U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                  For the fiscal year ended: December 31, 2003

                         Commission File Number: 0-13984

                             CREATIVE BAKERIES, INC.
                  --------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

               New York                                 13-3832215
   -------------------------------          ------------------------------------
   (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
    Incorporation or Organization)

    20 Passaic Avenue, Fairfield, NJ                      07004
----------------------------------------                ----------
(Address of Principal Executive Offices)                (Zip Code)

                    Issuer's telephone number: (973) 808-8248

         Securities registered under Section 12(b) of the Exchange Act:

                                                  Name of Each Exchange
            Title of Each Class                   on Which Registered
        -----------------------------             ---------------------
        Common Stock, $.001 per share                     OTCBB

      Securities registered under Section 12 (g) of the Exchange Act: None

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__

Check if there is 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  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. [ ]

Issuer's revenue for its most recent fiscal year was $3,369,742.  As of December
31, 2003 there were 5,496,750  shares of Company's Common Stock, par value $.001
per share,  outstanding.  The aggregate  market value of the voting stock of the
issuer held by non affiliates on December 31, 2003 was approximately $342,567.

       Transitional Small Business Disclosure Format (check one):Yes__  No _X_

<PAGE>

                             CREATIVE BAKERIES, INC.
                                   FORM 10-KSB
                          YEAR ENDED DECEMBER 31, 2003
                                TABLE OF CONTENTS


                                     PART I
                                                                           Page
         Item 1.  Description of Business                                   3

         Item 2.  Description of Property                                   5

         Item 3.  Legal Proceedings                                         5

         Item 4.  Submission of Matters to a vote of Security Holders       5

                                     PART II

         Item 5.  Market for Common Equity and Related Stockholder
                  Matters                                                   5

         Item 6.  Management's Discussion and Analysis of Financial
                  Condition and Plan of Operations                          5

         Item 7.  Financial Statements                                     14

         Item 8.  Changes In and Disagreements With Accountants on
                  Accounting and Financial Disclosure                      30

         Item 8A. Controls and Procedures                                  30

                                    PART III


         Item 9.  Directors and Executive Officers of the Registrant       30

         Item 10. Executive Compensation                                   32

         Item 11. Security Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder Matters               32

         Item 12. Certain Relationships and Related Transactions           33

         Item 13. Exhibits and Reports on Form 8-K                         34

         Item 14. Principal Accountant Fees and Services                   36


         SIGNATURES                                                        37




                                                                               2
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Creative Bakeries,  Inc.  ("Creative" or the "Company"),  offers a broad line of
premium quality pastries, cakes, pies, cookies and other assorted desserts which
are  produced  at its  baking  facility.  Such  baked  goods  are  marketed  and
distributed on a wholesale basis to supermarkets, restaurants, and institutional
dining facilities.

Creative was incorporated in November 1993. The Company's  executive offices are
located at 20 Passaic Avenue,  Fairfield,  NJ 07004 and its telephone  number is
(973) 808-8248.

The Company changed the name of its operating  subsidiary to Brooklyn Cheesecake
and Desserts Company in March 2002.

PRODUCTS

Baked Goods

The Brooklyn  Cheesecake and Desserts Company  Subsidiary markets a full line of
premium  quality  baked  products  such as cheese  cakes,  mousse cakes and tart
shells as well a complete  gourmet  line of muffins.  The Company  continues  to
develop new products and welcomes customer requests.

Kosher Foods

Kosher  foods  generally  are consumed by persons of the Jewish faith as well as
Muslims,  Seven Day Adventists and others who perceive kosher certification as a
seal of purity.  Kosher is a biblical term  originally used to denote that which
is "fit" and "proper".

The Company's wholly owned subsidiary  Brooklyn  Cheesecake and Desserts Company
has kosher  certification and the Company believes that it can capitalize on the
projected  growth  of  this  market.   The  Company  believes  that  its  kosher
certifications  will enable it to better  penetrate  certain  market areas.  The
Company's products are not kosher for Passover.

CUSTOMERS

The Brooklyn  Cheesecake  and  Desserts  Company  Subsidiary  sells its products
through food distributors to hotels, hospitals and institutional feeders such as
corporate  caters,  restaurants,  coffee  shops etc.  The products are also sold
retail through food distributors and direct to supermarket distribution centers.

The Company  maintained  sales from one  customer for 16% of total sales for the
year. A second customer accounted for 17%.

INGREDIENTS AND PRINCIPAL SUPPLIERS

The Company seeks to use only the highest  quality  ingredients  available.  The
Company has a policy of inspecting  all raw  ingredients  before their  intended
use.

The ingredients  used by the Company consist  primarily of flour,  eggs,  sugar,
butter  and  chocolate.  All  ingredients  used by the  Company  are  subject to
substantial price fluctuations.  The Company  historically has been able to pass
any significant  price  increases in its  ingredients  through to its customers.
However,  no  assurance  can be given that the Company  will be able to continue
this  practice  in  the  future.  Any  substantial  increase  in the  prices  of
ingredients used by the Company could, if not offset by a corresponding increase
in product  prices,  have a material  adverse effect on its business,  financial


                                                                               3
<PAGE>

condition or results of operations. The Company does not believe the loss of any
of its  suppliers  would  have a material  adverse  effect on its  business  and
believes that other suppliers could readily provide such products if necessary.

DISTRIBUTION AND MARKETING

The Brooklyn Cheesecake and Desserts Subsidiary bakes all of its products in its
27,362 square foot facility in Fairfield,  New Jersey.  Although  utilization of
the facility varies based on seasonal fluctuation, the facility operates on five
days a week  basis.  The  Company  believes  that the  Brooklyn  Cheesecake  and
Desserts  Company  Subsidiary  has the  capacity  to meet  future  requirements,
including those arising out of the consolidation with the Company.  The Brooklyn
Cheesecake  and  Desserts  Company  Subsidiary  delivers  90% of its products by
common carrier trucks to its institutional/wholesale customers. About 10% of its
customers  pick up their  orders  directly at the bakery and  utilize  their own
distribution networks.

Historically,   the  Company  has  relied  upon   word-of-mouth   and   customer
satisfaction  to market  its  products  to new  customers  and to make  existing
customers aware of new products.

COMPETITION

The baking industry is a highly competitive and highly fragmented industry.  The
Company  competes  with  national,  regional  and  local  bakeries  as  well  as
supermarket  chains that have in-store  bakeries.  Many of these competitors are
larger, more established and have greater financial and other resources than the
Company.  Competition  in both the  retail  and  institutional/wholesale  baking
industry is based on product  quality,  brand name  loyalty,  price and customer
service.

TRADEMARKS

The JMS Subsidiary has a trademark and design  registered with the United States
Patent and  Trademark  office for The Healthy  Bakery(R)  (US  Registration  No.
1,644,559).  While  the  Company  believes  that the  trademarks  are  valid and
enforceable,  there  can be no  assurance  as to the  degree of  protection  its
registered trademarks will afford the Company.

PLAN OF OPERATION

Future mergers and acquisitions:

The Company  continues to seek business in markets it does not  currently  serve
and is continuing to pursue mergers and acquisition opportunities.

GOVERNMENT REGULATION

The Company is subject to numerous state regulations relating to the preparation
and sale of food.  It is also  subject to federal and state laws  governing  the
Company's  relationship  with employees,  including  minimum wage  requirements,
overtime,  working and safety  conditions,  and  citizenship  requirements.  The
failure to obtain or retain  required food licenses or to be in compliance  with
applicable governmental  regulations,  or any increase in the minimum wage rate,
employee  benefits  costs  (including  costs  associated  with  mandated  health
insurance  coverage) or other costs  associated with employees,  could adversely
affect the  business,  results  of  operations  or  financial  condition  of the
Company.

EMPLOYEES

As of March 31, 2004, Brooklyn Cheesecake and Desserts Company had approximately
32  full-time  employees,  of  which 30 are  employed  in  production,  and 1 in
administration  and 1 in an  executive  position.  The Brooklyn  Cheesecake  and
Desserts Company  Subsidiary does not have a union and the Company believes that
the relationship with its employees is good.


                                                                               4
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

As of March 30, 2004, the Company leases in Fairfield,  New Jersey 27,362 square
feet for its baking facility and corporate headquarters. The Company has amended
its lease extending the term through August 31, 2008. The Company  believes that
its present facility is well  maintained,  in good condition and is suitable for
the  Company  to  continue  to  operate  and meet its  production  needs for the
foreseeable future.

ITEM 3. LEGAL PROCEEDING

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The  Company's  Common  Stock is quoted on the Over the Counter  Bulletin  Board
under the symbol "CBAK".  The following  table sets forth the range of quarterly
high and low bid prices, as reported during the last two fiscal years.


Period                                                     High     Low
------------------------------------------------------------------------
FISCAL YEAR 2002:
First Quarter                                              .40      .20
Second Quarter                                             .25      .09
Third Quarter                                              .07      .07
Fourth Quarter                                             .04      .04

FISCAL YEAR 2003:
First Quarter                                              .15      .04
Second Quarter                                             .12      .10
Third Quarter                                              .10      .04
Fourth Quarter                                             .12      .06

The number of  shareholders  of record of the Common Stock on March 17, 2004 was
45  excluding  2,519,578  shares of Common  Stock held by Cede & Co. The Company
believes that it has in excess of 500 shareholders.

The  Company  has never paid cash  dividends  on its  Common  Stock and does not
anticipate  paying  dividends in the foreseeable  future.  The payment of future
cash dividends by the Company on its Common Stock is subject to the terms of the
$250,000 loan obtained in October 2003, as wells as, the discretion of the Board
of  Directors  and will depend upon the  Company's  earnings  (if any),  general
financial  condition,  cash flows, capital requirements and other considerations
deemed relevant by the Board of Directors.


ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS

GENERAL - Recent Developments

In October of 2003, the Company  entered into an amendment to the building lease
at 20 Passaic  Avenue,  Fairfield,  NJ. The amended lease will save an estimated
$70,000 per annum. Additionally in October 2003, the Company obtained a $250,000
loan. These funds were used to purchase  packaging and processing  equipment and
for working capital.


