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 March 31, 2003

[ ]  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:


          CLASS                                  Outstanding at May 14, 2003
----------------------------                     ---------------------------
Common Stock $.001 par value                             14,730,389

                           XSTREAM BEVERAGE GROUP, INC.

PART I:   FINANCIAL INFORMATION                                           PAGE
                                                                          ----

                  Balance Sheet as of March 31,2003 (Unaudited)            3

                  Statement of Operations for the  three
                   months ended March 31, 2003 and March 31, 2002
                  and from September 9, 2001 (inception) to March 31,
                  2003 (unaudited)                                         4

                  Statement of Cash Flows for the Three  Months
                  Ended March 31, 2003 and Three Months Ended
                  March 31, 2002 and from September 9,
                  2001 (inception) to March 31, 2003 (unaudited)           5

                  Notes to Consolidated Financial Statements
                  (Unaudited) as of March 31, 2003                         6

                  Management Discussion and Analysis of Financial
                  Condition and Results of Operations                      14

PART II: OTHER INFORMATION                                                 15

                                       1
<PAGE>
                          Xstream Beverage Group, Inc.
                                and Subsidiaries
                          (A Development Stage Company)


                                    Contents
                                    --------

                                                                Page(s)
                                                                -------

Consolidated Balance Sheet                                         3

Consolidated Statements of Operations                              4

Consolidated Statements of Cash Flow                               5

Notes to Consolidated Financial Statements                        6-13


                                       2
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)
<TABLE>
<CAPTION>
                                     ASSETS
                                     ------
<S>                                                                               <C>
CURRENT ASSETS
Cash                                                                              $      2,968
Accounts Receivable                                                                     10,304
Due from Affiliate                                                                      25,000
Inventory                                                                               28,203
                                                                                  ------------
TOTAL CURRENT ASSETS                                                                    66,475
                                                                                  ------------

PROPERTY AND EQUIPMENT, NET                                                              5,280
                                                                                  ------------

OTHER ASSETS - DEPOSITS                                                                  5,085
                                                                                  ------------

TOTAL ASSETS                                                                      $     76,840
                                                                                  ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
Accounts Payable                                                                  $     72,470
Accrued Compensation                                                                    96,294
Loans payable - related parties                                                         35,719
Loans payable - Other                                                                   70,514
Convertible Debenture                                                                   70,000
                                                                                  ------------
TOTAL CURRENT LIABILITIES                                                              344,997
                                                                                  ------------

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares authorized, Series A,
  200,000 shares issued and outstanding                                                    200
Common stock, $0.001 par value, 50,000,000 shares authorized, 10,871,190 shares
  issued and outstanding, respectively                                                  10,872
Common stock issuable (135,850 shares)                                                     136
Additional paid-in capital                                                          13,806,017
Deficit accumulated during development stage                                       (11,319,861)
                                                                                  ------------
                                                                                     2,497,364
Less: deferred consulting expense                                                     (461,339)
Less: stock subscription receivable                                                 (2,304,182)
                                                                                  ------------
TOTAL STOCKHOLDERS' DEFICIENCY                                                        (268,157)
                                                                                  ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                    $     76,840
                                                                                  ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                         (A DEVELOPMENTAL STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
                            ------------------------
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                     Three Months Ended         From September 9,
                                                          March 31,            2001 (inception) to
                                                    2003            2002         March 31, 2003
                                                ------------    ------------   -------------------
<S>                                             <C>             <C>             <C>
REVENUE                                         $     10,304    $         --    $     10,304

COST OF GOODS SOLD                                     4,612              --           4,612
                                                ------------    ------------    ------------

GROSS PROFIT                                           5,692              --           5,692
                                                ------------    ------------    ------------


OPERATING EXPENSES
Compensation                                    $    127,985    $     93,750    $  2,542,119
Consulting                                           424,941       1,948,828       6,793,545
Professional fees                                     53,283         832,319       1,687,301
Rent                                                   7,791              --          35,452
General and administrative                            76,942          17,016         341,789
                                                ------------    ------------    ------------
TOTAL OPERATING EXPENSES                             690,942       2,891,913      11,400,206
                                                ------------    ------------    ------------

Loss from Operations                                (685,250)     (2,891,913)    (11,394,514)

