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


                                   FORM 10-QSB


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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2002


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


                        COMMISSION FILE NUMBER 000-28595

                              PEABODYS COFFEE, INC.
                 (Name of Small Business Issuer in its Charter)


            NEVADA                                               87-0468654
(State or other jurisdiction of                              (I.R.S. Employer
 Incorporation or organization)                             Identification No.)


             3845 ATHERTON ROAD, SUITE 9, ROCKLIN, CALIFORNIA, 95765
                     (Address of Principal Executive Office)

                                 (916) 632-6090
                           (Issuer's Telephone Number)


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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 21,618,476 shares of common stock.

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

                                      -1-
<PAGE>

                                TABLE OF CONTENTS

Part I - Financial Information

         Item 1     Financial Statements                                       3

         Item 2     Management's Discussion and Analysis or
                    Plan of Operation                                         15


Part II - Other Information

         Item 1     Legal Proceedings                                         18

         Item 2     Changes in Securities                                     18

         Item 3     Defaults Upon Senior Securities                           19

         Item 4     Submission of Matters to a Vote of Security Holders       19

         Item 5     Other Information                                         19

         Item 6     Exhibits and Reports on Form 8-K                          19

         Signatures                                                           21

                                      -2-
<PAGE>

                              PEABODYS COFFEE, INC.
                                 BALANCE SHEETS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                               2002            2001
                                                       ------------    ------------
ASSETS

Current Assets
<S>                                                    <C>             <C>
   Cash                                                $     59,357    $     75,492
   Other receivables                                         24,709          44,353
   Inventories                                               83,049          60,628
   Prepaid expenses                                          72,684          19,717
                                                       ------------    ------------
         Total Current Assets                               239,799         200,190

Property and equipment (net)                                343,859         384,764
Deposits and other assets                                   162,210         101,453
                                                       ------------    ------------

         Total Assets                                  $    745,868    $    686,407
                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
   Accounts payable                                    $    439,676    $    339,501
   Accrued expenses                                         350,215         326,409
   Short-term borrowings                                    190,000              --
   Secured convertible debentures                             7,534              --
   Current portion of long-term debt                          2,573              --
   Bridge note financing                                     35,000          40,000
                                                       ------------    ------------
         Total Current Liabilities                        1,024,998         705,910
                                                       ------------    ------------

Long-term debt, net of current portion                       11,105              --
                                                       ------------    ------------
         Total Liabilities                                1,036,103         705,910

Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 21,618,476 and 18,911,024
   $.001 par value                                     $     21,618    $     18,911

   Paid-in capital                                        5,701,573       4,891,267
   Deferred expenses                                        (76,663)        (63,793)
   Accumulated deficit                                   (5,936,763)     (4,865,888)
                                                       ------------    ------------

         Total Stockholders' Deficit                       (290,235)        (19,503)
                                                       ------------    ------------

         Total Liabilities and Stockholders' Deficit   $    745,868    $    686,407
                                                       ============    ============
</TABLE>

See accompanying notes to financial statements

                                      -3-
<PAGE>

                              PEABODYS COFFEE, INC.
                   STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                   Nine months ended              Three Months Ended
                                                      December 31,                    December 31,
                                                  2002            2001            2002            2001
                                              ------------    ------------    ------------    ------------
<S>                                           <C>             <C>             <C>             <C>
Sales                                         $  1,987,106    $  2,138,873    $    598,714    $    862,566

Cost of Sales                                      831,518         804,565         243,996         324,239
                                              ------------    ------------    ------------    ------------

   Gross Profit                                  1,155,588       1,334,308         354,718         538,327

Operating expenses
   Employee compensation and benefits            1,051,710         992,021         351,773         397,087
   General and administrative expenses             258,003         234,409          95,473          86,656
   Occupancy                                       231,851         244,886          71,977          96,011
   Director and professional fees                  282,803         191,866         101,588          71,880
   Depreciation and amortization                    95,645          95,001          31,875          32,247
   Other operating expenses                             --           3,105              --             605
                                              ------------    ------------    ------------    ------------
                                                 1,920,012       1,761,288         652,686         684,486
                                              ------------    ------------    ------------    ------------

   Operating Loss                                 (764,424)       (426,980)       (297,968)       (146,159)

Other income                                           242          24,000              --              --
Legal expense - former executive                  (153,253)             --          (6,874)             --
Interest and financing expense                     (37,588)        (35,275)        (20,506)        (24,458)
                                              ------------    ------------    ------------    ------------

   Net loss before extraordinary item             (955,023)       (438,255)       (325,348)       (170,617)
   Extraordinary item - forgiveness of debt        103,937          46,079             217          36,190
                                              ------------    ------------    ------------    ------------

