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 JUNE 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: 19,516,695 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                                           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                                                          22

                                      -2-
<PAGE>

                              PEABODYS COFFEE, INC.
                                 BALANCE SHEETS
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

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

Current Assets
<S>                                                        <C>              <C>
   Cash                                                    $      6,211     $      6,818
   Other receivables                                             49,186           23,183
   Inventories                                                   61,048           56,526
   Prepaid expenses                                              60,654          136,311
                                                           ------------     ------------
           Total Current Assets                                 177,099          222,838

Property and equipment (net)                                    391,378          419,680
Deposits and other assets                                       237,465          104,779
                                                           ------------     ------------

           Total Assets                                    $    805,942     $    747,297
                                                           ============     ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Cash overdraft                                          $     39,520     $     62,446
   Accounts payable                                             592,214          429,238
   Accrued expenses                                             244,236          365,862
   Liability for acquisition of inventory and equipment              --            8,000
   Other current liabilities                                         --           20,000
   Short-term borrowings                                         10,000           14,820
   Current portion of long-term debt                             46,673               --
   Bridge note financing                                         35,000           40,000
                                                           ------------     ------------
           Total Current Liabilities                            967,643          940,366
                                                           ------------     ------------

Long-term debt, net of current portion                          231,710               --
                                                           ------------     ------------
           Total Liabilities                                  1,199,353          940,366

Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 19,516,695 and 15,320,217
   $.001 par value                                               19,517           15,320

   Paid-in capital                                            5,037,661        4,320,558
   Accumulated deficit                                       (5,450,589)      (4,528,947)
                                                           ------------     ------------

           Total Stockholders' Deficit                         (393,411)        (193,069)
                                                           ------------     ------------

           Total Liabilities and Stockholders' Deficit     $    805,942     $    747,297
                                                           ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -3-
<PAGE>

                              PEABODYS COFFEE, INC.
                   STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
                    THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                    UNAUDITED

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

Sales                                             $    799,797     $    703,516

Cost of Sales                                          328,949          274,342
                                                  ------------     ------------

   Gross Profit                                        470,848          429,174

Operating expenses
   Employee compensation and benefits                  388,299          310,935
   General and administrative expenses                  81,873           54,605
   Occupancy                                            88,743           81,237
   Director and professional fees                      116,640           35,173
   Depreciation and amortization                        31,895           28,755
   Other operating expenses                                 --               --
                                                  ------------     ------------
                                                       707,450          510,705
                                                  ------------     ------------

   Operating Loss                                     (236,602)         (81,531)

Other income                                             7,892           24,000
Legal expense - former president/CEO                  (130,000)              --
Interest and other expense                              (6,374)          (2,731)
                                                  ------------     ------------

   Net loss before extraordinary item                 (365,084)         (60,262)
   Extraordinary item - forgiveness of debt                172            5,027
                                                  ------------     ------------

   Net Loss                                           (364,912)         (55,235)

Accumulated Deficit, beginning of period            (5,085,677)      (4,473,712)
                                                  ------------     ------------

Accumulated Deficit, end of period                $ (5,450,589)    $ (4,528,947)
                                                  ============     ============

Earnings per common share:
   Net loss before extraordinary item             $      (0.02)    $      (0.00)
   Extraordinary item                                     0.00             0.00
                                                  ------------     ------------
   Net loss                                       $      (0.02)    $      (0.00)
                                                  ============     ============

See accompanying notes to financial statements

                                      -4-
<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                    THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                             2002             2001
                                                                     ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                  <C>              <C>
Net Loss                                                             $   (364,912)    $    (55,235)
Adjustments to reconcile net loss to net cash
provided by (applied to) operating activities:
   Depreciation and amortization                                           31,895           28,755
   Debt settlements and forgiveness of debt                                (1,138)          (5,027)
   Loss on disposal of property and equipment                                  --               --
   Non-cash consulting fees                                                43,531           23,390
   Other income from reduction of obligation to issue
   shares of common stock                                                      --          (24,000)
Changes in operating assets and liabilities:
   Receivables                                                             18,241           (1,678)
   Inventories                                                              2,190           (6,143)
   Prepaid expenses                                                        (5,312)         (25,568)
   Cash overdraft                                                          (8,975)          13,888
   Accounts payable                                                       186,913           14,184
   Accrued expenses                                                       (35,484)          55,318
   Other current liabilities                                                   --               --
                                                                     ------------     ------------
           Net cash provided by (applied to) operating activities        (133,051)          17,884

