U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-KSBA
                                  ------------

(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    19341

                    For the fiscal year ended July 31, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the Transition period from____________________ to _____________________
Commission file number 0-24801

                          AQUA VIE BEVERAGE CORPORATION
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

           Delaware                                             82-056425
 ------------------------------                             ------------------
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

P.O. Box 6759 333 South Main Street Ketchum, Idaho                 83340
---------------------------------------------------                -----
    (Address of principal executive offices)                     (Zip Code)
   Issuer's telephone number (208) 622-7792

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class              Name of each exchange on which registered
-----------------------------         -----------------------------------------

Securities registered pursuant to Section 12(g) of the act:
--------------------------------------------------------------------------------
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if disclosure  of delinquent  filers in response to Item 405 of regulation
S-B is not contained in this form, and  incorporated by reference in Part III of
this  Form  10-KSB  or any  amendment  to this  Form  10-KSB ( ) State  issuer's
revenues for Its most recent fiscal year $912,000.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days. On October 31, 2001 the aggregate market
value was $2,940,000.

Note:  If  determining  whether  a  person  is  an  affiliate  will  involve  an
unreasonable  effort and expense,  the issuer may calculate the aggregate market
value of the common  equity held by  non-affiliated  on the basis of  reasonable
assumptions, if the assumptions are stated.

     (ISSUERS  INVOLVED IN BANKRUPTCY  PROCEEDINGS  DURING THE PAST FIVE YE ARS)
check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13, or 5(d) of the Exchange Act after the  distribution  of
securities under a plan confirm by a court. Yes_______No______

                   (APPLICABLE ONLY TO CORPORATE  REGISTRANTS)  State the number
of shares  outstanding of each of issuer's  classes of common equity,  as of the
latest practicable date. 65,313,173 outstanding on October 31, 2001.

                                        1
<PAGE>



DOCUMENTS INCORPORATED BY REFERENCE:

IF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE,  BRIEFLY DESCRIBE THEM
AND  IDENTIFY  THE PART OF THE FORM 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the documents incorporated: (1) any annual report to security holders; (2)
any proxy or information  statement;  and (3) any  prospectus  filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents  should be clearly  described for  identification  Transitional  Small
Business Disclosure Format (Check one):

Yes [ ]  No [X]


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

Aqua  Vie  Beverage  Corporation,  a  Delaware  Corporation,  ("Aqua  Vie")  was
incorporated  on July 29, 1998 and was  initially a wholly owned  subsidiary  of
BEVA ("BEVA")  Corporation,  which had been  incorporated in Delaware in 1990. A
merger procedure under Section 251(g) of the Delaware  Corporate Code in October
1998  resulted in Aqua Vie  becoming  the parent,  and BEVA  becoming the wholly
owned subsidiary, with the former shareholders of BEVA becoming by action of law
the shareholders of Aqua Vie. BEVA retained certain  liabilities it had prior to
this  procedure,  but is now inactive.  BEVA had been  originally  acquired in a
Chapter 11 Bankruptcy proceeding.

BARHILL  EXCHANGE:  Pursuant to an agreement and plan of merger dated August 31,
1999 between Barhill Acquisition  Corporation (Barhill), a Delaware corporation,
and Aqua Vie Beverage  Corporation,  all  outstanding  shares of common stock of
Barhill  were  exchanged  for  250,000  shares of common  stock of Aqua Vie in a
transaction in which Aqua Vie was the surviving company.  Barhill had no assets,
liabilities,  or history of operations. This transaction is more fully described
in Form 8-K/A dated October 28, 1999.

BUSINESS OF ISSUER:

PRODUCTS: Aqua Vie Beverage Corporation develops,  manufactures, and markets new
all-natural  beverages.  The Company has  developed a new  category of beverages
called "water beverages",  that includes  Hydrators(TM),  a line of spring water
beverages  that  encourages  personal   hydration,   "Eau  Vin"(TM)  a  line  of
non-alcoholic  wines and champagne  made from spring water,  and  PurePlay(TM) a
line of spring water beverages for children.

         3
PROCESS:  Aqua Vie presently  enters into long term contracts  with  specialized
beverage co-packing companies,  to produce all of its product lines, utilizing a
bottling filler technology that provides for all-natural beverage ingredients to
be bottled in Polyethylene  Terephthlate  (PET) plastic  bottles,  a universally
accepted  container/vehicle  for bottled water.  This  state-of-the-art  aseptic
filling   technology   protects  the  desired   attributes  of  the  all-natural
ingredients,  resulting in the  exclusive,  all-natural  product lines that have
been developed by Aqua Vie, all without preservatives.

Spring water is cold filtered with micron  filtration so fine that it can remove
bacteria  from  water,  and is then  combined  with  crystalline  fructose,  and
all-natural  flavors and fragrances that undergo the same filtration process. No
artificial  ingredients  or  preservatives  are used,  and the entire process is
reviewed for Kosher  certification.  The products are then  aseptically  bottled
into  distinctive  shrink  wrapped  PET  plastic  bottles.  They are  sealed for
freshness,  capped with a sports cap and then sealed with a  tamper-proof  outer
seal.

Although  a more  expensive  process  than  non-aseptic  bottling,  aseptic  PET
bottling  provides  for  the  complete  sterilization  of a PET  bottle  and its
contents,  without  the  addition  of  preservatives.   Processes  that  utilize
preservatives, destroy a substantial amount of the natural  attributes of fruits


                                        2
<PAGE>

and beverages  during the bottling  process such as color,  taste, and aroma, as
well as many of the nutritional  elements of these beverages including vitamins,
minerals,  and  herbs.  Aqua  Vie's PET  aseptic  process  retains  the  natural
nutrients of spring water.

When  Aqua  Vie's  aseptic  research  began in the early  1990's,  there was one
aseptic/PET beta test site in the United States capable of processing Aqua Vie's
new "water beverages",  which Aqua Vie employed as its first domestic co-packer.
Presently,  numerous PET/aseptic production facilities are starting up in the US
and Europe with equipment manufactured by several large manufacturing companies.

Aqua Vie has designed all facets of the retail packaging systems for its product
lines to accommodate  high-speed  production in bottling facilities in the U. S.
as well as Europe,  for both a co-packer and company owned  equipment.  Aqua Vie
was the first company to introduce the use of a poly-shrink,  full-body label on
a PET  plastic  bottle,  and in doing so created a system that can be applied by
readily available  commercial labelers onto a  consumer-acceptable,  generic PET
bottle.

Aqua Vie has developed a comprehensive  quality  assurance system for use in the
bottling  process.  Bottlers  are  required to adhere to the  quality  assurance
manual as part of their  bottling  contract.  Bottler  adherence to Aqua Vies QA
manual, when strictly followed, assures perfect product quality.

Aqua Vie has a total of 22 employees,  consultants, and sales agents, 8 of which
work out of corporate headquarters in Idaho. The additional 14 reside in offices
within the  southwestern  states in which Aqua Vie products are presently  being
distributed.  The Company also  utilizes a  consulting  network of 8 people in a
variety of beverage disciplines from across the U. S.

DISTRIBUTION  OF THE  PRODUCT:  The  Company  has  retained  a team of sales and
marketing  consultants  and food brokers  throughout  California,  Arizona,  New
Mexico, and Texas that focus their efforts on a pre-determined  network of chain
retail  grocery,  and club  accounts,  for  direct  sales and  marketing  of the
Company's  products  throughout  the  southwestern  U. S. As a result,  Aqua Vie
products are now  consistently  available  within the geography of those states.
The Company has also carried out consumer  tests in Saudi  Arabia,  Israel,  and
China as a part of a  bottling  production  agreement  with a bottler in France.
Aqua Vie offers  information  about its  products and a product  purchasing  and
subscription service on its Internet site.

AQUA VIE'S PLACE IN THE MARKET:  Aqua Vie  Hydrators  bridge two primary  market
categories in the beverage industry:  soft drinks and bottled water.  Standard &
Poor's Foods & Nonalcoholic  Beverages Industry Survey, May 2000, reports, "U.S.
retail  sales of the five major  nonalcoholic  refreshment  beverage  categories
totaled  approximately  $81.7 billion in 1998 (latest  available),  up 2.8% from
1997's level,  according to Beverage World magazine.  These  categories are soft
drinks ($54.3 billion),  fruit beverages  ($17.5  billion),  bottled water ($5.2
billion),  ready-to-drink tea ($2.5 billion), and sports drinks ($2.3 billion)."
Aqua Vie has  entered  the  market  with its  unique  packaging  and  product to
establish a new market segment for all-natural  flavored water that does not use
preservatives or artificial sweeteners.

