U. S. 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 JUNE 30, 2001

             [ ] 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                                               98-0209293
(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 filings 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: 17,390,217 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                                          14


Part II - Other Information

          Item 1   Legal Proceedings                                          16

          Item 2   Changes in Securities                                      16

          Item 3   Defaults Upon Senior Securities                            16

          Item 4   Submission of Matters to a Vote of Security Holders        16

          Item 5   Other Information                                          16

          Item 6   Exhibits and Reports on Form 8-K                           16

Signatures                                                                    17

                                      -2-
<PAGE>

                              PEABODYS COFFEE, INC.
                                 BALANCE SHEETS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                2001             2000
                                                        ------------     ------------
ASSETS

Current Assets
<S>                                                     <C>              <C>
   Cash                                                 $      6,818     $      4,908
   Other receivables                                          23,183           16,301
   Inventories                                                56,526           36,623
   Prepaid expenses                                          136,311          192,470
                                                        ------------     ------------
         Total Current Assets                                222,838          250,302

Property and equipment (net)                                 419,680          588,002
Deposits and other assets                                    104,779          129,518
                                                        ------------     ------------

         Total Assets                                   $    747,297     $    967,822
                                                        ============     ============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Cash overdraft                                       $     62,446     $     25,671
   Accounts payable                                          429,238          641,681
   Accrued expenses                                          365,862          222,637
   Other current liabilities                                  28,000               --
   Capital lease obligations                                      --              648
   Short-term borrowings                                      14,820           92,564
   Bridge note financing                                      40,000           40,000
                                                        ------------     ------------

         Total Current Liabilities                           940,366        1,023,201
                                                        ------------     ------------
Stockholders' Deficit
   Common stock authorized - 50,000,000 shares,
   issued and outstanding, 15,320,217 and 8,849,304
   $.001 par value                                            15,320            8,849

   Paid-in capital                                         4,320,558        3,809,152
   Accumulated deficit                                    (4,528,947)      (3,873,380)
                                                        ------------     ------------

         Total Stockholders' Deficit                        (193,069)         (55,379)
                                                        ------------     ------------

         Total Liabilities and Stockholders' Deficit    $    747,297     $    967,822
                                                        ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -3-
<PAGE>

                              PEABODYS COFFEE, INC.
                   STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
                    THREE MONTHS ENDED JUNE 30, 2001 AND 2000
                                    UNAUDITED

                                                          2001             2000
                                                  ------------     ------------

Sales                                             $    703,516     $    501,383

Cost of Sales                                          274,342          209,296
                                                  ------------     ------------

         Gross Profit                                  429,174          292,087

Operating expenses
   Employee compensation and benefits                  310,935          245,429
   General and administrative expenses                  54,605           60,871
   Occupancy                                            81,237           70,809
   Director and professional fees                       35,173          113,922
   Depreciation and amortization                        28,755           27,690
   Settlement costs and other fees                          --              888
                                                  ------------     ------------
                                                       510,705          519,609
                                                  ------------     ------------

   Operating Loss                                      (81,531)        (227,522)

Other income                                            24,000               --
Interest expense                                        (2,731)          (2,788)
                                                  ------------     ------------

   Net loss before extraordinary item                  (60,262)        (230,310)
   Extraordinary item - forgiveness of debt              5,027            9,266
                                                  ------------     ------------

         Net Loss                                      (55,235)        (221,044)

Accumulated Deficit, beginning of period            (4,473,712)      (3,652,336)
                                                  ------------     ------------

Accumulated Deficit, end of period                $ (4,528,947)    $ (3,873,380)
                                                  ============     ============

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

See accompanying notes to financial statements

                                      -4-
<PAGE>

                              PEABODYS COFFEE, INC.
                            STATEMENTS OF CASH FLOWS
                    THREE MONTHS ENDED JUNE 30, 2001 AND 2000
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                     2001             2000
                                                             ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                          <C>              <C>
Net Loss                                                     $    (55,235)    $   (221,044)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
   Depreciation and amortization                                   28,755           27,690
   Gain on extraordinary item - forgiveness of debt                (5,027)          (9,266)
   Other income from reduction of obligation to issue
   shares of common stock                                         (24,000)              --
Changes in operating assets and liabilities:
   Receivables                                                     (1,678)           6,565
   Inventories                                                     (6,143)           3,825
   Prepaid expenses                                                (2,178)          41,231
   Cash overdraft                                                  13,888           25,671
   Accounts payable                                                14,184             (567)
   Accrued expenses                                                55,318           (4,906)
                                                             ------------     ------------
         Net cash provided (used) by operating activities          17,884         (130,801)