                                                                               5
<PAGE>

Management  believes that the modest increase in net sales for 2003, as compared
to 2002, does not accurately reflect the marketing efforts achieved. As a result
of product  streamlining,  approximately  15% of items sold to customers in 2002
were no longer  available  in 2003.  The  estimated  $550,000 of replaced  sales
revenue were from new customers  purchasing  primarily cheesecake items. The net
effect was a slight increase in the gross profit margin.

Branding opportunities for cheesecake and other dessert items packaged under the
Brooklyn  Cheesecake & Desserts  Company label continue to be expanded.  Branded
products have been sold on television and the internet by ShopNBC. A local Pizza
Hut  franchise  group in New Jersey has featured  Brooklyn  Cheesecake  on their
dessert menu displaying the distinctive Brooklyn Cheesecake logo.

Private  label  opportunities  have also been expanded for both  cheesecake  and
individual  portioned  dessert  items.  Distribution  of cheesecake in Japan has
increased. The Company continues to explore markets for niche health food items.
This includes low carbohydrate desserts.

Management  will continue to refine  operations and reduce costs.  This includes
evaluating items carried over from past financial reports.

At December 31, 2003 to the extent the company may have taxable income in future
periods,  there is an  available  net  operating  loss for  federal  income  tax
purposes  of  approximately  $8,417,800,  which can be used to reduce the tax on
income up to that amount through the year 2021.

BUSINESS STRATEGY

The Company's business strategy is comprised of the following:

       o      Institutional/Wholesale:   The  Company   plans  to  increase  its
              penetration   in  the   institutional/wholesale   food  market  by
              expanding  its  marketing  efforts  to  restaurants,   hotels  and
              corporate  dining  facilities  and by  offering  its  products  to
              supermarkets on a national basis. The Company plans to expand both
              its product line and geographic distribution through the following
              strategies:

       o      Expand geographic  distribution by acquiring new food distributors
              in  the  Connecticut  and  Philadelphia   areas  as  well  as  key
              distributor  areas  throughout the United States.  To do this, the
              Company  intends to  appoint  food  brokers  in various  states to
              handle sales on a commission-only basis.

       o      Continue to expand the fat-free  product line  targeting  existing
              customers as well as new customers.

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

       o      Kosher  Foods.  The  Company  also is seeking to benefit  from the
              growth of the kosher food industry.  According to Prepared  Foods,
              the kosher food industry  generated  approximately  $33 billion in
              sales in 1994 and has been growing at a rate of approximately  15%
              per  annum.  The  company's   Brooklyn   Cheesecake  and  Desserts
              Subsidiary  has a kosher  certification  and the Company  believes
              that it can benefit from the projected growth of this market.

BUSINESS PHILOSOPHY

High Quality  Ingredients.  The Company believes that developing and maintaining
premium quality products is the key to its future success.  The Company uses the
highest quality ingredients in its products including,  AA creamy butter,  whole
eggs,  premium  fruits,  nuts, and chocolates  blended for the Company's  unique
recipes.  The  Company  seeks to  maintain  rigorous  standards  for  freshness,
quality, and consistency.


                                                                               6
<PAGE>

Customer  Service.  The  Company  depends  on and  enjoys a high  rate of repeat
business.  The Company believes that the quality of the relationship between its
employees and its customers is critical to its success.  The Company  strives to
hire and train well-qualified, highly motivated employees committed to providing
superior levels of customer service.

RESULTS OF OPERATIONS

The  Company's  consolidated  revenues  from  continuing  operations  aggregated
$3,369,742  and  $3,318,088  for the  years-ended  December  31,  2003  and 2002
respectively,  an increase  of  $51,654,  or 1.6%.  This is in  comparison  to a
decrease of $452,419,  or 12%, to $3,318,088 from $3,770,507 for the years-ended
December  31,  2002 and 2001  respectively.  The  increase in 2003 is due to the
increase in cheesecake  sales.  The 2002 decrease is a result of the sale of the
batter business in 2001.

The cost of goods  sold  were  $2,904,140  and  $2,893,226  for the  years-ended
December 31, 2003 and 2002  respectively,  an increase of $10,914,  or 0.4%;  as
opposed to a decrease of $386,693,  or 11.8%,  to $2,893,226 from $3,279,919 for
the  years-ended  December  31, 2002 and 2001  respectively.  Cost of goods sold
increased  in 2003,  due to an  increase  in sales.  The  decrease in 2002 was a
direct result of the sale of the batter business.

Selling,  general and administrative expenses were $784,253 and $636,302 for the
years-ended December 31, 2003 and 2002 respectively, an increase of $147,951, or
18.87%.  The increase in 2003 was due in part to additional  legal fees. This is
in comparison  to a decrease of $131,036,  or 17%, to $636,302 from $767,338 for
the  year-ended  December  31, 2002 and 2001  respectively.  The  decrease was a
result of aggressive cost cutting and product streamlining.

In 2003, the Company  amended its factory lease and as a result  recorded income
of $57,978 from an adjustment for rent straight-lining.

Interest  expense  increased  in 2003 to $20,206  from  $2,055,  an  increase of
$18,151,  or 883%,  as  opposed to a decrease  in 2002 to $2055  from  $7492,  a
decrease  of  $5,437,  or 265%.  The 2003  increase  was a result  of  increased
borrowing.  The  2001  expense  includes  various  bank  charges.  During  2002,
management  effectively  maintained its cash accounts and substantially  reduced
these fees.

The result of not having the 2001 items:  loss on impairment  of goodwill,  gain
from sale of disposition of assets,  and  cancellation  of certain  liabilities,
repeat in 2002 and 2003 created  losses from  continuing  operations  to be less
than the loss in 2001. The loss from continuing  operations increased in 2003 to
$280,879 from $213,945,  an increase of $66,934, or 31.3%. This is in comparison
to a decrease in 2002 to $213,495 from $806,526 in 2001, a decrease of $593,031,
or 73.5%.

Income  from  discontinued   operations  were  $134,265  and  $379,722  for  the
years-ended December 31, 2003 and 2002 respectively,  a decrease of $245,457, or
65%. Whereas,  income from discontinued operations increased to $379,722 in 2002
from $18,937 in 2001, an increase of $953,816,  or 1905%. Each year's amount was
a result of the write off of old  accounts  payable  related to the WGJ Desserts
operation sold in 1998. At the end of each period management  wrote-off payables
for which the statute of limitations had expired.

The  aggregate of these  adjustments  amounted to a net loss in 2003 of $146,614
and net income in 2002 of $166,227,  a decrease in income of $312,841,  or 188%.
This is in  comparison  to an  increase  in income of  $953,816,  or 574%,  from
($787,589) in 2001 to $166,227 in 2002.


SEGMENT INFORMATION

Not applicable since retail operations were discontinued.


                                                                               7
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Since its inception the  Company's  only source of working  capital has been the
$8,455,000 received from the issuance of its securities.

As of December 31, 2003, the Company had a negative  working capital of $381,077
as compared to a negative working capital of $126,326 at December 31,2002.

During  2003,  the Company was able to secure a $250,000  loan from an unrelated
party.  Additionally,  the Company  received loans from the chairman and another
director totaling $104,000 (see Certain Relationships and Related Transactions).
The  proceeds  of the  loans  were used to  acquire  equipment  and for  working
capital.

Although the Company has  previously  been  successful  in obtaining  sufficient
capital  funds through  issuance of common stock and  warrants,  there can be no
assurance that the Company will be able to do so in the future.

INFLATION AND SEASONALITY:

The  Company's  revenues  are affected by seasons  with higher  revenues  during
holiday seasons such as  Thanksgiving,  Christmas,  Jewish New Year,  Easter and
Passover.

RISK FACTORS

The Following  information  sets forth facts that could cause our actual results
to differ materially from those contained in forward looking  statements we have
made in this annual report and those we may make from time to time.

If We Are  Unable  to  Obtain  Additional  Funds,  We May Have to  Significantly
Curtail the Scope of Our Operations and Alter Our Business Model.

Management believes that profitable  operations are essential for the Company to
become viable. The present business plan contemplates profitable operations will
be achieved.  However, in the event that profitable operations are not achieved,
our present financial  resources should allow us to continue  operations through
June 30,  2004.  If  additional  financing is required  and not  available  when
required or is not available on acceptable  terms,  we may be unable to continue
our operations at current levels or at all. We are engaged in seeking additional
financing and we continue to impose  actions  designed to minimize our operating
loses. We would consider strategic  opportunities,  including  investment in the
Company, a merger or other acceptable  transactions,  to sustain our operations.
We do not  currently  have any  agreements  in place  with  respect  to any such
strategic  opportunity,  and there can be no assurances that additional  capital
will be  available  to us on  acceptable  terms,  or at all. If we are unable to
obtain additional financing or to arrange a suitable strategic opportunity,  our
business will be placed in significant financial jeopardy.

Our Independent  Auditors have Stated that Our Recurring  Losses from Operations
and Our  Accumulated  Deficit  Raise  Substantial  Doubt  About Our  Ability  to
Continue as a Going Concern.

The reports of our independent Certified Public Accountants dated March 17, 2004
and March 6, 2003 for the  December  31,  2003 and 2002  consolidated  financial
statements, respectively contained an explanatory paragraph that states that our
recurring losses from operations and accumulated deficit raise substantial doubt
about our ability to continue as a going  concern.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
that  uncertainty.  We believe  we will need to raise more money to finance  our
operations  and  sustain  our  business  model.  We may not be  able  to  obtain
additional  financing  on  acceptable  terms,  or at all.  Any  failure to raise
additional financing will likely place us in significant financial jeopardy.


                                                                               8
<PAGE>

Our Financial Condition Has Adversely Affected Our Ability to Pay Suppliers on a
Timely  Basis  Which May  Jeopardize  Our  Ability to  Continue  Our  Operations
Necessary to Continue Shipment and Sales of Our Products.

As of December 31, 2003 our accounts  payable totaled  $416,159 of which $47,163
were over sixty (60) days old. While we have  negotiated  payment plans with our
major suppliers and vendors whereby we pay C.O.D. with a nominal pay down of any
past due amounts,  there can be no  assurances  that we will be able to continue
these payment  plans or obtain the necessary  materials  and/or  ingredients  to
produce our baked  goods.  If we are unable to obtain  additional  financing  on
acceptable terms, our ability to make timely payments to our critical  suppliers
will be  jeopardized  and we will be  unable  to obtain  critical  supplies  and
services to maintain and continue to manufacture, ship and to sell our products.