GOVERNMENT APPROVAL:  Other than normal corporate registration and licensing the
Company does not need any additional and/or unique government license or permit.
The food and  beverage  industries  are  highly  regulated  and  subject to many
federal and state government rules,  regulations and oversight but compliance is
part of the service  furnished  by the  bottler  under the  bottling  production
contract.  As to any future possible government  regulations it is believed that
if any are ever imposed that they will be broad market  pervasive and of general
application to all members of the beverage industry.

                                        3
<PAGE>

 ITEM 2. DESCRIPTION OF PROPERTY.

Aqua Vie leases  approximately  3,800  square  feet of office  space in Ketchum,
Idaho for its  corporate  headquarters.  The two leases run to November 15, 2001
with an option to extend for one three-year period. Aqua Vie presently contracts
with a co-packer in California to produce its product.

 ITEM 3. LEGAL PROCEEDINGS.

There are a number of routine  litigations  involving claims against the company
by past  employees,  past-due  accounts  payable  and as  regards  a 1994  stock
issuance issue,  all of which are considered  normal for a company at this stage
of development and not of any consequence in the opinion of the registrant.


 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

                                     PART II

 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Aqua Vie's common stock is traded in the over-the  counter market and prices are
quoted on the NASDAQ Bulletin Board. The quotations reflect inter-dealer prices,
without retail mark-up,  mark-down or commission,  and may not represent  actual
transactions.


Year Ended July 31, 2000          High        Low
- ------------------------------------------------------

          First quarter           1.22       0.39

          Second quarter          1.91       0.33

          Third quarter           1.91       0.63

          Fourth quarter          0.88       0.47



Year Ended July 31, 2001          High        Low
- ------------------------------------------------------

          First quarter           0.61       0.31

          Second quarter          0.36       0.06

          Third quarter           0.16       0.06

          Fourth quarter          0.17       0.06



There is one class of common stock and  approximately  600 shareholders  plus an
estimated 12,500 beneficial holders in street name.
                                       4
<PAGE>

ITEM 6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION

Matters discussed herein, contain  forward-looking  statements that involve risk
and uncertainties. This is particularly true as it relates to comments about the
development and funding of Aqua Vie's future production capability, expectations
about  profitability,   and  new  product   introduction.   Results  may  differ
significantly from results indicated by forward-looking statements. Factors that
might cause some  differences,  include,  but are not limited to: (1) changes in
general economic conditions,  including but not limited to increases in interest
rates; (2) government  regulations  affecting customers and the bottling process
for products;  (3) the potential for product  recall and related  non-compliance
issues by third  parties;(4)  similar  products  competing  for shelf  space and
market  share in the  bottled  water  industry;  (5) the  ability of Aqua Vie to
successfully  bring new  products  from  their  development  stage into full and
profitable production and sales; (6) Aqua Vie's ability to raise sufficient debt
and/or equity capital to implement its business  plans;  (7) the  occurrences of
incidents that could subject Aqua Vie to liability or fines;  (8) the ability of
Aqua Vie to attract the needed networks for product distribution, and secure the
shelf space in stores necessary to achieve sales forecasts.


PLAN OF OPERATION: During the last fiscal year Aqua Vie continued establishing a
market  presence for its line of Hydrators,  the lightly  flavored  spring water
beverages,  and thereby increased sales revenue.  Throughout calendar 2001, this
effort has been  concentrated  exclusively in the  southwestern  U.S. Given Aqua
Vie's  market  distribution   presence,   frequently  based  upon  slotting  fee
arrangements  with major  grocery  and  convenience  store  chains,  its present
relationship  with its co-packer,  and the present  production and overhead cost
structure,  adequate levels of profitability can be achieved in a timely fashion
with adequate bridge financing.  The immediate solution to profitability in this
early  growth  scenario  rests  with  Aqua Vie  obtaining  the  adequate  bridge
financing to rapidly increase initial  production to meet the increased  product
demand available within the account base the Company has presently secured shelf
space, while building brand awareness through consumer marketing programs.

In the future Aqua Vie expects to improve margins through economies of scale and
by introducing new products that  management  believes will support higher gross
margins  even  in  today's  competitive  market  environment.  The  first  to be
introduced  will  be a line  of  Hydrators  especially  designed  for  children.
Subsequently,  it is planned to follow with multi  flavor line of  non-alcoholic
wine made from spring  water.  It has been  designed to satisfy the desire for a
glass or bottle  of wine or  champagne,  without  the  presence  of  alcohol  or
preservatives.  Aqua  Vie's  product  line  contains  no  directly  patented  or
patentable  features or components.  Copyrighting,  trade marking and the use of
trade secret techniques and formulations are utilized extensively. Aqua Vie uses
non-disclosure/non-compete  agreements with  employees,  suppliers and co-packer
bottlers.  At present  the  Company  has not issued  any  licenses,  franchises,
concessions,  royalty  agreements or labor contracts,  though future development
may include such actions being  incorporated into the corporate  strategy.  Aqua
Vie continues to offer information about its products and a subscription service
on its Internet site.
                                       5
<PAGE>


Aqua Vies revenue from Internet sales remains a small portion of current revenue
but it is  projected  to be an  important  part of  future  revenue.  Management
intends  to expand and  develop  marketing  of Aqua Vie  beverages  through  the
Internet. To date, the means and ability to obtain meaningful sales volume is in
place,  with product on the shelves in over 1200 major chain retail  grocery and
convenience store outlets.  However,  implementation  of the company's  consumer
marketing and advertising  strategies,  and in-store consumer awareness programs
was delayed, pending Aqua Vie's acceptance and approval for sale, of new product
inventory  produced by the co-packer who has  consistently not provided Aqua Vie
with  acceptable  product  quality,  for over two years;  this has  resulted  in
returns to the  co-packer  and the Company  for  re-inspection  and  replacement
shipments  which in the opinion of management  has had a  substantial  impact on
Company ability to meet and maintain sales and delivery schedules.

 The  Company  has  recently  engaged  a  Quality  Assurance  specialist  and  a
comprehensive co-packer line and production inspection system and audit program.
It is believed these  inspections  and oversight will ensure salable quality and
assist the  Company in  maintaining  delivery  schedules.  Investigation  of the
quality  assurance  issues,  which was ongoing during the fiscal year ended July
31, 2001, led to a new agreement  with the  co-packer.  Subsequent to the fiscal
year end, the Company  obtained  the services of parties that had been  directly
involved in the Hydrator product design and  development,  including the quality
assurance standards, protocols and procedures.

 LIQUIDITY  AND CAPITAL  RESOURCES:  Aqua Vie's  current  capitalization  is not
sufficient to meet the necessity of  maintaining a company  presence and to fund
the  production  of  the  anticipated  growth  in  orders  and  apparent  market
acceptance.   Company  capital  resources  have   traditionally  been  used  for
promotion,   sales  support,   slotting  fees,  inventory  support  and  general
administration as more particularly  described in prior filings. The Company has
devoted  substantial  resources in the past several years and during the current
year to  inventory  support in the  expectation  that sales would in part offset
other working capital  requirements  and would thus result in less dependence on
additional capital resources.

 As previously indicated,  numerous quality assurance problems have arisen which
has resulted in missed delivery  schedules,  product re-shipment for inspection,
additional inspections by the Company, and other delays which has had the effect
of  reducing  the amount of capital  from sales  which could be applied to other
working  capital  needs,   thus  requiring  more  capital  than  anticipated  by
management  to bring the product to market.  Partially  in  resolution  of these
issues, and to provide additional liquidity for product development, the Company
and the  co-packer  entered  into an  agreement  in  February,  2001 whereby the
co-packer would finance production by it for minimal financing costs, secured by
inventory  and  receivables  as more  particularly  described in filings at that
time.  This required  material  expenditures  by the Company for slotting  fees,
which was a condition  imposed by the  co-packer.  The slotting  fees were paid.
However, due to what management considered  unreasonably  restrictive conditions
based on the financing  arrangements  for  pre-approval  of production and final
resolution of past quality assurance issues, this agreement was terminated,  and
the current Agreement was executed.  The current Agreement  provided for certain
payments and concessions by the co-packer with respect to product produced by it
that was unpaid, and for future production to be on a take and pay basis.
                                       6
<PAGE>

The  Company is  currently  engaged in seeking  new  sources of  inventory  and
general  working  financing to support the sales which it believes it can effect
in 2002 in the 1200 outlets in which it has had product presence. The market for
finance for  developing  companies has been difficult in the past several months
particularly  as a  result  of the  September  11,  2001  Terrorist  attack  but
management  believes that climate has now begun to show some  improvement and is
cautiously optimistic about additional financing possibilities.

