UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   Form 10-KSB

     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000
                         Commission file number 01-15109

                                Cala Corporation
         --------------------------------------------------------------
         (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)               (Zip Code)

                                 (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
                          ----------------------------
                                 Title of Class

     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)

     The aggregate market value of voting common stock held by non-affiliates
was $7,740,489 on December 31, 2000 based on the average bid and asked price of
such stock as reported on the "pink sheets" of the National Daily Quotation
Service. (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     The number of shares outstanding of issuer's common stock, par value
$.005,as of December 31, 1999 was 48,702,262.

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













                                     Part I


Item 1. Business:

          In October, 1999, Joseph Cala became Chairman and CEO of Creative
Restaurant Concepts, Inc. In November, 1999 Creative Restaurant Concepts, Inc.
changed its name to Cala Corporation.

          In the First Quarter, 2000, the Company entered into a series of
letters of intent designed to establish itself as an international developer and
operator of hospitality and other businesses throughout the world. In January,
2000 the Company announced plans to concentrate development activities for the
Undersea Resort/Casino. Economic Research Associates of San Francisco,
California was hired to prepare an economic feasibility report and potential of
locating these facilities in various places around the world. Throughout the
balance of the First Quarter and into the Second Quarter, the Company announced
and pursued its intent to acquire various businesses including Costanzo,
Industries, whose operations were being over-seen by a department of the Italian
government. In May, 2000 the Company announced and later aborted an acquisition
of a 23-story office complex located in downtown Naples.

          In June, 2000 the Company announced the acquisition of a 51% interest
in the San Giuseppe Molino Mill and Bakery as well as a 51% interest in B-Tec of
Italy, a licensee of E-Tec, U.S.A., the manufacturer of 28 types of batteries.
The technology used in the manufacturer of B-Tec's batteries did not qualify for
sufficient funding to construct and build a plant in San Cataldo and the 51%
ownership was sold to the U.S. based minority partner. In the Second Quarter,
the Company also announced a 1.0 million share voluntary return, cancellation
and buy back program and qualified for listing in Standard and Poors Corporate
records publication. Corporate Records serves as a recognized securities manual
in 35 states for Blue Sky/Manual Exemption trading.

          Also in the Second quarter, the Company announced several potential
joint-venture developments which were later abandoned at the time that the
Costanzo, Industries acquisition was withdrawn from the market by the Italian
government to clarify the bidding criteria. Costanzo, Industries continues to be
operated under the supervision of a department of the Italian government. In the
Second Quarter Mr. Cala retired $258,000 in notes payable by the company.

          In September, 2000 Economics Research Associates completed it's
previously commissioned feasibility study on the Company's undersea
Resort/Casino. The results of the report were encouraging and Mr. John Del
Favero, agreed to serve as President of the Advisory Board for the Undersea
project. In October, Mr. Maxwell Hunter agreed to serve as Chairman of the
Advisory Board. Also in the Third Quarter, the company announced the acquisition
of 51% of Il Picciolo Golf Club and Hotel in Sicily. In the Third Quarter, the
company also completed the acquisition of a 51% interest in and control of
management for Pedana Costrafur, a niche construction company specializing in
smaller projects.

          In the Fourth Quarter, 2000, Cala Corporation entered negotiations to
acquire a 51% interest in Mancini, Olive Oil Company (I.M.O.I.L., srl.),
continued its research toward the design and location of the Undersea Resort and
prepared to initiate a hospitality industry program of scholarship opportunities
for under priviledged kids. Subsequent to the end of the Forth Quarter,
management made the decision to concentrate its resources on the Mancini Olive
Oil acquisition and divest the ownership of the companies acquired in the Third
Quarter.


          As of January 1, 2000 the company owned and operated one Ground Floor
Cafe located in the Nichols hills plaza in Oklahoma City, Oklahoma. In the Third
Quarter of 2000, the Company acquired a 51% interest in the San Giuseppe Molino
Mill and Bakery, a 51% interest and control of management in Pedana Costrafur
Construction Company and a 51% interest in the Il Picciolo Golf Club and Hotel.



