<PAGE>

                                          
                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
                                          
                                     FORM 10-K

 [X]  Annual report under Section 13 or 15(d) of the Securities Exchange Act of
                                        1934
                                   (FEE REQUIRED)

                     For the fiscal year ended March 31, 1998 or

    [ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
                                 Exchange Act of 1934
                                  (NO FEE REQUIRED)

                     For the transition period from:         to
                                          
                          Commission file number:  1-12932

                              PARADISE HOLDINGS, INC.
                             -------------------------
              (Exact number of Registrant as specified in its charter)

                   Delaware                              68-0412009
                ---------------                        ---------------
        (State or other jurisdiction of                 (IRS Employer
        incorporation or organization)                Identification No.)

    1610 Arden Way, Suite 145, Sacramento, California             95815
    -------------------------------------------------           ----------
       (Address of principal executive officers)                (Zip Code)

       Registrant's telephone number, including area code:  (916) 568-2310

          Securities registered pursuant to Section 12(b) of the Act:  None
  Securities registered pursuant to Section 12(g) of the Act:  Common Stock, no
                                     par value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed under Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days. Yes  X   No
                                       ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
Form 10-K.   [X]

The aggregate market value of the Registrant's common stock held by
non-affiliates as of June 22, 1998 (based on the closing sale price of the
Common Stock on the National Association of Securities Dealers Automated
Quotation System) was $15,804,974.

       As of June 22, 1998 there were outstanding 4,133,004 shares of the
                            Registrant's Common Stock.


                                          1
<PAGE>

<TABLE>
<CAPTION>

TABLE OF CONTENTS
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
 PART I
---------------------------------------------------------------------------------------------------------------
<S>             <C>                                                                                        <C>
    Item 1.     Business                                                                                     3
                     GENERAL DEVELOPMENT OF BUSINESS                                                         3
                     RECENT DEVELOPMENTS                                                                     4
                     FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS                                           7
                     NARRATIVE DESCRIPTION OF BUSINESS                                                       7
    Item 2.     Descriptions of property                                                                    14
    Item 3.     Legal proceedings                                                                           14

 PART II
---------------------------------------------------------------------------------------------------------------
    Item 5.     Market for the Company's Common Equity and Related Stockholder Matters                      17
    Item 6.     Selected Financial Data                                                                     17
    Item 7.     Management's Discussion and Analysis of Financial Condition and Results of                  18
                Operations
                     GENERAL                                                                                19
                     RESULTS OF OPERATIONS                                                                  20
                     LIQUIDITY AND CAPITAL RESOURCES                                                        25
    Item 8.     Financial Statements and Supplementary Data                                                 28
    Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial                   52
                Disclosure                                                                

 PART III
---------------------------------------------------------------------------------------------------------------
    Item 10.    Directors and Executive Officer of the Registrant                                           54
    Item 11.    Executive Compensation                                                                      56
                     EXECUTIVE COMPENSATION                                                                 56
                     COMPENSATION PURSUANT TO PLANS                                                         56
                     EMPLOYMENT AGREEMENTS                                                                  58
                     COMPENSATION OF DIRECTORS                                                              60
                     COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION            60
                     DECISIONS
    Item 12.    Security Ownership of Certain Beneficial Owners and Management                              60
    Item 13.    Certain Relationships and Related Transactions                                              61

 PART IV
---------------------------------------------------------------------------------------------------------------
    Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K                             64
                     FINANCIAL STATEMENTS                                                                   64
                     FINANCIAL STATEMENT SCHEDULES                                                          64
                     CURRENT REPORTS ON FORM 8-K                                                            64


</TABLE>


                                          2
<PAGE>

THE INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K SHOULD BE READ IN
CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO,
WHICH ARE INCLUDED AS PART HEREOF.  PARTS OF THIS ANNUAL REPORT MAY CONTAIN
FORWARD-LOOKING STATEMENTS REGARDING FUTURE EVENTS OR THE FUTURE PERFORMANCE OF
THE COMPANY THAT INVOLVE CERTAIN RISKS AND UNCERTAINTIES. IN THIS REPORT, THE
WORDS "ANTICIPATE(S)," "BELIEVE(S)," "EXPECT(S)," "INTEND(S)," "FUTURE," AND
SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS.  ACTUAL EVENTS OR THE
ACTUAL FUTURE RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM ANY
FORWARD-LOOKING STATEMENTS DUE TO SUCH RISKS AND UNCERTAINTIES.  THE COMPANY
ASSUMES NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS, EITHER DUE TO
SUCH RISKS AND UNCERTAINTIES OR TO REFLECT ACTUAL RESULTS OR CHANGES IN FACTORS
OR ASSUMPTIONS AFFECTING SUCH FORWARD-LOOKING STATEMENTS.  READERS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS THAT MAY BE FOUND
HEREIN, SINCE SUCH STATEMENTS REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE
HEREOF.  THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF
ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS, WHICH MAY BE MADE TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.



PART I
------------------------------------------------------------------------------
In this Form 10-K, unless the context otherwise requires the "Company" refers to
Paradise Holdings, Inc., a Delaware corporation, its wholly owned subsidiary
Paradise Bakery, Inc., a Delaware corporation ("PBI"), and its predecessor
corporate entity Java Centrale, Inc., a California corporation ("Java").
Paradise Holdings, Inc. was incorporated May 12, 1998 and Java Centrale, Inc.,
which was originally incorporated on March 5, 1992, was merged into it effective
as of May 8, 1998.


ITEM 1.  BUSINESS


GENERAL DEVELOPMENT OF BUSINESS

The Company (then Java Centrale, Inc.) operated as a development stage
enterprise through the end of its fiscal year ended March 31, 1993, commencing
principal and continuing operations in April of 1993. Effective as of May 8,
1998, Java merged with and into Paradise Holdings, Inc., a wholly owned
subsidiary created for the purpose of the merger, in a transaction designed to
change the Company's state of incorporation from California to Delaware. 

The Company has always operated in the food and beverage industry, originally
through its chain of Company-owned and franchised Java Centrale coffee cafes,
carts, and kiosks.  In March of 1995 the Company acquired a related line of
coffee cafes which operated as an unincorporated division under the brand name
Oh-La-La! In December of 1995 and January of 1996 the Company acquired the
Paradise Bakery & Cafe system, which included Company owned and franchised
bakery cafes. 

Due to the Company's continuing need for funds, and the losses experienced in
both the Java Centrale system and the Paradise Bakery system, the Company sold
its Oh-La-La! System (and related assets) in December of 1996, and its Java
Centrale system (and related assets) in December of 1997.

The Company is currently a holding company, with a majority of its assets held
in its wholly owned subsidiary, PBI. Through its PBI subsidiary, the Company
currently operates and franchises bakery cafes in eight Western States. 


                                          3
<PAGE>

The Company has never made a profit in any year since its formation, and the
Company's net losses have grown during each of the most recent three fiscal
years. As a result of these continuing losses and the Company's inability to
develop the capital needed to allow it to grow its Paradise Bakery system to
profitable levels, the Company's Board of Directors has decided that the best
available alternative reasonably open to the Company is to sell the assets of
its wholly owned subsidiary, PBI, and focus the Company's business in another
(as yet undetermined) direction, most likely outside the food and beverage
industry. After reviewing its available alternatives, on May 12, 1998, the
Company entered into a Letter of Intent with AFC Enterprises, Inc., a Minnesota
corporation ("AFC") pursuant to which the Company proposes to sell all of the
assets associated with its Paradise Bakery system, including both its
Company-owned and franchised outlets, as more fully described below.  The sale
of these assets would leave the Company without any significant operating assets
until another acquisition or merger could be completed. The Company is currently
in the process of implementing this new divestiture strategy and consequently
has entered into two letters of intent, one to sell its PBI operating assets and
one to acquire a company outside the food and beverage industry (see "PURCHASE
OF CERTAIN ASSETS OF AXXESS, INC.").  

Although the Company has entered into a letter of intent to acquire a Company
outside the food and beverage industry, there is no assurance that this
transaction will take place, thus the Company continues to seek additional
and/or alternative acquisition and/or merger candidates outside the food and
beverage industry.


RECENT DEVELOPMENTS

SALE OF THE COMPANY'S JAVA CENTRALE SYSTEM OF COFFEE CAFES

On December 31, 1997, the Company sold substantially all of the assets of the
Java Centrale franchise system to Massimo Da Milano, Inc. ("MDMI"). These assets
consisted of 20 franchised cafes and one Company-owned cafe.  Consideration
received by the Company was  $1,000,000 in a combination of future royalties to
be received by MDMI and credits from purchases by the Company from MDMI's
wholesale bakery operation and 5,000,000 Common Shares of MDMI.  

PROPOSED SALE OF SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS - - LETTER OF INTENT
WITH AFC

On May 12, 1998, the Company signed a conditional letter of intent for the sale
of the assets of its PBI operations to AFC Enterprises of Atlanta, Georgia
("AFC").  Consideration will consist of $5,000,000 in cash and potentially an
additional $2,000,000, in the form of either cash or stock in AFC (at the
Company's discretion), to be based on an earn-out period tied to store level
contributions. The earn-out period would commence one year after the closing
date, and would extend for a full year. The Company would be entitled to the
additional compensation if the Paradise Bakery system (including both franchised
and franchisor-owned locations) earns at least $3,000,000 in net profits (before
income taxes, depreciation, and certain other expenses) during this one-year
earn-out period.  To date, the Paradise Bakery system has never reached that
level of profitability and would require an increase in operating units to
achieve this level. The sale would include all of the Company-owned Paradise
cafes as well as its franchised Paradise operations and related commissary. The
transaction is to be structured as an asset purchase, to include all of the
assets of the Company's wholly owned operating subsidiary, PBI.  Certain of
PBI's liabilities would also be assumed, including primarily those arising under
its franchise agreements and real estate leases.

The conditions to closing the transaction include: completion of a satisfactory
due diligence review by AFC; receipt of all necessary consents from the Boards
of the Company and AFC, and any other necessary third parties, including
approval by the Company's shareholders, negotiation of a mutually acceptable
asset purchase agreement; and receipt of a favorable fairness opinion. 


                                          4
<PAGE>

The parties have agreed to work towards a closing date during August 1998. 
Prior to that date, the Company has agreed not to solicit or initiate
discussions or negotiations with any other party regarding a sale of its
Paradise Bakery assets. Under the terms of the letter of intent between the
Company and AFC, in the event that an Asset Purchase Agreement is eventually
signed it will include a "break-up fee," pursuant to which the Company could be
required to pay AFC $500,000 if the asset sale transaction is not consummated
for any reason (other than a default by AFC) and the Company then sells the
Paradise Bakery system to any other party, for the same or a higher price,
during the following calendar year.

The Company is currently in the process of completing the necessary due
diligence reviews and negotiating the terms of the final asset purchase
agreement. As of the date of this Annual Report, AFC has completed a substantial
amount of its due diligence review.  However, a number of technical and
substantive issues with respect to the proposed Asset Purchase Agreement remain
to be worked out between the Company and AFC. Because of the conditional nature
of the letter of intent, and because some of the conditions to closing the
foregoing transactions are not within the Company's control, there can be no
assurance that this transaction will in fact take place, or if it does, that the
final terms of such a transaction will not vary, in material respects, from
those disclosed above.

PROPOSED PURCHASE OF CERTAIN ASSETS OF PARADISE BAKERIES OF TULSA, INC.

In conjunction with the above asset sale, the terms of the transaction include
seven stores of Paradise Bakeries of Tulsa, Inc. ("Tulsa") as company owned. 
The Company has been negotiating with Tulsa to acquire these stores.  The
transaction would be an asset purchase and would include the assumption of
approximately $140,000 in notes payable by the Company and the issuance of
approximately 143,000 restricted Common Shares of the Company to Tulsa.  Because
some of the conditions to closing the foregoing transaction are not within the
Company's control, there can be no assurance that this transaction will in fact
take place, or if it does, that the final terms of such a transaction will not
vary, in material respects, from those disclosed above.  In the event that this
transaction does not close, it is uncertain at this time what impact there would
be on the above transaction with AFC.

PROPOSED PURCHASE OF CERTAIN ASSETS OF AXXESS, INC.

On May 15, 1998, the Company signed a conditional letter of intent to purchase
the Internet publications known collectively as the "FinancialWeb" from Axxess,
Inc. of Altamonte Springs, Florida.  The FinancialWeb family of investor sites
are distributed over the Internet and include free real-time quotes; technical
analysis, charting and portfolio analysis; news and market data; fundamental
research; recommendations and analysis from Wall Street; financial humor; EDGAR
filings; investigative reporting; short selling strategies and a site devoted to
the Small Cap market or derive income from banner advertising sales, syndication
of editorial content, licensing of data and technology, list rentals and sales
of premium services.

The transaction is expected to be structured as an asset purchase. The assets to
be acquired by the Company include various domain names, technology, hardware,
software, trademarks, clients, customers, etc. Additionally, the Company would
assume certain contractual obligations with respect to data and technology
providers, and key programmers and consultants necessary to the operation of the
web sites. The purchase price is to be a combination of $750,000 in cash and
2,000,000 shares of the Company's Common Stock, payable at closing, plus an
additional 2,000,000 shares of Common Stock if a specified number of additional
websites are open and operating as of one year after the closing, and the
average daily traffic of page impressions on the "FinancialWeb" websites being
acquired increases to certain specified benchmarks. 


                                          5
<PAGE>

The closing of this transaction is subject to the completion of a due diligence
review by the Company; receipt of all requisite board, shareholder and other
approvals; and the negotiation of a mutually acceptable asset purchase
agreement. In the meantime, Axxess has agreed not to initiate any discussions or
negotiations with any third parties regarding the sale of the FinancialWeb
family of web sites and the related assets. 

At the present time, the Company has experienced delays in completing its due
diligence review of Axxess. The Company is awaiting financial statements
prepared by Axxess' independent accountants, and due to the time and personnel
requirements created by the AFC transaction described above and the Company's
normal operational requirements, thus, the Company has not formed a firm
assessment of the likelihood of its proceeding to a closing of this transaction.
Considering both the conditional nature of the letter of intent, and some of the
conditions to closing, the foregoing transactions are not within the Company's
control and there can be no assurance that this transaction will in fact take
place, or if it does that the final terms of such a transaction will not vary,
in material respects, from those disclosed above.  Due to the above status of
this proposed transaction, the Company's Board of Directors continues to seek
additional and/or alternative acquisition and/or merger candidates outside the
food and beverage industry. 

CHANGE IN STATE OF INCORPORATION AND CORPORATE NAME

Effective as of May 8, 1998, the Company changed its state of incorporation from
California to Delaware through a merger of Java Centrale, Inc., the Company's
prior corporate entity ("Java"), into its wholly-owned subsidiary Paradise
Holdings, Inc., a Delaware corporation which was created for the sole purpose of
the re-incorporation ("Paradise").  As a result of the re-incorporation, the
Company formally changed its name from Java Centrale, Inc. to Paradise Holdings,
Inc. and Java ceased to exist as a corporate entity.  Paradise survived the
merger as the Company's current corporate entity, with all of the rights and
properties, and all of the liabilities and obligations, of Java, and each
outstanding share of Java's no par value Common Stock immediately prior to the
merger was exchanged for and converted into one fully-paid and non-assessable
share of Common Stock of Paradise, $.001 par value per share.  The merger and
reincorporation were approved by the Company's shareholders at its 1997 Annual
Meeting. Consummation of the merger and re-incorporation has not resulted in the
transfer of assets from Java, Paradise, or any of their subsidiaries, or altered
the Company's headquarters location or management.

FINANCIAL STATUS OF THE COMPANY

Since its inception, the Company has never earned a profit, and the Company's
operations have required, rather than provided, cash each year.  In order to
meet these cash requirements, the Company has from time to time sold Common
Stock, borrowed short-term, sold Company assets and issued convertible debt,
among other strategies.  The Company's net loss for the fiscal years ended March
31, 1998, 1997 and 1996 were $6,890,000, $5,326,000 and $3,966,000,
respectively. There can be no assurance that similar losses will not continue or
increase in the future, or that the Company will become profitable in the
future.

