarily indicative of the results to be expected for the
year.

For further information, refer to the audited consolidated financial statements
and footnotes for the year ended December 31, 2001 included in the Company's
Form 10-KSB.

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 the Company. For the three and six months ended
June 30, 2002 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. Pursuant to SFAS 128, for the three and six months ended June 30, 2002,
600,000 common shares issued were not included in the computation of loss per
share since they were contingently returnable (see Note 5(B)). At June 30, 2002,
there were 245,000 common stock warrants and 9,510,000 employee common stock
options outstanding, which may dilute future earnings per share.

NOTE 3   PROMISSORY NOTE
------------------------

In May 2002, the Company borrowed  $50,000 from an affiliate of the Company's
President. The note bears interest at 8% and is due on demand. In conjunction
with this issuance,  the Company issued the President  100,000 shares of common
stock as a loan fee. (See Note 5)

NOTE 4   COMMITMENTS AND CONTINGENCIES
--------------------------------------

         (A) LEGAL MATTERS AND SETTLEMENT AGREEMENT

         There were 175,000 post reverse split common shares held in escrow and
         previously reflected as outstanding. A put option liability of $400,000
         also existed on 6,250 other common shares. The Company maintained the
         position that the 175,000 shares were issued contingent on the raising
         of $1,000,000. The Company has taken the position that those shares
         will not be issued, as the funds were not raised and such shares were
         cancelled in May 2002. In litigation related to these matters, on May
         29, 2002, the Company entered into a settlement agreement whereby they
         paid
                                       6
<PAGE>

                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

         $50,000 cash and committed to issue 115,000 common shares to settle
         the put option liability and dispute over the 175,000 shares. No
         shares will be returned to the Company under the put option and the
         original 175,000 shares will be cancelled. In addition, they hired the
         plaintiff under a 90-day consulting agreement in exchange for an
         additional 60,000 common shares. The total new 175,000 shares were
         valued at the contemporaneous private placement offering of $0.50 per
         share resulting in a value of $87,500. The total settlement cost,
         including the consulting shares, is $137,500. Accordingly, a gain on
         settlement of $262,500 was recognized. The 175,000 were not issued as
         of June 30, 2002 and accordingly are reflected as issuable.

         (B) CONSULTING AGREEMENTS

         On March 15, 2002, the Company executed a consulting agreement whereby
         the consultant will provide mergers and acquisition consulting to the
         Company. The Company is to pay consideration based on executed
         acquisitions in which the consultant introduced the seller to the
         Company based on a stipulated schedule, which ranges from 0.5% to 5% of
         the consideration paid in the transaction plus reasonable out-of-pocket
         expenses. The Agreement continues until terminated by either party with
         30 days written notice.

         On June 3, 2002, the Company executed a non-exclusive six-month
         consulting agreement for financial advisory services. The financial
         advisor will be paid 11% of any gross proceeds raised from a source
         introduced by the financial advisor.

         (C) EMPLOYMENT AGREEMENTS

         The Company entered into three employment agreements with officers for
         approximately three to four years, providing annual compensation
         aggregating $375,000 with 10% annual increases and severance provisions
         providing up to 200% of the salaries. In addition, the agreements grant
         stock options to purchase an aggregate 9,500,000 at a $1.75 exercise
         price per share and the promise of future stock options grants
         aggregating 9,500,000 and exercisable at $1.75 per share based upon a
         stipulated performance schedule. All option provide for cashless
         exercise. In accordance with APB 25, since the exercise price of the
         options equaled the fair market value of the underlying common stock at
         the grant date, no compensation expense was recognized.

         The Company entered into a three-year agreement with the owner of a
         Company, which it acquired, which acquisition and associated employment
         agreement was then rescinded (see Note 7).

         (D) LETTER OF INTENT

         On May 24, 2002, the Company executed a letter of intent to acquire
         100% of the common stock of a beverage company. The agreement calls for
         a cash purchase price of $9 million payable over a two-year period and
         $25 million worth of the Company's common stock valued based upon the
         average weekly trading price 15 days before closing, however, at no
         less than $2.50 per share. The letter of intent calls for a definitive
         stock exchange agreement to be executed. Closing is to be on or before
         September 15, 2002.
                                       7

<PAGE>

                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

         (E) OFFICE LEASE

         On June 1, 2002 (the Effective Date"), the Company entered into a lease
         for new office space through February 28, 2003. The rent is $2,585 per
         month.