          As of December 31, 2000 the Company had disposed of its interests in
the San Giuseppe Molino Mill and Bakery, the Il Picciolo Golf Club and Hotel and
its interests in Pedana Costrafur. The Company closed the Ground Floor Cafe as
of December 31, 2000. On December 31, 2000, Cala Corporation owned the rights to
the Undersea Resort it acquired in the Cala Hotel acquisition reported earlier
in the year and the Cala Non-Profit Organization.


     Operations:

          Cala Corporation provides its businesses with standard operating
specifications for the operation of each business. It provides its hospitality
businesses 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.

          Cala Corporation 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 prices. Cala expects to be
able to offset cost increases in its ingredients by increasing the retail prices
of its products or services. Specifically, food, beverage and paper goods
inventory in its hospitality businesses usually will not exceed the value of one
week's sales.


     Marketing:

          Marketing activities for Cala Corporation businesses are handled on a
local basis. The Company does not now, nor does it plan to manage a nationwide
marketing or advertising program.


     Employees:

          As of December 31, 2000, the Company had 6 full time employees.


     Competition:

          Cala Corporation and its predecessor companies have competed with
numerous companies engaged in the business of operating hospitality and
constructions companies, hotels and restaurants. Many construction and food
service/hospitality companies compete for customers which existing and previous
Cala Corporation businesses were designed to attract. Additionally, any Cala
Corporation business will be subject to changes in eating habits or customer
preferences as well as the effects of local, regional, national and
international economic conditions that can influence spending habits.

          Many of Cala Corporation's competitors are better known, better
capitalized and have greater financial resources, more experienced organizations
with a greater number of employees than Cala Corporation. Management believes,
however, that the quality of its products in it's existing and former
businesses, the quality of management in the companies it acquires an interest
in, and the experience of it's own senior management, will enable Cala
Corporation to continue to compete in the future in the market.


     Regulation:

          Cala Corporation's businesses are subject to licensing and regulation
by various departments of alcohol licensing, health, sanitation, permitting,
zoning, fire, building, planning, traffic and revenue of the states and
municipalities in which these businesses operate. Delays in obtaining, or
denials of, necessary licenses or permits, or approvals of Company projects
could have a material impact on Cala Corporation's growth. Furthermore, any
expansion of certain of Cala Corporation's hospitality businesses through the
sale of licenses or franchises is subject to federal, state and local franchiser
disclosure laws.

Item 2. Properties:

          Cala Corporation's main office is located at BankOne Center 100
Broadway Suite 1890 Oklahoma City, OK. 73102 and Two N. First Street, San Jose,
California, 95113. The Company has a one year lease on 980 square feet of
commercial space. The Company has office affiliations in Milan, Italy and
Honolulu, Hawaii.

          Cala Corporation has no restaurant or other business locations as of
it's divestiture of it's acquisitions effective December 31, 2000.


Item 3. Legal Proceedings

          Ben E. Keith has sued the predecessor company alleging it is
responsible for food purchase invoices generated prior to the predecessor
company being involved in Crockett's smokehouse.


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

          There were no matters submitted to a vote of security holders in 2000.



                                     PART II

Item 5. Market for Registrants Common Stock and Related Stockholder Matters:

                                          Common Stock
                                              Bid
                                     High               Low
                                     ----               ---
     1999
          First Quarter              0.05              0.01
          Second Quarter             0.06              0.01
          Third Quarter              0.08              0.01
          Fourth Quarter             0.75              0.13

     2000
          First Quarter              0.75              0.55
          Second Quarter             0.65              0.30
          Third Quarter              0.50              0.20
          Fourth Quarter             0.25              0.18


          As of December 31, 2000, the Company's issued and outstanding common
stock was held by 466 holders of record.

