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 September 30, 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: 21,567,120 shares of common stock.

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

<PAGE>

                                TABLE OF CONTENTS


Part I - Financial Information

     Item 1    Financial Statements                                            3

     Item 2    Management's Discussion and Analysis or Plan of Operation      16


Part II - Other Information

     Item 1    Legal Proceedings                                              19

     Item 2    Changes in Securities                                          19

     Item 3    Defaults Upon Senior Securities                                20

     Item 4    Submission of Matters to a Vote of Security Holders            20

     Item 5    Other Information                                              20

     Item 6    Exhibits and Reports on Form 8-K                               20

     Signatures                                                               21

                                      -2-
<PAGE>

                              PEABODYS COFFEE, INC.
                                 Balance Sheets
                           September 30, 2002 and 2001
                                    Unaudited

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

Current Assets
<S>                                                        <C>              <C>
    Cash                                                   $      7,016     $      7,866
    Other receivables                                            14,936           31,384
    Inventories                                                  77,937           49,028
    Prepaid expenses                                            124,371           96,429
                                                           ------------     ------------
            Total Current Assets                                224,260          184,707

Property and equipment (net)                                    368,771          391,405
Deposits and other assets                                       203,251          125,191
                                                           ------------     ------------

            Total Assets                                   $    796,282     $    701,303
                                                           ============     ============


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Cash overdraft                                          $     13,876     $     40,208
   Accounts payable                                             492,301          392,007
   Accrued expenses                                             285,708          327,101
   Short-term borrowings                                         90,217           14,820
   Current portion of long-term debt                              4,173               --
   Bridge note financing                                         35,000           40,000
                                                           ------------     ------------
            Total Current Liabilities                           921,275          814,136
                                                           ------------     ------------

Long-term debt, net of current portion                           19,718               --
                                                           ------------     ------------
            Total Liabilities                                   940,993          814,136

Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 21,567,120 and 17,792,717
   $.001 par value                                         $     21,567     $     17,793

   Paid-in capital                                            5,445,354        4,600,835
   Accumulated deficit                                       (5,611,632)      (4,731,461)
                                                           ------------     ------------

            Total Stockholders' Deficit                        (144,711)        (112,833)
                                                           ------------     ------------

            Total Liabilities and Stockholders' Deficit    $    796,282     $    701,303
                                                           ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -3-
<PAGE>

                              PEABODYS COFFEE, INC.
                   Statements of Loss and Accumulated Deficit
                                    Unaudited

<TABLE>
<CAPTION>
                                                      Six Months Ended                 Three Months Ended
                                                        September 30,                     September 30,
                                                    2002             2001             2002             2001
                                                ------------     ------------     ------------     ------------
<S>                                             <C>              <C>              <C>              <C>
Sales                                           $  1,388,392     $  1,276,307     $    588,595     $    572,791

Cost of Sales                                        587,522          480,326          258,573          205,984
                                                ------------     ------------     ------------     ------------

   Gross Profit                                      800,870          795,981          330,022          366,807

Operating expenses
    Employee compensation and benefits               699,937          594,934          311,638          283,999
    General and administrative expenses              162,530          147,753           80,657           93,148
    Occupancy                                        159,874          148,875           71,131           67,638
    Director and professional fees                   181,215          119,986           64,575           84,813
    Depreciation and amortization                     63,770           62,754           31,875           33,999
    Other operating expenses                              --            2,500               --            2,500
                                                ------------     ------------     ------------     ------------
                                                   1,267,326        1,076,802          559,876          566,097
                                                ------------     ------------     ------------     ------------

    Operating Loss                                  (466,456)        (280,821)        (229,854)        (199,290)

Other income                                             242           24,000           (7,650)              --
Legal expense - former executive                    (146,379)              --          (16,379)              --
Interest expense                                     (17,082)         (10,817)         (10,708)          (8,086)
                                                ------------     ------------     ------------     ------------

    Net loss before extraordinary item              (629,675)        (267,638)        (264,591)        (207,376)
    Extraordinary item - forgiveness of debt         103,720            9,889          103,548            4,862
                                                ------------     ------------     ------------     ------------

    Net Loss                                        (525,955)        (257,749)        (161,043)        (202,514)

Accumulated Deficit, beginning of period          (5,085,677)      (4,473,712)      (5,450,589)      (4,528,947)
                                                ------------     ------------     ------------     ------------

Accumulated Deficit, end of period              $ (5,611,632)    $ (4,731,461)    $ (5,611,632)    $ (4,731,461)
                                                ============     ============     ============     ============

