<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      -------------------------------------

                                   FORM 10-QSB


     (X)  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

          For the quarterly period ended June 30, 1999
                                        --------------

                                       or

     ( )  Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1939

          For the transition period from              to
                                         -------------  -------------

Commission File Number: 1-13984
                        -------

                             CREATIVE BAKERIES, INC.
        (Exact name of small business issuer as specified in its charter)

<TABLE>
<S>                                             <C>                            <C>
          New York                              22-3576940
-------------------------------            ---------------------
(State or other jurisdiction of            (I.R.S. Employer
incorporation or organization)             Identification Number)


                                    20 Passaic Avenue, Fairfield, NJ  07004
                                    ---------------------------------------
                                    (Address of principal executive offices)


Issuer's telephone number, including area code:                                (973) 808-9292
                                                                                -------------
Former name:  William Greenberg Jr. Desserts and Cafes, Inc.
</TABLE>


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                                                   Yes X   No
                                                      ---    ---


Indicate the number of Shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
      Class                                        Outstanding at June 30, 1999
---------------------                              ----------------------------
<S>                                                          <C>
Common Stock, par value $0.001
per share                                                    5,120,750
</TABLE>




<PAGE>



                                      INDEX

<TABLE>
<S>                         <C>                                                       <C>
Part I.  Financial information

              Item 1.       Condensed consolidated financial statements:

                            Balance sheet as of June 30, 1999                            F-2

                            Statement of operations for the six and three
                            months ended June 30, 1999 and 1998                          F-3

                            Statement of cash flows for the six months
                            ended June 30, 1999 and 1998                                 F-4

                            Notes to condensed consolidated financial
                            statements                                               F-5 - F-13

              Item 2.       Management's discussion and analysis of
                            financial condition

              Item 3.       Legal proceedings


Part II.  Other information


Signatures
</TABLE>




<PAGE>


                           CREATIVE BAKERIES, INC. AND SUBSIDIARIES

                       CONDENSED CONSOLIDATED BALANCE SHEET - JUNE 30, 1999
                                          (Unaudited)


<TABLE>
<CAPTION>
                                                       ASSETS
<S>                                              <C>                               <C>
Current assets:
  Cash and cash equivalents                                                        $   209,352
  Accounts receivable, less allowance for doubtful
   accounts of $16,000                                                                 395,748
  Loans receivable                                                                      22,595
  Inventories                                                                          180,277
  Prepaid expenses and other current assets                                             42,412
                                                                                   -----------
    Total current assets                                                               850,384
                                                                                   -----------

Property and equipment, net                                                            680,398
                                                                                   -----------
Other assets:
  Goodwill, net of amortization                                                        930,397
  Security deposits                                                                      5,464
                                                                                   -----------
                                                                                       935,861
                                                                                   -----------
                                                                                   $ 2,466,643
                                                                                   ===========

                                        LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
  Note payable                                                                     $    18,572
  Notes payable, bank                                                                  145,241
  Loans payable, other                                                                  29,042
  Accounts payable                                                                     532,333
  Payroll taxes payable                                                                 74,082
  Accrued expenses                                                                     250,864
                                                                                   -----------
    Total current liabilities                                                        1,050,134
                                                                                   -----------
Other liabilities:
  Deferred rent                                                                        144,491
  Net liabilities of discontinued operations less
   assets to be disposed of                                                            527,380
                                                                                   -----------
                                                                                       671,871
                                                                                   -----------
Stockholders' equity:
  Preferred stock, $.001 par value, authorized 2,000,000
   shares; none issued
  Common stock, $.001 par value, authorized 10,000,000
   shares, issued 5,305,250 shares                                                       5,305
  Additional paid in capital                                                        11,505,697
   Deficit                                                                         (10,518,995)
                                                                                   -----------
                                                                                       992,007
  Common stock held in treasury, 184,500 shares                                       (247,369)
                                                                                   -----------
                                                                                       744,638
                                                                                   -----------
                                                                                   $ 2,466,643
                                                                                   ===========
</TABLE>

            See notes to condensed consolidated financial statements.

