# SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10QSB

| | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF 1934 For the quarterly period ended March 31, 2004
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE          SECURITIES
EXCHANGE ACT OF 1934          For the transition period from _________ to ____________
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commission
File No. 000-27233

LIVESTAR ENTERTAINMENT
GROUP, INC.  (Exact name of
Registrant as specified in its charter)

|                                                                       |                                                      
|---------------------------------------------------------------------- | -----------------------------------------------------
|NEVADA
(State or other jurisdiction of 
incorporation or organization) | 98-0204736
   (I.R.S. Employer
Identification Number)

|                                                                                                        |                      
|------------------------------------------------------------------------------------------------------- | ---------------------
|62 W. 8th Avenue, 4th FloorVancouver, British Columbia, Canada
(Address of principal executive offices) | V5Y 1M7
   (Zip Code)

Issuer's telephone number, including area code:    
(604) 682-6541

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 last
practicable date.

|                                          |                                                        
|----------------------------------------- | -------------------------------------------------------
|Class     
$0.0001 par value Common Stock | Outstanding as of March 31, 2004
           403,468,337

Transitional Small Business Disclosure Format
(check one):  Yes [  ]  No [ X ]

-1-

# PART 1 
FINANCIAL INFORMATION

# Item 1. Financial Statements

The accompanying unaudited financial
statements have been prepared in accordance with the instructions to Form 10-QSB and Item
310 (b) of Regulation S-B, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of operations, cash
flows, and stockholders equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been included and
all such adjustments are of a normal recurring nature. Operating results for the three
months ended March 2004 are not necessarily indicative of the results that can be expected
for the year ending December 31, 2004.

-2-

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# CONSOLIDATED BALANCE
SHEETS (Unaudited) (Stated in U.S.
Dollars)

|                                                            | MARCH 31
2004 | DECEMBER 31
2003 |  
|----------------------------------------------------------- | ------------- | ---------------- | -
|ASSETS                                                      |               |                  |  
|Current                                                     |               |                 
|Cash                                                        |               |                  | $
|Accounts receivable                                         |               |                  |  
|Goods and Services Tax recoverable                          |               |                  |  
|Prepaid expense                                             |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  |  
|Capital Assets(Note 5)                                      |               |                  |  
|Advances Receivable (Note 6)                                |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  | $
|LIABILITIES                                                 |               |                 
|Current                                                     |               |                 
|Accounts payable                                            |               |                  | $
|Loans and advances payable (Note 9)                         |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  |  
|STOCKHOLDERS' DEFICIENCY                                    |               |                 
|Share Capital                                               |               |                 
|Authorized:                                                 |               |                 
|1,000,000,000 common shares, par value $0.0001 per share    |               |                 
|200,000,000 preferred shares, par value $0.0001 per share   |               |                 
|Issued and outstanding:                                     |               |                 
|403,468,337 common shares at March 31, 2004 and 208,468,337 |               |                 
|at December 31, 2003                                        |               |                  |  
|875,000 preferred shares at March 31, 2004 and December     |               |                 
|31, 2003                                                    |               |                  |  
|Additional paid-in capital                                  |               |                  |  
|Deficit                                                     |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  |  
|                                                            |               |                  | $
|                                                            |               |                  |  

F-1

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT (Unaudited) (Stated in U.S.
Dollars)

|                                                                     | THREE MONTHS ENDED
MARCH 31
2004 | THREE MONTHS ENDED
MARCH 31
2003 | INCEPTION
OCTOBER 12
2000 TO
MARCH 31
2004
|-------------------------------------------------------------------- | -------------------------------- | -------------------------------- | ------------------------------------------
|Revenue                                                              |                                  |                                  | $                                         
|                                                                     |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|Expenses                                                             |                                  |                                 
|Administrative services                                              |                                  |                                  |                                           
|Amortization                                                         |                                  |                                  |                                           
|Business development                                                 |                                  |                                  |                                           
|Consulting                                                           |                                  |                                  |                                           
|Equipment leases                                                     |                                  |                                  |                                           
|Investor relations                                                   |                                  |                                  |                                           
|Marketing                                                            |                                  |                                  |                                           
|Media design                                                         |                                  |                                  |                                           
|Office, rent and sundry                                              |                                  |                                  |                                           
|Professional fees                                                    |                                  |                                  |                                           
|Software development                                                 |                                  |                                  |                                           
|Travel                                                               |                                  |                                  |                                           
|Wages and benefits                                                   |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|Loss Before The Following                                            |                                  |                                  |                                           
|Forgiveness Of Debt                                                  |                                  |                                  |                                           
|Write Down Of Investment                                             |                                  |                                  |                                           
|Minority Interest In Loss Of Subsidiary                              |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|Loss From Continuing Operations                                      |                                  |                                  |                                           
|Gain On Disposition Of Subsidiary                                    |                                  |                                  |                                           
|Gain From Discontinued Operations                                    |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           
|Net Loss For The Period                                              |                                  |                                  | $                                         
|                                                                     |                                  |                                  |                                           
|Net Loss Per Share Before Discontinued Operations, Basic and diluted |                                  |                                  | $                                         
|                                                                     |                                  |                                  |                                           
|Net Loss Per Share, Basic and diluted                                |                                  |                                  | $                                         
|                                                                     |                                  |                                  |                                           
|Weighted Average Number Of Common Shares Outstanding                 |                                  |                                  |                                           
|                                                                     |                                  |                                  |                                           

