Axtion Foods, Inc.
(Exact name of small business issuer as specified in its charter)

California (State or other jurisdiction of incorporation or organization)		98-0336674 (IRS Employer Identification No.)
4025 Camino Del Rio South Suite 300 San Diego, California www.axtionfoods.com. (Address of principal executive offices)		None (Former name or former address, if changed since last report)

92108 (Zip Code)		619-542-7719 (Issuer's Telephone Number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ý No o.

The number of shares of the registrant's only class of common stock issued and outstanding, as of March 31, 2002 was 26,982,000 common shares.

The unaudited financial statements for the three-month period ended March 31, 2002 are attached hereto.

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

The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or our behalf. We disclaim any obligation to update forward looking statements.

Axtion Foods, Inc. was incorporated under the laws of the State of California on April 20, 2000.

We are a development stage company. We are engaged in the development, manufacturing and distribution of health bars and health drinks. As of the date of this prospectus we have completed the development of a health bar, called the "Axtion Bar," but we have not yet completed the development of the health drink. We intend to market our products in three principal categories: sports nutrition; diet; and healthy snacks. Axtion plans to sell its products to mass volume retailers, health food stores and a combination of other channels, including health clubs and gyms, international markets and private label manufacturing and independent distributors. We plan to establish our distribution channels throughout the United States and Canada. We are currently developing only two products for which we have purchased the formulas.

Our administrative office is located at 4025 Camino Del Rio South, Suite 300, San Diego, California. Our telephone number is 619-542-7719. Our Internet address is www.axtionfoods.com.

Axtion currently has two products, a health bar which is fully developed, and a health drink, which is not yet fully developed. The health bar is called the "Axtion Bar" and comes in two flavors, nutty chocolate and peanut butter. Our health drink will be named the "Hammerhead XT." These products are designed to naturally and gently increases your body's metabolism by activating and then accelerating your body's fat-burning processes. The formulas are also designed to provide you with a noticeable increase in sustained energy throughout the day yet remain calm and relaxed at the same time.

The formulas contain a blend of herbs, plant extracts, and nutrients, including a natural extract of Zhi shi, a herbal extract which management believes enables your body to burn fat and increase energy in a safe and effective way without all of the negative effects of other thermogenic formulas. Other

ingredients contained in this formula are also designed to work to help suppress your appetite, regulate blood sugar levels, support the body's detoxification processes, and elevate your moods naturally. These ingredients include Zhi Shi extract, kola nut extract, white willow bark, Siberian Ginseng, kelp, pantothenic acid, also known as vitamin B5, chromium, and artichoke/sarsaparilla extract.

The development of the products involves turning the formulas into actual products. For instance, with respect to the Axtion Bar, an initial batch was prepared. This initial batch was then taste tested by management, our principal shareholders and Dr. Cochran. Following that, a trial run of about 3,000 to 4,000 bars in each flavor was produced. These bars are then used to calculate the average weight and size of the bar so that packaging can be cut that fits the bar. At the same time, we hired a graphic artist to design a bar wrapper that has been approved by management and can now been seen on our web site at www.axtionfoods.com. Axtion has been in production since approximately March 1, 2002.

The Axtion Bar, including the initial batches, is being produced by a California licensed nutritional manufacturing company located in Berkely, California. The bars are manufactured and produced by Berkeley Nutritional Manufacturing, also known as Protein Research Associates. Axtion does not have a formal contract with this company. Instead, the manufacturer takes purchase orders. The manufacturer is licensed by the state of California to manufacture food by the issuance of a "Processed Food Registration." The FDA does not license manufacturing per se; instead it issues guidelines that are enforced with occasional inspections. You can obtain more information about this company by visiting their web site at http://www.proteinresearch.com/. This facility guarantees its customers the highest quality possible. That commitment is backed by a five million dollar product liability insurance policy. The manufacturer charges us on a per order basis and offers the ability to take products from concept to market and quality is factored in from the start.