The Company And the Price Of Our Shares May Be Adversely  Affected By the Public
Sale of a Significant Number of the Shares Eligible For Future Sale.

All but a very small  number of the  outstanding  shares of our Common Stock are
freely  tradable.  Sales of Common Stock in the public  market could  materially
adversely  affect the  market  price of our  Common  Stock.  Such sales may also
inhibit our  ability to obtain  future  equity or  equity-related  financing  on
acceptable  terms. At our Annual Meeting of  Stockholders,  we intend to ask our
stockholders to approve an increase in the number of authorized shares of Common
Stock from  10,000,000  shares to 20,000,000  shares.  Based upon current Common
Stock outstanding and convertible securities, we may have an insufficient number
of authorized common shares.  The issuance and registration of additional shares
could  have a  significant  adverse  effect on the  trading  price of our Common
Stock.

We Have Not Issued  Shares of Common Stock We May be Required to Issue  Pursuant
to a Warrant.

Inter-Equity  Capital  Partners,  L.P., is a holder of a warrant for six percent
(6%)  of the  total  number  of  shares  of  each  class  of our  capital  stock
outstanding, on a fully diluted basis after giving effect to the exercise of the
warrant and all other warrants,  options and rights to acquire any shares of our
capital stock and the  conversion  of all the  convertible  securities  (if any)
thereto issued by us. Inter-Equity Capital Partners, L.P., exercised its warrant
on October 15, 2001 but we have refrained from issuing the underlying shares. In
lieu of the shares,  we have  offered to make cash  payments  of $10,000.  If we
cannot agree to a resolution of this matter, we may be required to issue 326,805
shares to Inter Equity Capital Partners, L.P.

We Have Obtained  Secured  Financing  With the Pledge of All of Our Assets Which
Will Have  Priority  Over  Security  Interests  of Any Holders of Our  Preferred
Shares.

We  have  procured  interim   financing  in  the  amount  of  $250,000  from  an
unaffiliated  lender. As part of this financing,  we were required to pledge and
grant a  security  interest  in all the  assets of the  Company  as a  condition
precedent. In the event of default, the lender will obtain, in addition to other
remedies,  the  right  to all of our  assets  as well as the  right  to  appoint
qualified members to our Board of Directors that would constitute a majority.

In addition, we have previously procured financing from the following directors:
Ronald L. Schutte, the Chief Executive Officer and Chairman of the Board, in the
amount of $141,217 and Anthony J.  Merante,  a Director of the  Company,  in the
amount of $47,352.  We intend to grant security  interest to these two directors
that will be subordinate to the recent $250,000 financing.


                                                                               9
<PAGE>

We Have Incurred Losses in the Past and We Expect To Incur Losses in the Future.

We have  incurred  losses in each year since our  inception.  Our net loss after
write off of certain old  liabilities,  for the fiscal year ended  December  31,
2003 was  $146,614  and our  accumulated  deficit as of  December  31,  2003 was
$11,368,970.  We expect operating losses to continue through 2004 as we continue
our marketing and sales  activities  and conduct  additional  development of our
products.

RISKS RELATED TO THE MARKET FOR OUR COMMON STOCK

The Price of Our Common Stock is Subject to Volatility

Our  Common  Stock  has  traded as low as $.04 per share and as high as $.15 per
share in the twelve (12) month ended  December  31,  2003.  Our average  trading
volume is  extremely  low. As such, a  significant  sale of our Common Stock may
result in a major fluctuation of the market price. Some other factors leading to
the volatility include:

       o      Price and volume fluctuation in the stock market at large which do
              not relate to our operating performance;

       o      Fluctuation in our operating results;

       o      Concerns about our ability to finance our continuing operations;

       o      Financing  arrangements  which  may  require  the  issuance  of  a
              significant  number of shares in relation to the number  shares of
              our Common Stock currently outstanding;

       o      Fluctuations in market demand and supply of our products.

Our Common Stock is Currently Traded on the  Over-The-Counter-Bulletin-Board and
an Investor's  Availability  to Trade Our Common Stock May Be Limited by Trading
Volume

The  trading  volume  in our  common  shares  has  been  relatively  limited.  A
consistently  active trading market for our Common Stock may not continue on the
Over-The-Counter-Bulletin-Board.  The average trading volume in our Common Stock
on the  Over-The-Counter-Bulletin-Board for the year ended December 31, 2003 was
approximately 2,111 shares.

RISKS RELATED TO OUR BUSINESS

We are Currently Dependent on a Few Major Customers for a Significant Portion of
Our Revenues

We  currently  record  sales  from  approximately  36  customers.  Two of  these
customers accounts for in excess of 10% of our revenues.  We intend to establish
long-term  relationships  with our customers and continue to expand our customer
base. While we diligently seek to become less dependent on any one customer,  it
is  likely  that  certain  business  relationships  may  result  in one or  more
customers contributing to a significant portion of our revenue in any given year
for the  foreseeable  future.  The  loss of one or  more  of  these  significant
customers  may  result in a  material  adverse  effect on our  revenues  and our
ability to become profitable or our ability to continue our business operations.


                                                                              10
<PAGE>

We Have Limited Ability to Sell and Market Our Products

At the current time, we have limited marketing  capability as compared with many
of our  competitors  and we do not have a large sales,  promotion  and marketing
budget as we are  constrained by our lack of working  capital and our ability to
raise the necessary  cash flow from our business  operations to re-invest in our
marketing programs.  As a result of our limited marketing  capabilities,  we are
forced  to rely  upon  customer  referrals  and a  part-time  sales  force.  Our
competitors  have direct  advertising  and sales  promotion  programs  for their
products as well as sales and  marketing  personnel  that may have a competitive
advantage  over us in  contacting  prospective  customers.  Our  position in the
industry is considered minor in comparison to that of our competitors, and while
we continue to develop and explore  new  marketing  methods and  techniques  and
programs  directed  toward  foreign  customers,  our  ability  to compete at the
present  time is  limited.  Our  success  depends  upon the  ability  to market,
penetrate and expand  markets and form  alliances  with  distributors.  However,
there can be no assurances that:

       o      Our direct selling efforts will be effective;

       o      We will obtain an expanded degree of market acceptance;

       o      We  will  be  able  to  successfully   form   relationships   with
              distributors to market our products.

We Depend Upon the Marketability of Primary Products

Frozen  cheesecake,  pre-portioned  desserts  and tart  shells  are our  primary
products.  We may have to cease  operations if any of our primary products fails
to achieve market acceptance and/or generate significant revenues. Additionally,
the  marketability of our products is dependent upon customer taste,  preference
and acceptance, which are variables that may be beyond our ability to control.

We May Not Be Able to Successfully  Develop and Market New Products That We Plan
to Introduce

We  plan  to  develop  new  baked  goods  for  production.  There  are  numerous
developmental  issues that may preclude the  introduction of these products into
commercial  sale.  If we are unable to  establish  market  acceptance  for these
products,  we may  have to  abandon  them  or  alter  our  business  plan.  Such
modifications  to our business plan will likely delay  achievement of milestones
related to revenue increases and achievement of profitability.

We May Experience Problems in Manufacturing Sufficient Quantities and Commercial
Quantities of Our Products

We may encounter  difficulties  in the  production of our current and any future
products due to such reasons as:

       o      Lack of working capital necessary to gain market acceptance;

       o      Limited equipment and resources to produce product;

       o      Quality control and assurance;

       o      Supplies of ingredients; and

       o      Shortages of qualified personnel.

Any of the  foregoing  or other  difficulties  would  affect our ability to meet
increases in demand should our products gain market acceptance.

We Claim  Certain  Proprietary  Rights in  Connection  with the  Combination  of
Ingredients and Manufacture of Our Products


                                                                              11
<PAGE>

Although  we do not  possess  any  patent  protection  for the  formulation  and
production of our products,  we believe that the  combination of ingredients and
our method of  production  are unique and  important  to our  ability to produce
quality baked goods and  desserts.  As we do not possess  intellectual  property
protection,  there is the risk that we may not be able to  prevent a  competitor
from duplicating our recipes or our methods of production.

We Use  Certain  Names  that Do Not  Have  Protection  under  Federal  or  State
Trademark Laws.

Our use of the names,  "Creative Bakeries,  Inc.," "Brooklyn Cheesecake Company,
Inc." and  "Brooklyn  Cheesecake  and Desserts  Company,"  under which  Creative
Bakeries conducts business and has established  goodwill may be subject to legal
challenge since there are other businesses  operating under similar names and we
have not  registered  trademarks  for these names with  either  federal or state
agencies.  In addition,  we utilize  packaging  with  depictions of the Brooklyn
Bridge in designed or stylized formats in conjunction with the names,  "Brooklyn
Cheesecake Company,  Inc." and "Brooklyn  Cheesecake and Deserts Company," which
have not been registered  with either federal or state  agencies.  In that we do
not possess  registered  trademarks  for our trade names or trade dress,  we may
face opposition to our usage of same that may require us to discontinue usage of
certain trade names or packaging,  which in turn will require us to re-establish
goodwill  associated  with our  product  names  and  packaging.  We are  seeking
trademark  registrations  with the United States Patent and Trademark Office but
there can be no assurances  that we will be successful in obtaining a registered
mark.

Attraction and Retention of Key Personnel

Our future success depends in significant part on the continued  services of key
sales and  senior  management  personnel.  The loss of Ronald  L.  Schutte,  our
Chairman  and Chief  Executive  Officer,  or other key  employees  could  have a
material  adverse  affect on our business,  results of operations  and financial
condition. There can be no assurances that we can attract,  assimilate or retain
other highly qualified personnel in the future.

We Do Not Have a Current Contract with Our Chairman and Chief Executive Officer

Our Chairman and Chief Executive Officer,  Ronald L. Schutte, is instrumental in
the day-to-day  operations and long-range  success of our Company.  In the event
Mr.  Schutte is unable to perform  his job or is  unwilling  to, we will face an
immediate  void in the  management  of our Company that may be difficult  and/or
impossible to fill in a timely manner. Additionally, we do not currently have an
employment  agreement with Mr. Schutte and as such there are no  restrictions on
either the Company or Mr. Schutte ending his employment at any time.

