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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

|                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------
|[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2002
|                                                                                                                                   
|or                                                                                                                                 
|                                                                                                                                   
|[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT                                                               
|For the transition period from   to                                                                                                

Commission file number 0-29258

AQUAPRO CORPORATION

---

(Exact name of Registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Tennessee                                                      |  | 62-1598919                             
|(State or other jurisdiction
of incorporation or organization) |  | (I.R.S. Employer
Identification number)

1100 Highway 3, Sunflower, Mississippi 38778

---

(Address and Zip Code of Principal Executive Offices)


Registrants telephone number, including area code: (662) 569-3331

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [  ]

As of March 31, 2002, Registrant had
outstanding 4,927,273 shares of common
stock, its only class of common equity outstanding.

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





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TABLE OF CONTENTS



|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART 1. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | Condensed Consolidated Balance Sheets               
|                              |                                                                                               | Condensed Consolidated Statements of Operations     
|                              |                                                                                               | Condensed Consolidated Statements of Operations     
|                              |                                                                                               | Condensed Consolidated Statements of Cash Flows     
|                              |                                                                                               | Notes to Condensed Consolidated Financial Statements
|                              | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                    
|                              | Item 2. Changes in Securities                                                                
|                              | Item 3. Defaults Upon Senior Securities                                                      
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                              | Item 5. Other Information                                                                    
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|Consulting Agreement         



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INDEX

|        |  |         |  |                                                                                                                         |  |         
|------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | --------
|        |  |         |  |                                                                                                                         |  | Page No.
|        |  |         |  |                                                                                                                         |  |         
|PART 1. |  |         |  | FINANCIAL INFORMATION                                                                                                   |  |         
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 1. |  | FINANCIAL STATEMENTS                                                                                                    |  |         
|        |  |         |  |                                                                                                                         |  |         
|        |  |         |  | Condensed Consolidated Balance Sheets at
March 31, 2002 (unaudited) and June 30, 2001                                   |  | 3       
|        |  |         |  |                                                                                                                         |  |         
|        |  |         |  | Condensed Consolidated Statements of Operations for the
Three and Nine Months ended March 31, 2002 and 2001
(unaudited) |  | 5       
|        |  |         |  |                                                                                                                         |  |         
|        |  |         |  | Condensed Consolidated Statements of Cash Flows for the
Nine Months ended March 31, 2002 and 2001 (unaudited)           |  | 7       
|        |  |         |  |                                                                                                                         |  |         
|        |  |         |  | Notes to Condensed Consolidated Financial Statements
(unaudited)                                                        |  | 8       
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations                                   |  | 8       
|        |  |         |  |                                                                                                                         |  |         
|PART II |  |         |  | OTHER INFORMATION                                                                                                       |  |         
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 1. |  | Legal Proceedings                                                                                                       |  | 12      
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 2. |  | Changes in Securities                                                                                                   |  | 12      
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 3. |  | Defaults Upon Senior Securities                                                                                         |  | 12      
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                     |  | 12      
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 5. |  | Other Information                                                                                                       |  | 12      
|        |  |         |  |                                                                                                                         |  |         
|        |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                                        |  | 12      





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##### Table of Contents






PART 1. FINANCIAL INFORMATION




Item 1. Financial Statements




AquaPro Corporation
Condensed Consolidated Balance Sheets

|                                       |                           |   |             |           |          |   |            |           | 
|-------------------------------------- | ------------------------- | - | ----------- | --------- | -------- | - | ---------- | --------- | 
|                                       |                           |   | March 31,   |           | June 30,
|                                       |                           |   | 2002        |           | 2001    
|                                       |                           |   | (Unaudited) |           | (Note 1)
|                                       |                           |   |             |           |         
|Assets                                 |                           |   |             |           |          |   |            |          
|Current assets:                        |                           |   |             |           |          |   |            |          
|                                       | Cash and cash equivalents |   | $           | 52,195    |          |   | $          | 810       | 
|                                       | Trade accounts receivable |   |             | 32,177    |          |   |            | 85,625    | 
|                                       | Other receivables         |   |             | 0         |          |   |            | 91,418    | 
|                                       | Live fish inventories     |   |             | 4,761,514 |          |   |            | 6,872,915 | 
|                                       | Prepaid expenses          |   |             | 79,009    |          |   |            | 60,217    | 
|                                       |                           |   |             |           |          |   |            |          
|Total current assets                   |                           |   | 4,924,895   |           |          |   | 7,110,985  |          
|Property, buildings and equipment, net |                           |   | 6,433,172   |           |          |   | 7,025,662  |          
|Investments in cooperatives            |                           |   | 169,240     |           |          |   | 169,240    |          
|Other assets                           |                           |   | 135,744     |           |          |   | 178,272    |          
|                                       |                           |   |             |           |          |   |            |          
|Total assets                           |                           | $ | 11,663,051  |           |          | $ | 14,484,159 |          
|                                       |                           |   |             |           |          |   |            |          