NOTE 5   STOCKHOLDER'S EQUITY
-----------------------------

         (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. The Board of Directors authorized
         Series A preferred stock, which is voting and convertible. Each share
         of preferred stock is convertible to one share of common stock and each
         share of preferred stock is entitled to 10,000 votes on each matter
         submitted to a vote of the total capital stock of the Company. In
         addition, the Company may pay dividends of common stock to preferred
         stockholders.

         In September 2001, the Board authorized the issuance of 200,000 Series
         A preferred shares for services, however, as the amendment to the
         articles for the Series A shares was never filed with the State of
         Nevada, the shares are not considered issued and outstanding as of June
         30, 2002 for legal purposes. For accounting purposes, the preferred
         shares are reflected as issuable at June 30, 2002.

         (B) ISSUANCES OF 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. The note
         bears interest at 8% and is due August 13, 2003. The $10,668,750
         deferred compensation and related $10,664,483 additional paid-in
         capital were reversed.

         In March 2002, the Company issued 600,000 contingently returnable
         common shares for legal services to be rendered. The shares were vested
         at the grant date resulting in a value of $3,300,000 based on the
         trading price on the grant date. The compensation will be recognized
         over the 12-month term of the service agreement, which began January
         2002. A legal expense of $825,000 was recognized in the three months
         ended March 31, 2002 and an amount of $2,475,000 was deferred at March
         31, 2002. Another $825,000 was amortized to legal expense for the three
         months ended June 30, 2002. Due to the contingency, the 600,000 shares
         are
                                       8
<PAGE>

                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

         reflected on the consolidated balance sheet as issued at June 30,
         2002 but are not included in the computation of net loss per share.
         (See Note 2)

         On March 7, 2002, the Company issued 50,000 of its common shares
         pursuant to a seven-month consulting agreement. The 50,000 shares were
         vested at the grant date resulting in a value of $275,000 based on the
         trading price on the grant date, to be recognized over the seven-month
         service period. During the three months ended March 31, 2002, $39,286
         of consulting expense was recognized and $235,714 was deferred at March
         31, 2002. During the three months ended June 30, 2002, $117,858 was
         amortized to consulting expense. Options to issue 200,000 common shares
         were also issued to the same consultant at a $4.50 per share exercise
         price. The options were valued at their fair market value of $1,088,681
         using the Black-Scholes method resulting in a consulting expense of
         $155,526 for the three months ended March 31, 2002 and a deferred
         amount of $933,155 at March 31, 2002. During the three months ended
         June 30, 2002, $466,578 was amortized to consulting expense. Such
         options expire in 18 months. In addition, 15,000 shares are due on the
         first of each month for the duration of the agreement. On March 31,
         2002, the Company issued 15,000 shares resulting in a consulting
         expense recognized of $59,250. On each date of April 1, May 1 and June
         1, 2002 the Company issued 15,000 common shares pursuant to the
         consulting agreement. The aggregate 45,000 shares were valued at the
         trading price of $3.95 per share on the original grant date resulting
         in an expense for the three months ended June 30, 2002 of $177,750.

         During February 2002, the Company issued 667,500 shares to various
         parties for nominal consideration. The Company recognized a consulting
         expense of $1,668,750 based on the $2.50 per share trading price of the
         common stock on the grant date.

         In 2001, the Company issued warrants to purchase 50,000 shares of
         common stock to a consultant at an exercise price of $1.80 per share
         through November 19, 2006. The warrants contain a cashless exercise
         provision. In March 2002, 7,500 warrants were exercised under the
         cashless exercise provision resulting in a commitment to issue 4,964
         shares of common stock. These shares are issued as of June 30, 2002.

         During May and June 2002, the Company issued 220,000 common shares for
         $0.50 per share or aggregate gross proceeds of $110,000. The Company
         paid associated cash offering costs of $14,000, which was charged
         against the gross proceeds to additional paid-in capital.

         On May 9, 2002, the Company issued 100,000 shares to its President as a
         loan fee relating to a $50,000 loan made in May 2002 (see Note 3). The
         shares were value at the contemporaneous offering price of $0.50 per
         share resulting in a loan fee expense of $50,000, which was recognized
         immediately since the loan was due on demand.