From  inception  at July 31, 1998 through July 31, 2000 Aqua Vie sold stock for
$2,145,124,  and  borrowed  $792,000  and  received  loans  from an  officer  of
$446,521.  In the year just ended, July 31, 2001, Aqua Vie sold additional stock
for $1,207,023 in cash,  decreased  borrowing by $340,000 through the conversion
of a loan into common stock of the company,  and recognized  the  forgiveness of
debt  and  accrued  payroll  owed to an  officer  by the  company  as a  capital
contribution  which  increased  additional  paid in  capital by  $796,408.  This
resulted in a remaining balance at year end due to the officer of $128,520.

RESULTS OF  OPERATIONS:  Aqua Vie continues to build its sales and  distribution
network based on concentrating  in the Southwestern  part of the country through
the payment of slotting fees to obtain shelf space in premier retail grocery and
convenience  stores. As a result, the Company received a meaningful  increase in
revenue  from sales of $151,924  recognized  in the last fiscal year ending July
31,  2000 to  $912,000  during the  current  fiscal  year end of July 31,  2001.
Management believes these revenues would have been substantially higher based on
the  slotting  arrangements  it had made near  year-end,  had the  inventory  it
believed was to be produced  under the inventory  financing  agreement  with the
co-packer  had been  produced  at the  levels and with the  timing  required  by
Management to effect summer sales.

The Company has paid,  obligated,  or  committed  to  approximately  $350,000 in
slotting fees amortized  over three years from the date incurred,  much of which
will be offset through product delivery.  It is anticipated that the shelf space
available  based on these slotting fees and those to be incurred,  will generate
projected  annual  sales  revenue in excess of $7 million for the coming  fiscal
year assuming availability of adequate funding and acceptable production quality
control.  General and  administrative  expenses  changed from the previous  year
primarily due to increased compensation and contract services.


                                       7
<PAGE>

ITEM 7. FINANCIAL STATEMENTS



                          AQUA VIE BEVERAGE CORPORATION

                              Financial Statements

                                  July 31, 2001



<PAGE>


                          AQUA VIE BEVERAGE CORPORATION

                                 C O N T E N T S


Independent  Auditor's Report...............................................F-1

Balance Sheets..............................................................F-2

Statements of Operations and Comprehensive Income (Loss)....................F-4

Statement of Stockholders' Equity...........................................F-5

Statements of Cash Flows....................................................F-7

Notes to the Financial Statements...........................................F-8


<PAGE>


To the Board of Directors and Stockholders
Aqua Vie Beverage Corporation
Ketchum, Idaho


                          INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying  balance sheet of Aqua Vie Beverage Corporation
(a Delaware  corporation)  as of July 31, 2001,  and the related  statements  of
operations,  stockholders' deficit and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The financial  statements of Aqua Vie Beverage Corporation as of July
31, 2000,  were audited by other auditors whose report dated September 26, 2000,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Aqua Vie Beverage as of July
31, 2001 and the results of its  operations and its cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As discussed in Note 2, the Company's
significant  operating  losses  raise  substantial  doubt  about its  ability to
continue as a going concern. Management's plans regarding those matters also are
described in Note 2. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.

As discussed in Note 14 to the financial  statements,  certain errors concerning
settlements  payable and  forgiveness of debt and payroll by the Company's chief
executive officer resulting in the understatement of previously  reported losses
as of July 31, 2001 were  discovered  by  management  of the Company  during the
current year.  Accordingly,  the July 31, 2001  financial  statements  have been
restated to correct  these  errors,  the net effect of which was to increase the
Company's accumulated deficit by $806,408.



 /s/  Williams & Webster, P.S.
 -----------------------------
      Williams & Webster, P.S.
      Certified Public Accountants
      Spokane, Washington

      November  12,  2001  except for Notes 2, 5, 8, 10, 11, and 14, as to which
      the date is April 30, 2002


                                       F-1
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                                 Balance Sheets
                                 --------------


                                                        July 31,
                                                   2001         2000
                                                (Restated)
                                                ---------    ---------
ASSETS

       CURRENT ASSETS
            Cash                                $   3,608    $  11,127
            Accounts receivable                    82,776       25,238
            Inventory                             155,372      249,790
            Prepaid and other assets               24,434       93,476
                                                ---------    ---------
                 Total Current Assets             266,190      379,631
                                                ---------    ---------

       PROPERTY AND EQUIPMENT
            Equipment                             201,608      152,336
            Less accumulated depreciation         (85,615)     (24,847)
                                                ---------    ---------
                 Total Property and Equipment     115,993      127,489
                                                ---------    ---------

       OTHER ASSETS
            Intangibles                           305,040       97,500
            Less accumulated amortization         (58,159)     (19,500)
                                                ---------    ---------
                 Total Other Assets               246,881       78,000
                                                ---------    ---------

       TOTAL ASSETS                             $ 629,064    $ 585,120
                                                =========    =========


   The accompanying notes are an integral part of these financial statements.

                                       F-2
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                                 Balance Sheets
                                   (Continued)
<TABLE>
<CAPTION>
                                                                                    July 31,
                                                                               2001           2000
                                                                           (Restated)
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT

      CURRENT LIABILITIES
           Accounts payable                                                $   362,312    $   154,621
           Bank overdraft                                                       52,412           --
           Settlements payable                                                  10,000           --
           Notes payable - current                                             455,135        792,000
           Accrued expenses                                                     64,101        467,564
           Loan from related party                                             128,520        353,600
                                                                           -----------    -----------
               Total Current Liabilities                                     1,072,480      1,767,785
                                                                           -----------    -----------

      LONG-TERM DEBT
           Notes payable-net of current portion                                 14,632         18,362
                                                                           -----------    -----------

      COMMITMENTS AND CONTINGENCIES                                               --             --
                                                                           -----------    -----------

      STOCKHOLDERS' DEFICIT
           Preferred  stock,  Series  A,  B,  C, D, E and  F,$0.001  par  value,
               1,000,000 shares authorized, 15,074 and 7,410
               shares issued and outstanding, respectively                          15              7
           Common stock, $0.001 par value, 120,000,000 shares
               authorized, 58,253,173 and 30,811,408 shares
               issued and outstanding, respectively                             58,253         30,811
           Additional paid-in capital                                        5,562,162      2,422,236
           Subscriptions receivable                                           (176,977)          --
           Accumulated deficit                                              (5,901,501)    (3,654,081)
                                                                           -----------    -----------
               Total Stockholders' Deficit                                    (458,048)    (1,201,027)
                                                                           -----------    -----------

      TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                          $   629,064    $   585,120
                                                                           ===========    ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                       F-3
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                             Statement of Operations


                                                          Years Ended
                                                            July 31,
                                                      2001            2000
                                                   (Restated)
                                                  ------------    ------------
NET REVENUES                                          $912,000    $    151,924

COST OF GOODS SOLD                                     804,064         232,358
                                                  ------------    ------------

GROSS PROFIT (LOSS)                                    107,936         (80,434)
                                                  ------------    ------------

GENERAL AND ADMINISTRATIVE EXPENSES
      Promotion and advertising                        544,815         578,359
      Legal and accounting                             165,614         360,923
      Depreciation and amortization                    100,427          34,597
      Bad debts                                         92,175            --
      Other general and administrative expenses      1,396,772         715,770
                                                  ------------    ------------
          Total expenses                             2,229,803       1,689,649
                                                  ------------    ------------

OPERATING LOSS                                      (2,191,867)     (1,770,083)

OTHER EXPENSES
      Interest expense                                 (55,553)        (77,139)
                                                  ------------    ------------
          Total other expenses                         (55,553)        (77,139)
                                                  ------------    ------------

LOSS BEFORE TAXES                                   (2,247,420)     (1,847,222)

INCOME TAXES                                              --              --
                                                  ------------    ------------

NET LOSS                                          $ (2,247,420)   $ (1,847,222)
                                                  ============    ============

NET LOSS PER COMMON SHARE
      BASIC AND DILUTED                           $      (0.06)   $      (0.07)
                                                  ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON
      SHARES OUTSTANDING, BASIC AND DILUTED         40,774,176      25,649,677
                                                  ============    ============


   The accompanying notes are an integral part of these financial statements.

