-------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------
                                   Form 10-KSB
                                   (Mark One)

[X]  Annual report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 For the fiscal year ended December 31, 1998
                               or
[ ]  Transition  report  pursuant  to  Section  13 or  15(d)  of the
     Securities Exchange Act of 1934 For the transition period from _____ to
                                      _____

                         Commission file number 0-22431

                           NEW YORKER MARKETING CORP.
                        (FORMERLY: MIKE'S ORIGINAL, INC.)
                 (Name of Small Business Issuer in its Charter)

       Delaware                                       11-3214529
(State or other jurisdiction of          (IRS Employer Identification No.)
 incorporation or organization)

        366 N. Broadway, Jericho, New York              11753
     (Address of Principal Executive Offices)         (Zip Code)

Issuer's telephone number, including area code:      (516) 942-8068

  Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 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  pursuant to Item 405 of
Regulation S-B 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 [x]

  Issuer's revenue for its most recent fiscal year:  $103,410

  The aggregate market value of the voting stock held by  non-affiliates  of the
registrant  as of February 26, 1999 based on the average  price on that date was
$4,938,741.  At  January  31,  1999,  the  number of shares  outstanding  of the
issuer's common stock was 5,152,908.

                       DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format     Yes [   ]   No [ x ]
<PAGE>

                                     PART I

ITEM 1.     DESCRIPTION OF BUSINESS

General

     According to the International Ice Cream Association, ice cream was part of
a $10.5 billion  nationwide frozen dessert industry in 1995 and has wide appeal,
with over 93% of households in the United States consuming these products.  From
its  inception,  New  Yorker  marketed,  sold and  distributed  Mike's  Original
Cheesecake  Ice  Cream,  an all  natural  blend  of ice  cream  with  cheesecake
ingredients.  This  product  line was offered in a variety of flavors  mainly to
supermarkets  and grocery  stores and also, to a lesser  extent,  to convenience
stores and food  service  outlets.  Since March 1998,  sales of Mike's  Original
Cheesecake Ice Cream have been nominal.  In June 1998, New Yorker  curtailed the
sale of its ice cream and began distributing Veryfine Frozen Juice Bars under an
agreement with Veryfine.

     Initially,  New Yorker manufactured,  marketed and distributed its own line
of ice cream  products.  New Yorker wants to change its  operations to marketing
and  distributing  a variety of ice cream  products and other  frozen  desserts,
including  nationally  known  brands of  super-premium  ice cream  products  and
possibly its own ice cream  products.  New Yorker plans to change its operations
by buying distribution companies in large metropolitan areas. New Yorker expects
these purchases to provide new brands and customers,  distribution expertise and
an operations  center that can absorb any future  acquisitions.  As part of this
plan,  New Yorker  recently  acquired  the rights to purchase  the assets of New
Yorker Ice Cream Corp.  and Jerry's Ice Cream Co., Inc. New Yorker Ice Cream and
Jerry's Ice Cream distribute and market ice cream and frozen novelties including
Haagen-Dazs,  Good Humor, and Edy's.  These companies had combined 1998 revenues
of approximately  $6,500,000 . New Yorker intends to use part of the proceeds of
a recently filed proposed public offering to buy these assets.

     New Yorker was  incorporated in New York in March 1993,  reincorporated  in
Delaware  in May 1994 and changed  its name from  Mike's  Original,  Inc. to New
Yorker Marketing Corp. in March 1999. It maintains its principal  offices at 366
N.  Broadway,  Jericho,  New York 11753 and its  telephone  number is (516) 942-
8068.

Agreement with Veryfine Products

  New Yorker  entered into a license  agreement  with  Veryfine  Products,  Inc.
effective  April  1,  1998 for the  sale of  Veryfine  Frozen  Juice  Bars.  The
agreement  grants  New  Yorker's  wholly-owned  subsidiary,  New  Yorker  Frozen
Desserts,  Inc., an exclusive  license to manufacture and sell frozen juice bars
in certain  flavors,  sizes and  packaging for a two year period in the New York
Metropolitan area, including Nassau, Suffolk,  Westchester,  Putnam and Rockland
counties,  and certain  counties in New Jersey and in the State of  Connecticut.
New  Yorker  has the  right to  manufacture  these  products  at  facilities  it
designates under quality  assurance  procedures  established by Veryfine.  These
products have been manufactured in the Fieldbrook facility in Buffalo,  New York
and New Yorker has been  selling  these  products  since June 1998.  The license
agreement  also  prohibits  New Yorker from  manufacturing  or selling any other
branded frozen juice bar.


<PAGE>

Proposed Acquisition of Distributors

     New Yorker will be using a portion of the proceeds of its proposed offering
to purchase  the assets of New Yorker Ice Cream and Jerry's Ice Cream,  two full
service  distributors and marketers of ice cream and frozen  novelties.  In July
1998, Multi Venture Partners Ltd. assigned to New Yorker all of its right, title
and interest  under  certain  purchase  agreements  to acquire the assets of New
Yorker and Jerry's. These agreements, which have since been amended, provide for
an aggregate purchase price of approximately $2,500,000, of which

 --      $970,000  is payable in cash at  closing,  
 --      $820,000  is payable in restricted  common stock at closing, 
 --      $200,000 is payable over six months at an 8% annual interest rate; and
 --      $495,000 is payable over four years at an 8% annual interest rate.

     Each agreement  further  provides:  (i) for a price guarantee on the common
stock issued at closing which is  exercisable by the purchaser  eighteen  months
from the  closing  date;  and (ii) that New  Yorker can call all or part of such
common stock at any time during such eighteen month period, at the closing price
of the common stock on the closing date of the acquisition.

     At closing Mr. Ted Ketsoglou, the principal of New Yorker Ice Cream and Mr.
Gerald Schneider,  the principal of Jerry's Ice Cream, will become directors and
officers of New Yorker and will be  employed  by New Yorker  pursuant to written
employment agreements. See "Management - Proposed Employment Agreements."

     Some of the products  currently  being  distributed by New Yorker Ice Cream
and Jerry's Ice Cream are Haagen Dazs,  Good Humor,  Baskin  Robbins,  Snickers,
Edy's,  Veryfine  Juice  Bars and  American  Classics.  New Yorker Ice Cream and
Jerry's Ice Cream own in the aggregate  approximately  2,000 freezers which they
have  placed  in   approximately   1,500  locations   throughout  the  New  York
Metropolitan  area,  including  Connecticut  and New  Jersey.  The  institutions
serviced  by these  companies  include  grocery  stores,  bodegas,  restaurants,
delicatessens,   supermarkets,  parks,  beaches  and  airports.  Their  combined
revenues for the year ended December 31, 1998 were approximately $6,500,000.

Principal Supplier

     For the years ended  December  31, 1998 and 1997  approximately  30% of the
combined  revenues  of New Yorker Ice Cream and  Jerry's Ice Cream were from the
sale  of  Haagen-Dazs   products.   While  these   companies   enjoy  long  term
relationships  with  Haagen-Dazs,  the loss of this company as a supplier  could
have a material adverse effect upon the business of New Yorker and Jerry's.

Manufacturing 

     New Yorker's  products are presently  manufactured by Fieldbrook  Farms, an
independent FDA approved facility located in Buffalo, New York, under a two-year
exclusive  manufacturing  agreement  expiring in March 1999.  The  manufacturing
agreement,  dated as of March 20, 1997,  provides that  Fieldbrook  shall be the
exclusive supplier of all products manufactured by Fieldbrook and distributed by
New Yorker east of the Mississippi River for a period of two years.
<PAGE>


     The products  distributed by New Yorker Ice Cream and Jerry's Ice Cream are
manufactured either by the ice cream company  themselves,  i.e., Haagen Dazs, or
by third party manufacturers, and sold to New Yorker and Jerry's.

Distribution and Marketing

     New Yorker,  through its officers,  consultants and other  representatives,
currently  markets the Mike's Original  products on a very limited basis through
supermarkets, grocery stores, convenience stores and food service outlets. While
New Yorker  incurred  substantial  promotional  expenses  for  freezer  space in
connection with entering new markets, maintaining existing markets, entering new
retailers and maintaining shelf space in existing retailers,  it has received no
assurance that these  retailers will continue to allocate  freezer space for New
Yorker's   products  even  after  the  payment  of  these  fees  and,  in  fact,
substantially  all of the supermarkets  have  discontinued  selling New Yorker's
products.

     New Yorker Ice Cream and Jerry's Ice Cream employees  primarily  distribute
their products to grocery  stores,  bodegas and restaurants in their own trucks.
New Yorker Ice Cream and  Jerry's Ice Cream have  placed  their own  freezers at
these  locations  at no  expense  to the store  owner.  New Yorker Ice Cream and
Jerry's  Ice  Cream  currently  have  placed  approximately  2,000  freezers  in
approximately 1,500 locations in the New York City Metropolitan area.

Competition

     In the distribution of products, New Yorker Ice Cream and Jerry's Ice Cream
compete with many distributors in the New York City Metropolitan  area,  several
of which have greater  financial and other  resources.  In order to maintain and
increase its market position, New Yorker and Jerry's must maintain the condition
of their freezers,  effectively  compete in the selling price of their products,
and seek additional locations for freezers.

Government Regulation

     New Yorker is  subject  to  regulation  by  various  governmental  agencies
regarding  the  distribution  and sale of food  products,  including the FDA and
various state agencies.  New Yorker believes that its marketing and distributing
operations comply with all existing applicable laws and regulations.

     New Yorker  cannot  predict  the  impact of  possible  changes  that may be
required in response to future legislation, rules or inquiries made from time to
time by governmental  agencies.  FDA regulations may, in certain  circumstances,
affect the ability of New Yorker, as well as others in the industry,  to develop
and market new products.  However,  New Yorker does not  presently  believe that
existing  applicable  legislative and administrative  rules and regulations will
have a significant impact on its operations.

Trademarks and Patents

     New Yorker owns  registered  trademarks  and service  marks under the names
"Mike's  Original ", "GRAMWICH " and "Graham  Cracker  Delight ". New Yorker has
common law trademarks for "Strawberry  Fantasy ",  "Chocolate  Tidbits ", Sorbet
Blends , Raspberry Romance and Lemon Lace . New Yorker does not believe that any
of these trademarks are material,  either  individually or collectively,  to New
Yorker's planned operations.

<PAGE>

  All  trademarks  and service marks  appearing in this  prospectus  that do not
relate to New Yorker products are the property of their respective holders.

Insurance

     New Yorker's  business exposes it to potential  liability which is inherent
in the  marketing  and  distribution  of food  products.  New  Yorker  currently
maintains $2,000,000 of product liability  insurance.  New Yorker also maintains
$1,000,000  of  general  and  personal  injury   insurance  per  occurrence  and
$5,000,000 in the aggregate.  Any product liability judgement against New Yorker
which is not covered by insurance  could have a material  adverse  effect on New
Yorker's business and prospects.

Employees

     New  Yorker  currently  employs  two  part-time   persons,   who  serve  in
administrative  capacities. New Yorker Ice Cream and Jerry's Ice Cream employ an
aggregate of approximately 30 full-time persons,  of whom approximately 5 are in
executive  and  administrative  operations  and  approximately  25 in warehouse,
selling and  distribution.  None of the  employees  are  represented  by a labor
union.  New Yorker,  New Yorker Ice Cream and Jerry's Ice Cream  consider  their
relationships with their employees to be satisfactory.

Seasonality

     The ice cream industry generally  experiences its highest volume during the
spring and summer  months and the lowest  volume in the winter  months.  In this
regard,  according  to  statistics  published  by the  International  Ice  Cream
Association,  35.5% of sales of novelty ice cream products and 29.5% of sales of
packaged  ice  cream  products  were  made  during  the  third  quarter  (July -
September)  of  calendar  1996 while  only  18.0% of sales of novelty  ice cream
products  and 22.4% of sales of  packaged  ice cream were made  during the first
quarter (January - March) of calendar 1996.

ITEM 2.     DESCRIPTION OF PROPERTY

     On October 1, 1998,  New Yorker  signed a  month-to-month  lease for office
space in Jericho,  New York at a monthly rental of $650.  This office will serve
as the  corporate  office of New  Yorker  until  such time as New Yorker and the
planned acquisitions can be relocated to an appropriate facility.

ITEM 3.     LEGAL PROCEEDINGS

     J.W.  Messner,  Inc. v. New Yorker  Marketing  Corp.  On May 22, 1997,  the
parties  entered into a stipulation  of settlement in this action pending in the
Supreme Court of New York, Nassau County, wherein New Yorker agreed to pay J. W.
Messner,  New Yorker's former advertising  agent, the sum of $125,936,  in three
installments  as  follows:  $40,000  on June 30,  1997;  $42,968,  plus  accrued
interest,  on or before June 30, 1998; and $42,968, plus accrued interest, on or
before  December 31, 1998.  Only the $40,000 due on June 30, 1997 has been paid.
On January  30,  1999,  a default  judgment in the amount of $97,688 was entered
against New Yorker.