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment                               (17,021)         (11,513)
Changes to deposits and other assets                               (2,403)         (20,683)
                                                             ------------     ------------
         Net cash used by investing activities                    (19,424)         (32,196)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of notes payable                                --            4,999
Principal reductions of notes payable                                  --               --
Net proceeds from sale of stock                                        --          160,000
Payments on capital lease obligations                                  --             (465)
                                                             ------------     ------------
         Net cash provided by financing activities                     --          164,534

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                                   (1,540)           1,537

CASH AND CASH EQUIVALENTS
Beginning of period                                                 8,358            3,371
                                                             ------------     ------------
End of period                                                $      6,818     $      4,908
                                                             ============     ============
</TABLE>

See accompanying notes to financial statements

                                      -5-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    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 -  Related Party Transactions

Note 3 -  Going Concern

Note 4 -  Acquisitions

Note 5 -  Inventories

Note 6 -  Property and Equipment

Note 7 -  Accounts Payable

Note 8 -  Bridge Note Financing

Note 9 -  Supplemental   Disclosures   of  Non  Cash   Investing  and  Financing
          Transactions

Note 10 - Forgiveness of Debt

Note 11 - Accrued Expenses

Note 12 - Commitments and Contingencies

Note 13 - Short Term Borrowing

Note 14 - Stockholders' Deficit

Note 15 - Earnings Per Common Share

                                      -6-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business
-----------------------
Peabodys  Coffee (the  "Company")  owns and operates  retail espresso coffee bar
kiosks  in  a  variety  of  corporate  and  institutional  locations  throughout
California  and Nevada.  The Company  has gained  access to this  segment of the
specialty coffee market by contracting with existing food service providers such
as Sodexho America, Aramark, The Compass Group and through direct contracts with
selected clients.  The Company's product offerings include:  high quality coffee
and espresso beverages, fruit smoothies,  pastries,  accompaniments,  and coffee
related accessories.

Estimates and Assumptions
-------------------------
The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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  10K-SB for the year ended  March 31,
2001.  The  results of  operations  for the period  ended June 30,  2001 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, 2001 and 2000 included in the Annual Report of the Company
on Form  10K-SB,  filed  with  the  Commission  on June  29,  2001,  are  hereby
incorporated by reference:

     Note 10 - Lease Obligations
     Note 12 - Income Taxes
     Note 15 - Stock Option Plans
     Note 16 - Warrants
     Note 20 - Risks and Uncertainties
     Note 21 - 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.

                                      -7-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

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.

Intangible Assets
-----------------
Goodwill  represents  the  excess of  acquisition  costs  over the fair value of
assets acquired.  Amortization is recorded on a straight-line  basis over twenty
years. It is the Company's  policy to evaluate the ongoing  profitability of the
acquired  assets in order to  determine  if any  impairment  of the net goodwill
value has occurred.

Non-compete  agreements are amortized on a straight-line  basis over the term of
the agreement.

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

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

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

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

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

Reclassifications
-----------------
Certain  amounts  from  the  June  30,  2000  financial   statements  have  been
reclassified to conform with the current year presentation.

                                      -8-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 2 - RELATED PARTY TRANSACTIONS

A member of the  Company's  Board of  Directors  provided  management  and other
services  to the  Company on various  business  issues.  Fees  accrued  for such
services by the Company  during the three  months  ended June 30, 2001 and 2000,
were $0 and $6,000,  respectively.  At June 30, 2001 and 2000,  $0 and  $26,300,
respectively, was accrued in accounts payable.

NOTE 3 - GOING CONCERN

These statements are presented on the basis that the Company is 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.
The  accompanying  financial  statements  show an  operating  loss for the three
months  ended June 30, 2001 of $81,531 and current  liabilities  exceed  current
assets by $717,528.  Without an infusion of  additional  capital,  the Company's
ability to continue  operations is doubtful.  No adjustment has been made to the
financial  statements  relating  to the  uncertainty  of  continuing  as a going
concern.