F-2

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Stated in U.S.
Dollars)

|                                                                                    | THREE MONTHS ENDED
MARCH 31
2004 | THREE MONTHS ENDED
MARCH 31
2003 | INCEPTION
OCTOBER 12
2000 TO
MARCH 31
2004 |          |   |  
|----------------------------------------------------------------------------------- | -------------------------------- | -------------------------------- | ------------------------------------------ | -------- | - | -
|Cash Flows From Operating Activities                                                |                                  |                                  |                                            |          |   |  
|Loss for the year from continuing     operations                                    |                                  |                                  | $                                          | (273,295 | ) | $
|Adjustments To Reconcile Net Loss To Net Cash Used By Operating Activities          |                                  |                                 
|Amortization                                                                        |                                  |                                  |                                            | 589      |   |  
|Stock based compensation                                                            |                                  |                                  |                                            | 44,778   |   |  
|Issue of common stock for expenses                                                  |                                  |                                  |                                            | --       |   |  
|Write down of investment                                                            |                                  |                                  |                                            | --       |   |  
|Minority interest in loss of subsidiary                                             |                                  |                                  |                                            | --       |   |  
|Accounts receivable                                                                 |                                  |                                  |                                            | (4,580   | ) |  
|Goods and Services Tax recoverable                                                  |                                  |                                  |                                            | (1,266   | ) |  
|Prepaid expense                                                                     |                                  |                                  |                                            | (6,939   | ) |  
|Notes receivable                                                                    |                                  |                                  |                                            | --       |   |  
|Accounts payable                                                                    |                                  |                                  |                                            | 26,068   |   |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|                                                                                    |                                  |                                  |                                            | (214,645 | ) |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|Cash Flows From Investing Activities                                                |                                  |                                 
|Net asset deficiency of legal parent at date       of reverse take-over transaction |                                  |                                  |                                            | --       |   |  
|Purchase of capital assets                                                          |                                  |                                  |                                            | (367     | ) |  
|Advances receivable                                                                 |                                  |                                  |                                            | (117,979 | ) |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|                                                                                    |                                  |                                  |                                            | (118,346 | ) |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|Cash Flows From Financing Activities                                                |                                  |                                 
|Loans and advances payable                                                          |                                  |                                  |                                            | 89,654   |   |  
|Shares issued for cash                                                              |                                  |                                  |                                            | 267,521  |   |  
|Share subscriptions received                                                        |                                  |                                  |                                            | --       |   |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|                                                                                    |                                  |                                  |                                            | 357,175  |   |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|Increase (Decrease) In Cash                                                         |                                  |                                  |                                            | 24,184   |   |  
|Net Cash From Discontinued Operations                                               |                                  |                                  |                                            | --       |   |  
|Cash Acquired On Acquisition Of Subsidiary                                          |                                  |                                  |                                            | --       |   |  
|Cash, Beginning Of Period                                                           |                                  |                                  |                                            | 14,892   |   |  
|                                                                                    |                                  |                                  |                                            |          |   |  
|Cash, End Of Period                                                                 |                                  |                                  | $                                          | 39,076   |   | $
|                                                                                    |                                  |                                  |                                            |          |   |  

F-3

# LIVESTAR ENTERTAINMENT
GROUP INC.

# (A Development Stage Company)

# CONSOLIDATED STATEMENT OF
STOCKHOLDERS DEFICIENCY

# MARCH 31, 2004

# (Unaudited)

# (Stated in U.S.
Dollars)

|                                            | PREFERRED STOCK | COMMON STOCK | ADDITIONAL
PAID-IN |          
|------------------------------------------- | --------------- | ------------ | ------------------ | ---------
|
|Balance, December 31, 2001                  |                 |              |                    | --       
|Shares issued for debt                      |                 |              |                    | --       
|Shares issued for services                  |                 |              |                    | --       
|Shares issued for cash and notes receivable |                 |              |                    | --       
|Shares cancelled                            |                 |              |                    | --       
|Forgiveness of shareholder debt             |                 |              |                    | --       
|Loss for the year                           |                 |              |                    | --       
|                                            |                 |              |                    |          
|Balance, December 31, 2002                  |                 |              |                    | --       
|Shares issued for debt                      |                 |              |                    | --       
|Shares issued for services                  |                 |              |                    | --       
|Shares issued for cash                      |                 |              |                    | --       
|Shares issued                               |                 |              |                    | 1,000,000
|Shares redeemed                             |                 |              |                    | (125,000 
|Stock based compensation                    |                 |              |                    | --       
|Loss for the year                           |                 |              |                    | --       
|                                            |                 |              |                    |          
|                                            |                 |              |                    |          
|Balance, December 31, 2003                  |                 |              |                    | 875,000  
|Shares issued for cash                      |                 |              |                    | --       
|Loss for the period                         |                 |              |                    | --       
|                                            |                 |              |                    |          
|                                            |                 |              |                    |          
|Balance, March 31, 2004                     |                 |              |                    | 875,000  
|                                            |                 |              |                    |          