   Net Loss                                       (851,086)       (392,176)       (325,131)       (134,427)

Accumulated Deficit, beginning of period        (5,085,677)     (4,473,712)     (5,611,632)     (4,731,461)
                                              ------------    ------------    ------------    ------------

Accumulated Deficit, end of period            $ (5,936,763)   $ (4,865,888)   $ (5,936,763)   $ (4,865,888)
                                              ============    ============    ============    ============

Earnings per common share:
   Net loss before extraordinary item         $      (0.05)   $      (0.02)   $      (0.02)   $      (0.01)
   Extraordinary item                                 0.01            0.00            0.00            0.00
                                              ------------    ------------    ------------    ------------
   Net loss                                   $      (0.04)   $      (0.02)   $      (0.02)   $      (0.01)
                                              ============    ============    ============    ============
</TABLE>

See accompanying notes to financial statements

                                      -4-
<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
                                    UNAUDITED


                                                             2002         2001
                                                       ----------   ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                               $ (851,086)  $ (392,176)
Adjustments to reconcile net loss to net cash
applied to operating activities:
   Depreciation and amortization                           95,645       95,001
   Debt settlements and forgiveness of debt              (103,937)     (46,079)
   Gain on disposal of assets                                (966)          --
   Non-cash consulting fees                                96,442           --
   Slotting fee expense                                    27,250           --
   Debenture accretion                                      7,534           --
   Other income from reduction of obligation to issue
   shares of common stock                                      --      (24,000)
Changes in operating assets and liabilities:
   Receivables                                            (92,879)     (22,848)
   Inventories                                            (19,811)     (10,245)
   Prepaid expenses                                       (12,759)      68,220
   Cash overdraft                                         (48,495)     (48,558)
   Accounts payable                                       212,057       (4,906)
   Accrued expenses                                        72,204       15,865
                                                       ----------   ----------
         Net cash applied to operating activities        (618,801)    (369,726)

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment                       (77,526)     (95,546)
Disposals of property and equipment                        57,379           --
Brand development costs                                   (65,269)          --
Changes to deposits and other assets                       13,115       22,076
                                                       ----------   ----------
         Net cash applied to investing activities         (72,301)     (73,470)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock                           122,658      525,150
Proceeds from issuance of notes payable                   639,000           --
Repayments of short-term borrowings                            --      (14,820)
Principal reductions of notes payable                     (18,506)          --
                                                       ----------   ----------
         Net cash provided by financing activities        743,152      510,330

NET INCREASE IN CASH AND
CASH EQUIVALENTS                                           52,050       67,134

CASH AND CASH EQUIVALENTS
Beginning of period                                         7,307        8,358
                                                       ----------   ----------
End of period                                          $   59,357   $   75,492
                                                       ==========   ==========

See accompanying notes to financial statements

                                      -5-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

The  notes  to  the  financial  statements  include  a  summary  of  significant
accounting  policies and other notes considered  essential to fully disclose and
fairly  present  the  transactions  and  financial  position  of the  company as
follows:

Note    1     -   Significant Accounting Policies

Note    2     -   Going Concern

Note    3     -   Inventories

Note    4     -   Property and Equipment, and Intangible Assets

Note    5     -   Accounts Payable

Note    6     -   Accrued Expenses

Note    7     -   Short-Term Borrowings

Note    8     -   Secured Convertible Debentures

Note    9     -   Long-Term Debt

Note   10     -   Bridge Note Financing

Note   11     -   Earnings Per Common Share

Note   12     -   Supplemental Disclosures to Statement of Cash Flows

Note   13     -   Forgiveness of Debt

Note   14     -   Commitments and Contingencies

                                      -6-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
---------------------
The financial  statements  included herein have been prepared by Peabodys Coffee
Inc., without audit, pursuant to the rules and regulations of the Securities and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included  in  financial   statements  prepared  in  conformity  with  accounting
principles  generally accepted in the United States of America have been omitted
pursuant  to  such  rules  and   regulations  of  the  Securities  and  Exchange
Commission.  Peabodys Coffee Inc.  believes that the disclosures are adequate to
make the information  presented not misleading when read in conjunction with its
financial  statements for the year ended March 31, 2002 included on Form 10-KSB.
The financial information presented reflects all adjustments,  which are, in the
opinion of management,  necessary for a fair statement of the financial position
and the results of operations for the interim periods presented.  The results of
operations  for the nine months  ended  December  31,  2002 are not  necessarily
indicative  of the  results to be expected  for the full year  ending  March 31,
2003, or any other period.