We Have Limited Product Liability Insurance Due to the High Cost of Same

We manufacture,  market and sell baked goods and dessert products.  In the event
our products are  tainted/spoiled  or cause  illness in  consumers,  we may face
potential claims. Due to the high cost of product liability  insurance,  we only
maintain  insurance  coverage of $2,000,000 to protect against claims associated
with the  consumption  of our  product.  Any claim  against  us,  whether or not
successful,  may result in our expenditure of substantial  funds and litigation.
Further,  any claims may require  management's time and use of our resources and
may have a materially adverse impact on us.


                                                                              12
<PAGE>

Geographic Concentration in New York City Tri-State Area

Most of Creative  Bakeries'  retail and  institutional/wholesale  customers  are
located in the New York City  metropolitan  area.  Adverse  changes in  economic
conditions in the New York City  metropolitan area are more likely to affect the
Company's  business,  financial  condition and results of operations than if its
operations were spread over a larger market area.

Government Regulation:  Maintenance of Licenses and Certification

Creative  Bakeries  is subject to  numerous  state  regulations  relating to the
preparation  and sale of food.  It is also  subject  to  federal  and state laws
governing the Company's  relationship  with  employees,  including  minimum wage
requirements,   overtime,   working  and  safety  conditions,   and  citizenship
requirements.  The failure to obtain or retain the required  food licenses or to
be in compliance with applicable  governmental  regulations,  or any increase in
the minimum wage rate,  employee benefits costs (including costs associated with
mandated health  insurance  coverage) or other costs  associated with employees,
could  adversely  affect  our  business,   financial  condition  or  results  of
operations.  In addition,  the  Company's  products  are  certified as kosher by
independent  entities.  We  believe  that we will  continue  to meet the  kosher
certification  requirements.  However,  the  failure  to retain  or obtain  such
certification  in  the  future  could  have a  material  adverse  effect  on our
business, financial condition or results of operations.

Continuing Changes in Food Service Industry

The results of  operations  of food  service  businesses  are affected by, among
other things, changes in consumer tastes, national,  regional and local economic
conditions,  demographic  trends,  traffic  patterns  and the type,  number  and
location of  competing  units.  Multi-unit  food service  companies  also can be
substantially  adversely affected by publicity resulting from poor food quality,
illness, injury or other health concerns or operating difficulties stemming from
one unit or a limited number of units, or health concerns as to particular types
of food or methods of preparing food. There can be no assurance that the Company
will be able  to  maintain  the  quality  of its  food  products.  In  addition,
dependence  on frequent  deliveries  of fresh  ingredients  also  subjects  food
service  businesses,  such as Creative  Bakeries,  to the risk that shortages or
interruptions  in supply  caused by adverse  weather or other  conditions  could
adversely affect the availability, quality and cost of ingredients.

Competition

The baking  industry is a highly  competitive  and highly  fragmented  industry.
Creative Bakeries competes with national, regional and local bakeries as well as
supermarket  chains that have in-store  bakeries.  Many of these competitors are
larger;  more established and have greater financial and other resources than we
do. Competition in both the retail and  institutional/wholesale  baking industry
is based on product  quality,  brand name loyalty,  price and customer  service.
Competitors with significant economic resources in the baking industry could, at
any time, enter the wholesale or retail bakery/cafe business.

Quarterly Fluctuations; Seasonality; Possible Volatility of Stock Price

Creative  Bakeries'  operating results may be subject to seasonal  fluctuations,
especially during the  Thanksgiving,  Christmas,  Chanukah,  Easter and Passover
seasons.  Such  variations  could cause the market  price of the Common Stock to
fluctuate  substantially.  In addition,  the stock  markets in the United States
have, from time to time,  experience  significant price and volume  fluctuations
that  are  unrelated  or  disproportionate  to  the  operating   performance  of
individual  companies.  Such  fluctuations may adversely affect the price of the
Company's Common Stock.


                                                                              13
<PAGE>

Possible Adverse Effect of Issuance of Preferred Stock

Creative Bakeries' Restated Certificate of Incorporation authorizes the issuance
of  2,000,000  shares  of  Preferred  Stock,  with   designations,   rights  and
preferences  as  determined  from time to time by the Board of  Directors.  As a
result of the  foregoing,  the Board of  Directors  can issue,  without  further
shareholder approval,  Preferred Stock with dividend,  liquidation,  conversion,
voting or other  rights that could  adversely  affect the voting  power or other
rights of the holders of Common  Stock.  The issuance of Preferred  Stock could,
under certain circumstances, discourage, delay or prevent a change in control of
the Company.

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This annual report contains certain  forward-looking  statements with respect to
the  financial  condition,  results of  operations  and  business of the Company
including  statements  relating to the cost savings,  revenue  enhancements  and
marketing  and  other  advantages  that are  expected  to be  realized  from the
Company's  plans to restructure  and consolidate its operations and grow through
strategic  acquisitions.  Such forward-looking  statements involve certain risks
and  uncertainties  that could cause actual  results to differ  materially  from
those  contemplated  by  such   forward-looking   statements.   Such  risks  and
uncertainties  include,  without limitation:  (1) expected cost savings from the
restructured  or  consolidated   operations   cannot  be  fully  realized;   (2)
difficulties relating to the integration of new businesses that may be acquired;
(3) the impact of  competition  on revenues  and margins;  (4)  increases in the
costs of ingredients;  and (5) other risks and  uncertainties as may be detailed
from time to time in the Company's public announcements and Commission filings.

ITEM 7. FINANCIAL STATEMENTS


  Report of Zeller Weiss & Kahn, LLP, Independent Auditors                   15

  Consolidated balance sheet                                                 16

  Consolidated statement of operations                                       17

  Consolidated statement of stockholders' equity                             18

  Consolidated statement of cash flows                                       19

  Notes to consolidated financial statements                              20-30



                                                                              14
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Creative Bakeries, Inc.

      We have audited the  accompanying  consolidated  balance sheet of Creative
Bakeries,  Inc.  and  Subsidiaries  as of  December  31,  2003,  and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years  ended  December  31,  2003 and  2002.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audits 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
audits provide 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 Bakeries,  Inc. as
of December 31, 2003,  and the results of its  operations and cash flows for the
years ended December 31, 2003 and 2002, in conformity with accounting principles
generally accepted in the United States of America.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming  the  Company  will  continue  as a  going  concern.  As  shown  in the
accompanying financial statements,  the Company incurred significant losses from
continuing  operations  for the years ended December 31, 2003 and 2002 and as of
December 31, 2003 has a working  capital  deficiency  in the amount of $493,733,
which  raises  substantial  doubt about the  Company's  ability to continue as a
going  concern.  Management's  plans in regard to these matters are discussed in
the notes to the financial statements.  The accompanying financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.



ZELLER WEISS & KAHN, LLP
March 17, 2004
Mountainside, New Jersey



                                                                              15


<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED BALANCE SHEET - DECEMBER 31, 2003

                                     ASSETS

Current assets:
  Cash and cash equivalents                                         $    82,523
  Accounts receivable, less allowance for doubtful
   accounts of $400                                                     174,983
  Inventories 173,519
  Prepaid expenses                                                       66,076

    Total current assets                                                497,101

Property and equipment, net                                             301,015

Other assets:
  Security deposits                                                       4,714
  Loan acquisition costs, net of amortization                            12,798
  Tradename and licensing agreements,
   net of amortization                                                  122,106

                                                                        139,618

                                                                    $   937,734

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities:
  Long-term debt, current portion                                   $    28,100
  Notes payable                                                         297,352
  Accounts payable                                                      416,159
  Accrued expenses                                                       87,861
  Notes payable, officer                                                 45,737
  Warrants payable                                                      115,625

    Total current liabilities                                           990,834

Other liabilities:
  Long-term debt, net of current portion                                 69,435
  Deferred rent                                                           5,520
                                                                         74,955
Stockholders' equity (deficiency):
  Preferred stock $.001 par value, authorized 2,000,000
   shares, none issued
  Common stock, $.001 par value, authorized 10,000,000
   shares, issued and outstanding 5,496,750 shares                        5,497
  Additional paid in capital                                         11,235,418
  Deficit              ( 11,368,970)

    Total stockholders' equity (deficiency)                            (128,055)

                                                                    $   937,734

                 See notes to consolidated financial statements.


                                                                              16
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002



                                                          2003          2002
                                                      -----------   -----------

Net sales                                             $ 3,369,742   $ 3,318,088

Cost of sales                                           2,904,140     2,893,226
                                                      -----------   -----------

Gross profit                                              465,602       424,862
                                                      -----------   -----------

Selling, general and administrative expenses              784,253       636,302

Change in estimate of straight-line rent                  (57,978)
Interest expense, net                                      20,206         2,055
                                                      -----------   -----------
                                                          746,481       638,357
                                                      -----------   -----------

Loss from continuing operations                          (280,879)     (213,495)

Discontinued operations:
  Income from operations of New York
   facility                                               134,265       379,722
                                                      -----------   -----------

Net income (loss)                                     ($  146,614)  $   166,227
                                                      ===========   ===========

Earnings per common share Basic and fully diluted:
    Continuing operations                             ($     0.05)  ($     0.04)
    Discontinued operations                                  0.02          0.07
                                                      -----------   -----------
Net income (loss) per share                           ($     0.03)  $      0.03
                                                      ===========   ===========

    Weighted average number of common
     shares outstanding                                 5,461,545     5,346,828
                                                      ===========   ===========




                 See notes to consolidated financial statements.


                                                                              17
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

                     YEARS ENDED DECEMBER 31, 2003 AND 2002




                                  Common stock
                                  ------------

<TABLE>
<CAPTION>
                                                                                                                          Total
                                                      Number                Additional                                Stockholders'
                                                        of                   Paid in        Accumulated    Treasury      Equity
                                                      Shares     Amount      Capital          Deficit       Stock     (Deficiency)
                                                    ---------   -------    -----------     ------------    ---------  ------------
<S>                                                 <C>          <C>       <C>             <C>             <C>          <C>
Balance at December 31, 2001                        5,245,250    $5,245    $11,340,530     ($11,388,583)   ($90,485)    ($133,293)

Treasury stock issued for services                                             (12,067)                      18,317         6,250

Stock issued in exchange for trade name rights        201,500       202         17,630                       72,168        90,000

Net income for the year ended December 31, 2002                                                 166,227                   166,227
                                                    ---------   -------    -----------     ------------    ---------  ------------

Balance at December 31, 2002                        5,446,750     5,447     11,346,093      (11,222,356)   ($     0)      129,184

Stock issued for professional services                 50,000        50          4,950                                      5,000

Reclassification of warrants payable                                          (115,625)                                  (115,625)

Net loss for the year ended December 31, 2003                                                  (146,614)                 (146,614)
                                                    ---------   -------    -----------     ------------    ---------  ------------

Balance at December 31, 2003                        5,496,750    $5,497    $11,235,418     ($11,368,970)   ($_____0)    ($128,055)
                                                    =========   =======    ===========     ============    =========  ============
</TABLE>



                See notes to consolidated financial statements.