Earnings per common share:
    Net loss before extraordinary item          $      (0.03)    $      (0.02)    $      (0.01)    $      (0.01)
    Extraordinary item                                  0.01             0.00             0.01             0.00
                                                ------------     ------------     ------------     ------------
    Net loss                                    $      (0.03)    $      (0.02)    $      (0.01)    $      (0.01)
                                                ============     ============     ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -4-
<PAGE>

                              PEABODYS COFFEE, INC.
                            Statements of Cash Flows
                  Six Months Ended September 30, 2002 and 2001
                                    Unaudited


<TABLE>
<CAPTION>
                                                                 2002             2001
                                                         ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                      <C>              <C>
Net Loss                                                 $   (525,955)    $   (257,749)
Adjustments to reconcile net loss to net cash
applied to operating activities:
   Depreciation and amortization                               63,770           62,754
   Debt settlements and forgiveness of debt                  (103,720)          (9,889)
   Gain on disposal of assets                                    (966)              --
   Non-cash consulting fees                                    83,110               --
   Slotting fee expense                                         5,625               --
   Other income from reduction of obligation to issue
   shares of common stock                                          --          (24,000)
Changes in operating assets and liabilities:
   Receivables                                                (62,106)          (9,879)
   Inventories                                                (14,699)           1,355
   Prepaid expenses                                           (10,488)          55,301
   Cash overdraft                                             (34,619)          (8,350)
   Accounts payable                                           263,620            9,010
   Accrued expenses                                             7,697           16,557
                                                         ------------     ------------
            Net cash applied to operating activities         (328,731)        (164,890)

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment                           (73,683)         (69,940)
Disposals of property and equipment                            57,379               --
Brand development costs                                       (65,269)              --
Changes to deposits and other assets                           11,857           (1,662)
                                                         ------------     ------------
            Net cash applied to investing activities          (69,716)         (71,602)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock                               126,658          236,000
Proceeds from issuance of notes payable                       289,000               --
Principal reductions of notes payable                         (17,502)              --
                                                         ------------     ------------
            Net cash provided by financing activities         398,156          236,000

NET DECREASE IN CASH AND
CASH EQUIVALENTS                                                 (291)            (492)

CASH AND CASH EQUIVALENTS
Beginning of period                                             7,307            8,358
                                                         ------------     ------------
End of period                                            $      7,016     $      7,866
                                                         ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -5-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 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  -  Acquisitions

Note  5  -  Property and Equipment, and Intangible Assets

Note  6  -  Accounts Payable

Note  7  -  Accrued Expenses

Note  8  -  Short-Term Borrowings

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
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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 and Nevada. 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.

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

Basis of Presentation
---------------------
In the opinion of management,  all adjustments of a normal and recurring nature,
which were  considered  necessary  for a fair  presentation  of these  financial
statements,  have been included.  It is suggested that these statements are read
in conjunction with the financial  statements and footnotes  thereto included in
the annual  report of the  Company on Form  10-KSB for the year ended  March 31,
2002. The results of operations for the six months ended  September 30, 2002 may
not  necessarily  be indicative  of the operating  results for the entire fiscal
year.

Incorporation by Reference
--------------------------
The following  notes from the Company's  audited  financial  statements  for the
years ended March 31, 2002 and 2001 included in the Annual Report of the Company
on Form  10-KSB,  filed  with  the  Commission  on July  15,  2002,  are  hereby
incorporated by reference:

            Note 2   - Related Party Transactions
            Note 10 - Lease Obligations
            Note 12 - Income Taxes
            Note 14 - Stock Options and Warrants
            Note 18 - Risks and Uncertainties
            Note 19 - Concentrations

Cash and Cash Equivalents
-------------------------
The Company  considers  all highly liquid  instruments  with a maturity of three
months or less at the time of purchase to be cash equivalents.

Property and Equipment
----------------------
Property and equipment are recorded at cost.  Depreciation  and amortization are
primarily  accounted for on the  straight-line  method over the estimated useful
lives  of  the  assets,   generally  ranging  from  five  to  seven  years.  The
amortization  of site  improvements is based on the shorter of the lease term or
the life of the improvement.

                                      -7-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Intangible Assets
-----------------
Goodwill  represents  the  excess of  acquisition  costs  over the fair value of
assets acquired. It is the Company's policy that goodwill and certain intangible
assets  with  indeterminable  lives  will  be  evaluated  based  on the  ongoing
profitability  of the assets in order to determine if any  impairment of the net
value has occurred.  No impairment of the net goodwill value has occurred during
the six months ended September 30, 2002 and 2001.

Non-compete  agreements and other intangible assets with determinable  lives, if
any, are  amortized on a  straight-line  basis over the term of the agreement or
estimated useful life.