                                                                             F-2



<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                SIX AND THREE MONTHS ENDED JUNE 30, 1999 AND 1998
                                   (Unaudited)




<TABLE>
<CAPTION>
                                                     Six Months                          Three Months
                                                    Ended June 30,                       Ended June 30,
                                            ------------------------------       -----------------------------
                                                                    1998                               1998
                                                1999              Restated           1999            Restated
                                            -----------        -----------       -----------      ------------
<S>                                          <C>                <C>               <C>              <C>
Net sales                                    $2,036,252         $1,959,341        $1,128,817       $  955,580

Cost of sales                                 1,611,200          1,646,774           892,486          795,390
                                            -----------         ----------       -----------       ----------
Gross profit                                    425,052            312,567           236,331          160,190

Selling, general and administrative
 expenses                                       529,842            614,680           232,736          256,616
                                            -----------         ----------       -----------       ----------
Income (loss) from continuing
 operations                                   (104,790)          (302,113)             3,595          (96,426)
                                            -----------         ----------       -----------       ----------

Other income (expenses):
  Sale of marketable securities                  3,216
  Miscellaneous income                           42,345             34,180             6,213           34,180
  Interest income                                 4,248              6,961             2,171            2,823
  Interest expense                               (5,629)           (18,829)           (3,422)          (5,851)
                                            -----------         ----------       -----------       ----------
                                                 44,180             22,312             4,962           31,152
                                            -----------         ----------       -----------       ----------

Income (loss) from continuing
 operations                                     (60,610)          (279,801)            8,557          (65,274)

Discontinued operations:
  Income (loss) from operations of
   New York facility to be disposed of           23,815           (282,211)           53,537          (69,492)
                                            -----------         ----------       -----------       ----------

Net income (loss)                              ($36,795)         ($562,012)          $62,094        ($134,766)
                                            ===========         ==========       ===========       ==========

Earnings per common share:
  Primary and fully diluted:
    Income (loss) on continuing
     operations                                 ($0.01)            ($0.05)            $0.00            ($0.01)
    Income (loss) from discontinued
     operations                                  $0.00              (0.05)             0.01             (0.01)
                                            -----------         ----------       -----------       ----------

Net income (loss) per common share              ($0.01)            ($0.10)            $0.01            ($0.02)
                                            ===========         ==========       ===========       ==========

Weighted average number of common
 shares  outstanding                         5,241,360          5,173,352         5,304,508         5,184,826
                                            ===========         ==========       ===========       ==========
</TABLE>


            See notes to condensed consolidated financial statements.
                                                                             F-3



<PAGE>



                                   CREATIVE BAKERIES, INC. AND SUBSIDIARIES

                                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                    SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                                        1998
                                                                          1999        Restated
                                                                       ----------    ------------
<S>                                                                    <C>            <C>
Operating activities:
  Loss from continuing operations                                       ($60,610)     ($279,801)
  Adjustments to reconcile income from
   continuing operations to cash provided from
   continuing operations:
     Depreciation                                                         58,045         87,321
     Amortization                                                         40,456         40,456
     Compensatory element of issuance of warrants                                         1,023
     Gain on sale of marketable securities                                 3,216
   Changes in other operating assets and liabilities
    from continuing operations:
     Accounts receivable                                                (133,272)        73,741
     Inventory                                                            55,315         89,236
     Prepaid expenses and other current assets                             6,810        (98,038)
     Security deposits                                                                   17,871
     Accounts payable                                                      8,760         14,273
     Accrued expenses and other current liabilities                       77,229        (84,027)
     Deferred rent                                                        (6,847)       (18,519)
                                                                        --------       --------

     Net cash provided by (used in) operating
      activities                                                          49,102       (156,464)
     Net cash used in discontinued operations                           (125,686)       (49,797)
                                                                        --------       --------

     Net cash used in operating activities                               (76,584)      (206,261)
                                                                        --------       --------

Investing activities:
  Proceeds from sale of marketable securities                              4,533
  Purchase of property and equipment                                     (16,229)       (10,598)
                                                                        --------       --------

     Net cash used in investing activities                               (11,696)       (10,598)
                                                                        --------       --------

Financing activities:
  Proceeds from issuance of common stock and
   warrants                                                              187,500        112,000
  Payment of debt                                                        (19,494)       (64,059)
                                                                        --------       --------