F-4

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S. Dollars)

|1. | BASIS
OF PRESENTATION
|-- | ---------------------

| |  | The unaudited
consolidated financial statements as of March 31, 2004 included herein have been prepared
without audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with United States of America generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. It
is suggested that these consolidated financial statements be read in conjunction with the
December 31, 2003 audited consolidated financial statements and notes thereto.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | NATURE
OF OPERATIONS
|-- | --------------------

| | a) | Organization
| | -- | ------------

| |  | The Company
was incorporated in the State of Nevada, U.S.A., on October 12, 2000.
| |  | ---------------------------------------------------------------------------------

| | b) | Development
Stage Activities
| | -- | ----------------------------

| |  | The Company
was organized as a holding company to develop or acquire innovative ventures with an
emphasis on serving the lifestyle needs of the 18  34 year Digital Generation
through the production and marketing of lifestyle products and services. The Companys
initial venture is RAHX, a business concept previously focused on delivering, for its
customers, a consolidated Entertainment Experience Network comprised of many services
ranging from digital media peer to peer file exchange to live entertainment and online
video games. At this time, the Companys focus is the developing of a live
entertainment business, specifically nightclubs and live events.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-5

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|2. | NATURE
OF OPERATIONS (Continued)
|-- | --------------------------------

| | c) | Going
Concern
| | -- | -------------

| |  | Since inception,
the Company has suffered recurring losses, net cash outflows from operations and, at
March 31, 2004, has a working capital deficiency of $1,907,606. The Company expects to
continue to incur substantial losses to complete the development of its business. Since
its inception, the Company has funded operations through common stock issuances and
related party loans in order to meet its strategic objectives. Management believes that
sufficient funding will be available to meet its business objectives, including
anticipated cash needs for working capital, and is currently evaluating several financing
options. However, there can be no assurance that the Company will be able to obtain
sufficient funds to continue the development of and, if successful, to commence the sale
of its products under development. As a result of the foregoing, there exists substantial
doubt about the Companys ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that might result from the outcome of
this uncertainty.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | SIGNIFICANT
ACCOUNTING POLICIES
|-- | -------------------------------

| |  | The consolidated
financial statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America. Because a precise
determination of many assets and liabilities is dependent upon future events, the
preparation of consolidated financial statements for a period necessarily involves the
use of estimates which have been made using careful judgement.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The consolidated
financial statements have, in managements opinion, been properly prepared within
reasonable limits of materiality and within the framework of the significant accounting
policies summarized below:
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | Consolidation
| | -- | -------------

| |  | These consolidated
financial statements include the accounts of the Company, its 100% owned subsidiaries,
RRUN Labs Inc., Livestar Entertainment Canada Inc. and Livestar Entertainment
Establishment Ltd., its 67% owned subsidiary, RAHX, Inc., and its discontinued wholly
owned subsidiary, AXXUS Corporation. On November 27, 2002, the Company disposed of its
100% interest in AXXUS Corporation.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-6

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) 
(Stated in U.S. Dollars)

|3. | SIGNIFICANT
ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------

| | b) | Development
Stage Company
| | -- | -------------------------

| |  | The Company
 is a  development  stage  company  as  defined in the  Statements  of  Financial
 Accounting          Standards  No. 7. The Company is devoting  substantially  all of its
 present  efforts to  establish a new          business  and none of its planned
 principal  operations  have  commenced.  All losses  accumulated  since
         inception have been considered as part of the Company ́s development stage
activities.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Investments
| | -- | -----------

| |  | Investments in
companies owned less than 20% are recorded at the lower of cost or fair market value.
| |  | ----------------------------------------------------------------------------------------------------

| | d) | Software
Development Costs
| | -- | --------------------------

| |  | The costs
to develop new  software  products  and  enhancements  to  existing  software  products
 will be          expensed  as  incurred  until   technological   feasibility  has  been
 established.   Once  technological          feasibility has been established, any
additional costs will be capitalized.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) | Income
Taxes
| | -- | ------------

| |  | The Company
has adopted  Statement of Financial  Accounting  Standards  No. 109   Accounting  for
Income          Taxes (SFAS 109).  This  standard  requires  the use of an asset and
 liability  approach  for  financial          accounting  and  reporting  on income
 taxes.  If it is more likely than not that some portion or all if a          deferred
tax asset will not be realized, a valuation allowance is recognized.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) | Amortization
| | -- | ------------

| |  | Capital assets
are being amortized on the declining balance basis at the following rates:
| |  | -----------------------------------------------------------------------------------------

|                               | 
|------------------------------ | 
|Computer equipment             | 
|Computer software              | 
|Office furniture and equipment | 