<PAGE>

     Universal  Folding Box Co., Inc. v. New Yorker  Marketing  Corp., et al. On
April 2, 1998,  New Yorker was served with a complaint  in an action  pending in
the Supreme Court of New York,  Nassau County and seeks damages in the amount of
$82,037,  arising from New Yorker's alleged failure to pay for certain inventory
purchased. New Yorker has filed an answer in this action. In December, 1998, the
parties  submitted the case to  non-binding  arbitration in which the arbitrator
recommended that New Yorker pay Universal  Folding $30,000.  New Yorker disputes
the non-binding arbitrator's recommendation and has filed a request for trial.

     Lee's Marketing  Services,  Inc. v. New Yorker  Marketing Corp. On December
16, 1998, Lee's Marketing  commenced an action against New Yorker in the Circuit
Court,  Jo Daviess  County,  Illinois,  seeking  $128,354  arising  from  coupon
processing  services  allegedly  performed  for New  Yorker in 1996.  New Yorker
intends to deny the  allegations in the complaint and to vigorously  defend this
action and intends to file an answer in March 1999.

     Except as set forth  above,  New  Yorker is not  involved  in any  material
pending legal proceedings.


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

     The  Registrant  held its Annual  Meeting of  Stockholders  on December 28,
1998.

     Three  directors  were  elected at the Annual  Meeting.  The names of these
directors and votes cast in favor of their  election and shares  withheld are as
follows:

<TABLE>
<CAPTION>

          Name                               Votes For         Votes Withheld
          ----                               ---------         ---------------
<S>                                          <C>                  <C>
Myron Levy (to serve until the
  Annual Meeting of Stockholders in 1999)    2,949,314             18,598    
Frederic D. Heller (to serve until the
  Annual Meeting of Stockholders in 2000)    2,949,314             18,598
Arthur G. Rosenberg (to serve until the
  Annual Meeting of Stockholders in 2001)    2,949,314             18,598
</TABLE>

     In addition to the election of  directors,  the  stockholders  approved the
following:

     (a) a proposal to amend New Yorker's Certificate of Incorporation to change
the name to "New Yorker  Marketing Corp." - 2,939,268 shares were voted in favor
of this proposal, 19,804 shares against and 8,840 shares abstained;

     (b) a  proposal  to amend New  Yorker's  Certificate  of  Incorporation  to
authorize,  subject to Board of Director's  discretion,  a one-for-four  reverse
stock split of New Yorker's Common Stock. - 2,890,174 shares were voted in favor
of this proposal, 59,856 shares against and 17,881 shares abstained;

     (c) a  proposal  to amend New  Yorker's  Certificate  of  Incorporation  to
authorize,  subject to Board of Director's  discretion,  a one-for-five  reverse
stock split of New Yorker's Common Stock. - 2,890,174 shares were voted in favor
of this proposal, 59,856 shares against and 17,881 shares abstained.

<PAGE>

                            PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS

     New Yorker's  common  stock has traded on the OTC Bulletin  Board under the
symbol "MIKS" since July 31, 1997.  The following  table sets forth the high and
low closing prices for the common stock for the periods indicated.

<TABLE>
<CAPTION>
                                                  High         Low
                                                  ----         ---
                                             

     <S>                                          <C>        <C> 
     1999
     First Quarter (through February 26, 1999)    1 1/8        3/8       

     1998
     Fourth Quarter. . . . . . . . . . . .        1            3/8
     Third Quarter . . . . . . . . . . . .        1 5/32       5/8
     Second Quarter. . . . . . . . . . . .        2 5/8        3/4
     First Quarter . . . . . . . . . . . .        4          2 1/4

     1997
     Fourth Quarter. . . . . . . . . . . .        5 11/16    2 9/16
     Third Quarter . . . . . . . . . . . .       12          5 1/8

</TABLE>


     As of February 26, 1999, there were  approximately 195 holders of record of
the common  stock.  On February 26, 1999,  the closing sales price of New Yorker
common stock was $1.00 per share.

     New Yorker  has not paid any  dividends  on its  Common  Stock and does not
presently  intend to do so.  Future  dividend  policy will be  determined by its
Board of Directors on the basis of New Yorker's earnings,  capital requirements,
financial condition and other factors deemed relevant.

     The transfer  agent and registrar of New Yorker's  Common Stock is American
Stock Transfer and Trust Co., 40 Wall Street, New York, New York 10005.

<PAGE>


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

Results of Operations

Years Ended December 31, 1998 and December 31, 1997

     New  Yorker's  sales for the years  ended  December  31, 1998 and 1997 were
$103,410 and $384,348  respectively,  a decrease of 73%. This decrease  resulted
from the limited  operations of New Yorker and limited capital.  In May 1998 New
Yorker   introduced   Veryfine   frozen  juice  bars  and  sales  did  not  meet
expectations.  The limited available  capital created  difficulty in getting the
product introduced into the marketplace.

     New Yorker  experienced  a gross loss in the years ended  December 31, 1998
and 1997.  For the year ended  December 31, 1998 the loss  increased to $333,047
from the 1997  level of  $66,850  primarily  due to raw  ingredients  and excess
packaging  that had to be  discarded.  The decrease in gross  profit  dollars is
primarily  attributable to the decline in net sales and gross profit percentage.
Gross profit as a percentage of net sales declined  partly as a result of higher
raw material costs and the very limited volume.

     General and administrative  expenses (G&A) for the years ended December 31,
1998  and  December  31,  1997  were   approximately   $760,000  and  $2,177,000
respectively. The major components of these expenses for the year ended December
31, 1998 were  payroll  and  related  taxes of  $139,000,  professional  fees of
$183,000,  director's  expense of $144,000 (of which $128,000 was paid in Common
Stock) and legal fees of $84,000. The major components of these expenses for the
year ended  December 31, 1997 were payroll and related taxes of $399,000,  legal
and  accounting  fees of $597,000  and  consulting  fees of  $948,000  (of which
$855,000  was paid in Common  Stock).  The shares  issued  during the year ended
December 31, 1997,  though restricted  securities,  were valued by New Yorker at
$1,311,000,  based upon 25% discounts from the Initial Public  Offering price on
transactions  occurring  prior to the IPO and the  closing bid price on the date
authorized for transactions occurring after the IPO.

     Selling and  shipping  expenses  for the years ended  December 31, 1998 and
December 31, 1997 were approximately $32,000 and $724,000 and respectively.  The
sharp  decline for the 1998 period was  primarily  due to New  Yorker's  limited
operations and low volume.

     Interest  expense,  net of interest income for the years ended December 31,
1998 and  December  31, 1997 were  $167,000  and  $1,506,000  respectively.  The
primary  expense in 1998 was associated  with the issuance of private  placement
notes.  The notes  were part of a sale of units with each unit  consisting  of a
$50,000 12% note and 200,000 shares of Common Stock.  In the year ended December
31, 1997,  $169,000 of the net interest cost was  attributable to the conversion
of  open  accounts  payable  into  interest-bearing   accounts,  and  additional
borrowings  from  related  parties  and  other  creditors.  These  additions  to
interest-bearing  obligations  began  in mid 1996 and  continued  in 1997  until
completion of New Yorker's  Initial Public  Offering.  The remainder of interest
charges for the years December 31, 1997 resulted from non-cash  imputed interest
charges of $1,327,000  primarily in connection with the issuance of Common Stock
to New  Yorker's  manufacturer,  and the  issuance  of  convertible  debt and/or
warrants  to  lenders,   including   vendors.   The  imputed   interest  charges
attributable  to the shares  issued and issuable to these  various  creditors in
1997 were  charged  to  operations  in the  period  the  shares  or  convertible
securities were initially issued. The shares, though restricted securities, were
valued by New Yorker based upon a 25% discount from the Initial Public  Offering
price.

<PAGE>

     Net loss for the years  December 31, 1998 and 1997  amounted to  $1,113,000
and $4,503,000 respectively. The primary reason for the net loss in 1998 was the
low volume  created by the limited  operations.  The primary  reason for the net
loss in 1997 was due to the lack of volume from the absence of distributors, the
lack of cash flow through the date of the initial  public  offering and the high
interest cost associated with the high debt levels prior to the offering.

Seasonality

     New Yorker  typically  experiences  more demand for its products during the
summer than during the winter.

     The ice cream industry generally  experiences its highest volume during the
spring and summer  months and the lowest  volume in the winter  months.  In this
regard,  according  to  statistics  published  by the  International  Ice  Cream
Association,  35.5% of sales of novelty ice cream products and 29.5% of sales of
packaged  ice  cream  products  were  made  during  the  third  quarter  (July -
September)  of  calendar  1996 while  only  18.0% of sales of novelty  ice cream
products  and 22.4% of sales of  packaged  ice cream were made  during the first
quarter (January - March) of calendar 1996.


<PAGE>

Liquidity and Capital Resources

     New  Yorker's  cash  requirements  have been  significantly  exceeding  its
resources due to the limited  operations of New Yorker. At December 31, 1998 New
Yorker had a working capital deficit of $1,974,550.  It is anticipated  that the
collection  of  receivables  and the net proceeds of $355,000  from New Yorker's
recent private placement should sustain New Yorker until an additional  offering
of securities  can be  accomplished.  While New Yorker has filed a  registration
statement  with the  Securities  and  Exchange  Commission  covering a secondary
offering of securities, there are no assurances that such additional offering of
securities  can be  accomplished.  If the offering of  additional  securities is
successful,  New Yorker plans to consummate the two acquisitions currently under
contract with New Yorker and may seek  additional  acquisitions  to continue the
shift  of New  Yorker's  business  to more of a  distributorship  rather  than a
manufacturer.  These  acquisitions  and additional  financing are anticipated to
generate  sufficient cash flow to meet New Yorker's needs for the balance of the
year.  The  failure of New Yorker to  complete  this  secondary  offering  would
require  New  Yorker to seek other  financing  in order to  continue  as a going
concern and New Yorker has no alternative plans for financing.

Impact of the Year 2000 on Information Systems

     The Year 2000 issue arises as the result of computer  programs  having been
written, and systems having been designed,  using two digits rather than four to
define the  applicable  year.  Consequently,  such software has the potential to
recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
could  result in a system  failure or  miscalculations  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions, send invoices, or engage in similar normal business activities.

     New Yorker is not  expected to be affected by Year 2000 as it does not rely
on date-sensitive software or affected hardware. New Yorker's current accounting
and other systems were purchased  "off-the-shelf".  New Yorker intends to timely
update its  accounting  and other systems which are determined to be affected by
Year 2000 by purchasing Year 2000 compliant software and hardware available from
retail vendors at reasonable cost.

     New Yorker has not yet  contacted  other  companies  on whose  services New
Yorker  depends to  determine  whether  such  companies'  systems  are Year 2000
compliant. If the systems of New Yorker or other companies on whose services New
Yorker depends,  including New Yorker's customers,  are not Year 2000 compliant,
there could be a material adverse effect on New Yorker's financial  condition or
results of operations.


     Except for  historical  information  contained in this Report,  the matters
discussed are  forward-looking  statements that involve risks and uncertainties.
Among the factors that could cause actual  results to differ  materially are the
following:  the  inability  of New Yorker to  complete  its  proposed  secondary
offering;  the  effect  of  business  and  economic  conditions;  the  impact of
competitive   products  and  pricing;   capacity  and  supply   constraints   or
difficulties;   product   development,    commercialization   or   technological
difficulties; and the regulatory and trade environment.

<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

     The  following  selected  financial  data has been derived from the audited
financial  statements of New Yorker and should be read in conjunction  with, the
financial statements and related notes appearing elsewhere in this Form 10-KSB.


Statement of Operations Data:

<TABLE>
<CAPTION>
                              Fiscal Year Ended December 31,
                              ------------------------------
                                   1998         1997   
                                   ----         ----

<S>                              <C>          <C>                   
Net sales                        $103,410     $384,348              
Net loss                       (1,113,155)  (4,502,645)             
Loss per Common Share               $(.31)     $ (1.69)             
Weighted Average Common                   
  Shares Outstanding            3,627,133    2,662,013

Balance Sheet Data:                                                         

                                 As of December 31, 1998
                                 -----------------------  
                                        Actual          
                                        ------ 
  
Total assets                          $   311,893                   
Current liabilities                     2,084,507                   
Long-term liabilities net of current             
    portion                                                         
Stockholders' equity (deficit)        (1,772,614)

</TABLE>


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

Not applicable.


<PAGE>


                                    PART III

ITEM 9:  DIRECTORS AND EXECUTIVE OFFICERS, COMPLIANCE WITH SECTION
         16(A) OF THE EXCHANGE ACT

     New Yorker's  directors and executive  officers as of January 31, 1999 were
as follows:

             Name            Age        Position(s) with New Yorker
             ----            ---        ---------------------------  

     Arthur G. Rosenberg     61         President and Director
     Marc P. Palker          47         Secretary
     Frederic D. Heller      60         Director
     Myron Levy              56         Director 


     Arthur G. Rosenberg, Esq. has been a director of New Yorker since September
1995 and  President  since  September 1, 1998.  Mr.  Rosenberg has been the Vice
President of Acquisitions for The Associated Companies, a real estate developer,
in  Bethesda,  Maryland  since  June  1987  and  is a  principal  of  Millennium
Development  Group,  LLC, a real estate  developer in Frederick,  Maryland.  Mr.
Rosenberg  is an attorney  admitted to practice in the State of New York and has
practiced law for over 30 years.  Mr.  Rosenberg is a director of Phar-mor Inc.,
which operates a chain of retail drug stores.