     Net cash provided by financing activities                           168,006         47,941
                                                                        --------       --------

Net increase (decrease) in cash and cash
 equivalents                                                              79,726       (168,918)

Cash and cash equivalents, beginning of period                           129,626        479,312
                                                                        --------       --------

Cash and cash equivalents, end of period                                $209,352       $310,394
                                                                        ========       ========

Supplemental disclosures:
  Cash paid during the period:
    Interest paid during the period
      Continuing operations                                             $  5,629       $ 18,348
                                                                        ========       ========
      Discontinued operations                                           $      0       $      0
                                                                        ========       ========
</TABLE>


            See notes to condensed consolidated financial statements.
                                                                             F-4



<PAGE>


                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.  The accompanying unaudited financial statements have been prepared in
     accordance with generally accepted accounting principles for interim
     financial information and with the instructions to Form 10-QSB.
     Accordingly, they do not include all of the information and footnotes
     required by generally accepted accounting principles for complete financial
     statements. In the opinion of management, all adjustments considered
     necessary for a fair presentation have been included. The results of
     operations for the six months ended is not necessarily indicative of the
     results to be expected for the full year. For further information, refer to
     the consolidated financial statements and footnotes thereto included in the
     Company's annual report for the year ended December 31, 1998 included in
     its Annual Report filed on Form 10-KSB.


2.  Organization of the Company:

    On January 23, 1997, the Company purchased 100% of the outstanding common
     stock of J.M. Specialties, Inc. ("JMS") in a transaction to be accounted
     for as a purchase (the "Acquisition"). The purchase price of $2,160,000
     consisted of (i) $900,000 in cash, (ii) 500,000 shares of the Company's
     common stock valued at fair market value of $1.75 per share (aggregating
     $875,000), and (iii) 350,000 purchase warrants valued at fair value of
     $1.10 per warrant (aggregating $385,000) to acquire 350,000 shares of the
     Company's common stock at $2.50 per share. The warrants are in the same
     form as those described below.

    JMS, which was founded in 1984, offers a line of both batter and frozen
     finished cakes, brownies and muffins - with muffins constituting
     approximately 90% of sales. These products are produced in batches using
     partially automated equipment at its facility in Parsippany, New Jersey.
     The product is sold to wholesale customers as well as supermarket
     distribution centers and is marketed primarily through food distribution
     companies in New Jersey and New York. In turn, according to JMS's
     management, the distributor sells approximately forty percent of the
     product to supermarkets and sixty percent to food service customers, such
     as hospitals, colleges, restaurants and corporate dining rooms.

    On September 1, 1997, the Company acquired 100% of the outstanding common
     shares of Chatterly Elegant Desserts, Inc. (Chatterly) in a transaction to
     be accounted for as a pooling of interest. The Company issued 1,300,000 of
     its common shares pursuant to the acquisition, of which 200,000 shares were
     returned to the Company on March 10, 1998 when the seller's sales agreement
     was amended.

    Chatterly, which was founded in 1985, produces a line of cakes, tortes and
     other dessert items which are made in its facility in Fairfield, New
     Jersey. The products are sold to wholesale  customers as well as
     supermarkets and other food distributors in New Jersey and New York.


                                                                             F-5



<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



3.   Summary of significant accounting policies:

     Principles of consolidation:

    The consolidated financial statements of Creative Bakeries, Inc. and
     subsidiaries  include the accounts of all significant  wholly owned
     subsidiaries,  after  elimination  of  all  significant  intercompany
     transactions and accounts. Financial statements have been restated as of
     June 30, 1998 to reflect the discontinuation of the operations of WGJ
     Desserts, Inc. (see Note 15)

    Cash and cash equivalents:
     Cash and cash equivalents include all highly liquid investments with an
      original maturity of three months or less.

    Inventories:
     Inventories are stated at the lower of cost or market. Market is
      considered at net realizable value.

    Per share amounts:
     Net earnings per share are calculated by dividing net earnings by the
      weighted average shares of common stock of the Company and weighted
      average of common stock equivalents outstanding for the period. Common
      stock equivalents represent the dilutive effect of the assumed
      exercise of certain outstanding stock options. The Company uses the
      treasury stock method in its treatment of stock options.