OTHER INCOME (EXPENSE)
Settlement gain                                           --              --         262,500
Interest income                                       42,118              --         170,769
Settlement loss                                     (193,000)             --        (285,900)
Interest expense                                     (51,667)             --         (72,716)
                                                ------------    ------------    ------------
TOTAL OTHER INCOME , NET                            (202,549)             --          74,653
                                                ------------    ------------    ------------

NET LOSS                                        $   (887,799)   $ (2,891,913)   $(11,319,861)
                                                ============    ============    ============

NET LOSS PER SHARE - BASIC AND DILUTED          $      (0.09)   $      (0.62)   $      (1.42)
                                                ============    ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
   DURING THE PERIOD - BASIC AND DILUTED          10,218,110       4,664,527       7,963,606
                                                ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                         (A DEVELOPMENTAL STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                            ------------------------
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         Three Months Ended         From September 9,
                                                             March 31,             2001 (inception) to
                                                        2003            2002         March 31, 2003
                                                    ------------    ------------   -------------------
<S>                                                 <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                (887,799)   $ (2,891,913)    (11,319,861)
Adjustments to reconcile net loss to cash used in
   operating activities:
Stock based expenses                                     465,025       2,773,828      10,094,981
Stock based loan fee                                          --              --          50,000
Stock based settlement loss                              193,000              --         300,500
Contributed officer services                                  --              --          27,540
Interest income on subscription receivable               (42,090)             --        (170,232)
Amortization of debt discount to interest expense         51,667              --          70,000
Depreciation                                                 236              --             609
Gain on settlement                                            --              --        (262,500)
(Increase) decrease in:
Accounts receivable                                      (10,304)             --         (10,304)
Inventory                                                (28,203)             --         (28,203)
Deposits                                                      --              --          (5,085)
Increase (decrease) in:
Accounts payable                                           8,056           4,370          60,024
Accrued compensation                                      94,818          93,750         348,915
Accrued expenses                                         (10,000)             --              --
Due to affiliate                                              --           1,050              --
Other taxes                                                   --              --           1,350
                                                    ------------    ------------    ------------
NET CASH USED IN OPERATING ACTIVITIES:                  (165,594)        (18,915)       (842,266)
                                                    ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from return of deposit                           25,000              --              --
Purchase of equipment                                         --              --          (5,889)
Advance to pending acquiree                              (25,000)             --         (25,000)
Loans to principal stockholder                                --              --              --
Cash acquired in recapitalization                             --              --             108
                                                    ------------    ------------    ------------
NET CASH USED IN INVESTING ACTIVITIES                         --              --         (30,781)
                                                    ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds                                             70,514              --              --
Settlement payment related to put option                      --              --         (50,000)
Repayment of cash overdraft                                   --           2,617          70,514
Proceeds from related party loans                         36,500          25,000          35,719
Proceeds from sale of common stock, net                   17,200              --         828,557
Offering costs                                            (1,950)             --              --
Repayments of related party loans                             --          (8,702)         (8,775)
                                                    ------------    ------------    ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                122,264          18,915         876,015
                                                    ------------    ------------    ------------

Net Increase (Decrease) in Cash                          (43,330)             --           2,968

Cash at Beginning of Period                               46,298              --              --
                                                    ------------    ------------    ------------

CASH AT END OF PERIOD                               $      2,968    $         --    $      2,968
                                                    ============    ============    ============
</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, 2003
                                 --------------
                                   (Unaudited)

NOTE 1   BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS
-------------------------------------------------------------------

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, 2002 included in the Company's
Form 10-KSB.

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

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 months ended March 31,
2003, March 31, 2002 and the period from September 9, 2001 (inception) to March
31, 2003, the diluted loss per share is the same as basic loss per share since
the effect of all common stock equivalents was antidilutive due to the net loss.
Pursuant to SFAS 128, for the three months ended March 31, 2003, 950,000 common
shares issued were not included in the computation of loss per share since they
were contingently returnable. At March 31, 2003, there were 500,000 common stock
consultant warrants and 9,129,268 employee common stock options outstanding,
which may dilute future earnings per share. There were also 4,000,000 employee
common stock options granted in April 2003 (see Note 13).