The manufacturer's comprehensive packaging capability ensures product integrity which allows Axtion to avoid potential errors from using secondary packages. In addition, the complete "in-house" approach enables us to avoid exposure to product damage and to reduce freight costs. The manufacturing process includes a number of quality-in-process checks. The equipment is stainless steel, and cleaned with U.S. Food and Drug Administration approved detergents. All wash down is done with approved hoses that release 160 degree Fahrenheit water. The blending areas have fiberglass coated walls for sanitation, high flow exhaust systems and floor drains to ensure clean, sanitary conditions. The wrapping rooms are supplied with a filtered conditioned air supply and are totally enclosed to prevent cross contamination.

The health drink, the Hammerhead XT, will be developed from the formula we acquired in the same way. All production will take place at California licensed cannery in Edison, California. Following initial development, the Guimarra Vineyard Corporation will bottle the health drink. Axtion does not have a contract with this company. Instead, Axtion will issue purchase orders for certain numbers of drinks which will then be bottled by this company. Axtion will not begin producing the health drink until after it has sold at least five production lots of our health bar because of the expense associated with producing the health drink. Management calculates that Axtion will make a net profit after all packaging and manufacturing costs of $.75 with the exception of bars that we may sell at a discount for promotional purposes. Thus, the sale of 250,000 bars will net sufficient profit to pay for the first run of 150,000 cans of the Hammerhead XT without the necessity of raising additional capital. The drink development is taking place in conjunction with a professional health food developer who is paid on a per order basis. This developer will produce our health drink that will be shelf stable and exhibit the following characteristics: chemically stable low acid formula, 2 year shelf life, lower sugar, carbohydrate, and calorie content, excellent mouth feel, delicious flavor and "last" on the palate including "lite" formulas with reduced calories.

Since all development and manufacturing work is performed by third parties at their processing plants, Axtion currently rents an administrative office for administrative purposes. Once large scale

production of the Axtion Bar begins, it may rent a distribution space of approximately 500 square feet for the purpose of coordinating and shipping orders for our Internet web site. Axtion anticipates that the rent for such a space would be no more than $250 to $500.00 per month. Large deliveries to independent contractor sales people or third party distributors will be shipped directly from the manufacturing facility.

Axtion depends upon third party food processor and cannery sub-contractors licensed by the California Department of Health Services, Food and Drug Branch, for the manufacture and packaging of its products. These licensees are required to observe all provisions governing the manufacturing, packaging, storage and shipping of foods and beverages contained in the Sherman Food, Drug Cosmetic Act embodied in the California Health And Safety Code, Sections 109875 through 112855 and state regulations promulgated under these laws. These laws, among other things, make it a crime to manufacture food and beverage products without a license or to manufacture food and beverage products that do not conform to regulatory requirements. The California law also incorporates by reference all standards and manufacturing requirements set forth in the Federal Food, Drug And Cosmetic Act.

California licensees, including subcontractors engaged by Axtion, are subject to periodic inspection by state officials for compliance with all federal and state standards for the manufacturing, labeling, storage and shipping of foods and beverages. In addition, local county health departments are authorized by these California laws to assist with inspection and enforcement of California and Federal food and beverage processing and canning standards. Licensees are subject to penalties for noncompliance with these standards that can include license revocation or probation, criminal charges, seizure, embargo, recall and injunctions.

There is no established industry practice for companies such as Axtion that purchase foods and beverages manufactured by licensed subcontractors to inspect the subcontractors for compliance with California and Federal regulatory requirements. Further, Axtion does not have sufficient resources or expertise to conduct such inspections, and must instead rely upon state and county health officials for enforcement. Under the Uniform Commercial Code, however, which has been adopted in California, Axtion does have the right to reject nonconforming products and demand reimbursement. Axtion does not believe that it would share administrative, civil or criminal liability for noncompliance with California and Federal law by its subcontractors unless Axtion was aware of the noncompliance or otherwise did not cooperate with state and county officials if regulatory enforcement proceedings of any kind were commenced. Penalties for noncompliance by Axtion with California or Federal regulatory requirements could result in, among other things, injunctions, product withdrawals, recalls, seizures, civil monetary judgments, fines and criminal prosecutions.