    Property and equipment:
     Property and equipment are stated at cost. Depreciation of property and
      equipment is provided using the straight-line method over the following
      useful lives.

<TABLE>
<CAPTION>
                                                          Years
                                                          -----
                 <S>                                      <C>
                  Manufacturing                            5-20
                  Furniture and fixtures                   7-20
                  Other equipment                          5-14
                  Buildings and improvements              10-50
                  Automotive equipment                      5
</TABLE>


    Expenditures for major renewals and betterment that extend the useful lives
     of property and equipment are capitalized. Expenditures for maintenance and
     repairs are charged to expense as incurred.

    Income taxes:
     The Company has elected to file a consolidated corporate income tax
      return with its subsidiaries. For tax reporting purposes, the Company
      uses certain  accelerated  depreciation  methods  which may create
      timing differences between book and tax income. Deferred income taxes
      will be reflected for these timing differences.

                                                                             F-6




<PAGE>


                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



3.   Summary of significant accounting policies (continued):

     Deferred taxation:
      Provision is made by the liability method for taxation deferred in
       respect of all timing differences. Deferred tax benefit is recognized
       only when there is reasonable assurance of realization.

     Allowance for doubtful accounts:
      An allowance for doubtful accounts has been established based on
        management's review of the outstanding accounts receivable balance and
        their determination of possible uncollectible accounts.

     Use of estimates:
      The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make assumptions
       that affect the reported amounts of assets and liabilities and
       disclosure of contingent assets and liabilities at the date of the
       financial statements and the reported amounts of revenues and expenses
       during the reporting period. Actual results could differ from those
       estimates.


4.   Inventories:

     Inventories consist of the following:

<TABLE>
                        <S>                                                  <C>
                        Raw materials                                        $ 65,765
                        Finished goods                                         49,360
                        Packaging supplies,
                         labels, etc.                                          65,152
                                                                             --------
                                                                             $180,277
                                                                             ========
</TABLE>


5.   Note receivable:

     On November 3, 1998, the Company sold its one remaining retail facility for
      $405,000 which represented disposition of equipment and a license to
      sell under the "William Greenberg, Jr. Desserts and Cafes" name. The
      agreement called for a cash down payment of $110,000 with the remainder
      being paid on a note receivable due in semi-annual installments of
      $36,875 plus interest at prime.

     The maturities of the notes are as follows:

<TABLE>
                        <S>                                                 <C>
                        June 30, 2000                                        $ 73,750
                        June 30, 2001                                          73,750
                        June 30, 2002                                          73,750
                        June 30, 2003                                          36,875
                                                                             --------
                                                                             $258,125
                                                                             ========
</TABLE>

                                                                             F-7



<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5.   Note receivable (continued):

     In the event that the licensee opens and operates any additional retail
      store(s) utilizing the license (other than the original retail store) and
      the annual gross retail sales of any such store(s) exceeds $400,000, then
      the licensee shall pay the licensor (the Company) a five percent royalty
      on all sales in excess of the $400,000 of sales in each store. The
      licensee shall pay the licensor a royalty on a semi-annual basis of 3% of
      all mail order sales in excess of $100,000.


6.   Property and equipment:

     The following is a summary of property and equipment at June 30, 1999:

<TABLE>
                    <S>                                       <C>
                    Baking equipment                          $1,443,028
                    Furniture and fixtures                        78,864
                    Leasehold improvements                       180,422
                                                              ----------
                                                               1,702,314
                    Less:  Accumulated depreciation
                            and amortization                   1,021,916
                                                              ----------
                                                              $  680,398
                                                              ==========
</TABLE>


7.   Intangible assets:

     The excess cost over the fair value of the net assets acquired from J.M.
      Specialties, Inc. aggregated $1,213,565. This goodwill has been
      amortized  over its  estimated  useful life of fifteen  years.
      Amortization charged to operations amounted to $40,456 in 1999 and
      1998.