                                       F-4
<PAGE>

                          AQAU VIE BEVERAGE CORPORATION
                       Statement of stockholders' Deficit
                                 (SPLIT TABLE)
<TABLE>
<CAPTION>

                        Preferred, Series A, B, C, D, E and F     Common Stock          Additional
                                Number                       Number                       Paid-in    Subsctiption
                              of Shares       Amount        of Shares      Amount         Capital     Receivable
                             -----------    -----------    -----------   -----------    -----------   -----------
<S>                                <C>      <C>             <C>          <C>            <C>           <C>
Balance, August 1, 1999            8,884    $         9     21,964,657   $    21,964    $ 1,294,125   $   (10,000)

Issuance of common stock
     for cash at $0.32 per
     share                          --             --        2,596,000         2,596       833,928           --

Issuance of preferred,
     Series C for cash at
     $500.00 per share               200           --             --            --         100,000           --

Issuance of common stock
     for services at $0.30
     per share                      --             --        2,703,500         2,704        68,772         10,000

Issuance of common stock
     for payment of note
     payable at $0.40
     per share                      --             --          322,400           322       128,638           --

Conversion of preferred,
     Series A to common
     stock                        (1,340)            (1)     2,580,851         2,581        (2,582)          --

Conversion of preferred
     Series B to common
     stock                          (334)            (1)       644,000           644          (645)          --

Net loss for the year
     ended July 31, 2000            --             --             --            --            --             --
                             -----------    -----------    -----------   -----------   -----------    -----------

Balance, July 31, 2000             7,410    $         7     30,811,408   $    30,811    $ 2,422,236   $      --
                             -----------    -----------    -----------   -----------   -----------    -----------
</TABLE>
                              Accumulated
                               Deficit          Total
                             -----------    -----------
Balance, August 1, 1999      $(1,806,859)   $  (500,761)

Issuance of common stock
     for cash at $0.32 per
     share                         --          836,524

Issuance of preferred,
     Series C for cash at
     $500.00 per share             --          100,000

Issuance of common stock
     for services at $0.30
     per share                     --           81,476

Issuance of common stock
     for payment of note
     payable at $0.40
     per share                     --          128,960

Conversion of preferred,
     Series A to common
     stock                         --               (2)

Conversion of preferred
     Series B to common
     stock                         --               (2)

Net loss for the year
     ended July 31, 2000     (1,847,222)    (1,847,222)
                             -----------   -----------

Balance, July 31, 2000       $(3,654,081)   $(1,201,027)
                             -----------   -----------

   The accompanying notes are an integral part of these financial statements.

                                       F-5
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                       Statement of Stockholders' Deficit
                                 (SPLIT TABLE)
<TABLE>
<CAPTION>

                        Preferred, Series A, B, C, D, E and F        Common Stock          Additional
                                   Number                        Number                      Paid-in    Subsctiption
                                  of Shares       Amount        of Shares      Amount        Capital      Receivable
                                 -----------    -----------    -----------   -----------   -----------    -----------
<S>                                    <C>      <C>             <C>          <C>           <C>            <C>
Balance brough forward                 7,410    $         7     30,811,408   $    30,811   $ 2,422,236    $      --

Issuance of common stock
     for services at prices
     ranging from $0.02
      to $0.42                          --             --        5,335,000         5,335       640,783           --

Issuance of common stock
     for debt conversion at
     $0.40 per share                    --             --          850,000           850       340,000           --

Conversion of preferred
     Series A to common
     stock                            (1,368)            (2)     4,489,123         4,489        (4,487)          --

Conversion of preferred
     Series B to common
     stock                            (4,608)            (4)    16,567,642        16,568       (16,564)          --

Conversion of preferred
     Series C to common
     stock                              (200)          --          200,000           200          (200)          --

Issuance of preferred Series
     D for cash and receivable
     at $100 per share                12,000             12           --            --       1,199,988       (176,952)

Issuance of preferred Series
     E for cash at $100
     per share                           600              1           --            --          59,999            (25)

Issuance of preferred Series
     F for cash at $100
     per share                         1,240              1           --            --         123,999           --

Forgiveness of debt and
     accrued payroll by
     officer and majority
     stockholder                        --             --             --            --         796,408           --

Net loss for the year ended
     July 31, 2001 (Restated)           --             --             --            --            --             --
                                 -----------    -----------    -----------   -----------   -----------    -----------

Balance, July 31, 2001
     (Restated)                       15,074    $        15     58,253,173   $    58,253   $ 5,562,162    $  (176,977)
                                 ===========    ===========    ===========   ===========   ===========    ===========
</TABLE>

                               Accumulated
                                Deficit          Total
                              -----------    -----------
Balance brough forward        $(3,654,081)   $(1,201,027)

Issuance of common stock
     for services at prices
     ranging from $0.02
      to $0.42                       --          646,118

Issuance of common stock
     for debt conversion at
     $0.40 per share                 --          340,850

Conversion of preferred
     Series A to common
     stock                           --             --

Conversion of preferred
     Series B to common
     stock                           --             --

Conversion of preferred
     Series C to common
     stock                           --             --

Issuance of preferred Series
     D for cash and receivable
     at $100 per share               --        1,023,048

Issuance of preferred Series
     E for cash at $100
     per share                       --           59,975

Issuance of preferred Series
     F for cash at $100
     per share                       --          124,000

Forgiveness of debt and
     accrued payroll by
     officer and majority
     stockholder                     --          796,408

Net loss for the year ended
     July 31, 2001
     (Restated)                (2,247,420)    (2,247,420)
                              -----------    -----------

Balance, July 31, 2001
     (Restated)               $(5,901,501)   $  (458,048)
                              ===========    ===========

    The accompanying notes are an integral part of these financial statements.

                                       F-6
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                       Years Ended
                                                                         July 31,
                                                                   2001           2000
                                                                (Restated)
                                                               -----------    -----------
<S>                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                 $(2,247,420)   $(1,847,222)
      Adjustments to reconcile net loss to net cash
          used by operating activities:
              Bad debts                                             92,175           --
              Depreciation and amortization                        100,427         34,597
              Interest paid on notes payable converted
                to stock                                               850           --
              Compensation paid by stock issuance                  646,118         81,475
              Compensation of officer as additional paid-in
                capital                                            240,000           --
              Compensation paid by issuance of notes payable          --          115,000
              Expenses paid by the issuance of note payable        128,520           --
      Changes in assets and liabilities:
              Accounts receivable                                  (57,538)       (25,238)
              Inventory                                             94,418       (249,790)
              Prepaid expenses                                      69,042        (62,707)
              Accounts payable                                     207,691       (114,382)
              Settlements payable                                   10,000           --
              Accrued expenses                                    (403,463)       183,262
              Accrued compensation                                    --          240,000
                                                               -----------    -----------
          Net cash used by operating activities                 (1,119,180)    (1,645,005)
                                                               -----------    -----------

CASH USED BY INVESTING ACTIVITIES:
      Increase in intangible assets for slotting                  (207,540)          --
      Purchases of equipment                                       (49,272)       (56,796)
                                                               -----------    -----------
          Net cash used by investing activities                   (256,812)       (56,796)
                                                               -----------    -----------

CASH PROVIDED BY FINANCING ACTIVITIES
      Sale of common stock                                            --          836,525
      Sale of preferred stock, Series C, D, E and F              1,207,023        100,000
      Payments on notes payable                                       (595)          --
      Proceeds from notes payable                                     --         345,000
      Proceeds from bank overdraft                                  52,412           --
      Payment of advance from stockholders                         (77,681)          --
      Advances from stockholders                                   187,314        404,105
                                                               -----------    -----------
          Net cash provided by financing activities              1,368,473      1,685,630
                                                               -----------    -----------

INCREASE (DECREASE) IN CASH                                         (7,519)       (16,171)

BEGINNING BALANCE                                                   11,127         27,298
                                                               -----------    -----------

ENDING BALANCE                                                 $     3,608    $    11,127
                                                               ===========    ===========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
      Income taxes paid                                        $      --      $      --
      Interest paid                                            $      --      $      --

NON-CASH INVESTING AND FINANCING ACTIVITIES:
      Issuance of common stock for notes payable               $   340,850    $   128,638
      Issuance of common stock for services                    $   646,118    $    81,475
      Issuance of notes payable for compensation and
          accounts payable                                     $      --      $   115,000
      Issuance of common stock for retainer                    $      --      $    20,000
      Issuance of note payable for equipment                   $      --      $    21,000
      Forgiveness of debt and accrued payroll by
          officer and majority stockholder                     $   796,408    $       --
</TABLE>


    The accompanying notes are an integral part of these financial statements.