The Issuser's products are manufactured in accordance with specifications and packaging in wrappers and cans designed by Axtion but purchased from third parties. Management believes that the raw materials required for our products are available in abundance. Management also believes that it has sufficient capital to fund several bulk productions of our products and then commence and continue marketing and sales operations for the next twelve months. The issuser has an exclusive contract in place which protects its right to market and sell its health bars and drinks indefinitely. If for any reason these products are not acceptable in the market place, Axtion does not know whether it could obtain substitute products or whether obtaining substitute products would be cost prohibitive. There can be no assurance that market place rejection of the health bar and drink would not have a material adverse effect on our operations.

The nutritional health food industry consists of six principal types of suppliers: independent health food suppliers, who focus primarily on vitamins and nutritional supplements; mass volume retail

suppliers, who sell nutritional products that have mass appeal; gym and health club product companies; direct sale and mail order marketers; private label manufacturers; and major pharmaceutical companies. The majority of competitors in the nutritional supplement industry are small marketing operations focused on one or two of these distribution channels.

The company does not compete with any one competitor in all of its distribution channels. The company's primary competitors in the independent and natural health food market include Nature's Way, Nutraceuticals, Solgar, Twinlab, Rexall Sundown and EAS. In the mass volume retail market, competitors include Amerifit, Richardson Labs, Slim-Fast, Thompson Medical and Cybergenics. Gyms and health club suppliers include Costello's and Nature's Best. In the direct sale and mail order markets, competitors include Amrion, Amway, Nu-Skin, Usana and in the private label manufacturing market, competitors include GNP, Pharmavite, Leiner, Tishcon and Northridge Labs. In addition, large pharmaceutical companies and packaged food and beverage companies compete with us on a limited basis. Increased competition from such companies could have a material adverse effect on Axtion as they have greater financial and other resources available to them and possess extensive manufacturing, distribution and marketing capabilities far greater than ours.

We have no full time employees. Our President has agreed to allocate a portion of her time to our business activities, without compensation. This officer anticipates that our business plan can be implemented by his devoting minimal time per month to our business affairs and, consequently, conflicts of interest may arise with respect to the limited time commitment by such officer.

The advertising, promotion, distribution and sale of our products are subject to regulation by numerous governmental agencies, the most active of which is the U.S. Food and Drug Administration, which regulates our products under the Federal Food, Drug and Cosmetic Act and regulations promulgated there under. Axtion's products are also subject to regulation by, among other regulatory agencies, the Consumer Product Safety Commission, the U.S. Department of Agriculture and the Environmental Protection Agency. Advertising of our products is subject to regulation by the U.S. Federal Trade Commission, which regulates our advertising under the Federal Trade Commission Act. The manufacture, labeling and advertising of our products are also regulated by various state and local agencies as well as each foreign country to which the Company distributes its products.

The Dietary Supplement Health and Education Act of 1994 revised the provisions of the FDCA concerning the regulation of dietary supplements. In the judgment of the Company, the DSHEA is favorable to the dietary supplement industry. The legislation for the first time defined "dietary supplement." The term "dietary supplement" is defined as a product intended to supplement the diet that contains one or more of certain dietary ingredients, such as a vitamin, a mineral, an herb or botanical, an amino acid, a dietary substance for use by man to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of the preceding ingredients. The products marketed by the Company are regulated as dietary supplements under the FDCA.

Under the current provisions of the FDCA there are four categories of claims that pertain to the regulation of dietary supplements. Health claims are claims that describe the relationship between a nutrient or dietary ingredient and a disease or health related condition and can be made on the labeling of dietary supplements if supported by significant scientific agreement and authorized by the

FDA in advance via notice and comment rulemaking. Nutrient content claims describe the nutritional value of the product and may be made if defined by the FDA through notice and comment rulemaking and if one serving of the product meets the definition. Health claims may also be made if a scientific body of the U.S. government with official responsibility for the public health has made an authoritative statement regarding the claim, the claim accurately reflects that statement and the manufacturer, among other things, provides the FDA with notice of and the basis for the claim at least 120 days before the introduction of the supplement with a label containing the health claim into interstate commerce. For health claims that the FDA has approved, no prior notification is required.