8.   Deferred rent:

     The accompanying financial statements reflect rent expense on a straight-
      line basis over the life of the lease. Rent expense charged to
      operations differs with the cash payments required under the terms of
      the real property operating leases because of scheduled rent payment
      increases throughout the term of the leases. The deferred rent
      liability is the result of recognizing rental expense as required by
      generally accepted accounting principles.

                                                                             F-8




<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



9.   Common stock:

     In January 1999, the Company issued 150,000 of its common stock at $1.25
      for total proceeds of $187,500.

     In January 1999, the Company issued 40,000 of its common shares in lieu
      of payment of a note amounting to $100,000 held by a former
      shareholder.

     In May 1999,  the Company  issued 13,500 of its common shares in lieu of
      payment of compensation amounting to $11,812 to a former director.



10.  Notes payable:

     Equipment with a cost of $197,000 has been pledged as collateral on a note
      payable in monthly installments of $2,909, including interest. The
      notes carry interest varying rates of 10.30% to 17.87% and mature
      between 1998 and 2000.

     The total future annual payments as of June 30, 1999 are as follows:

<TABLE>
                  <S>                                         <C>
                  June 30, 1999                              $18,572
                                                             =======
</TABLE>


11.  Commitments and contingencies:

     J.M. Specialties:

     In connection with the  Acquisition,  the Company entered into an
      employment agreement with the selling shareholder pursuant to which he
      will serve as a director and chief executive officer of the Company at an
      annual salary level of $250,000 for 1997 and a minimum of $150,000
      thereafter. In addition, the Company agreed to provide $600,000 to JMS
      for working capital.

     In order to finance the Acquisition, the Company sold in a private
      placement 1,875,500 common stock purchase warrants ("the Placement
      Warrants") at a net price to the Company (after expenses of $315,000) of
      $1,747,500. Each Placement Warrant entitles the holder thereof to
      purchase one common share, par value $.001 per share, of the common
      stock of the Company at an exercise price per share of $2.50 for a
      term which will expire on December 31, 2000.

     The Company has the right to redeem the  Placement  Warrants,  in
      installments, at a redemption price of $.10 per warrant commencing six
      months after the date of issuance if the stock trades at a designated
      level for at least five trading days prior to the month preceding the
      date on which the redemption right may be exercised.

                                                                             F-9



<PAGE>


                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


11.  Commitments and contingencies (continued):

     The holders of the Placement Warrants have a put option pursuant to
      which for a 60 day period prior to their expiration date, the holder
      has the right to require the Company to repurchase the Placement
      Warrants for a consideration consisting of $.10 per warrant plus 40% of
      a share of common stock. In addition, the Placement Warrants have
      standard anti-dilution protection.

     Under the terms of its agreement with InterEquity Capital Partners, L.P.,
      the Company reserved 185,682 shares of its common stock for issuance
      under the warrant. Management ascribed a fair value of $1.10 per common
      share.

     Chatterly Elegant Desserts, Inc.:

     In connection with the acquisition of Chatterly Elegant Desserts, Inc.,
      the Company entered into an agreement with the selling shareholder for
      a two year period commencing September 1, 1997. The agreement calls
      for an annual salary of $100,000 to be paid to such shareholder.

     Litigation matters:

     The Company and its subsidiary, WGJ Desserts, Inc., have been named as
      defendants in an action entitled Bacal v Creative Bakeries, Inc. which
      was filed in the Supreme Court of the State of New York for the County of
      New York. The complaint in the action alleges that defendants Edmund
      Abramson, currently a director of the Company and Willa Abramson,
      who resigned as a director in 1996, allegedly acting on behalf of the
      Company and Greenberg, entered into an agreement with plaintiff, Murray
      Bacal, whereby Mr. Bacal would purchase warrants for common stock of
      the Company and that the Abramson's agreed to repurchase the warrants for
      the same price at which they were originally sold to him, plus out of
      pocket expenses. As a consequence, the complaint seeks $131,500 in
      compensatory damages and $1,000,000 in punitive damages. On December 14,
      1998, the Company moved by order to show cause to dismiss the complaint in
      its entirety as against the Company based on the fact that the action
      involves a private transaction between the plaintiff and the Abramson's,
      and the complaint fails to state a cause of action against Creative
      Bakeries, Inc. After a full briefing and oral argument, the papers were
      taken by the court on submission and the Company is awaiting a ruling on
      that motion. On summary judgement, the case was dismissed against the
      company.

