U.S. SECURITIES AND EXCHANGE
                        COMMISSION Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

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


         For the fiscal year ended December 31, 2003

                                       OR

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

         For the transition period from _____ to _____

                       Commission File Number 000-30115
                                              ---------

                            KUSHI NATURAL FOODS CORP.
       ------------------------------------------------------------------
       (Exact name of Small Business Issuer as specified in its charter.)

               DELAWARE                                 13-3912047
    -------------------------------                 -------------------
    (State of other jurisdiction of                   (IRS Employer
     incorporation or organization)                 Identification No.)

                    42 Barrett Road, Lawrence, New York 11559
          -------------------------------------------------------------
          (Address of principal executive offices, including zip code.)

                                 (516) 239-2360
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

                                                        Name of Each Exchange
         Title of Each Class                             on Which Registered
         -------------------                            ---------------------
                 None                                            None

Securities registered under Section 12(g) of the Exchange Act:

                         COMMON STOCK, PAR VALUE $.0001
                         ------------------------------
                                (Title of Class)

Check whether the issuer: (1) Filed all reports required to be filed by Section
13 or 14(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 there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this form 10-K. [X]

State issuer's revenues for its most recent fiscal year:  $0.

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the lack of average bid and asked prices of such stock on March
30, 2004 was $0.00. The number of shares outstanding of the issuer's common
stock as of March 12, 2004 was 10,588,718.

Transitional Small Business Disclosure Format (check one):   Yes [ ] No [X]

<PAGE>

FORWARD LOOKING STATEMENTS

THIS FORM 10-KSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY KUSHI
NATURAL FOODS CORP. (HEREINAFTER REFERRED TO AS "KUSHI AND/OR THE "COMPANY") OR
ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE
STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT
EXPECTATIONS OF KUSHI AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE
ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN
THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS
EXHIBIT 99.1 TO THE COMPANY'S FORM 10-SB12G, AND ARE HEREBY INCORPORATED HEREIN
BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE
FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF
UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.

RISK FACTORS

1. Control by Principal Shareholders, Officers and Directors.

         The Company's principal shareholders, officers and directors will
beneficially own approximately ninety percent (90%) of the Company's Common
Stock. As a result, such persons may have the ability to control the Company and
direct its affairs and business. Such concentration of ownership may also have
the effect of delaying, deferring or preventing change in control of the
Company. See "Principal Stockholders."

2. Conflicts of Interest.

         None of the Company's management is engaged by the Company on a full
time basis. In addition, both Dr. Eugene Stricker and Mark Schindler are engaged
in the venture capital business through entities other than the Company.
Accordingly, certain conflicts of interest exist between the Company and its
officers and directors. They have other business interests to which they devote
their attention, and they may be expected to continue to do so. As a result,
conflicts of interest may arise that can be resolved only through their exercise
of such judgment as is consistent with each officer's understanding of his
fiduciary duties to the Company. See "Management," and "Conflicts of Interest."

                                        2

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3. Possible Need for Additional Financing.

         The Company has very limited funds, and such funds may not be adequate
to take advantage of any available business opportunities. Even if the Company's
funds prove to be sufficient to acquire an interest in, or complete a
transaction with, a business opportunity, the Company may not have enough
capital to exploit the opportunity. The ultimate success of the Company may
depend upon its ability to raise additional capital. The Company has not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.

4. Regulation of Penny Stocks.

         The Company's securities, if and when available for trading, will be
subject to a Securities and Exchange Commission rule that imposes special sales
practice requirements upon broker-dealers who sell such securities to persons
other than established customers or accredited investors. For purposes of the
rule, the phrase "accredited investors" means, in general terms, institutions
with assets in excess of $5,000,000, or individuals having a net worth in excess
of $1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-
dealers to sell the Company's securities and also may affect the ability of
purchasers in this offering to sell their securities in any market that might
develop therefor.

         In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include Rules 3a51-1,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities
Exchange Act of 1934, as amended. Because the securities of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any market that
might develop for them.

         Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker- dealers;
and (v) the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along with
the resulting inevitable collapse of those prices and with consequent investor
losses. The Company's management is aware of the abuses that have occurred
historically in the penny stock market. Although the Company does not expect to
be in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to the Company's securities.

                                        3

<PAGE>

5. No Operating History.

         The Company was formed in August of 1996 in connection with the merger
of Kushi Macrobiotics Corp. and American Phoenix Group, Inc. Pursuant to the
terms of the merger agreement between Kushi Macrobiotics Corp. and American
Phoenix Group, Inc., the Company's shares were spun off to the Kushi
Macrobiotics Corp. holders on a three for one basis and all of Kushi
Macrobiotics Corp.'s assets related to its Kushi Cuisine business and
approximately $115,000 in cash were transferred to the Company. The Company
entered into a joint venture to continue to promote the Kushi Cuisine business,
but the joint venture failed and the Company lost its investment therein of
approximately $42,000. The Company was inactive for several years and has
registered its common stock under the 1934 Act in order to better pursue its
purpose of acquiring a business opportunity. The Company has no operating
history, revenues from operations, or assets other than cash transferred to the
Company at the time of its formation (of which approximately $30,000 remains on
hand). The Company faces all of the risks of a new business and the special
risks inherent in the investigation, acquisition, or involvement in a new
business opportunity. The Company must be regarded as a new or "start-up"
venture with all of the unforeseen costs, expenses, problems, and difficulties
to which such ventures are subject.

6. No Assurance of Success or Profitability.

         There is no assurance that the Company will acquire a favorable
business opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or profits, or
that the market price of the Company's Common Stock will be increased thereby.

7. Reporting Requirements May Delay Or Preclude Acquisition.

         Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act"),
requires companies subject thereto to provide certain information about
significant acquisitions, including certified financial statements for the
company acquired, covering one or two years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the 1934 Act are applicable.

8. Lack of Market Research or Marketing Organization.

         The Company has neither conducted, nor have others made available to
it, results of market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company does not have,
and does not plan to establish, a marketing organization. Even in the event
demand is identified for a merger or acquisition contemplated by the Company,
there is no assurance the Company will be successful in completing any such
business combination.

                                        4

<PAGE>

9. Possible Business - Not Identified and Highly Risky.

         The Company has not identified and has no commitments to enter into or
acquire a specific business opportunity and therefore can disclose the risks and
hazards of a business or opportunity that it may enter into except in a general
manner, and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. An investor can expect a potential business
opportunity to be quite risky. The Company's acquisition of or participation in
a business opportunity will likely be highly illiquid and could result in a
total loss to the Company and its stockholders if the business or opportunity
proves to be unsuccessful. See Item 1 "Description of Business."

10. Type of Business Acquired.

         The type of business to be acquired may be one that desires to avoid
effecting its own public offering and the accompanying expense, delays,
uncertainties, and federal and state requirements which purport to protect
investors. Because of the Company's limited capital, it is more likely than not
that any acquisition by the Company will involve other parties whose primary
interest is the acquisition of control of a publicly traded reporting company.
Moreover, any business opportunity acquired may be currently unprofitable or
present other negative factors.

11. Impracticability of Exhaustive Investigation.

         The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive investigation
and analysis of a business opportunity before the Company commits its capital or
other resources thereto. Management decisions, therefore, will likely be made
without detailed feasibility studies, independent analysis, market surveys and
the like which, if the Company had more funds available to it, would be
desirable. The Company will be particularly dependent in making decisions upon
information provided by the promoter, owner, sponsor, or others associated with
the business opportunity seeking the Company's participation. A significant
portion of the Company's available funds may be expended for investigative
expenses and other expenses related to preliminary aspects of completing an
acquisition transaction, whether or not any business opportunity investigated is
eventually acquired.

12. Lack of Diversification.

         Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities into
more than one area will subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.

13. Possible Reliance upon Unaudited Financial Statements.

         The Company generally will require audited financial statements from
companies that it proposes to acquire. No assurance can be given, however, that
audited financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been

                                        5

<PAGE>

verified by outside auditors. The lack of the type of independent verification
which audited financial statements would provide, increases the risk that the
Company, in evaluating an acquisition with such a target company, will not have
the benefit of full and accurate information about the financial condition and
operating history of the target company. This risk increases the prospect that
the acquisition of such a company might prove to be an unfavorable one for the
Company or the holders of the Company's securities. Moreover, the Company will
be subject to the reporting provisions of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and thus will be required to furnish certain
information about significant acquisitions, including audited financial
statements for any business that it acquires. Consequently, acquisition
prospects that do not have, or are unable to provide reasonable assurances that
they will be able to obtain, the required audited statements would not be
considered by the Company to be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. Should the Company,
during the time it remains subject to the reporting provisions of the Exchange
Act, complete an acquisition of an entity for which audited financial statements
prove to be unobtainable, the Company would be exposed to enforcement actions by
the Securities and Exchange Commission (the "Commission") and to corresponding
administrative sanctions, including permanent injunctions against the Company
and its management. The legal and other costs of defending a Commission
enforcement action are likely to have material, adverse consequences for the
Company and its business. The imposition of administrative sanctions would
subject the Company to further adverse consequences.