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment                                       (57,253)         (17,021)
Changes to deposits and other assets                                      (71,175)          (2,403)
                                                                     ------------     ------------
   Net cash applied to investing activities                              (128,428)         (19,424)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock                                            12,000               --
Proceeds from issuance of notes payable                                   254,000               --
Repayments of short-term borrowings                                            --               --
Principal reductions of notes payable                                      (5,617)              --
                                                                     ------------     ------------
           Net cash provided by financing activities                      260,383               --

NET DECREASE IN CASH AND
CASH EQUIVALENTS                                                           (1,096)          (1,540)

CASH AND CASH EQUIVALENTS
Beginning of period                                                         7,307            8,358
                                                                     ------------     ------------
End of period                                                        $      6,211     $      6,818
                                                                     ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -5-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 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  -  Commitments and Contingencies

                                      -6-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business
-----------------------
Peabodys  Coffee (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 gained  access to this  segment of the
specialty coffee market by contracting with existing food service providers such
as Sodexho America,  Aramark, and The Compass Group, and by contracting directly
with host facilities.  The Company's  product  offerings  include:  high quality
coffee and espresso beverages, fruit smoothies,  pastries,  accompaniments,  and
coffee related accessories.

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 three months ended June 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
                             JUNE 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 three months ended June 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  June  30,  2001  financial   statements  have  been
reclassified to conform to the current year presentation.

                                      -8-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 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  $790,544  and  $393,411,
respectively, as of June 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  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  its  engagement  of Ark of Commerce  will lead to  increased  investor
awareness and significant new sources of financing.  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
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 3 - INVENTORIES

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

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

     Coffee                              $ 19,240        $ 12,563
     Other food and beverage items         28,775          25,085
     Packaging and other supplies          13,033          18,878
                                         --------        --------
                                         $ 61,048        $ 56,526
                                         ========        ========

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
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 5 - PROPERTY AND EQUIPMENT, AND INTANGIBLE ASSETS

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

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

     Kiosk carts                                  $ 263,733           $ 280,204
     Kiosk equipment                                293,663             279,652
     Equipment and furniture                        263,430             249,027
     Signage                                         53,032              51,657
     Site improvements                              116,592              81,266
                                                   --------            --------
                                                    990,450             941,806
     Less: accumulated depreciation                (599,072)           (522,126)
                                                  ---------           ---------
                                                  $ 391,378           $ 419,680
                                                  =========           =========

Included  in other  assets at June 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                                      83,497               9,595
     Kiosk design                                     1,170               1,170
     Other identifiable intangibles                  14,600              16,942
                                                  ---------           ---------
                                                    165,197              93,637
     Less:  accumulated amortization                (33,776)            (13,692)
                                                  ---------           ---------
                                                  $ 131,421           $  79,945
                                                  =========           =========

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

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

     Depreciation                                 $  28,755           $  28,755
     Amortization                                     3,140                   -
                                                  ---------           ---------
                                                  $  31,895           $  28,755
                                                  =========           =========

NOTE 6 - ACCOUNTS PAYABLE

At June 30, 2002 and 2001, approximately 28% and 64% of the balances in accounts
payable, respectively, have been outstanding for more than 90 days.

                                      -11-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 7 - ACCRUED EXPENSES

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

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

     Accrued interest                             $  43,020           $  30,944
     Accrued wages                                   40,071              41,689
     Accrued sales and use tax                       32,008              29,959
     Accrued payroll taxes                          123,787             261,015
     Other                                            5,350               2,255
                                                  ---------           ---------
                                                  $ 244,236           $ 365,862
                                                  =========           =========

As of June 30, 2002, the Company has accrued past due payroll tax obligations to
the Internal  Revenue Service in the amount  $101,447.  As of June 30, 2001, the
Company had accrued past due payroll tax  obligations  to the  Internal  Revenue
Service  and the State of  California  in the amount  $244,863.  As of March 31,
2002, the past due payroll tax  obligations to the State of California have been
fully satisfied.

NOTE 8 - SHORT-TERM BORROWINGS

During the three months ended June 30, 2002 and 2001, the Company borrowed funds
to provide short-term working capital. Details of these loans are as follows:

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

     Unsecured loan, non-interest bearing, payable
     on demand                                                  -     $  14,820

     Unsecured loan, 10% interest per annum, interest
     only due monthly, balance due March 31, 2003       $  10,000             -

                                      -12-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 9 - LONG-TERM DEBT

The Company has  available 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.  The  outstanding  balance  at  June  30,  2002 is
summarized as follows.