                                                                              18
<PAGE>


                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   2003          2002
                                                                ---------     ---------
<S>                                                             <C>           <C>
Operating activities:
  Loss from continuing operations                               ($280,879)    ($213,495)
  Adjustments to reconcile loss from continuing
   operations to cash used in continuing operations:
     Depreciation and amortization                                 91,981       136,828
     Common stock issued for services                               5,000         6,250
     Change in straight-line rent accounting estimate             (57,978)
     Interest on accrued long-term debt                             7,480
    Changes in other operating assets and liabilities
      from continuing operations:
        Accounts receivable                                        10,294       115,247
        Inventory                                                  17,426       (38,367)
        Prepaid expenses                                           (2,308)          673
        Security deposits                                             250
        Accounts payable                                          (43,664)       38,352
        Accrued expenses                                           20,268      (168,447)
        Deferred rent                                              (9,102)      (21,933)
                                                                ---------     ---------
        Cash used in operating activities                        (241,482)     (144,642)
        Cash provided by discontinued
         operations                                                 1,020
                                                                ---------     ---------
        Net cash used in operating activities                    (241,482)     (143,622)
                                                                ---------     ---------
Investing activities:
    Purchase of property and equipment                            (53,282)      (85,714)
        Cash (used in) investing
         activities from continuing operations                    (53,282)      (85,714)
                                                                ---------     ---------
        Cash provided by investing
         activities from discontinued operations                   70,875
                                                                ---------     ---------
        Net cash (used in)
         investing activities                                     (53,282)      (14,839)
                                                                ---------     ---------
Financing activities:
  Proceeds from officers' notes payable                            54,000        88,000
  Proceeds from notes payable                                     300,000
  Payment of officers' note payable                                (8,263)
  Payment of notes payable                                         (2,648)
  Loan acquisition costs                                          (16,957)
                                                                ---------     ---------
        Net cash provided by
         financing activities                                     326,132        88,000
                                                                ---------     ---------

Net increase(decrease) in cash and cash equivalents                31,368       (70,461)

Cash and cash equivalents, beginning of year                       51,155       121,616
                                                                ---------     ---------

Cash and cash equivalents, end of year                          $  82,523     $  51,155
                                                                =========     =========
</TABLE>


                 See notes to consolidated financial statements.

                                                                              19
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

1. Going concern:

        During the year ended  December  31, 2003,  the Company  incurred a loss
         from  continuing  operations  in the amount of $280,879,  and had a net
         working  capital  deficiency  of  $493,733.  Although  the  Company  is
         currently  operating its businesses,  their  continuation is contingent
         upon,  among other things,  the continued  forbearance by the Company's
         creditors from  exercising  their rights in connection  with delinquent
         accounts payables.  These conditions,  among others,  raise substantial
         doubt about the Company's ability to continue as a going concern.

        During the year 2002,  Creative Bakeries Inc. acquired certain equipment
         and the name and logo of the Brooklyn  Cheesecake  Company (see Notes 8
         and 21). Upon completion of the acquisition,  the operating name of the
         company  was  changed  from  Chatterley  Elegant  Desserts  to Brooklyn
         Cheesecakes  and Desserts  Company.  As per  regulation S-X article 11,
         210.11-01, no proforma information is being presented for this purchase
         since the Company was inactive and the  presentation is not material to
         an understanding of future operations.

        The Company  intends to raise  capital  either  through an  offering  of
         preferred stock or conventional  financing.  The proceeds would be used
         to upgrade the production process. The Company's product line continues
         to be  streamlined  and greater  emphasis  has been placed on marketing
         portion controlled dessert items.

        In view of these matters management  believes that the actions presently
         being  taken  to  revise  the   Company's   operating   and   financial
         requirements  provide the  opportunity for the Company to continue as a
         going concern. The accompanying financial statements do not include any
         adjustments  relating to the recoverability and classification of asset
         carrying amounts or the amount and  classification  of liabilities that
         might  result  should  the  Company  be unable to  continue  as a going
         concern.

2. Accounting policies:

        Principles of consolidation:
         The accompanying consolidated financial statements include the accounts
         of the Company and all of its wholly owned  subsidiaries.  Intercompany
         transactions and balances have been eliminated in consolidation.

        Recent accounting pronouncements:
         In  April  2002,  The  Financial   Accounting  Standards  Board  issued
         Statement of Financial  Accounting Standards No. 145, "Revision of FASB
         Statements  No. 4, 44 and 64,  Amendment of FASB  Statement  No. 13 and
         Technical Corrections".  Among several accounting issues, the statement
         changes  the   treatment  and   classification   of  gain  or  loss  on
         extinguishment  of  debt  as  it  relates  to  characterization  as  an
         extraordinary  item.  The Company has adopted this  statement as of the
         year ended December 31, 2002.


                                                                              20
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

2. Accounting policies (continued):

        Cash and cash equivalents:
         For the purpose of the statement of cash flows,  the Company  considers
           all  short-term  debt  securities  purchased with a maturity of three
           months or less to be cash equivalents.

        Inventories:
         Inventories  are  stated at the lower of cost  (first-in-first-out)  or
market.

        Property and equipment:
         The cost of  property,  plant and  equipment  is  depreciated  over the
           estimated  useful lives of the related assets.  The cost of leasehold
           improvements  is  depreciated  over the  lesser of the  length of the
           related  leases  or  the  estimated   useful  lives  of  the  assets.
           Depreciation  is computed on the  straight-line  method for financial
           reporting  purposes and on the modified cost  recovery  system method
           for income tax basis.

        Deferred rent:
         The accompanying consolidated 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 expenses
           as required by generally accepted accounting principles.

        Comprehensive income:
         There were no items of other comprehensive income in 2003 and 2002, and
           thus, net income is equal to  comprehensive  income for each of those
           years.

        Use of estimates:
         The process  of  preparing  financial  statements  in  conformity  with
           generally  accepted   accounting   principles  requires  the  use  of
           estimates  and  assumptions   regarding   certain  types  of  assets,
           liabilities,  revenues and expenses.  Such estimates primarily relate
           to unsettled  transactions and events as of the date of the financial
           statements.  Accordingly,  upon settlement, actual results may differ
           from estimated amounts.

        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.


                                                                              21
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

3. Nature of operations, risks and uncertainties:

        The Company is a manufacturer of baking and confectionery products which
         are sold to supermarkets, food distributors,  educational institutions,
         restaurants,  mail order and to the public.  Although the Company sells
         its products throughout the United States, its main customer base is on
         the East Coast of the United States.

        The Company  maintains all of its cash balances in New Jersey  financial
         institutions. The balances are insured by the Federal Deposit Insurance
         Company  (FDIC) up to $100,000.  At December 31, 2003,  the Company had
         uninsured cash balances of $66,083.

        The Company  maintained  sales with two customers  which  comprised more
         than 10% of total  sales for the year.  If these  sales  levels were to
         change  this  could  have  a   significant   impact  on  the  Company's
         operations.

        At December 31, 2003 there were four customers  whose balances  included
         in  accounts  receivable  comprised  more  than 10% of  total  accounts
         receivable.  If these  customers  were to default  on these  amounts it
         could have a significant impact on the Company's operations.

4. Accounts receivable:

        Following is a summary of receivables at December 31, 2003:

               Trade accounts                                      $175,383
               Less allowance for doubtful accounts               (     400)
                                                                   ---------
                                                                   $174,983
                                                                   ========

        An analysis of the allowances for doubtful accounts for the year ending
        December 31, 2003 is as follows:

               Allowance for doubtful accounts, 01/01/03           $  4,200
               Direct write-offs against the allowance                6,766
                                                                   --------
                                                                   (  2,966)
               Less: Bad debt expense                                 2,966
               Plus: Additions to allowance for doubtful
                     accounts                                           400
                                                                   --------
               Allowance for doubtful accounts, 12/31/03           $    400
                                                                   ========

5.      Inventories:

        Inventories at December 31 consist of:

               Finished goods and work in process                  $ 36,789
               Raw materials                                         47,602
               Supplies                                              89,128
                                                                  ---------
                                                                   $173,519
                                                                   ========


                                                                              22
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


6. Property and equipment:

        The  following  is a summary of property  and  equipment at December 31,
        2003:

                    Baking equipment                             $1,402,608
                    Furniture and fixtures                           97,978
                    Leasehold improvements                          180,422
                                                                 ----------
                                                                  1,681,008
                    Less:  Accumulated depreciation
                            and amortization                      1,379,993
                                                                 ----------
                                                                 $  301,015
                                                                 ==========

        Depreciation  expense  charged to operations was $81,822 and $124,934 in
2003 and 2002, respectively.

        The useful  lives of property  and  equipment  for purposes of computing
depreciation are:
                                                                    Years
                                                                   -------
                    Machinery and equipment                          10
                    Furniture and computers                           5
                    Leasehold improvements                          10-15


7. Loan acquisition costs:

        The Company incurred loan acquisition  costs in the amount of $16,957 in
        connection with one of the notes payable  financings the Company entered
        into in 2003. These costs are being amortized over the life of the loan.
        Loan amortization  expense for the year ended December 31, 2003 amounted
        to $4,159.

8. Tradename and licensing agreements:

        On March 7, 2002,  the Company  purchased  the rights to the  tradenames
         Brooklyn Cheesecake Company,  Inc. and Brooklyn Cheesecake and Desserts
         Company,  Inc. and the related  corporate  logo in exchange for 300,000
         shares of the Company's  common  stock,  valued on the purchase date at
         $90,000.  The tradename rights are being amortized on the straight-line
         basis over a  fifteen-year  term.  Amortization  expense was $6,000 and
         $4,875, respectively, for the years ended December 31, 2003 and 2002.