Statements of nutritional support or product performance, which are permitted on labeling of dietary supplements without FDA pre-approval, are defined to include statements that: (i) claim a benefit related to a classical nutrient deficiency disease and discloses the prevalence of such disease in the United States; (ii) describe the role of a nutrient or dietary ingredient intended to affect the structure or function in humans; (iii) characterize the documented mechanism by which a dietary ingredient acts to maintain such structure or function; or (iv) describe general well-being from consumption of a nutrient or dietary ingredient. In order to make a nutritional support claim the marketer must possess substantiation to demonstrate that the claim is not false or misleading and if the claim is for a dietary ingredient that does not provide traditional nutritional value, prominent disclosure of the lack of FDA review of the relevant statement and notification to the FDA of the claim is equired. Drug claims are representations that a product is intended to diagnose, mitigate, treat, cure or prevent a disease. Drug claims are prohibited from use in the labeling of dietary supplements.

Claims made for our dietary supplement products may include statements of nutritional support and health and nutrient content claims when authorized by the FDA or otherwise allowed by law. The FDA's interpretation of what constitutes an acceptable statement of nutritional support may change in the future thereby requiring that the Company revise its labeling. The FDA recently issued a proposed rule on what constitutes permitted structure/function claims as distinguished from prohibited disease claims. Although we believe our product claims comply with the law, depending on the content of the final regulation, we may need to revise its labeling. In addition, a dietary supplement that contains a new dietary ingredient (i.e., one not on the market before October 15, 1994) must have a history of use or other evidence of safety establishing that it is reasonably expected to be safe. The manufacturer must notify the FDA at least 75 days before marketing products containing new dietary ingredients and provide the FDA the information upon which the manufacturer based its conclusion that the product has a reasonable expectation of safety.

The FDA has also announced that it is considering promulgating new GMPs specific to dietary supplements. Such GMPs, if promulgated, may be significantly more rigorous than currently applicable GMP requirements and contain quality assurance requirements similar to GMP requirements for drug products. Therefore, the Company may be required to expend additional capital and resources on manufacturing in the future in order to comply with the law.

The failure of Axtion to comply with applicable FDA regulatory requirements could result in, among other things, injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. The company's advertising of its dietary supplement products is subject to regulation by the FTC under the FTCA. Section 5 of the FTCA prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce. Section 12 of the FTCA provides that the dissemination or the causing to be disseminated of any false advertisement pertaining to drugs or foods, which would include dietary supplements, is an unfair or deceptive act or practice. Under the FTC's Substantiation Doctrine, an advertiser is required to have a "reasonable basis" for all objective product claims before the claims are made. Failure to adequately substantiate claims may be considered either deceptive or unfair practices. Pursuant to this FTC requirement the Company is required to have adequate substantiation for all material advertising claims made for its products.

On November 18, 1998, the FTC issued "Dietary Supplements: An Advertising Guide for Industry." This guide provides marketers of dietary supplements with guidelines on applying FTC law to dietary supplement advertising. It includes examples of the principles that should be used when interpreting and substantiating dietary supplement advertising. Although the guide provides additional explanation, it does not substantively change the FTC's existing policy that all supplement marketers have an obligation to ensure that claims are presented truthfully and to verify the adequacy of the support behind such claims.

The FTC has a variety of processes and remedies available to it for enforcement, both administratively and judicially, including compulsory process, cease and desist orders and injunctions. FTC enforcement can result in orders requiring, among other things, limits on advertising, corrective advertising, consumer redress, divestiture of assets, rescission of contracts and such other relief as may be deemed necessary. A violation of such orders could have a material adverse effect on our business, financial condition and results of operations.

Advertising and labeling for dietary supplements and conventional foods are also regulated by state and local authorities. There can be no assurance that state and local authorities will not commence regulatory action which could restrict the permissible scope of our product claims.

Governmental regulations in foreign countries where we may commence or expand sales may prevent or delay entry into the market or prevent or delay the introduction, or require the reformulation, of certain of our products. Compliance with such foreign governmental regulations is generally the responsibility of our distributors for those countries. These distributors are independent contractors over whom we have limited control.

