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

                                   FORM 10Q-SB

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2004

             [ ] 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)

<TABLE>
<CAPTION>
<S>                                                                                 <C>
                          Nevada                                                    87-0468654
     (State or other jurisdiction of Incorporation or                  (I.R.S. Employer Identification No.)
                       organization)


         660 Commerce Drive, Ste. B, Roseville, CA                                    95678
         (Address of Principal Executive Offices)                                   (Zip Code)

</TABLE>

                                 (916) 788-2630
                           (Issuer's Telephone Number)


Indicate by check mark whether the registrant (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 filings requirements for the past 90
days. Yes [X ] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-QSB or any
amendment to the Form 10-QSB. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date, is 41,670,421 shares of common stock,
$0.001 par value.

Transitional Small Business Disclosure Format (Check one): Yes |_| ; No |X|
<PAGE>

                              PEABODYS COFFEE, INC.
                                TABLE OF CONTENTS

       CONTENTS

       PART I - FINANCIAL INFORMATION

       1. Financial Statements

       2. Management's Discussion and Analysis

       3. Controls and Procedures


       PART II

       1. Legal Proceedings

       2. Unregistered Sales of Equity Securities and Use of Proceeds

       3. Defaults Upon Senior Securities

       4. Submission of Matters to a Vote of Security Holders

       5. Other Information

       6. Exhibits


       SIGNATURES

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                         PEABODYS COFFEE, INC.
                             BALANCE SHEETS
                       DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                       2004           2003
                                                                -----------    -----------
<S>                                                             <C>            <C>
ASSETS
Current Assets
         Cash                                                   $     1,600    $     3,110
         Accounts Receivable                                         15,717         56,094
         Inventories                                                 42,570         65,862
         Prepaid Expenses                                             7,206          1,384
                                                                -----------    -----------
            Total Current Assets                                     67,093        126,450

         Property and Equipment (Net)                                83,193        132,153
         Depositis and Other Assets                                  72,195         94,706

                                                                -----------    -----------
         Total Assets                                           $   222,481    $   353,309
                                                                ===========    ===========


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
         Cash Overdraft                                         $    12,982    $    36,166
         Accounts Payable                                           303,453        338,770
         Accrued Expenses                                           343,595        260,331
         Short-Term Borrowings                                      180,633        566,362
         Current Portion of Long-Term Debt                          103,979         82,891
         Secured Convertible Debentures                             225,776        250,000
         Bridge Note Financing                                       35,000         35,000
         Current Portion of Deferred Revenue                          6,250         12,500
         Advances from Future Conversion of Warrants                508,760             --
                                                                -----------    -----------
            Total Current Liablilities                            1,720,428      1,582,020

Long-Term Liabilities
         Long-Term Debt (Net of Current Protion)                      5,124         30,188
         Deferred Revenues (Net of Current Portion)                      --          6,250

                                                                -----------    -----------
            Total Liabilities                                     1,725,552      1,618,458

Stockholders' Deficit
         Common Stock
            Authorized - 50,000,000 Shares
            Issued and outstanding, 41,670,421 and 35,711,358
               @ $.001 Par Value                                     41,671         35,711

         Additional Paid In Capital                               6,935,739      6,685,234
         Deferred Expenses                                               --        (23,335)
         Accumulated Deficit                                     (8,480,481)    (7,962,759)

                                                                -----------    -----------
            Total Stockholders' Deficit                          (1,503,071)    (1,265,149)

                                                                -----------    -----------
         Total Liabilities & Stockholders' Deficit              $   222,481    $   353,309
                                                                ===========    ===========
</TABLE>

<PAGE>



ITEM 1.  Financial Statements - Continued

                    PEABODYS COFFEE, INC.
                     STATEMENTS OF LOSS
                 DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                         FOR THE                         FOR THE
                                                                    NINE MONTHS ENDED               THREE MONTHS ENDED

                                                                     2004            2003             2004            2003
                                                                     -----           -----            -----           ----
<S>                                                                <C>           <C>                <C>             <C>
Sales                                                              748,266       1,377,390          192,254         368,180