         In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, the
automated quotation system sponsored by the National Association of Securities
Dealers, Inc., the Over the Counter Bulletin Board, or on any existing stock
exchange. Moreover, the lack of such financial statements is likely to
discourage broker-dealers from becoming or continuing to serve as market makers
in the securities of the Company. Without audited financial statements, the
Company would almost certainly be unable to offer securities under a
registration statement pursuant to the Securities Act of 1933, and the ability
of the Company to raise capital would be significantly limited until such
financial statements were to become available.

14. Other Regulation.

         An acquisition made by the Company may be of a business that is subject
to regulation or licensing by federal, state, or local authorities. Compliance
with such regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the Company.

15. Dependence upon Management; Limited Participation of Management.

         The Company currently has four individuals who are serving as its
officers and directors. The Company will be heavily dependent upon their skills,
talents, and abilities to implement its business plan, and may, from time to
time, find that the inability of the sole officers and directors to devote their
full time attention to the business of the Company results in a delay in
progress toward implementing its business plan. Furthermore, since only four
individuals are serving as the officers and directors of the Company, it will be
entirely dependent upon their experience in seeking, investigating, and
acquiring a business and in making decisions regarding the Company's operations.
See "Management." Because investors will not be able to evaluate the merits of
possible business acquisitions by the Company, they should critically assess the
information concerning the Company's three officers and directors.

                                        6

<PAGE>

16. Lack of Continuity in Management.

         The Company does not have an employment agreement with any of its
officers and directors, and as a result, there is no assurance that they will
continue to manage the Company in the future. In connection with acquisition of
a business opportunity, it is likely the current officers and directors of the
Company may resign. A decision to resign will be based upon the identity of the
business opportunity and the nature of the transaction, and is likely to occur
without the vote or consent of the stockholders of the Company.

17. Indemnification of Officers and Directors.

         The Company's Articles of Incorporation and applicable Delaware Law
provide for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.

18. Director's Liability Limited.

         The Company's Articles of Incorporation exclude personal liability of
its directors to the Company and its stockholders for monetary damages for
breach of fiduciary duty except in certain specified circumstances. Accordingly,
the Company will have a much more limited right of action against its directors
than otherwise would be the case. This provision does not affect the liability
of any director under federal or applicable state securities laws.

19. Dependence upon Outside Advisors.

         To supplement the business experience of its officers and directors,
the Company may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection of any
such advisors will be made by the Company's officers and directors without any
input from stockholders. Furthermore, it is anticipated that such persons may be
engaged on an "as needed" basis without a continuing fiduciary or other
obligation to the Company. In the event the President of the Company considers
it necessary to hire outside advisors, he may elect to hire persons who are
affiliates, if they are able to provide the required services.

20. Leveraged Transactions.

         There is a possibility that any acquisition of a business opportunity
by the Company may be leveraged, i.e., the Company may finance the acquisition
of the business opportunity by borrowing against the assets of the business
opportunity to be acquired, or against the projected future revenues or profits
of the business opportunity. This could increase the Company's exposure to

                                        7

<PAGE>

larger losses. A business opportunity acquired through a leveraged transaction
is profitable only if it generates enough revenues to cover the related debt and
expenses. Failure to make payments on the debt incurred to purchase the business
opportunity could result in the loss of a portion or all of the assets acquired.
There is no assurance that any business opportunity acquired through a leveraged
transaction will generate sufficient revenues to cover the related debt and
expenses.

21.  Competition.

         The search for potentially profitable business opportunities is
intensely competitive. The Company expects to be at a disadvantage when
competing with many firms that have substantially greater financial and
management resources and capabilities than the Company. These competitive
conditions will exist in any industry in which the Company may become
interested. In addition, some acquisition candidates may negatively regard the
transaction in which the Company was formed as no registration statement under
the Securities Act of 1933, as amended, was filed at that time.

22. No Foreseeable Dividends.

         The Company has not paid dividends on its Common Stock and does not
anticipate paying such dividends in the foreseeable future.

23. Loss of Control by Present Management and Stockholders.

         The Company may consider an acquisition in which the Company would
issue as consideration for the business opportunity to be acquired an amount of
the Company's authorized but unissued Common Stock that would, upon issuance,
represent the great majority of the voting power and equity of the Company. The
result of such an acquisition would be that the acquired company's stockholders
and management would control the Company, and the Company's management could be
replaced by persons unknown at this time. Such a merger would result in a
greatly reduced percentage of ownership of the Company by its current
shareholders. In addition, the Company's officers could sell their control block
of stock at a premium price to the acquired company's stockholders.

24. No Public Market Exists.

         There is no public market for the Company's common stock, and no
assurance can be given that a market will develop or that a shareholder ever
will be able to liquidate his investment without considerable delay, if at all.
If a market should develop, the price may be highly volatile. Factors such as
those discussed in this "Risk Factors" section may have a significant impact
upon the market price of the securities offered hereby. Owing to the low price
of the securities, many brokerage firms may not be willing to effect
transactions in the securities. Even if a purchaser finds a broker willing to
effect a transaction in these securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may
exceed the selling price. Further, many lending institutions will not permit the
use of such securities as collateral for any loans.

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25. Rule 144 Sales.

         All of the outstanding shares of Common Stock held by present
stockholders are "restricted securities" within the meaning of Rule 144 under
the Securities Act of 1933, as amended.

         As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for more than one year may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock or the average weekly trading volume during the four calendar weeks
prior to the sale. As a result of revisions to Rule 144 which became effective
on or about April 29, 1997, there will be no limit on the amount of restricted
securities that may be sold by a non-affiliate after the restricted securities
have been held by the owner for a period of two years. A sale under Rule 144 or
under any other exemption from the Act, if available, or pursuant to subsequent
registrations of shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop. Of the total 10,588,718 shares of common stock held by present
stockholders of the Company, 8,603,718 shares which were issued more than two
years ago and are presently available for resales under Rule 144, and the
remaining 1,985,000 became available for resale starting in December 2000.
Management is aware that recent interpretations by the Securities and Exchange
Commission's Staff cast doubt as to whether Rule 144 will be available for the
resale of those 1,985,000 shares.

26. Blue Sky Considerations.

         Because the securities registered hereunder have not been registered
for resale under the blue sky laws of any state, the holders of such shares and
persons who desire to purchase them in any trading market that might develop in
the future, should be aware that there may be significant state blue-sky law
restrictions upon the ability of investors to sell the securities and of
purchasers to purchase the securities. Some jurisdictions may not under any
circumstances allow the trading or resale of blind-pool or "blank-check"
securities. Accordingly, investors should consider the secondary market for the
Company's securities to be a limited one.

                                        9

<PAGE>

                                     PART I

ITEM 1.           BUSINESS
ITEM I.           DESCRIPTION OF BUSINESS.

General

         The Company was incorporated under the laws of the State of Delaware on
August 1, 1996, and is in the early developmental and promotional stages. To
date the Company's only activities have been acquiring the "Kushi Assets", as
defined below, liquidating the same and activities directed at developing its
present business plan and raising its initial capital. The Company has not
commenced any commercial operations. The Company has no full-time employees and
neither owns nor leases any real estate. The Company was formed in connection
with the merger acquisition of Kushi Macrobiotics Corp. ("KMC") with American
Phoenix Group, Inc. (APGI") in 1996. Prior to such acquisition, KMC had operated
a business of marketing a line of natural foods (the "Kushi Cuisine"). This
business was not successful and management determined that it would be in the
shareholder's interest for KMC to operate a different business. In the APGI
reverse merger, the shareholders of APGI became the owners of 85% of the shares
of KMC, which changed its name to American Phoenix Group, Inc. As a condition to
the merger, KMC was required to divest itself of all assets related to the Kushi
Cuisine business. This divestiture was effected by transferring all of the
assets related to the Kushi Cuisine business, principally inventory and
receivables, and approximately $115,000 to a newly formed entity, the Company,
and spinning off the shares of the Company to the KMC shareholders on a three
for one basis simultaneously with the consummation of the KMC merger with APGI.
The Kushi Cuisine assets and a portion of the cash were contributed to a joint
venture which failed and the Company lost its investment therein of
approximately $42,000. See. "Notes to Financial Statements- Note 4." To the best
of the Company's knowledge, the Company's shares have never traded, nor have any
such shares been transferred from their original holders except by the laws of
descent and distribution.

         The proposed business activities described herein classify the Company
as a "blank check" or "shell company" whose sole purpose at this time is to
locate and consummate a merger or acquisition with a private entity. Many states
have enacted statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions. Management does not
believe it will undertake any efforts to cause a market to develop in the
Company's securities until such time as the Company has successfully implemented
its business plan described herein. However, if the Company intends to
facilitate the eventual creation of a public trading market in its outstanding
securities, it must consider that the Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker- dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefor.

                                       10

<PAGE>

         In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include Rules 3a51-1,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities
Exchange Act of 1934, as amended. Because the securities of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any market that
might develop for them.

         Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker- dealers;
and (v) the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along with
the resulting inevitable collapse of those prices and with consequent investor
losses. The Company's management is aware of the abuses that have occurred
historically in the penny stock market. Although the Company does not expect to
be in a position to dictate the behavior of the market or of broker- dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to the Company's securities.

         As part of its business plan, the Company filed a registration
statement on Form 10-SB on a voluntary basis in order to become a "public"
company by virtue of being subject to the reporting requirements of the
Securities Exchange Act of 1934.