<TABLE>
<CAPTION>
                                                                    2002           2001
                                                                  ------         ------
<S>                                                            <C>           <C>
     10% note, unsecured, payable in monthly installments
     of $849.88 including interest, due 03/31/07               $  38,438     $      -0-

     10% notes, unsecured, payable in monthly installments
     of $2,528.40 including interest, due 04/30/07               115,914            -0-

     10% notes, unsecured, payable in monthly installments
     of $1,593.53 including interest, due 05/30/07                74,031            -0-

     10% notes, unsecured, payable in monthly installments
     of $1,062.36 including interest, due 06/30/07                50,000            -0-

     Less current portion                                        (46,673)           -0-
                                                               ---------     ----------
                                                               $ 231,710     $      -0-
                                                               =========     ==========
</TABLE>

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

           Twelve months ended June 30               Amount
           ---------------------------             --------
                     2003                        $   46,673
                     2004                            51,560
                     2005                            56,958
                     2006                            62,923
                     2007                            60,269
                                                 ----------
                                                 $  278,383

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 June
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 June 30, 2002 and 2001,  the Company
has accrued  $33,650 and  $30,944,  respectively,  of interest  payable on these
notes.  As of June 30, 2002,  the Company has not received any notice of default
relating to the notes.

                                      -13-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 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
three  months  ended June 30, 2002 and 2001,  were  19,377,039  and  14,144,393,
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 three months ended June 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 three months ended June
30, 2002 and 2001 are as follows:

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

Issuance of common stock in exchange for
     services provided                                     $80,000    $50,000

Sale of equipment in exchange for receivable                52,730          -

Trade payables and accrued expenses forgiven                 6,771      5,027

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

Issuance of common stock in exchange for
     property and equipment                                      -     10,000

NOTE 13 - 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.

                                      -14-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2002 AND 2001
                                    UNAUDITED

NOTE 13 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

On June 26, 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  believes was settled in 1999.  The Company  disputes the  trustee's
claim and intends to clarify and resolve the matter as soon as  practicable.  No
accrual has been recorded pending the outcome of this dispute.

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 June 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 three  months ended June 30, 2002  increased  13.7% to
$799,797  from  $703,516 for the same period in fiscal 2001.  This was primarily
due to the  opening of new  hospital  locations  and a retail  cafe in  Southern
California. Retail sales accounted for 100% of revenues for both periods.

     COSTS AND EXPENSES

     Cost of sales for the three months ended June 30, 2002  increased  19.9% to
$328,949  from  $274,342 for the same period in fiscal 2001.  As a percentage of
net revenues,  cost of sales  increased to 41.1% for the three months ended June
30, 2002 from 39.0% 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 three months ended June 30, 2002
increased to $388,299  from  $310,935  for the same period in fiscal 2001.  As a
percentage  of net revenues,  employee  compensation  and benefits  increased to
49.0% for the three  months  ended June 30,  2002 from 44.2% for the  comparable
period in fiscal  2001.  The  increase as a percent of net revenues is primarily
due to increased workers compensation insurance rates.

     General and  administrative  expenses  for the three  months ended June 30,
2002  increased to $81,873 from $54,605 for the same period in fiscal 2001. As a
percentage of net revenues,  general and  administrative  expenses  increased to
10.2% for the three  months  ended  June 30,  2002 from 7.8% for the  comparable
period in fiscal  2001.  The  increase as a percent of net revenues is primarily
due to training costs associated with the hiring of new employees.

     Occupancy  costs for the three  months  ended June 30,  2002  increased  to
$88,743 from $81,237 for the same period in fiscal 2001.  As a percentage of net
revenues, occupancy costs decreased to 11.1% for the three months ended June 30,
2002 from 11.5% for the comparable period in fiscal 2001.

     Director  and  professional  fees for the three  months ended June 30, 2002
increased  to $116,640  from  $35,173 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).  In addition,  the
Company recognized the fees related to its annual audit for the year ended March
31, 2002 during the three months ended June 30,  2002.  Comparable  annual audit
fees for the year ended March 31, 2001 were  recognized  during the three months
ended September 30, 2001.

                                      -16-
<PAGE>

     Depreciation and  amortization  expense for the three months ended June 30,
2002  increased to $31,895 from $28,755 for the same period in fiscal 2000. As a
percentage of net revenues,  depreciation and amortization  expense decreased to
4.0% for the three  months  ended  June 30,  2002  from 4.1% for the  comparable
period in fiscal 2001.

     Operating  losses for the three  months  ended June 30, 2002  increased  to
$236,602  from  $81,531 the same period in fiscal 2001.  As a percentage  of net
revenues,  operating  losses  increased to 29.6% for the three months ended June
30, 2002 from 11.6% for the comparable period in fiscal 2001.

     Legal  expense  related to the  Company's  pending  litigation  against its
former  president/CEO  amounted to $130,000  for the three months ended June 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 three  months  ended June 30, 2002  increased  to $364,912
from  $55,235  for the same  period  in  fiscal  2001.  As a  percentage  of net
revenues, net losses increased to 45.6% for the three months ended June 30, 2002
from 7.9% 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 three months
ended June 30, 2002,  the Company had a net operating  loss of $236,602,  and an
overall  net loss of  $364,912.  At June 30,  2002,  the  Company  has a working
capital deficit of $790,544, and a shareholders' deficit of $393,411.