Cost of Sales                                                      353,552         637,026           95,896         189,429

                                                              -------------   -------------   --------------   -------------
            Gross Profit                                           394,714         740,364           96,358         178,751

Operating Expenses
       Employee Compensation and Benefits                          394,382         720,679          126,010         196,347
       General and Administrative Expenses                         190,106         244,603           48,682          56,479
       Occupancy                                                    78,014         172,103           26,992          44,763
       Director and Professional Fees                              139,860         240,217           48,083          54,340
       Depreciation and Amortization                                16,476          68,522            5,444          25,312
       Gain/Loss on Disposal of Assets                              (4,476)              -              (77)              -
       Other Operating Expenses                                          -               -                -               -
                                                              -------------   -------------   --------------   -------------
            Total Operating Expenses                               814,362       1,446,124          255,134         377,241

            Operating Loss                                        (419,648)       (705,760)        (158,776)       (198,490)

       Other Income                                                      -         (75,300)               -            (442)
       Financing Costs - Secured Convertible Debt                        -               -                -               -
       Interest and Other Expenses                                 (36,994)       (390,605)         (10,106)       (101,332)

            Net Loss Before Extraordinary Items                   (456,642)     (1,171,665)        (168,882)       (300,264)

       Extraordinary Item                                                -           8,274                -              45
       Forgiveness of Debt                                          46,300                                -               -

                                                              -------------   -------------   --------------   -------------
Net Loss                                                          (410,342)     (1,163,391)        (168,882)       (300,219)
                                                              =============   =============   ==============   =============

Earnings Per Share
       Basic (Weighted Average)
           Net Loss Before Extraordinary Items                      (0.011)         (0.030)          (0.004)         (0.010)
           Extraordinary Items                                       0.001           0.000                -           0.000
                                                              -----------------------------   ------------------------------
           Net Loss Before Extraordinary Items                      (0.010)         (0.030)          (0.004)         (0.010)
</TABLE>

<PAGE>



ITEM 1.  Financial Statements - Continued

                           PEABODYS COFFEE, INC.
                             STATEMENTS OF CASH FLOW
                            DECEMER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                         2004                      2003
                                                                                          -----                     ----
<S>                                                                                  <C>                     <C>
Cash Flows From Operating Activities
   Net Income                                                                        $ (410,341)             $ (1,163,391)

   Adjustments to Reconcile Net Loss to Net Cash Applied
     To Operating Activities:
       Depreciation & Amortization                                                       47,308                    68,522
       Gain/Loss on Disposal of Assets                                                   (3,800)                   75,300
       Non-Cash Consulting Fees                                                               -                    45,745
       Financing Costs - Secured Convertible Debenture                                        -                   336,805
      Debt Forgiveness                                                                  (46,300)                        -
      Recognition of Deferred Revnue                                                     (9,375)                        -

   Changes in Operating Assets and Liabilities:
       Accounts Receivable                                                               66,978                    39,136
       Inventories                                                                          211                    (8,804)
       Prepaid Expenses                                                                  13,448                    40,179
       Deposits and Other Assets                                                          8,314                     7,410
       Cash Overdraft                                                                         -                    11,522
       Account Payable & Accrued Expenses                                               145,750                    37,589
       Deferred Revenue                                                                       -                    18,750
                                                                             -------------------       -------------------
     Net Cash Provided By Operating Activities                                         (187,806)                 (491,237)

Cash Flows From Investing Activities
   Proceeds from Sale of Assets                                                          15,000                    54,000
   Additions to Property and Equipment                                                        -                   (19,879)
   Additions to Trade Name Costs                                                         (2,158)                  (17,985)
   Changes in Valuation of Goodwill                                                           -                         -
                                                                             -------------------       -------------------
     Net Cash Provided By Financing Activities                                           12,843                    16,136