In recent months, the Company's Board of Directors has undertaken a
comprehensive review of its business plan and strategic direction, including the
potential for a new public or private financing, merger with or the acquisition
of other companies, and the possible sale or merger of the Company's wholly
owned subsidiary, PBI. After consideration of the Company's financial position
and the alternatives available to it, the Company's Board of Directors has
concluded that its best available alternative is to sell its PBI assets,
including all of its Company-owned and franchised cafes, and focus the Company's
business in another direction, most likely outside the food and beverage
industry.  The sale of the PBI assets would leave the Company without any
significant operating assets until another acquisition or merger could be
completed. The Company is currently in the process of implementing this new
divestiture strategy (see "PROPOSED SALE OF SUBSTANTIALLY ALL OF THE COMPANY'S
ASSETS - - LETTER OF INTENT WITH AFC" and "PROPOSED PURCHASE OF CERTAIN ASSETS
OF AXXESS, INC." above).


                                          6
<PAGE>

The Company's management anticipates that these or similar transactions, coupled
with the successful completion of the Company's recent private placement of
Common Stock and Stock Purchase Warrants and the exercise of the underlying
warrants described elsewhere herein (see "Item 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -  LIQUIDITY AND
CAPITAL RESOURCES" below), should improve the Company's liquidity and provide
the Company with the opportunity to attract other capital resources.  Until the
warrants are exercised or some other source of funding is obtained, however,
there can be no assurance that these events will occur and the Company will
continue to have a material working capital shortfall.

NASDAQ SMALL CAP LISTING RISKS

The Company's common stock is currently listed for trading on the NASD SmallCap
Market On February 23, 1998, the NASD adopted a number of changes to its listing
and maintenance criteria for companies quoted on the NASDAQ SmallCap Market. 

The NASD's new rules require, among other things, that the minimum bid price for
any stock quoted on that market is $1.00; if the minimum bid price for a listed
company's stock should drop below $1.00 for a material period of time, it would
become eligible for delisting from the NASDAQ SmallCap Market List. Under the
NASD's revised rules, if the daily minimum bids for the Company's Common Stock
do not remain above a $1.00 per share, the Company may need to consider
effectuating another reverse stock split or take some other corporate action in
order to be confident of its continuing ability to meet the NASD's new minimum
bid requirements in this respect.  The Company has been in compliance with this
rule since February 23, 1998.

Another of the new criteria adopted by the NASD, is that companies having
securities listed on the SmallCap Market maintain at least one of the following:
either (a) net tangible assets of $2,000,000, or (b) a market capitalization of
$35,000,000, or (c) annual net income for two of the previous three years of at
least $500,000. The Company currently does not currently meet any of these
criteria. However, as a result of its capital raising efforts, including the
exercise of warrants described elsewhere herein, the completion of the Paradise
Bakery system sale, and the acquisition of the assets of Axxess, Inc. (or the
completion of a similar transaction), the Company anticipates that it will meet
the net tangible assets criteria above by the end of calendar 1998.

NASDAQ also requires that listed companies have at least two outside Board of
Director memebers.  On May 12, 1998, the Company's Chairman of the Board,
Richard S. Crosby, resigned leaving the Company with one outside Director.  The
Board is currently seeking a replacement to fill this vacancy.

In the event the Company is unable to continue to meet the listings criteria
adopted by the NASD, the Company's Common Stock could ultimately be de-listed
from the NASDAQ SmallCap Market List. In such an event, the trading market for
its Common Stock would immediately become far less liquid than it is at present.


FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

Not applicable.


                                          7
<PAGE>

NARRATIVE DESCRIPTION OF BUSINESS.

GENERAL

As it is presently constituted, the Company operates and franchises upscale
bakery cafes under the trade name Paradise Bakery and Cafes, through its wholly
owned subsidiary, Paradise Bakery, Inc. The Paradise Bakery system has developed
a brand identity of quality over its 22 years of existence, and it uses only
high quality ingredients in preparing its food products.  Freshly baked cookies,
muffins and croissants have been, the signature products at the Paradise Bakery
cafes.  

OPERATIONS

The Paradise Bakery system includes cafes at 50 locations in Hawaii, 
California, Arizona, Oregon, Washington, Colorado, Oklahoma and Texas. Of 
these, highly visible sites include those at the Phoenix Airport, Scottsdale 
Fashion Square, and in the ski resorts of Aspen and Snowmass. Both Company 
and Franchisee-owned cafes seek to capture "prime" high-traffic locations 
such as shopping malls, airports, and upscale recreational/tourist areas.

As of March 31, 1998, the Company operates one brand, Paradise Bakery and 
Cafe, under the Company's wholly owned subsidiary, Paradise Bakery, Inc.  
However for nine months of the fiscal year, the Company operated under two 
brands: Java Centrale, which was sold on December 31, 1997 (see "Item 8.  
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS"), 
and Paradise Bakery and Cafe.  As of March 31, 1997, the Company operated 
under two brands: Java Centrale and Paradise Bakery and Cafe.  Whereas for 
nine months of the fiscal year March 31, 1997, the Company operated three 
brands: Java Centrale, Paradise Bakery and Cafe, and Oh La La!, a division of 
Java Centrale, which was sold in December 1996 (see "Item 8.  FINANCIAL 
STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS").

The following table set forth the Company's operations at March 31, 1998, 
1997, 1996, 1995 and 1994:

<TABLE>
<CAPTION>

                         Operating Units as of March 31,
-------------------------------------------------------------------------------
                           Company                          Franchised
               -------------------------------   ------------------------------
                 1998  1997  1996  1995   1994     1998  1997  1996  1995   1994
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<S>              <C>   <C>   <C>   <C>    <C>      <C>   <C>   <C>   <C>    <C>
 Java Centrale     -     1     9     4     1         -    30    28    22     6
 Paradise  Bakery
 & Cafe           15    16    18     -     -        35    33    33     -     -
 Oh La La!         -     -    13    13     -         -     -     -     -     -
-------------------------------------------------------------------------------
 Total            15    17    40    17     1        35    63    61    22     6
-------------------------------------------------------------------------------

</TABLE>

In December 1997, the Company and Host Marriott Services (Host) signed an
exclusive master concession agreement.  This five-year agreement appoints Host
as the exclusive franchisee for single-operator food courts, airports and travel
plaza.  Host currently operates two Paradise Bakery and Cafes in Texas.  Host
currently controls approximately 70% of travel plazas and 65% of airport venues
in the United States.  Host will be looking to add Paradise Bakery to these
venues in 1998 as well.

INDUSTRY OVERVIEW

Independent experts and industry surveys predict that the Bakery and Cafe
segment in which Paradise Bakery has positioned its operations will experience
some of the highest growth rates in the food service industry.  This provides an
underlying growth trend to stimulate interest among consumers, franchisees,
investors, and money managers.  It was reported that:


                                          8
<PAGE>

     -    MODERN BAKING MAGAZINE reported in its February, 1997 issue which
          features Paradise Bakery on the cover, that the BAKERY/CAFE segment
          will experience 30% growth within a year; and, over the next several
          years, growth should accelerate to explosive levels. 

     -    THE GALLUP ORGANIZATION, in a special report prepared for the
          International Dairy-Deli-Bakery Association in 1995, confirms the
          strong growth in the consumption of sweet goods, such as cookies,
          muffins, and danish or pastries, between 1990 and 1995.  For example:

     -    31% of consumers eat sweet goods for breakfast
     -    16% of households eat cookies every day and 35% eat cookies one to six
          times a week
     -    18% of consumers eat muffins once a week or more.  That represents a
          20% increase in consumption

The Company believes that the increasing popularity of the bakery/cafe segment
results from the trend of eating healthier, customers seeking fresh products,
and the general growth in the gourmet food markets.  The Company also believes
the bakery/cafe segment will continue to grow and that further consolidation of
regional operators will continue.

COMPETITION

The Paradise concept has limited competition in the upscale bakery/cafe 
segment. As noted by the Fessel International market study commissioned by 
the Company, Paradise has no direct competition in its targeted niche.  
Paradise does not directly compete with the other food court operators and 
usually does not encounter those concepts that it does compete with in food 
court situations.  However, Paradise indirectly competes with a variety of 
fast service food concepts, some of which are located in covered malls.  Some 
competition comes from concepts such as, Au Bon Pain, which is a bakery/cafe 
concept, or sandwich/salad concepts, such as Wall Street Deli.  Other types 
of competitors are strictly bakery products driven such as, Cinnabon and Mrs. 
Fields.  What sets Paradise apart from most competitors are menu mix, 
positioning, and value.

Paradise Bakery & Cafe is now the second largest operator in the Bakery/Cafe 
segment, behind Au Bon Pain as shown in the table that follows.

<TABLE>
<CAPTION>

   RANK      # OF                       OPERATOR                                                CONCEPT
             UNITS
-----------------------------------------------------------------------------------------------------------------------
<S>          <C>            <C>                                     <C>
     1       287            Au Bon Pain/St. Louis Bread Co.         Baked goods, breads, sandwiches, salads & soups 

     2        50                  Paradise Bakery & Cafe            Fresh baked muffins, pastries, cookies & 
                                                                    croissants, gourmet sandwiches, salads & soups

     3        35                     Vie De France                  Fresh baked goods, sandwiches, salads & soups

     4        32              Mrs. Powell's Bakery/Eatery           Fresh baked goods, sandwiches, salads & soups

     5        19                   Le Croissant Shop                Croissants, desserts, breads, soup and salads
 


</TABLE>


                                          9
<PAGE>

PRODUCTS

Freshly baked cookies, muffins and croissants have been the signature 
products at Paradise Bakery cafes. Paradise Bakery also offers brownies, 
cinnamon rolls and other pastry and bakery goods. Most bakery goods are made 
from scratch, baked on the premises throughout the day to ensure freshness, 
and are made from the highest quality ingredients.  Paradise Bakery cafes 
also feature freshly made specialty sandwiches, entree salads, pasta salads, 
and soups. The Company is currently implementing a proprietary coffee 
program.  The products offered under this new banner are quality-brewed 
coffees and espresso based specialty coffee beverages such as lattes, 
cappuccinos and espressos.  These products are an integral part of the 
overall positioning of the concept, as they address the customer's desire to 
eat healthy food, which is served quickly. 

The Paradise Bakery menu has evolved over the years in order to meet the 
changing lifestyles of our customers.  For example, to satisfy 
health-conscious customers, Paradise offers many pastry and food items, which 
are low in fat.  Paradise's re-designed and expanded menu has been an 
overwhelming success with both existing and new customers alike.

PRICING

The Company prices its coffees, menu items and retail goods at or above the 
prevailing high-end prices for these items in each of its markets. The 
products offered by the Company are of the highest quality and would command 
a premium price based on value alone.  Additionally, the Company's research 
on specialty consumers has shown that they expect to pay a higher price for 
specialty food and beverage products and look with suspicion on products, 
even products of high quality, that are priced below the market.  This 
strategy differentiates the Company from many of its retail competitors that 
are required to compete on a PRICE ONLY basis.  The Company believes that 
this pricing strategy assures that necessary margins are protected and 
thereby allows the Company and its franchisees to focus primarily on product 
quality and service to earn and retain customers.

MANAGEMENT AND EMPLOYEES

Each Company-owned or franchised cafe employs an average of approximately 15 
hourly employees, most of whom work part-time.  The management staff of a 
typical cafe operated by the Company consists of a general manger, an 
assistant manager and one crew leader.  A typical franchised location is 
managed directly by the franchisee and an assistant manager and one crew 
leader.  Company cafe managers report to a district manger, while franchised 
locations work in conjunction with one of the Company's franchise field 
representative.  The district mangers or franchise field representatives are 
responsible for assuring compliance with the Company's products and 
facilities' standards and supervising and assisting in the implementation of 
the Company's local cafe marketing programs.

TRAINING

The Paradise training program currently consists of four weeks at a company 
cafe in southern California and an additional two weeks of pre-opening and 
opening training at the franchised cafe location.

Franchisees receive extensive training covering all aspects of cafe operation 
at the training location in southern California.  The training takes place in 
a fully functional cafe where the franchisee receives operations manuals and 
hands-on experience.  Training continues with on-site assistance in the cafe, 
including setup and planning for the grand opening.  Training never ends, as 
the Company always strives to deliver better products and service.  Paradise 
Bakery & Cafe field support representatives work with the franchisee on a 
regular basis to help refine and improve their local operations.

                                          10
<PAGE>

DESIGN

The Company's Paradise Bakery cafe design has evolved over the years always 
adapting to the ever-changing consumer needs.  Presently, the majority of the 
Paradise cafes have a design of a tropical theme utilizing the color palette 
of light blue, pink and white.  The attractive cafe designs and functional 
building plans are an integral part of the Paradise success formula.  These 
designs provide an exciting environment that supports product display, 
encourages impulse sales and provides color efficiency.

Paradise has upgraded its design to meet today's consumer demands for novel 
food products and services to meet their constantly evolving needs and 
tastes.  The most recent design change reflects a more open, unique eating 
experience at Paradise by enabling the customer to come into a tantalizing 
theater brimming with irresistible foods and beverages.  The color palette is 
changing to light, effervescent, bright fruit and vegetable colors, such as 
mango, lemon, grape, tomato, and avocado. Other changes include extensive use 
of product display, fresh food graphics, and enhanced graphic communication 
system.  The cafes with this new design have been well accepted by the 
customers.

To emphasize its baked from scratch method of product preparation, the ovens 
are now located in the front of the house in full customer view allowing them 
to observe the high quality baked items being prepared fresh throughout the 
day.  The sandwich making station has been redesigned into a "display 
kitchen" type of preparation area where customers can see their sandwiches 
being made from wholesome breads and other fresh ingredients.  The internally 
lighted bakery displays are made of a marble like material whose quality and 
beauty helps draw the customers attention to the fresh baked products offered 
for sale. 

DEVELOPMENT TIME

After the signing of a franchise agreement for a particular location or 
locations, the amount of time necessary to develop that location and 
eventually open and operate the cafe or kiosk varies depending on several 
factors including site selection, preparation and approvals of plans, 
acquisition of necessary permits, length of construction period and whether 
the training of the employees will take place on-site or off-site.  Based on 
the Company's experience to date, the average development time of a 
single-unit cafe franchise has been 4 to 8 months.

In addition to these development factors, multi-unit franchisees are 
obligated under their franchise agreements to build cafes based on a three to 
five year development schedule in which the majority of the locations are 
opened in the first half of the development schedule.  In the case of 
multi-unit developments, it is necessary to develop real estate relationships 
that are likely to provide more than one desirable location and, therefore, 
extra time and care is devoted to contracting with the right firm for that 
purpose in the market in question.  This recruiting process could require an 
additional thirty to sixty days. In the case of a single unit franchise where 
the territory is a subset of the larger market, the Company typically selects 
the most experienced commercial real estate firm that specializes in retail 
locations in that defined area.  All of these factors affect the Company's 
ability to open cafes within a specific time frame.  Although the development 
of a single franchised or Company-owned cafe will always be subject to these 
timing factors, the number of cafes opened in any given month or year will 
increase dramatically as additional franchises are sold and leases for 
Company locations are signed.

FRANCHISEE SUPPORT SERVICES

SITE SELECTION.  The Company assists the franchisee with site selection for 
cafes. Through the Company's network of commercial real estate site 
selectors, the Company often finds a site that meets its demographic criteria 
before the franchisee.  In any case, the franchisee and the Company must 
mutually approve each site before a lease is signed.

                                          11
<PAGE>

CONSTRUCTION AND EQUIPMENT.   The Company offers franchisees selected 
national equipment suppliers and assists in construction solutions.   The 
Company believes that outside third parties will allow the franchisee to 
build their cafes at the best price and value.

FIELD SUPPORT.  The Company maintains a staff of well-trained and experienced 
franchise field representatives who help to train franchisees and assist them 
in opening new cafes and who monitor the operations of existing locations.  
These services are provided as part of the Company's franchise program.

MARKETING AND ADVERTISING SUPPORT.  The Company provides franchisees with a 
full range of marketing materials and consumer literature.  The Company 
regularly prepares and provides to franchisees feature promotions relating to 
a specific coffee, beverage, food or retail item.  These items, in 
conjunction with the Company's Local Cafe Marketing Manual, provide the core 
of the marketing and advertising support system.  The franchise field 
representative and the Company's marketing department work with the 
franchisee to implement and monitor the effectiveness of the various 
promotions.