F-7

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|3. | SIGNIFICANT
ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------

| | g) | Stock
Based Compensation
| | -- | ------------------------

| |  | The Company
 accounts  for  stock  based  employee  compensation  arrangements  in  accordance  with
 the          provisions of  Accounting  Principles  Board  Opinion No. 25  Accounting
 for Stock Issued to Employees         (APB No. 25) and complies with the disclosure
 provisions of Statement of Financial  Accounting  Standards          No. 123   Accounting
 for Stock  Based  Compensation  (SFAS No.  123).  Under APB No. 25,  compensation
         expense is recognized  based on the  difference,  if any, on the date of grant
between the estimated  fair          value of the  Companys  stock and the  amount an
 employee  must pay to acquire  the stock.  Compensation          expense is  recognized
 immediately  for past  services and rateably for future  services  over the option
         vesting period.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h) | Financial
Instruments
| | -- | ---------------------

| |  | The Companys
financial instruments consist of cash, GST recoverable and accounts payable.
| |  | ------------------------------------------------------------------------------------------

| |  | Unless otherwise
 noted,  it is  managements  opinion  that this  Company is not exposed to  significant
         interest or credit  risks  arising from these  financial  instruments.  The fair
value of these  financial          instruments approximate their carrying values, unless
otherwise noted.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i) | Net
Loss Per Share
| | -- | ------------------

| |  | In February
 1997,  the Financial  Accounting  Standards  Board issued  Statement of Financial
 Accounting          Standards  No. 128  Earnings Per Share (SFAS  128).  Under SFAS
128,  basic and diluted  earnings per          share are to be presented.  Basic
 earnings per share is computed by dividing  income  available to common
         shareholders  by the  weighted  average  number  of  common  shares  outstanding
 in the  period.  Diluted          earnings per share takes into consideration  common
shares outstanding  (computed under basic earnings per          share) and  potentially
 dilutive common shares.  Diluted loss per share is not presented  separately from
         loss per share as the exercise of any options and warrants would be
anti-dilutive.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|3. | SIGNIFICANT
ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------

| | j) | Foreign
Currency Translation
| | -- | ----------------------------

| |  | Transaction amounts
 denominated in foreign  currencies  are  translated at exchange rates  prevailing at
         transaction  dates.  Carrying  values of monetary  assets and  liabilities  are
 adjusted at each  balance          sheet  date  to  reflect  the  exchange  rate  at
that  date.  Non-monetary  assets  and  liabilities  are          translated at the
exchange rate on the original  transaction  date.  Gains and losses from  restatement of
         foreign  currency  monetary and  non-monetary  assets and  liabilities  are
included in the  statements of          operations.  Revenues and expenses are
 translated  at the rates of exchange  prevailing on the dates such          items are
recognized in the statements of operations.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | DISCONTINUED
OPERATIONS
|-- | -----------------------

| |  | Byan
agreement  dated  November  27, 2002,  the Company  disposed of its 100%  interest in
Axxus  Corporation      (Axxus)  for cash  consideration  of $1. The revenue and
 expenses  related to the business of Axxus for the      years ended  December  31,  2002
and 2001,  and for the period  from  inception  to  December  31,  2002,  are
     reflected as discontinued operations in the statements of operations and cash flows.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | CAPITAL
ASSETS
|-- | --------------

|                               | 2004 | 2003
|------------------------------ | ---- | ----
|
|Computer equipment             |      |     
|Computer software              |      |     
|Office furniture and equipment |      |     
|                               |      |     
|                               |      |     
|                               |      |     

|6. | ADVANCES
RECEIVABLE
|-- | -------------------

| |  | The Company
has entered  into an  agreement to acquire  100% of the issued and  outstanding  common
 shares of      1485684 Ontario Limited, an Ontario,  Canada corporation,  doing business
as The Sequel Nightclub  (Sequel).      Completion of the  acquisition  is subject to
certain  conditions  precedent  which had not been  satisfied at      March 31, 2004.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-9

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|6. | ADVANCES
RECEIVABLE (continued)
|-- | -------------------------------

| |  | As at
March 31,  2004,  the Company has issued  1,000,000  preferred  shares at a value of
$200,000 to acquire      certain  amounts  owed by Sequel to its  shareholder.  In
 addition,  the  Company  has made  working  capital      advances to Sequel totaling
$199,198.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | STOCK
OPTIONS AND WARRANTS OUTSTANDING
|-- | --------------------------------------

| |  | Stock options
| |  | -------------

| |  | As at
March 31, 2004, options were outstanding for the purchase of common shares as follows:
| |  | --------------------------------------------------------------------------------------------

|NUMBER
OF SHARES | PRICE
PER SHARE | EXPIRY
DATE |  
|---------------- | --------------- | ----------- | -
|                 | 200,000         |             | $
|                 | 380,000         |             | $

| |  | In accordance
 with the vesting  provisions of these  agreements,  580,000  stock options are
 exercisable  at      March 31, 2004.
| |  | -----------------------------------------------------------------------------------------------------------------------------------

| |  | A summary
of the changes in stock options for the period ended March 31, 2004 is presented below:
| |  | -------------------------------------------------------------------------------------------------

|                           | SHARES | WEIGHTED
AVERAGE
EXERCISE
PRICE
|-------------------------- | ------ | -------------------------------
|Balance, December 31, 2001 |        |                                
|Granted                    |        |                                
|Exercised                  |        |                                
|Expired                    |        |                                
|                           |        |                                
|Balance, December 31, 2002 |        |                                
|Granted                    |        |                                
|Exercised                  |        |                                
|Expired                    |        |                                
|                           |        |                                
|Balance, December 31, 2003 |        |                                