                                       F-7
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Aqua Vie Beverage  Corporation was incorporated on July 31, 1998 in the State of
Delaware.  The Company's  principal  assets were  acquired  through a bankruptcy
court ordered  liquidation of a predecessor company and included the trade name,
beverage formula and the predecessor's public status. These assets were acquired
by the issuance of Series B preferred stock. The Company's  business  activities
have been financed primarily through the issuance of equity securities,  outside
loans, and loans from officers and stockholders.

The Company's principal products include low calorie, non-preservative,  lightly
flavored bottled water.  Management plans include the marketing and distribution
of the Company's products nationally and internationally.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Aqua Vie Beverage Corporation
is presented to assist in understanding the Company's financial statements.  The
financial statements and notes are representations of the Company's  management,
which is  responsible  for their  integrity and  objectivity.  These  accounting
policies  conform to  accounting  principles  generally  accepted  in the United
States of America and have been  consistently  applied in the preparation of the
financial statements.

Accounting Method
-----------------
The Company's  financial  statements  are prepared  using the accrual  method of
accounting.

Principles of Consolidation
---------------------------
The accompanying  financial statements are not deemed to be consolidated because
the Company's wholly owned subsidiary, BEVA Corporation is dormant.

Cash and Cash Equivalents
-------------------------
For  purposes  of the  statement  of  cash  flows,  the  Company  considers  all
short-term debt securities purchased with maturity of three months or less to be
cash equivalents.

Allowance for Doubtful Accounts
-----------------------------\--
Provision for losses on trade accounts receivable is made in amounts required to
maintain  an  adequate  allowance  to  cover  anticipated  bad  debts.  Accounts
receivable  are  charged  against the  allowance  when it is  determined  by the
Company that payment will not be received.
                                      F-8
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories
-----------
Inventories  consist  primarily of raw  materials  and finished  product and are
valued at the lower of cost (first in, first out) or market.

Property and Equipment
----------------------
Property,  plant  and  equipment  are  stated  at  cost.  All  expenditures  for
improvements,  replacements  and  additions  are added to the asset  accounts at
cost.

Expenditures  for normal repairs and maintenance are charged against earnings as
incurred. The cost and related accumulated  depreciation are eliminated from the
accounts  and the  resulting  gain or loss is  reflected  in the  statements  of
operations  when   depreciable   assets  are  retired  or  otherwise   disposed.
Depreciation is provided for by the use of straight-line and accelerated methods
over the  estimated  useful  lives of the assets.  Depreciation  expense for the
years ended July 31, 2001 and 2000 was $60,768 and $24,847, respectively.

Intangible Assets
-----------------
Most intangible  assets are amortized over their estimated  useful lives of 3 to
10 years on a  straight-line  basis.  Amortization  expense for the years ending
July 31, 2001 and 2000 was $38,659 and $9,750, respectively.

Income Taxes
------------
Income taxes are provided based upon the liability method of accounting pursuant
to SFAS No. 109  "Accounting  for Income Taxes." Under this  approach,  deferred
income  taxes are  recorded to reflect the tax  consequences  on future years of
differences  between the tax basis of assets and liabilities and their financial
reporting  amounts at each year-end.  A valuation  allowance is recorded against
deferred tax assets if management does not believe the Company has met the "more
likely than not" standard  imposed by SFAS No. 109 to allow  recognition of such
an asset.

At July 31,  2001,  the Company  had net  deferred  tax assets of  approximately
$2,970,000, principally arising from net operating loss carryforwards for income
tax  purposes.  As management of the Company  cannot  determine  that it is more
likely than not that the Company  will  realize the benefit of the net  deferred
tax asset,  a valuation  allowance  equal to the net deferred tax asset has been
established at July 31, 2001. See Note 4.

At  July  31,  2001,  the  Company  has  net  operating  loss  carryforwards  of
approximately $14,880,000, which expire in the fiscal years ending July 31, 2002
through July 31, 2021.
                                      F-9
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basic and Diluted Loss Per Share
--------------------------------
Loss per share was  computed by dividing  the net loss by the  weighted  average
number of common  shares and common  share  equivalents  outstanding  during the
year. The weighted  average number of shares was calculated by taking the number
of  shares  outstanding  and  weighting  them by the  amount  of time  they were
outstanding.  Outstanding  warrants were not included in the computation of loss
per share because they would be antidilutive.

Revenue Recognition and Slotting Fees
-------------------------------------
Revenues  from sales of product are  recognized  when the product is shipped and
collectibility  is reasonably  assured with title passing at the shipping point.
Sales terms for  distributors  and retail  customers are 2%, net 30. At July 31,
2001,  the  Company  was not  selling to or through  distributors.  Sales  terms
generally  do not allow a right of return.  Products  are drop  shipped from the
bottler to the customer and the customer pays all shipping charges.

Sales of products  directly to  customers  through  e-commerce  and  traditional
channels are recognized when shipped. In these transactions, the Company acts as
merchant-of-record.  Accordingly,  the Company records as revenue the full sales
price of the  product  sold and  records  the full  cost of the  product  to the
Company as cost of revenues,  upon shipment of the product.  All internet  sales
are paid via credit card and are considered immediately collectible.

The  Company  pays  slotting  or  shelving  fees to  retailers.  These costs are
deferred and expensed  over an estimated  time frame of 3 years.  Slotting  fees
paid during the year ended July 31, 2001 were $207,540.  This amount is included
in  intangibles.  Effective  with its April 30, 2002 financial  statements,  the
Company has changed its accounting policy to record slotting fees as a reduction
of  revenue.  This new  policy is in accord  with the  consensus  of EITF  01-09
"Accounting for  Consideration  Given by a Vendor to a Customer or a Reseller of
the Vendor's  Products,"  which affirms that the payment of  consideration  by a
vendor to a  customer  should  not be  recognized  as an asset of the vendor and
further  affirms that  slotting  fees should be accounted  for as a reduction of
revenues.  If the Company had implemented this new policy in the year ended July
31, 2001, then the Company's net loss would have increased by $168,881.

Compensated Absences
--------------------
Employees  of the Company  are  entitled  to paid  vacation,  paid sick days and
personal days off, depending on job classification, length of service, and other
factors.  The Company's policy is to recognize the costs of compensated absences
when actually paid to employees.  The related  liability,  due to immateriality,
has not been recorded.
                                      F-10
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

Impaired Asset Policy
---------------------
The Company reviews its long-lived  assets  quarterly to determine if any events
or changes in  circumstances  have  transpired  which indicate that the carrying
value of its assets may not be  recoverable.  The  Company  does not believe any
adjustments are needed to the carrying value of its assets at July 31, 2001.

Fair Value of Financial Instruments
-----------------------------------
The  Company  has  adopted  the  fair  value  accounting  rules  to  record  all
transactions in equity instruments for goods or services.

Goodwill
--------
Goodwill  represents  the excess of the purchase  price and related direct costs
over the fair value of net assets  acquired  as of the date of the  acquisition.
Goodwill  is  amortized  on a  straight-line  basis over 10 years.  The  Company
periodically  reviews its goodwill to assess  recoverability  based on projected
undiscounted cash flows from operations. Impairments are recognized in operating
results when a permanent diminution in value occurs.

Derivative Instruments
----------------------
The  Financial   Accounting   Standards  Board  issued  Statement  of  Financial
Accounting  Standards ("SFAS") No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities," as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging  Activities - Deferral of the Effective Date of FASB No.
133",  and SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments  and
Certain Hedging Activities", which is effective for the Company as of January 1,
2001.  This  standard   establishes   accounting  and  reporting  standards  for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts,  and for  hedging  activities.  It  requires  that  an  entity
recognize all  derivatives as either assets or  liabilities in the  consolidated
balance sheet and measure those instruments at fair value.
                                      F-11
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivative Instruments (Continued)
----------------------------------
If certain conditions are met, a derivative may be specifically  designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging  derivative  with the  recognition of (i) the changes in the fair
value of the hedged asset or liability that are  attributable to the hedged risk
or  (ii)  the  earnings  effect  of the  hedged  forecasted  transaction.  For a
derivative  not  designated  as a  hedging  instrument,  the  gain  or  loss  is
recognized in income in the period of change.