NOTE 3   DUE FROM AFFILIATE
---------------------------

A short-term, non-interest bearing demand note in the amount of $25,000 was
remitted to a new Acquiree, which the acquisition closed in April 2003.

NOTE 4   INVENTORY
------------------

The company had $28,203 of raw goods and materials on hand as of the three
months ended, March 31, 2003. All items are valued at cost based on a "first-in,
first-out" inventory policy.

NOTE 5   ACCRUED COMPENSATION
-----------------------------

Accrued compensation pursuant to three employment agreements was $254,097 at
December 31, 2002. On March 31, 2003, the Board, which consists of the three
officers subject to such employment agreements, approved the officers'
forgiveness of their compensation accrued through December 31, 2002. The Company
recognized contributed capital of $254,097 since this was a related party
transaction. Accrued compensation pursuant to three employment agreements was
$93,750 at March 31, 2003 which was included in the total accrued compensation
balance of $96,294.

                                       6
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

NOTE 6   LOANS PAYABLE - RELATED PARTIES
----------------------------------------

The Company has loans payable to a principal stockholder, Xstream Beverage, Inc.
of $35,719 at March 31, 2003. This loan is undocumented, non-interest bearing
and considered due on demand.

NOTE 7   LOANS PAYABLE - OTHER
------------------------------

The Company has other loans of $70,514 at March 31, 2003. These are non-interest
bearing demand notes with no specified term.

NOTE 8   CONVERTIBLE DEBENTURE
------------------------------

On December 20, 2002 (the "Commitment Date") the Company issued a $70,000, 12%
unsecured convertible debenture to an individual (the "holder") in exchange for
that individual's payment to a legal services vendor under a settlement
agreement. The principal and any accrued interest is due on or before June 30,
2003 and interest is to be paid monthly beginning January 31, 2003. At any time
after January 31, 2003, upon written notice, the holder may convert the debt at
a minimum amount of $10,000 into the Company's common shares at a conversion
price of $0.23 per share. The Company may prepay at any time. The debenture's
embedded conversion feature resulted in an allocation of a portion of the
proceeds to that beneficial conversion feature since the $1.00 fair value of the
common stock on the commitment date, based on the contemporaneous
private-placement offering price, exceeded the conversion price of $0.23 per
share. The computation of the benefit is limited to the gross proceeds of the
debenture under the rules of EITF 98-5 "Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios." The computed benefit is recorded to debt discount and amortized over
the period from the commitment date to the earliest conversion date, which is
January 31, 2003. Accordingly, the Company recognized interest expense of
$18,333 in December 2002 and $51,667 in January 2003. In April, 2003, the debt
and related accrued interest was converted and 315,000 common shares were
issued. (See subsequent events).

NOTE 9   COMMITMENTS AND CONTINGENCIES
--------------------------------------

         (A) 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. On March 1, 2003 (the "Effective Date"), the Company
         renewed the lease agreement through August 31, 2003. The rent is 2,621
         per month. Rent expense in 2003 was $7,791 and was $35,452 from
         September 9, 2001 (inception) through March 31, 2003.

                                       7
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

         (B) EMPLOYMENT AGREEMENTS

         In 2002, Company entered into separate employment agreements with each
         of three 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 options provide for
         cashless exercise. During the period the options were granted, there
         was zero trading volume on the Company's stock. The highest bid price
         was $1.25. In accordance with APB 25, since the exercise price of the
         options exceeded the highest bid price of the underlying common stock
         at the grant date, no compensation expense was recognized in 2002. The
         Company issued 200,000 common shares under a cashless exercise
         provision relating to 370,732 options exercisable at $1.75 per share In
         March 2003, all accrued compensation at December 31, 2002 related to
         the above employment agreements was forgiven by the employees (see Note
         5).

         In April 2003, three additional employment agreements were executed as
         a result of an acquisition (see Note 13).

         (C) PRIVATE PLACEMENT

         As of March 19, 2003, the Company is offering 2,500,000 common shares
         at $0.50 per share. The Company, since the opening of the offering has
         sold 44,000 shares in April 2003 (see Note 13).

NOTE 10   STOCKHOLDER'S DEFICIENCY
----------------------------------

         (A) ISSUANCES OF COMMON STOCK

         The Company issued 1,000,000 common shares to its founder for payment
         of $86 of incorporation fees at inception.