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|                                           |                                                                                                                                                      |   |             |             |          |   |            |             |  
|------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | ----------- | -------- | - | ---------- | ----------- | -
|                                           |                                                                                                                                                      |   | March 31,   |             | June 30,
|                                           |                                                                                                                                                      |   | 2002        |             | 2001    
|                                           |                                                                                                                                                      |   | (Unaudited) |             | (Note 1)
|                                           |                                                                                                                                                      |   |             |             |         
|Liabilities and stockholders equity       |                                                                                                                                                      |   |             |             |          |   |            |            
|Current liabilities:                       |                                                                                                                                                      |   |             |             |          |   |            |            
|                                           | Notes payable                                                                                                                                        |   | $           | 2,266,559   |          |   | $          | 2,827,994   |  
|                                           | Accounts payable                                                                                                                                     |   |             | 1,532,270   |          |   |            | 740,503     |  
|                                           | Accrued expenses                                                                                                                                     |   |             | 481,731     |          |   |            | 159,240     |  
|                                           | Current maturities of long-term debt                                                                                                                 |   |             | 598,955     |          |   |            | 1,210,247   |  
|                                           |                                                                                                                                                      |   |             |             |          |   |            |            
|Total current liabilities                  |                                                                                                                                                      |   | 4,879,515   |             |          |   | 4,937,984  |            
|Long-term debt, less current maturities    |                                                                                                                                                      |   | 4,727,337   |             |          |   | 4,811,027  |            
|Stockholders equity:                      |                                                                                                                                                      |   |             |             |          |   |            |            
|                                           | Common stock, no par value -
authorized 100,000,000 shares, issued
and outstanding 4,927,273 at March 31, 2002
and 4,923,273 shares at June 30, 2001 |   |             | 15,389,659  |          |   |            | 15,392,064  |  
|                                           | Unearned compensation                                                                                                                                |   |             | (1,404      | )        |   |            | (7,183      | )
|                                           | Retained earnings (deficit)                                                                                                                          |   |             | (13,332,056 | )        |   |            | (10,649,733 | )
|                                           |                                                                                                                                                      |   |             |             |          |   |            |            
|Total stockholders equity                 |                                                                                                                                                      |   | 2,056,199   |             |          |   | 4,735,148  |            
|                                           |                                                                                                                                                      |   |             |             |          |   |            |            
|Total liabilities and stockholders equity |                                                                                                                                                      | $ | 11,663,051  |             |          | $ | 14,484,159 |            
|                                           |                                                                                                                                                      |   |             |             |          |   |            |            

See accompanying notes to unaudited condensed consolidated financial statements.





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##### Table of Contents






AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)

|                                                             |                  |   |                    |          |      |   |           |          |  
|------------------------------------------------------------ | ---------------- | - | ------------------ | -------- | ---- | - | --------- | -------- | -
|                                                             |                  |   | Three Months ended
|                                                             |                  |   | March 31          
|                                                             |                  |   |                   
|                                                             |                  |   | 2002               |          | 2001
|                                                             |                  |   |                    |          |     
|Net sales                                                    |                  | $ | 1,310,505          |          |      | $ | 837,481   |         
|Cost of products sold                                        |                  |   | 1,996,992          |          |      |   | 831,018   |         
|                                                             |                  |   |                    |          |      |   |           |         
|Gross profit                                                 |                  |   | (686,487           | )        |      |   | 6,463     |         
|Selling, general and administrative                          |                  |   | 400,538            |          |      |   | 285,531   |         
|                                                             |                  |   |                    |          |      |   |           |         
|Operating loss                                               |                  |   | (1,087,025         | )        |      |   | (279,068  | )       
|Other income (expense):                                      |                  |   |                    |          |      |   |           |         
|                                                             | Interest expense |   |                    | (191,696 | )    |   |           | (181,195 | )
|                                                             | Other, net       |   |                    | 2,782    |      |   |           | 42,313   |  
|                                                             |                  |   |                    |          |      |   |           |         
|                                                             |                  |   | (188,914           | )        |      |   | (138,882  | )       
|                                                             |                  |   |                    |          |      |   |           |         
|Net loss                                                     |                  | $ | (1,275,939         | )        |      | $ | (417,950  | )       
|                                                             |                  |   |                    |          |      |   |           |         
|Basic and diluted net loss per share                         |                  | $ | (0.26              | )        |      | $ | (0.08     | )       
|                                                             |                  |   |                    |          |      |   |           |         
|Basic and diluted weighted average
common shares outstanding |                  |   | 4,927,273          |          |      |   | 4,919,273 |         
|                                                             |                  |   |                    |          |      |   |           |         