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


Item 6. Management's Discussion and Analysis of Operations:

          Results of Operations: During 2000, the Company owned and operated the
Ground Floor Cafe in Nichols Hills Plaza, Oklahoma City, Oklahoma and other for
the times indicated.

o        Ground Floor Cafe - Nichols hills plaza - 1/1/2000 - 12/10/2000

o        San Giuseppe Molino Mill and Bakery - Sicily - 7/1/2000 - 12/31/2000

o        Il Picciolo Golf Club - Sicily - 7/1/2000 - 12/31/2000

o        Pedana Costrafur Construction Company 7/1/2000 - 12/31/2000


Item 7. Financial Statements:

          The financial statements and schedules are included herewith.


Item 8. Changes in, Disagreements with Accountants on Accounting and Financial
Disclosure:

          The company has changed auditing firms from 1999, Hunter, Atkins,
Russell of Oklahoma City to Roger Castro of Oxnard, California. There were no
disagreements with the accountants on accounting or financial disclosure.


                                    PART III


Item 9. Directors and Executive Officers of the Registrant:

          The directors and officers of Cala corporation as of 12/31/2000 are
identified below. No family relationships exist between or among any directors
or officers of Cala Corporation.


    Name               Age      Position with the Company     Continuous Since

 Giuseppe Cala         40            Chairman, CEO              October, 1999
                                       Director

 Stephen Ko            49              Director                November, 1999


          Giuseppe Cala, 40, is chairman of the Board, and CEO of Cala
Corporation. Mr. Cala has been an international business owner most of his
professional life. He began his career at an early age rising to top management
positions in some of the most prestigious and luxurious resorts in the world.
Mr. Cala, as Chairman & CEO of the Cala group has been involved in various
ventures such as: Fila Sportswear USA; Mondi Fashions, USA; L'Italiano
Restaurants and Weddings in California, Hawaii and Japan, Cala Hotels, Inc .dba
Undersea Resort; and Hydrogen Future, Inc.

          Stephen Ko, 49, formerly served as Associate Managing Director with
Private Capital Corporation responsible for providing investment banking and
financial consulting services to private clients. Prior to that, Mr. Ko served
as Executive Vice President, Bank of America, FSB in Honolulu, Hawaii. In that
capacity he was responsible for all internal audit and corporate compliance with
specific responsibility for corporate development programs. Prior to joining
Bank of America, Mr. Ko was a senior supervising auditor and computer audit
specialist for KPMG, Honolulu, Hawaii and as staff auditor for Coopers, Lybrand
in Seattle, Washington.


Item 10. Executive Compensation:

          Giuseppe Cala, Cala Corporation's Chairman, President and CEO is paid
an annual salary of $150,000. Part of that compensation was paid in cash with
the balance being paid in restricted common stock.

          Stephen Ko, Interim Financial Officer has been paid 24,000 shares of
common stock for his services in 2000.


     Compensation Pursuant to Plans.

          The number of shares available for issue under Creative Restaurant
Concepts, Inc.'s 1996 Stock Option Plan have been exhausted and none were issued
in 2000.

          The following shares of Creative Restaurant Concepts, Inc.'s common
stock were issued as partial or full payment of monies due in lieu of cash
compensation during 2000 for work performed in 2000.


Item 11. Security Ownership of Certain Beneficial Owners and Management:

A.       Security Ownership of Certain Beneficial Owners

      Name                       Shares                 Percentage
      ----                       ------                 ----------
Giuseppe Cala                  24,052.319                 49.38%
2 First Street 325
San Jose, Ca. 95113


B.       Security Ownership of Management


                           Name of        Beneficially Owned   Numbers of Shares
  Title of Class       Beneficial Owner    as of 12/31/2000         Per Class
  --------------       ----------------    ----------------         ---------
 Cala Corporation       Giuseppe Cala         24,052.319               Common
   Common Stock
  Par Value $.005         Stephen Ko              24,000               Common


(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 on the shares of Cala Corporation Common
           Stock outstanding as reflected on the Company's books as of
           12/31/2000 and is calculated without regard to the Cala Corporation
           common shares issuable upon exercise of outstanding warrants or any
           stock options, if any or upon conversion of the Company's convertible
           securities except that any shares a person is deemed to own by having
           the right to acquire by exercise of a warrant of option or the
           conversion of a convertible security are considered to be outstanding
           solely for the purposes of calculating such person's percentage of
           ownership.