         The Company's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses, and to pursue other related
activities intended to enhance shareholder value. The acquisition of a business
opportunity may be made by purchase, merger, exchange of stock, or otherwise,
and may encompass assets or a business entity, such as a corporation, joint
venture, or partnership. The Company has limited capital, and it is unlikely
that the Company will be able to take advantage of more than one such business
opportunity. The Company intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings.

         At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any agreement
or definitive understanding with any person concerning an acquisition. The
Company's officers and directors have previously been in discussions involving a
possible merger between an established company and a shell entity, and have a
number of contacts within the field of corporate finance. As a result, they have
had preliminary contacts with representatives of several companies concerning
the general possibility of a merger or acquisition by a shell company. However,
none of these preliminary contacts or discussions have developed into a possible
merger or acquisition transaction with the Company.

         It is anticipated that the Company's officers and directors may in the
future contact broker-dealers and other persons with whom they are acquainted
who are involved in corporate finance matters to advise them of the Company's

                                       11

<PAGE>

existence and to determine if any companies or businesses they represent have an
interest in considering a merger or acquisition with the Company. In connection
with any transaction which may occur, the Company may be required to pay finders
fees in stock, cash or a combination thereof. No assurance can be given that the
Company will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available for
acquisitions, or that any acquisition that occurs will be on terms that are
favorable to the Company or its stockholders.

         The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or on a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv). The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued. Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low profitability.

         The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.

         As a consequence of this registration of its securities, any entity
which has an interest in being acquired by, or merging into the Company, is
expected to be an entity that desires to become a public company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would be issued by the Company or purchased from the current
principal shareholders of the Company by the acquiring entity or its affiliates.

         Depending upon the nature of the transaction, the current officers and
directors of the Company may resign their management positions with the Company
in connection with the Company's acquisition of a business opportunity. See
"Form of Acquisition," below, and "Risk Factors - The Company - Lack of
Continuity in Management." In the event of such a resignation, the Company's
current management would not have any control over the conduct of the Company's
business following the Company's combination with a business opportunity.

         It is anticipated that business opportunities will come to the
Company's attention from various sources, including its officers and directors,
its other stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.

                                       12

<PAGE>

         The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its officers or directors
are currently affiliated. Should the Company determine in the future, contrary
to the foregoing expectations, that a transaction with an affiliate would be in
the best interests of the Company and its stockholders, the Company is in
general permitted by Delaware law to enter into such a transaction if:

1.       The material facts as to the relationship or interest of the affiliate
and as to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or

2.       The material facts as to the relationship or interest of the affiliate
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or

3.       The contract or transaction is fair as to the Company as of the time it
is authorized, approved or ratified, by the Board of Directors or the
stockholders.

Investigation and Selection of Business Opportunities

         To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, the
perceived benefit the company will derive from becoming a publicly held entity,
and numerous other factors which are difficult, if not impossible, to analyze
through the application of any objective criteria. In many instances, it is
anticipated that the historical operations of a specific business opportunity
may not necessarily be indicative of the potential for the future because of the
possible need to shift marketing approaches substantially, expand significantly,
change product emphasis, change or substantially augment management, or make
other changes. The Company will be dependent upon the owners of a business
opportunity to identify any such problems which may exist and to implement, or
be primarily responsible for the implementation of, required changes. Because
the Company may participate in a business opportunity with a newly organized
firm or with a firm which is entering a new phase of growth, it should be
emphasized that the Company will incur further risks, because management in many
instances will not have proved its abilities or effectiveness, the eventual
market for such company's products or services will likely not be established,
and such company may not be profitable when acquired.

         It is anticipated that the Company will not be able to diversify, but
will essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.

         It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's shareholders pursuant to
the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders, prior to any merger or

                                       13

<PAGE>

acquisition, with financial statements, or any other documentation, concerning a
target company or its business. In some instances, however, the proposed
participation in a business opportunity may be submitted to the stockholders for
their consideration, either voluntarily by such directors to seek the
stockholders' advice and consent or because state law so requires.

         The analysis of business opportunities will be undertaken by or under
the supervision of the Company's President, who is not a professional business
analyst. See "Management." Since Company management has no current plans to use
any outside consultants or advisors to assist in the investigation and selection
of business opportunities, no policies have been adopted regarding use of such
consultants or advisors, the criteria to be used in selecting such consultants
or advisors, the services to be provided, the term of service, or regarding the
total amount of fees that may be paid.

         The Company anticipates that it will consider, among other things, the
following factors:

1.       Potential for growth and profitability, indicated by new technology,
         anticipated market expansion, or new products;

2.       The Company's perception of how any particular business opportunity
         will be received by the investment community and by the Company's
         stockholders;

3.       Whether, following the business combination, the financial condition of
         the business opportunity would be, or would have a significant prospect
         in the foreseeable future of becoming sufficient to enable the
         securities of the Company to qualify for listing on an exchange or on a
         national automated securities quotation system, such as NASDAQ, so as
         to permit the trading of such securities to be exempt from the
         requirements of Rule 15c2-6 recently adopted by the Securities and
         Exchange Commission. See "Risk Factors - The Company - Regulation of
         Penny Stocks."

4.       Capital requirements and anticipated availability of required funds, to
         be provided by the Company or from operations, through the sale of
         additional securities, through joint ventures or similar arrangements,
         or from other sources;

5.       The extent to which the business opportunity can be advanced;

6.       Competitive position as compared to other companies of similar size and
         experience within the industry segment as well as within the industry
         as a whole;

7.       Strength and diversity of existing management, or management prospects
         that are scheduled for recruitment;

8.       The cost of participation by the Company as compared to the perceived
         tangible and intangible values and potential; and

9.       The accessibility of required management expertise, personnel, raw
         materials, services, professional assistance, and other required items.

         In regard to the possibility that the shares of the Company would
qualify for listing on NASDAQ, the current standards include the requirements
that the issuer of the securities that are sought to be listed have total assets

                                       14

<PAGE>

of at least $4,000,000 and total capital and surplus of at least $2,000,000, and
proposals have recently been made to increase these qualifying amounts. Many,
and perhaps most, of the business opportunities that might be potential
candidates for a combination with the Company would not satisfy the NASDAQ
listing criteria.

         No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to analyze all
factors appropriate to each opportunity and make a determination based upon
reasonable investigative measures and available data. Potentially available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex. Potential investors must recognize that, because of the Company's
limited capital available for investigation and management's limited experience
in business analysis, the Company may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.

         The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.

         Prior to making a decision to participate in a business opportunity,
the Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions between such
company and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.

         As part of the Company's investigation, the Company's executive
officers and directors may meet personally with management and key personnel,
may visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise. There
will be no loan agreements or understandings between the Company and third
parties, nor does the Company intend to raise any operating capital by
implementing private placements of restricted stock and/or public offerings of
its common stock.

         It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors - - Regulation
of Penny Stocks."

                                       15

<PAGE>

         Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates which have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.

Form of Acquisition

         It is impossible to predict the manner in which the Company may
participate in a business opportunity. Specific business opportunities will be
reviewed as well as the respective needs and desires of the Company and the
promoters of the opportunity and, upon the basis of that review and the relative
negotiating strength of the Company and such promoters, the legal structure or
method deemed by management to be suitable will be selected. Such structure may
include, but is not limited to leases, purchase and sale agreements, licenses,
joint ventures and other contractual arrangements. The Company may act directly
or indirectly through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger, consolidation
or reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there is no assurance that the Company
would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing directors may resign and new
directors may be appointed without any vote by stockholders.

         Management may actively negotiate or otherwise consent to the purchase
of any portion of their common shares as a condition to or in connection with a
proposed merger or acquisition transaction. It is emphasized that management of
the Company may effect transactions having a potentially adverse impact upon the
Company's shareholders pursuant to the authority and discretion of the Company's
management to complete acquisitions without submitting any proposal to the
stockholders for their consideration. Holders of the Company's securities should
not anticipate that the Company necessarily will furnish such holders, prior to
any merger or acquisition, with financial statements, or any other
documentation, concerning a target company or its business. In some instances,
however, the proposed participation in a business opportunity may be submitted
to the stockholders for their consideration, either voluntarily by such
directors to seek the stockholders' advice and consent or because state law so
requires.

         It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other securities of
the Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the

                                       16

<PAGE>

total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. (See "Description of Business - General").

         It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.

         The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.

         As a general matter, the Company anticipates that it, and/or its
officers and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.

         It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs theretofore incurred in the related investigation would
not be recoverable. Moreover, because many providers of goods and services
require compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate future time
may make it impossible to procure goods and services.

Investment Company Act and Other Regulation

         The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.

                                       17

<PAGE>

         Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.

         The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders will
not be afforded these protections.

         Any securities which the Company might acquire in exchange for its
Common Stock will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to resell
such securities, such sale cannot proceed unless a registration statement has
been declared effective by the Securities and Exchange Commission or an
exemption from registration is available. Section 4(1) of the Act, which exempts
sales of securities not involving a distribution, would in all likelihood be
available to permit a private sale. Although the plan of operation does not
contemplate resale of securities acquired, if such a sale were to be necessary,
the Company would be required to comply with the provisions of the Act to effect
such resale.