Description of Business
-----------------------
Peabodys Coffee (the "Company") is a retailer and marketer of certified  organic
branded specialty coffee beverages and packaged whole bean coffees.  The Company
owns and operates  retail  espresso  coffee bar kiosks in a variety of corporate
and  institutional  locations  throughout  California.   The  Company  has  also
established  wholesale  operations to enter the mass retail markets  through the
sale of packaged whole bean coffees in  supermarkets,  specialty food stores and
other mass retail venues under its Black Rhino Coffee(TM) brand.

Reclassifications
-----------------
Certain  amounts  from the  December  31, 2001  financial  statements  have been
reclassified to conform to the current period presentation.

NOTE 2 - GOING CONCERN

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States of America,  which
contemplates  continuation  of the  Company as a going  concern.  Going  concern
contemplates  the  realization of assets and the  satisfaction of liabilities in
the normal course of business  over a reasonable  length of time.  However,  the
Company has sustained  operating  losses since its inception and has deficits in
both  working  capital  and  stockholders'  equity  of  $785,199  and  $290,235,
respectively, as of December 31, 2002.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification of recorded asset amounts or the amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue as a going  concern.  The Company's  ability to continue as a
going  concern is dependent  upon several  factors.  These  factors  include its
ability to:  generate  sufficient cash flows to meet its obligations on a timely
basis;  obtain  acceptance of payment terms for certain payables to key vendors;
obtain  additional  financing or  refinancing  as may be required;  aggressively
control costs; and, achieve profitability and positive cash flows.

                                      -7-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 2 - GOING CONCERN (CONTINUED)

Management  plans to address  these  challenges by building on the launch of its
organic Black Rhino Coffee(TM) brand into the U.S. mass retail sector. The brand
achieved  significant  awareness  at its  introduction  in May  2002  at the FMI
supermarket  convention in Chicago. The benefit of this channel of trade is that
a small  number of orders can  significantly  increase  corporate  revenues  and
earnings.  Management  believes that entry to this new market sector will expose
the Company to different and potentially more fertile financing  opportunities -
such as project-based  non-dilutive debt financing secured by purchase orders or
accounts  receivable.  Management believes this is a crucial new opportunity for
the Company given the continuing uncertainty of conventional equity markets.

Management  also  believes its  strategic  alliance  with  Marathon  Global will
facilitate  rapid market  penetration  by providing a level of  credibility  and
negotiating  strength otherwise  unavailable to the Company.  Management further
believes that the Company's  gradual  transition  from reliance on  full-service
units  to an  asset-light  company  concentrating  more on brand  ownership  and
management  will  reduce the  capital  needs for  future  large  tangible  asset
acquisitions.

There  is  no  assurance  that  management's  plans  will  be  successful  or if
successful,  that they will result in the Company continuing as a going concern.
Additionally,  the sale of additional  equity or other securities will result in
dilution of the Company's stockholders ownership position.


NOTE 3 - INVENTORIES

At December 31, 2002 and 2001, inventories were comprised of the following:

                                                     2002             2001
                                             ------------     ------------
     Coffee                                  $     36,674     $     11,946
     Other food and beverage items                 18,621           28,418
     Packaging and other supplies                  27,754           20,264
                                             ------------     ------------
                                             $     83,049     $     60,628
                                             ============     ============

                                      -8-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 4 - PROPERTY AND EQUIPMENT, AND INTANGIBLE ASSETS

At December 31, 2002 and 2001,  property  and  equipment  were  comprised of the
following:

                                                     2002             2001
                                             ------------     ------------
     Kiosk carts                             $    267,733     $    261,318
     Kiosk equipment                              292,862          283,369
     Equipment and furniture                      261,357          226,996
     Signage                                       60,113           49,997
     Site improvements                            118,376          104,646
                                             ------------     ------------
                                                1,000,441          926,326
     Less: accumulated depreciation              (656,582)        (541,562)
                                             ------------     ------------
                                             $    343,859     $    384,764
                                             ============     ============

Included in other assets at December 31, 2002 and 2001, were  intangible  assets
comprised of the following:

                                                     2002             2001
                                             ------------     ------------
     Goodwill                                $     40,930     $     40,930
     Non competition agreement                     25,000           25,000
     Trade name                                    88,253            9,595
     Kiosk design                                   2,241            2,270
     Other identifiable intangibles                14,600           16,942
                                             ------------     ------------
                                                  171,024           94,737
     Less:  accumulated amortization              (40,016)         (22,428)
                                             ------------     ------------
                                             $    131,008     $     72,309
                                             ============     ============

The Company recognized depreciation and amortization expense for the nine months
ended December 31, 2002 and 2001 as follows:

                                                     2002             2001
                                             ------------     ------------

     Depreciation                            $     86,265     $     86,265
     Amortization                                   9,380            8,736
                                             ------------     ------------
                                             $     95,645     $     95,001
                                             ============     ============

NOTE 5 - ACCOUNTS PAYABLE

At December  31,  2002 and 2001,  approximately  44% and 51% of the  balances in
accounts payable, respectively, have been outstanding for more than 90 days.