         On September 14, 2001, the company was deemed to have issued 220,000
         common shares pursuant to a recapitalization (see above).

         In October 2001, the Company issued 500,000 common shares to a
         consultant for services rendered. The stock was considered vested upon
         issuance and was valued at the common stock trading price on the grant
         date of $5.20 resulting in an immediate expense of $2,600,000.

         In November 2001, the Company granted 20,000 common shares to a
         consultant. The Company valued the shares at a total $30,000 based on
         the $1.50 per share trading price on the grant date and based on a
         measurement date equal to the grant date since the shares are
         considered vested upon issuance. Accordingly, the Company recognized a
         consulting expense of $2,500 in 2001 and $27,500 in 2002 over the one
         year term of the consulting agreement.

         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 2002 was
         $128,142 and is included in subscriptions receivable deducted from
         equity at December 31, 2002.

                                       8
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

         During February 2002, the Company issued 667,500 shares to various
         parties for nominal consideration. The issuance was treated as stock
         for consulting services and the Company recognized a consulting expense
         of $1,668,700 based on the $2.50 per share trading price of the common
         stock on the grant date less a total of $50 received from some of the
         recipients later in the year.

         In March 2002, the Company issued 600,000 contingently returnable
         common shares for legal services to be rendered. The contingency was
         based on the law firm completing all periodic filings during 2002 and
         in no event later than January 10, 2003. The Company initially recorded
         $3,300,000 as deferred legal fees based on the $5.50 trading price of
         the common stock at the grant date to be recognized over the one year
         term of the legal services agreement, which was effective on January 1,
         2002. The Company applies the variable accounting method under SFAS
         123, EITF 96-18, and FIN 28, which provides that the Company must
         adjust the fair value of the shares at each balance sheet date to a
         current value until the contingency expires and a measurement date is
         achieved. As of December 31, 2002 based on a current private placement
         offering price of $1.00, the Company has recognized $600,000 of legal
         expense for the 600,000 shares issued. Due to the contingency, the
         600,000 shares are reflected on the consolidated balance sheet as
         issued at December 31, 2002 but are not included in the computation of
         net loss per share. On January 10, 2003, the contingency expired and no
         expense adjustment was necessary, as the private placement offering at
         $1.00 was still active. (See Note 1(F))

         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 fair value of $275,000 based on
         the quoted trading price on the grant date, to be recognized over the
         seven-month service period. During 2002, the $275,000 was fully
         recognized as consulting expense. Options to issue 200,000 common
         shares were also granted to the same consultant at a $4.50 per share
         exercise price. In addition, 15,000 shares are due on the first of each
         month for the duration of the agreement. On the first of each month
         April through September 2002, 15,000 common shares became issuable
         pursuant to the consulting agreement. Through December 31, 2002 45,000
         shares have been issued and 45,000 shares are issuable under the
         agreement. The aggregate 90,000 shares were valued based on the quoted
         trading price of the common stock through June 2002 (ranging from $2.99
         to $3.45 per share) and based on the private placement price of $0.50
         per share from July through September 2002 resulting in a total
         consulting expense recognized in 2002 of $166,623. In January 2003, the
         Company settled a dispute with the consultant by agreeing to issue an
         additional 95,000 common shares. The shares were recorded as a
         settlement expense in January 2003 at the contemporaneous private
         placement price of $1.00 per share or $95,000. (See Note 6(B))

         In March 2002, 7,500 warrants were exercised under a cashless exercise
         provision resulting in the issuance of 4,964 shares of common stock.

         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.

                                       9
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

         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. The shares were
         valued 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. The loan was repaid
         during 2002.

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

         In May 2002, the Company settled a legal matter by issuing 175,000
         common shares. The shares were valued at the contemporaneous private
         placement offering of $0.50 per share resulting in a fair value of
         $87,500. In addition, 175,000 previously issued shares held in escrow
         relating to the above matter were cancelled. (See Note 6(A)).

