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, 2003


             [ ] 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: 22,761,558 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.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                             2003             2002
                                                         ------------     ------------
ASSETS

Current Assets
<S>                                                      <C>              <C>
    Cash                                                 $      7,270     $      6,211
    Other receivables                                          52,180           49,186
    Inventories                                                54,462           61,048
    Prepaid expenses                                           25,722            7,322
                                                         ------------     ------------
          Total Current Assets                                139,634          123,767

    Property and equipment (net)                              164,170          391,378
    Deposits and other assets                                  84,561          226,331
                                                         ------------     ------------

    Total Assets                                         $    388,365     $    741,476
                                                         ============     ============


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
    Cash overdraft                                       $         --     $     39,520
    Accounts payable                                          390,557          592,214
    Accrued expenses                                          305,372          244,236
    Short-term borrowings                                      60,000           10,000
    Short-term deferred revenue                                12,500               --
    Secured convertible debentures                            687,000               --
    Current portion of long-term debt                          35,988           46,673
    Bridge note financing                                      35,000           35,000
                                                         ------------     ------------
          Total Current Liabilities                         1,526,417          967,643
                                                         ------------     ------------

Long-term debt, net of current portion                         45,776          231,710
Long-term deferred revenue                                     12,500               --
                                                         ------------     ------------
    Total long-term liabilities                                58,276          231,710
                                                         ------------     ------------
          Total Liabilities                                 1,584,693        1,199,353

Stockholders' Deficit
    Common stock authorized - 50,000,000 shares,
    issued and outstanding, 22,980,616 and 19,516,695
    $.001 par value                                            23,006           19,517

    Paid-in capital                                         6,289,204        5,037,661
    Deferred expenses                                         (49,999)         (64,466)
    Accumulated deficit                                    (7,458,539)      (5,450,589)
                                                         ------------     ------------

          Total Stockholders' Deficit                      (1,196,328)        (457,877)
                                                         ------------     ------------

          Total Liabilities and Stockholders' Deficit    $    388,365     $    741,476
                                                         ============     ============
</TABLE>

                 See accompanying notes to financial statements

                                       3
<PAGE>

                              PEABODYS COFFEE, INC.
                   STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
                    THREE MONTHS ENDED JUNE 30, 2003 AND 2002
                                    UNAUDITED

                                                      2003             2002
                                                  ------------     ------------

Sales                                             $    545,093     $    799,797

Cost of Sales                                          232,301          328,949
                                                  ------------     ------------

    Gross Profit                                       312,792          470,848

Operating expenses
    Employee compensation and benefits                 304,452          388,299
    General and administrative expenses                 97,953           81,873
    Occupancy                                           66,333           88,743
    Director and professional fees                     121,876          116,640
    Depreciation and amortization                       29,442           31,895
    Other operating expenses                                --               --
                                                  ------------     ------------
                                                       620,056          707,450
                                                  ------------     ------------

    Operating Loss                                    (307,264)        (236,602)

Other income (Loss)                                    (81,373)           7,892
Legal expense - former president/CEO                        --         (130,000)
Interest and other expense                            (270,534)          (6,374)
                                                  ------------     ------------

    Net loss before extraordinary item                (659,171)        (365,084)
    Extraordinary item - forgiveness of debt                --              172
                                                  ------------     ------------

    Net Loss                                          (659,171)        (364,912)

Accumulated Deficit, beginning of period            (6,799,368)      (5,085,677)
                                                  ------------     ------------

Accumulated Deficit, end of period                $ (7,458,539)    $ (5,450,589)
                                                  ============     ============


Earnings per common share:
    Net loss before extraordinary item            $      (0.03)    $      (0.02)
    Extraordinary item                                      --             0.00
                                                  ------------     ------------
    Net loss                                      $      (0.03)    $      (0.02)
                                                  ============     ============

                 See accompanying notes to financial statements

                                       4
<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                    THREE MONTHS ENDED JUNE 30, 2003 AND 2002
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                        2003             2002
                                                                    ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                 <C>              <C>
Net Loss                                                            $   (659,171)    $   (364,912)
Adjustments to reconcile net loss to net cash
provided by (applied to) operating activities:
     Depreciation and amortization                                        29,442           31,895
     Debt settlements and forgiveness of debt                                 --           (1,138)
     Loss on disposal of property and equipment                           81,373               --
     Non-cash consulting fees                                             19,082           43,531
     Financing costs-convertible debentures                              250,000               --
Changes in operating assets and liabilities:
     Receivables                                                         (35,222)          18,241
     Inventories                                                          20,206            2,190
     Prepaid expenses                                                     22,732           (5,312)
     Cash overdraft                                                      (24,644)          (8,975)
     Accounts payable                                                     29,540          186,913
     Accrued expenses                                                    (38,137)         (35,484)
     Increases in deferred revenue                                        25,000               --
                                                                    ------------     ------------
          Net cash provided by (applied to) operating activities        (279,799)        (133,051)