         An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance with
such regulations can be expected to be a time-consuming and expensive process.

Competition

         The Company expects to encounter substantial competition in its efforts
to locate attractive opportunities, primarily from business development
companies, venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities will have
significantly greater experience, resources and managerial capabilities than the
Company and will therefore be in a better position than the Company to obtain
access to attractive business opportunities. The Company also will experience
competition from other public "blind pool" companies, many of which may have
more funds available than does the Company.

Employees

         The Company is a development stage company and currently has no
employees. Management of the Company expects to use consultants, attorneys and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business opportunities. The
need for employees and their availability will be addressed in connection with
the decision whether or not to acquire or participate in specific business

                                       18

<PAGE>

opportunities. Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of, the Company's
officers prior to, or in conjunction with, the completion of a business
acquisition. The Company's officers have accepted common stock for services
rendered for consulting, organizing the corporation, seeking merger candidates
and evaluating these candidates. See "Executive Compensation" and under "Certain
Relationships and Related Transactions."

ITEM 2.           DESCRIPTION OF PROPERTIES

         The Company currently maintains a mailing address at 42 Barrett Road,
Lawrence, New York 11559, which is the office and residence address of Dr.
Eugene Stricker. The Company's telephone number is (516) 239-2360 which is the
telephone number of Dr. Eugene Stricker. These offices and telephone number are
used without expense to the Company. Other than this mailing address, the
Company does not currently maintain any other office facilities, and does not
anticipate the need for maintaining office facilities at any time in the
foreseeable future. The Company pays no rent or other fees for the use of this
mailing address and facilities.

ITEM 3.           LEGAL PROCEEDINGS

         The Company is not currently a party to any material legal proceeding.


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

           There were no matters submitted to a vote of stockholders during the
fourth quarter of 2004.

                                       19

<PAGE>

                                     PART II

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

         No public trading market exists for the Company's securities and all of
its outstanding securities are restricted securities as defined in Rule 144.
There were approximately 200 holders of record of the Company's common stock on
December 31, 2003. No dividends have been paid to date and the Company's Board
of Directors does not anticipate paying dividends in the foreseeable future.

         The Company does not plan to take affirmative steps to request or
encourage any broker-dealer to act as a market maker for the Company's
securities. There are to date no understandings, agreements or discussions in
place with any such broker-dealer. Although management has set forth disclosure
throughout this registration statement indicating it would consider the public
"trading" of its securities if such activity was in the best interests of its
shareholders, it presently has no plans to do so.

         The Company has never declared dividends or paid any cash dividends on
its capital stock. The Company currently intends to retain all future earnings,
if any, for use in the operation and development of its business and, therefore,
does not expect to declare or pay any cash dividends on its Common Stock in the
foreseeable future.

ITEM 6.           MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION

Plan of Operations

         Kushi intends to seek to acquire assets or shares of an entity actively
engaged in business which generates revenues, in exchange for its securities.
Kushi has no particular acquisitions in mind and has not entered into any
negotiations regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary contact or
discussions with any representative of any other company regarding the
possibility of an acquisition or merger between the Company and such other
company as of the date of this registration statement.

         While the Company will attempt to obtain audited financial statements
of a target entity, there is no assurance that such audited financial statements
will be available. The Board of Directors does intend to obtain certain
assurances of value of the target entity's assets prior to consummating such a
transaction, with further assurances that an audited statement would be provided
within seventy-five days after closing of such a transaction. Closing documents
relative thereto will include representations that the value of the assets
conveyed to or otherwise so transferred will not materially differ from the
representations included in such closing documents. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to Kushi's present stockholders.

         The Company has, and will continue to have, limited capital with which
to provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling

                                       20

<PAGE>

ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with the acquisition of a business opportunity, including
the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related
reports and documents. The Securities Exchange Act of 1934 (the "34 Act"),
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying with
the 34 Act. Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which would
support the perceived benefits of a merger or acquisition transaction for the
owners of a business opportunity.

         As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
intends to become subject to all of the reporting requirements included in the
34 Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a merger
or acquisition, as well as the Company's audited financial statements included
in its annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of the 34
Act, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents may provide that the proposed transaction will be
voidable, at the discretion of the present management of the Company.

Liquidity and Capital Resources

         On December 31, 2003, the Company had on hand approximately $23,000
which represents the net remaining of the $115,000 cash that it received in the
spin off. Such assets are maintained in a checking account and a money market
account and earn nominal interest. In the opinion of Management, these assets
should be sufficient to enable the Company to effect this registration under the
Exchange Act and file periodic reports until such time as it is able to locate
an acquisition partner and complete its business plan.

         The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.

Results of Operations

         The Company has not conducted any operations in the last year and,
other than activities incident to locating an acquisition partner and effecting
an acquisition, does not expect to conduct substantial operations in the current
year. Costs of operations during the year ended December 31, 2003 consisted of
$6,677 in Selling, General and Administrative expense which was primarily
related professional fees and EDGARizer's charges to complying with the
reporting requirements under the Exchange Act of 1934, as amended.

                                       21

<PAGE>

Need for Additional Financing

         The Company believes that its existing capital will be sufficient to
meet the Company's cash needs, including the costs of compliance with the
continuing reporting requirements of the Securities Exchange Act of 1934, as
amended, for a period of more than two years. Accordingly, in the event the
Company is able to complete a business combination during this period, it
anticipates that its existing capital will be sufficient to allow it to
accomplish the goal of completing a business combination. There is no assurance,
however, that the available funds will ultimately prove to be adequate to allow
it to complete a business combination, and once a business combination is
completed, the Company's needs for additional financing are likely to increase
substantially.

Income Taxes

         The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") issued by the Financial Accounting Standards Board ("FASB"), under which
deferred tax assets and liabilities are provided on differences between the
carrying amounts for financial reporting and the tax basis of assets and
liabilities for income tax purposes using the enacted tax rates.

         Under SFAS 109, deferred tax assets may be recognized for temporary
differences that will result in deductible amounts in future periods. A
valuation allowance is recognized, if on the weight of available evidence, it is
more likely than not that some portion or all of the deferred tax asset will not
be realized.

Federal Income Tax Aspects of Investment in the Company

         The discussion contained herein has been prepared by the Company and is
based on existing law as contained in the Code, amended United States Treasury
Regulations ("Treasury Regulations"), administrative rulings and court decisions
as of the date of this Registration Statement. No assurance can be given that
future legislative enactments, administrative rulings or court decisions will
not modify the legal basis for statements contained in this discussion. Any such
development may be applied retroactively to transactions completed prior to the
date thereof, and could contain provisions having an adverse affect upon the
Company and the holders of the Common Stock. In addition, several of the issues
dealt with in this summary are the subject of proposed and temporary Treasury
Regulations. No assurance can be given that these regulations will be finally
adopted in their present form.

Basis in Common Stock

         The tax basis that a Shareholder will have in his Common Stock will
equal his cost in acquiring his Common Stock. If a Shareholder acquires Common
Stock at different times or at different prices, he must maintain records of
those transactions so that he can accurately report gain or loss realized upon
disposition of the Common Stock.

Dividends on Common Stock

         Distributions made by the Company with respect to the Common Stock will
be characterized as dividends that are taxable as ordinary income to the extent
of the Company's current or accumulated earnings and profits ("earnings and

                                       22

<PAGE>

profits"), if any, as determined for U.S. federal income tax purposes. To the
extent that a distribution on the Common Stock exceeds the holder's allocable
share of the Company's earnings and profits, such distribution will be treated
first as a return of capital that will reduce the holder's adjusted tax basis in
such Common Stock, and then as taxable gain to the extent the distribution
exceeds the holder's adjusted tax basis in such Common Stock. The gain will
generally be taxed as a long-term capital gain if the holder's holding period
for the Common Stock is more than one year.

         The availability of earnings and profits in future years will depend on
future profits and losses which cannot be accurately predicted. Thus, there can
be no assurance that all or any portion of a distribution on the Common Stock
will be characterized as a dividend for general income tax purposes. Corporate
shareholders will not be entitled to claim the dividends received deduction with
respect to distributions that do not qualify as dividends. See the discussion
regarding the dividends received deduction below.

Redemption of Common Stock

         The Company does not have the right to redeem any Common Stock.
However, any redemption of Common Stock, with the consent of the holder, will be
a taxable event to the redeemed holder.

         The Company does not believe that the Common Stock will be treated as
debt for federal income tax purposes. However, in the event that the Common
Stock is treated as debt for federal tax purposes, a holder generally will
recognize gain or loss upon the redemption of the Common Stock measured by the
difference between the amount of cash or the fair market value of property
received and the holder's tax basis in the redeemed Common Stock. To the extent
the cash or property received are attributable to accrued interest, the holder
may recognize ordinary income rather than capital gain. Characterization of the
Common Stock as debt would also cause a variety of other tax implications, some
of which may be detrimental to either the holders, the Company, or both
(including, for example, original issue discount treatment to the Investors).
Potential Investors should consult their tax advisors as to the various
ramifications of debt characterization for federal income tax purposes.