     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  its  engagement  of Ark of Commerce  will lead to  increased  investor
awareness and significant new sources of financing.  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 three months ended June 30,
2002  consisted of capital  additions  to property and  equipment of $57,253 and
increases to deposits and other assets of $71,175.  The capital  additions  were
primarily  related to costs associated with  refurbishing  existing kiosks.  The
increases to deposits and other assets were primarily costs  associated with the
development and launch of the Black Rhino Coffee(TM) brand.

     The Company had net cash provided from  financing  activities for the three
months  ended June 30, 2002  totaling  $260,383.  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 $254,000 from net
long-term borrowings under the line of credit, and $12,000 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

     On May 8, 2002,  the Company filed an action in the United States  District
Court,  Eastern District of California,  against its former CEO,  Clifford Brent
Young,  and others.  Peabodys  Coffee Inc. v. Young et al., No. S-02-994 LLK PAN
("Peabodys v. Young").  The complaint sought  declaratory and injunctive  relief
precluding  the  defendants  from  transferring  in  violation  of  the  federal
securities laws unregistered stock originally issued to Mr. Young. The complaint
also  alleged  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.
The complaint further sought Mr. Young's removal as a director of the Company.

     On May 29,  2002,  the  Company  moved for a  temporary  restraining  order
precluding  any stock  transfers  and (as to Mr. Young and the former  employee)
from  competition  at  certain  sites  that  are the  subject  of a  non-compete
agreement  between the Company and Mr. Young.  Immediately  prior to the May 30,
2002 hearing on that motion,  Mr. Young filed a petition for bankruptcy with the
United States  Bankruptcy  Court,  Central  District of California,  staying the
action  as to him  (although  he did  not  list  the  action  in his  bankruptcy
petition). The Court denied the remainder of the motion.  Subsequently,  on June
17, 2002, Mr. Young resigned as a director of the Company.

     The  Company  also  challenged  the  client's  legal  right to  cancel  the
contracts.  On June 25, 2002, the Company settled the potential dispute with the
client and the former employee. The settlement provides that the client will pay
the  Company in exchange  for being  allowed to cancel the  contracts;  that the
claims  against the former  employee in Peabodys v. Young will be dismissed with
prejudice; and for other consideration.  The Company also has agreed or proposed
agreement  with most of the other  defendants who hold the  unregistered  stock,
that the claims against them will be dismissed  without  prejudice,  in exchange
for  agreement on the part of these persons not to transfer the stock before the
date such transfers may be made under the federal  securities  laws. The Company
is  assessing  its options as to its claims  against  Mr.  Young in light of his
bankruptcy filing.

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 April 3, 2002, the Company  issued 120,000 shares to an individual  upon
the exercise of a stock option,  which had been granted for services rendered as
a director.  The issuance was exempt from registration under Section 4(2) of the
Securities  Act of 1933, as amended.  The exercise  price was paid in cash.  The
individual to whom the shares were issued 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.

     On April 15, 2002,  the Company  issued  200,000 shares to an individual as
compensation  for  services  as  a  director.   The  issuance  was  exempt  from
registration  under Section 4(2) of the Securities Act of 1933, as amended.  The
individual to whom the shares were issued had a pre-existing relationship

                                      -19-
<PAGE>

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.

     On April 29, 2002, the Company  issued 28,171 shares to an individual  upon
the exercise of an option,  which had been granted for  services  rendered.  The
issuance was exempt from registration under Section 4(2) and Section 4(a)(11) of
the Securities Act of 1933, as amended.  The exercise was a "cashless"  exercise
under the terms of the warrant,  with the exercise  price being paid with shares
of the Company's stock at its then-current  market value. The individual to whom
the shares were issued had a pre-existing relationship with the Company, and had
access to the same information as would be included in a registration  statement
prepared by the Company.

     On June 14, 2002, the Company  issued 120,000 shares to an individual  upon
the exercise of a stock option,  which had been granted for services rendered as
a director.  The issuance was exempt from registration under Section 4(2) of the
Securities  Act of 1933, as amended.  The exercise  price was paid in cash.  The
individual to whom the shares were issued 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.

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

                                      -20-
<PAGE>

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.
          -------------------

     The Company filed one report on Form 8-K during the reporting period, dated
June 17, 2002.  The Form 8-K was filed to report the  resignation  of one of the
Company's directors, Clifford Brent Young.

                                      -21-
<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, President
                                            Date:  August 14, 2002

                                      -22-
<PAGE>