Cash Flows from Financing Activities
   Proceeds from Sale of Common Stock                                                         -                   100,000
   Proceeds from Issuance of Notes Payable                                                    -                         -
   Proceeds from Issuance of Secured Convertible Debentures                                   -                   500,000
   Conversion of Secured Debentures to Common Stock                                           -                         -
   Principal Reductions of Debt                                                         (10,809)                 (127,905)
   Proceeds on Advances on Future Conversion of Warrants                                194,000                         -
   Serivces for Common Stock                                                                  -                         -
                                                                             -------------------       -------------------
     Net Cash Provided By Financing Activities                                          183,191                   472,095

Net Increase in Cash                                                                      8,228                    (3,006)
Cash At March 31st                                                                      (19,610)                   (5,406)
                                                                             -------------------       -------------------
Cash At December 31st                                                                 $ (11,382)                   (8,412)
                                                                             ===================       ===================


Other Significant Non-Cash Transactions
         Direct Payment to Note Holder from Convertible Debt Holder                     250,000                         -
         Conversion of Warrant to Common Stock                                          132,240                         -
         Conversion of Convertible Debt to Common Stock                                  13,224                         -
         Conversion of Accounts Payable to Property and Equipment                         9,710                         -
</TABLE>

<PAGE>



ITEM 2.  Management's Discussion and Analysis

The preparation of this section requires us to make estimates and assumptions
about our past, current and future activities, business practices, and financial
records. Actual results may differ from these estimates and assumptions.
Foreseeable risks and uncertainties are described elsewhere in this report and
in detail under "Risk Factors Affecting the Company".

Results of Operations - Three Months Ended December 30, 2004 As Compared Three
Months Ended December 31, 2003

Revenues

      Net revenues for the quarter ended December 31, 2004 decreased $175,926 or
47.8% to $192,254 from $368,180 for the corresponding period in fiscal 2004.
This decrease was primarily due to lost revenue of approximately $135,000
resulting from the sale or closure of one hospital kiosk location and two retail
stores. Revenues for our packaged Black Rhino Coffee(TM) products for the
quarter ended December 31, 2004 decreased $21,077 or 46.8% to $23,950 from
$45,027 for the corresponding period in fiscal 2003. The decrease in Black Rhino
Coffee(TM) revenues was partially due to a reduction in distribution center
inventory levels from our retail clients and the elimination of one item by our
largest client. Black Rhino Coffee(TM) sales accounted for approximately 12.5%
of our total revenue for the quarter ended December 31, 2004. For the quarter
ended December 31, 2004, kiosk and retail outlet revenue decreased $155,482 or
48.5% to $165,179 from $320,661 for the same period in fiscal 2003. Kiosk and
retail outlet revenue was generated from three different clients, with the
largest client representing 41.8% of total net revenue.

Costs of Goods Sold

         Cost of goods sold for the quarter ended December 31, 2004 decreased to
$95,896 from $189,429 for the same period in fiscal 2003. As a percentage of net
revenues, cost of goods sold decreased to 49.9% for the quarter ended December
31, 2004 from 51.5% for the comparable period in fiscal 2003. The decrease was
primarily due to a shift in the sales mix resulting from increased Black Rhino
Coffee(TM) revenues as percentage of total net revenues.

Operating Expenses

      Employee compensation and benefits for the quarter ended December 31, 2004
decreased to $126,010 from $196,347 for the same period in fiscal 2003. As a
percentage of net revenues, employee compensation and benefits increased to
65.5% for the quarter ended December 31, 2004 from 53.3% for the comparable
period in fiscal 2003. Employee compensation for administrative and corporate
level employees for the quarter ended December 31, 2004 decreased to $29,921
from $33,055 for the same period in fiscal 2003.

                                       6
<PAGE>

      General and administrative expenses for the quarter ended December 31,
2004 decreased to $48,682 from $56,480 for the same period in fiscal 2003. As a
percentage of net revenues, general and administrative expenses increased to
25.3% for the quarter ended December 31, 2004 from 15.3% for the comparable
period in fiscal 2003. The increase is due to an $11,511 increase for in-store
promotions to support our packaged Black Rhino Coffee(TM).

