<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1998.

Commission file number 01-15109

                         CREATIVE RESTAURANT CONCEPTS, INC.
           (Exact name of registrant as specified in its amended charter)

           Oklahoma                                  73-1251800
     (State of other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                 Identification No.)

           100 N. Broadway, Suite 1890, Oklahoma City, OK 73102
     (Address of principal executive offices)

           (405) 235-4960
     (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:

           Common Stock $.005 par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
                                                  ---   ---

Disclosure of delinquent filers in response to Item 405 of Regulation S-B is
not contained in this form, and no disclosure will be contained, to the best
of the Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-KSB or any amendment to
this form 10-KSB (X)

Issuer's revenues for the year ended December 31, 1998 were $1,226,852

The aggregate market value of voting common stock held by non-affiliates was
$125,000 on December 31, 1998 based on the average bid and asked price of
such stock as reported on the "pink sheets" of the National Daily Quotation
Service.

As of December 31, 1998, 9,556,560 (Post Reverse Split) shares of Issue's
common stock, par value $.005, were issued and 9,556,560 were outstanding.

Documents incorporated by reference - None

Transitional Small Business Disclosure Format Yes      No X
                                                 ---     ---

<PAGE>



                                     PART I

ITEM 1.  BUSINESS:

           Creative Restaurant Concepts, Inc. (hereinafter referred to as CRC or
           the Company) has engaged in the joint venture development, operation
           and ownership of various restaurant concepts since its inception in
           June, 1985 as Magnolia Foods, Inc.

           On January 1, 1998, the Company acquired the Wichita Kansas
           francished City Bites Sandwich Shop from City Bites of Wichita, Inc.
           In conjunction with that acquisition, the Company entered into a
           joint-ventures development agreement with City Bites, Inc. to build
           additional stores in Wichita, Kansas. The venture was owned 80% by
           CRC and 20% by City Bites, Inc.

           On February 28, 1998, the shareholders approved a 1 for 20 reverse
           stock split. The authorized common stock remained at 50,000,000
           shares and par value remained at $0.005 per share.

           In November 1997, the Company entered into a management agreement to
           oversee the operation of three Oklahoma City Ground Floor Cafes in
           exchange for a six month right to acquire the restaurants. On May 15,
           1998, the Company acquired 100% of the outstanding stock of the
           Ground Floor Cafe Corporation, an Oklahoma corporation. The Company
           exchanged 750,000 shares of CRC stock for 100% of the Ground Floor
           Cafe Corporation stock making the Ground Floor Cafe Corporation a
           wholly owned subsidiary of CRC.

           In October, 1998 the Company entered into negotiations to acquire the
           outstanding shares of stock of Crockett's Smokehouse of Choctaw,
           Inc., Crockett's Smokehouse of South May, Inc., Pizza Planet of Reno
           and Meridian, Inc. and the assets of McAllister and Reed, Inc. from
           Paul McNutt.

           On December 31, 1998, the Company sold its interest in the City Bites
           Sandwich Shop in Wichita, Kansas to its restaurant general manager.

           OPERATIONS: Creative Restaurant Concepts, Inc. provides its
           restaurants with standard operating specifications for the
           preparation and service of food and beverages plus specifications for
           the maintenance of the premises and proper employee conduct.

           CRC is not dependent on particular suppliers for its food, beverages
           or other products and believes there are numerous suppliers from
           which it can obtain similar products at comparable costs. CRC expects
           to be able to offset cost increases in its ingredients by increasing
           the retail prices of its products. Food, beverage and paper goods
           inventory in CRC's restaurants usually will not exceed the value of
           one week's sales.

           MARKETING: Marketing for CRC's restaurants is handled on a local
           basis. CRC does not


<PAGE>



           now, nor does it plan to manage or conduct a nationwide marketing or
           advertising program.

           EMPLOYEES: As of December 31, 1998, CRC had 27 full time employees
           and 22 part time employees.

           COMPLETION: CRC has competed with numerous companies engaged in the
           business of operating casual dining, family style restaurants. Many
           restaurants compete for customers which existing and previous CRC
           restaurants were designed to attract. Additionally, any CRC
           restaurant will be subject to change in eating performances of the
           public as well as local and national economic conditions that
           influence consumer spending habits.