We also may be subject to additional laws or regulations by the FDA or other federal, state or foreign regulatory authorities, the repeal of laws or regulations which the Company considers favorable, such as the Dietary Supplement Health and Education Act of 1994, or more stringent interpretations of current laws or regulations, from time to time in the future. The Company is unable to predict the nature of such future laws, regulations, interpretations or applications, nor can it predict what effect additional governmental regulations or administrative orders, when and if promulgated, would have on its business in the future. They could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, imposition of additional record keeping requirements, expanded documentation of the properties of certain products, expanded or different labeling and scientific substantiation. Any or all of such requirements could have a material adverse affect on our business, financial condition and results of operations.

Axtion plans to sell its products to mass volume retailers, health food stores and a combination of other channels, including health clubs and gyms, international markets and private label manufacturing and independent distributors. We plan to establish our distribution channels throughout the United States and Canada. We are currently developing only two products for which we have purchased the formulas. We commenced business operations as a nutritional foods distributor on July 1, 2001.

Prior to July 1, 2001 the company had no business operations. To date, we have not completed the development of our proposed web site we have just commenced revenue producing operations. Our activities to date have consisted of acquiring the formulas for a health bar and drink from the inventor, developing the health bar, developing our web site, conducting a private offering of our securities and preparing this offering.

We intend to generate revenue through the sale of our products to mass volume retailers, health food stores and a combination of other channels, including health clubs and gyms, international markets and private label manufacturing and independent distributors as well as on our website.

Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we

obtain additional capital to pay our bills. This is because as of the date of the audit we had not generated any revenues and no revenues were anticipated until we began selling our products. We have financed our activities to date through the sale of securities. At inception, prior to any stock splits, our founding shareholder loaned the company $5,000 and received 5,000,000 shares of common stock in lieu of interest. From August 3, 2001 through October 15, 2001, we conducted a private placement sale of common stock for gross proceeds of $157,000. As of March 31, 2002, we had incurred operating losses of $32,514 since inception.

We have acquired the formulas for a health bar and health drink. These forumlas must be developed into actual products by us. The process is analogous to creating cookies from a recipe. The ingredients are assembled in their recommended amounts and then made into trial batches. Development consists of creating test products to be evaluated for taste and measured for size and weight to assure conformance with our wrapper design. As of the date of this prospectus, we have paid an artist $1,000 for the wrapper design, an example of which can be viewed on our web site at www.axtionfoods.com.

We have conducted a successful initial test production run of 3,500 nutty chocolate flavor Axtion Bars for which we paid $3,500. Our manufacturer now requires us to purchase the bars in lots of 50,000. We have placed our order for the first lot of 50,000 bars which will be delivered on approximately April 20, 2002. Our total cost per bar for a 50,000 lot is $.42 per bar, for a total $21,000. In addition, we are required by our wrapper manufacturer to purchase bar wrappers in lots of 1,000,000 at a cost of $0.01492 per wrapper, for a total cost of $14,920 plus a one time charge for the creation of printing plates that contain the wrapper design. These wrappers have been ordered and will arrive also arrive on approximately April 20, 2002.

We have sold two purchase orders, one for 10,000 bars and one for 12,500 bars at $.55 per bar plus reimbursement of our costs for wrappers and packaging. These two purchase orders were placed by national wholesale food distributors for test marketing purposes. If the test marketing is satisfactory, these distributors have indicated they will begin placing orders for 100,000 to 500,000 bars at a time. There can be no assurance at this time that we will actually receive those kinds of purchase orders. We are also in negotiations for with several other national retail wholesale distributors. We are also engaged in negotiations to establish independent distributors to whom we will sell the bars for as much as $1.00 plus wrapping and packaging costs resulting in net profit to us of $.58 per bar after all costs. Management believes that it can obtain this price because bars of similar weight will sell for $1.50 to $2.00 retail.

Owing to these events, Management does not anticipate being required to raise any additional capital. Management believes that if Axtion can be begin to sell its bars in lots of 100,000 to 500,000 wholesale at a net profit of $0.10 per bar, there will be more than adequate capital to sustain our operations since Axtion is set up to run with a minimal staff because all manufacturing is conducted by subcontractors. In addition, if Axtion is able to sell its bars to independent distributors, there will be a net profit after all costs of $.50 per bar. These orders, if placed, will produce sufficient capital for Axtion to operate indefinitely and begin production of its Hammerhead XT drink.