Other Disposition of the Common Stock

         Upon the sale or exchange of shares of Common Stock, to or with a
person other than the Company, a holder will recognize capital gain or loss
equal to the difference between the amount realized on such sale or exchange and
the holder's adjusted basis in such stock. Any capital gain or loss recognized
will generally be treated as a long-term capital gain or loss if the holder held
such stock for more than one year. For this purpose, the period for which the
Common Stock was held would be included in the holding period of the Common
Stock received upon a conversion.

State, Local and Foreign Taxes

         In addition to the federal income tax consequences described above,
prospective investors should consider potential state, local and foreign tax
consequences of an investment in the Common Stock.

                                       23

<PAGE>

ERISA Considerations for Tax-Exempt Investors/Shareholders

General Fiduciary Requirements

         Title I of ERISA includes provisions governing the responsibility of
fiduciaries to their Qualified Plans. Qualified Plans must be administered
according to these rules. Keogh plans that cover only partners of a partnership
or self-employed owners of a business are not subject to the fiduciary duty
rules of ERISA, but are subject to the prohibited transaction rules of the Code.

         Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a Qualified Plan is
considered to be a fiduciary of such Qualified Plan (subject to certain
exceptions not here relevant).

         ERISA Section 404(a)(1) requires a fiduciary of a Qualified Plan to
"discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries and (A) for the exclusive purpose of: (i)
providing benefits to participants and their beneficiaries, and (ii) defraying
reasonable expenses of administering the plan; (B) with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims; (C) by
diversifying the investments of a plan so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so; and
(D) in accordance with the documents and instruments governing the plan."
Fiduciaries who breach the duties that ERISA imposes may suffer a wide variety
of legal and equitable remedies, including (i) the requirement to restore
qualified plan losses and to pay over any fiduciary's profits to the qualified
plan; (ii) removal as fiduciary of the qualified plan; and (iii) liability for
excise taxes that Section 4975 of the Code imposes


ITEM 7.           FINANCIAL STATEMENTS

SEE "FINANCIAL STATEMENTS" BEGINNING ON PAGE F-1.


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

         None.

ITEM 8A.          CONTROLS AND PROCEDURES

         The Company's Chief Executive Officer and Chief Financial Officer
("Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for the Company. The Certifying Officers have
concluded (based on their evaluation of these controls and procedures as of a
date within 90 days of the filing of this report) that the design and operation
of the Company's disclosure controls and procedures (as defined in Rule 13a-
14(c) under the Securities Exchange Act of 1934) adequately meet intended
objectives and are effective. As of this date, given the small size of the
Company and its limited operations and over the last year, the Company utilized
a preliminary and basic standard of internal controls and procedures related to
its financial reporting for the period covered by this report. Management is

                                       24

<PAGE>

in the process of developing and adopting new and more stringent controls and
procedures and anticipates such controls and procedures to be in place prior to
the end of fiscal year 2004.

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in Company
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in Company reports filed under the Exchange
Act are accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.

         No significant changes were made in the Company's internal controls or
in other factors that could significantly affect those controls subsequent to
the date of the evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

ITEM 9:           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

         The directors and executive officers currently serving the Company are
as follows:

Name                        Age        Positions Held and Tenure
----                        ---        -------------------------

Dr. Eugene Stricker          66        President and a Director since inception

Mark Schindler               82        Vice President, Secretary and a Director
                                       since inception

Daniel A. France             55        Treasurer a Director since February 1999

Frank J. Hariton             55        Assistant Secretary since December 1999

         The directors named above will serve until the first annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
the pleasure of the board of directors, absent any employment agreement, of
which none currently exists or is contemplated. There is no arrangement or
understanding between the sole directors and officers of the Company and any
other person pursuant to which any director or officer was or is to be selected
as a director or officer.

         The directors and officers of the Company will devote their time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which they will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.

Biographical Information

         Dr. Eugene Stricker was elected a Director upon the organization of the
Company and has served the Company as President and Director since inception. He
had been a partner with Mr. Schindler in Madison Venture Capital II, Inc., a

                                       25

<PAGE>

venture capital firm, for more than five years, prior to such firm's dissolution
in late 2002. Since 2003, he has been the principal of Fifth Avenue Venture
Capital Partners, Inc., a venture capital firm. From 1968 until 1991, he held
various administrative positions within the New York State Department of Health,
including serving as special assistant to the Commissioner. Dr. Stricker is a
graduate of the University of Maryland, received his Doctor of Dentistry from
Howard University, Washington, D.C., and received a Masters in Public Health
from the University of Michigan at Ann Arbor. He was a Director of Servtex
International, Inc. from September 1991 until its merger with Hymedix, Inc.
(HYMX:OTCBB) in February 1994. From December 1991 to November 1994 he was a
Director of Natural Child Care, Inc. which merged into Winners All
International, Inc. in September 1992 and which later became Erecotes
Industries, Inc. (UREC:OTCBB). In July 1993, he became a Director of Light
Savers USA, Inc. and served until February 1995 when that company was merged
into Hospitality World Wide, Inc. (HWS:AMEX) which later became Hotel Works.com.
Dr. Stricker was a Director and Secretary of Kushi Macrobiotics Corp ("KMC")
from May 1994 to October 1996 when it merged with American Phoenix Group, Inc.
("APGI") which later merged with Tal Wireless Networks, Inc. (TALW:OTCBB) .

         Mark Schindler has been a Director, Vice President and Secretary of the
Company since inception. He was a partner with Dr. Stricker in Madison Venture
Capital II, Inc., a venture capital firm, for more than five years prior to such
firm's dissolution late in 2002. He was the owner, until 1984, of his own
business engaged in electronics distribution. Mr. Schindler was a founder of
Astrex, Inc. and its Chairman from September 1960 to August 1984. While he
remains a Director of that entity, he devotes no time to it other than attending
Board Meetings. He was a Director of Servtex International, Inc. from September
1991 until its merger with Hymedix, Inc. (HYMX: OTCBB) in February 1994. From
December 1991 to November 1994 he was a Director of Natural Child Care, Inc.
which merged into Winners All International, Inc. in September 1992 and which
later became Erecotes Industries, Inc. (UREC:OTCBB). In July 1993, he became a
Director of Light Savers USA, Inc. and served until February 1995 when that
company was merged into Hospitality World Wide, Inc. (HWS:AMEX) which became
Hotel Works.com. Mr. Schindler was a Director and Treasurer of KMC from May 1994
to October 1996 when it merged with APGI which later merged with Tal Wireless
Networks, Inc. (TALW:OTCBB) .

         Daniel A. France, was a co-founder of KMC and became Vice
President/Finance and Chief Financial Officer of KMC on July 6, 1994 and
Assistant Secretary on December 15, 1994. Mr. France was the Chief Financial
Officer of Natural Child Care, Inc. from May 1992 until September 1993.
Following its merger with Winners All International, Inc. ("WAI"), he maintained
the accounting records of WAI and Light Savers USA, Inc. until December 1994
when he resigned from both to devote full time to KMC. Mr. France served as
KMC's Vice President/Finance and Chief Financial Officer from July 1994 until
shortly after KMC's merger with APGI in September 1996. Since such time Mr.
France has be self employed as a financial and business consultant. Mr. France
was elected treasurer and a director of the Company in February 1999. Mr. France
is a CPA.

         Frank J. Hariton is an attorney in private practice with offices in
White Plains, New York. He has been engaged in the private practice of law for
more than the last five years. He received a B.A. in 1971 and a J.D. in 1974
from Case Western Reserve University. He was also assistant secretary of
Vitafort International Corporation (VRFT:OTCBB), a company which was engaged in
developing, marketing and distributing snack foods and low fat and fat free
snacks from December 1989 to June 2002.

                                       26

<PAGE>

Indemnification of Officers and Directors

         Article Seventh of the Company's Certificate of Incorporation provides
for indemnification of the Company's officers and directors to the fullest
extent permitted under the General Corporation Law of the State of Delaware
("DGCL").

                  SECTION 145 of the DGCL, as amended, applies to the Company
and the relevant portion of the DGCL provides as follows:

                  145.     Indemnification of Officers, Directors, Employees and
Agents; Insurance.

                           (a)      A corporation may indemnify any person who
                  was or is a party or is threatened to be made a party to any
                  threatened, pending or completed action, suit or proceeding,
                  whether civil, criminal, administrative or investigative
                  (other than an action by or in the right of the corporation)
                  by reason of the fact that he is or was a director, officer,
                  employee or agent of the corporation, or is or was serving at
                  the request of the corporation as a director, officer,
                  employee or agent of another corporation, partnership, joint
                  venture, trust or other enterprise, against expenses
                  (including attorneys' fees), judgments, fines and amounts paid
                  in settlement actually and reasonably incurred by him in
                  connection with such action, suit or proceeding if he acted in
                  good faith and in a manner he reasonably believed to be in or
                  not opposed to the best interests of the corporation, and,
                  with respect to any criminal action or proceeding, had no
                  reasonable cause to believe his conduct was unlawful. The
                  termination of any action, suit or proceeding by judgment,
                  order, settlement, conviction, or upon a plea of nolo
                  contendere or its equivalent, shall not, of itself, create a
                  presumption that the person did not act in good faith and in a
                  manner which he reasonably believed to be in or not opposed to
                  the best interests of the corporation, and, with respect to
                  any criminal action or proceeding, had reasonable cause to
                  believe that his conduct was unlawful.