                                      -9-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 6 - ACCRUED EXPENSES

At December 31, 2002 and 2001, accrued expenses were comprised of the following:

                                                     2002             2001
                                             ------------     ------------
     Accrued interest                        $     37,577     $     40,086
     Accrued wages                                 50,657           48,202
     Accrued sales and use tax                     32,008           32,008
     Accrued payroll taxes                        221,323          198,464
     Other                                          8,650            7,649
                                             ------------     ------------
                                             $    350,215     $    326,409
                                             ============     ============

Included in accrued  payroll  taxes at  December  31, 2002 and 2001 are past due
payroll tax  obligations  in the amount  $205,590  and  $178,162,  respectively.
Management has entered into a repayment plan with the Internal  Revenue Service.
Terms of the repayment plan require $2,500 minimum  monthly  installments  until
the obligations are satisfied.

NOTE 7 - SHORT-TERM BORROWINGS

The Company periodically borrows funds to provide short-term working capital. At
December  31,  2002  and  2001,  these  working  capital  loans  consist  of the
following:

                                                             2002         2001
                                                        ---------    ---------
     Unsecured, non-interest bearing note,
     payable to a shareholder, due February 18, 2003    $ 100,000    $      --

     Unsecured, non-interest bearing obligation,
     payable to a shareholder, due on demand               10,000           --

     Unsecured, non-interest bearing obligation,
     payable to the Company's legal counsel, due
     December 31, 2003                                     60,000           --

     Unsecured, non-interest bearing obligation,
     payable to the Company's former legal counsel,
     due in monthly installments of $3,000 through
     July 1, 2003                                          20,000           --
                                                        ---------    ---------
                                                        $ 190,000    $      --
                                                        =========    =========

                                      -10-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 8 - SECURED CONVERTIBLE DEBENTURES

In order to provide  working  capital and financing for the Company's  operation
and expansion,  as of December 20, 2002,  the Company  entered into a securities
purchase agreement and related  agreements with three accredited  investors (the
"Purchasers")  for  the  purchase  of  up  to  $750,000  of  the  Company's  10%
Convertible Debentures. The debentures bear interest at a rate of 10% per annum,
payable  quarterly in common stock or cash at the option of the Purchasers.  The
debentures are to be sold in three separate tranches.  The first tranche, in the
amount of  $250,000,  was  consummated  December  20,  2002 and the  convertible
debentures  relating  to the  first  tranche  are due  December  20,  2003.  The
aggregate  net  proceeds of the December  2002  tranche,  after  payment of some
related  expenses,  was  approximately  $201,000.  The  terms of the  securities
purchase  agreement and related  agreements  restrict the  Company's  ability to
issue stock  without the  Purchasers'  approval,  except to comply with existing
contractual  arrangements;  specifically  with  investors  holding bridge notes,
notes payable, options and warrants.

The  debentures  initially  are  convertible  into shares of common stock at the
lesser of $0.30 per share or 50% of the  average  of the three  lowest  intraday
trading  prices  for a share of common  stock  during the  twenty  trading  days
immediately preceding conversion.

Pursuant to the Rules and Regulations of the Securities and Exchange  Commission
regarding beneficial conversion features,  using the intrinsic value method, the
Company  allocated  the  total  $250,000  debenture  to the  conversion  feature
resulting in a corresponding  credit to additional paid in capital.  The Company
is amortizing  over the life of the debentures as financing  costs any excess of
the fair market value of the common stock at the  debenture  issuance  date over
the conversion  price.  For the current  period,  the  amortization  amounted to
$7,534 for the debentures due December 20, 2003.

Upon the issuance of the  December  2002  debentures,  the  Purchasers  received
five-year term warrants to purchase 625,000 shares of the Company's common stock
at an initial  exercise  price of $0.25 per share.  The fair market value of the
warrants  were  deemed  immaterial  as  estimated  on the grant  date  using the
Black-Scholes  option  pricing method as required under SFAS 123. As of the date
of this report no warrants have been exercised.

Subsequent  to  December  31,  2002,  the second  tranche of  $250,000  has been
received under similar terms and conditions as the first tranche.