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment                                       (4,023)         (57,253)
Changes in valuation of Goodwill                                          36,839               --
Changes to deposits and other assets                                       5,004          (71,175)
                                                                    ------------     ------------
          Net cash applied to investing activities                        37,820         (128,428)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock                                               --           12,000
Proceeds from issuance of notes payable                                       --          254,000
Proceeds from issuance of secured debentures                             250,000               --
Conversion of secured debentures to common stock                           2,768               --
Repayments of short-term borrowings                                       (9,000)              --
Principal reductions of notes payable                                       (635)          (5,617)
                                                                    ------------     ------------
          Net cash provided by financing activities                      243,133          260,383

NET DECREASE IN CASH AND
CASH EQUIVALENTS                                                           1,154           (1,096)

CASH AND CASH EQUIVALENTS
Beginning of period                                                        6,116            7,307
                                                                    ------------     ------------
End of period                                                       $      7,270     $      6,211
                                                                    ============     ============
</TABLE>

                 See accompanying notes to financial statements

                                       5
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

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

Note      1     -   Significant Accounting Policies

Note      2     -   Going Concern

Note      3     -   Inventories

Note      4     -   Property and Equipment, and Intangible Assets

Note      5     -   Accounts Payable

Note      6     -   Accrued Expenses

Note      7         Deferred Revenue

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

Note     14         Subsequent Events

                                       6
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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

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,
2003. The results of operations for the three months ended June 30, 2003 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, 2003 and 2002 included in the Annual Report of the Company
on Form  10-KSB,  filed  with  the  Commission  on July  15,  2003,  are  hereby
incorporated by reference:

     Note 2 - Related Party Transactions
     Note 10 - Lease Obligations
     Note 13 - 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 FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    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, 2003 and 2002.  On June 12,  2003,  $40,930 in
goodwill was reversed due to the sale of the related assets.

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.

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,  2002  financial   statements  have  been
reclassified to conform to the current year presentation.

                                       8
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    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  $1,386,783  and  $790,544,
respectively, as of March 31, 2003.

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  focusing  on the  further
development of the Black Rhino  Coffee(TM) brand in the U.S. mass retail sector.
Since introduction in May 2002 at the FMI supermarket convention,  the brand has
penetrated the shelves of approximately  500  supermarkets.  The benefit of this
channel  of trade is that a small  number of orders can  significantly  increase
corporate revenues and earnings.  The brand has experienced reorders from all of
its retail  distribution  channels and  management  believes that further orders
will continue, quite possibly on an accelerated basis.

Management  believes  that the  introduction  of Black Rhino ground  coffee will
increase  revenue,  allowing  access to a broader  consumer  market and that new
redesigned  brand  packaging will improve the in-store shelf impact.  Management
has also re-aligned  upstream supply chain to meet  operational  requirements of
the grocery and mass  retail  distribution  channels  and  re-designed  business
processes to support those operational requirements.

Management  believes that entry to this new market sector will eventually expose
the Company to financing  opportunities - such as  project-based  debt financing
secured by purchase orders or accounts receivable. Management also believes that
an orderly  exit from full  service  retail will allow for the  redeployment  of
capital to support the Company's  strategic goal while reducing central overhead
costs.

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 FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

NOTE 3 - INVENTORIES

At June 30, 2003 and 2002, inventories were comprised of the following:

                                          2003            2002
                                      ------------    ------------
     Coffee                           $     18,126    $     19,240
     Other food and beverage items          13,117          28,775
     Packaging and other supplies           23,219          13,033
                                      $     54,462    $     61,048

                                       10
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

NOTE 4 - PROPERTY AND EQUIPMENT, AND INTANGIBLE ASSETS

At June 30,  2003  and  2002,  property  and  equipment  were  comprised  of the
following:

                                                 2003             2002
                                             ------------     ------------