      Occupancy costs for the quarter ended December 31, 2004 decreased to
$26,992 from $44,763 for the same period in fiscal 2003. As a percentage of net
revenues, occupancy costs for the quarter ended December 31, 2004 increased to
14.0% from 12.2% for the comparable period in fiscal 2003.

      Director and professional fees for the quarter ended December 31, 2004
decreased to $48,083 from $54,340 for the same period in fiscal 2003. As a
percentage of net revenues, director and professional fees decreased to 14.2%
for the quarter ended December 31, 2004 from 14.8% for the comparable period in
fiscal 2003. The decrease was primarily due to a decrease in legal expense for
the quarter.

         Operating losses for the quarter ended December 31, 2004 increased to
$158,778 from $35,739 for the same period in fiscal 2003. As a percentage of net
revenues, operating losses increased to 71.8% for the quarter ended December 31,
2004 from 9.7% for the comparable period in fiscal 2003. The increased operating
loss is primarily due to a $163,195 gain recognized on settlement of early
redemption of a secured convertible debenture in the quarter ended December 31,
2003.

Net Loss

      Net loss for the quarter ended December 31, 2004 decreased to $168,884
from $300,221 for the same period in fiscal 2003. As a percentage of net
revenues, net losses decreased to 77.0% for the quarter ended December 31, 2004
from 81.5% for the comparable period in fiscal 2003.


                                       7
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

1         As the accompanying financial statements show, for the quarter ended
December 31, 2004, we had a net operating loss of $158,776, and an overall net
loss of $168,882. At December 31, 2004, we had a working capital deficit of
$1,653,335 and a shareholders' deficit of $1,503,071.

      Because of our operating losses and financial situation, the Independent
Auditor's Report of the accompanying financial statements expresses a "going
concern" opinion. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. Our ability to continue as a going concern is dependent upon
several factors. These factors include our ability to: generate sufficient cash
flows to meet our 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.

      We plan to address these challenges by continuing our efforts to develop
our organic Black Rhino Coffee(TM) brand into the U.S. mass retail sector. The
brand has penetrated the shelves of approximately 600 supermarkets. The benefit
of this channel of trade is that a small number of orders can significantly
increase our revenues and earnings. In addition, we are currently evaluating
other potential channels of trade for our packaged Black Rhino Coffee(TM)
products. We also believe that our 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.

      Our operating activities increased cash by $8,228 for the nine months
ended December 31, 2004. The reduction in net loss of $168,882 was the primary
reason for the increase.

         We had net cash provided from financing activities for the nine months
ended December 31, 2004 totaling $183,191. During the quarter we received
$44,000 for advances on future conversion of warrants and made payment against
principal on notes and short term borrowings of $10,809.



RISK FACTORS AFFECTING THE COMPANY

We Have a History Of Losses Which May Continue, Requiring Us To Seek Additional
Sources of Capital Which May Not Be Available, Requiring Us To Curtail Or Cease
Operations.

                                       8
<PAGE>

      We incurred net losses of $168,884 for the quarter ended December 31,
2004. We cannot assure you that we can achieve or sustain profitability on a
quarterly or annual basis in the future. If revenues grow more slowly than we
anticipate, or if operating expenses exceed our expectations or cannot be
adjusted accordingly, we will continue to incur losses. We will continue to
incur losses until we are able to establish significant sales of Black Rhino
Coffee(TM). Our possible success is dependent upon the successful development
and marketing of our products, as to which there is no assurance. Any future
success that we might enjoy will depend upon many factors, including factors out
of our control or which cannot be predicted at this time. These factors may
include changes in or increased levels of competition, including the entry of
additional competitors and increased success by existing competitors, changes in
general economic conditions, increases in operating costs, including costs of
supplies, personnel and equipment, reduced margins caused by competitive
pressures and other factors. These conditions may have a materially adverse
effect upon us or may force us to reduce or curtail operations. In addition, we
will require additional funds to sustain and expand our sales and marketing
activities, particularly if a well-financed competitor emerges. We anticipate
that we will require approximately $600,000 to fund our continued operations for
the next twelve months, depending on revenue from operations. There can be no
assurance that financing will be available in amounts or on terms acceptable to
us, if at all. The inability to obtain sufficient funds from operations or
external sources would require us to curtail or cease operations.