Income Taxes
------------
The Company  accounts  for income  taxes under the  provisions  of  Statement of
Financial  Accounting  Standards No. 109,  "Accounting  for Income Taxes," which
requires the use of the asset and liability method of computing  deferred income
taxes.

Inventories
-----------
Inventories  are  stated at the lower of cost  (first-in,  first-out  method) or
market.

Stock Transaction Costs
-----------------------
Transaction  costs  related  to the sale of  common  shares  are  recorded  as a
reduction to capital raised by the Company.

Compensated Absences
--------------------
Employees  of the  Company  are  entitled  to  paid  vacation  depending  on job
classification,  length of service and other  factors.  It is  impracticable  to
estimate the amount of compensation  for future absences,  and  accordingly,  no
liability  has been  recorded  in the  accompanying  financial  statements.  The
Company's policy is to recognize the costs of compensated absences when actually
paid to employees.

Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash and cash equivalents  approximates fair value because
of the short-term maturity of those instruments. The carrying value of long-term
debt approximates fair value.

Reclassifications
-----------------
Certain  amounts from the  September  30, 2001  financial  statements  have been
reclassified to conform to the current year presentation.

                                       -8-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


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  $697,015  and  $144,711,
respectively, as of September 30, 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.

Management  plans to address  these  challenges  by building  on the  successful
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.

                                      -9-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 3 - INVENTORIES

At September 30, 2002 and 2001, inventories were comprised of the following:

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

          Coffee                                  $  25,857       $   8,782
          Other food and beverage items              22,250          21,803
          Packaging and other supplies               29,830          18,443
                                                  ---------       ---------
                                                  $  77,937       $  49,028
                                                  =========       =========

NOTE 4 - ACQUISITIONS

During the year ended March 31, 2001, the Company  purchased certain assets of a
coffee roasting company in Van Nuys, California,  in exchange for the promise to
issue up to  320,000  shares of common  stock at $0.20 per  share.  Terms of the
agreement  specify that the actual number of shares to be issued is reduced each
month until the seller  obtains  the  release of certain  liens from the assets.
During the nine months ended December 31, 2001, the seller obtained the required
release of the liens,  resulting in the issuance of 40,000  shares.  There is no
further obligation to issue additional shares.

The purchase  price has been  allocated  to the acquired  assets on the basis of
their  estimated  fair value on the date of  acquisition.  The fair value of the
assets acquired is summarized as follows:

          Inventory                               $ 11,662
          Roasting equipment                        52,338
                                                  --------
                                                  $ 64,000
                                                  ========

Effective  December 12, 2000,  the Company  transferred  possession of the above
roasting  equipment  for $20,000 to an  unrelated  party.  The book value of the
equipment was adjusted at September 30, 2000 to its net realizable value. During
the nine months  ended  December  31,  2001,  clear title to the  equipment  was
obtained and the sale of the equipment was finalized.

                                      -10-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 5 - PROPERTY AND EQUIPMENT, AND INTANGIBLE ASSETS

At September  30, 2002 and 2001,  property and equipment  were  comprised of the
following:

                                                    2002            2001
                                                 ----------     ----------
     Kiosk carts                                 $  267,733     $  260,895
     Kiosk equipment                                290,263        286,702
     Equipment and furniture                        261,097        228,291
     Signage                                         60,113         49,179
     Site improvements                              117,392         79,145
                                                 ----------     ----------
                                                    996,598        904,212
     Less: accumulated depreciation                (627,827)      (512,807)
                                                 ----------     ----------
                                                 $  368,771     $  391,405
                                                 ==========     ==========

Included in other assets at September 30, 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                                     1,170          1,170
     Other identifiable intangibles                  14,600         16,942
                                                 ----------     ----------
                                                    169,953         93,637
     Less:  accumulated amortization                (36,896)       (18,936)
                                                 ----------     ----------
                                                 $  133,057     $   74,701
                                                 ==========     ==========

The Company recognized  depreciation and amortization expense for the six months
ended September 30, 2002 and 2001 as follows:

                                                    2002           2001
                                                 ----------     ----------
     Depreciation                                $   57,510     $   57,510
     Amortization                                     6,260          5,244
                                                 ----------     ----------
                                                 $   63,770     $   62,754
                                                 ==========     ==========

NOTE 6 - ACCOUNTS PAYABLE

At  September  30, 2002 and 2001,  approximately  40% and 59% of the balances in
accounts payable, respectively, have been outstanding for more than 90 days.