     The Company has also been named as a defendant in an action entitled
      Ackerman v Alan Sloan, an adversary proceeding brought in the United
      States Bankruptcy Court by the Chapter 7 trustee of Alliotto Bakery
      Cafe, Inc. The complaint alleges that the Company, while operating as
      William Greenberg, Jr. Desserts and Cafes, Inc. used customer lists and
      property of the Chapter 7 debtor for a period of several weeks sometime
      after June 1998  without  having paid fair value or consideration.
      While the Company does not believe it committed any actionable conduct,
      the Company does not believe the claim is material because it is believed
      to involve a potential exposure of only several thousand dollars. The
      Company has not yet filed a formal response to the claim.


                                     F-10



<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


     12.  Earnings per share:


<TABLE>
<CAPTION>
                                                                    1999         1998
                                                                  ---------   ---------
               <S>                                               <C>         <C>
               Weighted average of shares actually
                 outstanding                                      5,271,360   5,173,352

               Common stock purchase warrants
                                                                  ---------   ---------
               Primary and fully diluted weighted
                 average common shares outstanding                5,271,360   5,173,352
                                                                  =========   =========
</TABLE>


     The conversion of the common stock warrants was not assumed as the effect
      would be anti-dilutive.



13.  Supplemental schedule of non-cash investing and financing activities:


<TABLE>
<CAPTION>
                                                                    1999       1998
                                                                  --------    ------
               <S>                                               <C>          <C>
               Common shares issued in consideration
                 of legal, consulting fees and other
                 obligations                                      $111,812
                                                                  --------    --------
                                                                  $111,812    $      0
                                                                  ========    ========
</TABLE>


14.  Discontinued operations:

     In 1998, the Company adopted a formal plan to close WGJ Desserts and
      Cafes, Inc., its New York manufacturing facility, which was done in
      July of 1998 and to dispose of its one remaining retail store, which was
      accomplished in November 1998. The New Jersey facility was
      unaffected and still continues to sell and manufacture.

     The sale of the final retail location resulted in a selling price of
      $405,000 which includes a note receivable of $295,000. The sale
      resulted in a gain of $321,350.


                                                                            F-11




<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



14.  Discontinued operations (continued):

     Net liabilities, less assets to be disposed of, of WGJ Desserts, Inc.
      consisted of the following as of June 30, 1999:


<TABLE>
                    <S>                                       <C>
                    Accounts payable                    $283,713
                    Accrued payroll                      303,084
                    Accrued expenses                     249,354
                    Deferred rent                         40,954
                                                        --------
                                                         877,105
                                                        --------

                    Notes receivable                     260,125
                    Interest receivable                    5,102
                    Property and equipment                35,000
                    Covenant not to compete               25,000
                    Security deposits                     24,498
                                                        --------
                                                         349,725
                                                        --------

                                                        $527,380
                                                        ========
</TABLE>


     Information relating to discontinued operations for WGJ Desserts and Cafes,
      Inc. for the six months ended June 30, 1999 and 1998 is as follows:


<TABLE>
<CAPTION>
                                                             1999                   1998
                                                           --------               --------
              <S>                                          <C>                    <C>
              Net sales                                                           $705,410

              Cost of sales                                                        367,979
                                                                                  --------
              Gross profit                                                         337,431

              Operating expenses                            $66,181                476,465
                                                            -------               --------
              Loss from operations                          (66,181)              (139,034)

              Loss on abandonment of leasehold
               improvements                                                        143,177

              Settlement income                              79,065

              Interest income                                10,931
                                                            -------                --------
              Net income (loss) from discontinued
               operations                                   $23,815               ($282,211)
                                                            =======                ========
</TABLE>


                                                                            F-12



<PAGE>



                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



15.  Other matters:

     The year 2000 issue relates to the inability of many electronic data
      processing (EDP) systems to accurately process year-date data beyond the
      year 1999. Unless year 2000 problems are remedied, significant
      problems relating to the integrity of all electronically processed
      information based on time will occur.