FRANCHISE FEES AND ROYALTIES

Under the Company's current Franchise Agreement for cafes, each franchisee is 
generally required to pay a franchise fee of $35,000.  The franchise fee is 
generally paid to the Company upon the execution of the Franchise Agreement 
and is non-refundable.  If the franchisee thereafter executes another 
Franchise Agreement for an additional cafe at a different location, the 
franchisee is generally required to pay a franchise fee of $15,000 for each 
such additional cafe location, which franchise fee is non-refundable.  If a 
franchisee purchases an area pursuant to an Area Development Agreement, the 
franchisee must pay an Area Development Fee of $5,000 for each cafe to be 
developed in accordance with the Agreement's development schedule.  The Area 
Development Fee is paid to the Company in full upon the execution of the Area 
Development Agreement and is not refundable.  In addition to the Area 
Development Fee, the Company is entitled to receive a Cafe Fee for each cafe 
location to be opened under the terms of the Agreement.  The first Cafe Fee 
of $20,000 is due upon execution of the Area Development Agreement and is 
non-refundable.  The subsequent Cafe Fees of $10,000 per location are due 
when leases are signed and are non-refundable.

The rights of each cafe, whether opened on an individual basis or by an area 
franchise, include the right to operate satellite locations within the 
exclusive territory of that cafe.  Satellite locations are kiosk or counter 
operations located in self-contained facilities where full cafe operation is 
not feasible. Facilities occupied by one of franchisee's satellite locations 
are governed by the existing Franchise Agreement, and once opened are 
considered a part of the franchised business.  The Company is generally 
entitled to a satellite location opening fee of $3,500 which is paid to the 
Company upon approval of the satellite location and is non-refundable.

Each cafe franchisee is generally required to pay the Company on a 
weekly/monthly basis a 4%-6% royalty on cafe or satellite location gross 
receipts (not including sales tax) and to pay on a weekly basis 2% of the 
cafe's gross receipts (not including sales tax) to the Company's national 
advertising fund after the Company has 25 cafes in operation, whether 
Company-owned or franchised.  Each cafe franchisee is also required to spend 
2% of its gross receipts (not including sales tax) on local cafe marketing.

ADVERTISING AND PROMOTION 

The Company instills in each new franchisee's mind that while quality baked 
goods and food is the heart and soul of the system, marketing is the 
lifeblood of the business.  Repetition, in fact, builds reputation.  The 
Company strives to teach them how to be 1% better than the competition in 100 
different ways.  The goal is to increase the levels of customer awareness and 
in turn the customer counts through a consistent advertising campaign that 
promotes the location and the quality bakery and food products offered by the 
Company.  Through a cooperative effort between the advertising department, 
outside advertising 

                                          12
<PAGE>

resources and its franchises, Paradise Bakery & Cafe expands consumer awareness 
of its products, enhances system-wide identity and increases sales.

SUPPLIES

The Company and its franchisees purchase their food, beverages and supplies 
only from Company-approved suppliers.  All products must meet the standards 
and specifications set by the Company.  Management of the Company constantly 
monitors the quality of the coffee, food, beverages and other supplies 
provided to the cafes and kiosks.  The Company has been successful in 
negotiating national distribution and price concessions from suppliers for 
bulk purchases of coffee, food and paper supplies used by the Company's 
system of cafes and kiosks.  The Company believes that these arrangements 
have achieved cost savings, improved quality and consistency and helped 
decrease volatility of coffee, food and supply costs.  The Company believes 
that essential coffee, food and beverage products are available or, upon 
short notice, could be made available from alternate qualified suppliers.

TRADEMARKS

The Company has registered the Paradise Bakery name and logos with the United 
States Department of Commerce Patent and Trademark Office.  The Company 
currently uses a variety of other trademarks, which are "Cookie Muncher's 
Paradise", "Paradise Bakery", "Paradise Bakery Unique Quality", "Cookie 
Muncher's Paradise A Unique Bakery", "Paradise Bakery & Cafe", and "Chip 
Munchers".

GOVERNMENTAL REGULATION

The Company is subject to Federal Trade Commission ("FTC") regulation and 
state laws, which regulate the offer and sale of franchises.  The Company is 
also subject to a number of state laws, which regulate substantive aspects of 
the franchisor-franchisee relationship.  The FTC's Trade Regulation Rule on 
Franchising (the "FTC Rule") requires that the Company to furnish to 
prospective franchisees a franchise offering circular containing information 
prescribed in the FTC Rule.

State laws that regulate the offer and sale of franchises and the 
franchisor-franchisee relationship presently exist in a substantial number of 
states.  Such laws generally require registration of the franchise offering 
with state authorities and regulate the franchise relationship by, for 
example, requiring the franchisor to deal with its franchisees in good faith, 
prohibiting interference with the right of free association among 
franchisees, limiting the imposition of standards of performance on a 
franchisees and regulating discrimination against franchisees in charges, 
royalties or fees.  Although such laws may restrict a franchisor in the 
termination of a franchise agreement by, for example, requiring "good cause" 
to exist as a basis for the termination, advance notice to the franchisee of 
the termination provides an opportunity to cure a default and a repurchase of 
inventory or other compensation, these provisions have not had, and are not 
expected to have, a material effect on the Company's franchise operations. 
The Company is not aware of any pending franchise legislation, which in its 
view is likely to significantly affect the operations of the Company. The 
Company believes that its operations comply in all material respects with the 
FTC Rule and the applicable state franchise laws.

Each Company-owned and franchised cafe and kiosk is subject to licensing and 
regulation by a number of governmental authorities, which may include health, 
sanitation, safety, fire building and other agencies in the state and 
municipality in which the cafe or kiosk is located.  Additionally, the food 
service industry in general is subject to extensive federal, state and local 
government regulations relating to the development and operation of food 
service outlets, including laws and regulations relating to building and 
seating requirements, the preparation and sale of food, cleanliness, safety 
in the work place and accommodations for the disabled.  The Company-owned and 
franchised cafes which are currently operating are subject to various 
federal, state and local laws and regulations, including, without limitation, 
the Fair Labor Standards Act, the 

                                          13
<PAGE>

Americans With Disabilities Act, the Department of Agriculture, the Food & 
Drug Administration, and various state agencies.  Difficulties in obtaining 
or failure to obtain the required licenses or approvals could adversely 
affect currently operating cafes and could delay or prevent the development 
of a new cafe or kiosk in a particular area or location.

The Company is also subject to federal and state environmental regulations, 
but, to date, these regulations have not had and are not expected to have in 
the future, any material effect on the Company's operations.  More stringent 
or varied requirements of local governmental authorities with respect to 
zoning, land use and environmental matters could delay or prevent the 
development of a new cafe or kiosk in a particular area or location.

The Company is also subject to state and federal labor laws that govern its 
relationship with its employees, such as minimum wage requirements, overtime 
and working conditions, citizenship requirements and prohibitions against 
discrimination.  Significant numbers of the Company's food service and 
preparation personnel are paid at rates governed by the federal minimum wage 
laws. Accordingly, further increases in the minimum wage will increase the 
Company's labor costs.

COMPANY EMPLOYEES

As of March 31, 1998, the Company had 7 full time salaried employees and 4 
hourly employees at its headquarters location in Sacramento, California.  
Additionally as of such date, the Company also employed 29 salaried employees 
and 226 hourly employees in its operations.  None of the Company's employees 
is represented by a labor union and the Company considers relations with its 
employees to be generally good.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

     Not Applicable.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company leases 7,768 square feet of office space in Sacramento, 
California, which it utilizes for its corporate headquarters.  The Company 
has a lease for the facility, which expires in August of 2001.

The Company assumed leases for 31,000 square feet as part of the Paradise 
Bakery system operations in California and Texas.  These leases expire from 
1997 to 2007.

The following table sets forth the location of the 15 Company-operated bakery 
cafes as of March 31, 1998.  The premises of all locations, which average 
approximately 1,000 square feet each, are leased.

   ----------------------------------------------
    CALIFORNIA                           TEXAS
   ----------------------------------------------
   ----------------------------------------------
     Cerritos      Marston             Arlington
     Concord       Pleasanton          Irving
     Fairfield     Santa Ana           Prestonwood
     Grossmont     West Covina         Rennaissance
     Long Beach    Westminster         Vista Ridge
   ----------------------------------------------

The minimum aggregate rental for all these properties is $4,567,000.  Actual 
rental expense for fiscal 1998 was $1,594,000, as compared to $1,970,000 in 
fiscal 1997 and $1,214,000 in 1996.

                                          14
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

On June 27, 1997 Mr. Peter Merganthaler, an individual resident of the State 
of Florida, filed suit against the Company in the 15th Judicial Circuit Court 
in Palm Beach Country, Florida alleging breach of two 1995 financial 
consulting agreements.  The relief sought by Mr. Merganthaler includes 
payment of approximately $30,000 in consulting fees, $20,000 in out of pocket 
expenses and $500,000 in commissions on private placements of the Company's 
Common Stock. The Company believes that the Company has substantial defenses 
to all of the claims asserted by Mr. Merganthaler, and it intends to deny the 
allegation made in his complaint.  On that basis, the Company believes that 
the ultimate disposition of this lawsuit will not have a material adverse 
effect on the Company's financial condition or operating results.

On March 30, 1995, the Company issued to Oh La La!, Inc, Debtor-in Possession, a
promissory note in principal amount of $932,342 (the "Note").  The Note was
convertible into shares of the Company's common stock, at its option and under
certain circumstances.  In September 1995, the Company notified representatives
of PSSS, Inc., successor in interest to Oh La La!, Inc., that the required
circumstances had been met and that it intended to convert the note into shares
of its common stock, and a number of shares sufficient to convert the
outstanding principal balance of the Note was delivered to representatives of
PSSS, Inc.  In November 1996, PSSS, Inc. notified the Company that it rejected
the September 1995 conversion because the shares delivered to it were not
sufficient to convert the then-outstanding interest due on the Note, and on May
28, 1997, PSSS, Inc. sent Java a formal demand letter for the immediate payment
of the principal amount of the Note plus $122,602.97 in accrued interest to date
of such letter.  On December 1, 1997, the Bankruptcy Court has referred this
case to the District Court, California Northern District for further 
proceedings.  Discovery has commenced with no trial date set as of the date 
of this annual report. The Company's management believes that the Company has 
substantial defenses to the claim that the September 1995 conversion was 
ineffective, and on that basis believes that the ultimate disposition of the 
claims asserted by PSSS, Inc. in this matter will not have a material adverse 
effect on the Company's financial condition or operating results.

In January 1998, the Company was served with notice of suit by California-Birch
Associates, a California Limited Partnership in the Santa Clara County Superior
Court.  The suit is related to past due rent, mitigation and legal fees totaling
$110,000, resulting from claimed losses from the abandonment of said premise by
a Java Centrale franchisee who has filed for protection under the provisions of
the United States Bankruptcy Court.  The Company is a party to the lease of the
premises and currently is in negotiation to settle this matter.  The Company's
management believes that the ultimate disposition of this matter will not have a
material adverse effect on the Company's financial condition or operating
results.

In January 1998, the Company was served with notice of suit by Phoenix Leasing
Inc. in the Marin County Superior Court, for past due lease payments, interest
and penalties totaling $198,000.  The lease was originated by a Maryland
franchisee and is guaranteed by the Company. The franchisee is continuing
operations. On the basis of its anticipated success in persuading the franchisee
to resolve this issue, the Company believes that it will prevail upon the
franchisee to remunerate Phoenix Leasing for all past due amounts. The Company's
management believes that the ultimate disposition of this matter will not have a
material adverse effect on the Company's financial condition or operating
results.

In February 1998, the Company was served with notice of suit by Medar Properties
Washington, LLC in Los Angeles, CA; Los Angeles Superior Court.  The suit is
related to past due rent, mitigation and legal fees resulting from claimed
losses from the abandonment of said premise by a Java Centrale franchisee. 
Total damages being claimed are $448,000.  The Company is a party to the lease
of the premises, along with the Franchisee, who also has been named in the suit,
as the Franchisee and individually.  The Company's management believes that the
ultimate disposition of this matter will not have a material adverse effect on
the Company's financial condition or operating results.


                                          15
<PAGE>

In May 1998, the Company was served with notice of suit by DeMirjian
Enterprises, Inc., in Los Angeles, CA; Los Angeles County Superior Court.  The
suit is related to past due rent, mitigation and legal fees. In June 10, 1998,
the Company settled with DeMirjian Enterprises, Inc.  The settlement is secured
by the assets of the Company and calls for a payment of $125,000 plus 10%
interest on July 15, 1998.   The Company may extend the settlement date for up
to six successive, one-month periods by paying DeMairjian Enterprises, Inc.
additional consideration of $5,000 for each one-month extension.  Extensions
must be paid on or before the 15th of the month.

In June 1998, the Company was served with notice of suit by Topanga Plaza
Partnership in Los Angeles, CA; Los Angeles County Superior Court.  The suit is
related to past due rent and legal fees resulting from claimed losses from the
failure of the tenant, a Paradise franchisee, to pay rent.  Total damages being
claimed are $26,000.  The Company is a party to the lease of the premises, along
with the Franchisee, who also has been named in the suit.  In the event that
this matter is not resolved, there is the possibility that the landlord will
seek further rent and mitigation. The Company's management is currently in
negotiations with the landlord and believes that the ultimate disposition of
this matter will not have a material adverse effect on the Company's financial
condition or operating results.

On June 24, 1998, the Company was notified of Chart House Enterprises, Inc.
demand for arbitration under the certain Amended and Restated Promissory Note
dated January 17, 1996.  This note is currently due and payable (See "Item 8. 
FINANICAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE M.  LONG-TERM DEBT"),
however the Company's management believes that there may have been material
omissions on the part of Chart House Enterprises, Inc. related to the
acquisition of Paradise Bakery, Inc. by the Company in December 1995 that may
ultimately have an impact on the final disposition of the balance due to Chart
House.  The arbitration date has yet to be set.  The principal amount and
accrued interest on this note have been classified as current in the
accompanying Consolidated Financial Statements.  The Company's management
believes that the ultimate outcome of the arbitration will not have a material
adverse effect on the Company.


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

None.


                                          16
<PAGE>

PART II
-------------------------------------------------------------------------------
ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED 
          STOCKHOLDER MATTERS

The Company's Common Stock is its only class of equity securities outstanding. 
The Common Stock is listed for trading on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") Small Cap List, under the symbol
"PRDS." Previous to the Company's reincorporation to Delaware, and change in
name from Java Centrale, Inc., which took place effective as of May 8, 1998 (see
"Item 1.  BUSINESS - - GENERAL DEVELOPMENT OF BUSINESS," above), the Company's
common stock traded under the symbol "JAVC.  The following table sets forth, for
the calendar quarterly periods indicated, the range of high and low bid prices
for the Common Stock as reported by NASDAQ since January 1, 1996. All
information contained in this table has been adjusted as appropriate to reflect
the Company's one-for-ten reverse stock split of its Common Stock, which took
place effective as of November 19, 1998.

<TABLE>
<CAPTION>
                                                     HIGH        LOW
                                                    -------    ------
     <S>                                            <C>        <C>
      1996
      First Quarter                                 $33.13     $15.00
      Second Quarter                                $16.88      $7.50
      Third Quarter                                 $15.94      $5.00
      Fourth Quarter                                $10.00      $4.69
     
        Year                                        $33.13      $4.69

      1997
      First Quarter                                  $6.88      $4.06
      Second Quarter                                 $4.69      $1.56
      Third Quarter                                  $6.88      $2.50
      Fourth Quarter                                 $6.56      $2.00

        Year                                         $6.88      $1.56

      1998
      First Quarter                                  $5.13      $1.88
      Second Quarter (through June 22, 1998)         $4.38      $2.67

        Year To Date                                 $5.13      $1.88

</TABLE>

At June 22, 1998, there were 170 holders of record of the Company's Common
Stock.  The Company has never paid a cash dividend on its Common Stock, and does
not anticipate paying any dividends in the immediately foreseeable future. 