                                      -11-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 7 - ACCRUED EXPENSES

At  September  30,  2002  and  2001,  accrued  expenses  were  comprised  of the
following:

                                                    2002           2001
                                                 ----------     ----------
     Accrued interest                            $   44,589     $   32,566
     Accrued wages                                   44,515         65,489
     Accrued sales and use tax                       32,008         29,959
     Accrued payroll taxes                          162,158        198,603
     Other                                            2,438            484
                                                 ----------     ----------
                                                 $  285,708     $  327,101
                                                 ==========     ==========

Included in accrued  payroll  taxes at September  30, 2002 and 2001 are past due
payroll tax  obligations  in the amount  $145,456  and  $180,835,  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 8 - SHORT-TERM BORROWINGS

During the six months ended  September 30, 2002 and 2001,  the Company  borrowed
funds to provide  short-term  working  capital.  These working capital loans are
unsecured,  non-interest  bearing,  and  amounted  to $90,217  and $14,820 as of
September 30, 2002 and 2001, respectively.

                                      -12-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


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.

On September 30, 2002,  certain note holders  discharged the Company of $279,689
of its obligations  under the notes, and  relinquished  their rights to purchase
284,000 shares of common stock in exchange for 1,398,445 shares of the Company's
common stock.

The outstanding balance at September 30, 2002 is summarized as follows.

<TABLE>
<CAPTION>
                                                                         2002          2001
                                                                     --------      --------
<S>                                                                  <C>           <C>
          10% note, unsecured, payable in monthly installments
          of $212.47 including interest, due 04/30/07                $  9,477      $    -0-

          10% notes, unsecured, payable in monthly installments
          of $318.71 including interest, due 05/30/07                  14,414           -0-

          Less current portion                                         (4,173)          -0-
                                                                     --------      --------
                                                                     $ 19,718      $    -0-
                                                                     ========      ========
</TABLE>

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

          Twelve months ended September 30           Amount
          --------------------------------           ------
                      2003                         $  4,173
                      2004                            4,610
                      2005                            5,092
                      2006                            5,626
                      2007                            4,390
                                                   --------
                                                   $ 23,891
                                                   ========

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
September 30, 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  September  30, 2002 and 2001,  the
Company has accrued $35,219 and $32,566,  respectively,  of interest  payable on
these notes.  As of September 30, 2002,  the Company has not received any notice
of default relating to the notes.

                                      -13-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 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 six
months  ended  September  30, 2002 and 2001,  were  19,484,955  and  15,772,581,
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 six months ended September 30, 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 six months ended September
30, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                             2002         2001
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
          Issuance of common stock in exchange for
                services provided                                       $  80,000    $  88,750

          Issuance of common stock in exchange for
                discharge of obligations on long-term
                borrowings, trade payables and other liabilities          290,085        8,000

          Trade payables and accrued expenses forgiven                    103,720        9,889

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

          Credit memos issued to customers for slotting agreements         67,500           --

          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>

                                      -14-
<PAGE>

                              PEABODYS COFFEE, INC.
                          Notes to Financial Statements
                           September 30, 2002 and 2001
                                    Unaudited


NOTE 13 - FORGIVENESS OF DEBT

Forgiveness  of debt  amounted to $103,720  and $9,889 for the six months  ended
September  30,  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.

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 June  2002,  the  Company  received  correspondence  from the  trustee of the
bankruptcy  estate  of  a  former  vendor  requesting   payment  on  a  $250,000
obligation.  The Company  believed  that it had settled this  obligation in 1999
with an  agreement to pay $20,000.  The matter has been  clarified  and resolved
with the United States Bankruptcy Court for the Northern District of California.
The Company is obligated  to pay the sum of $20,000  over a six-month  period in
exchange for a release from any claim the Trustee  might have against it. As the
accounts of the  Company  had already  reflected  the  original  settlement,  no
accrual was necessary.

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 September 30, 2002 and
2001.

                                      -15-
<PAGE>

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 six months ended  September 30, 2002 increased 8.8% to
$1,388,392 from $1,276,307 for the same period in fiscal 2001. This increase was
primarily due to the opening of a retail cafe in Southern  California during the
quarter  ended  December 31, 2001.  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 13.5% of the Company's net revenue for
the quarter.

          COSTS AND EXPENSES

     Cost of sales for the six months ended  September 30, 2002 increased  22.3%
to $587,522 from $480,326 for the same period in fiscal 2001. As a percentage of
net  revenues,  cost of  sales  increased  to  42.3%  for the six  months  ended
September  30, 2002 from 37.6% for the  comparable  period in fiscal  2001.  The
increase as a percent of net revenues is primarily due to lower margin  products
offered at the Company's retail cafe in Southern California.