           Many of CRC's competitors are better known, better capitalized and
           have greater financial resources, more experienced organizations with
           a greater number of employees than CRC. CRC believes, however, that
           the quality of its food in its previous restaurants, the physical
           attractiveness of its facilities, modest prices and the extensive
           prior restaurant experience of its senior manager, will enable CRC to
           continue to compete further in market by market restaurant
           operations.

           REGULATION: CRC's restaurants are subject to licensing and regulation
           by the departments of alcohol licensing, health, sanitation, fire,
           building, planning, traffic and revenue of the state and municipality
           in which these restaurants operate. Delays in obtaining, or denials
           of, necessary licenses or approvals of future restaurants, could have
           a material adverse impact on CRC's growth rate and to the Fair Labor
           Standards Act, which governs such matters as working conditions and
           minimum wages. Furthermore, expansion through the sale of licenses or
           franchises is subject to federal, state and local franchise
           disclosure laws.

ITEM 2.  PROPERTIES:

           CRC's corporate office is located in Bank One Tower, Oklahoma City,
           Oklahoma at the following address where it has a three year lease on
           1,100 sq. ft. of commercial space.

                           100 N. Broadway, Suite 1890
                           Oklahoma City, Oklahoma 73102

           RESTAURANT LOCATIONS: City Bites Sandwich Shop occupies 3,750 sq. ft.
           of commercial space on a five year lease at the following location.

                           City Bites Sandwich Shop
                           2120 N. Woodlawn
                           Wichita, Kansas 67208

           The three Ground Floor Cafes in Oklahoma City are located as shown
below:

<PAGE>

                         - 3,650 sq. ft.
                           6430 Avondale Dr.
                           Oklahoma City, OK 73116
                           (Nichols Hills Plaza - 3 year lease)

                         - 990 sq. ft.
                           Leadership Square
                           Downtown, Oklahoma City
                           (3 year lease)

                         - 1,400 sq. ft.
                           Mathis Brothers Furniture Store
                           Reno and Meridian, Oklahoma City
                           (1 year lease)

ITEM 3.  LEGAL PROCEEDINGS:

           -      Country Club Associates, an Oklahoma General Partnership vs.
                  Magnolia Foods, Inc. - Lawsuit on amount due under a lease
                  guaranty for Gators Restaurant closed in 1995. The amount
                  contested is approximately $13,000.

           -      Bowne and Co., Dallas, Texas vs. Magnolia Foods, Inc.
                  - Lawsuit on amount of printing costs for work performed in
                  1997.  The amount contested is $6,500.

           -      Oklahoma Tax Commission vs. Gators/Magnolia Foods Inc. -
                  Lawsuit on amount of sales taxes for Gators Restaurant for
                  1995. An agreement was reached and a payment plan was
                  executed. As of this date payments are current and the tax
                  amount due is less than $10,000.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

           The shareholders of CRC voted to approve a 1 for 20 reverse split
           effective February 28, 1998.


<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS:

<TABLE>
<CAPTION>
                                                  Common Stock
                                                       Bid
                                  ---------------------------------------------
                                         High                      Low
                                  -------------------      --------------------
             1997
             ----
             <S>                  <C>                      <C>

               First Quarter                   .03125                     .0100

               Second Quarter                  .03125                     .0325

               Third Quarter                    .1250                     .0325

               Fourth Quarter                   .0200                     .0100

             1998
             ----

               First Quarter                    .1250                     .0325

               Second Quarter                   .2500                     .1250

               Third Quarter                    .0375                     .1250

               Fourth Quarter                   .2500                     .1250

</TABLE>

         As of December 31, 1998, the Company's issued and outstanding common
stock was held by 413 holders of record.

         CRC has never declared a cash dividend on its common stock. It is
the present policy of CRC not to pay cash dividends on CRC common stock. Any
payment of cash dividends in the future will be dependent upon the prior
payment of regional dividends on outstanding CRC preferred Stock, the amount
of funds legally available thereof, CRC's earnings, financial condition,
capital requirements and other factors which the CRC Board of Directors deem
relevant.

ITEM 6.  MANAGEMENT'S DECISION AND ANALYSIS OR PLAN OF OPERATION:

         RESULTS OF OPERATIONS: During 1998, the Company owned the following
         restaurants at the times indicated.