         On August 17, 2002, the Company agreed to issue 20,000 common shares to
         a consultant under a six month agreement. The related expense is
         recognized pro rata over the six month term of the agreement. As of
         December 31, 2002 the Company recognized consulting expense of $7,432
         and deferred consulting of $2,568 based on the contemporaneous offering
         price of $0.50 per share

         In August and September 2002, 61,800 common shares were issued to
         various consultants for services rendered. The shares were valued at
         the contemporaneous private placement offering price of $0.50 per share
         resulting in a consulting expense of $30,900.

         On September 20, 2002, the Company issued 175,001 common shares for
         nominal consideration. The shares issued were treated as stock for
         consulting services and valued at the contemporaneous private placement
         offering price of $0.50 resulting in a consulting expense of $87,500.

         On September 27, 2002, the Company became obligated to issue 175,000
         common shares under a consulting agreement and was to place another
         100,000 common shares into escrow to be release in six months. The
         175,000 shares were valued at $87,500 based on the contemporaneous
         private placement offering price of $0.50 at September 27, 2002. In
         October 2002, the 100,000 shares, which were never placed into escrow,
         were released and issued to the consultant resulting in a value of
         $100,000 based on a new private placement offering price of $1.00 per
         share. The expense is to be recognized ratably over the one-year term
         of the agreement resulting in a consulting expense of $40,777
         recognized in 2002 and a deferred consulting expense of $146,723
         deducted from equity at December 31, 2002.

         From July through September, the Company expensed $22,500 of consulting
         expense for 45,000 common shares based on the contemporaneous offering
         price of $0.50 per share. The shares are included in common stock
         issuable at December 31, 2002.

         During the period of July through September 2002, the Company issued
         823,000 common shares for gross proceeds of $411,500. A subscription
         receivable $200 remains at December 31, 2002. Offering costs of $59,059
         were charged to additional paid-in capital.

                                       10
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

         On October 18, 2002, the Company issued 67,500 common shares to a
         consultant for services rendered. The Company recognized $67,500 in
         consulting expense based on the contemporaneous private placement
         offering price of $1.00 per share.

         On October 31, 2002 (the "Settlement Date") the Company agreed to
         issue, under an amendment to a consulting agreement, 1,050,000
         contingently cancelable common shares (including the 52,800 shares
         already issued under the July 2002 Agreement) (see Note 6(B)) in
         exchange for the investment bank raising or assisting with the raise of
         $10 million in equity capital for the Company. In addition, the
         amendment provides for an additional 20,000 common share issuance that
         is not contingently cancelable. Accordingly, another 950,000 common
         shares were issued to the investment bank and 67,200 are recorded as
         issuable at December 31, 2002. The 1,050,000 common shares issued are
         contingently cancelable at the Company's option if the full $10 million
         is not raised by September 30, 2003. The 47,200 issuable shares were
         recorded as deferred consulting expense at the $1.00 contemporaneous
         offering price since they related to shares that should have been
         issued under the original consulting agreement. The 20,000 shares were
         valued at the contemporaneous cash offering price of $1.00 per common
         share and recorded as a $20,000 settlement expense on the Settlement
         Date. The 950,000 shares are contingent and therefore not recorded as
         outstanding for accounting purposes in accordance with EITF 96-18 and
         related interpretations.

         During the period of October 1, 2002 through December 31, 2002, the
         Company issued 20,000 common shares at $0.50 per share and 294,000
         common shares at $1.00 per share under two private placements for gross
         proceeds of $260,000 and subscriptions receivable of $44,200. Offering
         costs of $36,000 were charged to additional paid-in capital. In
         addition, proceeds of $15,000 were received relating to previous
         quarter subscriptions receivable. Remaining subscriptions receivable at
         December 31, 2002 was $44,200.

         During the first three months, the Company issued 275,000 shares for
         services rendered valued at $275,000 consulting expense based on the
         contemporaneous offering price of $1.00 per share.

         In addition, the Company issued 5,000 shares under the private
         placement at $1.00 per share for $5,000, cancelled 44,000 shares
         relating to a subscription receivable that was reflected at December
         31, 2002, and issued 90,280 of the shares reflected as issuable at
         December 31, 2002. In addition, the Company issued 200,000 common
         shares under a cashless exercise provision relating to 370,732 options
         exercisable at $1.75 per share under office employment agreements.
         .
         In January 2003, the Company issued 140,000 shares as final settlement
         of a service agreement, 45,000 of which were reflected as issuable at
         December 31, 2002. The settlement expense was recognized at $95,000
         based on the contemporaneous offering price of $1.00 per share.