Historically,  the Company has not entered into  derivatives  contracts to hedge
existing risks or for speculative purposes.

At July 31, 2001, the Company has not engaged in any transactions  that would be
considered derivative instruments or hedging activities.

Accounting Pronouncements
-------------------------
In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive Income" ("SFAS
No. 130"), and No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"). SFAS 130 establishes  standards for reporting and
displaying  comprehensive income, its components and accumulated balances.  SFAS
131 establishes  standards for the way that companies report  information  about
operating  segments in annual  financial  statements  and requires  reporting of
selected  information about operating segments in interim financial  statements.
Both SFAS 130 and SFAS 131 are effective for periods  beginning  after  December
15, 1997. The Company adopted these accounting standards,  and since the Company
has no  reportable  segments,  their  adoption  had no effect  on the  Company's
financial statements and disclosures.

In September  2000, the FASB issued SFAS No. 140  "Accounting  for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." This statement
provides  accounting  and  reporting  standards  for  transfers and servicing of
financial assets and extinguishment of liabilities and also provides  consistent
standards for  distinguishing  transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS No. 140 is effective for recognition
and   reclassification   of   collateral   and  for   disclosures   relating  to
securitization  transactions  and  collateral  for  fiscal  years  ending  after
December 15, 2000,  and is effective  for  transfers  and servicing of financial
assets and  extinguishments  of liabilities  occurring after March 31, 2001. The
Company  believes  that the adoption of this  standard  will not have a material
effect on the Company's results of operations or financial position.
                                      F-12
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Going Concern
-------------
As  shown  in the  financial  statements,  the  Company  incurred  a net loss of
$2,247,420  for the year ended July 31, 2001 and has an  accumulated  deficit of
$5,901,501 and negative  stockholders'  equity at July 31, 2001. The Company has
negative equity, and negative working capital and limited cash resources.  These
factors  indicate that the Company may be unable to continue in  existence.  The
financial   statements   do  not   include  any   adjustments   related  to  the
recoverability  and  classification  of  recorded  assets,  or the  amounts  and
classification  of liabilities  that might be necessary in the event the Company
cannot  continue  existence.  Management's  plans  for  ensuring  the  Company's
continued viability are as follows:

Management's plans to sell new stock issuances,  which are expected to raise the
capital needed to operate the Company.  Management is also actively pursuing the
distribution of the Company's products nationally and internationally.

Shipping and Handling Costs
---------------------------
The Company includes all shipping and handling costs in cost of sales.


NOTE 3 - STOCK BASED COMPENSATION

Financial  Accounting  Standards No. 123 (SFAS 123) addresses the accounting for
stock-based  compensation  arrangements.  SFAS 123  permits a company  to choose
either a new fair-value-based method or the APB Opinion 25 intrinsic value-based
method of accounting for stock option-based  compensation  arrangements.  During
the year ended July 31,  2001,  the  Company  adapted the  fair-value  method of
accounting for stock-based  compensation.  In accordance  with this policy,  the
Company values stock issued to employees,  officers,  directors and consultants,
at its fair  market  value on the date  issued.  During  the year ended July 31,
2000,  the  Company  recorded  stock  based  compensation  using APB  Opinion 25
intrinsic-value-based  method.  The pro forma effect on the income  statement if
the  Company had  adopted  the SFAS 123 fair  value-based  method to account for
stock-based compensation arrangements would have been to increase net loss by an
estimated $250,000 for fiscal year ended July 31, 2000.
                                      F-13
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 4 - NET OPERATING LOSS CARRYFORWARD

The  Company  acquired,  as  part  of the  assets  purchased  in the  bankruptcy
liquidation  sale, the  predecessor  company's net operating  loss  carryforward
(NOL) in the approximate amount of $15,000,000.  A valuation  allowance has been
established  so that no value is  reflected  at the balance  sheet dates for any
deferred tax benefit. The value, if any, of the NOL will depend upon a number of
unknowns,  including  attaining  profitable  operations and other tax law issues
related to the  acquisition  of the NOL from the  Company's  predecessor.  These
issues include the change in ownership  limitations and any adjustments from the
relief  of debts  from  prior  operations.  The  aggregate  net  operating  loss
carryforwards began to expire during the year ended July 31, 2001.


NOTE 5 - RELATED PARTY TRANSACTIONS

Advances from Officer
---------------------
At July 31, 2001 and 2000, the Company owed $128,520 and $353,850, respectively,
to its CEO.  These  amounts are payable on demand and carry no interest.  During
the year  ended  July 31,  2001,  the  Company's  CEO  forgave  $176,441  of the
previously  accumulated  obligation.  This  amount was  recorded  in the revised
financial  statements as a capital  contribution.  The Company's chief executive
officer has the majority of the Company's common stock voting rights.

Forgiveness of Accrued Payroll
------------------------------
During the year ended July 31,  2001,  the  Company's  CEO  forgave  $499,968 of
compensation accrued and $120,000 of current period compensation.  These amounts
were  also  recorded  as  a  capital   contribution  in  the  revised  financial
statements.


NOTE 6 - STOCK WARRANTS

At July 31, 2001 and 2000,  there were warrants  outstanding to purchase 250,000
and 422,800 shares,  respectively,  of the Company's  common.  During the fiscal
year ended July 31, 2001,  warrants to purchase  172,800 shares of the Company's
common  stock  expired  unused.  At July 31,  2001,  the  Company's  outstanding
warrants consisted of the following:

<TABLE>
<CAPTION>
                                                                         Common           Common
 Date             Expiration          Price            Number of        Shares per        Shares
Issued                Date          per Share          Warrants          Warrant         Issuable
-------            -------------     ---------        ------------      -----------      ----------
<S>                  <C>                <C>               <C>            <C>             <C>
8/31/00              8/31/04            $1.00             1              250,000         250,000
</TABLE>
                                      F-14
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 7 - COMMON STOCK

During the year ended July 31, 2000,  the Company sold  2,596,000  shares of its
common  stock for  $836,524.  The Company  also issued  2,703,500  shares of its
common  stock for  services  valued at $81,476 and 322,400  shares of its common
stock in payment  of notes  payable  valued at  $128,960.  The stock  issued for
services was valued at its intrinsic value on the date of issuance.  See Note 3.
Other  issuances  resulted  from the  conversion  of 1,340 shares of  preferred,
Series A stock and 334  shares of  preferred,  Series B stock to  2,580,851  and
644,000 shares, respectively, of the Company's common stock.

During the year ended July 31, 2001,  the Company  issued  850,000 shares of its
common stock in exchange for a convertible  note payable  valued at $340,850 and
5,335,000 shares of its common stock for services valued at $646,118. The shares
were valued at their fair market value on the date of issuance.  Other issuances
resulted from the conversion of 1,368 shares of preferred Series A stock,  4,608
shares of preferred Series B stock and 200 shares of preferred Series C stock to
4,489,123;  16,567,642 and 200,000 shares,  respectively of the Company's common
stock.


NOTE 8 - PREFERRED STOCK

The Company has 1,000,000  shares  authorized of preferred  stock,  par value at
$0.001.  The Company has been  authorized to issue 200,000  shares of $0.001 par
value  Series A preferred  stock,  200,000  shares of $0.001 par value  Series B
preferred  stock,  10,000  shares of $0.001 par value Series C preferred  stock,
20,000  shares of $0.001 par value  Series D preferred  stock,  5,000  shares of
$0.001 par value Series E preferred  stock, and 5,000 shares of $0.001 par value
Series  F  preferred  stock.  The  board of  directors  of the  Company  has the
authority to issue  shares of  preferred  stock from time to time in one or more
classes or series, which may have such voting power, full or limited as fixed by
the board of directors.  The board of directors may also  determine the terms of
any such series or class, including dividend rights, dividend rates, conversion,
exchange,  voting rights and terms of redemption,  the redemption  price and the
liquidation preference of such class or series.