<PAGE>


                  -  City Bites Sandwich Shop, Wichita, Kansas
                     (1/1/98 - 12/31/98)

                  -  Ground Floor Cafe - Leadership Square,
                     Nichols Hills and Mathis Brothers Locations
                     (5/15/98 - 12/31/98)

         Sales during 1998 were $1,226,852 versus $0 in 1997. The Company did
not operate any restaurants during 1997. Cost of Goods Sold for 1998 was
$480,026 or 39.1% versus none in 1997. General and Administrative expenses
for the 12 months ending 12/31/98 were $1,341,543 versus $153,165 for the
same period last year. These costs increased due to the Company operating
four restaurants in 1998 versus none in 1997. A significant component of the
General and Administrative expenses is the cost of shares of common stock
issued to note holders as an incentive for them to renew their debt
instruments while the Company searched for a viable business to operate.

         The Company continues to pursue viable restaurant businesses for
acquisition into CRC and also continues to reduce its liabilities by
converting debt into its common stock.

LIQUIDITY AND FINANCIAL RESOURCES:

         Working capital at 12/31/98 was ($1,546,245) versus ($861,900) for
the previous year ended 12/31/97. The increases in deficit was due to the
loss sustained in 1998. However, a significant part of the loss and increased
deficit results from the company issuing stock as incentive shares for
continued renewal of Notes Payable as they came due.

         The Company intends to entertain proposals to acquire existing
operating businesses and seek interested merger candidates.

ITEM 7.  FINANCIAL STATEMENTS:

         The financial statements and schedules are included herewith.

ITEM 8.  CHANGES IN, DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND
FINANCIAL DISCLOSURE.:

         None.


<PAGE>


                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

         The directors and officers of CRC as of 12/31/98 are identified
below. No family relationships exist between or among director or officers of
CRC.

<TABLE>
<CAPTION>
                                                                            Director
                                             Position                       Continuously
             Name                 Age        with the Company               Since
             ----                 ---        ----------------               ------------
             <S>                  <C>        <C>                            <C>

             Joseph J. Johnston   55         Chairman of the                June, 1985
                                             Board
                                             President and Director

             David Loveland       51         Secretary, Director            June, 1992

             Bill Weaver          63         Director                       June, 1992

</TABLE>

         Joseph J. Johnston, Jr., age 55, has served as President of the
Company and also has served as Chairman of the Board and a director of
Creative Restaurant Concepts, Inc. since 1985. In 1986, Mr. Johnston was
instrumental in formulating and developing the Mamasita's Mexican Restaurant,
which specializes in gourmet Mexican Food. Prior to joining CRC, Mr. Johnston
served as President and a director of Kelly-Johnston Enterprises, Inc. Mr.
Johnston joined the predecessor companies of Kelly-Johnston Enterprises, Inc.
in 1977 and served in these capacities from the formation of Kelly-Johnston
Enterprise, Inc., in 1981 until July, 1985. Kelly-Johnston Enterprises, Inc.
conducted business as a franchisee of Chi-Chi's Mexican Restaurants and a
Franchiser of Duff's Famous Smorgasbord Restaurants, Joe Kelly's Restaurants
and Joe Kelly's Oyster Docks.

         From January, 1973, through May, 1977, Mr. Johnston served in
various capacities with Kentucky Fried Chicken Corporation. Starting as a
Regional manager of Real Estate, Mr. Johnston subsequently served as Area and
District Manager of Operations and Director of Operations and Marketing
Midwest Region, supervising 400 Kentucky Fried Chicken Restaurants. Mr.
Johnston also served as Director of Franchising for New Concepts. Mr.
Johnston's final position with the Kentucky Fried Chicken Corporation was its
Vice President of operations, Midwest Region responsible for $82,000,000 in
revenues at the age of 34.

         Mr. Johnston graduated from Western Illinois State University in
1966 with a Bachelors in Business Administration and joined Shell Oil Company
as a dealer salesman in the Chicago, Illinois. After four years of military
service, Mr. Johnston was employed by the commercial development department
of American Investment Company Realty Services, Inc. of Chicago Illinois.


<PAGE>


         David Loveland, age 51, was elected as a Director of the Company and
was appointed as corporate secretary in June, 1992. For more than the past
six years, Mr. Loveland has been self-employed as a consultant in television
program production, program creation and the marketing of television series.
Prior to that time Mr. Loveland worked as general sales manager of Oklahoma
City based Channel 5 (KOCO) TV in Oklahoma City for 10 years. Mr. Loveland
graduated from Central State University with a Bachelor of Arts Degree in
Marketing.