         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 three months ended March 31, 2003, $68,158 was
         recognized as consulting expense and $281,842 was deferred.

                                       11
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

         In March 2003, the Company issued 120,000 shares for legal services to
         be rendered. The shares were vested at the grant date resulting in a
         value of $60,000 based on the contemporaneous offering price of $0.50
         per share. The company received proceeds in the amount of $7,500 and
         recognized a legal expense of $52,500.

         In addition, the company issued 200,000 common shares under an exercise
         provision relating to 200,000 options exercisable at $0.01, from
         options allegedly granted to a consultant. The validity of these
         options was in dispute and thus the company treated the stock issuance
         as a settlement. The company received proceeds in the amount of $2,000
         and recognized a settlement expense of $98,000 based on the
         contemporaneous offering price of $0.50 per share.

         (B) 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. 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.

         In September 2001, the Board authorized the issuance of 200,000 Series
         A preferred shares to the Company's chairman for services. The Series A
         preferred stock does not have dividend rights.

NOTE 11 GOING CONCERN
---------------------

As reflected in the accompanying consolidated financial statements, the Company
has net losses for the three months ended March 31, 2003 of $887,799, a deficit
accumulated during the development stage of $11,319,861 at March 31, 2003, cash
used in operations for the three months ended March 31, 2003 of $165,594, and is
a development stage company with no significant 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.

                                       12
<PAGE>
                  XSTREAM BEVERAGE GROUP, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2003
                                 --------------
                                   (Unaudited)

In April 2003, the Company closed on its first acquisition and has generated
nominal revenues in the first quarter from a new product developed by the
company. In addition, the Company is seeking funding and additional
acquisitions.

NOTE 12 RELATED PARTIES
-----------------------

Sales for the three months ended March 31, 2003 were $10,304. Of the total
sales, $4,640 was sales to a distributor, which was acquired in 2003. (See Note
13)

In the quarter ended March 31, 2003, the Company borrowed $35,719 from a
principal stockholder.

NOTE 13 SUBSEQUENT EVENTS
-------------------------

In accordance with the Company's plan to acquire beverage companies, on April 9,
2003 (the "Agreement Date") the company, acquired a recently formed inactive
company, Total Beverage Network, Inc., ("Total Beverage") which had an agreement
to acquire the assets and liabilities of Universal Florida Beverage
Distributors, Inc. ("Universal"), a South Florida beverage distributor. The
acquisition of the Universal assets was to occur simultaneously with the
acquisition of the common stock of Total Beverage and to be paid for with
550,000 restricted shares of the Company's common stock to the stockholders of
Universal. The acquisition of Total Beverage was to be paid with 1,000,000
shares of the Company's common stock to the stockholders of Total Beverage. All
of the Company's common stock is valued at the contemporaneous offering price of
$0.50 per share or a total value of $275,000 for the Universal acquisition and
$500,000 for the Total Beverage acquisition. The company will apply the purchase
method of accounting for these business combinations under SFAS No. 141. The
Company is currently analyzing its allocation of the $275,000 purchase price to
the assets acquired, and liabilities assumed of Universal, and the accounting
treatment of $500,000 value of the shares issued for Total Beverage pending
completion of acquisition audits and valuation data. Total Beverage Network,
Inc., d/b/a Beverage Network of S. Florida, will continue the operations of
Universal Florida Beverage Distributors and has entered into employment
agreements with key existing management (see below). The first employment
agreement included the company issuing 125,000 shares of restricted common stock
upon execution of an annual contract.

The operation of the acquired companies will be included in the Company's
results of operations from the Acquisition Date.

Simultaneous with the foregoing acquisition, the company executed three-year
employment agreements for two key management positions, CEO and President. The
employment agreements 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 using the intrinsic value method of APB 25.

In May 2003, the company is anticipating the consummation of a second
acquisition valued at $550,000. The terms of the sale require $150,000 cash and
800,000 shares of restricted common shares valued at the contemporaneous
offering price of $0.50 per share. The shares were issued in April 2003 but are
held in escrow, pending the close of the sale. The company anticipates that one
key management position will be retained to continue operations.