     Marc  P.  Palker  has  been a  financial  consultant  to New  Yorker  since
December,  1997 and  Secretary  of New Yorker  since  September  1,  1998.  From
January,  1997 to the  present,  Mr.  Palker has been an  independent  financial
consultant.  From  February,  1989 through  December,  1996 Mr. Palker was Chief
Financial  Officer of Firetector Inc. a publicly owned business  involved in the
design,  manufacture and service of life safety communications  equipment.  From
1994 through 1995, Mr. Palker served as National Vice President of the Institute
of Management Accountants. Mr. Palker is a Certified Management Accountant.

     Frederic D. Heller was Vice President of Finance and director of New Yorker
from January 1997 until  November 14, 1997 when he resigned as an officer of New
Yorker.  Since November 1997, Mr. Heller has been Chief Financial Officer of J &
W Management Corp., a commercial real estate management company. Mr. Heller is a
CPA  licensed  in the  State of New York for over the last ten  years.  Prior to
joining New Yorker,  from November 1994 through January 1997, he practiced as an
independent financial consultant including rendering such services to New Yorker
in that capacity from August 1996 to January 1997.  From  September 1992 through
October  1994,  Mr.  Heller  was Vice  President  of  Finance  and  director  of
Vasomedical,  Inc.,  formerly  Future Medical  Products,  Inc., a publicly owned
business  involved in the  merchandising  of certain  medical  technology.  From
October  1990  through  September  1992,  Mr.  Heller  was  president  and chief
operating  officer  of FDH  Enterprises,  Inc.,  a company  rendering  financial
consulting services to business clients.

     Myron Levy has been a director  of New Yorker  since July 1997.  Since June
1993, Mr. Levy has been President of Herley  Industries,  Inc., a publicly owned
designer and manufacturer of flight instrumentation  products.  From May 1991 to
June 1993,  Mr. Levy served as Executive  Vice President and Treasurer of Herley
Industries, Inc. Mr. Levy also has been a director of Herley since 1992.

<PAGE>

     New Yorker's  Board of  Directors is  classified  into three  classes.  The
directors in each class serve for  three-year  terms.  Arthur G.  Rosenberg is a
member of Class I which  serves  until  New  Yorker's  2001  Annual  Meeting  of
Stockholders. Myron Levy is a member of Class II which serves until New Yorker's
1999 Annual Meeting of Stockholders. Frederic D. Heller is a member of Class III
which serves until New Yorker'S 2000 Annual Meeting of  Stockholders.  Directors
who are not  employees  of New  Yorker  receive no cash  compensation  for their
services to New Yorker as directors,  but are reimbursed  for expenses  actually
incurred in connection  with attending  meetings of the Board of Directors.  All
members of the Board of Directors  are eligible to  participate  in New Yorker's
stock option plans.  Each director  attended or  participated in at least 75% of
the meetings of the Board of Directors during his tenure in fiscal 1998.

ITEM 10. EXECUTIVE COMPENSATION

     The  following  table  sets forth the cash and other  compensation  paid or
accrued by New Yorker  during the year ended  December  31, 1998 and 1997 to New
Yorker's Chief Executive Officer.  Michael Rosen ceased to be New Yorker's Chief
Executive  Officer effective in May 1998. No other executive officer earned over
$100,000 in any fiscal year.

<TABLE>
<CAPTION>

                                                                    Long Term      
                                Annual Compensation                 Compensation
                                                                    Securities
Name and                                            Other Annual    Underlying      All  Other 
Principal Position      Year    Salary      Bonus  Compensation(2)  Options         Compensation
------------------      ----    ------      -----  ---------------  -------------  --------------
                                                                                
<S>                     <C>     <C>          <C>         <C>          <C>                <C> 
Michael Rosen           1998    $36,458       -          -               -                -
Chairman of the Board,  1997     98,083       -          -             50,000(3)          -     
President, Chief        1996    112,250(1)    -          -            200,000(3)          -      
Executive Officer       

<FN>
(1) Does not include an  aggregate  of $89,565 of salary which was accrued
    and not  paid to Mr.  Rosen  during  the  period  from  inception  through
    September  30,  1996,  to which Mr.  Rosen has waived all rights.  
(2) The value of all perquisites  provided to New Yorker's officers did not 
    exceed the  lesser of  $50,000 or 10% of the  officer's  salary  and  bonus.
(3) Represents  ten-year  options  granted  in May  1996  and  September  1996
    pursuant to New Yorker's 1995 Long Term Incentive Plan.
</FN>
</TABLE>


<PAGE>


Option/SAR Grants in Last Fiscal Year

     The following  table sets forth all stock options  granted to the executive
officers named in the Executive  Compensation table during the fiscal year ended
December 31, 1998 and 1997.
<TABLE>
<CAPTION>

                                           Individual Grants
                   ------------------------------------------------------------------
                   Number of        % of Total
                   Securities       Options/SARS
                   Underlying       Granted to        Exercise or
                   Options/SARS     Employees in      Base                Expiration
Name               Granted (#)      Fiscal Year       Price ($/Sh)        Date    
----               -------------    --------------    --------------      -----------           

<S>                    <C>              <C>               <C>            <C>       
Michael Rosen          50,000           42.9%             $1.50           May 1, 2007(1)
------
<FN>
(1)  Represents ten year options granted in May 1997 pursuant to New Yorker's 
     1995 Long Term Incentive Plan.  Options became fully vested on November 1, 
     1997.
</FN>
</TABLE>

Consulting Agreements

     In October 1998, New Yorker entered into a five-year  consulting  agreement
with its  President,  Arthur  G.  Rosenberg  which  becomes  effective  upon the
acquisition  of New Yorker Ice Cream and  Jerry's  Ice Cream,  at which time Mr.
Rosenberg  will be resigning as  President of New Yorker and  continuing  in his
position as Chief Executive  Officer.  Mr.  Rosenberg is to provide  management,
sales and marketing services to New Yorker for a monthly fee of $5,000.

     New Yorker has entered into a  consulting  agreement  with Alma  Management
Corp.  ("Alma"),  as of  November  1, 1996.  Under this  agreement,  which ended
October 31, 1998, Alma agreed to cause its two principals,  to provide sales and
marketing  advisory  and  consulting  services to New Yorker.  Alma  received an
annual  consulting fee of $50,000  payable at New Yorker's option in either cash
or common stock.  In addition,  Alma has received  30,000 shares of common stock
and options to purchase  133,333  shares of common stock at an exercise price of
$1.50 per share.

Proposed Employment Agreements

     Ted Ketsoglou has entered into a five year employment agreement, commencing
on the closing of the New Yorker Ice Cream acquisition, wherein he has agreed to
serve as President  of New Yorker Ice Cream.  The term of the  agreement  may be
extended for an additional five year period at the sole option of New Yorker. As
compensation for his services, Mr. Ketsoglou is to receive $126,000 annually and
an annual bonus equal to 2% of New Yorker pretax profits.  He is also to receive
annual  salary  increases  of 5%  during  the  initial  five  year  term and 10%
thereafter.  Upon the  effectiveness of the agreement,  New Yorker will issue to
Mr.  Ketsoglou  200,000 shares of its common stock,  of which half shall vest on
January 15, 1999 and half on January 15, 2000.  His  employment  agreement  also
provides  that  New  Yorker  will  grant  certain   options  on  closing  future
acquisitions and for certain payments following death or disability.  During the
term of his employment,  New Yorker has also agreed to use reasonable efforts to
cause  Mr.  Ketsoglou's  appointment  or  election  to  New  Yorker's  Board  of
Directors.  For more than the past five years,  Mr. Ketsoglou has been President
of New Yorker Ice Cream.

<PAGE>

     Gerald  Schneider  has  entered  into a  five  year  employment  agreement,
commencing on the closing of the Jerry's Ice Cream  acquisition,  wherein he has
agreed  to serve as Vice  President  of  Sales  of New  Yorker.  The term of the
agreement may be extended for an additional  five year period at the sole option
of New Yorker.  As compensation  for his services,  Mr.  Schneider is to receive
$115,500  annually and an annual bonus equal to 2% of New Yorker pretax profits.
He is also to receive  annual  salary  increments  of 5% during the initial five
year term and 10%  thereafter.  Upon the  effectiveness  of the  agreement,  New
Yorker will issue to Mr.  Schneider  200,000 shares of its common stock on which
half shall vest on January 15, 1999 and half on January 15, 2000. His employment
agreement  also provides  that New Yorker will grant certain  options on closing
future  acquisitions  and for certain  payments  following  death or disability.
During the term of his employment,  New Yorker has also agreed to use reasonable
efforts to cause Mr.  Schneider's  appointment or election to New Yorker's Board
of  Directors.  For more  than the  past  five  years,  Mr.  Schneider  has been
President of Jerry's Ice Cream.

Stock Plans

     1995 Long Term Incentive Plan

     In August 1995,  New Yorker  adopted a 1995 Long Term  Incentive  Plan (the
"1995 Incentive Plan") in order to motivate  qualified  employees of New Yorker,
to assist New Yorker in attracting  employees and to align the interests of such
persons with those of New Yorker stockholders.

     The 1995 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal  Revenue Code of 1986,  as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to officers,  key employees,  consultants  and independent
contractors of New Yorker and its affiliates.

     The 1995 Incentive  Plan,  which is administered by the Board of Directors,
authorizes the issuance of a maximum of 433,333  shares of common stock.  If any
award under the 1995  Incentive  Plan  terminates,  expires  unexercised,  or is
canceled,  the common stock that would  otherwise  have been  issuable  pursuant
thereto will be available for issuance  pursuant to the grant of new awards.  To
date, New Yorker has granted an aggregate of 306,667  options to purchase common
stock under the 1995 Incentive  Plan, of which 250,000 options have been granted
to Michael Rosen,  New Yorker's former Chairman of the Board and Chief Executive
Officer.  33,333 of these options are exercisable for ten years from the date of
grant at a price of $3.00 per share and 216,667 of these options are exercisable
for ten  years  from the date of grant at a price of $1.50  per  share.  Another
56,667  options  have been  granted  to Steven A.  Cantor.  Each of the  options
granted to Mr.  Cantor are  exercisable  for a ten year term at a price of $1.50
per share. As of December 31, 1998, none of these options had been exercised.

     1996 Non-Qualified Stock Option Plan

     In  October  1996,  New  Yorker's  Board  of  Directors   approved  a  1996
Non-Qualified Stock Option Plan (the "Non-Qualified  Plan") which covers 500,000
shares  of  New  Yorker's  common  stock.  The  options  become  exercisable  in
installments as determined at the time of grant by the Board of Directors. As of

<PAGE>

the date of this registration statement,  New Yorker had granted 478,332 options
to purchase shares of common stock under the  Non-Qualified  Plan at an exercise
price of $1.50 per share.  Arthur G. Rosenberg,  Martin Pilossoph and Myron Levy
have been granted  options to purchase 23,333 shares of common stock each at the
exercise price of $1.50 per share pursuant to the Non-Qualified  Plan.  Frederic
D. Heller has been granted  options to purchase 58,333 shares of common stock at
the exercise price of $1.50 per share pursuant to the  Non-Qualified  Plan. Alma
has been  granted  options  to  purchase  133,333  shares of common  stock at an
exercise price of $1.50 per share pursuant to the Non-Qualified  Plan. Steven A.
Cantor has been granted  options to purchase 76,667 shares of common stock at an
exercise  price of $1.50 per  share.  As of  December  31,  1998,  none of these
options had been exercised.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

     The following table sets forth the beneficial ownership of shares of voting
stock of New Yorker,  as of December 31,  1998,  of (i) each person known by New
Yorker to beneficially own 5% or more of the shares of outstanding common stock,
based  solely  on  filings  with the SEC,  (ii) each of New  Yorker's  executive
officers  and  directors  and (iii) all of New Yorker's  executive  officers and
directors as a group. Except as otherwise indicated, all shares are beneficially
owned, and investment and voting power is held by, the persons named as owners.

<TABLE>
<CAPTION>

                               Amount and Nature  
Name and Address  of               of Shares               Percentage
Beneficial Owner               Beneficially Owned          Ownership
---------------------          -------------------         -----------

<S>                               <C>                         <C>  
Steven A. Cantor (1)              283,333  (2)                5.4%
Annette Cantor (1)                298,650                     5.8%
Arthur G. Rosenberg (1)            33,333  (3)                 *
Frederic D. Heller (1)            160,000  (4)                3.1%
Myron Levy (1)                    125,833  (3)                2.4%
All officers and directors
 as a group (3  persons)          319,166  (5)                6.1%

<FN>
* less than one percent (1%) unless otherwise indicated.