         Bill Weaver was elected as a director in June, 1992. Mr. Weaver has
worked in the insurance industry and is a principal in the Oklahoma Intermede
Group. Mr. Weaver graduated from Oklahoma City University with a Bachelor of
Arts Degree in Business.

ITEM 10.  EXECUTIVE COMPENSATION:

         Joseph J. Johnston, CRC President, was paid $67,519 of which $39,115
direct CRC operating expenses were paid.

         COMPENSATION PURSUANT TO PLANS

         Under CRC's Stock Option Plan ("Plan"), 2,000,000 shares of CRC
Common are reserved for issuance upon the exercise of options. The plan is
designed to serve as an incentive for attracting and retaining qualified and
competent key employees, consultants, officers and directors. While some
options granted under the Plan are intended to qualify as "incentive stock
options" under Section 422A of the Internal Revenue Code, other options may
be granted that do not qualify.

         The plan is administered by the CRC Board of Directors. The Board of
Directors is authorized to grant options to such key employees, consultants,
officers and directors as it may determine.

         Options may be granted on such terms and at such prices as
determined by the Board of Directors; provided, however, that the exercise
price may not be less than the fair market value of CRC Common on the date of
grant. Each option will be exercisable after the period of periods specified
in the individual option agreements, but no incentive stock option shall be
exercisable for more than ten years from the date of grant.

         The following shares of CRC Common Stock were issued for salaries in
lieu of cash compensation during 1998 for work performed in 1998 Linda A.
Matlock, 150,000 common shares, Frank Ward, 125000 shares, and Sed Kennedy
62,5000 common shares.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

         A.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

              Beneficial Ownership of over 5% of Common Stock.

<PAGE>

<TABLE>
<CAPTION>
                                                     Shares          Percentage
                                                     ------          ----------
              <S>                                    <C>             <C>
              Dulaney's, Inc.
              P.O. Box 54714                        2,341,357           24.2%
              Oklahoma City, OK 73154

              Randall Colton
              1736 Kingsbury
              Oklahoma City, OK 73116
</TABLE>

         B.   SECURITY OWNERSHIP OF MANAGEMENT

<TABLE>
<CAPTION>
                                                               Number of Shares
                                     Name of                   Beneficially Owned          Percent
          Title of Class             Beneficial Owner          as of 12/31/98 (1)          Class (2)
          --------------             ----------------          ------------------          ---------
          <S>                        <C>                       <C>                         <C>

          CRC, Inc. Common Stock     Joseph J.                     401,500 (3)               .000%
          Par Value $0.05            Johnston

</TABLE>

         (1) Except as otherwise described herein, each beneficial owner has
             sole voting and investment power with respect to the shares
             listed.

         (2) Percent of class is based upon shares of CRC Common outstanding
             after the 1 for 20 reverse split 2/28/98 and is calculated
             without regard to the shares of CRC Common issuable upon
             exercise of outstanding warrants or stock options or upon
             conversation of convertible securities, except that any shares a
             person is deemed to own by having the right to acquire by
             exercise of a warrant or option or the conversion of a security
             are considered to be outstanding solely for purposes of
             calculating such person's percentage ownership.

         (3) Mr. Johnston beneficially owns 401,500 shares of CRC Common. Such
             Such amount exclude (I) 5,000 shares held by Linda Johnston in
             her own name; (ii) 75,000 shares held by the Linda B. Johnston
             Trust for the benefit of Linda Johnston, for which she also
             serves as the controlling Co-Trustee; (iii) 25,000 shares held
             by Michael T. Johnston Trust for the benefit of Michael T.
             Johnston, son of Mr. and Mrs. Johnston, for which Mrs. Johnston
             serves as Trustee; and (iv) 25,000 shares held by the Jennifer
             A. Johnston Trust for the benefit of Jennifer A. Swales,
             daughter of Mr. and Mrs. Johnston, for which Mrs. Johnston
             serves as Trustee.

         (4) Excludes 401,500 shares of CRC Common beneficially owned by
             Joseph J. Johnston.