If We Are Unable to Obtain Additional Funding Our Business Operations Will be
Harmed and If We Do Obtain Additional Financing Our Then Existing Shareholders
May Suffer Substantial Dilution.

      Additional capital will be required to effectively support the operations
and to otherwise implement our overall business strategy, including rapid growth
in establishing the Black Rhino Coffee brand. However, there can be no assurance
that financing will be available when needed on terms that are acceptable to us.
The inability to obtain additional capital will restrict our ability to grow and
may reduce our ability to continue to conduct business operations. If we are
unable to obtain additional financing, we will likely be required to curtail our
marketing and development plans and possibly cease our operations. Any
additional equity financing may involve substantial dilution to our then
existing shareholders.

                                       9
<PAGE>


Our Independent Auditors Have Expressed Substantial Doubt About Our Ability to
Continue As a Going Concern, Which May Hinder Our Ability to Obtain Future
Financing.

      In their report dated July 6, 2004, our independent auditors stated that
our financial statements for the year ended March 31, 2004 were prepared
assuming that we would continue as a going concern. Our ability to continue as a
going concern is an issue raised as a result of a loss for the year ended March
31, 2004 in the amount of $1,270,772 and stockholders deficit of $1,269,027 as
of March 31, 2004. We continue to experience net operating losses. Our ability
to continue as a going concern is subject to our ability to generate a profit
and/or obtain necessary funding from outside sources, including obtaining
additional funding from the sale of our securities, increasing sales or
obtaining loans and grants from various financial institutions where possible.
Our continued net operating losses and stockholders' deficit increases the
difficulty in meeting such goals and there can be no assurances that such
methods will prove successful.


We May be Required to Pay Outstanding Secured Promissory Notes Which Are
Currently in Default. If We Are Required to Repay the Outstanding Debt Our
Working Capital May be Depleted Or We May be Required to Raise Additional Funds
to Repay Such Debt. Our Failure to Repay the Secured Promissory Notes Could
Result in Legal Action Against Us, Which Could Require the Sale of Substantial
Assets.

      In an earlier private placement, we offered and sold units, with each unit
consisting of a secured promissory note ("Secured Note") and warrants to
purchase common stock. We are now obligated to make quarterly payments on the
interest outstanding and to repay such Secured Notes. As of December 31, 2004,
we were in default on the principal balance of the Secured Notes in the amount
of $35,000 and approximately $50,000 in arrears on such interest payments
relating to the Secured Notes. Under the terms of the Security Agreement
relating to the Secured Notes, a noteholder has the right to:

      o     declare all principal and interest immediately due and owing;

      o     exercise its rights and remedies under the California Commercial
            Code as a secured creditor having a security interest in the
            collateral, which includes, but is not limited to, equipment,
            inventory, accounts, trademarks and tradenames and other
            intellectual property rights (the "Collateral"), and, in particular,
            sell any part of the Collateral; and

      o     exercise any other rights or remedies of a secured party under
            California law.

      As of the date hereof, we have not received any notice of default relating
to the Secured Notes. It is our understanding that the noteholders lien has
lapsed due to the noteholders failure to file a continuation with the California
Secretary of State. Due to the noteholders failure to file a continuation, the
California Secretary of State has purged the lien from our records.


                                       10
<PAGE>

A Small Number of Customers Account for a Significant Portion of Our Revenue and
if We Are Unable to Maintain Our Current Customer Base or Attract a New Customer
Base We Will be Required to Curtail or Cease Operations.

      Our largest client represents 41.8% of our gross revenue for the quarter
ended December 31, 2004. Our two largest clients represented 71.3% of the gross
revenue for the quarter ended December 31, 2004. We would likely experience a
material decline in revenues if we were to lose any of our major clients.