F-10

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|7. | STOCK
OPTIONS AND WARRANTS OUTSTANDING (Continued)
|-- | --------------------------------------------------

| |  | Stock Options
(Continued)
| |  | -------------------------

|                           | SHARES | WEIGHTEDAVERAGE
EXERCISE
PRICE
|-------------------------- | ------ | ------------------------------
|Balance, December 31, 2003 |        |                               
|Granted                    |        |                               
|Exercised                  |        |                               
|                           |        |                               
|Balance, March 31, 2004    |        |                               
|                           |        |                               

| |  | Share Purchase
Warrants
| |  | -----------------------

| |  | As at
March 31, 2004, share purchase warrants were outstanding for the purchase of common
shares as follows:
| |  | ------------------------------------------------------------------------------------------------------------

|NUMBER
OF SHARES | PRICE
PER SHARE
|---------------- | ---------------
|                 | 1,882,355      
|                 | 1,332,000      
|                 | 2,230,000      
|                 | 168,795        
|                 | 567,500        
|                 | 420,000        
|                 | 100,000        
|                 | 340,000        
|                 | 100,000        
|                 | 1,648,750      

| |  | The warrants
expire between September 4, 2004 and January 17, 2006.
| |  | -------------------------------------------------------------------

F-11

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|7. | STOCK
OPTIONS AND WARRANTS OUTSTANDING (Continued)
|-- | --------------------------------------------------

| |  | Share Purchase
Warrants (Continued)
| |  | -----------------------------------

| |  | A summary
of the changes in share purchase warrants for the period ended March 31, 2004 is
presented below:
| |  | -----------------------------------------------------------------------------------------------------------

|                                              | SHARES | WEIGHTED
AVERAGE
EXERCISE
PRICE
|--------------------------------------------- | ------ | -------------------------------
|Balance, December 31, 2001                    |        |                                
|Granted                                       |        |                                
|Exercised                                     |        |                                
|Cancelled                                     |        |                                
|                                              |        |                                
|Balance, December 31, 2002                    |        |                                
|Granted                                       |        |                                
|                                              |        |                                
|Balance, December 31, 2003 and March 31, 2004 |        |                                
|                                              |        |                                

|8. | STOCK
BASED COMPENSATION
|-- | ------------------------

| |  | On January
30, 2004, March 5, 2004 and May 6, 2004 respectively, the Board of Directors approved the
Employee Stock Incentive Plan for the Year 2004 No. 1, No. 2 and No. 3, under which
designated officers and employees of the Company and its subsidiaries may be granted
stock options. The Company may grant options to acquire up to 510,000,000 shares of
common stock under the plans.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | During the
period ended March 31, 2004, the Company granted stock options to officers and employees
to acquire up to 118,000,000 shares of common stock at a weighted average exercise prices
of $0.01 per share, expiring between January and February 2014. All of these options vest
immediately.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-12

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|8. | STOCK
BASED COMPENSATION (Continued)
|-- | ------------------------------------

| |  | The  fair
value of the options granted during the period was estimated at the date of grant using
the Black-Scholes option pricing model with the following assumptions: risk free interest
rate of 3.10%, expected volatility ranging from 29% to 194%, an expected option life of
one week, and no expected dividends. Had the Company determined compensation cost based
on the fair value at the date of grant for its employees stock options, the net loss
would have increased by $61,734 for the period ended March 31, 2004. During the period
ended March 31, 2004, the Company recognized stock based compensation for the intrinsic
value of employee awards in the amount of $44,778.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                      | 2003 | 2002
|--------------------------------------------------------------------- | ---- | ----
|Net loss, as reported                                                 |      |     
|Add:  Stock based compensation expense included in net loss, as       |      |     
|reported                                                              |      |     
|Deduct:  Stock based compensation expense determined under fair value |      |     
|method                                                                |      |     
|                                                                      |      |     
|Net loss, pro-forma                                                   |      |     
|                                                                      |      |     
|Net loss per share (basic and diluted), as reported                   |      |     
|                                                                      |      |     
|Net loss per share (basic and diluted), pro-forma                     |      |     
|                                                                      |      |     

|9. | LOANS
AND ADVANCES PAYABLE
|-- | --------------------------

| |  | Loansand
advances payable are interest free and are repayable within one year. Certain of the
loans and advances are convertible to common shares as follows:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|AMOUNT                                            | CONVERSION
PRICE                                  | CONVERSION
AFTER                                                              
|------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------------------------
|$  11,570
$   1,000
$     400
$ 263,087
$ 107,321 | $    0.12
$    0.02
$    0.02
$    0.02
$    0.05 | August 31, 2002
September 14, 2002
August 31, 2003
June 30, 2004
June 30, 2004