The number of shares outstanding of preferred stock,  Series A, B, C, D, E and F
and amounts were as follows:


                                 July 31, 2000
                                 -------------

                                      Number
                                     of Shares     Amount
                                     ---------     ------
                  Series A            2,557          $ 3
                  Series B            4,653          $ 4
                  Series C              200          $ -

                                 July 31, 2001
                                 -------------

                                      Number
                                     of Shares     Amount
                                     ---------     ------
                  Series A            1,189          $ 1
                  Series B               45          $ -
                  Series C               -           $ -
                  Series D           12,000          $12
                  Series E              660          $ 1
                  Series F            1,240          $ 1

                                      F-15
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

General Terms
All Series A, B, C, D, E and F preferred  stock contain  standard terms relative
to adjustment for stock splits and combinations,  reorganizations,  mergers, and
consolidations or sales of assets, registration of stock issued upon conversion,
and registration rights. For dividend, liquidation,  mergers and consolidations,
the respective rights of each series are different.  Series A preferred stock is
limited to $300 per share in non-cumulative preferential dividends before common
stock,  liquidation  rights of each Series A preferred share before common stock
and merger or consolidation right of each Series A preferred share before common
stock.  Series B  preferred  stock is limited to $6 per share in  non-cumulative
preferential dividends before common stock,  liquidation rights of each Series B
preferred  share before common stock and merger or  consolidation  right of each
Series B preferred  share  before  common  stock.  Series C  preferred  stock is
limited  to $0.25  per share in  non-cumulative  preferential  dividends  before
common stock,  liquidation rights of each Series C preferred share before common
stock and merger or consolidation  right of each Series C preferred share before
common  stock.  Series  D  preferred  stock  is  limited  to $100  per  share in
non-cumulative preferential dividends before common stock, liquidation rights of
each Series D preferred  share before  common stock and merger or  consolidation
right of each Series D preferred  share before common stock.  Series E preferred
stock is  limited  to $100 per share in  non-cumulative  preferential  dividends
before common stock,  liquidation rights of each Series E preferred share before
common stock and merger or consolidation  right of each Series E preferred share
before  common stock.  Series F preferred  stock is limited to $100 per share in
non-cumulative preferential dividends before common stock, liquidation rights of
each Series F preferred  share before  common stock and merger or  consolidation
right of each Series F preferred share before common stock.

As of the date of these  financial  statements,  the Company had an  accumulated
deficit in the amount of $6,080,133 and no dividends have been declared.

Voting Rights
-------------
All Series A, B, C, D, E, and F preferred shares have the right to vote based on
their conversion rights to common shares.
                                      F-16
<PAGE>
                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 8 - PREFERRED STOCK (Continued)

Conversion Features
All Series A, B and C preferred shares  outstanding have the right to convert in
accordance with their conversion  provisions  subject to authorized common stock
being  available.  The Company can elect to convert  all  preferred  stock under
certain  stated limited  events  occurring.  Holders of Series A and B preferred
shares have the right to convert 5% of their  shares to common  stock after a 12
month period which started  October 14, 1998 and to convert an additional 10% of
their shares to common stock after an additional  12 month holding  period which
started on October 14, 1999 and to convert all of their  shares to common  stock
after October 14, 2001.

Series C preferred stockholders have the right to convert their shares to common
stock after 180 days from the original date of issue.

Conversion to Common Shares
Preferred  stock is  convertible  to  shares of common  stock and  common  stock
equivalent voting rights as of July 31, 2001 and 2000 as follows.
<TABLE>
<CAPTION>
           Preferred                            Common Shares            Voting Right       Preferred
            Shares          Conversion           Issuable on               Ratio of         Equivalent
         Outstanding           Ratio             Conversion               Preferred       Voting Rights
         -----------           -----             ----------               ---------       -------------
July 31, 2001:
<S>            <C>             <C>                <C>                       <C>               <C>
A              1,189           3,721              4,424,269                 3,721             4,424,269

B                 45           3,721                167,445                 6,000               270,000

D             12,000           1,667             20,000,000                 1,667            20,000,000

E                600           1,667              1,000,000                 1,667             1,000,000

F              1,240           2,000              2,480,000                 2,000             2,480,000
                                              -------------                                 -----------

                                                 28,071,714                                  28,174,269
                                              =============                                 ===========
</TABLE>

Series D preferred shares also confer  additional  voting rights.  Each Series D
preferred share entitles its holder to a vote equivalent to that of 9,167 shares
of the Company's common stock.
                                      F-17
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 8 - PREFERRED STOCK (Continued)

<TABLE>
<CAPTION>
           Preferred                            Common Shares            Voting Right       Preferred
            Shares          Conversion           Issuable on               Ratio of         Equivalent
         Outstanding           Ratio             Conversion               Preferred       Voting Rights
         -----------           -----             ----------               ---------       -------------
July 31, 2001:
<S>            <C>             <C>                <C>                       <C>               <C>
A              2,557           2,166              5,538,462                 2,166             5,538,462

B              4,653           2,166             10,078,398                 6,000            27,918,000

C                200           1,000                200,000                 1,000               200,000
                                               ------------                                ------------

                                                 15,816,860                                  33,656,462
                                               ============                                ============
</TABLE>

The Series B preferred  provides  that each share is  entitled to an  additional
conversion  share to common  stock based on a formula  that  reflects  increased
market value of the common  stock when the common  shares have a market price in
excess of $2 but not greater than $12 per share.

Preferred  Series A, B, and C stock have a basic conversion rate of 1,000 shares
of common stock for every share of  preferred  stock.  Preferred  Series D and E
have a basic  conversion rate of 1,667 shares of common stock for every share of
preferred stock. Preferred Series F have a basic conversion rate of 2,000 shares
of common  stock for every share of preferred  stock.  The  conversion  ratio to
common for Series A and B preferred stock is adjusted  upwards  depending on any
future issue of common shares at below $1.65 per share. The conversion rates for
Series A and B preferred  stock were 1:3,721 and 1:2,166  preferred to common as
of July 31, 2001 and 2000, respectively.


NOTE 9 - NOTES PAYABLE

Current notes payable at July 31, 2001 and 2000 consisted of the following:
                                      F-18
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 9 - NOTES PAYABLE (Continued)

<TABLE>
<CAPTION>
Creditor and Conditions                                    2001                        2000
------------------------                             ------------                -------------
<S>                                                  <C>                          <C>
Note  payable to GMAC,  interest at
13.99%,  secured by 2000  Plymouth  Voyager,
payable in monthly installments
of $452.07 through April 28, 2006.                   $    17,767                  $    18,362

Roy Schneiderman, unsecured, interest
at 8%, due on July 27, 2002, (converted to
common stock in fiscal
year ended July 31, 2001)                                     -                       340,000

Bruce Butcher, unsecured, interest at
8%, convertible to one share of common
stock per $0.80 of debt, due on
September 1, 2001                                         75,000                       75,000

Joe Wozniak, unsecured, interest at
8%, convertible to one share of common
stock per $0.80 of debt, due on
September 1, 2001                                         80,000                       80,000

Keely Smith, secured by
product inventory, interest at 24%,
due on September 25, 1998, delinquent.                    60,000                       60,000

Roy Schneiderman, unsecured, interest at
8%, due on March 15, 2000, delinquent.                   237,000                      237,000
                                                    ------------                -------------

Total notes payable                                      469,767                      810,362

Less current portion                                     455,135                      792,000
                                                    ------------                -------------

Net long-term debt                                  $     14,632                $      18,362
                                                    ============                =============
</TABLE>
                                      F-19
<PAGE>


                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Officer's Salary
----------------
The Company  formerly agreed to pay its CEO a salary of $20,000 per month. As of
July 31, 2000,  $420,000 had been accrued for this  commitment.  During the year
ended July 31, 2001, the Company's CEO forgave $499,968 of accrued  compensation
and waived any further  compensation  through October 31, 2001. This amount plus
compensation  for the  year  ended  July  31,  2001 was  recorded  as a  capital
contribution. See Note 5.

Office Lease
------------
The Company  maintains its  administrative  offices in Ketchum,  Idaho under two
annual leases,  which total $6,514 per month. The leases expire in November 2001
and contain  options to renew for three years.  The Company's CEO has personally
guaranteed this lease. Lease payments for the years ended July 31, 2001 and 2000
totaled  $96,880 and $93,996  respectively.  The Company plans to renew only one
lease in the amount of $3,545 per month.

Equipment Leases
----------------
The Company  leases two autos with monthly lease  payments,  which total $1,130.
The  leases on the  automobiles  are for five years and are set to expire in May
2003.

Distribution Agreements
-----------------------
The  Company  has  several  distribution  agreements,  which  consist of selling
initial product with no ongoing commitment.