(1)  The address for each of these persons is 366 N. Broadway, Jericho, NY 11753
(2)  Includes  options to purchase  56,667  shares of common  stock  granted
     under the 1995  Long-Term  Incentive  Plan and options to  purchase  76,667
     shares of common  stock  granted  under the 1996  Non-Qualified  Plan.  
(3)  Includes  options to purchase  23,333  shares of common stock granted under
     the 1996 Non-Qualified Plan. 
(4)  Includes options to purchase 58,333 shares of common stock granted under
     the 1996 Non-Qualified Plan.
(5)  Includes 104,999 shares issuable upon the exercise of options granted 
     pursuant to New Yorker stock option plans.
</FN>
</TABLE>


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In October 1998,  New Yorker  authorized  the issuance of 475,000 shares of
common stock to Arthur G. Rosenberg,  which shares are issuable upon the closing
of New  Yorker  Ice Cream and  Jerry's  Ice Cream,  in  consideration  for prior
management services,  including negotiating the acquisition  agreements with New
Yorker Ice Cream and Jerry's Ice Cream,  overseeing the operations of New Yorker
and providing  financial advice to New Yorker.  These services were performed in
1998.  85,000 shares were issued at such time to each of Myron Levy and Frederic
D. Heller as directors' compensation.

<PAGE>

     In August 1998,  New Yorker issued 97,500 shares of common stock to Marc P.
Palker in  consideration  for  financial  consulting  services  rendered for New
Yorker through July 1998.

     In May 1998, New Yorker entered into a settlement and general  release with
Michael Rosen, its then Chairman of the Board and President, Rachelle Rosen, its
then Secretary and Treasurer, Martin Pilossoph, the father of Rachelle Rosen and
father-in-law of Michael Rosen and then a director and Elizabeth Pilossoph,  the
mother of Rachelle Rosen and  mother-in-law  of Michael  Rosen.  Pursuant to the
terms of the Settlement Agreement,  (i) Michael Rosen, Rachelle Rosen and Martin
Pilossoph voluntarily resigned as officers and directors of New Yorker, (ii) the
employment agreements of each of Michael Rosen and Rachelle Rosen, providing for
annual compensation of $125,000 and $40,000  respectively  through May 31, 2001,
were  terminated,   (iii)  New  Yorker  agreed  to  repay  certain   outstanding
indebtedness  aggregating  $305,000 to Michael Rosen and Elizabeth Pilossoph and
(iv) each of New Yorker on the one hand,  and the Rosens and  Pilossophs  on the
other hand, gave the other a general release.

     In April 1997,  New Yorker issued  150,000 shares of common stock to Steven
A. Cantor as  consideration  for the  termination  of his three year  consulting
agreement  providing  for  payments  of  $125,000  annually,  which  would  have
commenced on New Yorker initial public offering in July, 1997.

     In  October  1996,  New  Yorker  issued  16,667  shares of common  stock to
Frederic D. Heller,  New Yorker former Vice  President-Finance,  Treasurer and a
director,  as payment for services  rendered  during the year ended December 31,
1996.  These shares were valued at $3.00 per share,  the  estimated  fair market
value of the common stock at the date of issuance.

     On August  28,  1996,  Michael  Rosen was issued a  promissory  note in the
principal  amount of  $206,250.  The funds that Mr. Rosen loaned New Yorker were
the proceeds of a sale by Mr. Rosen to investors of 183,333 shares of his common
stock at a price of $1.12 per share.  This loan bears  interest  at a rate of 8%
and  initially was payable the earlier of (i) thirteen (13) months from the date
of the loan,  or (ii) the date New Yorker  successfully  consummates  an initial
public  offering of  securities  of New Yorker,  but only to the extent that the
over-allotment  option is exercised in such  offering and only from the proceeds
received  by New Yorker  from the  exercise  of the  over-allotment  option.  In
September  1996,  the  maturity  date of this  promissory  note was  revised  to
September  30, 1998.  In addition,  the revised  promissory  note  provides that
one-half  of the  outstanding  principal  amount  of the note  will be paid with
accrued  interest  thereon in the event New Yorker  successfully  consummates an
initial public offering of securities of New Yorker, but only to the extent that
the  over-allotment  option was  exercised  in such  offering  and only from the
proceeds received by New Yorker from the exercise of the over-allotment  option.
This loan was part of the May 1998 settlement agreement with Mr. Rosen.

     In August, September and October 1996, New Yorker received three loans from
Steven  A.  Cantor  aggregating  $253,750.  A  portion  of the  funds  that this
stockholder loaned New Yorker was a result of the stockholder  selling shares of
his common stock to an investor.  In August 1996, this  stockholder  sold 38,889
shares of his common  stock at a price of $1.12 per share.  In  September  1996,
this  stockholder sold 23,333 shares of his common stock at a price of $1.50 per

<PAGE>

share.  These loans,  which were  consolidated  into one note in September 1997,
bear  interest  at a rate of 8% and are payable the earlier of (i) June 1, 1997,
or (ii) with respect to $123,750 of the  principal  amount,  the date New Yorker
successfully consummates an initial public offering of securities of New Yorker,
but only to the extent that either the  over-allotment  option is  exercised  in
such  offering or within  ninety (90) days after the  underwriter  elects not to
exercise the over-allotment option. This loan was repaid in 1997.

     As a general  rule,  all  transactions  among New Yorker and its  officers,
directors or stockholders have been, and in the future will be, made on terms no
less favorable to New Yorker than those available from unaffiliated parties.

<PAGE>


ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a)  Exhibits
     --------
 
3.1    Restated Certificate of Incorporation  of the Registrant (*).
3.2    By-laws of the Registrant (*).
10.1   1995 Long Term Incentive Plan (*).
10.2   1996 Non-Qualified Stock Option Plan (*).
10.3   Employment  Agreement dated June 1, 1995 between the Registrant and 
       Michael Rosen,  as amended (*). 10.4  Consulting  Agreement  dated 
       November 1, 1996 between the Registrant and Alma Management Corp. (*)
10.5   Form of Second Private Placement Note (*).
10.6   Form of Second Private Placement Unit Subscription Agreement (*).
10.7   Form of  Indemnification  Agreement between the Registrant and its 
       officers and  directors  (*).  
10.8   Credit  Agreement  dated April 10, 1996,  as amended, between the 
       Registrant and The Penn Traffic Company (*).
10.9   Manufacturing,  Delivery & Pricing Agreement dated as of September 11,
       1996 between the Registrant and Fieldbrook Farms (*).
10.10  Credit Agreement with Fieldbrook Farms dated March 20, 1997 (*). 
10.11  Modification Agreement with The Penn Traffic Company dated April 15, 
       1997 (*).
10.12  Asset Purchase Agreement among New Yorker Ice Cream Corp., Kerry
       Group Ltd.,  Ted  Ketsoglou  and the  Registrant  dated as of July 20,
       1998.** 
10.13  Asset Purchase Agreement between Jerry's Ice Cream, Inc. and the 
       Registrant dated as of July 20, 1998.**
10.14  Proposed Employment Agreement with Ted Ketsoglou.**
10.15  Proposed Employment Agreement with Gerald Schneider.**
10.16  Test Market  License  Agreement  for  Veryfine  Frozen Juice Bar
       dated April 1, 1998.** 
10.17  Consulting  Agreement between  Registrant and Arthur G.  Rosenberg.**  
10.18  Form of Promissory  Note dated July 20, 1998 between  Registrant  and 
       New Yorker Ice Cream  Corp.**  
10.19  Form of  Promissory  Note dated July 20, 1998 between  Registrant  and
       Jerry's Ice Cream Co.,  Inc.** 
10.20  Security  Agreement  dated as of July 20,  1998  between  Registrant  
       and New Yorker Ice Cream  Corp.**
10.21  Security  Agreement dated as of July 20, 1998 between Registrant
       and Jerry's Ice Cream Co., Inc.** 
10.22  Settlement and General Release dated May 15, 1988 among  Michael  Rosen,
       Rachelle  Rosen,  Elizabeth Pilossoph, Martin Pilossoph and Registrant.**
21     Subsidiaries of Registrant

                  Name                       State of Incorporation
                  ----                       ----------------------  

          New York Frozen Desserts, Inc.           New York
          Natco Brands, Inc.                       New York
  
27    Financial Data Schedule

(*)   Incorporated by reference to registration statement on Form SB-2 
      (No. 333-21575) filed July 23, 1997.
(**)  Incorporated by reference to registration statement on Form SB-2 
      (No. 333-67227) filed November 13, 1998.

     (b)  Reports on Form 8-K
          None

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities Act
of 1933, New Yorker  Marketing Corp. has duly caused this report to be signed on
its  behalf by the  undersigned,  thereunto  duly  authorized  on the 2nd day of
March, 1999.

                               NEW YORKER MARKETING CORP.


                               By:  /s/ Arthur Rosenberg
                                   ____________________________________        
                                   Arthur G. Rosenberg
                                   President  (Chief Executive Officer)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has been  signed  on  March  2,  1999 by the  following  persons  in the
capacities indicated:

        Signature                                Title
        ---------                                ----- 


/s/ Arthur G. Rosenberg                President, Chief Executive Officer, 
Arthur G. Rosenberg                    Chief Financial Officer, Director

/s/ Frederic D. Heller                 Director
Frederic D. Heller

/s/ Myron Levy                         Director  
Myron Levy



<PAGE>

                          INDEX TO FINANCIAL STATEMENTS


                                                                   Page(s)
                                                                   --------

Report of Independent Certified Public Accountants                  F - 2
Financial Statements:
  Balance Sheets                                                    F - 3
  Statements of Operations                                          F - 4
  Statement of Changes in Stockholders' Deficit                     F - 5
  Statements of Cash Flows                                          F - 6

Notes to Financial Statements                                       F - 7

                                      F - 1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Board of Directors and Stockholders
New Yorker Marketing Corp.


We have  audited  the balance  sheets of New Yorker  Marketing  Corp.,  formerly
Mike's  Original,  Inc.,  (a Delaware  corporation)  as of December 31, 1998 and
1997,  and the  related  statements  of  operations,  changes  in  stockholders'
deficit, and cash flows for the years then ended. These 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  generally   accepted  auditing
standards. 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 New Yorker Marketing Corp., as
of December 31, 1998 and 1997,  and the results of its  operations  and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the Company has  incurred net losses of  $1,113,155  and
$4,502,645 for the years ended December 31, 1998 and 1997, respectively, current
liabilities exceeded current assets by $1,974,550 and $1,062,651, as of December
31,  1998  and  1997,  respectively  and the  stockholders'  deficit  aggregated
$1,772,614 and $1,051,056, as of December 31, 1998 and 1997, respectively. These
factors,  among others,  raise  substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding these matters are also
described in Note 2. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.


                               


                                  LAZAR LEVINE & FELIX LLP


New York, New York
February 15, 1999

                                     F - 2
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                                 BALANCE SHEETS
                                 --------------
                        AS OF DECEMBER 31, 1998 AND 1997
                        -------------------------------- 
                               - ASSETS (Note 8) -
<TABLE>
<CAPTION>
                                                                          1998       1997       
                                                                      ---------- -----------
<S>                                                                  <C>         <C>    
CURRENT ASSETS:
                                                              
Cash                                                                 $    19,166 $   438,277
 Accounts receivable, less allowance for doubtful
  accounts of $-0- and $15,916 for 1998 and 1997,
  respectively                                                            13,372      12,600
 Inventories (Notes 3b and 4)                                             55,371     143,899
 Prepaid expenses                                                         22,048      17,303
                                                                     ----------- -----------
TOTAL CURRENT ASSETS                                                     109,957     612,079
                                                                     ----------- -----------
FIXED ASSETS - NET (Notes 3c and 5)                                        1,210       3,505
                                                                     ----------- -----------
OTHER ASSETS:
 Trademarks and organization costs, net of accumulated amortization of  
  $17,701 and $15,489 for 1998 and 1997, respectively (Note 3d)            1,115       3,022
 Security deposits and other assets (Note 13f)                           188,154       5,068
 Deferred offering costs                                                  11,457        -      
                                                                     ----------- -----------
                                                                         200,726       8,090
                                                                     ----------- -----------
                                                                     $   311,893 $   623,674
                                                                     =========== ===========
</TABLE>
            - LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) -
<TABLE>
<CAPTION>
<S>                                                                  <C>         <C>    
CURRENT LIABILITIES:
 Accounts payable - trade                                            $   670,205 $   500,453
 Accrued payroll and payroll taxes                                          -         20,587
 Other accrued liabilities (Note 6)                                      157,473     137,822
 Notes payable - related parties (Note 7)                                346,586     486,250
 Notes payable - other (Notes 8 and 13d)                                 910,243     529,618
                                                                     ----------- -----------
TOTAL CURRENT LIABILITIES                                              2,084,507   1,674,730
                                                                     ----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 2, 12, 13 and 14)

STOCKHOLDERS' EQUITY (DEFICIT) (Notes 10 and 11):
 Preferred stock, $.01 par value; 500,000 shares authorized;
  none issued or outstanding                                                -           -     
 Common stock, $.001 par value; 20,000,000 shares authorized;
 5,152,908 and 3,265,429 shares issued and outstanding for
 1998 and 1997, respectively                                               5,153       3,265
 Additional paid-in capital                                           11,506,636  10,087,327
 Deferred financing costs                                             (1,029,600)       -      
 Accumulated deficit                                                 (12,254,803)(11,141,648)
                                                                     ----------- -----------
                                                                      (1,772,614) (1,051,056)
                                                                     ----------- -----------
                                                                  $      311,893 $   623,674
                                                                     =========== ===========