F-13

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|10. | RELATED
PARTY TRANSACTIONS
|--- | --------------------------

| | a) | Included
in accounts payable at March 31, 2004 is $546,192 (2003           $436,848) owing
to directors or companies controlled by a director.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Included
in loans and advances payable at March 31, 2004 is $366,350 (2003            $374,432)
owing to directors or a company controlled by a director.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | During
the period ended March 31, 2004, the Company incurred $Nil (2003           $50,000)
in consulting and business development expenses with directors.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | COMMITMENT
|--- | ----------

| |  | During the
year ended December 31, 2002, the Company executed Management Services Memorandums with
three key directors/officers which were effective January 1, 2002. In addition to total
signing bonuses of $258,000 which have no specific payment date and are payable in cash
or shares of the Company or its subsidiary, RAHX, Inc., the memorandums provide for
performance bonuses and total annual compensation as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | 
|---------------------------- | 
|Year ended December 31, 2004 | 
|Year ended December 31, 2005 | 
|Year ended December 31, 2006 | 

|12. | INCOME
TAXES
|--- | ------------

| |  | A reconciliation
of income taxes at statutory rates with the reported taxes is as follows:
| |  | ------------------------------------------------------------------------------------------

|                                                     | MARCH 31
2004 | DECEMBER 31
2003
|---------------------------------------------------- | ------------- | ----------------
|Loss before income taxes                             |               |                 
|                                                     |               |                 
|Income tax recovery                                  |               |                 
|Unrecognized benefit of operating loss carryforwards |               |                 
|                                                     |               |                 
|Income tax recovery                                  |               |                 
|                                                     |               |                 

F-14

# LIVESTAR ENTERTAINMENT
GROUP INC. (A Development Stage Company)

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

# MARCH 31, 2004 (Unaudited) (Stated in U.S.
Dollars)

|12. | INCOME
TAXES (Continued)
|--- | ------------------------

| |  | Significant components
of the Companys future tax assets based on statutory tax rates are as follows:
| |  | ------------------------------------------------------------------------------------------------------

|                    | MARCH 31
2004 | DECEMBER 31
2003
|------------------- | ------------- | ----------------
|Deferred tax assets |               |                 
|Loss carryforwards  |               |                 
|Valuation allowance |               |                 
|                    |               |                 
|                    |               |                 
|                    |               |                 
|                    |               |                 

| | The
Company has approximately $4,149,000 (2003  $3,875,000) of operating loss
carryforwards which expire beginning in 2020.
| | ----------------------------------------------------------------------------------------------------------------------------

| | The
Company has provided a valuation allowance against its deferred tax assets given that it
is in the development stage and it is more likely than not that these benefits will not be
realized.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 13. SUBSEQUENT EVENT

| | Subsequent
to March 31, 2004, 36,000,000 common shares on the settlement of debt, and 75,000,000
common shares for services pursuant to consulting agreements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The warrants
expire between September 4, 2004 and January 17, 2006.
| |  | -------------------------------------------------------------------

F-15

# Item 2.
Managements Discussion and Analysis or Plan of Operations

# Forward Looking
Statements

Except
for the historical information and discussions contained herein, statements contained in
this Form 10-QSB may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve a number of
risks, uncertainties and other factors that could cause actual results to differ
materially, including any projections of earnings, revenues, or other financial items; any
statements of the plans, strategies, and objectives of management for future operation;
any statements concerning proposed new products, services, or developments, any statements
regarding future economic conditions or performance, statements of belief, statements of
assumptions underlying any of the foregoing and other risks, uncertainties and factors
discussed elsewhere in this Form 10-QSB or in the Companys other filings with the
Securities and Exchange Commission.

RESULTS
OF OPERATIONS

FOR
THE THREE MONTH PERIOD ENDED MARCH 31, 2004

For
the three-month period ended March 31, 2004, the Company earned revenues of $58,100. The
revenues were related to ticket sales from three (3) concert productions through the
Companys live events business.

During
the three month period ended March 31, 2004, the Company incurred operational expenses of
$331,395. These operating expenses included: consulting fees of $104,440, $117,959 in
wages and benefits, and professional fees of $37,077 for the three month period ending
March 31, 2004. The company continues to incur significant consulting costs, which
includes business development, in its effort to realize its business strategy and its
business plan.

During
the three month period ended March 31, 2004, the Company incurred a net loss from
operations of $273,295.

FOR
THE THREE MONTH PERIOD ENDED MARCH 31, 2004, COMPARED TO THE THREE MONTH PERIOD ENDED
MARCH 31, 2003.

For
the three month period ended March 31, 2004, the Company earned revenues of $58,100, as
compared to revenues of $0 for the same period ended March 31, 2003. The revenues in 2004
are realized from continued efforts in our Live Events business that began in 2003.

For
the three month period ended March 31, 2004, the Company incurred operational expenses of
$331,395, as compared to $114,740 during the same period in 2003. These operating expenses
included: consulting fees and business development expenses $104,440 and $ 71,000; wages
& benefits of $117,959 and $0, and professional fees of $37,077 and $7,441 for the
three month period ended March 31, 2004, and 2003, respectively. The increase in expenses
from March 31, 2004 as compared to the same period in 2003 is due to the increased level
of business and operating activities in the Company.

The
Company incurred a net loss from operations of $273,295 for the fiscal quarter ended March
31, 2004, as compared to $114,740 for the same period in 2003.

-3-

# Liquidity and Financial
Condition As Of March 31, 2004

We
had cash-on hand of totaling $39,076 as of March 31, 2004.

In order
to finance our acquisitions and developments, and our phases of implementation we plan to
raise investment capital through the execution of a number of development finance
strategies. Current Development Finance Strategy:

In order to finance the first and
second acquisition or development establishments the Company may use its preferred or
common stock to finance the acquisition or development or to raise the necessary capital
for acquisition or development.