NOTE 9 - LONG-TERM DEBT

The  Company  has fully  utilized a  $300,000,  unsecured  line of credit with a
related  party.  Each  advance  against  this line of credit is  evidenced by an
interest-bearing  note.  For each  note,  the  Company is  obligated  to issue a
warrant to purchase  one share of common stock for each dollar  borrowed,  at an
exercise price of $0.40 per share.

Through  December 31,  2002,  certain  note  holders  discharged  the Company of
$289,960 of its obligations  under the notes, and  relinquished  their rights to
purchase  294,000 shares of common stock in exchange for 1,449,801 shares of the
Company's common stock.

                                      -11-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 9 - LONG-TERM DEBT (CONTINUED)

The outstanding balance at December 31, 2002 is summarized as follows.

                                                             2002          2001
                                                        ---------     ---------
10% note, unsecured, payable in monthly installments
of $212.47 including interest, due 04/30/07             $   9,073     $      --

10% note, unsecured, payable in monthly installments
of $106.24 including interest, due 05/30/07                 4,605            --

Less current portion                                       (2,573)           --
                                                        ---------     ---------
                                                        $  11,105     $      --
                                                        =========     =========

Aggregate maturities of long-term debt over the next five years are as follows:

     Twelve months ended December 31                Amount
     -------------------------------              ---------
              2003                                $   2,573
              2004                                    2,842
              2005                                    3,140
              2006                                    3,468
              2007                                    1,655
                                                  ---------
                                                  $  13,678
                                                  =========

NOTE 10 - BRIDGE NOTE FINANCING

In May 1996,  the  Company  issued  "units"  consisting  of secured  convertible
promissory  notes and warrants to purchase the  Company's  common  stock.  As of
December 31, 2002 and 2001,  there were $35,000 and  $40,000,  respectively,  of
bridge notes outstanding. The notes are secured by all assets of the Company.

The Company is obligated to make  quarterly  interest  payments on the principal
balance  outstanding  at nine percent (9%) per annum and to repay such principal
balance in full on December  31,  1998.  As of December  31, 2002 and 2001,  the
Company has accrued $36,824 and $34,224,  respectively,  of interest  payable on
these notes. As of December 31, 2002, the Company has not received any notice of
default relating to the notes.

                                      -12-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 11 - EARNINGS PER COMMON SHARE

Earnings  per common  share are  computed by dividing  net income by the average
number of common  shares and common  stock  equivalents  outstanding  during the
period. The weighted average number of common shares outstanding during the nine
months  ended  December  31,  2002 and 2001,  were  20,181,720  and  16,593,043,
respectively.

Common stock  equivalents are the net additional  number of shares that would be
issuable upon the exercise of the outstanding common stock options and warrants.
For the nine months ended December 31, 2002 and 2001, fully diluted earnings per
common share are equal to basic  earnings per common share because the effect of
potentially  dilutive  securities  underlying the stock options and warrants are
anti-dilutive and therefore not included.

NOTE 12 - SUPPLEMENTAL DISCLOSURES TO STATEMENT OF CASH FLOWS

Non-cash investing and financing transactions for the nine months ended December
31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                      2002         2001
                                                                 ---------    ---------
<S>                                                              <C>          <C>
     Issuance of common stock in exchange for
          services provided                                      $  85,000    $  88,750

     Issuance of common stock in exchange for
          discharge of obligations on long-term
          borrowings, trade payables and other liabilities         300,356       10,400

     Trade payables and accrued expenses forgiven                  103,937       46,079

     Conversion of trade payables to short-term note                80,217           --

     Credit memos issued to customers for slotting agreements       88,500           --

     Sale of equipment in exchange for obligations
          on trade payables and other liabilities                       --       47,195

     Reduction of obligation to issue shares of common stock            --       24,000

     Issuance of common stock in exchange for
          property and equipment                                        --       10,000
</TABLE>

                                      -13-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

NOTE 13 - FORGIVENESS OF DEBT

Forgiveness  of debt  amounted to $103,937 and $46,079 for the nine months ended
December 31, 2002 and 2001, respectively. This income represents the forgiveness
of trade payables and accrued  expenses  recorded as expenses in the current and
prior years.  Significant  transactions  relating to the forgiveness of debt are
explained in the following paragraphs.

On September 30, 2002,  the Company's  legal counsel  agreed to forgive  accrued
legal fees totaling $75,059. These fees were accrued in the Company's litigation
against a former executive.

On August 26, 2002,  the Company's  legal counsel  agreed to accept an option to
purchase  250,000  shares of common stock,  with an exercise  price of $0.15 per
share as full and final  settlement  for accrued  legal fees  totaling  $24,665.
These fees were accrued in the Company's regular course of business.