                                          17
<PAGE>

ITEM 6.  SELECTED FINANICAL DATA

The following table sets forth the selected operating results and balance sheet
data of the Company for the periods and as of the dates indicated.  The selected
financial data was derived from the Company's financial statements which have
been audited by Burnett Umphress and Company, LLP as of and for the year ended
March 31, 1998, and Grant Thornton LLP, as of and for the years ended March 31,
1997, 1996, 1995, and 1994, independent certified public accountants, and should
be read in conjunction with such financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS DATA:
                                                1998(4)         1997(3)       1996 (1)(2)       1995           1994
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>              <C>
Revenues                                   $10,473,000     $14,825,000    $ 9,526,000    $ 1,776,000    $   887,000
Operating expenses                          16,535,000      19,751,000     13,564,000      3,811,000      2,102,000
----------------------------------------------------------------------------------------------------------------------
Operating loss                              (6,062,000)     (4,926,000)    (4,038,000)    (2,035,000)    (1,215,000)
Debt conversion expense                              -               -              -       (119,000)             -
Interest income (expense), net                (900,000)       (549,000)       (19,000)       260,000        (25,000)
Non-operating income (expense), net             72,000         149,000         91,000              -              -
----------------------------------------------------------------------------------------------------------------------
Net loss                                   $(6,890,000)    $(5,326,000)    (3,966,000)   $(1,894,000)   $(1,240,000)


Loss per equivalent Common Share(5)        $     (3.42)    $     (4.61)    $    (6.08)   $     (4.22)   $     (4.94)
----------------------------------------------------------------------------------------------------------------------
Common stock and equivalent Common 
Shares outstanding  weighted average (5)     2,013,731       1,154,974        652,550        448,853        250,765
----------------------------------------------------------------------------------------------------------------------

<CAPTION>

BALANCE SHEET DATA:
                                                  1998            1997           1996           1995           1994
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>              <C>

Working capital (deficit)                  $(4,108,000)    $(2,856,000)     $(313,000)    $3,801,000       $(33,000)
Total assets                                 5,689,000      11,019,000     16,732,000      7,564,000      1,000,000
Long-term debt                                  73,000         345,000      4,800,000        833,000        678,000
Redeemable convertible preferred stock  
Series B                                             -               -              -              -      1,000,000
Common Stock                                20,892,000      18,508,000     15,593,000      9,577,000        600,000
Accumulated deficit                        (20,328,000)    (13,438,000)    (8,112,000)    (4,146,000)    (2,252,000)

</TABLE>
---------------------------------------

(1)  For the year ended March 31, 1996, the Company completed 12 months of
     operation from the Oh La La! acquisition dated March 31, 1995.

(2)  For the year ended March 31, 1996, the Company's results include three
     months of operations from the Paradise Bakery acquisitions dated December
     31, 1995. (See "Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE
     E. SIGNIFICANT ACQUISITIONS")

(3)  For the year ended March 31, 1997, the Company sold the Oh La La! Division
     in December 1996.  (See "Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
     DATA -- NOTE F. DISPOSAL OF ASSETS")

(4)  For the year ended March 31, 1998, the Company sold the assets of the Java
     Centrale franchise system in December 1997. (See "Item 8. FINANCIAL
     STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F. DISPOSAL OF ASSETS")

(5)  All per share and share data have been restated to reflect the ten for 
     one reverse stock split effectuated December 19, 1997.

                                          18
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
            OF OPERATIONS

GENERAL

Paradise Holdings, Inc. and subsidiary is currently a holding company, with a 
majority of its assets held in its wholly owned subsidiary, PBI.  Through 
PBI, the Company currently operates and franchises upscale bakery cafes. 

As of March 31, 1998, and as it is presently constituted, the Company 
operates one brand, Paradise Bakery and Cafe, under the Company's wholly 
owned subsidiary, Paradise Bakery, Inc.  However for nine months of the 
fiscal year 1998, the Company operated under two brands: Java Centrale, which 
was sold on December 31, 1997 (see "Item 8.  FINANCIAL STATEMENTS AND 
SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS"), and Paradise Bakery and 
Cafe.  As of March 31, 1997, the Company operated under two brands: Java 
Centrale and Paradise Bakery and Cafe.  Whereas for nine months of the fiscal 
year March 31, 1997, the Company operated three brands: Java Centrale, 
Paradise Bakery and Cafe, and Oh La La!, a division of Java Centrale, which 
was sold in December 1996 (see "Item 8.  FINANCIAL STATEMENTS AND 
SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS").

Paradise Bakery and Cafe operates in high-end locations such as upscale malls 
and airports. Menu items feature, depending upon the location, an assortment 
of bakery products, including cookies, muffins, croissants and desserts, 
freshly prepared and baked daily at each location, as well as, specialty 
soups, salads, and sandwiches.  The franchised cafes pay a franchise fee of 
$15,000 - $35,000 per cafe and weekly royalties of 4%-6% of the gross 
receipts from each franchise cafe and/or kiosk.  As of March 31, 1998, the 
Company had 15 Company-owned cafes and 35 franchised locations.

The following table set forth the Company's operations at March 31, 1994-1998:

<TABLE>
<CAPTION>
                                   Operating Units as of March 31,
------------------------------------------------------------------------------------
                              Company                          Franchised
                  ---------------------------------   ------------------------------
                    1998  1997  1996  1995   1994     1998  1997  1996  1995   1994
---------------------------------------------------   ------------------------------
<S>               <C>     <C>   <C>   <C>    <C>      <C>   <C>   <C>   <C>    <C>
 Java Centrale       -     1     9     4     1         -    30    28    22     6
 Paradise Bakery & 
  Cafe              15    16    18     -     -        35    33    33     -     -
 Oh La La!           -     -    13    13     -         -     -     -     -     -
---------------------------------------------------   ------------------------------
 Total              15    17    40    17     1        35    63    61    22     6
---------------------------------------------------   ------------------------------
</TABLE>

The following tables' sets forth the Company's cafe operating activities for 
the fiscal years ended March 31, 1998, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                          --------------------------------------------------------------------------------------------------------
                              Paradise Bakery & Cafe                  Java Centrale                          Oh La La!
                          -----------------------------   -------------------------------------   --------------------------------
                           1998    1997    1996   1995      1998       1997      1996     1995     1998    1997      1996     1995
-------------------------------------------------------   -------------------------------------   --------------------------------
<S>                       <C>      <C>     <C>    <C>       <C>        <C>       <C>      <C>      <C>     <C>       <C>      <C>
 Openings                   4        2      -       -         5         5         12       20       -        -
 Closings                  (3)      (4)     -       -       (15)       (8)        (1)      (1)      -        -
 Dispositions to a 
    non-franchisee          -        -      -       -       (21)       (3)         -       -        -      (13)       -        -
 Acquisition 
    (Non-franchise 
     related)               -        -      51      -         -         -          -       -        -        -        -        13
-------------------------------------------------------   -------------------------------------   --------------------------------
 Total Change               1       (2)     51      -       (31)       (6)        11       19       -      (13)       -        13
-------------------------------------------------------   -------------------------------------   --------------------------------
</TABLE>

                                          19
<PAGE>

The Company has never earned a profit in any fiscal year and operations have 
required (rather than provided) cash every year.  The net losses for the 
fiscal years ended March 31, 1998, 1997 and 1996 were $6,890,000,  $5,326,000 
and $3,966,000 respectively.  There can be no assurance that losses will not 
continue, or that the Company as currently constituted will become profitable 
in the future.  As of March 31, 1998, the Company had an accumulated deficit 
of $20,328,000.  The Company has been operating at a loss primarily due to 
the under performance of the cafes in its Java Centrale system and to its 
administrative overhead.   The Company has experienced higher than 
anticipated expenses in pursuing the development of cafes, closing of outlets 
and settling disputes with franchisees, in the Java Centrale system.  The 
continuing operating losses have left the Company materially weak, which has 
resulted in the Company being unable to develop its more profitable Paradise 
Bakery system as rapidly and extensively as it has planned to do.  

Over the last year, the Company's financing plan has been to raise new equity 
through private placements, refinance or obtain new debt funding and sell 
assets of the Company's operations.  On May 15, 1998 the Company announced 
its decision to sell the assets of its wholly owned subsidiary, Paradise 
Bakery, Inc. in addition to the prospect of purchasing a company, most likely 
outside the food and beverage industry.  The Company has maintained its 
financing plan and has entered into two letters of intent (See "Item 1.  
BUSINESS") to sell the assets of its wholly owned subsidiary, Paradise 
Bakery, Inc. and acquire a company outside the food and beverage industry 
(see "Item 1.  BUSINESS").  The Company expects to complete its divestiture 
during fiscal 1999 and believes that net proceeds, after selling expenses and 
income taxes, will be approximately $4,500,000, with potentially an 
additional $2,000,000 in cash to be received two years after the closing of 
this transaction upon the meeting of certain cafe level contributions of the 
Paradise Bakery and Cafe system.  The Company can not make any assurance that 
these plans will be completed.

RESULTS OF OPERATIONS

MARCH 1998 COMPARED TO MARCH 1997

REVENUE

The Company's revenue is derived from Company cafe sales, franchise fees, 
royalties, and supplies.  Total revenue decreased 29% to $10,473,000 for the 
fiscal year ended March 31, 1998, as compared to $14,825,000 for the fiscal 
year ended March 31, 1997, which included $2,626,000 derived from the Oh La 
La! Division, which was sold in December 1996.  Excluding the Oh La La! 
Division, revenues decreased $1,726,000 for the fiscal year ended March 31, 
1998 as compared to fiscal year ended March 31, 1997.  This decrease results 
from the following components:

COMPANY CAFE SALES.  Company cafe sales represented 86% and 87% of the 
Company's revenues during the fiscal years ended March 31, 1998 and 1997, 
respectively. 

<TABLE>
<CAPTION>
                               COMPANY CAFE SALES 
                             COMPARISON BY DIVISIONS
                            FOR YEARS ENDED MARCH 31,
                                                                   VARIANCE
                                              ---------------------------------
 IN THOUSANDS                                    1998     1997      $      %
-------------------------------------------------------------------------------
<S>                                           <C>      <C>       <C>     <C>
Paradise Bakery & Cafe                         $9,038  $  9,448  $ (410)   (4%)
Java Centrale Division (sold in December 1997)      -       757    (757) (100%)
Oh  La  La!  Division  (sold in December 1996)      -     2,626  (2,626) (100%)
-------------------------------------------------------------------------------
Total                                         $ 9,038  $ 12,831 $(3,793)  (30%)
-------------------------------------------------------------------------------
</TABLE>


                                          20
<PAGE>

The company cafe sales decreased in the Paradise Bakery & Cafe stores as a 
result of the sale of two Company operated locations to a franchisee during 
fiscal 1997, which contributed $152,000 in revenues during fiscal 1997, and 
decreased revenues of $258,000 for fiscal 1998, as compared to 1997, due to 
the under performance of four locations in the system that are located in 
economically depressed regional malls. 

FRANCHISED CAFES.  Franchise cafe revenue is comprised of: the recognition of 
franchise fees when either a new franchise has opened, a cancellation has 
occurred, or franchise ownership transfers; and from the royalties earned, 
which is a fee of 4% to 6% of the gross sales of franchisees in accordance 
with Franchise Agreements.  

                             FRANCHISED CAFE SALES 
                             COMPARISONS BY DIVISION
                            FOR YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                                  VARIANCE
                                               ---------------------------------
 IN THOUSANDS                                     1998     1997      $      %
--------------------------------------------------------------------------------
<S>                                            <C>        <C>     <C>     <C>
 Paradise Bakery & Cafe                           $  992  $   949  $  43     5%
 Java Centrale Division (sold in December 1997)      443    1,045   (602)  (58%)
 Oh La La! Division (sold in December 1996)            -        -       -    0%
--------------------------------------------------------------------------------
 Total                                            $1,435  $ 1,994  $(559)  (28%)
--------------------------------------------------------------------------------
</TABLE>

Although the Paradise Bakery & Cafe Division increased the openings of
franchised cafes, franchised cafe revenues decreased by 30%, due to the majority
of the new cafes opened during fiscal 1998 were under pre-existing franchise
agreements.  Additionally royalty revenue increased 8% for fiscal 1998, as
compared to fiscal 1997.  This increase essentially results from an increase  in
franchisees in the Paradise Bakery & Cafe Division, along with an 8% increase in
sales reported by franchisees for fiscal 1998, as compared to the fiscal 1997.

The franchised cafe sales for the Java Centrale Division decreased 58% due to
the sale of this division in December 1997 (see "Item 8.  FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS").

COST OF COMPANY SALES


The cost of company sales consists of costs relating to the operations of
Company-owned bakery/cafes; selling, general and administrative expense,
depreciation and amortization, loss associated with cart and cafe closures, bad
debt expenses, loss on investments and impairment of goodwill.  The total cost
of company sales decreased $3,216,000, or 16%.  This decrease is a result of the
items described below.

COMPANY OPERATED CAFES.  Cost of company operated cafes represents all the cost
of goods, direct and occupancy, labor and other costs directly associated with
the operation of Company-owned cafes.  

                           COMPANY OPERATED CAFE COSTS 
                             COMPARISONS BY DIVISION
                            FOR YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                                     VARIANCE
                                                ---------------------------------
IN THOUSANDS                                     1998     1997       $       %
---------------------------------------------------------------------------------
<S>                                             <C>     <C>      <C>      <C>
Paradise Bakery & Cafe                          $8,416  $ 8,531  $  (115)    (1%)
Java Centrale Division (sold in December 1997)      30    1,168   (1,138)   (97%)
Oh La La! Division (sold in December 1996)           -    2,327   (2,327)  (100%)
---------------------------------------------------------------------------------
Total                                           $8,446  $12,026  $(3,580)   (30%)
---------------------------------------------------------------------------------
</TABLE>

                                          21
<PAGE>

Although the Paradise Bakery & Cafe costs of company operated cafes remained
virtually the same, the costs associated with those sales increased by 3% (see
chart below).  This increase is a result of four stores that are located in
economically depressed malls during fiscal 1997.

PARADISE BAKERY & CAFE
MARCH 31,

<TABLE>
<CAPTION>
                                      ----------------------------------
IN THOUSANDS                              1998               1997
------------------------------------------------------------------------
<S>                                   <C>        <C>      <C>      <C>
Revenue:  Company operated cafes      $ 9,038    100%     $ 9,448  100%
Cost:  Company operated cafes           8,416     93%       8,531   90%
------------------------------------------------------------------------
                                      $   622      7%     $   917   10%
------------------------------------------------------------------------
</TABLE>

SELLING, GENERAL AND ADMINISTRATIVE.  General and administrative expenses
consist primarily of salaries and other related expenses of administrative,
executive and financial personnel and other professional fees.  During the
fiscal year ended March 31, 1998 selling, general and administrative expenses
decreased $1,001,000, or 21%, to $3,686,000 for fiscal 1998, as compared to
$4,687,000 during fiscal 1997.  This decrease is a result from decreased
personnel costs ($495,000), general consulting fees ($266,000), general office
($220,000), travel costs associated with training ($167,000), general
administrative costs associated with the Oh La La! Division ($137,000),
marketing and advertising ($126,000), and costs general costs associated with
training ($98,000) in addition to increases in legal and accounting ($358,000)
and fees associated with financing ($154,000). 

OPERATING LOSS.  The Company's operating loss increased 23% to $6,062,000 during
fiscal 1998, as compared to $4,926,000 during fiscal 1997.  This increase is a
result of the above described changes, along with decreased losses totaling
approximately $1,375,000 associated with the following: the disposal of assets
($508,000); conversion of a note receivable ($275,000); loss on joint ventures
($256,000); loss on store closures ($47,000); and lower depreciation and
amortization costs ($289,000). Additionally, there were increases totaling
$2,740,000 associated with the following: settlement expenses ($53,000); bad
debt expenses ($290,000); impairment of goodwill ($1,850,000); and loss on
investments ($547,000).  During fiscal 1998, the Company assessed the carrying
value of its intangible assets (see "Item 8.  FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA -- NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES"), and
based upon the Company's recently signed letter of intent (see "Item 1. 
BUSINESS" above) the Company has written down the value of goodwill by an
additional $1,850,000.  In addition, during the current fiscal year, the Company
recognized a one-time, non-recurring adjustment to the GFF common stock
amounting to $547,000 (see "Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-- NOTE J.  INVESTMENTS").  The Company also increased its bad debt reserve by
$290,000 associated with an impaired note due from a franchisee (see "Item 8. 
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE H.  NOTES RECEIVABLE).

NET LOSS.  The Company's net loss increased 29% to $6,890,000 during fiscal
1998, as compared to $5,326,000 during fiscal 1997.  The increased net loss is
primarily a result of the items described in the operating loss above, in
addition to increased interest expense of $351,000 and decreased other
non-operating income of $77,000, associated with rebates essentially derived
from the Oh La La! Division.