High Quality Certified Organic Coffee is Limited in Availability and Traded on a
Negotiated Basis. If We Are Unable to Obtain an Adequate Supply of Certified
Organic Coffee, then Our Profits May be Negatively Impacted.

      The supply and price of coffee are subject to significant volatility.
Although most coffee trades in the commodity market, coffee of the quality
sought by our company tends to trade on a negotiated basis at a substantial
premium above commodity coffee prices, depending upon the supply and demand at
the time of purchase. We acknowledge that high quality certified organic coffee
is limited in availability. We depend upon our relationship with our roaster,
with coffee brokers and importers and with exporters for our supply of certified
organic green coffee. We believe, based on relationships established with our
suppliers in the past, that the risk of non-delivery is low. However, an
increase in the prices of specialty coffees could have an adverse effect on our
profitability.


There Can be no Assurance That We Will be Able to Manage Any Substantial
Expansion of Our Business, and a Failure to do so Could Have a Materially
Adverse Effect on Our Operating Results.

      Our success will require significant expansion of our business. Any such
expansion could place a significant strain on our resources and would require us
to hire additional personnel to implement additional operating and financial
controls and improve coordination between marketing, administration and finance
functions. We would be required to install additional reporting and management
information systems for sales monitoring, inventory control and financial
reporting. There can be no assurance that we would be able to manage any
substantial expansion of our business, and a failure to do so could have a
materially adverse effect on our operating results.


If We Are Unable to Retain the Services of Mr. Tkachuk or If We Are Unable to
Successfully Recruit Qualified Managerial and Sales Personnel Having Experience
in Business, We May Not Be Able to Continue Our Operations.

      Our success depends to a significant extent upon the continued service of
Mr. Todd Tkachuk, our President, Chief Financial Officer and Secretary. Loss of
the services of Mr. Tkachuk could have a material adverse effect on our growth,
revenues, and prospective business. We do not maintain key-man insurance on the
life of Mr. Tkachuk. In addition, in order to successfully implement and manage
our business plan, we will be dependent upon, among other things, successfully
recruiting qualified managerial and sales personnel having experience in
business. Competition for qualified individuals is intense. There can be no
assurance that we will be able to find, attract and retain existing employees or
that we will be able to find, attract and retain qualified personnel on
acceptable terms.

                                       11
<PAGE>


We Have Recently Commenced Sales to Supermarkets, Specialty Food Stores and
Other Mass Retail Venues and If We Are Not Successful in Establishing Our
Company Within the Mass Retail Market Our Revenue May Be Severely Impacted.

      Our company's strategic goal is to establish our packaged consumer Black
Rhino Coffee(TM) brand in domestic mass retail markets. If we are not successful
in entering the mass retail market our revenue may be severely impacted.

Risks Relating to Our Current Financing Arrangement:

There Are a Large Number of Shares Underlying Our Convertible Debentures, and
Warrants That May be Available for Future Sale and the Sale of These Shares May
Depress the Market Price of Our Common Stock.

         As of December 26, 2004, we had 41,670,421 shares of common stock
issued and outstanding and convertible debentures outstanding that may be
converted into an estimated 307,125,000 shares of common stock at current market
prices, and outstanding warrants and options to purchase 8,062,760 shares of
common stock, including, 2,257,760 shares of common stock issued pursuant to the
Securities Purchase Agreement dated December 5, 2003. In addition, pursuant to
the Plan and Agreement of Reorganization and merger we assumed the rights and
obligations or convertible promissory noted that are convertible into 75,604
shares. In addition, the number of shares of common stock issuable upon
conversion of the outstanding convertible debentures may increase if the market
price of our stock declines. All of the shares, including all of the shares
issuable upon conversion of the debentures and upon exercise of our warrants,
may be sold without restriction. The sale of these shares may adversely affect
the market price of our common stock.

The Continuously Adjustable Conversion Price Feature of Our Convertible
Debentures Could Require Us to Issue a Substantially Greater Number of Shares,
Which Will Cause Dilution to Our Existing Stockholders.