On December 31, 2001, a client of the Company agreed to forgive  accrued revenue
sharing  obligations  totaling  $35,026.  The Company  continues  to operate its
retail espresso coffee bar kiosks at the client's facilities.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

On May 8, 2002,  the  Company  initiated  legal  action  against its former CEO,
Clifford Brent Young,  and others.  The complaint  alleged,  among other things,
that Mr.  Young,  in  association  with a former  employee of the  Company,  had
breached  contractual  duties,  and/or  committed  torts, in connection with the
purported  cancellation  of contracts  between the Company and a client,  and in
connection with other acts of competition, disparagement, and conversion. On May
30,  2002,  Mr.  Young filed a petition for  bankruptcy  with the United  States
Bankruptcy Court, Central District of California,  staying the action as to him.
The ultimate  ability of the Company to pursue relief  against Mr. Young remains
to be  determined,  and  there  can be no  assurance  that the  Company  will be
successful  in pursuing  its claims in that  forum.  The Company has settled its
claims against the former employee.

In the normal course of business, the Company has various legal claims and other
contingent matters outstanding.  Management believes that any ultimate liability
arising from these contingencies would not have a material adverse effect on the
Company's results of operations or financial  condition at December 31, 2002 and
2001.

                                      -14-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                    UNAUDITED

ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITIONS  AND
          RESULTS OF OPERATIONS

     The preparation of this section  requires  management to make estimates and
assumptions about the past, current and future activities,  business  practices,
and  financial  records of the  Company.  Actual  results  may differ from these
estimates and assumptions.

          REVENUES

     Net revenues for the nine months ended  December 31, 2002 decreased 7.1% to
$1,987,106 from $2,138,873 for the same period in fiscal 2001. This decrease was
primarily  due to the  closure  of two  hospital  kiosk  locations  in  Southern
California during the quarter ended June 30, 2002. These locations accounted for
approximately  $362,000 of the  decrease  in revenue  for the nine months  ended
December 31, 2002. In addition, the Company's new Black Rhino Coffee(TM) product
line began shipping during the quarter ended  September 30, 2002.  Sales of this
product accounted for approximately $89,000 of the Company's net revenue for the
nine months ended December 31, 2002.

          COSTS AND EXPENSES

     Cost of sales for the nine months ended December 31, 2002 increased 3.4% to
$831,518  from  $804,565 for the same period in fiscal 2001.  As a percentage of
net  revenues,  cost of sales  increased  to 41.8%  for the  nine  months  ended
December  31,  2002 from 37.6% for the  comparable  period in fiscal  2001.  The
Company's two former hospital locations in Southern California had operated at a
combined  36% cost of sales.  The  increase  as a  percent  of net  revenues  is
primarily  due to the closure of these two hospital  locations and the resulting
shift in the mix of cost of sales from the Company's remaining operating units.

     Employee  compensation  and benefits for the nine months ended December 31,
2002  increased to $1,051,710  from $992,021 for the same period in fiscal 2001.
As a percentage of net revenues, employee compensation and benefits increased to
52.9% for the nine months ended  December 31, 2002 from 46.4% for the comparable
period in fiscal  2001.  The  increase as a percent of net revenues is primarily
due to higher  staffing  levels at the  Company's  retail  cafe  relative to the
Company's traditional sites, and increased workers compensation  insurance rates
in effect throughout the state of California.

     General and administrative  expenses for the nine months ended December 31,
2002  increased to $258,003 from $234,409 for the same period in fiscal 2001. As
a percentage of net revenues,  general and administrative  expenses increased to
13.0% for the nine months ended  December 31, 2002 from 11.0% for the comparable
period in fiscal  2001.  The  increase as a percent of net revenues is primarily
due to new  costs  related  to the sale of the  Company's  organic  Black  Rhino
Coffee(TM) brand, in particular slotting fees and commissions  incurred to place
the product for sale.

     Occupancy  costs for the nine months ended  December 31, 2002  decreased to
$231,851  from  $244,886 for the same period in fiscal 2001.  As a percentage of
net  revenues,  occupancy  costs  increased  to 11.7% for the nine months  ended
December 31, 2002 from 11.4% for the comparable period in fiscal 2001.

     Director and professional  fees for the nine months ended December 31, 2002
increased to $282,803  from  $191,866  for the same period in fiscal  2001.  The
majority of these expenses result from the engagement of various consultants and
legal  fees  to  assist  the  Company  in  obtaining  growth  financing  and  in
penetrating  new  markets  with its  packaged  consumer  brand  of  Black  Rhino
Coffee(TM).