        The Company has a licensing  agreement  for the use of the trademark and
         name of one of its subsidiaries and various recipes and methods used in
         the  production  of baked  and other  goods.  The  agreement  calls for
         royalties  to be  paid  upon  reaching  certain  sales  levels  by  the
         licensee.  The carrying amount of the license agreement at December 31,
         2003 was $42,981.


                                                                              23
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

9. Warrants payable:

        The Company has 1,156,250  outstanding warrants that allow the holder to
         redeem the warrants for  consideration  of $.10 and 40% of one share of
         common  stock.  The  holder  of these  warrants  is a  director  of the
         Company.  Management  has  elected to have the  expiration  date of the
         warrants  extended for a one-year  period through  December 31, 2004 in
         exchange for not  redeeming  the  warrants.  If the warrants were to be
         redeemed the Company would have to repurchase  the warrants for a total
         monetary  consideration of $115,625 plus shares of the Company's common
         stock (see Note 18).


10.     Long-term debt

        During 2002,  an officer of the Company made loans to the Company in the
         amount of $88,000.  On January 1, 2003 this short-term note was amended
         by an agreement  extending the maturity date to December 31, 2005.  The
         note bears  interest at 8.5% per annum.  Interest only payments are due
         on the principal balance  outstanding at each month's end for the first
         eighteen  months and  principal  and interest  payments are due monthly
         thereafter  until note maturity.  If any amount owing under the note is
         not paid when due the  interest  rate on that unpaid  portion  shall be
         12.5% per annum.  The balance on the note was  $95,480 at December  31,
         2003, including accrued interest.


11. Common stock:

        During 2003 the Company  issued 50,000  restricted  shares of its common
         stock in exchange for legal services.  The shares were valued at $5,000
         which approximated the quoted stock price at the time of issuance.  The
         issuance of the common stock was exempt from  registration  pursuant to
         Section 4(2) of the Securities Act of 1933, as amended.

        During 2002 the Company issued 325,000  restricted  shares of its common
         stock. 25,000 shares were issued under an employee stock incentive plan
         (see Note 14), granted in February, 2002. The additional 300,000 shares
         were issued  pursuant to the purchase  agreement  for the tradename and
         logo of Brooklyn Cheesecake Company, Inc. entered into in March 2002 as
         described in Note 16. The Company utilized all of its remaining 123,500
         shares  previously  held as  treasury  stock  plus new share  issues to
         complete the stock transactions.


                                                                              24
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

12. Statement of cash flows supplemental disclosures:


        Cash paid during the year for:

        Interest:
           Continuing operations                           $12,059       $   0
                                                           =======       =====
           Discontinued operations                         $     0       $   0
                                                           =======       =====

        Non-cash investing and financing transactions:

        Stock issued for services                            $5,000      $   0
                                                           ========      =====
        Reclassification of warrants payable               $115,625      $   0
                                                           ========      =====

13. Commitments and contingencies:

        The Company entered into an amendment under an existing lease for use of
         27,362  square feet of office and plant space in New Jersey.  The terms
         call for a reduction in annual rent in the first year from  $200,000 to
         $136,800. The amendment also shifts responsibility for snow removal and
         landscaping  from the  lessee to the  lessor.  The new  rental  amounts
         commenced September 1, 2003 and expire December 31, 2008.

        The minimum future rentals on the baking facility are as follows:

                        December 31, 2004             $139,200
                        December 31, 2005              148,000
                        December 31, 2006              158,000
                        December 31, 2007              164,000
                        December 31, 2008              112,000
                                                      --------
                                                      $721,200
                                                      ========

        Rent  expense  including  real  estate  taxes and  common  area  charges
         amounted  to  $226,377  in  2003  and  $228,065  in 2002  and  includes
         straight-line amortization of rent adjustments discussed in Note 2.

        The Company  also leases a vehicle  under an operating  lease  agreement
         that expires in December 2004. Total lease expense for 2003 was $7,200.
         Future minimum rentals are as follows:

                        December 31, 2004                7,200
                                                      ========

        The Company  entered into an agreement for legal services  commencing on
         November 1, 2003.  The  agreement  calls for a monthly  retainer fee of
         $1,500 of which $750 is to be paid in cash and $750 to be paid  through
         the issuance of an equivalent  number of restricted common shares based
         on an agreed upon market value formula.  The shares are to be issued on
         a quarterly  basis.  At December  31, 2003 the Company  included in its
         liabilities  $1,500  representing  9,677  shares of common  stock to be
         issued under the agreement at the end of January 2004.


                                                                              25
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

13. Commitments and Contingencies (continued):

        The Company has 1,156,250  outstanding  common stock  purchase  warrants
         that  give the  warrant  holder  the  right to elect  that the  Company
         repurchase  each  warrant  for  consideration  consisting  of $.10  per
         warrant plus 40% of one share of the Company's common stock or exercise
         the warrants at $.6875 per warrant less the $.10 feature.  The warrants
         originally  expired on December  31, 2000 and have been  extended for a
         one-year period over the last two years. The Company has again extended
         the expiration  date of the warrants from December 31, 2003 to December
         31, 2004 in exchange for the warrant  holders'  forbearance.  The total
         number of shares  represented by the warrants is 462,500.  These shares
         have been  included in the  computations  of  outstanding  common stock
         options and warrants at Note 19.

14. Off-balance-sheet risk:

        The  Company  is a third  co-guarantor  on a vehicle  lease for a former
         officer of the Company  with a lease buyout of  approximately  $12,000.
         The lease expires on March 31, 2004.

15. Income taxes:

        The Company  accounts for income taxes in accordance  with  Statement of
         Financial  Accounting Standards ("SFAS No. 109") "Accounting for Income
         Taxes",  which  requires an asset and  liability  approach to financial
         accounting and reporting for income taxes.  Deferred  income tax assets
         and  liabilities  are  computed  annually for  differences  between the
         financial statement and income tax basis of assets and liabilities that
         will  result in taxable or  deductible  amounts in the future  based on
         enacted  tax laws and  rates  applicable  to the  periods  in which the
         differences are expected to affect taxable income.

        Valuation  allowances are established  when necessary to reduce deferred
         tax assets to the amount expected to be realized. Income tax expense is
         the tax payable or refundable for the period,  plus or minus the change
         during the period in deferred tax assets and liabilities.  There was no
         cumulative   effect  of  adoption  or  current   effect  in  continuing
         operations  mainly because the Company has  accumulated a net operating
         loss carryforward of approximately $8,417,800.  The Company has made no
         provision  for a  deferred  tax  asset  due to the net  operating  loss
         carryforward  because a valuation  allowance has been provided which is
         equal to the deferred tax asset.  It cannot be  determined at this time
         that a deferred tax asset is more likely that not to be realized.

        The Company's  loss  carryforward  of  approximately  $8,417,800  may be
         offset against future taxable income. The carryforward losses expire at
         the end of the years 2006 through 2021.


                                                                              26
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

16. Warrants:

        In order to obtain financing for the acquisition of Greenberg's -L.P., a
         discontinued  subsidiary,  the Company  sold to a lender for $1,000,  a
         Convertible  Note which in accordance  with the terms of the conversion
         agreement, was converted by the lender into a warrant to acquire shares
         of  stock of the  Company  in a  number  sufficient  to equal 6% of the
         Company's  then  outstanding  preferred and common  stock.  The warrant
         contains  anti-dilutive  provisions  throughout  its six (6) year  life
         which  entitles  the  holder  to  its  applicable  percentages  of  the
         Company's  capital  stock on the date the  warrant  is  exercised.  The
         warrant,  representing 314,715 shares, was to expire on October 1, 2001
         and the  lender  inquired  regarding  exercising  its  right  under the
         warrant before the expiration  date. The lender,  who is in bankruptcy,
         held discussions with the Company's management and did not act upon the
         warrant.  The  Company  has not heard from the  lender  since and it is
         management's   opinion  the  warrant   will  not  be   exercised.   The
         representative   shares  have  been  included  in  the  computation  of
         outstanding stock options per Note 19.

        At December 31, 2003, the Company also had outstanding  1,156,250 common
         stock purchase  warrants with an exercise  price of $.6875 each,  which
         expire on December 31, 2004.  These  warrants are the same  warrants as
         described  in  Note  15,   commitments  and   contingencies,   and  are
         exercisable as described in Note 15 or they can be used to purchase 40%
         of one share of common stock per one warrant. The warrants are included
         in the  computation of  outstanding  stock options and warrants in Note
         19.

19. Common stock options:

        In May 2001 and February 2002, the Company granted stock options to some
         of its  employees  for the purpose of  advancing  the  interests of the
         Company and its  stockholders  by  assisting  the Company to obtain and
         retain the services of key management employees and officers. The Board
         of  Directors  has full  authority  and  discretion  to  determine  the
         eligible  participants  to be granted the options,  the exercise option
         price,  the date of  issuance  and the date of  expiration.  The  total
         number of shares  set aside was  325,000.  At the grant date the option
         exercise  price was  equal to the fair  market  value of the  Company's
         stock. The options expire five years from the grant date and there were
         no options granted during the calendar year 2003.