                           (b)      A corporation may indemnify any person who
                  was or is a party or is threatened to be made a party to any
                  threatened, pending or completed action or suit by or in the
                  right of the corporation to procure a judgment in its favor by
                  reason of the fact that he is or was a director, officer,
                  employee or agent of the corporation, or is or was serving at
                  the request of the corporation as a director, officer,
                  employee or agent of another corporation, partnership, joint
                  venture, trust or other enterprise against expenses (including
                  attorneys' fees) actually and reasonably incurred by him in
                  connection with the defense or settlement of such action or
                  suit if he acted in good faith and in a manner he reasonably
                  believed to be in or not opposed to the best interests of the

                                       27

<PAGE>

                  corporation and except that no indemnification shall be made
                  in respect of any claim, issue or matter as to which such
                  person shall have been adjudged to be liable to the
                  corporation unless and only to the extent that the Court of
                  Chancery or the court in which such action or suit was brought
                  shall determine upon application that, despite the
                  adjudication of liability but in view of all the circumstances
                  of the case, such person is fairly and reasonably entitled to
                  indemnity for such expenses which the Court of Chancery or
                  such other court shall deem proper.

                           (c)      To the extent that a director, officer,
                  employee or agent of a corporation has been successful on the
                  merits or otherwise in defense of any action, suit or
                  proceeding referred to in subsections (a) and (b) of this
                  section, or in defense of any claim, issue or matter therein,
                  he shall be indemnified against expenses (including attorneys'
                  fees) actually and reasonably incurred by him in connection
                  therewith.

                           (d)      Any indemnification under subsections (a)
                  and (b) of this section (unless ordered by a court) shall be
                  made by the corporation only as authorized in the specific
                  case upon a determination that indemnification of the
                  director, officer, employee or agent is proper in the
                  circumstances because he has met the applicable standard of
                  conduct set forth in subsections (a) and (b) of this section.
                  Such determination shall be made (1) by the board of directors
                  by a majority vote of a quorum consisting of directors who
                  were not parties to such action, suit or proceeding, or (2) if
                  such a quorum is not obtainable, or, even if obtainable a
                  quorum of disinterested directors so directs, by independent
                  legal counsel in a written opinion, or (3) by the
                  stockholders.

                           (e)      Expenses (including attorneys' fees)
                  incurred by an officer or director in defending any civil,
                  criminal, administrative or investigative action, suit or
                  proceeding may be paid by the corporation in advance of the
                  final disposition of such action, suit or proceeding upon
                  receipt of an undertaking by or on behalf of such director or
                  officer to repay such amount if it shall ultimately be
                  determined that he is not entitled to be indemnified by the
                  corporation as authorized in this section. Such expenses
                  (including attorneys' fees) incurred by other employees and
                  agents may be so paid upon such terms and conditions, if any,
                  as the board of directors deems appropriate.

                           (f)      The indemnification and advancement of
                  expenses provided by, or granted pursuant to, the other
                  subsections of this section shall not be deemed exclusive of
                  any other rights to which those seeking indemnification or
                  advancement of expenses may be entitled under any by-law,
                  agreement, vote of stockholders or disinterested directors or

                                       28

<PAGE>

                  otherwise, both as to action in his official capacity and as
                  to action in another capacity while holding such office.

                           (g)      A corporation shall have power to purchase
                  and maintain insurance on behalf of any person who is or was a
                  director, officer, employee or agent of the corporation, or is
                  or was serving at the request of the corporation as a
                  director, officer, employee or agent of another corporation,
                  partnership, joint venture, trust or other enterprise against
                  any liability asserted against him and incurred by him in any
                  such capacity, or arising out of his status as such, whether
                  or not the corporation would have the power to indemnify him
                  against such liability under this section.

                           (h)      For purposes of this section, references to
                  "the corporation" shall include, in addition to the resulting
                  corporation, any constituent corporation (including any
                  constituent of a constituent) absorbed in a consolidation or
                  merger which, if its separate existence had continued, would
                  have had power and authority to indemnify its directors,
                  officer and employees or agents, so that any person who is or
                  was a director, officer, employee or agent of such constituent
                  corporation, or is or was serving at the request of such
                  constituent corporation as a director, officer, employee or
                  agent of another corporation, partnership, joint venture,
                  trust or other enterprise, shall stand in the same position
                  under this section with respect to the resulting or surviving
                  corporation as he would have with respect to such constituent
                  corporation if its separate existence had continued.

                           (i)      For purpose of this section, references to
                  "other enterprises" shall include employee benefit plans;
                  references to "fines" shall include any excise taxes assessed
                  on a person with respect to any employee benefit plan; and
                  references to "serving at the request of the corporation"
                  shall include any service as a director, officer, employee or
                  agent of the corporation which imposes duties on, or involves
                  services by, such director, officer, employee, or agent with
                  respect to an employee benefit plan, its participants, or
                  beneficiaries; and a person who acted in good faith and in a
                  manner he reasonably believed to be in the interest of the
                  participants and beneficiaries of an employee benefit plan
                  shall be deemed to have acted in a manner "not opposed to the
                  best interests of the corporation" as referred to in this
                  section.

                                       29

<PAGE>

                           (j)      The indemnification and advancement of
                  expenses provided by, or granted pursuant to, this section
                  shall, unless otherwise provided when authorized or ratified,
                  continue as to a person who has ceased to be a director,
                  officer, employee or agent and shall inure to the benefit of
                  the heirs, executors and administrators of such a person.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.

Conflicts of Interest

         The officers and directors of the Company will devote only a small
portion of their time to the affairs of the Company, estimated to be no more
than approximately 10 hours per month, except at times when a business
combination may be imminent. There will be occasions when the time requirements
of the Company's business conflict with the demands of their other business and
investment activities. Such conflicts may require that the Company attempt to
employ additional personnel. There is no assurance that the services of such
persons will be available or that they can be obtained upon terms favorable to
the Company. Dr. Stricker will devote most of his time to the affairs of Fifth
Avenue Venture Capital Partners, Inc., and this may result in conflicts with the
Company. In addition, in the future, one or more members of management may
become involved in the management of other "blank check" companies. Messrs.
Schindler and Stricker, or Fifth Avenue Venture Capital Partners, Inc. may
receive consulting fees for investment banking or business consulting services
which they may offer to a party to a business combination with the Company.
While, Messrs. Stricker and Schindler believe that any such fees will be
consistent with fees that they or Fifth Avenue Venture Capital Partners, Inc.
may charge to entities in similar circumstances, the presence of such fees may
impact upon the number of shares received by the Company's shareholders in the
business combination.

         There is no procedure in place which would allow the Company's
management to resolve potential conflicts in an arms-length fashion.
Accordingly, they will be required to use their discretion to resolve them in a
manner which they consider appropriate.

ITEM 10:          EXECUTIVE COMPENSATION.

         No officer or director has received any remuneration from the Company
during the year ended December 31, 2003. The Company's officers and directors
purchased the Company's stock in the December 1999 Private Placement. See
"Certain Relationships and Related Transactions." The Company has no stock
option, retirement, pension, or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may recommend
adoption of one or more such programs in the future.

         It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or more members of the Company's management for the
purposes of providing services to the surviving entity, or otherwise provide

                                       30

<PAGE>

other compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.

         No member of management of the Company will receive any finders fee,
either directly or indirectly, as a result of their respective efforts to
implement the Company's business plan outlined herein. Also, there are no plans,
proposals, arrangements or understandings with respect to the sale or issuance
of additional securities by the Company prior to the location of an acquisition
or merger candidate. Please also see "Item I, Description of Business-General"
for information regarding the seeking out and selection of a target company,
addressing matters such as the manner of solicitation of potential investors,
the approximate number of persons who will be contacted or solicited, their
relationships to the Company's management, etc.

ITEM 11:          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT

         The following table sets forth as of December 31, 2003, information
with respect to the beneficial ownership of the Company's outstanding Common
Stock by (i) each director and executive officer of the Company, (ii) all
directors and executive officers of the Company as a group, and (iii) each
shareholder who was known by the Company to be the beneficial owner of more than
5% of the Company's outstanding Common Stock. Except as otherwise indicated, the
persons or entities listed below have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.


                                               NUMBER                PERCENTAGE
         NAME                                  OF SHARES             OF CLASS
         ----                                  ---------             --------

         Dr. Eugene Stricker                   1,052,127 (1)             9.9%

         Mark Schindler                          827,695 (2)             7.8%

         Daniel A. France                        253,113                 2.4%

         Frank J. Hariton                        162,000                 1.5%

         All officers and
         directors as a group (4 persons)      2,294,935 (1) (2)        21.7%

(1)      Does not include 70,044 shares owned by the Eugene Stricker Irrevocable
         Trust. Dr. Stricker disclaims beneficial ownership of such shares.

                                       31

<PAGE>

(2)      Does not includes: (i) 140,088 shares owned by the Mark Schindler
         Irrevocable Trust; and (ii) 140,088 shares owned by Mr. Schindler's
         fiance, Ms. Barbara Serota. Mr. Schindler disclaims beneficial
         ownership of these shares. Includes 565,000 shares owned by The SBS
         Limited Partnership, a limited partnership where Mr. Schindler is the
         general partner.