         On May 21, 2002, the Company issued 103,500 common shares for nominal
         consideration. The shares were treated as stock for consulting services
         and valued at the contemporaneous offering price of $0.50 resulting in
         a consulting expense of $51,750.


                                       9
<PAGE>


                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

         During the three and six months ended June 30, 2002, $26,016 and
         $52,032 of deferred consulting fees relating to a Management and
         Investment banking Agreement entered into in November 2001 were
         amortized as consulting expense.

NOTE 6   RELATED PARTY TRANSACTIONS
-----------------------------------

The Company paid rent to an affiliate of an officer. Rent accrued to that
affiliate as of June 30, 2002 was $1,750. As of June 30, 2002, the Company
entered into a lease for a new corporate office with an unaffiliated lessor.

In May 2002, an affiliate of the President loaned $50,000 to the Company and the
President received a 100,000 common shares as a loan fee relating to this
transaction (see Notes 3 and 5(B)).

NOTE 7   ACQUISITION AND SUBSEQUENT RESCISSION
----------------------------------------------

On April 30, 2002, the Company closed on an agreement to acquire a beverage
company (the "Acquiree"). The Company committed to issue 571,428 of it common
shares in exchange for 100% of the Acquiree's outstanding capital stock and
10,000 common shares pursuant to a related employment agreement with the former
owner of the Acquiree. (See Note 4(C)) The shares were never issued.

The Company has determined that the acquiree cannot provide the required audited
financial statements and the Company never gained control of the acquiree after
the closing. As a result, the Company is unilaterally rescinding the agreement,
which includes the employment agreement with a shareholder of the acquiree. In
addition, the Company has discovered certain facts that will likely give rise to
an independent cause of action against the shareholders of the acquiree. Since
the Company never gained control of the acquiree and believes there were no
operations in the acquiree, the accompanying consolidated financial statements
do not include any operations of the acquiree.

NOTE 8   GOING CONCERN
----------------------

As reflected in the accompanying consolidated financial statements, the Company
has operating losses for the three months ended June 30, 2002 of $1,615,323, a
deficit accumulated during the development stage of $9,187,634 at June 30, 2002,
and cash used in operations for the six months ended June 30, 2002 of $47,598,
and is a development stage company with no revenues. 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
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.

On September 14, 2001, the Company was recapitalized as an SEC reporting Company
and in the three months ended June 30, 2002, the Company raised $96,000 net
proceeds from an equity offering. In addition, the Company is seeking additional
funding and additional acquisitions.

NOTE 9   SUBSEQUENT EVENTS
--------------------------

(A) Financial Advisory Agreement and Related Common Stock Issuances

On July 10, 2002, the Company entered into a non-exclusive one-year financial
advisory agreement. The agreement provides for various fees as follows:

                                       10
<PAGE>


                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
                                   (Unaudited)

         (a)      Financial Advisory Fees and Funding Fee:

                  The Company will issue 200,000 of its common shares as an
                  advisory fee, such shares payable quarterly with 50,000 upon
                  signing of the agreement and 50,000 shares on each of October
                  1, 2002, January 1, 2003, and April 1, 2003. The shares vest
                  pro-rata over the agreement term.

                  In addition, if, within 90 days following execution of the
                  agreement,, the financial advisor secures at least $3 million
                  financing for the Company or introduces the Company to a
                  financing source of $3 million, or arranges a business
                  combination for the company, the Company will pay a financial
                  advisory funding fee of 200,000 common shares and warrants to
                  purchase 200,000 common shares at an exercise price of $3.00
                  per share for five years.

                  The Company will also pay $25,000 for assistance with a
                  private placement.

         (b)      Financing Fee:

                  The Company will pay a financing fee to the financial advisor
                  from 5% to 10% of funds raised, plus expenses, as stipulated
                  in the agreement.

         (c)      Finders Fee and Transaction Fee

                  The Company will pay a quarterly finders fee, as 5% of
                  revenues collected, as a result of a business relationship
                  between the Company and a third party introduced by the
                  financial advisor. The Company will also pay a sliding scale
                  transaction fee from 1% to 5% based on the value of any
                  transaction, such as a business combination, that occurs as a
                  result of the introduction by the financial advisor


                                       11
<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.