     Additionally, there are many other operational issues that need to be
      assessed, such as computer-run maintenance systems, as well as systems
      that may be indirectly controlled by computer by way of a chip
      embedded in their designs.

     The effect, if any, at this time about the problems that could occur and
      the costs to remedy can not be determined.


                                                                            F-13






<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Plan of
Operation

General:

Our plan for restructuring the company is well under way. The commissary along
with unprofitable retail stores have been closed. In November 1998 the Company
sold its remaining retail store on Madison Ave., thus completing its
exit from direct involvement in retailing.

The buyer purchased:
1. The Madison Avenue Store
2. The license to open additional stores from which the Company stands to earn
   royalty and
3. A 50% stake in the wholesale and mail order business.

Plans call for leveraging the William Greenberg brand through licensing
agreements and expanding the Batter Bake-Chatterley wholesale business by
penetrating new areas and introducing new products.

At June 30, 1999 to the extent the Company may have taxable income in future
periods, there is available a net operating loss for federal income tax purposes
of approximately $7,100,000 which can be used to reduce the tax on income up to
that amount through the year 2011.

b. Results of Operations (continuing) for three months ending June 30, 1999 vs.
three months ended June 30, 1998:

The Company's consolidated revenues aggregated $1,128,817 in the 2nd quarter
1999 vs. $955,580 in the second quarter 1998. The cost of goods sold was
$892,486 vs. $795,390. Operating expenses were $232,736 vs. $256,616. As a
result, the gain from operations for the 2nd quarter 1999 was $3,595 vs. a loss
in the 2nd quarter of 1998 of $96,426. The turnaround from net operating loss to
net operating gain was due to better margins and lower operating expenses.

The net interest expense for the 2nd quarter was $3,422. The resulting net gain
aggregated $62,094 for 2nd quarter 1999 or $.01 per share vs. a net loss of
$65,274 for the 2nd quarter 1998 or ($.01) per share.

Net income from discontinued operations was 53,537 for 2nd quarter 1999 or $0.01
per share vs. net loss of 69,492 for 2nd quarter 1998 or ($0.01) per share.

Batter Bake-Chatterley Inc., (the BBC subsidiary) offers a line of batter and
frozen finished cakes, muffins, tart shells and other desserts. BBC's financial
records and affairs









<PAGE>


are kept separate from the parent but included in the consolidated financial
statements at June 30, 1999 and 1998.



c. Plan of Operation

Exit from Retail Operations:

After analyzing the Company's retail operations, management concluded that the
unprofitable retail division was diverting its attention away from pursuing
profitable opportunities in the Company's other division. Therefore, by December
31, 1997, the company closed down four of its six stores. A fifth store, in
Macy's cellar was taken over by Ferrara Bakery from April 1, 1998. The
commissary was closed down on June 30, 1998 and the last remaining store on
Madison Avenue was sold in November 1998.

The Company retains a 50% stake in the Wholesale and Mail Order business, which
it will develop jointly with the new owners.

Under the licensing agreement, a second Greenberg retail store is scheduled to
open in August 1999.

The company will earn royalties on sales exceeding $400,000 in any new store.

The company has also signed a licensing agreement with Stone American Marketing
and meetings were held to explore licensing the William Greenberg name with a
major department store chain. This arrangement allows us to increase revenue and
profits without incurring the expenses normally associated with opening and
operating stores.

In connection with the restructuring plan, management has written down property
& equipment as of June 30, 1999 to approximately $35,000. The Company had
charged 1996 with a $450,000 provision for actions aimed at restructuring the
Company, of which $369,459 was actually incurred as of June 30, 1999. This
charge mainly comprises write down of leasehold improvements on stores that have
been closed down, provisions for lease obligations on certain retail stores, and
charges for consultants involved in the restructuring. By taking the above
actions, future periods will not be burdened with the amortization, depreciation
or expense of these costs.

We have turned the corner in the current quarter. The new management's
strategies have not only stemmed the losses but have finally steered the company
into a profitable mode.

Wholesale Operations:






<PAGE>


The next phase in the company's plan of action is to build up the wholesale end
of its business with fewer, newer and more profitable products. This process
includes the following:

Calling on supermarket headquarters and chain restaurant accounts. Brokers have
been appointed and sales calls and visits are being made.