         Our obligation to issue shares upon conversion of our convertible
debentures is essentially limitless. The following is an example of the amount
of shares of our common stock that are issuable, upon conversion of our
convertible debentures (excluding accrued interest), based on market prices 25%,
50% and 75% below the market price, as of March 26, 2005 of $0.01.

                                       12
<PAGE>


<TABLE>
<CAPTION>
                                                                       Number                             % of
% Below             Price Per                  With Discount             of Shares                        Outstanding
Market                 Share                     at 20%                  Issuable                         Stock
------                 -----                     ------                  --------                         -----
<S>                   <C>                        <C>                     <C>                              <C>
25%                   $.0075                     $.0060                  410,250,000                      91.07%
50%                   $.005                      $.0040                  616,500,000                      93.88%
75%                   $.0025                     $.0020                1,235,250,000                      96.85%
</TABLE>


         As illustrated, the number of shares of common stock issuable upon
conversion of our convertible debentures will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.

The Continuously Adjustable Conversion Price feature of our Convertible
Debentures May Encourage Investors to Make Short Sales in Our Common Stock,
Which Could Have a Depressive Effect on the Price of Our Common Stock.

         The convertible debentures are convertible into shares of our common
stock at a 20% discount to the trading price of the common stock prior to the
conversion. The significant downward pressure on the price of the common stock
as the selling stockholder converts and sells material amounts of common stock
could encourage short sales by investors. This could place further downward
pressure on the price of the common stock. The selling stockholder could sell
common stock into the market in anticipation of covering the short sale by
converting their securities, which could cause the further downward pressure on
the stock price. In addition, not only the sale of shares issued upon conversion
or exercise of debentures, warrants and options, but also the mere perception
that these sales could occur, may adversely affect the market price of the
common stock.

The Issuance of Shares Upon Conversion of the Convertible Debentures and
Exercise of Outstanding Warrants May Cause Immediate and Substantial Dilution to
Our Existing Stockholders.

         The issuance of shares upon conversion of the convertible debentures
and exercise of warrants may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion. Although the selling stockholders
may not convert their convertible debentures and/or exercise their warrants if
such conversion or exercise would cause them to own more than 4.9% of our
outstanding common stock, this restriction does not prevent the selling
stockholders from converting and/or exercising some of their holdings and then
converting the rest of their holdings. In this way, the selling stockholders
could sell more than this limit while never holding more than this limit. There
is no upper limit on the number of shares that may be issued which will have the
effect of further diluting the proportionate equity interest and voting power of
holders of our common stock, including investors in this offering.

                                       13
<PAGE>


If We Are Required for any Reason to Repay Our Outstanding Convertible
Debentures, We Would Be Required to Deplete Our Working Capital, If Available,
Or Raise Additional Funds. Our Failure to Repay the Convertible Debentures, If
Required, Could Result in Legal Action Against Us, Which Could Require the Sale
of Substantial Assets.

In December 2003, we entered into a Securities Purchase Agreement for the sale
of an aggregate of $250,000 principal amount of convertible debentures. The
convertible debentures are due and payable, with 7 3/4% interest, two years from
the date of issuance, unless sooner converted into shares of our common stock.
In addition, any event of default could require the early repayment of the
convertible debentures at a price equal to 125% of the amount due under the
debentures. We anticipate that the full amount of the convertible debentures,
together with accrued interest, will be converted into shares of our common
stock, in accordance with the terms of the convertible debentures. If we are
required to repay the convertible debentures, we would be required to use our
limited working capital and raise additional funds. If we were unable to repay
the debentures when required, the debenture holders could commence legal action
against us and foreclose on all of our assets to recover the amounts due. Any
such action would require us to curtail or cease operations.

If We Fail to Remain Current on Our Reporting Requirements, We Could be Removed
From the OTC Bulletin Board Which Would Limit the Ability of Broker-Dealers to
Sell Our Securities and the Ability of Stockholders to Sell Their Securities in
the Secondary Market.

         Companies trading on the OTC Bulletin Board, such as us, must be
reporting issuers under Section 12 of the Securities Exchange Act of 1934, as
amended, and must be current in their reports under Section 13, in order to
maintain price quotation privileges on the OTC Bulletin Board. If we fail to
remain current on our reporting requirements, we could be removed from the OTC
Bulletin Board. As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market.