The development costs of Hammerhead XT drinks will total approximately $1,500.00. A test run of the drink will cost approximately $5,000.00 and the initial actual production runs will cost somewhere between $75,000.00 to $78,000.00 for 150,000 8.4 oz cans. We will not conduct an initial production run of the drink unless we raise additional capital within the next twelve months or the results of operations from the sale of Axtion Bars are sufficient to pay the cost of at least one production run of 150,000 cans.

There is no historical financial information about our company upon which to base an evaluation of our performance. We are a development stage company. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in production and possible cost overruns due to price and cost increases in our products. To become profitable and competitive, we must establish a market presence through our web site and through direct marketing of our products.

We just recently acquired our first formulas for the manufacturing and distribution of nutritional products. At this time we have developed a health bar but we are still working on developing a health drink. We have not yet commenced meaningful business operations and we have not yet generated any revenue from the sale of products. As of June 30, 2001, the end of our most recent fiscal year, we had experienced operating losses of $4,934 since inception. As of March 31, 2002, we had experienced operating losses of $32,514 since inception.

Our plan of operations over the next 12 months includes the expected completion of development and thereafter the marketing and distribution of our first two products, a health bar and a health drink, in addition to the completion of our initial web site devoted to the sale of our products. We also intend to develop a network of independent contractors who will market products developed by us in addition to developing a multi-level marketing network and establishing contacts with mass volume retailers, health food stores and a combination of other channels, including health clubs and gyms, international markets and private label manufacturing. We plan to establish our distribution channels throughout the United States and Canada.

We are currently developing only two products for which we have purchased the formulas. We commenced business operations as a nutritional foods distributor on July 1, 2001. We have received our first orders for Axtion Bars. We believe that our working capital as of the date of this prospectus will be sufficient to satisfy our estimated working capital requirements through the next twelve months. We intend to employ additional people during the year 2002.

Using the funds from our recent private offering of securities, we plan to implement the following two-phase business strategy within the next twelve months. The first phase is to develop our health bar and health drink. To date, we have completed the development of the health bar, which has been named the "Axtion Bar," and we are in the midst of the development of our health drink, which will be called the "Hammerhead XT." We also plan to seek out licenses and formulations for additional health food products.

The second phase of our business plan will be to market products to potential customers such as retail outlets by establishing a network of independent contractor distributors. Currently, we do not have any such distributors in place. We also intend to prepare and design marketing materials, provide spokespersons to help market the products, and to provide marketing support through our web site.

In addition, we intend to establish distribution through our website at www.axtionfoods.com. Initially we will offer only two products on the web site, the health bar and the health drink for which we have acquired formulas. We intend, however, to also offer additional sports nutrition products. We anticipate being able to fully implement our marketing plan within the next twelve months.

As of the date of this registration statement, we have yet to generate any revenues from our business operations. Since our inception, and prior to any stock splits, our founding shareholder has loaned the company $5,000 in cash and was issued 5,000,000 shares of common stock in lieu of interest. This money has been utilized for organizational and start-up costs and as operating capital. As of June 30, 2001 we had sustained operating losses of $4,934 since inception. As of September 30, 2001 we had sustained operating losses of $22,599 since inception. From August 3, 2001 until October 15, 2001 we conducted a private offering of our securities wherein we raised $157,000 in exchange for 1,570,000 shares of common stock.

We commenced business operations as a nutritional foods manufacturer and distributor on July 1, 2001 and we do not yet have any results from operations. Prior to July 1, 2001 the company had no business operations. On October 15, 2001 we conducted a four for one forward split of our common stock. Immediately prior to that date, we had issued 5,000,000 shares to the founder, 1,570,000 shares in connection with our private placement, 50,000 shares to acquire formulas for products, and 175,500 shares for services, for an aggregate 6,795,500 shares outstanding. At the completion of the four for one forward split, there were 26,982,000 shares of common stock outstanding.

The money raised in our private offering is being utilized to fund the development of our first two products, health bar and health drink, to pay for production of the health bar, in addition to the creation of our web site, initiating marketing and to pay the expenses of this offering. We believe that we have sufficient working capital to conduct our operations for the next twelve months.

There are no material legal proceedings to which we (or any of our officers and directors in their capacities as such) is a party or to which our property is subject and no such material proceedings is known by our management to be contemplated.