<PAGE>

             The following table sets forth the CRC Common ownership of
             directors and all directors and officers as a group, as of
             March 30, 1995:

<TABLE>
<CAPTION>
                                   Number of shares
          Name                     Beneficially Owned (1)     Percent of class
          ----                     ----------------------     ----------------
          <S>                      <C>                        <C>
          Joseph J. Johnston             401,500                    .0008
</TABLE>

(1) - (3) For footnotes 1, 2 and 3 see footnotes 1, 2 and 3 of the immediate
preceding table.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

         During the fiscal year ended December 31, 1997, there existed no
relationships and there were no transactions reportable under this item.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K:

         The following documents are filed as part of this report:

               Exhibit
               -------

                   11    Statement re: Computation of Earnings Per Share.

                   27    Financial Data Schedule.

                   (b)   The Company did not file a Form 8-K during the period.


<PAGE>


SIGNATURES

         Pursuant to the requirements of Section 13 or 15 (d) 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 authorized.

                          Cala Corporation
                          (Formerly Creative Restaurant Concepts, Inc.)

                          /s/JOSEPH J. JOHNSTON
                          By: Joseph J. Johnston, Vice President and
                              Chief Financial Officer

Dated: February 02, 2000

         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on the 26th day of January, 2000.


/s/JOSEPH J. JOHNSTON
Joseph J. Johnston, Director


/s/JOSEPH CALA
Joseph Cala, Director


/s/STEPHEN KO
Stephen Ko, Director


<PAGE>

<TABLE>
<CAPTION>
                                   Table of Contents
<S>                                                                            <C>

Independent Auditor's Report......................................................1
Balance Sheets....................................................................2
Statement of Income...............................................................3
Statement of Cash Flow............................................................4
Statement of Stockholders Equity..................................................5
Notes to Financial Statements..................................................6-12

</TABLE>


<PAGE>



                       HUNTER, ATKINS & RUSSELL, PLC
                        CERTIFIED PUBLIC ACCOUNTANTS

A.T. (AL) HUNTER                                       5805 NORTH GRAND SUITE D
DENNIS ATKINS                                           OKLAHOMA CITY, OK 73118
CASEY RUSSELL                                            MAIL: P.O. BOX 12056
                                                        OKLAHOMA CITY, OK 73157
MEMBER SEC                                             TELEPHONE (405) 843-3964
PRACTICE SECTION                                          FAX (405) 843-9975
                                                               INTERNET
                                                          HUNATKCPA@AOL.COM



   Board of Directors
   Creative Restaurant Concepts, Inc.
   Oklahoma City, Oklahoma

                             INDEPENDENT AUDITOR'S REPORT

   We have audited the accompanying balance sheets of Creative Restaurant
   Concepts, Inc. as of December 31, 1998 and the related statements of
   income, cash flows and stockholder's equity for the year then ended. These
   financial statements are the responsibility of the Company's management.
   Our responsibility is the express an opinion on these financial statements
   based on our audit.

   We conducted our audit in accordance with generally accepted auditing
   standards. Those standards require that we plan and perform the audit to
   obtain reasonable assurance about whether the financial statements are
   free of material misstatement. An audit includes examining, on a test
   basis, evidence supporting the amounts and disclosures in the financial
   statements. An audit also includes assessing the accounting principles
   used and significant estimates made by management, as well as evaluating
   the overall financial statement presentation. We believe that our audit
   provides a reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
   in all material respects, the financial position of Creative Restaurant
   Concepts, Inc. as of December 31, 1998 and the results of its operation
   and it cash flows for the year then ended in conformity with generally
   accepted accounting principles.



   Hunter, Atkins & Russell, PLC
   January 12, 2000


<PAGE>



                              Creative Restaurant Concepts, Inc.
                                       Balance Sheet
                                      December 31, 1998

<TABLE>
<CAPTION>
                                          ASSETS
<S>                                                                             <C>

    CURRENT ASSETS
     Cash and cash equivalents                                                   ($3,625)
     Inventory
       Total current assets                                                       13,566
                                                                                --------
                                                                                   9,941

    PROPERTY AND EQUIPMENT, net                                                  239,824

    OTHER ASSETS

     Organizational costs, net                                                    10,028
     Deposits
       Total other assets                                                          6,620
                                                                                --------
                                                                                  16,648
       Total Assets

                                                                                $266,413
                                                                                ========

                          LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES
     Accounts payable                                                           $181,335
     Accrued expenses                                                            140,589
     Notes payable and current portion of long-term debt                         934,792
                                                                             -----------
                                                                               1,256,716