See accompanying notes to unaudited condensed consolidated financial statements.





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##### Table of Contents






AquaPro Corporation
Condensed Consolidated Statements of Operations
(Unaudited)

|                                                             |                  |   |                   |          |      |   |           |          |  
|------------------------------------------------------------ | ---------------- | - | ----------------- | -------- | ---- | - | --------- | -------- | -
|                                                             |                  |   | Nine Months ended
|                                                             |                  |   | March 31         
|                                                             |                  |   |                  
|                                                             |                  |   | 2002              |          | 2001
|                                                             |                  |   |                   |          |     
|Net sales                                                    |                  | $ | 3,518,645         |          |      | $ | 4,383,763 |         
|Cost of products sold                                        |                  |   | 4,671,123         |          |      |   | 3,866,598 |         
|                                                             |                  |   |                   |          |      |   |           |         
|Gross profit                                                 |                  |   | (1,152,478        | )        |      |   | 517,165   |         
|Selling, general and administrative                          |                  |   | 1,013,139         |          |      |   | 1,117,841 |         
|                                                             |                  |   |                   |          |      |   |           |         
|Operating income (loss)                                      |                  |   | (2,165,617        | )        |      |   | (600,676  | )       
|Other income (expense):                                      |                  |   |                   |          |      |   |           |         
|                                                             | Interest expense |   |                   | (620,706 | )    |   |           | (582,921 | )
|Other, net                                                   |                  |   | 104,000           |          |      |   | 221,287   |         
|                                                             |                  |   |                   |          |      |   |           |         
|                                                             |                  |   | (516,706          | )        |      |   | (361,634  | )       
|                                                             |                  |   |                   |          |      |   |           |         
|Net loss                                                     |                  | $ | (2,682,323        | )        |      | $ | (962,310  | )       
|                                                             |                  |   |                   |          |      |   |           |         
|Basic and diluted net loss per share                         |                  | $ | (0.54             | )        |      | $ | (0.20     | )       
|                                                             |                  |   |                   |          |      |   |           |         
|Basic and diluted weighted average
common shares outstanding |                  |   | 4,927,273         |          |      |   | 4,919,273 |         
|                                                             |                  |   |                   |          |      |   |           |         

See accompanying notes to unaudited condensed consolidated financial statements.





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##### Table of Contents






AquaPro Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)

|                                                   |  |                   |            |      |  |   |          |  
|-------------------------------------------------- |  | ----------------- | ---------- | ---- |  | - | -------- | -
|                                                   |  | Nine Months ended
|                                                   |  | March 31         
|                                                   |  |                  
|                                                   |  | 2002              |            | 2001
|                                                   |  |                   |            |     
|Net cash provided by operating activities          |  | $                 | 1,267,738  |      |  | $ | 796,257  |  
|Cash flows from investing activities:              |  |                   |            |      |  |   |          |  
|Purchases of property and equipment                |  |                   | (1,136     | )    |  |   | (53,108  | )
|Proceeds from disposal of assets                   |  |                   | 1,200      |      |  |   | 27,057   |  
|Sale of joint venture                              |  |                   | 40,000     |      |  |   | (40,000  | )
|                                                   |  |                   |            |      |  |   |          |  
|Net cash provided by(used in) investing activities |  |                   | 40,064     |      |  |   | (66,051  | )
|Cash flows from financing activities:              |  |                   |            |      |  |   |          |  
|Net decrease in notes payable                      |  |                   | (561,435   | )    |  |   | (330,966 | )
|Principal payments on long-term borrowings         |  |                   | (694,982   | )    |  |   | (424,586 | )
|                                                   |  |                   |            |      |  |   |          |  
|Net cash used in financing activities              |  |                   | (1,256,417 | )    |  |   | (755,552 | )
|                                                   |  |                   |            |      |  |   |          |  
|Net increase(decrease)in cash and cash equivalents |  |                   | 51,385     |      |  |   | (25,346  | )
|Cash and cash equivalents at beginning of period   |  |                   | 810        |      |  |   | 46,604   |  
|                                                   |  |                   |            |      |  |   |          |  
|Cash and cash equivalents at end of period         |  | $                 | 52,195     |      |  | $ | 21,258   |  
|                                                   |  |                   |            |      |  |   |          |  