Our Directors and Executive Officers Beneficially Own Approximately 9.7% of Our
Stock; Their Interests Could Conflict with Yours; Significant Sales of Stock
Held by Them Could Have a Negative Effect on Our Stock Price; Stockholders May
be Unable to Exercise Control.

         As of December 31, 2005, our executive officers, directors and
affiliated persons beneficially owned approximately 7.97 % of our common stock.
As a result, our executive officers, directors and affiliated persons will have
significant influence to:


                                       14
<PAGE>

      o     elect or defeat the election of our directors;

      o     amend or prevent amendment of our articles of incorporation or
            bylaws;

      o     effect or prevent a merger, sale of assets or other corporate
            transaction; and

      o     control the outcome of any other matter submitted to the
            stockholders for vote.

         As a result of their ownership and positions, our directors and
executive officers collectively are able to significantly influence all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. In addition, sales of significant amounts
of shares held by our directors and executive officers, or the prospect of these
sales, could adversely affect the market price of our common stock. Management's
stock ownership may discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of us, which in turn could reduce our
stock price or prevent our stockholders from realizing a premium over our stock
price.



ITEM 3.  Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

         Our Chief Executive Officer and Principal Financial Officer, after
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2004
("the Evaluation Date"), have concluded that as of the Evaluation Date, our
disclosure controls and procedures (as required by paragraph (b) of the
Securities and Exchange Act of 1934 Rules 13a-15 or 15d-15) were adequate and
designed to ensure that material information relating to us would be made known
to them by others within those entities.

                                       15
<PAGE>

(b) Changes in internal controls over financial reporting.

There were no changes in our internal controls over financial reporting in
connection with the evaluation required by paragraph (d) of the Securities
Exchange Act of 1934 Rules 13a-15 or 15d-15 that occurred during the quarter
ended September 30, 2004 that has materially affected, or is reasonably likely
to materially affect, our internal control over the financial reporting.


                                       16
<PAGE>

                              PEABODYS COFFEE, INC.
                                     PART II
                                OTHER INFORMATION

                           PART II - OTHER INFORMATION

ITEM 1   Legal Proceedings

For the quarter ended December 31, 2004, the Company is not aware of any legal
or governmental proceeding to which it became a party.

ITEM 2   Unregistered Sales of Equity Securities and Use of Proceeds

None.


ITEM 3   Defaults Upon Senior Securities

In the three months ended on December 31, 2004, there have not been any material
defaults upon senior securities.

ITEM 4   Submission of Matters to a Vote of Security Holders

During the three months ended on December 31, 2004, no matter has been submitted
to a vote of security holders.

ITEM 5   Other Information

None.

ITEM 6   Exhibits


31.1  Certification of the Chief Executive Officer and Principal Financial
      Officer of Peabodys Coffee, Inc. pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.

32.1  Certification of the Chief Executive Officer and Principal Financial
      Officer of Peabodys Coffee, Inc. pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.


                                       17
<PAGE>

                              PEABODYS COFFEE, INC.


                                   SIGNATURES


         In accordance with Section 13 of the Securities Exchange Act of 1934,
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 N.Tkachuk
                                                  -------------------------
                                                 Todd Tkachuk, President
                                                 Date: March 28, 2005


         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
Signature                                   Title                                             Date

<S>                                                       <C>                                   <C>
/s/Todd N. Tkachuk                          President, Chief Financial Officer and Director   March 28, 2005
------------------------------------------  (Principal Executive Officer and Principal
Todd N. Tkachuk                             Financial Officer


/s/Roman Kujath                             Director                                          March 28, 2005
------------------------------------------
Roman Kujath


/s/Barry Gibbons                            Director                                          March 28, 2005
------------------------------------------
Barry Gibbons


/s/David Lyman                              Director                                          March 28, 2005
------------------------------------------
David Lyman
</TABLE>

                                       18
<