     Kiosk carts                                   84,042          263,733
     Kiosk equipment                               85,525          293,663
     Equipment and furniture                      169,625          263,430
     Signage                                       28,609           53,032
     Site improvements                             52,731          116,592
     Assets not in service                         93,824               --
                                             ------------     ------------
                                                  514,356          990,450
     Less: accumulated depreciation              (350,186)        (599,072)
                                             ------------     ------------
                                             $    164,170     $    391,378
                                             ============     ============

Included  in other  assets at June 30,  2003 and 2002,  were  intangible  assets
comprised of the following:

                                                 2003             2002
                                             ------------     ------------
     Goodwill                                $         --     $     40,930
     Non competition agreement                         --           25,000
     Trade name                                    53,224           83,497
     Kiosk design                                      --            1,170
     Other identifiable intangibles                50,100           14,600
                                             ------------     ------------
                                                  103,324          165,197
     Less:  accumulated amortization              (40,100)         (33,776)
                                             ------------     ------------
                                             $     63,224     $    131,421
                                             ============     ============

The  Company  recognized  depreciation  and  amortization  expense for the three
months ended June 30, 2003 and 2002 as follows:

                                                 2003             2002
                                             ------------     ------------
     Depreciation                            $     26,872     $     28,755
     Amortization                                   2,570            3,140
                                             ------------     ------------
                                             $     29,442     $     31,895
                                             ============     ============

NOTE 5 - ACCOUNTS PAYABLE

At June 30, 2003 and 2002, approximately 41% and 28% of the balances in accounts
payable, respectively, have been outstanding for more than 90 days.

                                       11
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

NOTE 6 - ACCRUED EXPENSES

At June 30, 2003 and 2002, accrued expenses were comprised of the following:

                                                 2003             2002
                                             ------------     ------------
     Accrued interest                           66,004.00     $     43,020
     Accrued wages                              33,824.00           40,071
     Accrued sales and use tax                  31,083.00           32,008
     Accrued payroll taxes                     171,666.00          123,787
     Other                                       2,795.00            5,350
                                             ------------     ------------
                                             $    305,372     $    244,236
                                             ============     ============

As of June 30, 2003, the Company has accrued past due payroll tax obligations to
the Internal  Revenue Service in the amount  $148,859.  As of June 30, 2002, the
Company had accrued past due payroll tax  obligations  to the  Internal  Revenue
Service and the State of California in the amount $171666. As of March 31, 2002,
the past due payroll tax  obligations to the State of California have been fully
satisfied.

NOTE 7 - DEFERRED REVENUE
On June 12,  2003,  David  Thorpe,  purchased  a two year  licensing  agreement,
related to sale of our San Diego State University site assets,  in the amount of
$25,000.  This  agreement  has  duration of two years and will be amortized on a
straight-line  basis  starting in July of 2003.  The  deferred  revenue has been
allocated to current and non-current liabilities

NOTE 8 - SHORT-TERM BORROWINGS
During the three months ended June 30, 2003 and 2002, the Company borrowed funds
to provide short-term working capital. Details of these loans are as follows:

<TABLE>
<CAPTION>
                                                                           2003                   2002
                                                                       -------------           ------------
<S>                                                                     <C>                     <C>
     Unsecured loan, 10% interest per annum, interest
     only due monthly, balance due March 31, 2004                       $  10,000               $        -

     Unsecured loan, 10% interest per annum, interest
     only due monthly, balance due March 31, 2004                       $  50,000               $        -
</TABLE>


                                       12
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    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,  2003 is
summarized as follows.


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

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

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

10% Note, unsecured, payable in monthly installments                        -
of $212.47 including interest, due 05/31/07             $   8,235

10% Note, unsecured, payable in monthly installments                        -
of $106.24 including interest, due 06/30/07                 4,189

10% Note, unsecured, payable in monthly installments
of $3,136.77 including interest, due 03/31/05              69,340

Less current portion                                       35,988     (46,673)
                                                        ---------    --------
                                                        $ 117,752    $231,710
                                                        =========    ========

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

          Twelve months ended June 30          Amount
                                            -------------
          2004                              $      34,106
          2005                                     35,560
          2006                                     11,542
          2007                                      3,433
          2008                                          -
                                            $      84,640

                                       13
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

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, 2003 and 2003, there were $35,000 and $35,000, 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, 2003 and 2002,  the Company
has  accrued  $40,089  and $33,650  respectively,  of interest  payable on these
notes.  As of June 30, 2003,  the Company has not received any notice of default
relating to the notes.