See accompanying notes to unaudited condensed consolidated financial statements.





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##### Table of Contents






AquaPro Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2002



|1. |  | Basis of Presentation of Unaudited Financial Statements
|-- |  | -------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles in the United States for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles in the United States for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for three-month and
nine-month periods ended March 31, 2002 is not necessarily indicative
of the results that may be expected for the fiscal year ended June 30,
2002.



| |                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The condensed consolidated balance sheet at June 30, 2001 has been
derived from the audited consolidated financial statements at that date
but does not include all of the information and footnotes required by
generally accepted accounting principles in the United States for
complete consolidated financial statements.



| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For further information, refer to the consolidated financial statements
and footnotes thereto included in the Companys annual report on Form
10-KSB for the year ended June 30, 2001.




Item 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially
from those projected in the forward-looking statements as a result of
certain factors including those set forth in this Item 2 and elsewhere
incorporated by reference into, this report.





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##### Table of Contents





| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO
THREE MONTHS ENDED MARCH 31, 2001:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | NET SALES. Net sales during the three-month period ended March 31, 2002
totaled $1,310,505 compared to $837,481 for the same period in 2001.
This represents an increase of $473,024 or 56.5%. Volume increased
1,283,505 pounds to 2,559,255 pounds of fish sold compared to 1,275,750
pounds sold during the three-month period ended March 31, 2001.
Accordingly, volume represented a 101% increase during the three months
ended March 31, 2002 compared to the same period in fiscal 2001. The
average price per pound sold decreased from 65.6 to 51.2 cents, a 22%
decline, in the three-month period ended March 31, 2002 compared to the
same period in fiscal 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | COST OF PRODUCTS SOLD AND GROSS PROFIT. Cost of products sold was
$1,996,992, an increase of $1,165,974 or 140% compared to the same
three-month period in 2001, while net sales increased 101%. On a per
pound basis, the costs of products sold was 78 cents in the three-month
periods ended March 31, 2002, compared to 65.1 cents per pound during
the same period in fiscal 2001. The gross profit margin from fish sales
was a negative $686,487 or -26.8 cents per pound during the three-month
period ended March 31, 2002 as compared to $6,463 for the same period
in fiscal 2001. Cost of products sold is largely dependent on the
Companys cost structure in the previous year due to the 12  18 month
grow out period required for fish to mature. During the three month
period ended March 31, 2002, the Company closed certain catfish ponds
to make them ready for prawn production. The number of pounds of fish
in these ponds that were able to be transferred to other Company ponds,
was 867,718 pounds less than the amount recorded in inventory. As a
result, $526,365, or 20.6 cents per pound, was added to the cost of
products sold for the three month period ended, March 31, 2002.
The Company does not drain its catfish ponds each year. However, in
preparation for the Companys diversification into the fresh
water shrimp business, approximately 300 acres of catfish ponds were
drained, during the quarter ended March 31, 2002. In keeping with
industry averages, the Company had expected that 15% to 20% of the
fish in the ponds would escape capture or die during the lengthy pond
closing procedure. The balance of the shortfall is believed to be
from localized winter-kill. Winter-kill events are individual to
groups of ponds. Since the water is cold, dead fish do not float to
the surface as they do in the hot days of the summer.
The Company adjusts its perpetual inventory once feeding has
commenced and accurate verification of pond weight can be determined
by the amount of feed consumed per day. The ponds with the closed
pond variances were closed during the winter in preparation for the
Companys diversification into fresh water prawn.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses during the three-month period ended March 31,
2002 were $400,538 or $115,007 more than in the three-month period
ended March 31, 2001. The selling, general and administrative expenses
represented a decrease in relation to sales volume, from 34.1% of sales
in the three-month period month ended March 31, 2001, compared to 30.6%
of sales in the same period in 2002.



| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | INTEREST EXPENSE. Interest expense increased $10,501 or 5.8% to
$191,696 in the three-month period ended March 31, 2002 compared to the
same period in 2001, due principally to an increase in average
borrowings.