                                      -15-
<PAGE>

     Operating  losses for the nine months ended  December 31, 2002 increased to
$764,424  from  $426,980 the same period in fiscal 2001.  As a percentage of net
revenues, operating losses increased to 38.5% for the nine months ended December
31, 2002 from 20.0% for the  comparable  period in fiscal  2001.  The  increased
operating  loss is primarily due to higher  employee  compensation  and benefits
costs and higher director and professional fees.

     Legal expense related to the Company's pending  litigation against a former
executive  amounted to $153,253 for the nine months ended  December 31, 2002. On
May 8, 2002, the Company initiated legal action against its former CEO, Clifford
Brent Young, and others.  The complaint  alleged,  among other things,  that Mr.
Young,  in  association  with a former  employee of the  Company,  had  breached
contractual  duties,  and/or  committed  torts, in connection with the purported
cancellation  of contracts  between the Company and a client,  and in connection
with other acts of competition,  disparagement, and conversion. On May 30, 2002,
Mr.  Young filed a petition for  bankruptcy  with the United  States  Bankruptcy
Court,  Central  District  of  California,  staying  the  action as to him.  The
ultimate ability of the Company to pursue relief against Mr. Young remains to be
determined, and there can be no assurance that the Company will be successful in
pursuing  its claims in that forum.  The Company has settled its claims  against
the former employee.

     Net loss for the nine months ended  December 31, 2002 increased to $851,086
from  $392,176  for the same  period  in fiscal  2001.  As a  percentage  of net
revenues,  net losses  increased to 42.8% for the nine months ended December 31,
2002 from 18.3% for the comparable period in fiscal 2001.

          LIQUIDITY AND CAPITAL RESOURCES

     Despite the Company's "unit level" profitability,  the Company has not been
profitable.  As the accompanying  financial statements show, for the nine months
ended December 31, 2002,  the Company had a net operating loss of $764,424,  and
an overall net loss of $851,086. At December 31, 2002, the Company has a working
capital deficit of $785,199, and a stockholders' deficit of $290,235.

     Management  plans to address these  challenges by building on the launch of
its organic Black Rhino Coffee(TM)  brand into the U.S. mass retail sector.  The
brand achieved significant  awareness at its introduction in May 2002 at the FMI
supermarket  convention in Chicago. The benefit of this channel of trade is that
a small  number of orders can  significantly  increase  corporate  revenues  and
earnings.  Management  believes that entry to this new market sector will expose
the Company to different and potentially more fertile financing  opportunities -
such as project-based  non-dilutive  debt financing secured by purchase order or
accounts receivable notes. Management believes this is a crucial new opportunity
for the Company given the continuing uncertainty of conventional equity markets.

     Management  also believes its strategic  alliance with Marathon Global will
facilitate  rapid market  penetration  by providing a level of  credibility  and
negotiating  strength otherwise  unavailable to the Company.  Management further
believes that the Company's  gradual  transition  from reliance on  full-service
units  to an  asset-light  company  concentrating  more on brand  ownership  and
management  will  reduce the  capital  needs for  future  large  tangible  asset
acquisitions.

                                      -16-
<PAGE>

     Cash applied to investing activities for the nine months ended December 31,
2002  consisted  of capital  additions  to property  and  equipment  of $77,526,
disposals  of property  and  equipment of $57,379,  brand  development  costs of
$65,269,  and  decreases to deposits  and other  assets of $13,115.  The capital
additions were primarily related to costs associated with refurbishing  existing
kiosks and the  purchase  of  exhibition  materials  for the launch of the Black
Rhino Coffee(TM) brand.  Brand development costs are associated with the design,
development and launch of the Black Rhino Coffee(TM) brand.

     The Company had net cash provided from  financing  activities  for the nine
months ended December 31, 2002 totaling  $743,152.  In January 2002, the Company
secured  a line of  credit  for up to  $300,000.  This line of credit is for the
acquisition  of  equipment  and kiosks as well as for  meeting  working  capital
needs.  In  December  2002,  the  Company  entered  into a  securities  purchase
agreement  and  related  agreements  for the  purchase  of up to $750,000 of the
Company's 10% Convertible  Debentures.  Cash from financing activities primarily
consists of $639,000 from net long-term  borrowings under the line of credit and
the debentures,  and $122,658 net proceeds from the sale of Company stock. These
amounts were primarily utilized in the day-to-day operations of the Company.

                                      -17-
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          None


ITEM 2.   CHANGES IN SECURITIES

     (c)  The  following   equity   securities  were  sold  by  the  Company  in
unregistered transactions during the period covered by this report:

     On October 1, 2002, the Company  granted a  non-statutory  stock option for
the purchase of 400,000  shares of its common stock to an entity for  consulting
services.  The  option  has a term of one  year,  is  fully  vested,  and has an
exercise  price of $0.05 per share.  The option was granted  under the exemption
provided by Section 4(2) of the Securities Act of 1933, as amended. The optionee
was a sophisticated  investor with a preexisting  relationship  with the Company
and had access to the same  information  as would be included in a  registration
statement prepared by the Company.