(3)        Mr. Cala beneficially owns 24,052.319 shares of Cala Corporation
           common stock. Such amount excludes (a) 308,855 shares held by Sandra
           Olga Acevedo (b) shares held by the Alexis Cala Trust for which
           Sandra Acevedo is Trustee (c) 160,000 shares held by the Filippo Cala
           Trust for which Sandra Acevedo is Trustee.

(4)        Mr. Ko beneficially owns 24,000 shares.

           The following table sets forth the Cala Corporation common stock
ownership of all directors and officers as a group as of December 31, 2000:

                               Number of Shares                 Percent of
     Name                    Beneficially Owned (1)                Class
     ----                    ----------------------                -----
     Giuseppe Cala                24,052.319                       49.38%

     Stephen Ko                       24,000                        0.5%


Item 12. Certain Relationships and Related Transactions:

(A)        During fiscal year 1999 Cala Corporation purchased assignment of a
           ten year lease agreements owned by Cala Hotels, Inc. from Mr. Cala at
           a price of $6.0 million which was paid as 10,000,000 shares up front
           and 20,000,000 million shares to be issued as the Undersea Resorts
           open.

(B)        In September, 2000 Mr. Cala returned 5.6 million shares of Cala
           Corporation shares which had been previously issued to himself and
           Mr. Gary Modafferi in exchange for their interest in the Cascina
           Restaurant in San Francisco, Ca. which was cancelled.

(C)        In March, 2000. Antonio Cala was issued 1,082.423 shares of
           restricted Cala Corporation common stock in exchange for his services
           in opening the Cala Corporation office in Milan, Italy and for his
           assistance in securing both the European acquisitions and the design
           concept work for the L'Italiano Restaurant & Bakery the company is
           considering building in the USA Company.



Item 13. Exhibits and Reports:

          Audited financial statements for the company follow.



Signatures:

          Pursuant to 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
it's behalf by the undersigned, thereunto duly authorized.

                   Cala Corporation


                   By: /s/ Giuseppe Cala
                   ---------------------
                           Giuseppe Cala, Chairman, President, CEO

 Dated April 21, 2000


          Pursuant to the requirements of the Securities 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 April 21, 2000.


                  /s/ Giuseppe Cala
                  -----------------
                      Giuseppe Cala, Chairman, CEO, Director

                 /s/ Stephen Ko
                 --------------
                     Stephen Ko, Director





<PAGE>










                          INDEX TO FINANCIAL STATEMENTS


     Independent Auditor's Report.......................................  F-1
     Balance Sheet......................................................  F-2
     Statement of Income................................................  F-3
     Statement of Cash Flow.............................................  F-4
     Statement of Stockholders Equity...................................  F-5
     Notes to Financial Statements......................................  F-6-8











<PAGE>



                                Rogelio G. Castro
                           Certified Public Accountant
                               463 W. Fifth Street
                            Oxnard, California 93030
                                 (805) 486-5630





To the Board of Directors
CALA Corporation
San Jose, California



                          Independent Auditor's Report


We have audited the accompanying balance sheets of CALA CORPORATION as of
December 31, 2000 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 CALA CORPORATION as of December
31, 2000 and the results of its operation and it cash flows for the year then
ended in conformity with generally accepted accounting principles.