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | RESULTS OF OPERATIONS NINE MONTHS ENDED MARCH 31, 2002 COMPARED TO NINE
MONTHS ENDED MARCH 31, 2001:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | NET SALES. Net sales during the nine-month period ended March 31, 2002
totaled $3,518,645 compared to $4,383,763 for the same period in fiscal
2001. This represents a decrease of $865,118 or 19.7%. Volume decreased
86,612 pounds to 6,594,130 pounds of fish sold compared to 6,507,518
pounds sold during the nine-month period ended March 31, 2001.
Accordingly, volume represented an 1.3% decrease during the nine-months
ended March 31, 2002 compared to the same period in 2001. The decrease
in volume for the nine-month period resulted principally from the
requirement that the minimum size of marketable fish be increased by an
additional ninety days of growing time, thus fish anticipated to reach
marketable size and be sold during the nine months, did not reach a
marketable size. In addition to the volume decrease for the nine months
ended March 31, 2002 compared to the same period in the prior year,
there was a decrease of approximately 14 cents per pound in the average
selling price of fish.





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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | COST OF PRODUCTS SOLD AND GROSS PROFIT. Cost of products sold was
$4,671,123, an increase of $804,525 or 20.8% compared to the same
nine-month period of 2001, while net sales decreased 19.7%. On a per
pound basis, the costs of products sold increased from 59.4 cents in
the nine-month period ended March 31, 2001 to 66.1 cents in the same
period in fiscal 2002. Of this increase in cost per pound sold,
$526,365 or 8 cents per pound was due to the closed pond variance
referred to above. Margin from fish sales was -32.8% during the
nine-month period ended March 31, 2002 as compared to 11.8% in the same
period in fiscal 2001.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses during the nine-month period ended March 31,
2002 were $1,013,139 or $104,702 less than the nine-month period ended
March 31, 2001. Selling, general and administrative expenses
represented an increase in relation to sales volume, from 25.5% of
sales for the nine-months ending March 31, 2001 to 28.8% of sales in
fiscal 2002, due to a decrease in the average selling price for fish.
In relation to pounds of fish sold, selling, general, and
administrative expenses decreased 10.6% from 17.2% of pounds sold to
15.4% for the nine months ended March 31, 2002.



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | INTEREST EXPENSE. Interest expense increased $37,785 or 6.5% to
$620,706 in the nine-month period ended March 31, 2002 compared to the
same period in 2001, due principally to increased average borrowings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | LIQUIDITY AND CAPITAL RESOURCES. As of March 31, 2002, the Company had
a current ratio of 1.0 to 1, compared to 1.4 to 1 at June 30, 2001.
Current assets exceeded current liabilities by $45,380 at March 31,
2002 compared to $2,173,001 at June 30, 2001. Cash and cash equivalents
increased during the nine-month period ended March 31, 2002 by $51,385.
Cash and cash equivalents were used primarily to grow live fish
inventories and service the Companys debt. Live fish inventories
decreased by 3,358,154 pounds to approximately 8,716,806 pounds at
March 31, 2002, and the carrying basis of this inventory amount
decreased by approximately $2,111,401. Feeding activity is typically at
its lowest level during the winter months of the Companys third fiscal
quarter.