Merchant Service Agreement
--------------------------
The Company has an ongoing month-to-month merchant service agreement with Yahoo!
Store for internet sales of its products.  The agreement calls for a hosting fee
in the amount of $50 per month,  a monthly  insertion fee in the amount of $0.10
for every product  available  from the Merchant's  Store, a monthly  transaction
equal to 0.5% of total revenue and a monthly  revenue share fee equal to 3.5% of
network revenue.


NOTE 11 - LITIGATION

Atlas Stock Transfer
--------------------
This  transfer  agent  claims  that the  Company  owes it  $68,536  for costs it
incurred  in  defending  against a wrongful  refusal to  transfer  respecting  a
predecessor company during 1993 and 1994. Management believes that this claim is
likely to be barred by the  limitations  statute  therefore no amounts have been
accrued in these financial statements.
                                      F-20
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 11 - LITIGATION (Continued)

Creditor's Judgment
-------------------
A creditor  brought action against the Company for a delinquent  account payable
in the amount of $5,214 and was awarded a judgment in this  amount.  This amount
remains  unpaid  at July 31,  2001 and is  included  in the  Company's  accounts
payable.

Former Commissions and Wages
----------------------------
The Company received notice from a former sales agent that he is bringing action
for  nonpayment of  commissions  and/or wages during the calendar year 1999. The
Company  plans to  vigorously  contest  this  action  and  expects  to  prevail.
Accordingly, no amounts have been recognized in these financial statements.

Other Claims
------------
An individual has filed a breach of contract claim against the Company disputing
prior  employment  status.  The claim is currently in litigation with settlement
discussion  continuing.  The Company expects to settle for an unspecified amount
less then $10,000.  This amount has been accrued in the financial  statements as
settlements payable at July 31, 2001.

An individual has filed a breach of contract claim against the Company  claiming
that he is entitled to receive  additional  shares of common stock. The claim is
in initial  stages of  litigation  and the  Company  expects a vigorous  defense
against it. It is too early to estimate any  potential  loss or  liability  and,
accordingly, no amount has been accrued in the financial statements.

There are several  individuals  who have filed a joint action  alleging that the
Company  owes them shares of common  stock for  settlement  of loans made to the
Company's CEO in connection  with the bankruptcy of a predecessor  company.  The
outcome of this  action is  uncertain  and,  accordingly,  no amounts  have been
accrued in these financial statements.


NOTE 12 - CONCENTRATIONS

During the last three months of its fiscal year, most of the Company's  revenues
were derived from sales to one customer,  a national  supermarket chain. At July
31, 2001,  69% of the Company's  trade accounts  receivable  were from this same
customer.
                                      F-21
<PAGE>

                          AQUA VIE BEVERAGE CORPORATION
                        NOTES TO THE FINANCIAL STATEMENTS
                                  July 31, 2001

NOTE 13 - SUBSEQUENT EVENTS

In  August  and  September  2001,  subsequent  to the  date of  these  financial
statements,  the Company finalized new retail agreements.  These agreements will
allow for product  expansion  into  additional  regions of the United  States of
America.

In October  2001,  the  Company  established  a  department  to oversee  quality
assurance  throughout  the  manufacturing  and  bottling  process,  and  oversee
technology transfer issues.


NOTE 14 - RESTATEMENT AND CORRECTION OF AN ERROR

The Company's  financial  statements  for the year ended July 31, 2001 have been
restated to reflect the correction of errors as follows.

1.        Settlements   payable   have  been  accrued  to  reflect  an  expected
          settlement on a breach of contract claim for $10,000.

2.        Forgiveness of advances and payroll by the Company's  chief  executive
          officer is shown as a capital  contribution which increased additional
          paid-in  capital by $796,408  and  expenses by $120,000 for salary not
          recognized in the last six months of the Company's fiscal year.

The effect of these corrections was restated financial statements, which thereby
increased  net loss for the year ended July 31, 2001 by $806,408,  and increased
liabilities by $10,000.
                                      F-22
<PAGE>

 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None

                                    PART III

 ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS



Name                       Age                       Position
-----                      ---                       --------

Thomas Gillespie           54                        President, Director


Thomas Gillespie is the founder of Aqua Vie Beverage  Corporation and has served
as president  and director  since its original  formation in 1991.  From 1986 to
1991,  Mr.  Gillespie was the principal of Kauai Water Company,  Kauai,  Hawaii.
Prior to 1986,  Mr.  Gillespie  founded  and served as  president  of  Marketing
Design, a retail package design and product development company.

Since 1996, Mr. Gillespie has owned Aqua Vie Advance Corporation. From 1991 to
1997, Mr. Gillespie served in various positions with Aqua Vie Beverage
Corporation, the predecessor corporation to the Aqua Vie subsidiary BEVA
Corporation.

Thomas  Gillespie  was  president  and founder of Aqua Vie Beverage  Corporation
(BEVA) when it was subjected to an involuntary Chapter 11 Bankruptcy petition in
January  1995  as  part of a  hostile  takeover  attempt  of the  company  by an
outsider. All of the assets associated therewith were transferred by court order
in December 1997, which provided for a continuing corporate existence.  Series B
Preferred shares were issued as a consequence of this transfer.

ITEM 10. EXECUTIVE COMPENSATION

Thomas Gillespie per terms with the company is entitled to a salary of $20,000 a
month;  however he has never collected any of this compensation and has forgiven
$600,000 accrued compensation during this current fiscal year which was recorded
as a capital contribution.

                                       8
<PAGE>

Mr. Gillespie was granted 700,000  restricted  shares pursuant to rule 701, as a
benefit for minimal  consideration,  in August 1999.  During the fiscal year Mr.
Gillespie was granted 600,000  registered common shares as a benefit for minimal
consideration pursuant to Form S-8.

 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


<TABLE>
<CAPTION>


Title of class
Percent of                                                                               Amount and
class                             Name and address of beneficial owner                   nature of
-----                             ------------------------------------                   ---------

<S>                  <C>                                                                   <C>
Common Stock         Thomas J. Gillespie, 333 S Main St #204, Ketchum, ID 83340            1,383,829
2.38%

Series A preferred   Bruce Butcher, 1001 4th Ave Plaza Bldg #3827, Seattle, WA 98154         703.191
59.16%

Series A preferred   Roy Schneiderman, 20 Woodbridge Ave, Buffalo, NY 14225                   141.00
11.87%
Common Stock         952,451          1.64%

Series A preferred   Joseph J. Wozniak, 15404 20th SW, Burien, WA 98166                       324.82
28.97%
Series F preferred  1,240.00        100.00%
Common Stock         980,000          1.68%


Series B Preferred   Brace Foundation Trust, C/O Bruce Butcher                                 44.84
100.00%
Series D Preferred    12,000        100.00%
Common Stock         620,329          1.06%

Series E preferred   Valerie Gillespie, P.O. Box 4815, Ketchum, Idaho 83340                   600.00
100.00%

Common Stock         CEDE, P.O. Box 20, Bowling Green Station, NY, NY 10274               46,188,666
79.29%

Common Stock         Directors and executive officers as a group
                   1,383,829          2.38%

</TABLE>


Thomas  Gillespie,  President,  his wife,  Marie,  and his four children are the
named beneficiaries of the Brace Trust,  without designated  remainder interest,
and T. Gillespie, father of Thomas Gillespie is a designated remainder holder of
30% of the Trust. All voting rights of Trust shares, which constitute a majority
of all voting  shares,  have been  granted to Thomas  Gillespie  by  irrevocable
proxy.

 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None  other than as noted in Note 6 of the Notes to the  Consolidated  Financial
Statements.


                                       9
<PAGE>

 ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

No reports on Form 8-K were filed since the third quarter.

Aqua Vie Beverage Corporation

FORM 10KSB Exhibit List



 2.1    Auditor's letter                                  April 10, 2001
 4.1    Designation Series D                           November 15, 2000
 4.2    Designation Series E                           November 15, 2000
 4.3    Designation Series F                               July 27, 2001


                                   SIGNATURES

In accordance with Section13 or 15(d) of the Exchange Act, the registrant causes
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

Aqua Vie Beverage Corp.
(Registrant)

Date 6/27/02        By /s/ Thomas J. Gillespie
     --------      --------------------------
                           Thomas J. Gillespie,
                           CEO and President

Signature                                  Title                       Date
/s/ Thomas J. Gillespie                                              06-27-02
------------------------             ------------------------        --------
    Thomas J. Gillespie                 CEO, President, Director


                                       10