Rogelio G. Castro, CPA
April 23, 2001














                                       F-1
<PAGE>


                                CALA CORPORATION
                                  Balance Sheet
                                December 31, 2000

                                     ASSETS


CURRENT ASSETS
     Cash and cash equivalents                                       $    1,148
     Notes receivable                                                    82,000
                                                                     ----------
        Total Current Assets                                             83,148
                                                                     ----------
OTHER ASSETS
     Lease assignment, net                                              872,330
     Deposits                                                             6,622
                                                                     ----------
        Total Other Assets                                              878,952
                                                                     ----------
          Total Assets                                               $  962,100
                                                                     ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                $  165,633
     Accrued expenses                                                     5,625
     Notes payable and contracts payable                                288,499
                                                                    -----------
         Total current liabilities                                      459,757


STOCKHOLDERS' EQUITY
     Series AA 6 % cumulative convertible
     preferred stock, par value $0.01
       10,000 shares authorized,
       1,485 shares issued and outstanding                              138,500
     Common Stock - par value $.005, 50,000,000
       shares authorized, 48,702,262 shares
       issued and outstanding                                           243,512
     Additional paid-in capital                                       8,688,903
     Retained Earnings (deficit)                                     (8,567,370)
         Less:  Treasury stock -  at cost                            (    1,202)
                                                                    -----------
         Total Stockholders' Equity                                     502,343
                                                                    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $   962,100
                                                                    ===========










           See accountants' report and notes to financial statements.



                                       F-2
<PAGE>


                                CALA CORPORATION
                             Statement of Operations
                      For the Year Ended December 31, 2000



Sales                                                            $         -

Cost of Sales                                                              -
                                                                  -----------

Gross Profit                                                               -

Operating Expenses                                                  1,297,883
                                                                  -----------
Net loss from continuing operation                                 (1,297,883)
                                                                  -----------

Discontinues operation:
   Income from operations of
      discontinued segments                                           482,305
   Loss on disposal of discontinued
      segments                                                      (  27,408)
                                                                   ----------
Net loss                                                          $(  842,986)
                                                                   ===========

Loss per share                                                      $   (0.02)
                                                                    ===========

Fully Diluted Loss Per Share                                        $   (0.02)
                                                                    ===========

Weigthed average shares outstanding                                  43,559,691
                                                                    ===========






           See accountants' report and notes to financial statements.


                                       F-3
<PAGE>



                                CALA CORPORATION
                             Statement of Cash Flows
                      For the Year Ended December 31, 2000

Cash flows from operating activities                                $(  842,986)
     Net loss

Adjustments to reconcile net income to net cash Provided by operating
    activities:
         Depreciation and amortization                                  169,851
         Stocks issued for services                                     417,983

Changes in assets and liabilities (Increase) decrease in:
         Inventory                                                       16,069
         Notes receivable                                               (82,000)
         Deposits and Organizational Costs                               20,800
     Increase (decrease) in
         Accounts Payable                                                83,400
         Accrued expenses                                              (263,017)

-----------
         Net cash provided operating activities                         479,900
                                                                    -----------

Cash flows from investing activities
     Disposal of property and equipment                                  37,619


-----------
         Net cash provided by investing activities                       37,619
                                                                    -----------
Cash flows from financing activities
     Repayment of debts                                               (319,348)
     Issuance of stock                                                 666,078
                                                                    ----------
         Net cash used financing activities                           (346,730)
                                                                    -----------

Net decrease in cash and cash equivalents                              (95,551)

Cash and cash equivalents at beginning of period                        96,699
                                                                    -----------

Cash and cash equivalents at end of period                          $    1,148
                                                                    ===========

Supplemental cash flow information:
Cash paid during the year for interest                              $  108,883
                                                                    ===========






           See accountants' report and notes to financial statements.

                                       F-4
<PAGE>

                                                   CALA CORPORATION
                                          Statement of Stockholders' Equity
                                        For the Year Ended December 31, 2000



<TABLE>
<S>                            <C>          <C>          <C>           <C>           <C>             <C>             <C>

                                Series A      Series AA            Common Stock                          Retained
                               Preferred      Preferred     ------------------------      Paid-in        Earnings       Treasury
                                 Stock           Stock        Shares         Amount       Capital        (Deficit)        Stock
                               ---------     ----------    ----------     ----------     -------        ---------       ---------
--------

Beginning balance - 1/01/00     $ 2,500      $     149     24,662,156   $    123,311   $  7,446,903    ($ 7,724,384)   ($  1,202)

Stocks issued for cash                                      2,319,910         11,600        654,478

Stocks issued for services                                  9,891,351         49,282        368,526

Stocks issued for debt                                     11,828,845         59,144        218,996

Preferred stocks retired         (2,500)

Preferred stocks issued for debt               138,351

Net loss - 12/31/2000                                                                                      (722,186)
                                 -------      --------     ----------        --------      ---------    ------------    ----------
Balance at 12/31/00             $     -      $ 138,500     48,702,262       $ 243,512     $8,688,903    $(8,867,370)    $(  1,202)
                                 =======      ========     ==========        ========      =========     ===========     =========


</TABLE>






See accountants' report and notes to financial statements.