In April 2003 the Company sold 44,000 common shares under a new $0.50 per share
private placement.

                                       13

<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, 2003:

With the introduction of our new Yohimbe Energy Drink, we were able to generate
our first revenues of $10,304. Our gross profit was $5,692. We believe that we
will be able to increase our margins in the future as we were offering special
promotional programs in order to attract both distributors and retailers. Our
operating expenses totaled $690,942 which resulted in a loss from operations of
($685,250) as compared to a loss of ($11,394,514) since our inception. . During
the three months ended March 31, 2003, we incurred consulting fees of $424,941,
most of which represents non-cash based compensation. Our net loss for the
period was ($887,799) as compared to a net loss since inception of
($11,319,861).

Until such time as we can increase sales of Yohimbe, or generate other revenues
through acquisitions of various distribution companies, it is unlikely that we
will operate profitably.

Liquidity and Capital Resources

As of March 31, 2003, we had $2,948 in cash and total current assets of $66,475
and total assets of $76,840.

                                       14
<PAGE>
Our current liabilities total $344,997, which includes $96,294 of accrued
compensation which is due management. Total Stockholders's Deficiency was
($268,157).

Unless we can significantly increase sales or raise additional capital, we will
not have sufficient assets to satisfy our existing obligations. We believe our
acquisition of Universal Florida Beverage and the pending closing of our
acquisition of a second distributorship in Connecticut will permit us to meet
these objectives.

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, 2003 we issued the following securities:

Name                            Date                            No. of Shares

Jeffrey Klein                   March 25, 2003                  40,000
Irwin Newman                    March 25, 2003                  40,000
Kenneth Pollock                 March 25, 2003                  40,000
Innovative Capital              March 25, 2003                  10,000
Bruce Jordan                    March 25, 2003                   5,000
Richard Kagel                   January 24, 2003                50,000
Kashner Davidson Securities     January 24, 2003               350,000
Marc Leads                      March 25, 2003                   5,000
Vincent Mannapolli              March 25, 2003                   5,000
Mark McKeive                    January 24, 2003                22,500
Ron Schmidt                     January 24, 2003                10,000
Georgia Sitaris                 January 24, 2003                37,500
Sperkacz, Zorfan & Sarkacz      January 24, 2003                50,000
Tadros, David & Vervois         January 24, 2003                20,000
Tom Viscosi                     March 25, 2003                 200,000
Bruce Jordan                    March 25, 2003                 200,000
Edward Arioli                   March 7, 2003                  100,000
Steve Haglund                   March 7, 2003                  100,000
Kevin Patit                     March 25, 2003                   5,000
Ron Anderson, IRA               March 25, 2003                  10,000
Samuel Burkhalter               February 14, 2003                1,450
Dale Carlson                    February 12, 2003                4,600


                                       15
<PAGE>

Name                            Date                            No. Of Shares

Carol Deets                     February 14, 2003                  850
Dennis Duve IRA                 February 14, 2003                3,000
Carl Franklin                   February 12, 2003               16,400
Edwin Gann                      February 14, 2003                1,000
W. W. Gay                       January 27, 2003                10,000
Donald Hartwick                 January 27, 2003                 4,430
Willie Johnston                 February 12, 2003                1,300
Joel Key                        January 24, 2003                10,000
John Mundo                      March 6, 2003                   10,000
Derek Paulson                   February 12, 2003                  900
Jack Ridge                      February 12, 2003                3,000
Philip Smith                    January 29, 2003                10,000
John Wiley                      February 14, 2003                5,400
J. Preston Wscoberbarry         February 12, 2003                2,950
Edward York                     February 12, 2003                4,000

          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, 2003.

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

         On February 21, 2003 we filed a Form 8-k discussing the termination of
a proposed agreement with Florida Brewery, Inc. and the launch of our new energy
drink, "Yohimbe". Also on May 6, 2003 we filed a report on Form 8-K reporting on
the acquisition of Total Beverage Network, Inc. for a total of one million
shares of our common stock and the acquisition of certain assets and liabilities
of Universal Florida Beverage Distributors, Inc. for a total of 550,000 shares
of our common stock.

                                       16
<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, Co-Chairman
May 14, 2003

                                       17