Revenues for the six months ended June 30, 2002:

We have not generated any revenues for the six months ended June 30, 2002. We
rescinded our agreement with Buzzy's Beverages, Inc. Not only was Buzzy's unable
to provide us with audited financial statements, we discovered that
representations made by the shareholders were inaccurate and as a result, we may
be forced to institute legal proceedings.

We signed a letter of intent to acquire all of the issued and outstanding shares
of common stock of Dark Dog Sale & Retail Vertriebs GmBh ("Dark Dog") for $9
million in cash payable over three years and $25 million of our common stock. If
we are not able to close on this transaction, our ability to generate revenues
during our next quarter will be significantly impaired.

For the three and six months ended June 30, 2002, we incurred losses from
operations of ($1,877,823) and ($4,769,736) and a net loss per share of ($.23)
and ($.78) respectively. This compares to a loss since inception (September 9,
2001) of ($9,187,634) and a net loss per share of ($2.12). A significant portion
of the operating expenses reflected on the income statement reflect non-cash
expenditures which we have incurred as a result of the issuance of our common
stock.

Liquidity and Capital Resources

As of June 30, 2002, we had $65,643 in cash and total assets of $68,631 as
compared to no cash and total assets of $343 as of December 31, 2001. The cash
proceeds represents the remainder of

                                       12
<PAGE>

the proceeds received from the sale of our common stock to investors pursuant to
a private placement conducted pursuant to Rule 506 of Regulation D. We have been
offering up to $1 million of our common stock at a price of $.50 per share.

Our current liabilities total $367,452 as compared to $464,206 as of December
31, 2002. Total Stockholders's Deficiency was ($298,821) as compared to
($463,863). The reduction primarily reflects the settlement of the $400,000 put
option liability and increases in accounts payable, loans payable to related
parties and accrued compensation.

We issued 4,267,500 shares of our common stock to Xstream Beverage Inc. in
consideration for a promissory note in the amount of $2,133,750. Edward Arioli
serves as our president and is the president of Xstream Beverage Inc. The $.50
cost per share is equal to the cost per share which Xstream is offering its
common stock in its private placement.

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 June 30, 2002 we issued the following securities:

Joseph Azzata                       5/21/02                            50,000
Deal Flow Advisors                  5/21/02                            22,500
Jack Kuhn                           5/21/02                             3,500
Brently Martin                      5/21/02                            50,000
Georgia Sitaris                     5/21/02                            22,500
Murray Segal                        5/30/02                            20,000
Jonathan Rich                       6/25/02                             3,364
Yanneth Arrango                     6/25/02                             5,000
Barbara Bant                        6/25/02                            10,000
Thomas Blake                        6/25/02                             2,200
J. Allison Defore                   6/25/02                             2,000
Evelyn Diamond                      6/25/02                             5,000
Theresa Dickinson                   6/25/02                             2,000
Gary Ferguson IRA                   6/25/02                             1,000
James Healey                        6/25/02                             5,000
Kerry Lee Herdon IRA                6/25/02                             5,000
J. Stanton Kane                     6/25/02                            10,000
Don Larson IRA                      6/25/02                            20,000
Marcia Neafsey                      6/25/02                             1,000
Maryland & David Nelson             6/25/02                             2,000
Ronlo Inc.                          6/25/02                             5,000
Phyllis Sague                       6/25/02                             2,000
Nick Silverio IRA                   6/25/02                             5,000
Maria Smith                         6/25/02                             2,000
Cindy Swift                         6/25/02                               800
Nancy  Trescott                     6/25/02                             5,000
Francisco Valdez                    6/25/02                            25,000
Norman Mills                        6/25/02                            34,000
Matt Tugwell                        6/07/02                             1,600

         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.

                                       13
<PAGE>

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 June 30, 2002.

Item 5.   Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-k

         (a) Exhibits.

         99.1 Certification by chief executive officer

(b)      Reports on Form 8-K

         There were no reports on Form 8-K filed during the quarter ended June
30, 2002. We did however file a Form 8-k on August 1, 2002 in connection with
the termination of the Buzzy's Beverages agreement and the signing of the letter
of intent with respect to the acquisition of Dark Dog Sale & Retail Vertriebs
GmBh..

                                       14

<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.


REGISTRANT:

XSTREAM BEVERAGE GROUP, INC.


    /s/ Steve A. Haglund
-------------------------------------
BY: Steve A. Haglund, CEO
August 13, 2002



                                       15