    LONG-TERM DEBT, less current portion of $44,320                              125,573

    STOCKHOLDERS' EQUITY
     Series B 10% cumulative preferred stock,
       par value $.10, 25,000 shares authorized,                                   2,500
       issued and outstanding
     Series AA 6% cumulative convertible                                         148,500
       preferred stock par value $0.10, 10,000
       shares authorized, 1,485 shares issued
       and outstanding
     Common stock - par value $.005,
       50,000,000 shares authorized,                                              45,970
       9,694,056 shares issued and
       outstanding
     Additional paid in capitol                                                5,881,256
     Retained earnings (deficit)                                              (7,192,000)
     Less: Treasury stock - 4,530 shares at cost                                  (1,202)
                                                                             ------------
       Total Stockholders' Equity                                             (1,115,876)
       Total Liabilities and
       Stockholders' Equity                                                     $266,413
                                                                             ============
</TABLE>

<PAGE>

                           Creative Restaurant Concepts, Inc.
                                Statement of Operations
                          For the Year Ended December 31, 1998
<TABLE>
<CAPTION>

    <S>                                                                    <C>
    REVENUES                                                               $1,226,852

    COST OF SALES                                                             480,026
                                                                           ----------
    GROSS PROFIT                                                              746,826

    OPERATING COSTS AND EXPENSES
       General, selling, and administrative                                 1,341,523
                                                                           -----------

       Operating loss                                                        (594,697)

    OTHER EXPENSE
       Interest                                                                89,646
                                                                           -----------

       Loss before income taxes                                              (684,343)

    Provision for income taxes                                                     --

       NET LOSS                                                             ($684,343)
                                                                           ===========
</TABLE>





            See accountants' report and notes to financial statements.


<PAGE>



                                Creative Restaurant Concepts, Inc.
                                     Statement of Cash Flows
                               For the Year Ended December 31, 1998
<TABLE>
<CAPTION>

<S>                                                                               <C>                        <C>
Cash flows from operating activities
   Net loss                                                                                                  ($684,343)

Adjustments to reconcile net income to net cash
   provided by operating activities;
       Depreciation and amortization                                                                            63,331
Changes in assets and liabilities
   (Increase) decrease in:
       Decrease in other current assets                                                                         52,500
       Increase in inventory                                                                                   (13,566)
       Increase in accounts payable and accrued expenses                                                       133,655
       Total adjustments                                                                                     ----------
                                                                                                              $235,920
                                                                                                             ----------
       Net cash used by operating activities                                                                 ($448,423)

Cash flows from investing activities
   Purchases of property and equipment                                            ($300,111)
   Organization costs                                                               (10,028)
   Other deposits                                                                    (6,622)
       Net cash used by investing activities                                      ----------
                                                                                                              (316,761)
Cash flows from financing activities
   Proceeds from borrowings                                                         $323,910
   Issuance of stock                                                                 430,369
       Net cash provided by financing activities                                  ----------
                                                                                                               754,279
                                                                                                             ----------
Net increase in cash and cash equivalents                                                                     ($10,905)

Cash and cash equivalents at beginning of period                                                                 7,280
                                                                                                             ----------
Cash and cash equivalents at end of period.                                                                    ($3,625)
                                                                                                             ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for interest                                                                              $0
                                                                                                             ----------
Cash paid during the year for income taxes                                                                          $0
                                                                                                             ==========
</TABLE>




            See accountants' report and notes to financial statements


<PAGE>


                                        Creative Restaurant Concepts, Inc.
                                         Statement of Shareholders Equity
                                       For the Year Ended December 31, 1998
<TABLE>
<CAPTION>

                         Series B                               Common Stock                             Retained
                         Preferred        Preferred             ------------             Paid in         Financing       Treasury
                           Stock            Stock          Shares         Amount         Capital         (Deficit)        Stock
                        -----------      -----------    ------------   ------------    ------------    ------------    ------------
<S>                     <C>              <C>            <C>            <C>             <C>             <C>             <C>

Beginning Balance,
  January 1, 1998          $ 2,500               $0      49,976,000        249,730       5,395,628      (6,508,557)         (1,202)

Reflect 1 for 20                                        (47,448,700)      (237,243)        237,243
  reverse stock split

Common stock issued for                                   7,196,756         33,483         248,385
  payment of debt and
  financing