The Board of Directors and  management  acknowledge  the issues raised as to the
future of the Company.  Over the past several years,  the Company has eliminated
over  $1.5  million  of debt  through  a  combination  of debt  forgiveness  and
conversion  of debt to equity,  and intends to further  reduce debt via the same
approach.  Also,  a concerted  effort is being placed on the  evaluation  of the
Company's business practices,  including site locations,  product quality,  menu
selection and pricing policy, with the goal of achieving positive cash flow from
operations.  In  addition,  the  Company  has  engaged  the  services of various
consultants  to enhance  merger and  acquisition  activity  and capital  raising
efforts.  Management  believes the  combination  of these efforts will allow the
Company to continue as a going concern.

NOTE 4 - ACQUISITIONS

During the year ended March 31, 2001, the Company  purchased certain assets of a
coffee roasting company in Van Nuys, California,  in exchange for the promise to
issue up to  320,000  shares of common  stock at $0.20 per share.  The  ultimate
number of shares to be issued is  contingent  upon to the  seller's  ability  to
remove  certain  liens.  The seller has thus far been unable to remove the liens
from the assets.  Under the terms of the agreement the maximum  consideration to
be paid is reduced by 40,000 shares per month.  As of June 30, 2001, the maximum
consideration to be paid is 40,000 shares at $0.20 per share; therefore,  $8,000
is  included  in  other  current  liabilities  in  the  accompanying   financial
statements.

                                      -9-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 4 - ACQUISITIONS - CONTINUED

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

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

Effective December 12, 2000, the Company transferred  possession of the roasting
equipment  for $20,000.  The Company has recorded this transfer in other current
liabilities until such time as clear title has been acquired.  The book value of
the equipment has been adjusted to its net realizable value.

NOTE 5 - INVENTORIES

At June 30, 2001 and 2000, inventories were comprised of the following:

                                                2001           2000
                                           ---------      ---------
          Coffee                           $  12,563      $   7,706
          Other food and beverage items       27,045         19,477
          Packaging and other supplies        16,918          9,440
                                           ---------      ---------
                                           $  56,526      $  36,623
                                           =========      =========

NOTE 6 - PROPERTY AND EQUIPMENT

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

                                                2001           2000
                                           ---------      ---------

          Kiosk carts and equipment        $ 559,856      $ 494,028
          Equipment and furniture            249,027        382,664
          Signage                             51,657         39,848
          Site improvements                   81,266         74,568
                                           --------       ---------
                                             941,806        991,108
          Less: accumulated depreciation    (522,126)      (403,106)
                                           ---------      ---------
                                           $ 419,680      $ 588,002
                                           =========      =========

                                      -10-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 7 - ACCOUNTS PAYABLE

Of the  $429,238  and  $641,681 in  accounts  payable at June 30, 2001 and 2000,
approximately  64% and  70%  have  been  outstanding  for  more  than  90  days,
respectively.

NOTE 8 - 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. There were
$40,000 of bridge notes outstanding at June 30, 2001 and 2000.

Interest payments on the principal balance  outstanding is nine percent (9%) per
annum due in full on  December  31,  1998.  As of June 30,  2001 and  2000,  the
Company has accrued $30,944 and $24,860 of interest  payable on these notes. The
Notes are secured by all assets of the Company. As of June 30, 2001, the Company
has not received any notice of default relating to the Secured Notes.

NOTE  9  -  SUPPLEMENTAL   DISCLOSURES  OF  NON  CASH  INVESTING  AND  FINANCING
TRANSACTIONS

Non cash  investing and financing  transactions  for the three months ended June
30, 2001 and 2000 are as follows:

                                                               2001         2000
                                                          ---------    ---------

          Issuance of common stock in exchange for
               services provided                             50,000    $ 225,000

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

          Issuance of common stock in exchange for
               property and equipment.                       10,000      160,000

          Trade Payables forgiven                             5,027           --

          Conversion of obligations on bridge financing
               notes into shares of common stock                 --       20,000

          Accrued interest on bridge note obligations
               forgiven in exchange for warrants to
               purchase common stock                             --        9,266

                                      -11-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 10 - FORGIVENESS OF DEBT

This income represents the forgiveness of accrued expenses, recorded as expenses
in prior years and in the three months ended June 30, 2001.