                                                                              27
<PAGE>


                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

19. Common stock options (continued):

        Information relating to stock option and warrant activity for 2003 is as
        follows:

<TABLE>
<CAPTION>
                                                                                            Weighted
                                                                                            Average
                                                                   Number of                Exercise
                                                                     Shares                  Price
                                                              ---------------------   ---------------------
<S>                                                                      <C>                         <C>
        Outstanding at December 31, 2002                                 1,386,315                   $0.50
           Granted                                                               0                    0.00
           Cancelled                                                     (284,100)                  (0.66)
                                                              ---------------------   ---------------------
        Outstanding at December 31, 2003                                 1,102,215                   $0.45
                                                              =====================   =====================

        Options exercisable
           at December 31, 2002                                          1,211,315                   $0.55
                                                              =====================   =====================
        Options exercisable
           at December 31, 2003                                          1,077,215                   $0.46
                                                              =====================   =====================

<CAPTION>
                                            Stock Options Outstanding

                                                                  Weighted Avg              Weighted
                                           Number of               Remaining                Average
        Range of                             Shares               Contractual               Exercise
        Exercise Prices                   Outstanding            Life in Years               Price
                                      ---------------------   ---------------------   ---------------------
<S>                                                <C>                        <C>                    <C>
        $.05-.25                                   325,000                    3.75                   $0.11
        $.26-.50                                   314,715                    1.00                    0.50
        $.51-.75                                   462,500                    1.00                    0.66
                                      ---------------------   ---------------------   ---------------------
                                                 1,102,215                    1.15                   $0.45
                                      =====================   =====================   =====================

<CAPTION>
                                            Stock Options Exercisable

                                                                  Weighted Avg              Weighted
                                           Number of               Remaining                Average
        Range of                             Shares               Contractual               Exercise
        Exercise Prices                   Outstanding            Life in Years               Price
                                      ---------------------   ---------------------   ---------------------
<S>                                                <C>                        <C>                    <C>
        $.05-.25                                   300,000                    3.92                   $0.07
        $.26-.50                                   314,715                    1.00                    0.50
        $.51-.75                                   462,500                    1.00                    0.66
                                      ---------------------   ---------------------   ---------------------
                                                 1,077,215                    1.48                   $0.46
                                      =====================   =====================   =====================
</TABLE>

20. Earnings per share:

        Primary  earnings per share is computed  based on the  weighted  average
         number of shares actually  outstanding  plus the shares that would have
         been  outstanding  assuming  conversion  of the common  stock  purchase
         warrants which are considered to be common stock equivalents.  However,
         according to FASB 128,  effective for financial  statements  issued and
         annual periods beginning after December 15, 1997,  entities with a loss
         from continuing operations should not include the exercise of potential
         shares in the  calculation  of earnings  per share  since the  increase
         would result in a lower loss per share.  Thus,  common  stock  purchase
         warrants and stock options as described in Notes 18 and 19 are excluded
         from the calculation of earnings per share.


                                                                              28
<PAGE>

                    CREATIVE BAKERIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

20. Earnings per share (continued):

        Reconciliation of shares used in computation of earnings per share:

                                                              2003        2002
                                                              ----        ----
           Weighted average of shares actually
              outstanding                                  5,461,545   5,346,828
                                                           ---------   ---------
           Common stock options and purchase warrants
           Primary and fully diluted weighted
           average common shares outstanding               5,461,545   5,346,828
                                                           =========   =========

21. Related party transactions:

        In March 2002, the Company  purchased the tradename and logo of Brooklyn
         Cheesecake  Company,  Inc.  in  exchange  for  300,000  shares  of  the
         Company's common stock.  Brooklyn Cheesecake  Company,  Inc. was wholly
         owned by the current chief executive officer of Creative Bakeries, Inc.
         The Company  also  purchased  $45,000 of baking  equipment  in the same
         purchase transaction.

22. 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.  In November  2002,  the Company
         received the last of its payments on the note  receivable from the sale
         of its discontinued operations. The company determined that the statute
         of  limitations  had  expired as of  December  31, 2003 and 2002 on old
         accounts   payable   related  to  WGJ   Desserts  and  wrote  them  off
         accordingly.  Income  from  discontinued  operations  presented  in the
         statement of operations for the year ending  December 31, 2003 and 2002
         includes   $134,625  and  $379,722,   respectively,   related  to  this
         adjustment.  The Company does not anticipate any further income or loss
         from its discontinued operations in the future.

        Information  relating to  discontinued  operations  for WGJ Desserts and
         Cafes,  Inc.  for the  year  ended  December  31,  2003  and 2002 is as
         follows:
                                                       2003              2002
                                                    --------          --------
        Correction of estimated liabilities
         on disposition of assets                   $      -          $ 79,841
        Cancellation of indebtedness to former
         shareholders and certain other
         accounts payable                                  -           302,267
        Cancellation of accrued expenses             134,625                 -
        Interest income                                    -             1,884
                                                    --------          --------
                                                     134,625           383,992
        Reduction of note receivable
         upon settlement                                   -          (  4,270)
                                                    --------          --------
        Income from discontinued operations         $134,625          $379,722
                                                    ========          ========


                                                                              29
<PAGE>

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE.

None.


ITEM 8A. CONTROLS AND PROCEDURES

As of the  year-end  period  covered by this Annual  Report on Form  10-KSB,  we
carried out an evaluation,  under the supervision and with the  participation of
our management,  including our Chief Executive Officer,  of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on the
forgoing, our Chief Executive Officer has concluded that our disclosure controls
and procedures were effective as of the year ended December 31, 2003.


We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management,  including our Chief Executive  Officer,  as appropriate,  to
allow  timely  decisions  regarding  required   disclosure.   In  designing  and
evaluating the disclosure  controls and procedures,  management  recognized that
any controls and  procedures,  no matter how well  designed  and  operated,  can
provide  only  reasonable  and not absolute  assurance of achieving  the desired
control objectives. In reaching a reasonable level of assurance,  management was
required to apply its judgment in evaluating the  cost-benefit  relationship  of
possible  controls  and  procedures.  In  addition,  the design of any system of
controls also is based in part upon certain  assumptions about the likelihood of
future  events,  and there can be no  assurance  that any design will succeed in
achieving its stated goals under all  potential  future  conditions;  over time,
control may become inadequate because of changes in conditions, or the degree of
compliance with policies or procedures may deteriorate.  Because of the inherent
limitations in a cost-effective  control system,  misstatements  due to error or
fraud may occur and not be detected.



                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

Information Concerning the Board of Directors and Executive Officers

         The following table sets forth certain information concerning the Board
of  Directors,  persons  nominated  to be elected  as  directors  and  executive
officers of the Company:


                                                                              30
<PAGE>


<TABLE>
<CAPTION>
Name of Director or
Executive Officer,
Age and Position                           Principal Occupation                                  Date of Initial
Held with Company                          For Previous Five Years                               Election as Director
------------------------------------------ ---------------------------------------------         --------------------
<S>                                        <C>                                                       <C>
Ron Schutte, 47                            Chief Executive Officer,                                  June 1, 2001
President and Director                     Aug. 2000 - May 2001
                                           Brooklyn Cheesecake Company
                                           Apr. 1999 - Jul 2000
                                           Crestwood Consulting
                                           Mar 1997 - Mar 1999
                                           Mother's Kitchen
                                           July 1982 - Feb 1997
                                           Pres,Creative Bakers Inc.
                                           Brooklyn, NY

Richard Fechtor, 73                        Founder of and since 1974 Executive Vice                  July 11, 1996
Director                                   President of Fechtor, Detwiler & Co., Inc.,
                                           the representative of the underwriters in
                                           the Company's initial public offering;
                                           Director of Vascular  Laboratories since
                                           1989

Karen Brenner, 50                          President of Fortuna Advisors, Inc., an                   July 1997
Director                                   investment advisory firm in California 1993
                                           to present; founder and President of Karen
                                           Brenner, Registered Investment Advisor, the
                                           predecessor to Fortuna Advisors, Inc., 1984
                                           to 1993; Managing Partner of F.C. Partners,
                                           a California limited partnership, April
                                           1996 to present; Director on DDL
                                           Electronics, Inc., a publicly held company,
                                           July 1996 to present; Director of Krug
                                           International Corp., a publicly held
                                           company, July 1996 to present.

Vincent Bucchimuzzo, 50                    Executive for CINN Worldwide                              January 2003
Director                                   Westchester Venture Group
                                           Univest Partners 1982-1995

Anthony Merante, 43                        Certified Public Accountant                               January 2003
Director

Mel Foti, 51                               VP & Manager Credit &                                     January 2003
Director                                   Marketing National Bank
                                           Of Egypt, NY Branch
</TABLE>


All  directors  hold office until the next annual  meeting of  shareholders  and
until their successors are elected and qualified.

Officers are appointed by the Board of Directors and serve at the  discretion of
the Board.

Section 16(a) Beneficial Ownership Reporting Compliance


                                                                              31
<PAGE>

The Securities and Exchange  Commission  (the  "Commission")  has  comprehensive
rules  relating  to the  reporting  of  securities  transactions  by  directors,
officers and  shareholders  who  beneficially own more than 10% of the Company's
Common Shares (collectively,  the "Reporting Persons").  These rules are complex
and  difficult  to  interpret.  Based  solely on a review of  Section 16 reports
received by the Company from  Reporting  Persons,  the Company  believes that no
Reporting  Person has failed to file a beneficial  ownership  report on a timely
basis during the most recent fiscal year,  except for Messrs Schutte and Merante
who filed beneficial ownership reports late.


ITEM 10. EXECUTIVE COMPENSATION


Compensation of Directors

Directors of the Company who are not salaried  officers  receive a fee of $1,000
for attending each meeting of the Board of Directors or a committee thereof.  In
addition,  all  directors  are  reimbursed  for their  reasonable  out-of-pocket
expenses incurred in connection with attending such meetings.

Executive Compensation

The following table sets forth  compensation paid to the Chief Executive Officer
and to executive officers of the Company, excluding
those  executive  officers  who did not  receive  an annual  salary and bonus in
excess of $100,000, for the three years ended December 31, 2003

<TABLE>
<CAPTION>
--------------------------------- ---------- -------------------- ------------------ --------------
Name and Principal Position       Year       Salary ($)           Bonus ($)          Other Annual
                                                                                     Compensation
--------------------------------- ---------- -------------------- ------------------ --------------
<S>                               <C>        <C>                  <C>                <C>
Ron Schutte, CEO                  2003       $100,000             $0.00              $0.00
--------------------------------- ---------- -------------------- ------------------ --------------
                                  2002       $150,000             $0.00              $0.00
--------------------------------- ---------- -------------------- ------------------ --------------

                                  2001       $150,000             $0.00              $0.00
--------------------------------- ---------- -------------------- ------------------ --------------
</TABLE>

No other executive officer received a salary and bonus in excess of $100,000 for
the three years ended  December 31, 2003.  The Company has not granted any stock
options,  stock  appreciation  rights  or  long-term  incentive  awards  to  any
executive officer of the Company since its inception.