Future Development
Financing Strategy:

In the future, we hope to fund the
majority of our new establishment locations through the selling of a minority interest in
the new establishments through the sale of up to 49% of the equity or through limited
partnerships. This minority interest is hoped to be sold to either individual investors
who wish to invest directly into an establishment or into a fund or partnership that will
be funded by investors wishing to diversify their investment over a number of
establishments that the fund or partnership may invest in. This proposed fund is planned
to be formed by LIVESTAR exclusively for LIVESTAR establishments. The Company hopes to
establish an internal corporate finance department and external network or syndicate of
investment advisors, investment bankers and broker dealers that will raise capital via the
direct investments strategy and/or form the fund or partnership that will raise capital
through the fund or partnership strategy. It is planned that investors under this strategy
are planned to receive cash dividends and some capital stock or warrants in the Company.
In addition to the direct investment and fund or partnership strategy the Company hopes to
raise capital for its new establishments through the forming of a real estate financing
plan that is hoped to utilize real estate financing to fund the purchase of properties and
subsequently secure construction financing to fund the renovations of the establishment.

We believe that this Future
Development Financing Strategy will enable us to achieve our development goals with a hope
over the long-term of reducing the potential dilution to our existing shareholders. By
raising capital directly in each establishment through our planned Future Development
Financing Strategy we may not have to dilute the existing shareholders to any great extent
to grow the business. As our cash producing businesses grow due to the planned
implementation and hopeful success of the Future Development Financing Strategy we plan to
utilize the available cash to pay for operations without having to use stock to pay for
large and important operational items item such as staff and consultants.

The result of this is, that as our
cash flow may grow as our dilution may slow. More specifically, we have developed
comprehensive business and financial plans that result in our development of a network of
entertainment establishments that should operate on a cash positive basis and without
incurring substantial dilution to stockholders such that the Company can possibly increase
its overall valuation substantially. This possible increase in the Companys overall
valuation may be accomplished by using the positive cash flow to buy back the
Companys common stock from the public float. There is no current plans to implement
a stock buy back program, although one is intended over the long-term and will only be
implemented based on the success of the foregoing and solely of the discretion of the
Companys management and board of directors. In addition to the above we plan we plan
to invite direct investments into the Company to provide funds for general corporate
purposes.

-4-

CAPITAL REQUIREMENTS

We believe that the first acquisition
or development of a entertainment establishment will require approximately a minimum of
$500,000 for the transaction, plus approximately $100,000 in legal, accounting and
administrative expenses. In addition our first acquisition or development will require a
minimum of another $400,000 for working capital and general corporate purposes. This is a
minimum total of approximately $1,000,000 that will be required in the next quarter during
which we are hoping to make the first acquisition or development. In the following 3
months, we plan to execute one or two additional acquisitions or developments. We believe
that the cost of a second and third acquisition or development project will be
approximately a minimum of $1,000,000 each and that approximately another $500,000 minimum
each will be required for the same purposes as listed above for the first acquisition or
development and for working capital and general corporate purposes. Thus, we anticipate
needing a minimum of $4,000,000 of investment capital during the next six months.

After the first two acquisitions or
development projects, we intend to develop other entertainment establishments from initial
buildout rather than from acquisitions. Our plan is to open two additional entertainment
establishments by the end of 2004 and we anticipate that additional funding (approximately
$1,000,000) will be required to accomplish this. Management anticipates that funding
requirements for this plan will be less than the overall cost of opening these nightclubs,
since the revenues from the first two or three nightclubs is expected to generate enough
positive cash flow to reduce the level of external capital required. We have developed
comprehensive business and financial plans that result in our development of a network of
entertainment establishments that should operate on a cash positive basis and hopefully
without incurring substantial dilution to stockholders such that the Company can possibly
increase its overall valuation substantially. The Company believes it will require
approximately $1,000,000 to grow its live events business unit, including the cost of
acquisitions or development and their subsequent integration and for the venture
development of other potential lines of business for 2004. The total additional working
capital financing described in this section is planned to also include the development of
other synergistic business units such as, including but not limited to, membership
services, brand licensing and merchandising.

CAPITAL ACQUIRING PLANS

Management plans on initiating a
series of securities offerings to raise the investment capital needed to meet our
acquisition and development plans. Although we will make efforts to minimize dilution to
current shareholders, we may not be able to avoid significant dilution due to many
factors, including but not limited to, the closing of financing at lower than the desired
market price of the Companys common stock. LIVESTAR hopes to secure the financing to
satisfy the capital needs for each phase of its implementation plan through the execution
of various funding methods, primarily financing through its Future Development Financing
Strategy, private placement investments or debt financing. LIVESTAR hopes to achieve this
by securing relationships with accredited individual investors, investment bankers,
venture capitalists, and/or finance investment advisors that have the experience and
relationships to aid LIVESTAR with its capital raising efforts. The source of the capital
may be comprised of a mix of principal shareholders, private investors and venture capital
companies.