</TABLE>
 
                            See accompanying notes

                                     F - 3
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                            STATEMENTS OF OPERATIONS
                            ------------------------
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                 ----------------------------------------------
<TABLE>
<CAPTION>

                                                              1998           1997     
                                                          -----------   -----------  
<S>                                                       <C>           <C>        
SALES - NET (Notes 3e)                                    $   103,410   $   384,348

COST OF SALES                                                 436,457       451,198
                                                          -----------   -----------
GROSS PROFIT (LOSS)                                          (333,047)      (66,850)
                                                          -----------   -----------
OPERATING EXPENSES:
 Selling, marketing and shipping (Note 3f)                     31,878       723,861
 General and administrative                                   759,928     2,177,698
 Research and development (Note 3h)                             7,754        28,594
                                                          -----------   -----------
                                                              799,560     2,930,153
                                                          -----------   -----------
LOSS FROM OPERATIONS                                       (1,132,607)   (2,997,003)
                                                          -----------   -----------
OTHER INCOME (EXPENSE):
 Forgiveness of debt (Note 7)                                 186,221          -     
 Interest expense - net of interest income of $3,698 
  and $30,744 for 1998 and 1997, respectively                (166,769)   (1,505,642)
                                                          -----------   -----------
                                                               19,452    (1,505,642)
                                                          -----------   -----------
LOSS BEFORE INCOME TAXES                                   (1,113,155)   (4,502,645)

 Provision for income taxes (Notes 3i and 9)                     -             -      
                                                          -----------   -----------
NET LOSS                                                  $(1,113,155)  $(4,502,645)
                                                          ===========   ===========

BASIC LOSS PER SHARE (Note 3j)                                 $(0.31)       $(1.69)
                                                               ======        ======   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3j)        3,627,133     2,662,013
                                                          ===========   ===========

</TABLE>



                          See accompanying notes

                                     F - 4
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                  STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                  ---------------------------------------------

<TABLE>
<CAPTION>
                                                             Additional     Deferred                     Total       
                                           Common    Common    Paid-in      Financing    Accumulated  Stockholders'
                                           Shares    Amount    Capital        Costs        Deficit       Deficit      
                                          ---------  ------  -----------  ------------   -----------  -------------
<S>                                       <C>        <C>     <C>          <C>            <C>           <C>         
Balance at December 31, 1996              1,892,641  $1,892  $ 4,000,700  $  (360,000)   $(6,639,003)  $(2,996,411)

Amortization of imputed interest               -
 convertible debt                              -       -            -         360,000           -          360,000
Conversion of debt into common stock
 by creditor                                320,288     320      455,938         -              -          456,258
Imputed interest - convertible debt            -       -         426,715         -              -          426,715
Issuance of common stock for imputed
 interest                                    67,000      67      301,433         -              -          301,500
Issuance of common stock for services
 rendered                                   285,500     286    1,330,964         -              -        1,331,250
Waiver of compensation payable to
 founder                                       -       -          27,333         -              -           27,333
Imputed interest attributable to
 warrants issued and loans                     -       -         202,500         -              -          202,500
Proceeds from Company's initial 
 public offering                            700,000     700    3,341,744         -              -        3,342,444

Net loss                                       -       -            -            -        (4,502,645)   (4,502,645)
                                          ---------  ------  -----------  -----------   ------------  ------------
Balance at December 31, 1997              3,265,429   3,265   10,087,327         -       (11,141,648)   (1,051,056)

Issuance of common stock for
 services rendered                        327,479       328      285,869         -              -          286,197
Shares issued in private offering
 of securities                          1,560,000    1,560    1,168,440   (1,170,000)           -             -     
Costs associated with offering
 of securities                               -        -         (35,000)        -               -          (35,000)
Amortization of interest - private
 offering                                    -        -            -         140,400            -          140,400

Net loss                                     -        -            -            -         (1,113,155)   (1,113,155)
                                        ----------  ------  -----------  -----------    ------------   -----------
BALANCE AT DECEMBER 31,
 1998                                   5,152,908   $5,153  $11,506,636  $(1,029,600)   $(12,254,803)  $(1,772,614)
                                        =========   ======  ===========  ===========    ============   ===========

</TABLE>







                          See accompanying notes

                                     F - 5
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                            STATEMENTS OF CASH FLOWS
                            ------------------------  
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                                                         1998         1997     
                                                                     ------------ ------------
<S>                                                                  <C>          <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                            $(1,113,155) $(4,502,645)
 Adjustments to reconcile net
 loss to net cash used in operating activities:
  Depreciation and amortization                                            6,020       14,675
  Allowance for doubtful accounts                                        (15,916)      (4,835)
  Imputed interest                                                       140,400    1,327,051
  Compensation expense attributable to issuance of common
   stock for services rendered                                           286,197    1,325,250
  Compensation expense attributable to issuance of common
  stock and stock options                                                   -           6,000 
  Forgiveness of debt                                                   (186,221)        -      
 Changes in operating assets and liabilities:
  Decrease in accounts receivable                                         15,144       53,454
  Decrease in inventories                                                 88,528      103,709
  (Increase) in prepaid expenses and other current assets                 (4,745)        (714)
  Increase (decrease) in accounts payable                                175,501     (130,986)
  Increase (decrease) in accrued expenses and other liabilities           84,871      (12,920)
                                                                      ----------  -----------    
   Net cash used in operating activities                                (523,376)  (1,821,961)
                                                                      ----------  -----------    
CASH FLOWS FROM INVESTING ACTIVITIES:
 Refund of security deposits                                               3,788       14,023
 Purchases of fixed assets                                                (1,513)        -      
 Deposits and costs relating to potential acquisition                   (187,179)        -      
                                                                      ----------  -----------    
   Net cash (used in) provided by investing activities                  (184,904)      14,023
                                                                      ----------  -----------    
CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayment of stockholders notes                                            -        (123,750)
 Net proceeds from issuance of common stock                                 -       3,387,444
 Costs associated with offering of securities                            (46,457)        -      
 Payment of notes payable to related parties                             (45,000)    (253,750)
 Payment of capital lease obligations                                       -         (13,568)
 Payment of line of credit                                                (9,374)     (14,130)
 Proceeds from short-term loans                                          390,000      440,000
 Repayment of short-term loans                                              -        (315,000)
 Repayment of notes payable - trade creditors                               -        (893,554)
                                                                      ----------  -----------    
   Net cash provided by financing activities                             289,169    2,213,692
                                                                      ----------  -----------    
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                    (419,111)     405,754

 Cash and cash equivalents, at beginning of year                         438,277       32,523
                                                                      ----------  -----------    
CASH AND CASH EQUIVALENTS, AT END OF YEAR                             $   19,166  $   438,277
                                                                      ==========  ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
 (a)      Interest paid                                                 $   -        $267,369
          Taxes paid                                                        -            -      

 (b)      During 1997, the Company converted  $432,077 of trade
          accounts payable to  notes  payable,  respectively.
          During  1997,  the  Company  also converted $39,920
          of accounts payable and $380,000 of  notes payable 
          into common stock.
</TABLE>

                          See accompanying notes

                                     F - 6
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 1 - ORGANIZATION:

     New Yorker Marketing Corp., formerly Mike's Original, Inc., (the "Company")
     was  incorporated  in Delaware  in May 1994 as  successor  to Melanie  Lane
     Farms, Inc.  ("Melanie  Farms"),  a New York corporation formed in 1993. In
     June 1994, Melanie Farms was merged into the Company. As both entities were
     under common control, the merger was accounted for in a manner similar to a
     pooling of interests. On December 18, 1997, a new entity, New Yorker Frozen
     Desserts,  Inc., was incorporated in New York, as a wholly-owned subsidiary
     of the Company, for the purpose of making  acquisitions.  On March 4, 1998,
     the Company formed NATCO Brands Inc. for the purpose of operating licensing
     agreements for the manufacture and distribution of branded  desserts.  Both
     of these subsidiaries are currently inactive.  In February 1999, subsequent
     to the year end,  the  Company  changed  its name to New  Yorker  Marketing
     Corp., approved by a shareholder vote in December 1998.

     Effective  December 31, 1995, the Company  changed its fiscal year-end from
     March 31 to December 31.

     Since  April 1, 1993,  the Company has been  engaged in the  marketing  and
     distribution  of super-  premium ice cream  products  and  licensed  frozen
     desserts.  The Company  initially  marketed,  sold and  distributed  Mike's
     Original  Cheesecake  Ice  Cream,  a  blend  of ice  cream  and  cheesecake
     ingredients.  This product line was offered in a variety of flavors  mainly
     to  supermarkets  and  grocery  stores  and also,  to a lesser  extent,  to
     convenience  stores,  food service outlets and warehouse clubs. Since March
     1998,  sales of Mike's ice cream have been nominal.  In June 1998, sales of
     Mike's ice cream were reduced and the Company began  distributing  Veryfine
     Frozen Juice Bars under an  agreement  between  Veryfine and the  Company's
     subsidiary - New Yorker Frozen Desserts, Inc. See also Note 13f.


NOTE 2 - BASIS OF PRESENTATION:

     The Company has incurred losses from operations since its inception in 1993
     and,  at  December  31,  1998,  has a  stockholders'  deficit and a working
     capital deficit of $1,772,614 and $1,974,550, respectively. At December 31,
     1997, the Company had a stockholders' deficit and a working capital deficit
     of  $1,051,056  and  $1,062,651  respectively.   Further,  the  Company  is
     continuing to incur operating losses from its limited operations

     The  circumstances  described  above  raise  substantial  doubt  about  the
     Company's  ability to continue as a going  concern.  Management's  plans in
     regard  to  this  matter  are to  change  the  emphasis  of  the  Company's
     operations from marketing and distributing super-premium ice cream products
     to marketing and  distributing  frozen desserts that will include a line or
     lines of super- premium ice cream products.  Management hopes to accomplish
     this plan through the  strategic  acquisition  of  distribution  companies,
     concentrated in large metropolitan areas, which will provide new brands and
     customers,  distribution expertise and an operations center that can absorb
     future  acquisitions.  On December 18, 1997,  and amended  through July 20,
     1998, the Company entered into agreements to acquire two such distributors.
     The Company is engaged in discussions  with  nationally  known companies to
     obtain  licenses to market and distribute  product  bearing the name of the
     licensor. See Note 13f.

                                     F - 7
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 2 - BASIS OF PRESENTATION (Continued):

     These  acquisitions  and  distribution  licenses  would be financed from an
     additional  offering of securities  filed with the  Securities and Exchange
     Commission  on November  13, 1998 and amended on January 22, 1999 (see Note
     14). It is anticipated that the offering will close in the first quarter of
     1999. If an offering cannot be consummated or other financing obtained, the
     Company would not be able to continue operations. The Company does not have
     sufficient  cash on hand to meet its  current  obligations.  The  financial
     statements  do not  include  any  adjustments  that might  result from this
     uncertainty.


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)  Use of Estimates in Financial Statement Presentation:

     The preparation of these financial  statements in accordance with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that could  affect the  amounts  reported  in these  financial
     statements  and  related  notes.  Actual  results  could  differ from these
     estimates.

(b)  Inventories:

     Inventories  are  stated at the lower of cost or  market  value,  with cost
     determined on a first-in, first out basis.

(c)  Fixed Assets:

     Fixed assets are stated at cost less accumulated depreciation. Depreciation
     of fixed assets is recorded on a  straight-line  basis over their estimated
     useful lives  ranging  from three to five years.  Certain  leased  computer
     equipment  with  rental   payments  for  periods  through  1998  have  been
     capitalized.  These  amounts  are  included  in  fixed  assets  within  the
     accompanying  balance sheets and are being  depreciated  over the estimated
     useful life of the equipment or term of the lease, whichever is shorter.

(d)  Other Assets:

     Costs  related  to  trademark  and  organizational  expenditures  have been
     deferred and are being amortized on a straight-line basis over five years.

(e)  Revenue Recognition:

     Revenue from the sale of products is recognized  upon  shipment.  Sales are
     presented net of  distribution  fees of $95,679 for the year ended December
     31, 1997. In the year ended December 31, 1997 a significant  portion of the
     Company's  sales was made to one  distributor  pursuant  to a  distribution
     agreement which provides for the payment of distribution  fees based upon a
     percentage  of sales,  price  protection  and  certain  rights of return on
     product  unused by third  parties.  A  provision  for such costs is made as
     revenue is recognized; however, costs relating to price protection have not
     been material to date.  This  distribution  agreement was terminated by the
     distributor in September 1997.

                                     F - 8
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

(f)  Advertising:

     Advertising  costs are charged to  operations  when  incurred.  Advertising
     costs  charged to  operations  were  $2,000 and $93,000 for the years ended
     December 31, 1998 and 1997, respectively.

(g)  Introductory Programs:

     Payments  for   introductory   programs  are  made  to  certain   customers
     (supermarkets  and other food chain  retailers) in exchange for the Company
     obtaining retail shelf space and are charged to operations when the Company
     initially  ships products to customers  under such  agreement.  No costs of
     introductory programs are deferred as of December 31, 1998 and 1997.

(h)  Research & Development:

     Research & development expenditures, primarily for product development, are
     expensed as incurred.