Continue to expand the fat free and sugar free product line targeting existing
as well as new customers; and

Enter into co-packing arrangements whereby the company would introduce private
label products of other bakery operations.


Liquidity and Capital Resources:

Since its inception the Company's only source of working capital has been the
$8,642,500 received from the issuance of its securities.

In June 1995, The Company issued 180,000 shares of common stock to unrelated
parties for $600,000 and in August 1995, the Company issued 60,000 shares of its
common stock to unrelated parties for $200,000. In connection with the
acquisition of Greenberg's L.P., the Company received $2,000,000 from the sale
of two notes to InterEquity Capital Partners, L.P. ("InterEquity"). During
October 1995, the Company received net proceeds of $4,900,000 from the sale of
1,150,000 shares of its common stock in an initial public offering. During
January 1997 the Company received net proceeds of $1,747,500 from the private
placement of 1,875,500 common stock purchase warrants at $1.10 per warrant.
During October 1997 the Company received net proceeds of $883,000 from the
exercise of a portion of these common stock warrants. During January 1999, the
Company received a further $187,500 from the exercise of another 150,000 of
these warrants. Of the $5,700,000 proceeds from the aforementioned stock sales:
(i) $2,125,000 was issued to repay the InterEquity debt including interest; (ii)
$2,615,000 was used in operations; (iii) $765,00 was used to purchase property,
equipment and leaseholds; and (iv) $195,000 was used for general corporate
purposes. The $1,650,000 proceeds from the private placement warrants was used
to acquire JMS. Of the $1,071,000 proceeds from the exercise of warrants
$325,000 was used for consolidation and merger of JMS and Chatterley and the
balance is being used for corporate purposes and to fund new business.

As of June 30, 1999, the Company (continuing operations) has a negative working
capital of approximately $199,750 as compared to a negative working capital of
$111,015 at June 30, 1998.

 During 1997 and 1998 Management took actions aimed at restructuring the Company
in order to reduce operating costs and enhance the Company's focus and
efficiency.






<PAGE>


Pursuant to the restructuring, a new management team was put into place,
executive contracts and leases were renegotiated and certain positions were
eliminated and an exit strategy out of retailing was completed.

The Company is continuing to seek new and profitable avenues of growth during
1999. As a result of the new strategy and concentration on growing Batter
Bake-Chatterley, there has been an increase in new business. The Company has
secured approximately $1000,000 in new annualized business from a national
supermarket chain for which it started producing in June 1999. Another $800,000
in annualized business will begin for a fund raising company starting September
1999. This is a seasonal business to be delivered between September and
December.

Reception to our new mini cakes has been overwhelming. The company has already
obtained confirmed orders in excess of $250,000 for the next five weeks. Future
plans call for producing these products sugar free for people on special diets.

The Company will continue to seek out potential candidates for mergers or
acquisition that meet its specific needs.






<PAGE>


                                  SIGNATURES

    In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on August 16, 1999.


                                    CREATIVE BAKERIES, INC.

                                    By: /s/ Philip Grabow
                                        --------------------------
                                        Philip Grabow
                                        President and Chief
                                        Executive Officer


    In accordance with the Exchange Act, this report has been signed below
by the following  persons on behalf of the registrant and in the capacities
indicated on May 20, 1999.


<TABLE>
<CAPTION>

Signatures                                       Title
----------                                       -----
<S>                                              <C>
                                                 President, Chief Executive
/s/ Philip Grabow                                Officer/Director
----------------------
Philip Grabow

                                                 Chief Financial Officer
/s/ Ashwin R. Shah                               (Principal Accounting Officer)
----------------------
Ashwin R. Shah


                                                 Director
----------------------
Richard Fector


/s/ Raymond J. McKinstry                         Director
----------------------
Raymond J. McKinstry


/s/ Kenneth Sitomer                              Director
----------------------
Kenneth Sitomer


/s/ Karen Brenner                                Director
----------------------
Karen Brenner


/s/ Yona Abrahami                                Director
----------------------
Yona Abrahami

</TABLE>