         Management has no plans to issue any additional securities to
management, promoters or their affiliates or associates and will do so only if
such issuance is in the best interests of shareholders of the Company and
complies with all applicable federal and state securities rules and regulations.

         Although the Company has a very large amount of authorized but unissued
common and preferred stock that may be issued without further shareholder
approval or notice, it is the intention of the Company to avoid initiating
certain transactions with prospective acquisition or merger candidates through
the issuance of preferred stock.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.

         The Company was formed in August, 1996. Each of the then shareholders
of KMC received three shares of the Company's common stock for each share of KMC
that they owned in connection with the spin off of the Company by KMC. See. Item
1. Description of Business - General. Included in such shareholders were the
then officers and directors of KMC.

         During December 1999, the Company sold 1,985,000 shares of its common
stock to eleven investors in a private placement for $1,985 or $.001 per share.
Among the Purchasers in such private placement were: Dr. Eugene Stricker, an
officer and director of the Company, who purchased 580,000 shares for $580; The
SBS Limited Partnership, a New York limited partnership of which Mark Schindler,
an officer and director of the Company is the general partner, purchased 565,000
shares for $565; Daniel A. France, on officer and director of the Company,
purchased 78,000 shares for $78; and Frank J. Hariton, an officer of the
Company, purchased 162,000 shares for $162. The purchase was at par value and
therefor below book value.

                                     PART IV

ITEM 13:          EXHIBITS LIST AND REPORTS ON FORM 8-K.

(a)      Exhibits:

3(a)     Articles of Incorporation*

3(b)     Bylaws*

4(b)     Specimen Stock Certificate*

10.1     Spin - Off Agreement, dated September 19, 1996, between the Registrant
         and Kushi Macrobiotics Corp.*

                                       32

<PAGE>

10.2.    Amended and Restated Agreement and Plan of Merger by and among Kushi
         Macrobiotics Corp. and American Phoenix Group, Inc. and the Registrant,
         dated August
         12, 1996*

21       Subsidiaries of the Registrant - None

99.1     Other Exhibits. - Private Securities Litigation Reform Act of 1995 Safe
         Harbor Compliance Statement for Forward Looking Statements*

99.2     Certification of Principal Executive Officer

99.3     Certification of Principal Accounting Officer

*        Incorporated by reference to the like numbered exhibit to the Company's
Registration Statement on Form 10-SB.

(b)      Reports on Form 8-K.

         There were no reports on Form 8-K filed during the quarter ended
December 31, 2003.

                                       33

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereby duly authorized.

KUSHI NATURAL FOODS CORP.


By: /s/ DR. EUGENE STRICKER
    --------------------------------------
    Dr. Eugene Stricker, President

NEW YORK, NEW YORK
DATE:  March 30, 2004


Pursuant to the requirements of the Exchange Act, this report has been duly
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

Name                              Title(s)                        Date
----                              --------                        ----


/s/ DR.EUGENE STRICKER            Director and President          March 30, 2004
---------------------------       (Principal Executive
Dr. Eugene Stricker               and Finanacial Officer)


/s/ MARK SCHINDLER                Director                        March 30, 2004
---------------------------
Mark Schindler


/s/ DANIEL A. FRANCE              Director and Treasurer          March 30, 2004
---------------------------       (Principal Accounting Officer)
Daniel A. France


/s/ FRANK J. HARITON              Director                        March 30, 2004
---------------------------
Frank J. Hariton

                                       34

<PAGE>

REPORT OF INDEPENDENT AUDITORS
------------------------------


The Board of Directors and Stockholders
Kushi Natural Foods Corp.

We have audited the accompanying balance sheet of Kushi Natural Foods Corp. (a
development stage enterprise) as of December 31, 2003, and the related
statements of operations, changes in stockholders' equity, and cash flows for
each of the two years in the period ended December 31, 2003, and for the period
August 1, 1996 (inception) through December 31, 2003. 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 audits.

We conducted our audits 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 audits provide 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 Kushi Natural Foods Corp. at
December 31, 2003, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 2003, and for the period
August 1, 1996 (inception) through December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.



                                     WOLINETZ, LAFAZAN & COMPANY, P.C.



Rockville Centre, New York
January 30, 2004

                                       F-1

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                                  BALANCE SHEET
                                  -------------
                                DECEMBER 31, 2003
                                -----------------

<TABLE>
<CAPTION>
ASSETS
------
<S>                                                       <C>            <C>
Current Assets:

  Cash and Cash Equivalents                                              $    22,945
                                                                         -----------

Total Assets                                                             $    22,945
                                                                         ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current Liabilities:

  Accounts Payable                                                       $    17,803

Commitments and Contingencies

Stockholders' Equity:

  Preferred Stock, $.0001 par value; 5,000,000 shares
    Authorized, none issued and outstanding               $        --
  Common Stock, $.0001 par value; 35,000,000 shares
    Authorized, 10,588,718 shares issued and outstanding        1,059
  Additional Paid-In Capital                                  213,494
  Deficit Accumulated in the Development Stage               (209,411)
                                                          -----------

         Total Stockholders' Equity                                            5,142
                                                                         -----------

Total Liabilities and Stockholders' Equity                               $    22,945
                                                                         ===========
</TABLE>

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

                                       F-2

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                            STATEMENTS OF OPERATIONS
                            ------------------------
<TABLE>
<CAPTION>
                                                                                       Cumulative
                                                                                          From
                                                                                      August 1, 1996
                                                               Year Ended              (Inception)
                                                               December 31,           To December 31,
                                                       ----------------------------    ------------
                                                           2003            2002            2003
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues                                               $         --    $         --    $         --

Costs and Expenses:
  Selling, General and Administrative Expenses                6,677           6,958          71,075
                                                       ------------    ------------    ------------

Loss from Operations                                         (6,677)         (6,958)        (71,075)

Other Income:
  Interest Income                                                --              53           2,949
                                                       ------------    ------------    ------------

Loss from Continuing Operations                              (6,677)         (6,905)        (68,126)
                                                       ------------    ------------    ------------

Discontinued Operations:

  Loss from Operations of Discontinued Joint Venture             --              --         (99,143)
  Loss on Write-Off of Investment in Discontinued
    Joint Venture                                                --              --         (42,142)
                                                       ------------    ------------    ------------
                                                                 --              --        (141,285)
                                                       ------------    ------------    ------------

Net Loss                                               $     (6,667)   $     (6,905)   $   (209,411)
                                                       ============    ============    ============

Earnings Per Common Share - Basic

Weighted Average Common Shares Outstanding               10,588,718      10,588,718
                                                       ============    ============

Net Loss Per Common Share - Basic                      $       (.00)   $       (.00)
                                                       ============    ============
</TABLE>

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

                                       F-3

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  --------------------------------------------
         FOR THE PERIOD AUGUST 1, 1996 (INCEPTION) TO DECEMBER 31, 2003
         --------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                 Deficit
                                                                               Accumulated
                                                                 Additional      In The
                                   Preferred        Common        Paid-In      Development
                                     Stock          Stock         Capital         Stage           Total
                                  ------------   ------------   ------------   ------------    ------------
<S>                               <C>            <C>            <C>            <C>             <C>
Balance at August 1, 1996         $         --   $         --   $         --   $         --    $         --

Issuance of 8,603,718 Shares of
  Common Stock as Consideration
  for the Net Assets of Kushi
  Macrobiotics Corp.                        --            860        129,488             --         130,348

Contributed Capital by Officers
  Pursuant to Debt Cancellation             --             --         78,250             --          78,250

Net Loss for the Period Ended
  December 31, 1996                         --             --             --        (41,190)        (41,190)
                                  ------------   ------------   ------------   ------------    ------------

Balance at December 31, 1996                --            860        207,738        (41,190)        167,408

Net Loss for the Year Ended
  December 31, 1997                         --             --             --       (112,116)       (112,116)
                                  ------------   ------------   ------------   ------------    ------------

Balance at December 31, 1997                --            860        207,738       (153,306)         55,292

Net Loss for the Year Ended
  December 31, 1998                         --             --             --        (30,000)        (30,000)
                                  ------------   ------------   ------------   ------------    ------------

Balance at December 31, 1998                --            860        207,738       (183,306)         25,292

Sale of 1,985,000 Shares of
  Common Stock                              --            199          5,756             --           5,955

Net Loss for the Year Ended
  December 31, 1999                         --             --             --         (4,248)         (4,248)
                                  ------------   ------------   ------------   ------------    ------------

Balance at December 31, 1999                --          1,059        213,494       (187,554)         26,999
</TABLE>

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

                                       F-4

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  --------------------------------------------
         FOR THE PERIOD AUGUST 1, 1996 (INCEPTION) TO DECEMBER 31, 2003
         --------------------------------------------------------------
                                   (Continued)
<TABLE>
<CAPTION>
                                                                              Deficit
                                                                            Accumulated
                                                              Additional      In The
                                Preferred        Common        Paid-In      Development
                                  Stock          Stock         Capital         Stage           Total
                               ------------   ------------   ------------   ------------    ------------
<S>                            <C>            <C>            <C>            <C>             <C>
Balance at December 31, 1999   $         --   $      1,059   $    213,494   $   (187,554)   $     26,999

Net Loss for the Year Ended
  December 31, 2000                      --             --             --         (3,404)         (3,404)
                               ------------   ------------   ------------   ------------    ------------