(i)  Income Taxes:

     Deferred income taxes are recognized for temporary  differences between the
     financial statement and income tax bases of assets and liabilities and loss
     carryforwards  for which income tax benefits are expected to be realized in
     future  years.  A valuation  allowance has been  established  to offset the
     deferred  tax  assets  since it is not  "more  likely  than  not" that such
     deferred  tax assets will be  realized.  The effect on deferred  taxes of a
     change in tax rates is recognized in income in the period that includes the
     enactment date.

(j)  Income Per Common Share:

     The Company has adopted SFAS 128 "Earnings  Per Share" ("SFAS 128"),  which
     has changed the method of calculating earnings per share. SFAS 128 requires
     the presentation of "basic" and "diluted" earnings per share on the face of
     the income statement. Loss per common share is computed by dividing the net
     loss by the weighted average number of common shares and common  equivalent
     shares outstanding during each period.

(k)  Statements of Cash Flows:

     For the purpose of the statements of cash flows, the Company  considers all
     highly  liquid  investments  purchased  with a remaining  maturity of three
     months or less to be cash equivalents.

                                     F - 9
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

(l)  New Accounting Pronouncements:

     SFAS 130 "Reporting  Comprehensive Income" is effective for years beginning
     after December 15, 1997. This statement  prescribes standards for reporting
     comprehensive  income and its components.  Since the Company currently does
     not  have  any  items  of  other  comprehensive   income,  a  statement  of
     comprehensive income is not yet required.

     SFAS  131  "Disclosures   About  Segments  of  an  Enterprise  and  Related
     Information", is effective for years beginning after December 15, 1997. The
     Company  does not  presently  believe  that it  operates  in more  than one
     identifiable segment.

(m)  Impact of the Year 2000 Issue:

     The year 2000  issue  ("Y2K")  is the  result of  computer  programs  being
     written  using two digits rather than four to define the  applicable  year.
     Any of the Company's  computer programs that have  date-sensitive  software
     may recognize a date using "00" as the year 1900 rather than the year 2000.
     This  could  potentially  result  in a system  failure  or  miscalculations
     causing  disruption  of  operations,   including,  among  other  things,  a
     temporary inability to process  transactions,  send invoices,  or engage in
     other similar normal business activities.  The Company's current accounting
     system  was  purchased  "off-the-shelf,""and  this  will  be  replaced,  if
     necessary,  by Y2K compliant  software and hardware  available  from retail
     vendors  at  reasonable  cost.  The  Company  has not yet  contacted  other
     companies on whose services it depends to determine whether such companies'
     systems are Y2K compliant.


NOTE 4 - INVENTORIES:

     Inventories consist of the following as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
                                             1998         1997 
                                            -------     -------- 
         <S>                                <C>         <C>     
         Finished goods                     $37,255     $143,899
         Raw materials                       18,116         -      
                                            -------     -------- 
                                            $55,371     $143,899
                                            =======     ========
</TABLE>
                                     F - 10
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 5 - FIXED ASSETS:

     Fixed assets consist of the following as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
                                              1998     1997  
                                            -------  ------- 
         <S>                                <C>      <C>    
         Computer equipment                 $29,447  $29,447
         Office equipment                     7,513    6,000
                                             36,960   35,447
         Less: accumulated depreciation      35,750   31,942
                                            -------  ------- 
                                            $ 1,210  $ 3,505
                                            =======  ======= 
</TABLE>

NOTE 6 - OTHER ACCRUED LIABILITIES:

     Other accrued  liabilities consist of the following as of December 31, 1998
     and 1997:
<TABLE>
<CAPTION>
                                             1998       1997   
                                           --------   -------  
         <S>                               <C>          <C>  
         Accrued distribution fee          $   -        1,499
         Accrued interest payable 
          (Notes 7 and 8)                   143,998   124,288
         Other accrued expenses              13,475    12,035
                                           --------  --------
                                           $157,473  $137,822
                                           ========  ========  
</TABLE>

NOTE 7 - NOTES PAYABLE TO RELATED PARTIES:

     During the fiscal year ended March 31, 1994, the Company borrowed  $100,000
     from a shareholder of the Company.  This loan,  which was originally due on
     demand,  was formalized in the form of a promissory  note during  September
     1995.  In April 1996,  the  maturity  date of the $100,000  obligation  was
     revised to occur  subsequent to the repayment of the promissory note issued
     in April 1996 as  further  described  in Note 8. The loan was  non-interest
     bearing  through  April  1994.  From May 1994  through  maturity,  interest
     accrues at an annual rate of 6% and is payable upon maturity.  In September
     1996,  the maturity date of this  promissory  note was revised to occur the
     earlier  of: (i)  February  1, 1998 or (ii) upon the  occurrence  of events
     defined by the note as a "Change in  Control."  The  Company has not repaid
     this note and is currently  negotiating  to satisfy this  liability  with a
     payment of $25,000.  Accrued interest payable related to this note amounted
     to $33,491 at December 31, 1998.


                                     F - 11
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 7 - NOTES PAYABLE TO RELATED PARTIES (Continued):

     During the  fiscal  year  ended  March 31,  1995,  the  Company  issued two
     promissory  notes of  $25,000  each to an  investor,  who is related to the
     founder of the Company,  which were originally due in November and December
     1998,  respectively.  The  Company  repaid  $25,000 of these notes in April
     1995. In September  1995, the maturity date of the  outstanding  promissory
     note was  revised to occur the earlier of the  Company  receiving  proceeds
     from a  securities  offering or June 1, 1996.  In April 1996,  the maturity
     date of the outstanding  promissory note was revised to occur subsequent to
     the  repayment  of the  promissory  note  issued in April  1996 as  further
     described  in  Note  8.  In  September  1996,  the  maturity  date  of this
     promissory  note was revised to occur the earlier of: (i)  February 1, 1998
     or (ii) upon the  occurrence of events  defined by the note as a "Change in
     Control."  Interest  accrues at an annual  rate of 6% and is payable at the
     maturity date of the note.  On May 1, 1998,  these notes along with accrued
     interest were reduced to $11,250 and fixed at that amount with $6,250 to be
     paid at the closing of the offering of securities contemplated in 1999. The
     other  $5,000 is to be paid from the  proceeds of  additional  offerings of
     securities closed prior to April 30, 2001. This forgiveness of debt is part
     of a settlement reached with the founder.

     On May 30, 1996, the Company received loans  aggregating  $100,000 from two
     stockholders. The loans were originally due on demand bearing interest at a
     rate of 10%. In September 1996, the maturity date of these promissory notes
     was revised to occur the earlier of: (i)  twenty-four  months from the date
     of the loans,  or (ii) the date the  Company  successfully  consummates  an
     initial  public  offering of  securities  of the  Company,  but only to the
     extent that the  over-allotment  option is exercised  in such  offering and
     only from the  proceeds  received by the Company  from the  exercise of the
     over-allotment  option.  These notes are still  outstanding at December 31,
     1998.  Accrued  interest  payable related to these notes amounts to $25,833
     and $15,833 at December 31, 1998 and 1997, respectively.

     During the fiscal year ended March 31,  1994,  the Company  obtained  loans
     from the founder of the Company, and issued promissory notes of $40,000 and
     $15,000  which were  payable in May and June 1998,  respectively.  Interest
     accrued at an annual rate of 8% and was payable at the maturity date of the
     notes.  On August  28,  1996,  the  founder  of the  Company  was issued an
     additional promissory note of $206,250. The funds that the founder lent the
     Company were a result of the founder selling 183,333 shares of his stock to
     an investor at a price of $1.12 per share.  This loan bears  interest at an
     annual rate of 8% and was  originally  payable the earlier of: (i) thirteen
     months from the date of the loan, or (ii) the successful consummation of an
     initial  public  offering of  securities  of the  Company,  but only to the
     extent that the  over-allotment  option is exercised  in such  offering and
     only from the  proceeds  received by the Company  from the  exercise of the
     over-allotment  option.  In  September  1996,  the  maturity  date  of this
     promissory note was revised to occur twenty-four  months from September 30,
     1996. In addition,  the revised  promissory  note provides that one-half of
     the note  will be paid with  accrued  interest  in the  event  the  Company
     successfully  consummates an initial  public  offering of securities of the
     Company, but only to the extent that the over-allotment option is exercised
     in such  offering and only from the  proceeds  received by the Company from
     the exercise of the over-allotment  option. On May 1, 1998, these two notes
     along  with  accrued  interest  were  reduced to $180,386 and fixed at that

                                     F - 12
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 7 - NOTES PAYABLE TO RELATED PARTIES (Continued):

     amount with $70,336 to be paid at the closing of the offering of securities
     contemplated in 1999 and 12 monthly  payments of $5,000 effective May 1998.
     The other $50,000 is to be paid from the proceeds of  additional  offerings
     of securities  closed prior to April 30, 2001. This  forgiveness of debt is
     part of a settlement  agreement  reached  with the founder.  The Company is
     current in its monthly  payments of $5,000,  and at December 31, 1998,  the
     outstanding balance was $135,336.

     In August and  September  1996,  the  Company  received  three loans from a
     stockholder  aggregating  $253,750.  A  portion  of  the  funds  that  this
     shareholder lent the Company was a result of the shareholder selling shares
     of his stock to investors.  In August 1996,  this  shareholder  sold 38,889
     shares of his stock at a price of $1.12 per share.  In September  1996, the
     shareholder  sold 23,333 shares of his stock at a price of $1.50 per share.
     During 1997 the Company repaid the entire balance of $253,750 plus interest
     accrued (at an annual rate of 8%), to the date of repayment of $18,162.

     As of  December  31,  1998 and  1997,  loans  payable  to  related  parties
     aggregated $346,586 and $486,250, respectively. Interest accrued and unpaid
     at December 31, 1998 and 1997 aggregated $59,324 and $90,455, respectively.


NOTE 8 - NOTES PAYABLE - OTHER:

     In April  1996,  the  Company  issued a  promissory  note in the  amount of
     $830,275 in exchange for certain trade  accounts  payable.  The Company was
     required  to make  payments  in  monthly  installments  beginning  May 1996
     consisting  of: (i) accrued  interest,  and (ii) principal in the amount of
     $12,000.  In  addition  to these  monthly  installments,  the  Company  was
     required to pay additional  amounts upon the occurrence of certain  events.
     In the event the Company did not complete an initial public  offering,  the
     note was due in full on December 31, 1996.  Interest on the promissory note
     accrues at the prime rate plus 1% per annum. This note is collateralized by
     substantially  all of the assets of the  Company.  The balance of this note
     was $710,275 at December 31, 1996. Accrued interest payable related to this
     note amounted to $2,738 at December 31, 1996.  In April 1997,  the terms of
     the note were  amended to provide  for  payments  to the  lender,  from the
     proceeds  of the  Company's  initial  public  offering,  in the  amount  of
     $575,000 with the balance of $135,275  payable on December 31, 1997. In the
     event that the initial  public  offering was not completed by June 1, 1997,
     all amounts  outstanding  will then become  immediately  due and payable in
     full.  Further,  in April 1997, the Company  issued a $221,550  convertible
     note due December 31, 1998 in exchange for a like amount of trade payables.
     The convertible note bears interest at 10% per annum,  payable at maturity,
     and is  convertible  by the holder  into the  Company's  common  stock at a
     conversion rate of $3.00 principal amount for each share of common stock at
     the option of the holder at any time prior to maturity.  In June 1997,  the
     Company  renegotiated the terms of this agreement.  The renegotiated  terms
     provide that if the Company's  initial public  offering is not completed by
     July 15, 1997, all amounts will then become  immediately due and payable in
     full.  In addition,  the balance due to the lender from the proceeds of the
     Company's  initial public  offering was increased from $575,000 to $595,000
     and the principal balance of the convertible note due December 31, 1998 was
     reduced to  $201,000.  On August 8,  1997,  at the  closing of the  initial
     
                                     F - 13
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 8 - NOTES PAYABLE - OTHER (Continued):

     public  offering,  the principal amount plus all accrued interest was paid.
     At December 31,  1998,  $115,275  plus  accrued  interest of $15,280 of the
     convertible  note  remain  unpaid.  During  1997,  the  Company  issued  an
     additional 10% promissory  note to this vendor in the amount of $193,033 in
     exchange  for a like  amount  of  trade  payables,  which  amount  is still
     outstanding  at December 31, 1998,  plus accrued  interest of $28,955.  The
     creditor has agreed to accept  payment of $190,000,  to satisfy these notes
     plus  accrued  interest,  if such  payment is made by April 10,  1999.  The
     Company  plans to make  that  payment  from the  proceeds  of the  proposed
     offering (see Note 14).

     On August 20, 1996, the Company  issued a promissory  note in the amount of
     $289,482 in exchange for certain trade  accounts  payable and  inventories.
     The note bears  interest  at a rate of 10% per annum and was  payable on or
     before November 15, 1996. The balance of this note was $210,283 at December
     31, 1996. On December 31, 1996, the Company was not in compliance  with the
     terms of the note, however,  the vendor amended the agreement to permit the
     Company  to be in  compliance  with such terms at  December  31,  1996.  In
     February 1997, the Company issued a second promissory note in the amount of
     $20,000 in exchange for a like amount of trade payables. In April 1997, the
     lender  agreed to extend the due date of such notes to the  earlier of June
     1, 1997 or the closing of the Company's  initial  public  offering.  In the
     event the Company  completed its initial  public  offering by June 1, 1997,
     the lender agreed to extend the due date of the then outstanding $96,000 of
     principal to December 31, 1998. If such amount is extended,  the lender has
     the right to convert such amount into 32,000 shares of the Company's common
     stock at any time prior to maturity.  At December 31, 1998,  $96,000 of the
     convertible note plus accrued interest of $11,394 remain unpaid.