MARCH 1997 COMPARED TO MARCH 1996

REVENUE

The Company's revenue is derived from Company cafe sales, franchise fees,
royalties, and supplies.  Total revenue decreased 56% to $14,825,000 for the
fiscal year ended March 31, 1997, as compared to $9,526,000 for the fiscal year
ended March 31, 1996.  This decrease results from the following components:

                                          22
<PAGE>

COMPANY CAFE SALES.  Company cafe sales represented 87% and 80% of the Company's
revenues during the fiscal years ended March 31, 1997 and 1996, respectively. 

                                COMPANY CAFE SALES 
                              COMPARISONS BY DIVISION
                              FOR YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                            VARIANCE
                                              ---------------------------------
IN THOUSANDS                                     1997     1996      $       % 
-------------------------------------------------------------------------------
<S>                                            <C>      <C>       <C>      <C>
Paradise Bakery & Cafe                         $ 9,448  $ 2,630   $6,818   259%
Java Centrale Division (sold in December 1997)     757    1,484     (727)  (49%)
Oh La La! Division (sold in December 1996)       2,626    3,488     (862)  (25%)
-------------------------------------------------------------------------------
Total                                          $12,831  $ 7,602   $5,229    69%
-------------------------------------------------------------------------------
</TABLE>

The Paradise Bakery & Cafe stores operated for three months during fiscal 1996,
as compared to 12 months during fiscal 1997, which resulted increased company
cafe sales.  Additionally the sales for the Java Centrale Division decreased 49%
due to the sale of three company-owned locations to a franchisee during fiscal
1997, as compared to fiscal 1996.  Further the sales for the Oh La La! Division
decreased due to the sale of the Oh La La! Division (see "Item 8.  FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS"), attributable
to the stores operating for 9 months of fiscal 1997, as compared to 12 months
for fiscal 1996.

FRANCHISED CAFES.  Franchise cafe revenue is comprised of: the recognition of
franchise fees when either a new franchise has opened, a cancellation has
occurred, or franchise ownership transfers; and from the royalties earned, which
is a fee of 4% to 6% of the gross sales of franchisees in accordance with
Franchise Agreements.  

                               FRANCHISED CAFE SALES 
                              COMPARISONS BY DIVISION
                              FOR YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                            VARIANCE
                                               --------------------------------
IN THOUSANDS                                     1997     1996      $       %
-------------------------------------------------------------------------------
<S>                                            <C>      <C>       <C>     <C>
Paradise Bakery & Cafe                         $  949   $  197    $ 752   382%
Java Centrale Division (sold in December 1997)  1,045    1,727     (682)  (39%)
Oh La La! Division (sold in December 1996)          -        -        -     0%
-------------------------------------------------------------------------------
Total                                          $1,994   $1,924    $  70     4%
-------------------------------------------------------------------------------
</TABLE>

The increased franchised cafe sales in the Paradise Bakery & Cafe system is
attributed to the stores operating for 12 months during fiscal 1997, as compared
to only 3 months during fiscal 1996.  Additionally, the franchise cafe sale
decreased for the Java Centrale Division as a result of decreased cafe openings.

COST OF COMPANY SALES

The cost of company sales consists of costs relating to the operations of
Company-owned bakery/cafes; selling, general and administrative expense,
depreciation and amortization, loss associated with cart and cafe closures, bad
debt expenses, loss on investments and impairment of goodwill.  The total cost
of company sales increased $6,187,000, or 46%.  This increase is a result of the
items described below.


                                          23
<PAGE>

COMPANY OPERATED CAFES.  Cost of company operated cafes represents all the cost
of goods, direct and occupancy, labor and other costs directly associated with
the operation of Company-owned cafes.  

                            COMPANY OPERATED CAFE COSTS 
                              COMPARISONS BY DIVISION
                              FOR YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                                  VARIANCE
                                              ---------------------------------
IN THOUSANDS                                    1997     1996      $       %
-------------------------------------------------------------------------------
<S>                                            <C>      <C>      <C>      <C>
Paradise Bakery & Cafe                         $ 8,531  $ 2,365  $ 6,166   261%
Java Centrale Division (sold in December 1997)   1,168    2,944   (1,776) (60%)
Oh La La! Division (sold in December 1996)       2,327    2,929     (602) (21%)
-------------------------------------------------------------------------------
Total                                          $12,026  $ 8,238  $(3,788) (46%)
-------------------------------------------------------------------------------
</TABLE>

Although the company cafe costs increase in the Paradise Bakery & Cafe stores,
as a consequence of the stores operating for three months during fiscal 1996, as
compared to 12 months during fiscal 1997, the increase was proportional to the
increase in sales (see chart below).

PARADISE BAKERY & CAFE
YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                        ------------------------------
IN THOUSANDS                                1997           1996
----------------------------------------------------------------------
<S>                                     <C>      <C>    <C>      <C>
Revenue:  Company operated cafes        $9,448   100%   $2,630   100%
Cost:  Company operated cafes            8,531    90%    2,365    90%
----------------------------------------------------------------------
                                        $  917    10%   $  265    10%
----------------------------------------------------------------------
</TABLE>

Further, the company cafe costs decreased in the Java Centrale Division, as a
result of sale of three company-owned locations to a franchisee during fiscal
1997, which were operating in fiscal 1996, however the cost of sales had
improved by 44% (See chart below).


JAVA CENTRALE DIVISION
YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                      ----------------------------------
IN THOUSANDS                               1997               1996
------------------------------------------------------------------------
<S>                                   <C>      <C>      <C>       <C>
Revenue:  Company operated cafes      $  757    100%    $ 1,484    100%
Cost:  Company operated cafes          1,168   (154%)     2,944   (198%)
------------------------------------------------------------------------
                                      $ (411)   (54%)   $(1,460)   (98%)
------------------------------------------------------------------------
</TABLE>

Additionally, the company cafe costs decreased in the Oh La La! Division, due to
the sale of the Oh La La! in December 1996 (see "Item 8.  FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA - NOTE F.  DISPOSAL OF ASSETS"), which resulted
operations for 9 months of fiscal 1997, as compared to 12 months for fiscal
1996.  Although the sales and cost of sales decreased they did not decrease
proportionately (see chart below).

OH LA LA! DIVISION
YEARS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                     -----------------------------
IN THOUSANDS                             1997            1996
------------------------------------------------------------------
<S>                                  <C>      <C>    <C>      <C>
Revenue:  Company operated cafes     $2,626   100%   $3,488   100%
Cost:  Company operated cafes         2,327    89%    2,929    84%
------------------------------------------------------------------
                                     $  299    11%   $  559    16%
------------------------------------------------------------------
</TABLE>

                                          24
<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE.  General and administrative expenses
consist primarily of salaries and other related expenses of administrative,
executive and financial personnel and other professional fees.  During the
fiscal year ended March 31, 1997, selling, general and administrative expenses
increased 11% to $4,686,000 for fiscal 1997, as compared to $4,220,000 during
fiscal 1996.  This increase is a result from an increased costs associated with;
the operation of the Paradise Bakery & Cafe Division consisting of ($1,160,000),
legal and accounting expenses ($271,000) financing fees ($39,000), along with
decreased; personnel costs ($365,000), advertising and marketing ($334,000),
consulting expenses ($264,000) and merger expenses ($40,000).

OPERATING LOSS.  The Company's operating loss increased 22% to $4,926,000 during
fiscal 1997, as compared to $4,038,000 during fiscal 1996.  This increase is a
result of the above described changes, along with increased losses associated
with; the disposal of assets ($128,000), conversion of a note receivable
($275,000), joint ventures ($256,000), store closures ($3,000), bad debt
($398,000), settlement expense ($336,000), and high depreciation and
amortization costs ($536,000).  During fiscal 1997, the Company recognized loss
on investment of $275,000 associated with the termination of a Joint Venture
Agreement (see "Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F. 
DISPOSAL OF ASSETS").  Additionally during fiscal 1997, the Company recognized a
loss on the conversion of a note receivable to Common Shares from GFF (see "Item
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA -- NOTE F.  DISPOSAL OF ASSETS")
of $275,000.  Further during fiscal 1997, the Company increase bad debt expenses
of $398,000, as a consequence of certain franchisee related notes and royalties,
in addition to increasing settlement expenses associated with two franchisees
and a former employee of Paradise Bakery amounting to $336,000.

NET LOSS.  The Company's net loss increased to $5,326,000 during fiscal 1997, as
compared to $3,996,000 during fiscal 1996.  The increased net loss is primarily
a result of the items described in the operating loss above, in addition to
increased interest expense of $530,000 and decreased other non-operating income
of $58,000, associated with rebates essentially derived from the Oh La La!
Division.


LIQUIDITY AND CAPITAL RESOURCES

At the Company's current level of development, including the operations of its
Paradise Bakery subsidiary, it does not generate net cash from operations. To
fund its current operations, the Company requires either additional financing,
rapid sales of additional franchises, or a substantial increase in its network
of Company-owned and or franchised cafes. For the years ended March 31, 1998,
1997 and 1996, the Company incurred a net loss of $6,890,000, $5,326,000 and
$3,966,000 and used net cash of $1,303,000, $3,062,000 and $2,391,000 for
operating activities, respectively. These losses have continued into the current
fiscal quarter. The Company's current obligations total $5,325,000, of which
$2,991,000 is currently due on notes payable.  The Company's debt situation and
overall financial condition have not materially improved since March 31, 1998.

The Company has developed a specific operating plan to meet the ongoing
liquidity needs of the Company's existing operations, including its Paradise
Bakery, Inc. ("PBI") operations.  Management believes that the Company's
operating and financing plan, if carried out successfully, will be sufficient to
meet the Company's liquidity needs for the year ended March 31, 1999, and
thereafter. However, the operating and financing plan currently includes the
sale of the assets of PBI, as discussed in "Item 1.  BUSINESS" above.  If the
Company completes the asset sale of PBI, and after the Company has retires all
notes payable, accounts payable and long term debt, the Company anticipates
having $500,000 in cash.  In addition, a potential $2,000,000 in deferred
compensation may be received from AFC two years from the close of the 
transaction pursuant to the terms of the asset purchase agreement, more fully 
discussed in "Item 1.  BUSINESS" above.  Also, if the Selling Shareholders 
continue to exercise the remaining Warrants, the Company would receive 
proceeds of approximately $2,400,000 in cash.  

                                          25
<PAGE>

However, if the Company is unable to complete the sale of these assets, or to
complete such a sale on terms sufficiently favorable to the Company, management
believes that it is unlikely to have sufficient liquidity to continue operations
for the medium to long term, and will need to raise additional funds, whether
through the issuance of common, preferred or debt securities, the sale of
assets, obtaining a commercial bank credit facility, or otherwise.  Under these
circumstances, there can be no assurance that the Company will achieve the
necessary liquidity, or that the Company's liquidity goals will be reached in
the immediate future, if ever.

In the 1996 fiscal year, the Company issued 160,469 Common Shares for $3,541,000
in proceeds in a series of private placements. 

In April 1996, the Company received a series of short-term loans from Alta
Petroleum, Inc. totaling $500,000. During the six months ended September 30,
1997, the Company borrowed an additional $275,000 thereby increasing the balance
on the note to Alta Petroleum, Inc. to $575,000. The loan has an interest rate
of 16%, along with certain bonus provisions, and is currently due.

In April 1997, the Company received loan advancements from Baycor Venture, Inc.,
Gary C. Nelson, the Company's President and Chief Executive Officer, and Steven
J. Orlando, its then-Chief Financial Officer.  As of March 31, 1998, Baycor
Venture, Inc. deferred receipt of salary and expenses totaling $165,000, without
interest.  Gary C. Nelson loaned the Company $50,000 in exchange for a note
secured by the Company's assets and interest at the rate of prime plus 2%, at
March 31, 1998, the balance of this loan had been paid in full.  Steven J.
Orlando deferred salary for the period from December 1996 through March 1997
totaling $31,000, at March 31, 1998, the balance of this loan had been paid in
full.

In November 1996, the Company completed a financing with Imperial Credit
totaling $779,000 in long-term debt, pledging the assets of Paradise Bakery,
Inc.  The proceeds were used to retire notes totaling $680,000.  Although this
note is currently in default of certain financial covenants, it is current with
the required monthly payments.  The principal balance as of March 31, 1998, was
$554,000.

In December of 1996, the Company sold the assets of its Oh La La! Division to
Good Food Fast Companies, Inc. "GFF" for $1,250,000 in cash, 233,333 shares of
preferred stock and a $750,000 convertible note receivable due in 1999.  On
March 31, 1997, the Company agreed with GFF to exchange $250,000 of the
convertible note receivable for the assumption of certain liabilities of the
Company, exchange 233,333 preferred shares for 233,333 shares of Common Stock,
accelerate a payment of $145,000 due under the note receivable to May 1997, and
convert the remaining $355,000 balance of the note into 40,000 shares of GFF
Common Stock.  The Common Shares of GFF at March 31, 1998 have been valued at
$1.00. 

During fiscal 1996, the Company issued, through private placements, convertible
notes in the amount of $3,500,000.  The first note, in the amount of $2,000,000,
was due on December 15, 1997, with interest payable quarterly beginning on March
15, 1996, at the rate of 8% per year.  The note was convertible into Common
Stock of the Company after February 26, 1996, under certain terms and
conditions.  On May 20, 1997, $1,000,000 had been converted into 1,846,394
shares of Common Stock.  In July 1997, the remaining principal balance of
$1,000,000 was restructured to remove the conversion feature. Paradise Bakery,
Inc. Common Shares have been pledged as collateral and $250,000 was added to the
principal balance of the note as consideration for the elimination of the
conversion feature of the note. This restructured note was due April 1, 1998.  
As of March 31, 1998, the aggregate amount owed under this note, including
interest, was $1,374,000.

The second series of notes in the amount of $1,500,000 are due on January 29,
1998 with interest payable quarterly beginning on March 15, 1996, at the rate of
8% per year.  These notes were convertible into Common Stock of the Company
after April 12, 1996, under certain terms and conditions.  As of July 11, 1997,
the entire $1,500,000 had been converted into 385,103 Common Shares.


                                          26
<PAGE>

In August of 1997, the Company retained E.C. Capital Ltd. ("ECC"), a New York
based investment-banking firm, to raise equity capital in a private offering
(the "ECC Offering").  The Company issued to investors units consisting of
25,000 shares of Common Stock, 25,000 "A" and "B" Warrants.  The "A" Warrants
have a term of two years from the date of issuance and may be exercised to
purchase shares of Common Stock at a per share exercise price of $1.60.  The "B"
Warrants have a three-year term and may be exercised to purchase shares of
Common Stock at a price per share of $2.00.  The offering price for each full
unit of the ECC Offering was $25,000.   All the Units offered have been sold,
including a total of 625,000 Common Shares and Warrants for the purchase of an
additional 1,250,000 Common Shares, for net proceeds of $544,000.  The issuance
of the "A" and "B" Warrants were subject to approval by the Company's Board of
Directors and shareholders of (i) an amendment to the Company's Articles of
Incorporation increasing its authorized number of shares of Common Stock from
25,000,000 to 50,000,000, (ii) effecting a one for ten reverse stock split of
the outstanding shares of Common Stock, and (iii) moving the Company's state of
incorporation from California to Delaware.  All of the above proposals were
approved by the Company's shareholders at its annual meeting held November 25,
1997.  The Company has agreed to pay ECC a 10% commission on all sales of units
and a 3% non-accountable expense reimbursement.  Additionally, the Company has
issued to ECC 500,000 "A" and 500,000 "B" Warrants, as partial compensation for
its efforts in completing the ECC Offering, for a total of 1,000,000 Warrants in
all.  The Company has also agreed to retain ECC as an advisor for the next three
years at a fee of $3,000 per month and to pay ECC a 5% warrant solicitation fee
for any of the investor Warrants which are exercised.  The Company has also
agreed not to raise debt or equity financing during this three-year period other
than with consent of ECC and to allow a ECC designee to observe all meetings of
the Company's Board of Directors.  Further, all of the Company's officers and
directors have executed lock-up agreements with ECC whereby they have agreed not
to transfer, assign, sell or otherwise dispose of any of their Company shares,
except with the consent of ECC, until at least one year after the effective date
of the registration statement.

In addition to the ECC placement above, during the third quarter of the year
ended March 31, 1998, the Company issued the following Common Stock Purchase
Warrants: (a) 1,260,000 Warrants each representing the right to purchase one
share of stock at $0.50 per share, and (b) 45,000 Warrants each representing the
right to purchase one share of common stock at $1.80 per share.  