     On November  18,  2002,  the Company  issued a warrant to purchase  100,000
shares of common stock at an exercise price of $0.01 per share.  The warrant was
issued as additional  consideration  in conjunction  with the receipt of a short
term,  non-interest  bearing loan in the amount of $100,000,  which is presently
still owed. The issuance was exempt from registration  under Section 4(2) of the
Securities Act of 1933, as amended.

     To obtain funding for its ongoing  operations,  the Company  entered into a
Securities  Purchase  Agreement with three accredited  investors on December 20,
2002 for the sale of (i) $750,000 in convertible  debentures and (ii) a warrants
to buy  1,875,000  shares of the  Company's  common  stock.  The  investors  are
obligated to provide the Company with the funds as follows:

     o    $250,000 was disbursed on December 20, 2002 ;

     o    $250,000 will be disbursed  within 15 days of filing of a registration
          statement; and

     o    $250,000 will be disbursed  within five days of the  effectiveness  of
          the registration statement.

     Accordingly,  as of December 20, 2002,  the Company has received a total of
$250,000 pursuant to the Securities Purchase Agreement.

     The  debentures  bear interest at 10%,  mature on one year from the date of
issuance,  and are convertible into our common stock, at the investors'  option,
at the  lower of (i)  $0.30  or (ii)  50% of the  average  of the  three  lowest
intraday  trading  prices for the common stock on a principal  market for the 20
trading days before but not including the  conversion  date.  The full principal
amount of the  convertible  debentures  are due upon default  under the terms of
convertible  debentures.  In addition,  the Company has granted the  investors a
security interest in substantially  all of its assets and intellectual  property
and registration  rights. The warrants are exercisable until five years from the
date of  issuance  at a  purchase  price of $0.25 per  share.  In  addition  the
warrants  exercise  price gets  adjusted in the event the Company  issues common
stock at a price below market, with the exception of any securities issued as of
the date of the warrants.

                                      -18-
<PAGE>

     On December 31, 2002,  the Company sold 51,356  shares of its common stock,
at a price of $0.20 per share in a private  offering  exempt  under  Rule 506 of
Regulation D promulgated  under  Section 4(2), as amended.  The shares issued in
the offer were in exchange for debt  forgiveness.  The sale was to an individual
accredited investor.


ITEM 3.   DEFAULTS ON SENIOR SECURITIES

          None


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

     The Company has held no regularly scheduled,  called or special meetings of
shareholders during the reporting period.


ITEM 5.   OTHER INFORMATION

          None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

Exhibit No.    Description

2.1*           Articles of Incorporation of Kimberley Mines, Inc.
2.2*           Certificate of Amendment of Articles of Incorporation (Mine-A-Max
               Corp.)
2.3*           Certificate of Amendment of Articles of  Incorporation  (Peabodys
               Coffee, Inc.)
2.4*           Amended and Restated Bylaws of Peabodys Coffee, Inc.
3.1*           Peabodys Coffee, Inc. 1995 Stock Option Plan
3.2*           Peabodys Coffee, Inc. 1999 Stock Option Plan
6.1*           Executive Services Agreement with Barry J. Gibbons
6.2**          Asset Purchase Agreement with Arrosto Coffee Company, LLC
6.3***         Amendment No. 1--Arrosto Asset Purchase Agreement
6.4***         Amendment No. 2--Arrosto Asset Purchase Agreement
99.1           Certification  Pursuant  to 18  U.S.C.  Section  1350 As  Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*Incorporated  by  reference  to the  Company's  Registration  Statement on Form
10-SB, as amended,  originally  filed with the Commission under the Exchange Act
on December 21, 1999.

**Incorporated by reference to the Company's Annual Report on Form 10-KSB, filed
with the Commission on June 29, 2000.

***Incorporated  by reference to the Company's  Amended Quarterly Report for the
Period  Ending  September 30, 2000,  filed on Form 10-QSB/A with the  Commission
under the Exchange Act on February 1, 2001.

     (b)  Reports on Form 8-K.
          --------------------

          None

                                      -19-
<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                        PEABODYS COFFEE, INC.,
                                        A Nevada Corporation



                                        By: /s/ Todd Tkachuk
                                            --------------------------
                                            Todd Tkachuk, President
                                        Date: February 14, 2003

                                      -20-
<PAGE>