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For the nine-month period ended March 31, 2002, the Company had cash
flows from operations of $1,267,738 compared to $796,257 for the same
period in the previous year, a 59% increase. During the nine-month
period ended March 31, 2002, the Company had capital expenditures of
$1,136 as compared to $53,108 for the same period in the prior year.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the quarter ended March 31, 2002, the Company had not repaid its
production or feed lines of credit as contemplated in the agreements
with the lenders. During and subsequent to that period, the lenders are
applying one-half of the fish sales proceeds to the feed line and
allowing the Company to use the other half of the fish sales to meet
payroll and limited expenses. As of May 13, 2002, the obligations on
the feed line are approximately $180,000 and approximately $785,000 on
the production line. The Company is currently unable to increase its
borrowings on its feed lines to feed its fish. The Company is currently
in default in the payment of $48,081 of interest and $100,000 of
principal on certain of its investor notes. It is also in default on
over $810,483 of its obligations to trade creditors, which it is
currently paying on an agreed upon schedule. However, there is no
assurance that creditors will accept the scheduled payments in the
future and not declare all or a portion of this creditor debt in
default. Approximately, $216,726 of the Company trade debt is secured
by the Companys equipment necessary for the Companys continued
operations. There is no assurance that the Company would not lose all
or a substantial portion of this equipment in the event these creditors
do not continue to accept scheduled payments of their debt or, if the
Company is unable to pay the debt as scheduled. To date, the Company
has been successful in obtaining additional time to make these
payments. However, without debt or equity capital infusion, the Company
will be unable to service its debts or obligations to its vendors.
Non-payment could result in loss of secured assets through repossession
or foreclosure. Loss of a significant amount of land or equipment could
cause the Company to cease operations.





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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SUBSEQUENT EVENTS. To date, the Company has been unsuccessful in
obtaining a USDA B & I loan. The Company is pursuing other longer term
credit facilities. The Company is also pursuing a private equity
financing as well as funds from potential joint venture partners.
Subsequent to the quarter end, March 31, 2002, the Company entered into
a contract with Robert A. Wilson, Consultant, to provide business
planning and structure. During the term of this Agreement, Consultant
shall provide advice to undertake for and consult with the Company
concerning management, marketing, consulting, strategic planning,
corporate organization and structure, financial matters in connection
with the operation of the businesses of the Company, expansion of
services, acquisitions and business opportunities, and shall review and
advise the Company regarding its overall progress, needs and condition.
Consultant agrees to provide on a timely basis the following enumerated
services plus any additional services contemplated thereby:



| |  | (a) |  | The development of a written plan and implementation
of short-range and long-term strategic planning to
fully develop and enhance the Companys assets,
resources, products and services;                                                                                      
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | (b) |  | The implementation of a marketing program to enable
the Company to broaden the markets for its services
and promote the image of the Company and its products
and services;                                                                                                    
|
| |  | (c) |  | Advise the Company relative to the recruitment and
employment of key executives consistent with the
expansion of operations of the Company;                                                                                                                                    
|
| |  | (d) |  | The identification, evaluation, structuring,
negotiating and closing of joint ventures, strategic
alliances, business acquisitions and advice with
regard to the ongoing managing and operating of such
acquisitions upon consummation thereof; and                            
|
| |  | (e) |  | Advice and recommendations regarding corporate
financing including the structure, terms and content
of bank loans, institutional loans, private debt
funding, mezzanine financing, blind pool financing
and other preferred and common stock equity private
or public offering.





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##### Table of Contents






PART II. OTHER INFORMATION




Item 1.  Legal Proceedings



| |     
| | ----
| | None




Item 2.  Changes in Securities



| |                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the quarter ended March 31, 2002 four thousand (4,000) shares of
common stock were issued to senior management in the form of restricted
grants as part of their compensation package. The shares have a
two-year vesting period.



| |                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Subsequent to the quarter ended
March 31, 2002 500,000 shares of common
stock were issued to Robert A. Wilson, Consultant, in the form of
restricted securities as part of its compensation under its contract.
Upon instruction from Robert Wilson the Company will attempt to
register the securities under the provisions of Section S8.




Item 3.  Defaults Upon Senior Securities



| |     
| | ----
| | None




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



| |     
| | ----
| | None




Item 5.  Other Information



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A review of the Companys interim
financial statements as of March 31, 2002 and for the three- and
nine-month periods then ended, by independent auditors in accordance
with SAS 71, Interim Financial Information, has not been
completed.




Item 6.  Exhibits and Reports on Form 8-K

|                     |  |                          
|-------------------- |  | -------------------------
|Exhibits:            |  | 10.1 Consulting Agreement
|Reports on Form 8-K: |  | None                     





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##### Table of Contents



Signatures

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

|                    |                                  |  |  |                                        
|------------------- | -------------------------------- |  |  | ---------------------------------------
|                    | AquaPro Corporation
(Registrant)
|                    |                                  |  |  |                                        
|Dated: May 14, 2002 |                                  |  |  | By: /s/ George Hastings
CEO & President