If all of the above Warrants, including those issued with the ECC placement, are
duly exercised in accordance with their terms, the Company will receive
$4,761,000, in total. The Company, through May 31, 1998, has received a total of
$1,770,000 through the exercise of 1,692,500 such Warrants, and anticipates
further exercises in the near future. The Company is relying on the exercise of
most, if not all, of these warrant exercises to eliminate a substantial portion
of its current debt and allow it to pursue its specific operating plan, which
includes the sale of the assets of PBI and the acquisition and/or merger of
another company, most likely outside the food and beverage industry.

In November 1997, the Company borrowed $250,000 from The Harmat Organization, a
Delaware corporation, to meet working capital needs.  The loan, which bore
interest at the rate of 15% per year, was secured by Common Stock pledged by
officers of the Company.  As additional consideration for the loan, 10,000
Warrants were issued to Harmat at an exercise price of $0.50 per common share.
As of March 31, 1998, this loan had been repaid.
     
Effective December 31, 1997, the Company sold substantially all of the assets of
the Java Centrale franchise system to Massimo Da Milano, Inc., a Delaware
corporation, for $1,000,000 in future consideration and 5,000,000 shares of
Massimo's Common Stock, which has been valued at $300,000 as of March 31, 1998. 
The future consideration to be received by the Company consists of 50% cash
receipts from Java Centrale royalties and a 50% credit against products
purchased from Massimo's wholesale bakery operation.  Those cash receipts and
or/credits will be applied to the $1,000,000 until paid in full.  As of March
31, 1998, $8,000 had been received from MDMI.



                                          27
<PAGE>

Based on the Company's existing cost structure, and the Company's current and
anticipated revenue streams, including the operating income and franchise sales
expected to be produced by the Company's Paradise Bakery system, the Company
cannot estimate that it will break even on cash flow in the current fiscal year.
The Company does not expect to achieve profitability until after March 31, 1999
and then only if the Company's specific operating plan, which includes the sale
of the assets of Paradise Bakery, Inc. and the acquisition of another operating
unit, can be met and its cost structure further reduced. There can be no
assurance that enough new franchises will be sold to provide the necessary
liquidity, or that the Company's liquidity goals will be reached in the
immediate future, if ever.  The Company has certain debt obligations that are in
default for non-compliance with financial covenants and non-payment to the
scheduled required payments.  These obligations have been classified as
currently due in the financial statements and the Company cannot make any
assurances as to the ultimate disposition of these debt obligations, which total
approximately $2,900,000 as of May 31, 1998. The Company's plan of operation to
provide ongoing liquidity continues to include the sale of certain operating
assets, the active pursuit of debt and equity and the restructure of debt.  The
Company can not make any assurance that this plan will be achieved.  The Company
has no available credit line.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following 24 pages contain the Company's audited balance sheets as of March
31, 1998 and 1997, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the years ended March 31, 1998, 1997, and
1996.  No supplementary data is required to be filed by the Company by Section
302 of Regulation S-K.   


                                          28
<PAGE>


                                          
                         FINANCIAL STATEMENTS AND REPORT OF
                      INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                          
                              PARADISE HOLDINGS, INC.
                                   AND SUBSIDIARY
                                          
                   (FORMERLY JAVA CENTRALE, INC. AND SUBSIDIARY)
                                          
                           March 31, 1998, 1997 and 1996
                                          
                                          
                                          
                                          
                                          
                                          


                                          29
<PAGE>

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------
                                                                         Page
-------------------------------------------------------------------------------
<S>                                                                    <C>
Report of Independent Certified Public Accountant                           31

Consolidated Financial Statements

  Consolidated Balance Sheets                                               33

  Consolidated Statements of Operations                                     34

  Consolidated Statements of Stockholders' Equity                           35

  Consolidated Statements of Cash Flows                                36 - 37

  Notes to Consolidated Financial Statements                           38 - 53

</TABLE>
                                          30

<PAGE>

                               [LETTERHEAD]

           REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Stockholders
PARADISE HOLDINGS, INC. AND SUBSIDIARY

We have audited the accompanying consolidated balance sheets of PARADISE 
HOLDINGS, INC. (A DELAWARE CORPORATION)(FORMERLY JAVA CENTRALE, INC. AND 
SUBSIDIARY as of March 31, 1997, and the related consolidated statements of 
operations, stockholders' equity (deficit), and cash flows for the years 
ended March 31, 1997 and 1996.  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 audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Paradise 
Holdings, Inc. and Subsidiary as of March 31, 1997, and the consolidated 
results of their operations and their consolidated cash flows for the years 
ended March 31, 1997 and 1996 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 C to the 
financial statements, the Company has experienced recurring net losses from 
operations and has a net loss of approximately $5,300,000 for the year ended 
March 31, 1997 and as of that date, the Company's current liabilities 
exceeded it current assets by approximately $2,900,000.  At March 31, 1997, 
the Company is in default under a note agreement and is not in compliance 
with certain debt agreement covenants which could result in the notes 
becoming due and payable on demand.  The Company's plan in regard to these 
matters are also described in Note C.  The accompanying financial statements 
do not include any adjustments relating to the recoverability and 
classification of recorded asset amounts or the amounts and classifications 
of liabilities should the Company be unable to continue as a going concern.

GRANT THORNTON LLP

Sacramento, California
July 8, 1997

                                      31

<PAGE>


To the Board of Directors and Stockholders
PARADISE HOLDINGS, INC. AND SUBSIDIARY
(Formerly Java Centrale, Inc. and Subsidiary)
Sacramento, California

                                          
                            INDEPENDENT AUDITORS' REPORT


We have audited the accompanying consolidated balance sheet of Paradise
Holdings, Inc. (a Delaware Corporation) and Subsidiary (the Company) (formerly
Java Centrale, Inc. and Subsidiary) as of March 31, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year 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 audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Paradise Holdings,
Inc. and Subsidiary as of March 31, 1998 and the consolidated results of their
operations and their consolidated cash flows for the year 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 C to the
financial statements, the Company has experienced recurring net losses from
operations and has a net loss of $6,890,000 for the year ended March 31, 1998
and as of that date, the Company's current liabilities exceeded its current
assets by $4,108,000.  At March 31, 1998, the Company is in default under a note
agreement and is not in compliance with certain debt agreement covenants which
could result in the notes becoming due and payable on demand.  The Company's
plan in regard to these matters is also described in Note C.  The accompanying
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classifications of liabilities should the Company be unable to continue as a
going concern.

BURNETT, UMPHRESS & COMPANY, LLP 




Rancho Cordova, California
June 16, 1998


                                          32
<PAGE>

                                          
                      PARADISE HOLDINGS, INC., AND SUBSIDIARY
                   (Formerly Java Centrale, Inc. and Subsidiary)


                             CONSOLIDATED BALANCE SHEETS

                                      March 31,

<TABLE>
<CAPTION>
 

                                                                          1998            1997
-------------------------------------------------------------------------------------------------
<S>                                                                 <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents                                         $    460,000  $     351,000
  Notes - current                                                              -        448,000
  Accounts receivable (net of allowance of 
      $185,000 in 1998 and $176,000 in 1997)                             322,000        592,000
  Inventories                                                            213,000        314,000
  Prepaid expenses and other                                              48,000        397,000
-------------------------------------------------------------------------------------------------
     Total current assets                                              1,043,000      2,102,000
-------------------------------------------------------------------------------------------------

Property and equipment, net                                            2,128,000      2,781,000
Notes receivable                                                         147,000        990,000
Notes receivable - officer                                               169,000        241,000
Deferred and other charges                                                11,000        317,000
Intangible assets                                                      1,891,000      4,041,000
Marketable securities                                                    300,000        547,000
-------------------------------------------------------------------------------------------------
     Total assets                                                   $  5,689,000   $ 11,019,000
-------------------------------------------------------------------------------------------------


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                  $    984,000   $  1,124,000
  Accrued liabilities                                                  1,018,000        619,000
  Due to related parties                                                 130,000         44,000
  Current maturities of long-term debt                                 1,617,000      1,946,000
  Convertible debenture                                                1,374,000      1,197,000
  Current capital lease obligation                                        28,000         28,000
-------------------------------------------------------------------------------------------------
     Total current liabilities                                         5,151,000      4,958,000
-------------------------------------------------------------------------------------------------

Deferred revenues                                                         35,000        576,000
Convertible debenture                                                          -        249,000
Capital lease                                                             73,000         96,000
Other liabilities                                                         66,000         70,000

Stockholders' equity:
  Unrealized loss on securities                                         (200,000)             -
  Preferred Stock, no par, 25,000,000 shares authorized,                        
     Issued and outstanding shares;  none at  March 31, 1998                   -              -
  Common Stock, no par, 50,000,000 shares authorized, 
     Issued and outstanding shares;  3,540,504 at
     March 31, 1998 and 1,374,380 at March 31, 1997                   20,892,000     18,508,000
  Accumulated deficit                                                (20,328,000)   (13,438,000)
-------------------------------------------------------------------------------------------------
     Total stockholders' equity                                          364,000      5,070,000
-------------------------------------------------------------------------------------------------

     Total liabilities and stockholders' equity                     $  5,689,000   $ 11,019,000
-------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.

                                      33
<PAGE>

                               PARADISE HOLDINGS, INC., AND SUBSIDIARY
                             (Formerly Java Centrale, Inc. and Subsidiary)

                                CONSOLIDATED STATEMENTS OF OPERATIONS


                                   For the years ended March 31,

<TABLE>
<CAPTION>

                                                                1998           1997          1996
-----------------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
Revenue:
  Company operated cafes                                  $  9,038,000    $12,831,000     $7,602,000
  Franchised cafes                                           1,435,000      1,994,000      1,924,000
-----------------------------------------------------------------------------------------------------
     Total revenue                                          10,473,000     14,825,000      9,526,000
-----------------------------------------------------------------------------------------------------

Cost of company sales:
  Company operated cafes                                     8,446,000     12,026,000      8,238,000
  Selling, general and administrative                        3,686,000      4,686,000      4,220,000
  Depreciation and amortization                                869,000      1,158,000        622,000
  Loss associated with cart and cafe closures                  366,000        413,000        410,000
  Bad debt expense                                             762,000        472,000         74,000
  Loss on conversion of note receivable                              -        275,000              -
  Loss on joint venture                                              -        257,000              -
  Settlement expense                                           389,000        336,000              -
  Loss (gain) on disposal of assets                           (380,000)       128,000              -
  Loss on investments                                          547,000              -              -
  Impairment of goodwill                                     1,850,000              -              -
-----------------------------------------------------------------------------------------------------
     Total cost of company sales                            16,535,000     19,751,000     13,564,000
-----------------------------------------------------------------------------------------------------

     Operating loss                                         (6,062,000)    (4,926,000)    (4,038,000)
-----------------------------------------------------------------------------------------------------

Interest expense, net                                         (900,000)      (549,000)       (19,000)
Non-operating income, net                                       72,000        149,000         91,000
-----------------------------------------------------------------------------------------------------

     Net loss                                             $ (6,890,000)   $(5,326,000)   $(3,966,000)
-----------------------------------------------------------------------------------------------------

Net loss per weighted average equivalent
  common share outstanding                                $      (3.42)   $     (4.61)   $     (6.08)
-----------------------------------------------------------------------------------------------------

Equivalent common share outstanding                          2,013,731      1,154,974        652,550
-----------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.

                                      34
<PAGE>

                    PARADISE HOLDINGS, INC., AND SUBSIDIARY
                 (Formerly Java Centrale, Inc. and Subsidiary)

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                Three years ended March 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                       Preferred Stock              Common Stock           Unrealized  Accumulated
                                      Shares     Amount         Shares        Amount          loss      (Deficit)       Total
-------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>        <C>         <C>          <C>          <C>         <C>             <C>
Balances, March 31, 1995                -         -            531,682    $ 9,577,000          -   $ (4,146,000)   $ 5,431,000
Shares issued for acquisition
purchases                               -         -             78,565        933,000          -              -        933,000
Warrants converted to common 
stock                                   -         -             30,000        120,000          -              -        120,000
Note payable converted to 
common stock                            -         -             23,400        749,000          -              -        749,000
Shares issued for private 
offerings, net of expenses              -         -            160,469      3,541,000          -              -      3,541,000
Shares issued for joint venture 
investment                              -         -              8,943        120,000          -              -        120,000
Shares issued for consulting 
expenses                                -         -             20,300        453,000          -              -        453,000
Net loss                                -         -                  -              -          -     (3,966,000)    (3,966,000)
-------------------------------------------------------------------------------------------------------------------------------
Balances, March 31, 1996                -         -            853,359     15,493,000          -     (8,112,000)     7,381,000
Conversion for convertible 
notes                                   -         -            331,118      1,850,000          -              -      1,850,000
Shares issued for private 
offerings, net of expenses              -         -            153,846        900,000          -              -        900,000
Warrants converted to common 
stock                                   -         -             25,000         63,000          -              -         63,000
Shares issued for consulting 
expense                                 -         -             20,000         50,000          -              -         50,000
Warrants issued for consulting 
expense                                 -         -                  -        240,000          -              -        240,000
Warrants issued in connection 
with debt                               -         -                  -         32,000          -              -         32,000
Shares canceled for joint 
venture investment                      -         -             (8,943)      (120,000)         -              -       (120,000)
Net loss                                -         -                  -              -          -     (5,326,000)    (5,326,000)
-------------------------------------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1997                -         -          1,374,380     18,508,000          -    (13,438,000)     5,070,000
CONVERSION OF CONVERTIBLE 
NOTES                                   -         -            238,624        395,000          -              -        395,000
SHARES ISSUED FOR PRIVATE 
OFFERINGS, NET OF EXPENSES              -         -            625,000        399,000          -              -        399,000
WARRANTS CONVERTED TO COMMON STOCK      -         -          1,302,500      1,504,000          -              -      1,504,000
WARRANTS ISSUED IN 
CONNECTION WITH DEBT                    -         -                  -         86,000          -              -         86,000
UNREALIZED LOSS ON 
MARKETABLE SECURITIES                   -         -                  -              -   (200,000)             -       (200,000)
NET LOSS                                -         -                  -              -          -     (6,890,000)    (6,890,000)
-------------------------------------------------------------------------------------------------------------------------------
BALANCES, MARCH 31, 1998                -         -          3,540,504    $20,892,000  $(200,000)  $(20,328,000)   $   364,000
--------------------------------------------------------------------------------------------------------------------------------

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.


                                                                     35
<PAGE>


                                     PARADISE HOLDINGS, INC., AND SUBSIDIARY
                                 (Formerly Java Centrale, Inc. and Subsidiary)

                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               Years ended March 31, 

<TABLE>
<CAPTION>


                                                               1998           1997           1996   
------------------------------------------------------------------------------------------------------
<S>                                                        <C>            <C>            <C>
Cash flows from operating activities:
  Net loss                                                 $(6,890,000)   $(5,326,000)   $(3,966,000)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                             869,000      1,158,000        608,000
     Loss on conversion of note receivable                           -        275,000              -
     Loss on joint venture                                           -        257,000              -
     Impairment of goodwill                                  1,850,000              -              -
     Settlement expense                                        389,000        150,000              -
     Loss associated with cart and cafe closure                366,000        413,000        410,000
     Bad debt expense                                          762,000              -              -
     Loss on investment                                        547,000              -              -
     Stock issued for consulting expenses                            -        188,000        453,000
     Warrants issued in connection with debt                         -         32,000              -
     (Gain) loss on sale of assets                            (380,000)       128,000              -
     Changes in operating assets and liabilities:
       Inventories                                              50,000        (44,000)       (20,000)
       Deposits and prepaid expenses                                 -        125,000       (318,000)
       Accounts payable and accrued liabilities                (20,000)      (924,000)       513,000
       Payable to related parties                               86,000         16,000       (222,000)
       Deferred revenues                                      (184,000)      (417,000)       314,000
       Accounts receivable                                     232,000       (277,000)        22,000
       Notes receivable                                              -        962,000        201,000
       Deferred charges and other assets                     1,020,000        249,000       (524,000)
       Other liabilities                                             -        (27,000)       138,000
------------------------------------------------------------------------------------------------------
          Net cash used in operating activities             (1,303,000)    (3,062,000)    (2,391,000)
------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
  Proceeds from cafe sales                                           -      1,321,000              -
  Purchase of furniture and equipment                          (64,000)      (313,000)    (1,432,000)
  Increase of intangible assets                                      -        (15,000)        (2,000)
  Investment in joint venture                                        -              -        (13,000)
  Cash paid for net assets acquired and other
     acquisition expenses                                            -              -     (5,555,000)
------------------------------------------------------------------------------------------------------
  Net cash provided by (used in) investing activities          (64,000)       993,000     (7,002,000)
------------------------------------------------------------------------------------------------------

Cash flow from financing activities:
  Proceeds from issuing convertible debt                             -              -      3,500,000
  Proceeds from issuing common stock, net                      399,000        900,000      3,541,000
  Proceeds from notes payable                                  475,000      1,729,000              -
  Repayments of notes payable                                 (879,000)    (1,362,000)      (494,000)
  (Payments) proceeds from capital lease obligations           (23,000)       (92,000)       144,000
  Proceeds from warrant conversion                           1,504,000         63,000        120,000
------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities               1,476,000      1,238,000      6,811,000
------------------------------------------------------------------------------------------------------

     Net increase (decrease) in cash                           109,000       (831,000)    (2,582,000)
------------------------------------------------------------------------------------------------------

Cash and cash equivalents, beginning of period                 351,000      1,182,000      3,764,000
------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                      $460,000       $351,000     $1,182,000
------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.