<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    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, 2003 and 2002,  were  22,761,558  and  19,377,039,
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, 2003 and 2002,  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, 2003 and 2002 are as follows:

                                                         2003           2002
                                                      -----------    -----------

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

Sale of equipment in exchange for receivable                    -         52,730

Trade payables and accrued expenses forgiven                    -          6,771

Converson of 10.0% secured debentures to
     shares of common stock                               (63,000)             -

Issued 10.0% secured convertible debentures               250,000              -

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 FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    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, 2003 and
2002.

NOTE 14 - SUBSEQUENT EVENTS

Conversion of debentures

                                       15
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANIAL STATEMENTS
                             JUNE 30, 2003 AND 2002
                                    UNAUDITED

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

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

     REVENUES

     Net revenues for the three  months ended June 30, 2003  decreased  31.8% to
$545,094  from  $799,797 for the same period in fiscal 2002.  This was primarily
due to the  closing 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, 2003  decreased  29.4% to
$232,301  from  $328,949 for the same period in fiscal 2002.  As a percentage of
net revenues,  cost of sales  increased to 41.1% for the three months ended June
30, 2003 from 39.0% for the comparable  period in fiscal 2002. 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, 2003
decreased to $304,452  from  $388,299  for the same period in fiscal 2002.  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,
2003  increased to $97,953 from $81,873 for the same period in fiscal 2002. As a
percentage of net revenues,  general and  administrative  expenses  increased to
10.2% for the three  months  ended  June 30,  2003 from 7.8% for the  comparable
period in fiscal  2002.  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,  2003  decreased  to
$66,333 from $88,743 for the same period in fiscal 2003.  As a percentage of net
revenues, occupancy costs decreased to 11.1% for the three months ended June 30,
2003 from 11.5% for the comparable period in fiscal 2002.

     Director  and  professional  fees for the three  months ended June 30, 2003
increased to $121,876  from  $116,640  for the same period in fiscal  2002.  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, 2003 during the three months ended June 30,  2003.  Comparable  annual audit
fees for the year ended March 31, 2002 were  recognized  during the three months
ended September 30, 2002.

<PAGE>

     Depreciation and  amortization  expense for the three months ended June 30,
2003  increased to $29,442 from $31,895 for the same period in fiscal 2002. As a
percentage of net revenues,  depreciation and amortization  expense decreased to
4.0% for the three  months  ended  June 30,  2003  from 4.1% for the  comparable
period in fiscal 2002.

     Operating  losses for the three  months  ended June 30, 2003  increased  to
$307,264  from  $236,602 the same period in fiscal 2002.  As a percentage of net
revenues,  operating  losses  increased to 29.6% for the three months ended June
30, 2003 from 11.6% for the comparable period in fiscal 2002.

     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,
2003. 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, 2003  increased  to $659,171
from  $364,912  for the same  period  in fiscal  2002.  As a  percentage  of net
revenues, net losses increased to 45.6% for the three months ended June 30, 2003
from 7.9% for the comparable period in fiscal 2002.

     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, 2003,  the Company had a net operating  loss of $307,264,  and an
overall  net loss of  $659,171.  At June 30,  2003,  the  Company  has a working
capital deficit of $1,386,783, and a shareholders' deficit of $1,196,328.

     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.

                                       16
<PAGE>

     Cash  applied to investing  activities  for the three months ended June 30,
2003  consisted of capital  additions  to property  and  equipment of $4,023 and
decreases  to deposits and other assets of $5,004.  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 of the Black Rhino Coffee(TM) brand.

     The Company had net cash provided from  financing  activities for the three
months  ended June 30, 2003  totaling  $243,133.  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.

<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  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.


                                       17
<PAGE>

     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

                                       18
<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.

                                       19
<PAGE>

                                   SIGNATURES

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


                                        PEABODYS COFFEE, INC.,
                                        A Nevada Corporation

                                        By: ___________/S/___________
                                            Todd Tkachuk, President
                                        Date: August 14, 2003


                                       20
<PAGE>

I, Todd N. Tkachuk, certify that:

1.   I have reviewed this  quarterly  report on Form 10-QSB of Peabodys  Coffee,
     Inc., ("the registrant");

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based  on  my  knowledge,   the  financial   statements,   other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most  recent  evaluation  to the  registrant's  auditors  and the audit
     committee of registrant's board of directors:

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors and material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


                           /s/ Todd N. Tkachuk
                           ----------------------------
                           Todd N. Tkachuk
                           President, Chief Executive Officer,
                           Chief Financial Officer
                           August 19, 2003