     In December  1996,  the  Company  issued a $225,000  promissory  note to an
     investor  bearing  interest  at the  rate of 8% per  annum.  This  note was
     payable in full the  earlier  of: (i)  December  31, 1997 or (ii) five days
     after the closing date of an initial public offering.  In lieu of receiving
     payment,  the investor had the right to convert this promissory note within
     five days of the  closing of such  initial  public  offering  into  200,000
     shares of common stock of the Company,  par value $.001 per share.  Imputed
     interest  resulting from the difference between the estimated fair value of
     the Company's  common stock and the conversion  price has been provided for
     and was  charged  to  operations  over the period  this note  first  became
     convertible.  Interest  expense of $360,000 was  recognized  by the Company
     during  the three  months  ended  March 31,  1997,  which  represented  the
     amortization of the imputed interest  associated with this transaction.  In
     April 1997, the investor elected to convert this note.

     In January 1997,  the Company  issued a convertible  promissory  note to an
     investor  bearing  interest at the rate of 8% per annum,  in the  principal
     amount of $100,000. This convertible note is to be paid in full the earlier
     of five days after the closing of an initial public offering or January 31,
     1998. In April 1997, the investor  converted the note into 78,431 shares of
     the Company's common stock.  Interest expense of $252,940  representing the
     difference  between the estimated fair value of the Company's  common stock
     and the conversion price was recognized during the three months ended March
     31, 1997.

                                     F - 14
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 8 - NOTES PAYABLE (Continued):

     In March 1997, the Company issued a $50,000  promissory note to an investor
     bearing  interest  at the rate of 10% per  annum.  This note is  payable on
     demand on or after May 12, 1997. As additional consideration for this loan,
     the  Company  issued the lender  2,000  shares of its common  stock.  These
     shares were valued at $4.50 per share,  the estimated  fair market value of
     the stock at the date of issuance.  On April 3, 1997, the lender  converted
     $25,000 of the outstanding note balance into 12,500 shares of the Company's
     common stock.  An interest  charge of $31,000  representing  the difference
     between the  estimated  fair value of the  Company's  common  stock and the
     value the  Company  ascribed to these  shares on the date of  issuance  was
     recognized by the Company upon conversion.  In June 1997, the lender agreed
     to extend the maturity date of the outstanding  note balance to the earlier
     of  July  31,  1997  or the  completion  of the  Company's  initial  public
     offering. This note was fully repaid in August 1997, together with interest
     accrued to the date of payment.

     In May 1997,  the Company  negotiated  with a creditor in  connection  with
     trade accounts payable balances owed to this creditor  aggregating $60,000.
     The creditor  agreed that the Company  would repay  $30,000 of this balance
     upon  completion  of an  initial  public  offering.  The  Company  issued a
     convertible  promissory  note  for the  remaining  outstanding  balance  of
     $30,000 bearing interest at the rate of 10% per annum. The note was payable
     in full on December 31, 1998. As of December 31, 1998, $30,000 plus accrued
     interest of $5,000  remained  unpaid.  In lieu of  receiving  payment,  the
     creditor has the right to convert this  promissory  note, at any time prior
     to the maturity date, into 10,000 shares of common stock of the Company.

     In May and  June  1997,  the  Company  issued  three  promissory  notes  to
     investors  bearing  interest at the rate of 12% per annum in the  aggregate
     principal  amount of $150,000.  These notes are payable in full the earlier
     of: (i) July 31, 1997 or (ii) on the date of an initial public offering. In
     connection  with these  transactions,  the Company  issued an  aggregate of
     75,000  warrants,  expiring July 31, 2000,  to these  investors to purchase
     75,000 shares of the Company's  common stock at a price of $3.00 per share.
     These  notes  were  paid in full in August  1997,  together  with  interest
     accrued to the date of payment.

     From July through  November  1998,  the Company  issued an aggregate of 7.8
     private  placement units,  each unit consisting of $50,000 principal amount
     of private  placement  notes and  200,000  shares of the  Company's  common
     stock. The notes,  aggregating  $390,000,  bear interest at the rate of 12%
     per annum and are payable on the earlier of December 1, 1999 or the closing
     of the proposed offering. Accrued interest at December 31, 1998 amounted to
     $12,444 (see also Note 10).

                                     F - 15
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS     
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE   9   -  INCOME TAXES:

                  A  reconciliation  between the actual income tax (benefit) and
         the amount  computed by applying the statutory  Federal income tax rate
         to the loss before taxes is as follows:
<TABLE>
<CAPTION>

                                                                          1998         1997     
                                                                       ----------  ------------
         <S>                                                         <C>           <C>    
         Tax expense (benefit) at statutory Federal
          income tax                                                  $(378,000)   $(1,532,000)
         Nondeductible compensation                                       98,000       450,000
         Net operating loss not currently utilizable                     280,000     1,082,000
                                                                       ---------   -----------
                                                                       $    -      $      -      
                                                                       =========   ===========

          The tax effects of temporary differences and loss carryforwards giving
          rise to deferred tax assets and liabilities are as follows:

                                                                         1998           1997    
                                                                       ----------  ------------

         Net operating loss and other carryforwards                   $3,268,000   $ 2,890,000
         Bad debts                                                          -            5,000
         Depreciation/amortization                                          -            1,000
         Deferred compensation                                           350,000       276,000
                                                                     -----------   -----------  
                                                                       3,618,000     3,172,000
         Valuation allowance                                          (3,618,000)   (3,172,000)
                                                                     -----------   -----------  
                                                                     $      -      $      -      
                                                                     ===========   ===========
</TABLE>
 
     The Company anticipates that for the foreseeable future it will continue to
     be required to provide a 100%  valuation  allowance  for the tax benefit of
     its net  operating  loss  carryforward  and  temporary  differences  as the
     Company cannot presently predict when it will generate  sufficient  taxable
     income to utilize such deferred tax assets.

     At December 31, 1998 and 1997,  Company had net operating  losses available
     to carry forward of approximately  $9,300,000 and $8,500,000  respectively,
     for tax purposes.  Such net operating loss carryforwards expire through the
     year ending 2014. No benefit has been recorded for such loss  carryforwards
     since realization cannot be assured. The Company's use of its net operating
     loss carryforwards is limited as the Company is deemed to have undergone an
     ownership change as defined in Internal Revenue Code Section 382.


NOTE 10 - STOCKHOLDERS' EQUITY:

     On May 30, 1996, the Board of Directors authorized a reverse stock split in
     the ratio of one  common  share for every six and  one-half  common  shares
     outstanding  as of that  date.  In  addition,  on such  date,  the Board of
     Directors   approved  an  amendment  to  the   Company's   Certificate   of
     Incorporation  increasing the number of authorized  shares of the Company's
     common stock from 3,076,923 to 20,000,000  shares. On February 6, 1997, the
     Board of  Directors  authorized  a reverse  stock split in the ratio of two
     common shares for every three common shares  outstanding  as of February 7,
     1997.  The  reverse  splits and  changes in  authorized  capital  have been
     retroactively reflected for all periods presented.

                                     F - 16
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 10 - STOCKHOLDERS' EQUITY (Continued):

     During June 1996 through  September  1996, the Company  completed a Private
     Placement  Offering  pursuant  to Rule  506 of the  Securities  Act of 1933
     consisting of the sale of 61.5 units (the "Second Private Placement"). Each
     unit  consisted of a $2,500,  12%  subordinated  promissory  note and 7,500
     shares of common stock at an offering  price of $25,000 per unit.  The note
     balance at  December  31,  1996 which  resulted  from this  Second  Private
     Placement was $153,750.  These notes mature on the earlier of: (i) July 31,
     1997,  or (ii) the closing  date of the initial  public  offering.  Accrued
     interest  payable related to these notes amounted to $7,688 at December 31,
     1996.  In April 1997,  $30,000 of such notes,  as well as $2,100 of accrued
     interest,  were  converted to 16,050 shares of the Company's  common stock.
     The balance was repaid upon the successful  completion of the Company's IPO
     in July 1997.

     In March 1997,  the Company in  connection  with  entering  into a two-year
     exclusive East coast manufacturing  agreement,  issued 35,000 shares of its
     common  stock.  These shares were valued at $4.50 per share,  the estimated
     fair  market  value of the stock at the date of  issuance.  Pursuant to the
     agreement,  the  manufacturer  agreed to provide  $250,000 of 21-day credit
     terms.  Further, the Company was obligated to pay the manufacturer $150,000
     against  existing  amounts owed by April 30, 1997. In the event such amount
     was not paid,  the  Company was  obligated  to issue an  additional  30,000
     shares of its common stock to the  manufacturer.  These  additional  shares
     were issued to the manufacturer in May 1997.

     In May 1997,  the Company  issued 100,000 shares of its common stock to its
     legal counsel for services  rendered during March and April of 1997.  These
     shares  were  valued at $4.50 per share,  the  estimated  fair value of the
     stock at the date of issuance  and,  accordingly,  $450,000  was charged to
     operations during the year ended December 31, 1997.

     In June 1997,  the  Company  issued  13,307  shares of its common  stock to
     certain  individuals  in  settlement  of amounts owed to these  individuals
     aggregating  $39,921.  An  interest  charge  of  $19,961  representing  the
     difference  between the estimated fair value of the Company's  common stock
     and the value the Company  ascribed to these shares on the date of issuance
     was recognized by the Company in the year ended December 31, 1997.

     On July 31, 1997, the Company completed its Initial Public Offering ("IPO")
     of 700,000  units sold to investors on the OTC Bulletin  Board at $6.20 per
     unit for aggregate  gross proceeds of  $4,340,000.  Each unit contained one
     share of common  stock and two Class A warrants  to  purchase  one share of
     Common Stock each at $5.00 per share.  The Company realized net proceeds of
     $3,342,444.

     In August  1997,  the  Company  issued  35,500  shares  of common  stock as
     compensation for professional fees rendered aggregating $206,250.


                                     F - 17
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 10 - STOCKHOLDERS' EQUITY (Continued):

     In February 1998, the Company issued 30,000 shares of non-restricted common
     stock as compensation  for consulting  services to be rendered in 1998. The
     Company  charged  $88,800 to operations  based upon the market value of the
     stock at the time of  issuance.  The Company also issued  29,979  shares of
     common stock to this  consultant  in lieu of monthly  payments  aggregating
     $33,333, due under an agreement.  In August 1998, the Company issued 97,500
     shares of restricted common stock as compensation for professional services
     rendered.  These  shares were valued at 50% of the market price at the time
     of issuance and, accordingly, $36,564 was charged to operations.

     In October 1998,  the Company issued 170,000 shares of common stock (valued
     at 75% of the  proposed  public  offering  price  - see  Note  14),  to two
     directors as compensation for prior services rendered.  The Company charged
     $127,500 to operations.

     In November  1998,  the Company  issued  1,560,000  shares of common stock,
     valued at $0.75 per share,  as additional  interest in connection  with the
     private  placement  notes (see Note 8). The aggregate  value of $1,170,000,
     was deemed a financing charge,  and is being amortized over the term of the
     notes, one year. Amortization expense for the year ended December 31, 1998,
     aggregated $140,400.


NOTE 11 - STOCK OPTION PLANS:

     At December 31, 1997, the Company has two stock-based  compensation  plans,
     which are described below. The Company utilizes APB Opinion 25, "Accounting
     for Stock Issued to Employees"  and related  interpretations  in accounting
     for stock options  issued to employees.  The Company  applies  Statement of
     Financial  Accounting  Standards No. 123 ("SFAS No. 123"),  "Accounting for
     Stock-Based  Compensation,"  in  accounting  for  stock  options  issued to
     non-employees.  No options  were  granted  under these plans during 1998 or
     1997.

     Had compensation cost for employees been determined based on the fair value
     at the  grant  dates  consistent  with  the  methodology  of SFAS  No.  123
     (Black-Scholes option valuation model), the Company's net loss and net loss
     per share would have been increased to the pro forma amounts indicated:

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                     -----------------------  
                                                     1998               1997     
                                                 -----------          -----------      
             <S>                                 <C>                 <C>    
             Net loss:
               As reported                       $(1,113,155)        $(4,502,645)
               Pro forma                          (1,146,550)         (4,732,943)
             Net loss per share:
               As reported                             $(.31)             $(1.69)
               Pro forma                                (.32)              (1.78)
</TABLE>

                                     F - 18
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 1998 AND 1997
                           --------------------------


NOTE 11 - STOCK OPTION PLANS (Continued):

     In August 1995,  the Company  formally  adopted a Long-Term  Incentive Plan
     (the "1995  Plan"),  which  provides that the Company may grant certain key
     employees or consultants either stock options,  stock appreciation  rights,
     restricted  stock,  performance  grants or other  Company  securities  (the
     "Awards"). The 1995 Plan, as amended,  authorizes the issuance of a maximum
     of 433,333 shares of common stock. As of December 31, 1998, the Company has
     granted an  aggregate  of 306,667  options to  purchase  common  stock with
     exercise  prices  ranging from $1.50 to $3.00 under this Plan.  At December
     31, 1998 and 1997, options  exercisable under this plan were 306,667.  None
     of these options have been  exercised to date.  Options  granted under this
     plan are exercisable six months from date of grant and expire 10 years from
     date of grant.