                                      36
<PAGE>

                                PARADISE HOLDINGS, INC., AND SUBSIDIARY
                            (Formerly Java Centrale, Inc. and Subsidiary)

                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                                            Years ended March 31,

<TABLE>
<CAPTION>
                                                                          1998           1997            1996
--------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>           <C>               <C>     
Supplemental disclosure of cash flow information:
  Interest paid                                                       $  149,000    $   439,000       $ 55,000
  Income tax paid                                                          2,000          2,000              -
--------------------------------------------------------------------------------------------------------------

Supplemental disclosure of non-cash operating activities:
  Depreciation and amortization                                          869,000      1,158,000        622,000

Supplemental disclosure of non-cash financing activities:
  Preferred Stock received in connection with dispositions                     -        700,000              -
  Common Stock received in connection with dispositions                  500,000              -              -
  Issuance of Warrants for services                                       86,000        240,000              -
  Issuance of Common Stock for consulting services                             -        188,000              -
  Conversion of debenture to Common Stock                                446,000      2,054,000              -
  Cost associated with debt conversion                                   (51,000)             -

Supplemental disclosure of non-cash investing activities:
  Proceeds from the sale of assets:
     Cash received                                                    $        -    $ 1,556,000       $      -
     Account and note receivable                                               -      1,351,000              -
     Inventory                                                                 -         60,000              -
     Preferred Stock received                                                  -        700,000              -
     Common Stock received                                               500,000              -              -
     Liabilities assumed                                                 350,000        128,000              -
     Net book valued of assets                                          (470,000)    (3,667,000)             -
--------------------------------------------------------------------------------------------------------------
       Gain (loss) on sale of assets                                  $  380,000    $   128,000       $      -
--------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE FINANCIAL STATEMENTS.

                                      37
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE A.  ORGANIZATION AND NATURE OF BUSINESS

Effective May 8, 1998, the Company changed its state of incorporation from 
California to Delaware through a merger of Java Centrale, Inc., a California 
corporation, the Company's prior corporation entity ("Java"), into its 
wholly-owned subsidiary Paradise Holdings, Inc., a Delaware corporation which 
was created for the sole purpose of the re-incorporation ("the Company").  As 
a result of the re-incorporation, the Company formally changed its name from 
Java Centrale, Inc. to Paradise Holdings, Inc. and Java ceased to exist as a 
corporate entity.  Paradise survived the merger as the Company's current 
corporate entity, with all of the rights and properties, and all of the 
liabilities and obligations, of Java, and each outstanding share of Java's no 
par value Common Stock immediately prior to the merger was exchanged for and 
converted into one fully-paid and non-assessable share of Common Stock of the 
Company's, $.001 par value per share.  The merger and reincorporation were 
approved by the Company's shareholders at its 1997 Annual Meeting.  
Consummation of the merger and re-incorporation has not resulted in the 
transfer of assets from Java, Paradise, or any of their subsidiaries, or 
altered the Company's headquarters location or management.

The Company operates under the brand name of Paradise Bakery and Cafe through 
its wholly owned subsidiary, Paradise Bakery, Inc. (Paradise), acquired in 
December 1995 (see "NOTE E.  SIGNIFICANT ACQUISITIONS").  Paradise is 
primarily in the business of selling freshly baked cookies, muffins, 
croissants, along with a full lunch menu. Paradise operates both Company and 
franchisee owned locations.


NOTE B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation 
of the accompanying consolidated financial statements of the Company follows.

1.   PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and 
its wholly owned subsidiary.  All significant inter-company transactions are 
eliminated.

2.   REVENUE FROM FRANCHISE SALES

REVENUE FROM AREA FRANCHISE SALES - Franchise fee revenue and costs are
recognized on a pro rata basis as each unit is opened and all material services
or conditions relating to those units have been substantially performed or
satisfied by the Company.

REVENUE FROM INDIVIDUAL FRANCHISE SALES - Franchise fee revenue and costs from
individual franchise sales is recognized when all material services or
conditions relating to the sale have been substantially performed or satisfied
by the Company and the store is opened.

ROYALTY REVENUE - Royalty revenue is recorded as earned in accordance with
specific terms of each franchisee agreement.

                                      38
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

3.   INVENTORIES

Inventories, consisting principally of ingredients for baking at 
Company-owned cafes and franchise related supplies, are stated at the lower 
of cost (first-in, first-out method) or market.

4.   MARKETABLE SECURITIES

Available for sale securities are recorded at the aggregate fair value of the 
investment, based upon current market prices, with the change in fair value 
during the period excluded from earnings and recorded as a separate component 
of equity.

5.   PROPERTY AND EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation and 
amortization.  Depreciation and amortization of property and equipment is 
computed using the straight-line method over the estimated useful life of the 
asset ranging from 3 to 10 years.

6.   INTANGIBLE ASSETS

Intangible assets consist of goodwill and organizational costs.  All 
intangible assets are amortized on a straight line basis from 5 to 15 years.

7.   INCOME TAXES

The Company utilizes an asset and liability approach in accounting for income 
taxes.  This approach requires the recognition of the deferred tax 
liabilities and assets for the expected future tax consequences of temporary 
differences between the financial statement carrying amounts and tax basis of 
assets and liabilities.  Deferred tax assets and liabilities are reflected at 
currently enacted income tax rates applicable to the period in which the 
deferred tax assets or liabilities are expected to be realized or settled.  
As changes in tax laws or rates are enacted, deferred tax assets and 
liabilities are adjusted through the provision for income taxes.

8.   CASH AND CASH EQUIVALENTS

For purpose of the statement of cash flows, the Company considers all highly 
liquid investments purchased with maturities of three months or less to be 
cash equivalents.

9.   RECLASSIFICATIONS

Certain reclassifications have been made to the 1997 and 1996 financial 
statements in order to conform with the 1998 presentation.

                                      39
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

10.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments, including cash, accounts 
receivable, accounts payable and short-term debt approximated fair value as 
of March 31, 1998 and 1997 because of the relatively short maturity of these 
instruments.  The carrying value of long-term debt approximated fair value as 
of March 31, 1998 and 1997, based upon current market rates for the same or 
similar debt issues.  As of March 31, 1998 and 1997, notes receivable with a 
carrying value of $147,000 and $1,887,000 had an estimated fair value of 
$117,000 and $1,851,000, respectively, based upon current market rates for 
notes with similar terms and credit quality.

11.  ESTIMATES USED IN FINANCIAL REPORTING

In preparing financial statements in conformity with generally accepted 
accounting principles, management is required to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
the disclosure of contingent assets and liabilities at the date of the 
financial statements and revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

The allowances for losses on impaired notes receivable and accounts 
receivable are estimates for which there is at least a reasonable possibility 
of a change within one year of the balance sheet date and that could have a 
material effect on the financial statements.

12.    STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board (FASB) issued SFAS 
No. 123, "Accounting for Stock Based Compensation."  This statement requires 
entities to disclose the fair value of their employee stock options, but 
permits entities to continue to account for employee stock options under 
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock 
Issued to Employees."  The Company has determined that it will continue to 
use the method prescribed by APB Opinion No. 25, which recognizes 
compensation cost to the extent of the difference between the quoted market 
price of the stock at the date of grant and the amount an employee must pay 
to acquire the stock.  The Company grants stock options to employees with an 
exercise price equal to the Company's quoted market price of the stock at the 
date of grant.  Accordingly, no compensation cost is recognized for stock 
option grants.  Disclosure requirements in accordance with SFAS No. 123 are 
included at NOTE Q.  STOCK OPTIONS AND WARRANTS.

13.  LOSS PER SHARE

Loss per common share is based upon the weighted average number of common and 
common equivalent shares outstanding.  On December 19, 1997, the Company 
effected a one for ten-reverse stock split of the outstanding shares of 
common stock (see "NOTE A.  ORGANIZATION AND NATURE OF BUSINESS").  
Accordingly, all per share data has been restated to reflect this stock split.

For all periods presented, options, Warrants and preferred stocks are 
anti-dilutive.  Accordingly, only Common Shares outstanding are included in 
the computation of weighted average shares outstanding, and no fully diluted 
loss per share is presented.

                                      40
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Effective December 15, 1997, the Company adopted Statement of Financial 
Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).  SFAS No. 
128 establishes new requirements for computing and presenting earnings per 
share. Under the new requirements, the method previously used to compute 
earnings per share is changed and all prior periods presented must be 
restated to conform to meet the new requirements.  The new requirements 
eliminate primary earnings per share and earnings per common share, assuming 
full dilution, and require the presentation of earnings per common share and 
diluted earnings per common share. As a result, under the new requirements, 
earnings per common share excludes any dilutive effect of stock options and 
Warrants.  Also, the dilutive effect of stock options and Warrants used to 
compute diluted earnings per common share is based on the average market 
price of the Company's common stock for the period. Diluted earnings per 
share have not been presented as the result would be anti-dilutive.

14.  CONCENTRATION OF CREDIT RISK

The Company maintains cash balances in excess of Federal Deposit Insurance 
Corporation insurable limits with certain financial institutions.


NOTE C.  REALIZATION OF ASSETS

The accompanying financial statements have been prepared in conformity with 
generally accepted accounting principles, which contemplate continuation of 
the Company as a going concern.  However, the Company has incurred recurring 
net losses from operations and a net loss of $6,890,000 for the year ended 
March 31, 1998.  In addition, the Company has used, rather than provided, 
cash in its operations. At March 31, 1998, the Company is in default under 
certain note agreements and is not in compliance with certain debt covenants 
within the agreements, which could result in the notes becoming due and 
payable on demand. These notes have been classified as current in the 
consolidated balance sheet.

In view of the matters described in the preceding paragraph, recoverability 
of a major portion of the recorded asset amounts shown in the accompanying 
balance sheet is dependent upon continued operations of the Company, which is 
dependent upon the Company's ability to meet its financing requirements on a 
continuing basis and to succeed in its future operations.  The financial 
statements do not include any adjustments relating to the recoverability of 
recorded assets that might be necessary should the Company be unable to 
continue in existence.

To meet its liquidity needs the Company has entered into conditional letters 
of intent to sell the assets of its wholly-owned subsidiary, Paradise Bakery, 
Inc., and acquire the assets of Axxess Media, Inc. (see "NOTE V. SUBSEQUENT 
EVENTS"). Management expects that upon the completion of these transactions, 
the Company will have retired all existing notes payable and long-term debt, 
all of which have been classified as current in the accompanying Consolidated 
Financial Statements.  The Company cannot make any assurances that these 
plans will be completed.

                                      41
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE D.  FRANCHISE OPERATIONS

At March 31, 1998, the Company has commitments for one franchisee owned cafe, 
which subsequently opened in May 1998.  Under this commitment, the Company 
has received a $35,000 in nonrefundable deposit.

Related to this commitment, the Company has deferred revenues of $35,000 at 
March 31, 1998, which was recognized in May 1998, when the Company completed 
its initial commitment to the franchisee and the franchisee owned store was 
opened for business.


NOTE E.  SIGNIFICANT ACQUISITIONS

PARADISE BAKERY, INC. - On December 31, 1995, the Company acquired 100% of the
outstanding shares of Paradise Bakery, Inc., (Paradise), pursuant to the terms
of a Stock Purchase Agreement dated December 14, 1995 between the Company and
Chart House Enterprises, Inc. (Seller).  Paradise's operations consist of seven
bakery/cafe operations located in California and 44 franchised bakery/cafe
operations located in California, Washington, Oregon, Arizona, Colorado,
Oklahoma, Texas, Hawaii and Ontario, Canada.

The purchase price approximated $6,725,000, consisting of $5,375,000 in cash 
and $1,350,000 in a note payable and was accounted for as an asset purchase. 
The purchase price was allocated to the fair value of Paradise's assets and 
liabilities, and the excess of $3,692,000 was allocated to goodwill.  
Goodwill is amortized on the straight-line method over a period of 15 years 
and depreciable assets are depreciated over the remaining useful life on a 
straight-line basis.  The assets and liabilities are held in Paradise Bakery, 
Inc., as a wholly owned subsidiary of the Company.

FOUNDERS VENTURES, INC. - On January 17, 1996, the Company merged with Founders
Ventures, Inc. (Founders) pursuant to the terms of a merger agreement dated
December 15, 1995.  The consideration paid by the Company consisted of 43,185
shares of the Company's common stock.  The purchase price was allocated to the
fair value of Founder's assets and liabilities, and the excess of $627,000 was
allocated to goodwill. Goodwill is amortized on the straight-line method over a
period of 15 years and depreciable assets are depreciated over the remaining
useful life on a straight-line basis.  The assets and liabilities are held in
Paradise Bakery, Inc., a wholly owned subsidiary of the Company.


NOTE F.  DISPOSAL OF ASSETS

JAVA CENTRALE FRANCHISE SYSTEM - In December 1997, the Company sold the assets
of the Java Centrale franchise system to Massimo Da Milano, Inc. ("MDMI").  The
total consideration consists of $1,000,000 to be received from future royalties
of the Java Centrale franchise system and credits against purchases from MDMI's
bakery operations, and 5,000,000 shares of the Buyer's Common Stock.  The
Company recognizes the future consideration of $1,000,000 as cash is received or
credits are earned.  As of March 31, 1998, the Company has received $8,000 in
royalty payments and the investment in MDMI has been valued at $300,000.  The
gain on sale did not include the contingent proceeds of $1,000,000 and will be
recognized as received.

                                      42
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE F.  DISPOSAL OF ASSETS (CONTINUED)

OH LA LA! DIVISION - In December 1996, the Company sold all operating 
locations of their Oh La La! Division pursuant to the terms of an asset 
purchase agreement.  The consideration received for the sale of Oh La La! 
consisted of 233,333 shares of the purchaser's preferred stock, $1,250,000 in 
cash, $750,000 in a convertible note receivable.  The preferred stock was 
issued with certain conversion rights into Common Shares, an 8% cumulative 
dividend and certain covenants and restrictions.  On March 31, 1997, the 
preferred stock and note receivable were converted to $145,000 cash and 
40,000 Common Shares (See "NOTE J.  INVESTMENTS").  The Company recognized a 
loss on the exchange and conversion of the note receivable in the amount of 
$275,000.

JAVA SOUTHEAST - On November 14, 1994 the Company entered into an agreement with
Banyan Capital, Limited Partnership, Java Southeast Partners, L.P., and Java
Southeast, Inc. to develop the Florida market.  Pursuant to the terms of the
agreement, the Company issued 8,943 shares of common stock in exchange for 18.3%
of the joint venture's outstanding shares. The joint venture agreement was
terminated effective March 1997, and the Company canceled 8,943 shares of common
stock and recognized a loss on investment of $257,000.

COMPANY-OWNED BAKERIES AND CAFES - During the year ended March 31, 1997, the
Company sold six Java Company-owned cafes and two Paradise Company-owned cafes
to franchisees for consideration of $381,000 in cash, $566,000 in notes
receivable and the assumption of $45,000 in liabilities.