In 1996 the Company issued interest bearing convertible secured promissory notes
("Bridge  Notes").  During the three  months  ended June 30, 2000, a Bridge Note
holder elected to convert their outstanding  principal balance into common stock
at a conversion  price of $1.00 per share.  In addition,  the Bridge Note holder
who elected to convert the outstanding  principal  agreed to forgive the Company
of its debt obligations  related to accrued interest  associated with the Bridge
Note. In exchange for the debt  forgiveness  of $9,266,  the Company issued this
note holder warrants to purchase 9,266 shares of the Company's common stock at a
price per share of $1.00.

A tax  effect  was not  attributed  to the  gain as the  gain  will  reduce  the
Company's prior net operating loss.

NOTE 11 - ACCRUED EXPENSES

At June 30, 2001 and 2000, accrued expenses were comprised of the following:

                                                2001           2000
                                           ---------      ---------
          Accrued interest                 $  30,944      $  36,344
          Accrued wages                       41,689        151,195
          Estimated use tax                   29,959         29,959
          Accrued payroll taxes              261,015              -
          Other                                2,255          5,139
                                           ---------      ---------
                                           $ 365,862      $ 222,637
                                           =========      =========

NOTE 12 - COMMITMENTS AND CONTINGENCIES

As of June 30,  2001,  the  Company has  accrued  $246,015 of payroll  taxes and
$15,000 of penalties  and interest due to the Internal  Revenue  Service and the
State of California. Management has met with the Internal Revenue Service and is
in the process of  negotiating a payment plan.  Subsequent to June 30, 2001, the
Company has made the majority of its second  quarter 2001 payroll tax  deposits,
and intends to continue making timely deposits of its payroll tax obligations.

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, 2001 and
2000.

                                      -12-
<PAGE>

                              PEABODYS COFFEE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             JUNE 30, 2001 AND 2000
                                    UNAUDITED

NOTE 13 - SHORT-TERM BORROWINGS

During the three months ended June 30, 2001 and 2000, the Company borrowed funds
to  provide  short-term  working  capital.   These  working  capital  loans  are
unsecured, non-interest bearing, and amounted to $14,820 and $92,564 at June 30,
2001 and 2000 respectively.

NOTE 14 - STOCKHOLDERS' DEFICIT

The Company is authorized to issue up to 50,000,000  shares of common stock, par
value  $.001.  At June 30,  2001 and 2000 there were  15,320,217  and  8,849,301
shares of common stock outstanding.

At June 30, 2001 and 2000 the Company had not paid any dividends with respect to
its shares of common stock.

NOTE 15 - 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,  2001 and 2000,  were  14,144,393  and  8,569,304,
respectively.

Common stock  equivalents are the net additional number of shares which would be
issuable upon the exercise of the outstanding common stock options and warrants.
For the three  months  ended June 30, 2001 and 2000 fully  diluted  earnings per
common share are equal to basic  earnings per common share because the effect of
potentially  dilutive  securities  under the stock option plans and warrants are
anti-dilutive and therefore not included.

                                      -13-
<PAGE>

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

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

          REVENUES

     Net revenues for the three  months ended June 30, 2001  increased  40.3% to
$703,516  from  $501,383 for the same period in fiscal 2000.  This was primarily
due to the opening of new  hospital  locations  in Southern  California.  Retail
kiosk and cart sales accounted for 100% of revenues for both periods.

          COSTS AND EXPENSES

     Cost of sales for the three months ended June 30, 2001  increased  31.1% to
$274,342  from  $209,296 for the same period in fiscal 2000.  As a percentage of
net  revenues,  cost of sales was 39.0% for the three months ended June 30, 2001
and 41.7% for the comparable period in fiscal 2000.

     Employee compensation and benefits for the three months ended June 30, 2001
increased to $310,935  from  $245,429  for the same period in fiscal 2000.  As a
percentage  of net revenues,  employee  compensation  and benefits  decreased to
44.2% for the three  months  ended June 30,  2001 from 49.0% for the  comparable
period in fiscal 2000. The decrease as a percentage of net revenues is primarily
due to the  efficiencies  gained via  corporate  and  administrative  labor cost
controls.

     General and  administrative  expenses  for the three  months ended June 30,
2001  decreased to $54,605 from $60,871 for the same period in fiscal 2000. As a
percentage of net revenues,  general and  administrative  expenses  decreased to
7.8% for the three  months  ended June 30,  2001 from  12.1% for the  comparable
period in fiscal  2000.  The  decrease as a percent of net revenues is primarily
due to reduced travel expenditures and reduced telephone expenses resulting from
improved telecommunication service arrangements.