     On October 15,  1996,  the  Company's  Board of  Directors  approved a 1996
     Non-qualified  Stock  Option  Plan  ("Non-qualified  Plan")  for  officers,
     directors,  employees and consultants of the Company. The Plan, as amended,
     authorizes  the  issuance of up to 500,000  shares of common  stock.  As of
     December  31,  1998,  the Company has granted  478,332  options to purchase
     shares of common stock under the Non-qualified Plan at an exercise price of
     $1.50.  None of the stock  options  granted  have been  exercised  to date.
     Options  granted  under this plan are  exercisable  six months from date of
     grant and expire 10 years from date of grant.

     A summary of stock option  activity  related to the  Company's  Plans is as
     follows:
<TABLE>
<CAPTION>

                                                                                           Weighted
                                                                                           Average         1996                
                                                                       1995 Plan           Exercise   Non-qualified Plan    
                                                                 Shares     Price Range      Price   Shares    Price Range
                                                                 ------     -----------    --------  ------    -----------

         <S>                                                     <C>       <C>              <C>      <C>         <C>
         Outstanding at January 1, 1996                             -                                   -                
         Granted during 1996                                     256,667   $1.50 - $3.00    $1.69    396,666     $1.50
                                                                 -------                             -------
         Outstanding at December 31, 1996                        256,667   $1.50 - $3.00    $1.69    396,666     $1.50
         Granted during 1997                                      50,000       $1.50        $1.50     81,666     $1.50
                                                                  ------                              ------
         Outstanding at December 31, 1997
                            and 1998                             306,667       $1.66                 478,332     $1.50
                                                                 =======                             =======
         Exercisable at December 31, 1997
                            and 1998                             306,667   $1.50 - $3.00    $1.69    478,332     $1.50
                                                                 =======                             =======
</TABLE>

                                     F - 19
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK:

     The carrying  amounts of cash,  accounts  receivable,  accounts payable and
     other accrued  liabilities  are estimated to approximate  their fair value.
     The Company  believes that it is not  practicable  to estimate the value of
     its debt obligations due to its current financial condition.

     Concentration  of credit  risk with  respect to trade  accounts  receivable
     exists as the Company  sells  products  primarily to one  distributor.  The
     Company performs  periodic credit  evaluations of its customers'  financial
     condition  and  does  not  require   collateral  or  other  security.   The
     distributor  referred to in Note 3e accounted for  approximately 91% of the
     Company's  sales for the year ended  December 31, 1997.  As of December 31,
     1997,  the  Company no longer  sells to this  distributor  and there are no
     amounts uncollected.

     The Company's  products have  historically been manufactured by independent
     facilities.  These  facilities have ceased  manufacturing  on behalf of the
     Company due to the fact that these  facilities are owed substantial sums of
     money by the Company.


NOTE 13 - COMMITMENTS AND CONTINGENCIES:

(a)  Lease Commitments:

     The Company is  currently  renting  office space on a month to month basis.
     The monthly rent expense is $650. Rent expense for the years ended December
     31, 1998 and 1997 aggregated $27,049 and $32,160, respectively.

(b)  Employment Contracts:

     The Company had employment agreements with the founder and another employee
     which   provided  for  annual  base   salaries  of  $125,000  and  $40,000,
     respectively,  and  expire,  as  amended,  in  June  2001  and  June  1998,
     respectively.  During the year ended December 31, 1996,  these  individuals
     voluntarily  waived all rights to receive the accrued  salaries  payable to
     them aggregating $110,565 and,  accordingly,  such amount was recorded as a
     contribution to the Company's additional paid-in capital. Further, in April
     1997, the founder  agreed to waive an additional  $27,333 of accrued salary
     through  February 28, 1997.  In December 1997 the employee  whose  contract
     expired in June 1998,  agreed to modify the agreement and be compensated on
     an  hourly  basis  which is  anticipated  to  produce  substantially  lower
     compensation.  The  agreements  with the founder and another  employee have
     been  terminated  as part of a  settlement  agreement  which  includes  the
     repayment  of debt by the  Company  (See  Note 7).  Under  the terms of the
     settlement  dated  May 1,  1998,  the  Company  agreed  to  repay  debt  as
     previously discussed, along with an auto lease and health insurance.

                                     F - 20
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------  

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(b)  Employment Contracts (continued):

     In March 1997,  the Company  entered into a two-year  employment  agreement
     with its Vice- President - Finance which provided for an annual base salary
     of $95,000 for the first year and $105,000 for the second year. In November
     1997, this employee resigned,  however remained as a member of the Board of
     Directors.

     On July 16, 1997, the Company entered into an employment agreement with its
     Vice-President  Marketing. The agreement provided for an annual base salary
     of $115,000,  plus an incentive  bonus.  This  agreement was for an initial
     term of one year from the effective date of the initial public  offering of
     the Company's securities. Options were granted to purchase 66,667 shares of
     the  Company's  common stock at an exercise  price of $1.50 per share.  The
     Company  was  responsible  for up to  $25,000  of  expenses  related to the
     employee traveling to and from Buffalo, NY, temporary living and other such
     amounts  necessary  for the employee to devote his full time  employment to
     the Company.  The agreement  also  provided for an automobile  allowance of
     $650 per month.  On September 15, 1998, this employee was terminated due to
     the limited operations of the Company.

(c)  Consulting Agreements:

     On March 1, 1994, the Company  entered into a consulting  agreement with an
     investor  (the  "Investor"),  whereby  the Company  shall pay the  Investor
     $75,000 for the first year ended March 31,  1995,  $100,000  for the second
     year  and  $125,000  for the  third  year.  The  Company  recorded  accrued
     consulting  expense of $89,585  during the year ended December 31, 1996. In
     September 1996, this investor  voluntarily waived all rights to receive the
     consulting fee payable to him and accordingly, the aggregate amount waived,
     $247,917  has  been  reflected  as a  contribution  to  additional  paid-in
     capital.

     In  November  1996,  this  consulting  agreement  was  superseded  by a new
     agreement.  The new agreement  provides that beginning January 1, 1997, the
     Company  will pay  consulting  fees to the Investor at the rate of $125,000
     per annum for a three-year period.  However, no monies will be paid to this
     Investor  until  such time as the  Company  shall  consummate  a private or
     public  offering of its  securities  for not less than  $2,000,000 in gross
     proceeds.

     In April 1997, the November 1996  consulting  agreement was terminated and,
     in consideration for such termination, the Company issued 150,000 shares of
     its common stock to the consultant. At March 31, 1997, accrued compensation
     payable to this consultant aggregated  approximately $31,000. In April 1997
     the Company  recognized a charge to  operations of  approximately  $644,000
     based upon the  estimated  fair  market  value of the shares  issued to the
     consultant.

     During the year  ended  December  31,  1996,  the  Company  entered  into a
     consulting  agreement  with an entity that will provide sales and marketing
     advisory and consulting  services to the Company.  This entity will receive
     30,000  shares of common stock (see Note 10), an annual  consulting  fee of
     $50,000  and  has  received  options  to  purchase  133,333  shares  of the
     Company's  common stock at $1.50 per share  expiring  October 15, 2006. One
     third of such  options  become  exercisable  at the end of each  successive
     six-month period.  At December 31, 1997,  options to purchase 88,889 common
     shares were exercisable.

                                     F - 21
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------


NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(c)  Consulting Agreements (continued):

     In August 1998,  the Company  entered into a consulting  agreement  with an
     individual to provide financial  services.  This agreement calls for weekly
     payments  of $1,850 plus  reasonable  expenses  and the  issuance of 97,500
     shares of the Company's  common stock.  The Company  recorded an expense of
     $36,564 in connection with the issuance of those shares.

(d)  Line of Credit:

     In December  1995,  the Company  obtained an  unsecured  line of credit for
     $25,000.  Borrowings  under  this  line  bear  interest  at 15% per  annum.
     Borrowings  outstanding  under this line at December  31, 1997 were $9,374,
     which amount was repaid during 1998.

(e)  Legal Proceedings:

     The Company is subject to various legal proceedings, claims and liabilities
     which have  arisen as a result of the  Company's  inability  to satisfy its
     liabilities.  In the opinion of management, the amount of such liabilities,
     including applicable interest,  has been provided for with respect to these
     actions, in the aggregate of $160,000. In addition,  the Company is subject
     to two  additional  actions  brought by (i)  Darigold,  Inc.,  which  seeks
     damages in the amount of $59,379 arising from the Company's alleged failure
     to accept return of product and (ii) Lee's  Marketing  which seeks $128,354
     for services allegedly performed in 1996. The Company intends to deny these
     allegations  and to vigorously  defend these  actions.  The Company has not
     recorded any potential liability arising from these two actions.

(f)  Acquisitions:

     On July 20,  1998,  the  Company  entered  into two  agreements  to acquire
     companies engaged in the full service  distribution of ice cream in the New
     York  Metropolitan  area.  In exchange for all the assets of New Yorker Ice
     Cream Corp.,  the Company will pay (i) $515,000 at closing,  (ii)  $150,000
     payable in six months  with  interest  at 8% per annum,  (iii)  issuance of
     650,000  shares of the  Company's  common  stock  and (iv)  will  assume an
     existing  obligation  of  $695,000,  paying  $200,000 at  closing,  and the
     remaining  $495,000  over four years  with  interest  at 8% per  annum.  In
     exchange  for all the assets of Jerry's  Ice Cream Co.,  Inc.,  the Company
     will pay $255,000 at closing,  $50,000  payable in six months with interest
     at 8% per annum and 170,000 shares of the Company's common stock.

     In  connection  with  these  acquisitions,  the  Company  entered  into  an
     agreement with an unrelated third party that provides for a finder's fee in
     the amount of 1,500,000  shares of the  Company's  common stock and 750,000
     options to purchase  additional shares at an exercise price of $1.50, which
     amounts  are  payable  upon the  closing  of the  acquisitions.  All future
     acquisitions  introduced  by this third  party,  will  involve  similar fee
     arrangements to be negotiated prior to the closing of each transaction.

                                     F - 22
<PAGE>
                           NEW YORKER MARKETING CORP.
                           --------------------------
                        (formerly Mike's Original, Inc.)
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                           DECEMBER 31, 1998 AND 1997
                           --------------------------

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(f)  Acquisitions (continued):

     As of December 31, 1998,  the Company had (i) made  payments to the sellers
     aggregating  $90,000  as  required  per the terms of the  agreements,  (ii)
     deposited  $38,243 towards the purchase of new equipment and (iii) incurred
     $58,936 of costs associated with these acquisitions.

     The Company has also entered into five-year employment  agreements with two
     individuals  to  serve  as  President  and  Vice-President,   which  become
     effective upon the closing of these acquisitions.  These agreements provide
     for annual  payments of $126,000 and  $115,500,  respectively,  issuance of
     shares of common stock and bonus arrangements. The current President of the
     Company  will  resign  upon  the  closing  of  these  acquisitions,  and  a
     consulting  agreement which provides for monthly  payments of $5,000,  will
     then become effective.

(g)  Government Regulation:

     The  Company is  subject to  regulation  by various  governmental  agencies
     regarding the distribution and sale of food products, including the FDA and
     various  state  agencies.  The  Company  believes  that its  marketing  and
     distributing  operations  comply  with  all  existing  applicable  laws and
     regulations.

(h)  Insurance:

     The Company's business exposes it to potential  liability which is inherent
     in the marketing and distribution of food products.  The Company  currently
     maintains  $2,000,000  of product  liability  insurance.  The Company  also
     maintains   $1,000,000  of  general  and  personal  injury   insurance  per
     occurrence and $5,000,000 in the aggregate.  If any product liability claim
     is made and sustained  against the Company and is not covered by insurance,
     the  Company's  business  and  prospects  could  be  materially   adversely
     affected.


NOTE 14 - PROPOSED PUBLIC OFFERING:

     The Company has filed a  Registration  Statement  with the  Securities  and
     Exchange   Commission  to  register   3,500,000   shares  of  common  stock
     (pre-split),   at  a  price  of  $1.00  per  share,   or  an  aggregate  of
     approximately $2,800,000 of net proceeds.  Proceeds from this offering will
     be used to repay  existing debt,  including the  promissory  notes from the
     private  offering (see Note 8), acquire certain  operating assets (see Note
     13f) and for general working capital.

     The proposed  offering  also covers the sale of 1,560,000  shares of common
     stock held by certain shareholders. The Company will not receive any of the
     proceeds from the sale of these shares.

     In December  1998, the  stockholders  approved a reverse stock split in the
     ratio of one common share for every five common  shares  outstanding.  Such
     reverse  split will take  effect  upon the  consummation  of the  Company's
     proposed public offering.

                                     F - 23