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The  following  table  sets forth the number  and  percentage  of Common  Shares
beneficially  owned,  as of December 31, 2003,  by: (i) all persons known by the
Company to be the beneficial owner of more than 5% of the outstanding  shares of
Common  Stock;  (ii) each  director  of the  Company;  (iii)  each of the "named
executive officers" as defined under the rules and regulations of the Securities
Act of 1933, as amended;  and (iv) all  directors and executive  officers of the
Company as a group (6 persons):



                                                                              32
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------- -------------------------------------- --------------------------
NAME OF BENEFICIAL OWNER                  NO. OF SHARES BENEFICIALLY OWNED       PERCENT
----------------------------------------- -------------------------------------- --------------------------
<S>                                       <C>                                    <C>
DIRECTORS AND EXECUTIVE OFFICERS:
----------------------------------------- -------------------------------------- --------------------------
Ronald L. Schutte                         660,000 (1)                            12.0%
----------------------------------------- -------------------------------------- --------------------------
David Abrahami                            450,000                                8.3%
----------------------------------------- -------------------------------------- --------------------------
Yona Gonen                                451,000                                8.3%
----------------------------------------- -------------------------------------- --------------------------
Philip Grabow                             800,000 (2)                            14.6%
----------------------------------------- -------------------------------------- --------------------------
Righthand & Co.                           500,000                                9.2%
----------------------------------------- -------------------------------------- --------------------------
Anthony J. Merante                        50,000                                 *
----------------------------------------- -------------------------------------- --------------------------
Inter Equity Capital Partners, L.P.       326,805                                6.0%
----------------------------------------- -------------------------------------- --------------------------
Richard Fechtor                           242,933(3)                             4.5%
----------------------------------------- -------------------------------------- --------------------------
Karen Brenner                              40,000 (4)                            *
----------------------------------------- -------------------------------------- --------------------------
Vincent Bucchimuzzo                       0                                      N/A
----------------------------------------- -------------------------------------- --------------------------
Carmelo L. Foti                           0                                      N/A
----------------------------------------- -------------------------------------- --------------------------
Fortuna and Fortuna Unplugged             550,000(5)                             10.0%
----------------------------------------- -------------------------------------- --------------------------
Directors and Nominal Executives as a     702,933                                12.9%
Group (6 persons)
----------------------------------------- -------------------------------------- --------------------------
</TABLE>


* Less than 1%
(1) Includes 250,000 options exercisable at $.07 per share.
(2) Includes 300,000 warrants convertible at $.68 per share. The warrants
    expired December 31, 2003.
(3) Includes 100,000 warrants convertible at $.68 per share. The warrants
    expired December 31, 2003.
(4) Includes 40,000 warrants convertible at $.68 per share. The warrants expired
    December 31, 2003.
(5) Includes 550,000 warrants convertible at $.68 per share. The warrants
    expired November 1, 2004.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Notes from an Officer and member of the Board of Directors

An officer, Ron Schutte, of the Company made loans to the Company during 2003 in
the amount of  $54,000.  The  revolving  credit  note dated  April 2, 2003 bears
interest at the variable  rate of the officer's  corresponding  bank credit line
from which the note originates.  The interest rate at December 31, 2003 was 8.5%
per annum.  Monthly payments of principal and interest correspond to the minimum
monthly  amount due on the credit line which was $1,270 at December 31, 2003. If
any amount under the note is not paid when due the interest  rate on that unpaid
portion shall be at 12.5% until paid. The note matures October 15, 2004.

A note payable  effective  August 18, 2003 was received in the amount of $50,000
from  Anthony J.  Merante,  a member of the Board of  Directors.  The note bears
interest at the variable  corresponding  rate of the Board Members'  credit line
which at December 31, 2003 was 8.25%. Monthly payments of principal and interest
correspond to the minimum  monthly  amount due on the credit line which was $947
at  year-end.  If any  amount  owing  under  the note is not  paid  when due the
interest rate on the unpaid  portion shall be 12.5% until paid. The note matures
October 15, 2004.

The Purchase of the assets of Brooklyn Cheesecake Company Inc.

On March 7, 2002, the assets of the Brooklyn  Cheesecake  Company were purchased
by Creative Bakeries Inc. for 300,000 shares of stock and $45,000 in cash. These
assets were owned by our current C.E.O. and board member Ron Schutte.


                                                                              33
<PAGE>

ITEM 13. REPORTS ON FORM 8-K AND EXHIBITS

REPORTS ON FORM 8-K

None.


EXHIBITS

         **2.1 Purchase and Sale Agreement, dated June 2, 1995, by and among the
Company,   Greenberg  Dessert   Associates  Limited   Partnership,   SMG  Baking
Enterprises, Inc. and its limited partners.

         ***2.2 Stock Purchase  Agreement,  dated as of January 17, 1997, by and
between the Company and Philip Grabow, without exhibits.

         **3.1    Restated Certificate of Incorporation.

         **3.2    Amended and Restated By-laws.

         **4.1    Form of certificate for shares of Common Stock.

         **4.2    Form of Representatives Warrant.

         **4.3 Loan Agreement,  dated July 10, 1995, by and between  InterEquity
Capital Partners, L.P. and the Company.

         **10.1  Employment  Agreement,  dated July 10, 1995, by and between the
Company and Stephen Fass.

         **10.2 Employment Agreement,  dated as of July 10, 1995, by and between
the Company and Willa Rose Abramson.

         **10.3 Employment Agreement,  dated as of July 10, 1995, by and between
the Company and Maria Maggio Marfuggi.

         **10.4 Employment  Agreement and Consulting  Agreement,  dated July 10,
1995, by and between the Company and Seth Greenberg.

         **10.5  Consulting  Agreement,  dated July 10, 1995, by and between the
Company and William Greenberg Jr.. and Carol Greenberg.

         **10.6  Departmental  License Agreement  effective February 1995 by and
between the Company and Macy's East, Inc.

         **10.8 Form of Warrant for InterEquity Capital Partners, L.P.

         **10.9 1995 William Greenberg Jr. Desserts and Cafes, Inc. Stock Option
Plan

         **10.10 Lease  Agreement dated July 1995 between the Company and Murray
Greenstein.

         **10.11 Lease  Agreement  dated January 1994 between  Schnecken  Baking
Realty Corp. and Gerel Corporation.

         **10.12  Assignment and Assumption of Lease dated July 1995 between the
Company and Schnecken Baking Realty Corp.

         **10.13 Lease dated April 1991 between  Greenberg's  35th Street Baking
Co., Inc. and Rugby Managed Asset Fund.

         **10.14  Assignment and Assumption of Lease dated July 1995 between the
Company and Greenberg's 35th Street Baking Co.


                                                                              34
<PAGE>

         **10.15  Lease  dated May 1989 as  modified  in  January  1991  between
Greenberg's Triple S. Baking Co., Inc. and Stahl Real Estate Co.

         **10.16  Assignment and Assumption of Lease dated July 1995 between the
Company and Greenberg's Triple S. Baking Co., Inc.

         **10.17 Consulting  Agreement,  dated July 10, 1995, by and between the
Company and Marilyn Miller.

         **10.18 Form of Indemnity Agreement.

         **10.19 Sublease dated December 1995 between  Timothy's  Coffees of the
World, Inc., and the Company.

         ****10.20  Lease dated March 8, 1995 between Harran Holding Corp.,  c/o
A. J. Clarke Management and the Company.

         ****10.21  Agreement  dated January 13, 1996 by and between the Company
and Barry Kaplan Associates.

         *****10.22 Employment Agreement, dated January 23, 1997, by and between
the Company and Philip Grabow.

         *****10.23   Form  of  Warrant  for  the  Private   Placement  made  in
conjunction with the JMS Subsidiary acquisition.

         ******10.24 Stock Purchase Agreement dated August 28, 1997, between the
Company and Yona Abrahami.

         ******10.25  Employment  Agreement  dated  August 28, 1992  between the
Company and Yona Abrahami.

         ******10.26  Employment  Agreement  dated  August 28, 1992  between the
Company and David Abrahami.

         *******10.27  Amendment  to Stock  Purchase  Agreement  dated March 10,
1997, between the Company and Yona Abrahami.

         *10.28  Sixth  Amendment  to Lease dated  October 31, 2003  between the
Company and Airport Plaza Shopping Center, L.L.C.

         *10.29 Loan and Security  Agreement  dated  October 9, 2003 between the
Company and Fairfield Gourmet Food Corp.

         *******21.1  List  of  Subsidiaries  of  the  Company,   the  state  of
incorporation of each, and the names under which such subsidiaries do business.

         *31.1  Certification of Chief Executive Officer and president  pursuant
to the Sarbanes-Oxley Act of 2002.

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

         _____________________


*        Filed Herewith.

**  Incorporated  by reference to the Company's  Registration  Statement on Form
SB-2 Registration Number 33-96094.

***  Incorporated  by reference to Schedule  13-D filed by Philip  Grabow on SEC
File Number 005-48185.

****  Incorporated  by reference to the  Company's  Annual Report for the fiscal
year ended December 31, 1995, on Form 10-KSB Commission File Number 1-13984.


                                                                              35
<PAGE>

*****  Incorporated  by reference to the Company's  Annual Report for the fiscal
year ended December 31, 1996, on Form 10-KSB Commission.

******  Incorporated  by reference to the Company's  Current Report on Form 8-K,
dated September 11, 1997 and Form 8-K/A, dated November 17, 1997.

*******  Incorporated by reference to the Company's Annual Report for the fiscal
year ended December 31, 2003, on Form 10KSB/A No. 2.



ITEM 14. PRINCIPAL ACCOUNTANT'S FEES AND SERVICES


Approximately  $27,000 for the December 31, 2003 audit, review of 2003 quarterly
financial information and preparation of 2002 corporation income taxes.




                                                                              36
<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 March 31, 2004.

CREATIVE BAKERIES, INC.

By: /s/Ron Schutte
    ------------------------------
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
March 31, 2004.



Signatures                                Title
----------                                -----

/s/Ron Schutte
---------------------------------         President, Chief Executive
Ron Schutte                               Officer/Director

/s/ Vincent Bucchimuzzo                   Director
---------------------------------
Vincent Bucchimuzzo

/s/ Richard Fechtor                       Director
---------------------------------
Richard Fechtor

/s/ Anthony Merante                       Director
---------------------------------
Anthony Merante

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

/s/Mel Foti                               Director
---------------------------------
Mel Foti



                                                                              37