     Occupancy  costs for the three  months  ended June 30,  2001  increased  to
$81,237 from $70,809 for the same period in fiscal 2000.  As a percentage of net
revenues, occupancy costs decreased to 11.6% for the three months ended June 30,
2001 from 14.1% for the  comparable  period in fiscal  2000.  This  decrease  is
primarily  due to lower  average  revenue  sharing  rates at the  Company's  new
hospital locations.

     Director  and  professional  fees for the three  months ended June 30, 2001
decreased  to $35,173 from  $113,922  for the same period in fiscal  2000.  As a
percentage of net revenues, director and professional fees decreased to 5.0% for
the three  months  ended June 30, 2001 from 22.7% for the  comparable  period in
fiscal 2000.  The decrease as a percentage  of net revenues was primarily due to
the engagement of various consultants in April 2000. These consulting agreements
were to assist the Company in obtaining  growth financing and in the penetration
of new  markets.  There were no similar  agreements  in effect  during the three
months ended June 30, 2001.

     Depreciation and  amortization  expense for the three months ended June 30,
2001  increased to $28,755 from $27,690 for the same period in fiscal 2000. As a
percentage of net revenues,  depreciation and amortization  expense decreased to
4.1% for the three  months  ended  June 30,  2001  from 5.5% for the  comparable
period in fiscal 2000.

                                      -14-
<PAGE>

     Operating  losses for the three  months  ended June 30, 2001  decreased  to
$81,531 from  $227,522 the same period in fiscal  2000.  As a percentage  of net
revenues,  operating  losses  decreased to 11.6% for the three months ended June
30, 2001 from 45.4% for the comparable period in fiscal 2000.

     Net loss for the three months ended June 30, 2001 decreased to $55,235 from
$221,044 for the same period in fiscal 2000.  As a percentage  of net  revenues,
net losses decreased to 7.9% for the three months ended June 30, 2001 from 44.1%
for the comparable period in fiscal 2000.

          LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2001, the Company has a working capital deficit of $717,528. As
discussed in Note 3 of the  accompanying  financial  statements,  the Company is
aggressively working to eliminate debt through a combination of debt forgiveness
and  conversion of debt to equity.  The Company is also  evaluating its business
practices with the goal of achieving  positive cash flow from  operations.  Cash
provided by operating  activities  totaled $17,884 during the three months ended
June 30, 2001, as compared to cash utilized by operating  activities of $130,801
for the comparable period in fiscal 2000.

     Cash utilized for investing  activities for the three months ended June 30,
2001  primarily  consisted of capital  additions  to property  and  equipment of
$17,021.  The capital additions were primarily related to the equipment purchase
for the  opening  of a new  facility,  and costs  associated  with  refurbishing
existing kiosks.

     The  Company  estimates  that it will  require  approximately  $300,000  of
additional  investment  capital in order to open  sufficient  new sites to reach
break even with operational  costs.  Such growth will require  approximately six
months to achieve  after receipt of the  investment  capital.  In addition,  the
Company requires  additional  investment  capital to address the current working
capital deficit. The Company is planning to release a private placement offering
memorandum in August 2001. The details of the private  placement are still being
contemplated  and there can be no assurance  that the Company will be successful
in attracting investors.

                                      -15-
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     None

ITEM 2.   CHANGES IN SECURITIES

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

     Effective on June 30, 2001, the Company issued 200,000 shares of its common
stock to an individual in an unregistered transaction. The shares were issued as
consideration  for certain assets  (coffee  preparation  equipment,  an espresso
machine, etc.) acquired by the Company. The stock was valued at $0.05 per share.
The  issuance  was  exempt  from  registration  under Rule 506 of  Regulation  D
promulgated  under Section 4(2) of the Securities  Act of 1933, as amended.  The
individual  was a  sophisticated  investor and an accredited  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
6.4***         Amendment No. 2--Arrosto Asset Purchase Agreement

*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.

                                      -16-
<PAGE>

**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 no reports on Form 8-K during the reporting period.

                                      -17-
<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/______________
                                        Cliff B. Young, President

                                        Date: August 14, 2001

                                      -18-