Balance at December 31, 2000             --          1,059        213,494       (190,958)         23,595

Net Loss for the Year Ended
  December 31, 2001                      --             --             --         (4,871)         (4,871)
                               ------------   ------------   ------------   ------------    ------------

Balance at December 31, 2001             --          1,059        213,494       (195,829)         18,724

Net Loss for the Year Ended
  December 31, 2002                      --             --             --         (6,905)         (6,905)
                               ------------   ------------   ------------   ------------    ------------

Balance at December 31, 2002             --          1,059        213,494       (202,734)         11,819

Net Loss for the Year Ended
  December 31, 2003                      --             --             --         (6,677)         (6,677)
                               ------------   ------------   ------------   ------------    ------------

Balance at December 31, 2003   $         --   $      1,059   $    213,494   $   (209,411)   $      5,142
                               ============   ============   ============   ============    ============
</TABLE>

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

                                       F-5

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                            STATEMENTS OF CASH FLOWS
                            ------------------------
<TABLE>
<CAPTION>
                                                                                              Cumulative
                                                                                                 From
                                                                     Year Ended             August 1, 1996
                                                                     December 31,            (Inception)
                                                             ----------------------------   To December 31,
                                                                 2003           2002             2003
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
Cash Flows from Operating Activities:
  Loss from Continuing Operations                            $     (6,677)   $     (6,905)   $   (209,411)
  Adjustments to Reconcile Loss from Continuing
    Operations to Net Cash (Used) by Operating Activities:
  Stock Compensation                                                   --              --           3,970
  Loss from Operations of Discontinued Joint Venture                   --              --          99,143
  Loss on Write-Off of Investment in Discontinued Joint
     Venture                                                           --              --          42,142
  Changes in Operating Assets and Liabilities:

     Increase (Decrease) in Accounts Payable                         (372)            675          17,803
                                                             ------------    ------------    ------------

Net Cash (Used) by Operating Activities                            (7,049)         (6,230)        (46,353)
                                                             ------------    ------------    ------------

Cash Flows from Investing Activities:
  Investment in Joint Venture                                          --              --         (47,854)
  Cash Acquired Pursuant to Spin-Off                                   --              --         115,167
                                                             ------------    ------------    ------------

Net Cash Provided by Investing Activities                              --              --          67,313
                                                             ------------    ------------    ------------

Cash Flows from Financing Activities:
  Proceeds of Stock Subscriptions Receivable                           --              --           1,985
                                                             ------------    ------------    ------------

Net Cash Provided by Financing Activities                              --              --           1,985
                                                             ------------    ------------    ------------

Increase (Decrease) in Cash and Cash Equivalents                   (7,049)         (6,230)         22,945

Cash and Cash Equivalents - Beginning                              29,994          36,224              --
                                                             ------------    ------------    ------------

Cash and Cash Equivalents - Ending                           $     22,945    $     29,994    $     22,945
                                                             ============    ============    ============

Supplemental Disclosure of Cash Information:

  Cash Paid for Income Taxes                                 $         --    $         --    $         --
                                                             ============    ============    ============

  Cash Paid for Interest                                     $         --    $         --    $         --
                                                             ============    ============    ============

Non-Cash Investing and Financing Activities:
  Contributed Capital by Officers Pursuant
    to Debt Cancellation                                     $         --    $         --    $     69,250
                                                             ============    ============    ============
  Issuance of Common Stock as Consideration for
    the Net Assets of Kushi Macrobiotics Corp.
  Increase in Stock Subscriptions Receivable Upon Sale of
    Common Stock                                             $         --    $         --    $      1,985
                                                             ============    ============    ============
</TABLE>

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

                                       F-6

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                DECEMBER 31, 2003
                                -----------------


NOTE 1 -          Organization and Basis of Presentation
                  --------------------------------------

                  Kushi Natural Foods Corp. (the "Company") was incorporated on
August 1, 1996 under the laws of the State of Delaware as a wholly-owned
subsidiary of Kushi Macrobiotics Corp., a Delaware Corporation ("KMC").

                  On September 19, 1996 the Company was assigned certain assets
and assumed certain liabilities of KMC. The Company was thereafter spun-off to
the shareholders of KMC immediately prior to KMC's merger with another
corporation.

                  The assets and liabilities transferred to the Company by KMC
were for the purpose of the Company to develop, produce and/or market a full
line of high quality macrobiotic natural foods. The Company has not generated
any revenues from the natural foods business and has incurred losses to date.
Consequently, the Company has abandoned the natural foods business and is
currently seeking to obtain capital in order to take advantage of business
opportunities which may have profit potential. Accordingly, the Company's
financial statements are presented as statements of a development stage
enterprise.


NOTE 2 -          Summary of Significant Accounting Policies
                  ------------------------------------------

                  Use of Estimates
                  ----------------

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

                  Cash and Cash Equivalents
                  -------------------------

                  The Company considers those short-term, highly liquid
investments with original maturities of three months or less as cash
equivalents.

                  Joint Venture
                  -------------

                  The Company accounted for its investment in the Joint Venture
under the equity method.

                  Income Taxes
                  ------------

                  The Company records deferred income taxes using the liability
method. Under the liability method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the financial statement and income tax bases of the Company's assets and
liabilities. An allowance is recorded, based upon currently available
information, when it is more likely than not that any or all of the deferred tax
asset will not be realized. The provision for income taxes includes taxes
currently payable, if any, plus the net change during the year in deferred tax
assets and liabilities recorded by the Company.

                                       F-7

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                DECEMBER 31, 2003
                                -----------------


NOTE 2 -          Summary of Significant Accounting Policies (Continued)
                  ------------------------------------------

                  Net Loss Per Common Share
                  -------------------------

                  Net loss per common share is based upon the weighted average
number of common shares outstanding during the periods reported.

                  Fair Value of Financial Instruments
                  -----------------------------------

                  The carrying value of the Company's financial instruments,
including cash and cash equivalents and accounts payable approximated fair value
because of the short maturity of these instruments.


NOTE 3 -          Joint Venture
                  -------------

                  In October 1996 the Company and EnerVite Corp ("EVC") agreed
to enter into a joint venture in which the Company and EVC would each own 50% of
a new corporation called EVC/Kushi, Inc. ("EVCK").

                  The Company invested approximately $141,000 for a 50%
ownership interest in EVCK. In September 1997 EVCK discontinued operations.
During the period October 1996 to September 1997 EVCK incurred a net loss of
approximately $198,000. Upon discontinuance of operations of EVCK, the Company
wrote off the remaining balance of its investment in EVCK.


NOTE 4 -          Stockholders' Equity
                  --------------------

                  Spin-Off Agreement
                  ------------------

                  On September 19, 1996 the Company was assigned certain assets
and assumed certain liabilities of KMC. In connection therewith the Company
issued 8,603,718 shares of common stock as consideration for net assets in the
amount of $130,348. The Company was thereafter spun-off to the shareholders of
KMC immediately prior to KMC's merger with another corporation.

                  Conversion of Debt to Equity
                  ----------------------------

                  In 1996 four officers of the Company converted indebtedness of
the Company to them in the amount of $78,250 into additional paid-in capital.

                                       F-8

<PAGE>

                            KUSHI NATURAL FOODS CORP.
                            -------------------------
                        (A Development Stage Enterprise)
                        --------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                DECEMBER 31, 2003
                                -----------------


NOTE 4 -          Stockholders' Equity (Continued)
                  --------------------

                  Sale of Common Stock
                  --------------------

                  During December 1999 the Company sold 1,985,000 shares of its
common stock to eleven investors in a private placement for $1,985, or $.001 per
share. Although the sales price represented management's best estimate of fair
value at date of sale the Company has taken a charge to operations in the amount
of $3,970, representing the difference between the sales price and book value
per share. Among the purchasers in such private placement were four directors
and affiliates of the Company, of whom purchased 1,385,000 shares in the
aggregate.

                  Preferred Stock
                  ---------------

                  The Company's Board of Directors may, without further action
by the Company's stockholders, from time to time, direct the issuance of any
authorized but unissued or unreserved shares of Preferred Stock in series and
may, at the time of issuance, determine the rights, preferences and limitations
of each series. The holders of Preferred Stock may be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of the Common Stock. The
Board of Directors could issue Preferred Stock with voting and other rights that
could adversely affect the voting power of the holders of Common Stock and could
have certain anti-takeover effects.


NOTE 5 -          Income Taxes
                  ------------

                  As of December 31, 2003 the Company had a net operating loss
carryforward ("NOLC") for federal income tax purposes of approximately $206,000.
This NOLC is available to offset future federal taxable income, if any, through
2021. Limitations on the utilization of the Company's net operating tax loss
carryforward could result in the event of certain changes in the Company's
ownership.

                  The Company had deferred tax assets of approximately $70,000
at December 31, 2003, resulting primarily from net operating loss carryforwards.
The deferred tax assets have been fully offset by a valuation allowance
resulting from the uncertainty surrounding the future realization of the net
operating loss carryforwards.


NOTE 6 -          Commitments and Contingencies
                  -----------------------------

                  Legal
                  -----

                  The Company may be subject to legal proceedings and claims
which may arise in the ordinary course of its business. Currently, the Company
is not a party to any known legal proceedings.

                                       F-9