     Employee  compensation  and benefits for the six months ended September 30,
2002  increased to $699,937 from $594,934 for the same period in fiscal 2001. As
a percentage of net revenues,  employee  compensation and benefits  increased to
50.4% for the six months ended  September 30, 2002 from 46.6% 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 six months ended September 30,
2002  increased to $162,530 from $147,753 for the same period in fiscal 2001. As
a percentage of net revenues,  general and administrative  expenses increased to
11.7% for the six months ended  September 30, 2002 from 11.6% for the comparable
period in fiscal 2001.

     Occupancy  costs for the six months ended  September 30, 2002  increased to
$159,874  from  $148,875 for the same period in fiscal 2001.  As a percentage of
net  revenues,  occupancy  costs  decreased  to 11.5% for the six  months  ended
September 30, 2002 from 11.7% for the comparable period in fiscal 2001.

     Director and professional  fees for the six months ended September 30, 2002
increased to $181,215  from  $119,986  for the same period in fiscal  2001.  The
majority of these expenses result from the engagement of various  consultants to
assist the Company in obtaining  growth financing and in penetrating new markets
with its packaged consumer brand of Black Rhino Coffee(TM).

                                      -16-
<PAGE>

     Depreciation  and  amortization  expense for the six months ended September
30, 2002  increased  to $63,770 from $62,754 for the same period in fiscal 2001.
As a percentage of net revenues, depreciation and amortization expense decreased
to 4.6% for the six months ended September 30, 2002 from 4.9% for the comparable
period in fiscal 2001.

     Operating  losses for the six months ended  September 30, 2002 increased to
$466,456  from  $280,821 the same period in fiscal 2001.  As a percentage of net
revenues, operating losses increased to 33.6% for the six months ended September
30, 2002 from 22.0% 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 $146,379 for the six months ended  September 30, 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 six months ended  September 30, 2002 increased to $525,955
from  $257,749  for the same  period  in fiscal  2001.  As a  percentage  of net
revenues,  net losses  increased to 37.9% for the six months ended September 30,
2002 from 20.2% 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 six months
ended September 30, 2002, the Company had a net operating loss of $466,456,  and
an overall  net loss of  $525,955.  At  September  30,  2002,  the Company has a
working capital deficit of $697,015, and a stockholders' deficit of $144,711.

     Management  plans to address these challenges by building on the successful
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.

                                      -17-
<PAGE>

     Cash applied to investing activities for the six months ended September 30,
2002  consisted  of capital  additions  to property  and  equipment  of $73,683,
disposals  of property  and  equipment of $57,379,  brand  development  costs of
$65,269,  and  decreases  to  deposits of $11,857.  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 six
months ended September 30, 2002 totaling $398,156.  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. Cash from financing  activities  primarily  consists of $289,000 from net
long-term  borrowings  under the line of credit,  and $126,658 net proceeds from
the  sale of  Company  stock.  These  amounts  were  primarily  utilized  in the
day-to-day operations of the Company.

                                      -18-
<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 July 1, 2002, the Company granted a  non-statutory  stock option for the
purchase  of 75,000  shares of its  common  stock to an  entity  for  consulting
services. The option has a term of 5 years, is fully vested, and has an exercise
price of $0.20 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 August 5, 2002, the Company granted a non-statutory stock option for the
purchase of 250,000  shares of its common  stock to a law firm as  consideration
for forgiveness of debt for past services  rendered.  The option has a term of 5
years, is fully vested, and has an exercise price of $0.15 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.

     From September 16, 2002,  continuing  through the end of the period covered
by this report,  the Company has sold 2,025,425 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.  575,000 of the shares
issued in this offer were in exchange for cash.  1,450,425 of the shares  issued
in this  offer were in  exchange  for debt  forgiveness.  The sales were to both
individuals and entities, all of whom were accredited investors.

     On September 19, 2002, the Company granted a non-statutory stock option for
the purchase of 150,000  shares of its common stock to an entity for  consulting
services. The option has a term of 5 years, is fully vested, and has an exercise
price of $0.20 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  September  30, 2002,  the Company  issued  25,000  shares of its common
stock, at a price of $0.20 per share, as consideration for consulting  services.
The issuance was exempt from  registration  under Section 4(2) of the Securities
Act of 1933,  as amended.  The entity  receiving  the shares had a  pre-existing
relationship with the Company, was a sophisticated  investor,  and had access to
the same information as would be included in a registration  statement  prepared
by the Company.

                                      -19-
<PAGE>

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

                                      -20-
<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:  November 14, 2002

                                      -21-
<PAGE>