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

The unaudited financial statements of Axtion Foods, Inc. (the "Company") presented herein have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and note disclosures required by generally accepted accounting principles. However, management has included all adjustments necessary in order to make the financial statements not misleading, in the opinion of management. These statements should be read in conjunction with the financial statements and notes thereto included in our last audited financial statements. These audited statements are contained in our Form 10-K for the year ended June 30, 2001.

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

The Company has paid $9,500 for the development of a web site on which certain products which are being developed and acquired can be sold. Since the web site is not fully operational as of March 31, 2002 the Company has not taken any depreciation on this asset. Additionally, the Company acquired plates for the production of wrappers and displays in March 2002. The Company has taken one-month depreciation on these plates since they have had a production run for promotional bars.

The Company has authorized 400,000,000 of no par common stock, (see Note 4). During the first six months the Company issued 6,280,000 shares for $157,000. The Common Stock account has been reduced by $23,089 representing the offering costs paid or accrued through December 31, 2001.

In October 2001 the Company completed a four for 1 (4 for 1) split. All shares reported in this quarterly financial statements reflect this split.

			March31 2002			June 30 2001
			(Unaudited)
ASSETS
*Current Assets*
	Cash		$	54,616		$	4,893
	Prepaid interest						12

		Total current assets		54,616			4,905
*Fixed Assets*
	Website			9,500
	Production equipment, net			14,164

		Total fixed assets		23,664

		Total Assets	$	78,280		$	4,905

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
*Current Liabilities*
	Notes payable		$			$	5,000
	Accrued liabilities			5,950			3,500
	Accrued taxes			800			800

		Total current liabilities		6,750			9,300
*Long Term Liabilities*
*Stockholders' Equity (Deficit)*
	Common stock			134,450			539
	Accumulated deficit during development stage			(62,920	)		(4,934	)

		Total stockholders' equity (deficit)		71,530			(4,395	)

		Total Liabilities and Stockholders' Equity	$	78,280		$	4,905

			For the Three Months Ending March 31 2002			For the Nine Months Ending March 31 2002			From Inception April 20, 2000 Through March 31, 2002
			(Unaudited)
Revenue			$	2,102		$	2,102		$	2,102
Cost of Goods Sold				1,051			1,051			1,051

	Gross profit			1,051			1,051			1,051
Expenses
	General and administrative expenses		$	33,565		$	59,025			62,632

		Net Loss from Operations		(32,514	)		(57,974	)		(61,581	)
Interest Expense							12			539
Income Tax										800

		*Net Loss*	$	(32,514	)	$	(57,986	)	$	(62,920	)

	Weighted Average Shares			26,280,000			24,830,073			21,864,000
	Loss per share		$	nil		$	nil			nil

			For the First Nine Months Ending March 31, 2002			From Inception April 20, 2000 Through March 31, 2002
			(Unaudited)
*Cash Flows From Operating Activities*
	Net Loss		$	(57,986	)	$	(62,920	)
	Adjustments to reconcile net income to net cash provided by operating activities:
		Non cash interest expense		12			539
		Depreciation		240			240
		Changes in:
		Accrued liabilities		2,450			5,950
		Accrued income tax payable					800

Net Cash Used in Operating Activities				(55,284	)		(55,391	)
*Cash Flows from Investing Activities*
		Web site development		(9,500	)		(9,500	)
		Production equipment		(14,404	)		(14,404	)

Net Cash Used by Investing Activities				(23,904	)		(23,904	)
*Cash Flows from Financing Activities*
		Proceeds from note					5,000
		Repayment of note		(5,000	)		(5,000	)
		Sale of common stock		133,911			133,911

Net Cash Provided by Financing Activities				128,911			133,911
		Net Increase in Cash		49,723			54,616
	Cash, beginning of the year			4,893			0

	Cash, End of Period		$	54,616		$	54,616

*Supplemental Non Cash Investing and Financing Activities:*
*Supplemental Information:*
		Interest paid	$			$	0
		Taxes paid	$			$	0

		AXTION FOODS, INC.
Dated: June 4, 2002		/s/ Julia I. Reynolds Julia I. Reynolds President