Preferred stock issued
  in exchange for debt                      148,500

Net Loss                                                                                                  (684,343)
                        -----------      -----------    ------------   ------------     ------------   ------------    ------------
Ending Balance,            $ 2,500         $148,500       9,694,056        $45,970       $5,881,256     $7,192,000         ($1,202)
  December 31, 1998
                        ===========      ===========    ============   ============     ============   ============    ============
</TABLE>




                      See accountants' report and notes to financial statements


<PAGE>

                       CREATIVE RESTAURANT CONCEPTS, INC.
                             OKLAHOMA CITY, OKLAHOMA

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1998

ORGANIZATION

Magnolia Foods, Inc. (the Company) was incorporated on June 13, 1985 under
the laws of the State of Oklahoma. The Company's sole industry segment has
been the business of owning, operating, licensing and joint venturing
restaurants.

On August 21, 1997 the Company changed its name to Creative Restaurant
Concepts, Inc.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
all partnership and corporate subsidiaries in which the Company holds a
majority voting and controlling interest. Investments in affiliates for which
the Company does not exercise significant influence over operating and
financial policies are accounted for on the equity method. Significant
intercompany accounts and transactions are eliminated in consolidation.

INVENTORIES

Inventories of food and beverages are stated at the lower of cost (determined
by the first-in, first-out method) or market.

when a restaurant is opened, the initial purchase of china, glass, and
silverware (small wares) is recorded as inventory as is not amortized. All
replacements are expensed.

<PAGE>

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures which increase
values, change capacities, or extend useful lives are capitalized. Routine
maintenance, repairs and renewals are charged to operations.

Leasehold improvements are amortized by the straight-line method over the
lesser of the life of the lease including renewal options or the estimated
useful lives of the assets.

Furniture and equipment are depreciated by the straight-line method over the
estimated useful lives of the assets, generally seven years.

EARNINGS (LOSS) PER SHARE

Net income (loss) per share is based upon the weighted average number of
shares outstanding during the period. Fully diluted earnings per share is not
disclosed because it is anti-dilutive.

CASH EQUIVALENTS

For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

NOTE 2 - GOING CONCERN CONSIDERATIONS

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has sustained
substantial operating losses in recent years. In addition, the Company has
used substantial operating losses in recent years. In addition, the Company
has used substantial amounts of working capital in its operations. Further,
at December 31, 1998 current liabilities exceed current assets by $1,246,775.

<PAGE>

In view of these matters, payment of existing liabilities in the accompanying
balance sheet is dependent upon the success of the Company's future
operations and its ability to raise capital. The Company's management
believes that all obligations can and will be paid with future operations.
Management further believes that the Company is a going concern due to the
current operations that are not reflected as of the date of these financial
statements.

NOTE 3 - BUSINESS COMBINATION

During the year ending December 31, 1998 the Company acquired 100% of the
outstanding stock of Ground Floor Cafe an Oklahoma restaurant company. The
Company gave 750,000 shares of Creative Restaurant common stock for 100% of
the stock for Ground Floor Cafe, making Ground Floor Cafe a wholly owned
subsidiary of Creative Restaurant Concepts. Ground Floor Cafe is consolidated
with Creative Restaurant Concepts with Creative Restaurant Concepts is the
surviving entity.

NOTE 4 - PROPERTY AND EQUIPMENT

As of December 31, 1998 property and equipment consisted of office furniture
and restaurant equipment. Depreciation is calculated using the straight-line
method over the estimated useful life of the asset.

NOTE 5 - OTHER INVESTMENTS

On August 20, 1997 the Company entered into a joint venture agreement with
City Bites, Inc. to own and operate City Bites restaurants in the State of
Kansas. Such joint venture is owned 80% by the Company and 20% by City Bites,
Inc. During the year ending December 31, 1998 the Company sold its interest
in City Bites, Inc.

In October, 1998, the Company entered into negotiations which led to the
January 1, 1999 acquisition of 66 2/3 of the outstanding shares of Crockett's
Smokehouse of Choctaw, Inc. 80% of the outstanding shares of Crockett's
Smokehouse of South May, Inc., 90% of the outstanding shares of Pizza Planet
of Reno and Meridian, Inc. and the assets of McAllister and Reed Inc. from
Paul McNutt. At the same time 33 1/3 of the outstanding shares of Crockett's
Smokehouse of Choctaw, Inc. were acquired form Ali Khalili, 20% of the
outstanding shares of Crockett's Smokehouse of South May, Inc. were acquired
from Mark McAllister and 10% of Pizza Planet of Reno and Meridian, Inc. was
acquired from Steve Haben.