If needed capital investment for our
acquisitions or developments is not available, in whole or in part, we intend to delay the
implementation plan regarding our acquisitions or development plans until sufficient
investment capital becomes available. We cannot give any assurances that we will raise
sufficient investment capital to meet the business plan. In addition to delays to the
implementation plan regarding our acquisition or development plans due to insufficiency of
investment capital, we may suffer other consequences, including but not limited to the
following: We may have to significantly alter the scope and/or direction of our business
plan and subsequent capital requirements; We may have to suspend or discontinue operations
of one or more of our business units or; we may have to suspend or discontinue operations
of the Company if we become insolvent as a result. Until planned acquisitions (current and
future) and new development establishments begin to produce significant revenues and
subsequent positive cash flow, we will be reliant on capital received from private
placements, loans, and the exercise of options and warrants. Due to the depressed market
for our securities, we may not be able avoid significant dilution to current shareholders.
In addition, we expect to continue to retain certain management, staff and consultants,
such as legal counsel, and may need to compensate these individuals through the issuance
of our common stock as compensation. These stock based compensations may result in
significant dilution to current shareholders due to the depressed market for our
securities. We also continue to reduce or prevent collection of outstanding vendor debts
and accounts with creditors, such as suppliers and consultants, which could result in
litigation against the Company. There can be no guarantee that all of these negotiations
will be successful and the outcome of these negotiations may include settlements in cash
and/or issuance of common stock. These stock based settlements may result in significant
dilution to current shareholders due to the depressed market for our securities. We plan
on continuing to meet certain of our expenses through the issuance of our shares of common
stock, which may cause additional and significant dilution to existing shareholders due to
the depressed market for our securities.

-5-

# PART II  OTHER
INFORMATION

# Item 1. Legal Proceedings

In November 2003, Paul Carpenter
filed a lawsuit in the Lynchburg General District Court for the Commonwealth of Virginia.
The action concerned an alleged claim for unpaid wages of an employee of RRUN Labs, Inc.,
a subsidiary of LIVESTAR Entertainment Group, Inc. The amount of the lawsuit is $7,205.06,
not including interest accruing from October 30, 2001 plus court costs of $37.

The Company believes that, as it
grows revenue-producing operations and as it raises capital, we will have the resources to
settle the abovementioned case and we have every intention of doing so. We are working to
reduce or prevent collection litigation by creditors or others. Settlements in stock may
result in unforeseen dilution to current shareholders.

# Item 2. Changes in
Securities

# Recent Sales of
Unregistered Securities

During February 2004, the Company
issued 36, 000,000 shares of its previously authorized, but unissued common stock. The
shares were issued in settlement of a debt with a consultant for services previously
rendered. The transaction was valued at $0.0025 per share for a total consideration of
$90,000. The transaction was an isolated transaction with an individual having a close
affiliation with us and was exempt from registration under the Securities Act of 1933
pursuant to Section 4(2) of the Act because of not being part of a public offering. The
offering was for a limited purpose and did not use the machinery of public distribution.

# Item 3. Defaults upon
Senior Securities

None

# Item 4. Submission of Matters
to a Vote of Security Holders

None

# 5. Other Information

On October 24, 2003, the Registrant entered into an agreement to acquire 1485684
Ontario Limited, an Ontario corporation that owns and operates a nightclub styled as The Sequel. Subsequent to
the execution of the agreement the Registrant commenced its regulatory mandated process to finalize the
acquisition and implemented its efforts and plans to assume operations. Ultimately, however, the Registrant was
unable to obtain an audit of the prior business operations of the Sequel as required by the rules and regulations
of the Security and Exchange Commission. Upon that realization it then became necessary to renegotiate the
contemplated business transaction.

The Registrant has now determined to operate the Sequel through a business lease arrangement. Final documentation
for the business lease is being negotiated at the present time and is expected to become completed in the near
future.

-6-

# Item 6. Exhibits and
Reports on Form 8-K.

# (a) Exhibits

| | 31.1
Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
| | -----------------------------------------------------------------------------------------------------------------------------------

| | 31.2 Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
| | -----------------------------------------------------------------------------------------------------------------------------------

| | 32.1 Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
| | -----------------------------------------------------------------------------------------------------------------------------------

| | 32.2 Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
| | -----------------------------------------------------------------------------------------------------------------------------------

# (b) Reports on Form 8-K

On January 8, 2004, the Company filed
a report on Form 8-K/A. This filing further amends the original Form 8-K report filed on
August 11, 2003, and states under Item 7 that applicable financial statements and
information continues to be prepared. The filing further stated that management hopes to
file the required financial statements and information in a further amendment to the
original Form 8-K filing in the near future.

On March 29, 2004, the Company filed
a report on Form 8-K/A. This filing further amends the original Form 8-K report filed on
August 11, 2003, and states under Item 7 that applicable financial statements and
information continues to be prepared. The filing further discussed under Item 2 certain
aspects of the operations of the Sequel, regarding the ongoing discussions were continuing
with the Landlord regarding a renewal of the Premises Lease.

-7-

# SIGNATURES

In
accordance with the requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorised.

# LIVESTAR Entertainment
Group, Inc.

Date: May 24, 2004

By:
_______________________________
Ray Hawkins, President and Chief  Executive Officer

By:
________________________________
Edwin Kwong, Principal Accounting Officer  and Chief Financial Officer