                                       F-5
<PAGE>


                                CALA CORPORATION
                          Notes To Financial Statements
                                December 31, 2000



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. On November 21, 1999, the Company changed its name to Cala Corporation.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.       Basis - The Company uses the accrual method of accounting.

B.       Cash and cash equivalents - The Company considers all short term,
         highly liquid investments that are readily convertible within three
         months to known amounts as cash equivalents. Currently, it has no cash
         equivalents.

C.       Loss per share - Net loss per share is provided in accordance with
         Statement of Financial Accounting Standards No. 128 "Earnings Per
         Share". Basic loss per share reflects the amount of losses for the
         period available to each share of common stock outstanding during the
         reporting period, while giving effect to all dilutive potential common
         shares that were outstanding during the period, such as stock options
         and convertible securities. As of December 31, 2000, the Company had no
         issuable shares qualified as dilutive to be included in the earnings
         per share calculations.

D.       Estimates - The preparation of the financial statements in conformity
         with generally accepted accounting principles requires management to
         make estimates and assumptions that affect the amounts reported in the
         financial statement and accompanying notes. Actual results could differ
         from those estimates.


E.      Policy in Regards to Issuance of Common Stock in a Non-Cash Transaction:

          The  company's  accounting  policy  for  issuing  shares in a non-cash
          transaction  is to issue the  equivalent  amount of stock equal to the
          fair market value of the assets or services received.


NOTE 2 - RELATED PARTY TRANSACTIONS

Common stocks were issued an officer of the Company in exchanged for services.
The stocks issued were recorded using the fair market value of the services
provided.


NOTE 3 - 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
amounts of working capital in its operations. Further, at December 31, 2000
current liabilities exceed current assets by $ 346,609.




                                       F-6
<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 4 - DISCONTINUED OPERATIONS

During the fourth quarter of fiscal 2000, the Company disposed all its
subsidiaries Summarized results of this business are shown separately as
Discontinued Operations. Combined operating results of these businesses are as
follows:

       Net Sales                $1,592,649
       Net Earnings             $  482,305
       Loss on disposal         $(  27,408)



NOTE 5 - NOTES PAYABLE AND LONG-TERM DEBT

Notes payable consist of the following:

          Payable to various individuals, 12% interest,
          Unsecured, due various maturity dates                  $   288,499
                                                                 ===========

NOTE 6 - INCOME TAXES

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 carryforward of approximately
$8,000,000, which will expire between the years 2001 and 2007. 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.




                                  F-7
<PAGE>


NOTE 7 - LEASE COMMITMENTS

The Company leases office space for $938 per month under a lease expiring
December, 2002. Future minimum lease payments as of December 31, 2000 were
$32,830.

The Company acquired assignment of a ten year lease on a restaurant location in
San Francisco, California from Cala Hotels, Inc., a related party. Such
assignment was valued at $1,000,000, substantially less than the market value of
5,600,000 shares of the Company's stock exchanged for the assignment. The
assignment is being amortized over its ten year life.



NOTE 8 - CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED
            STOCK SERIES AA

The Company has outstanding 1485 shares of Series AA 6% cumulative convertible
redeemable preferred stock, par value $.01, 10,000 shares authorized. Each share
of Series AA preferred stock converts to 200 shares of common stock. Total
dilutive value of 2,000,000 shares.


NOTE 9 - CONTINGENCIES

Litigation

The Company has no material litigation as of December 31, 2000.









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