<PAGE>

In January 1999, the assets of Crockett's Smokehouse of Choctaw, Inc. were
sold to Ali Khalili. In August, 1999, the assets of Crockett's Smokehouse of
South May, Inc. were sold to CWT, Inc. In September, 1999, the assets of
Pizza Planet of Reno and Meridian Inc. were sold to Restaurant Acquisition
Corporation.

NOTE 6 - NOTES PAYABLE AND LONG-TERM DEBT

<TABLE>
<CAPTION>
                  <S>                                                                      <C>
                  Notes payable consist of the following:

                  Payable to various individuals, 10-18% interest,
                  Unsecured, due various maturity dates                                    $ 890,472
                                                                                           ---------

                  Long-term debt consists of the following:

                  Installment loan with local commercial bank,
                  9.5% interest rate, maturing October 2002,
                  collateralized by equipment and fixtures                                     9,916

                  Installment loan with local commercial bank,
                  9.5% interest rate, maturing October 2002,
                  collateralized by equipment and fixtures                                   159,977
                                                                                           ---------
                                                                                             169,983
                           Less: current portion                                              44,320
                                                                                           ---------
                                                                                           $ 125,573
                                                                                           =========
</TABLE>


The following is a summary of maturities of principal under long-term debt for
the years ending December 31:

<TABLE>
<CAPTION>

                           <S>                      <C>
                           1999                     $   44,320
                           2000                         44,320
                           2001                         44,320
                           2002                         36,933
                                                    ----------
                                                    $  169,893
                                                    ==========
</TABLE>

NOTE 7 - CAPITAL STOCK TRANSACTIONS

The Company issued 5,748,399 common shares in 1997 and 7,196,756 common shares
in 1998.


<PAGE>

During 1997, 405,000 shares were issued under common stock options granted in
1994 at an exercise price of $.18 per share. A total of 2,000,000 options
with an expiration date of December 31, 2000 were issued during 1997. At
December 31, 1998 a total of 2,00,000 options remained unexercised as follows:

<TABLE>
<CAPTION>

      NUMBER OF OPERATIONS                         EXERCISE PRICE                EXPIRATION DATE
      --------------------                         --------------                ---------------
      <S>                                          <C>                          <C>
           2,000,000                                     $.03                   December 31, 2000
</TABLE>

At December 31, 1998, dividends in arrears on the 10% cumulative preferred
stock were $8,250.

NOTE 8 - CAPITAL STOCK TRANSACTIONS

Income taxes are provided for the tax effect of transactions reported in the
financial statements in a period different from which they are reported for
income tax purposes. The items creating such a timing difference are the
accelerated depreciation of property and equipment for tax purposes as
compared to the straight-line method for financial reporting purposes, and
the amortization of leasehold improvements over a prescribed thirty-nine year
period for tax purposes as compared to the lease terms for financial
reporting purposes.

The Company has a consolidated net operating loss carrryforward of
approximately $5,000,000, which will expire between the years 2001 and 2006.
Because of the uncertainty of the Company's future operations, and because
possible restrictions on the application of the net operating losses against
future profits are being researched due to ownership changes reflected in
various stock issuance, no tax benefits are recorded in these financial
statements.

NOTE 9 - LEASE COMMITMENTS

The Company leases office space on a month to month basis.

NOTE 10 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

As supplemental information to the statement of cash flows, cash paid for
interest during the year was none. No income taxes were due during the
reporting years. Nor was any interest paid in cash for the year ending
December 31, 1998.

NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has a number of financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all financial
instruments at December 31, 1998, does not differ materially from the
aggregate carrying values of its financial instruments recorded in the
accompanying Balance Sheet. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies.

<PAGE>

NOTE 12 - REVERSE STOCK SPLIT

On February 28, 1998 the shareholders approved a 1 for 20 reverse stock
split. Authorized common shares remained at 50,000,000 and par value remained
at $0.005.

NOTE 13 - CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED
          STOCK SERIES AA

The company has issued 138,5000 shares of 6% cumulative convertible
redeemable preferred stock. The stock is not voting and dividends accumulate
till paid. This stock was issued for $138,500 in debt.

<PAGE>