NOTE G.  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at March 31,:

<TABLE>
<CAPTION>
                                                    1998              1997
------------------------------------------------------------------------------
 <S>                                         <C>               <C>
 Office furniture and equipment............  $      355,000     $      384,000
 Tenant improvements.......................         578,000          2,045,000
 Cafe equipment............................       2,615,000          1,243,000
------------------------------------------------------------------------------
                                                  3,548,000          3,672,000
 Less accumulated depreciation and              
 amortization..............................      (1,420,000)          (891,000)
------------------------------------------------------------------------------
                                             $    2,128,000     $    2,781,000
------------------------------------------------------------------------------
</TABLE>


NOTE H.  NOTES RECEIVABLE

Notes receivable consisted of the following at March 31:

<TABLE>
<CAPTION>
                                                              1998            1997
----------------------------------------------------------------------------------
 <S>                                                    <C>            <C>
 Franchise fees receivable...........................   $     -        $    80,000
 Equipment and advertising receivable (net of
      allowance of $52,000 in 1997)..................         -             16,000
 Notes from franchisees (net of allowance of
      $739,000 in 1998 and $185,000 in 1997).........        147,000     1,197,000
----------------------------------------------------------------------------------
 Notes from sale of Oh La La! Division...............         -            145,000
----------------------------------------------------------------------------------
                                                             147,000     1,438,000
 Less current portion................................         -           (448,000)
----------------------------------------------------------------------------------
                                                        $    147,000   $   990,000
----------------------------------------------------------------------------------
</TABLE>

                                      43
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE H.  NOTES RECEIVABLE (CONTINUED)

The five year maturity is as follows:

<TABLE>
<S>                                              <C>
                      1999                          -
                      2000                          -
                      2001                          -
                      2002                          -
                      2003                        57,000
                      After 2003                  90,000
                      ----------------------------------
                      Total                      147,000
</TABLE>

As of March 31, 1998 and 1997, respectively Management has determined that 
approximately $739,000 and $844,500 of the notes from franchisees are 
impaired according to SFAS 114, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A 
LOAN. Notes from franchisees have been recorded net of an impairment reserve 
of $739,000 and $156,000 as of March 31, 1998 and 1997, respectively.


NOTE I.  INTANGIBLE ASSETS

Intangible assets consisted of the following at March 31:

<TABLE>
<CAPTION>
<S>                                                       <C>                      <C>
                                                               1998                     1997
------------------------------------------------------------------------------------------------
 Goodwill.............................................    $   2,751,000            $   4,408,000
 Organizational cost..................................           31,000                   31,000
------------------------------------------------------------------------------------------------
                                                              2,782,000                4,439,000
 Less accumulated depreciation and amortization.......         (891,000)                (398,000)
------------------------------------------------------------------------------------------------
 Total net............................................    $   1,891,000            $   4,041,000
------------------------------------------------------------------------------------------------
</TABLE>

The carrying value of intangible assets is periodically reviewed by the 
Company based on the expected future undiscounted operating cash flows of the 
related business unit.  Based upon the Company's recently signed letter of 
intent to sell the assets of Paradise (see "NOTE V.  SUBSEQUENT EVENTS"), the 
Company has written down the value of goodwill by an additional $1,850,000 as 
of March 31, 1998.  The Company believes that no other material impairment of 
intangible assets exist at March 31, 1998.


NOTE J.  INVESTMENTS

MASSIMO DA MILANO INC. - In conjunction with the sale of the Java Centrale
franchise system, (see "NOTE F. DISPOSAL OF ASSETS"), the Company received
5,000,000 shares of the purchaser's restricted common stock. These marketable
securities have been classified as available for sale.  As March 31, 1998, the
Company has recorded an unrealized loss on securities available for sale of
$200,000.

GOOD FOOD FAST COMPANIES - The Company's investment in 273,333 Common Shares of
GFF as of March 31, 1998 has been valued at $1.00.  On March 18, 1998, the
Company granted an option to sell the shares of GFF for $90,000.  This option
expires on September 11, 1998.

                                      44
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE K.  ACCRUED LIABILITIES

Accrued liabilities consisted of the following at March 31: 

<TABLE>
<CAPTION>
                                           1998               1997
---------------------------------------------------------------------
<S>                                    <C>               <C>
Accrued payroll.....................   $    137,000      $    133,000
Accrued payroll taxes...............         75,000            75,000
Settlement expense..................        150,000           170,000
Accrued interest....................        311,000           101,000
Other...............................        345,000           140,000
---------------------------------------------------------------------
                                       $  1,018,000      $    619,000
---------------------------------------------------------------------
</TABLE>


NOTE L.  RELATED PARTIES

Baycor Venture, Inc. (Baycor) is a wholly owned subsidiary of Baycor Capital 
Inc., of Alberta, Canada.  A principal shareholder of Baycor Capital, Inc. is 
the former Chairman of the Board of the Company.  The individual was paid 
$58,000, $100,000 and $94,000, under the terms of an employment agreement 
during the years ended March 31, 1998, 1997 and 1996, respectively.  The 
Company also reimbursed Baycor for travel and entertainment expenses incurred 
by officers of Baycor on behalf of the Company.  At March 31, 1998 and 1997, 
the Company owed Baycor $130,000 and $44,000, respectively, for expense 
reimbursement and compensation.

During the year ended March 31, 1997, the Company received a bridge loan from 
Alta Petroleum, Inc. (Alta).  Alta's vice president is a former board member 
of the Company.  The balance outstanding at March 31, 1998, is $575,000, 
which was due August 1997.

At March 31, 1998 and 1997, the Company had notes receivable outstanding of 
$129,000 and $185,000 from Baycor and $40,000, respectively, from a vice 
president of the Company.  At March 31, 1998, the Company recorded a reserve 
of $56,000 for the note receivable from Baycor.


NOTE M.  LONG-TERM DEBT

Long-term debt consisted of the following at March 31:

<TABLE>
<CAPTION>
                                                           1998          1997
---------------------------------------------------------------------------------
 <S>                                                     <C>           <C>
 Note payable to Chart House Enterprises, Inc.
   The note bears interest at 10% per annum
   and is payable interest only for the first twelve
   months beginning February 1, 1996, and
   thereafter principal payments shall be payable in
   eight equal quarterly payments in amounts
   sufficient to fully amortize the entire principal
   balance over a period of eight quarters.
   The note is collateralized by franchisee note
   receivables. The Company was in default as of
   March 31, 1998.....................................   $ 446,000      $ 836,000
</TABLE>

                                      45
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE M.  LONG-TERM DEBT (CONTINUED)

<TABLE>
<CAPTION>
                                                           1998          1997 
--------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Tenant improvement loans with terms calling for           
   monthly principal and interest payments over           
   a period ranging from one to ten years with            
   interest rates ranging from 7.5 to 11 percent.......     42,000        89,000
                                                          
Note payable to Alta Petroleum, related party,            
   due August, 1997. The note bears interest at 14%       
   and is collateralized by all Paradise                  
   Bakery, Inc. shares.................................    575,000       300,000

Loan payable to Imperial Business Credit, Inc.
   The note bears interest at 12.551% per annum.
   Payments of $20,304 are due monthly.  The loan
   is collateralized by all equipment, receivables
   and inventory of the Paradise Company owned stores.
   The loan is subject to certain requirements
   and covenants of which the Company was not in
   compliance at March 31, 1998.........................   554,000       721,000
--------------------------------------------------------------------------------
                                                         1,617,000     1,946,000
 Less current maturity                                   1,617,000    (1,946,000)
                                                        $    -       $     - 
--------------------------------------------------------------------------------
</TABLE>


NOTE N.  PREFERRED STOCK

The Company has authorized 25,000,000 shares of $0.001 par Preferred Stock. 
The terms of the Preferred Stock are determinable by the Company's Board of 
Directors at the time of issuance.  As of March 31, 1998 and 1997, there was 
no Preferred Stock outstanding.


NOTE O.  CONVERTIBLE DEBT

During fiscal 1996, the Company issued, through private placements, 
convertible notes in the amount of $3,500,000.  The first note, in the amount 
of $2,000,000, was due on December 15, 1997, with interest payable quarterly 
beginning on March 15, 1996, at the rate of 8% per year.  The note was 
convertible into Common Stock of the Company after February 26, 1996, under 
certain terms and conditions.  As of December 31, 1997, $1,000,000 had been 
converted into 18,464 shares of Common Stock.  As of March 31, 1997 the 
balance due was $1,197,000. The remaining principal balance of $1,000,000 was 
restructured to remove the conversion feature in July 1997.  The restructured 
note was due April 1, 1998. Paradise Bakery, Inc. Common Shares have been 
pledged as collateral and $250,000 was added to the principal balance of the 
note as consideration for the elimination of the conversion feature of the 
note.  As of March 31, 1998, the balance due on this note was  $1,374,000, 
including accrued interest.

                                      46
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE O.  CONVERTIBLE DEBT (CONTINUED)

The second series of notes in the amount of $1,500,000 are due on January 29, 
1998 with interest payable quarterly beginning on March 15, 1996, at the rate 
of 8% per year.  These notes were convertible into Common Stock of the 
Company after April 12, 1996, under certain terms and conditions.  As of July 
11, 1997, the entire $1,500,000 had been converted into 385,103 Common Shares.


NOTE P.  STOCKHOLDERS' EQUITY

1.   STOCK SPLIT

At the Company's Annual Shareholders' Meeting held on November 25, 1997, the 
shareholders approved amendments to the Company's Articles of Incorporation 
which would increase the Company's authorized number of shares of common 
stock from 25,000,000 to 50,000,000 and effect a one for ten reverse stock 
split of the outstanding shares of common stock.  Effective December 19, 
1997, the Company's Articles of Incorporation were duly amended to implement 
each of the foregoing amendments.  The effect of these amendments was to 
reduce the number of currently outstanding shares by 90% and to increase the 
number of authorized shares of common stock from 25,000,000 to 50,000,000 
shares (on a post-split basis).  Per share data and number of shares have 
been restated to give retroactive effect to the stock split.

2.  ESCROW AGREEMENT

Certain stockholders, directors and officers of the Company (the "Security 
Holders") placed an aggregate of 85,530 of their currently outstanding 
Company shares in escrow (the "Escrowed Shares") in connection with the 
Company's public offering of its Common Stock in May of 1994.  The Escrow 
Agreement provides that the Escrowed Shares be released to the Security 
Holders if the Company achieves certain earnings requirements during the 
fiscal years ended March 31, 1995, 1996, 1997, and 1998.  The Company has not 
achieved the requirements during any of the fiscal years.  All of the 
escrowed shares shall be released in March 1999.  If any Security Holder 
exercises Warrants or options to acquire additional Common Shares of the 
Company ("Additional Shares"), one-third of such Additional Shares must be 
placed in escrow and will be released pursuant to the Escrow Agreement as if 
they were Escrowed Shares.


NOTE Q.  STOCK OPTIONS AND WARRANTS

1.   INCENTIVE STOCK OPTION PLAN

Effective November, 1993, the Company adopted a Stock Option Plan (the "1993 
Plan") under which options to purchase a maximum of 125,000 shares of Common 
Stock may be granted to selected officers, directors and key full-time 
salaried employees of the Company.  Under the 1993 Plan, options may, at the 
discretion of the Board of Directors, be granted either as Incentive Stock 
Options (as defined in the Internal Revenue Code of 1986, as amended) or as 
Nonstatutory Stock Options.  The options will have an


NOTE Q.  STOCK OPTIONS AND WARRANTS (CONTINUED)

                                      47
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



exercise price of not less than the fair market value of the Common Stock on 
the date the option is granted and, unless otherwise provided by the Board of 
Directors, will vest over a five-year period, with 20% of the shares 
exercisable at the end of each year the grantee has completed as a director 
or employee of the Company.

On July 31, 1996, the Company modified the exercise price of all outstanding 
options from $17.50 - $20.00 per share to $7.50 per share.  Also on July 31, 
1996, the Company canceled the stock options under the 1993 Plan for certain 
directors and officers and issued 120,000 Warrants to those individuals.  The 
Warrants are included in the table below.

The fixed stock option plan is accounted for under APB Opinion No. 25 and 
related Interpretations.  Accordingly, no compensation cost has been 
recognized for the plan.  Had compensation cost for the plan been determined 
based on the fair value of the options at the grant dates consistent with the 
method of SFAS No. 123, the Company's loss and net loss per share would have 
been increased to the pro forma amounts indicated below.

<TABLE>
<CAPTION>
                                                            1998                    1997
--------------------------------------------------------------------------------------------
<S>                            <C>                      <C>                     <C>
Net loss                       As reported............  $ (6,890,000)           $ (5,326,000)
                               Pro forma..............  $ (6,890,000)           $ (5,718,452)
                            
Net loss per share             As reported............  $      (3.42)           $      (4.61)
                               Pro forma..............  $      (3.42)           $      (5.00)
</TABLE>

The fair value of each option grant is estimated on the date of grant using 
the Black-Scholes option pricing model with the following weighted-average 
assumptions used for grants in the years ended March 31, 1998 and 1997: 
expected volatility of 80 percent; risk-free interest rate of 6.0% and 6.05%, 
respectively; and expected lives of 1.0 and 1.5 years, respectively.

A summary of the status of the Company's fixed stock option plan and Warrants 
issued to directors and officers as of March 31, 1998 and 1997 and changes 
during the years then ended are presented below.

<TABLE>
<CAPTION>
                                                                   1998                         1997
--------------------------------------------------------------------------------------------------------------
                                                            SHARES     WEIGHTED      Shares      Weighted  
                                                                       AVERAGE                   Average  
                                                                       EXERCISE                  Exercise 
                                                                        PRICE                     Price   
--------------------------------------------------------------------------------------------------------------
 <S>                                                        <C>        <C>           <C>        <C>
 Outstanding at beginning of year........................   224,250    $ 7.50        110,000    $  18.90
 Granted
      Options............................................              $             118,350    $   7.50
      Warrants...........................................              $             120,000    $   7.50
 Exercised...............................................       -      $  -                     $    -
 Forfeited...............................................  (224,250)   $  7.50      (124,100)   $  17.60
--------------------------------------------------------------------------------------------------------------
 Outstanding at end of year..............................       -      $  -          224,250        7.50
 Options and Warrants exercisable at year end............              $             171,901    $   7.50
 Weighted-average fair value of options and
        Warrants granted during the year.................              $                        $   2.00
</TABLE>


NOTE Q.  STOCK OPTIONS AND WARRANTS (CONTINUED)

                                      48
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



As of March 31, 1998 there were no outstanding options and Warrants issued to 
directors and officers.

2.   WARRANTS

The Company has issued Warrants in exchange for consulting services, stock 
subscriptions and debt issuances.  These transactions, summarized below, have 
been accounted for at fair market value.

In July 1995, the Company granted Warrants to purchase 68,200 shares of 
common stock at $25.80 per share for consulting services.  The Warrants 
expired in July 1997.

In August 1995, the Company granted Warrants to purchase 15,000 shares of 
common stock at $15.00 per share for consulting services.  The Warrants 
expire in August 2002.

In January 1996, the Company granted Warrants to purchase 10,000 shares of 
common stock at $27.50 per share for consulting services.  The Warrants 
expire in January 2001.

In July 1996, the Company granted Warrants to purchase 30,000 shares of 
common stock at a resulting exercise price of $28.125 per share.  The 
Warrants were granted in conjunction with a debt issuance and they expire 
June 30, 2000.

In September 1996, the Company granted Warrants to purchase 76,923 shares of 
common stock at $12.50 per share in conjunction with a stock subscription 
agreement.  The Warrants expire September 23, 1998.

In October 1996, the Company granted Warrants to purchase 5,000 shares of 
common stock at a resulting exercise price of $28.125 per share.  The 
Warrants were granted in conjunction with a debt issuance and they expire 
June 30, 2000.

In February 1997, the Company issued the following Warrants for consulting 
services:

          (a)  Warrants to purchase 30,000 shares of common stock at 60 percent
               of the prior day's closing bid price per share and Warrants to
               purchase 30,000 shares of common stock at 75 percent of the prior
               day's closing bid price per share; these Warrants are effective
               for 120 days, and 52,500 of such Warrants were exercised
               subsequent to March 31, 1997.

          (b)  Warrants to purchase 60,000 shares of common stock at $7.50 per
               share effective for 120 business days following the exercise or
               expiration of all of the Warrants described in (a), above.

          (c)  Warrants to purchase 60,000 shares of common stock at $7.50 per
               share effective for 120 business days following the exercise or
               expiration of all of the Warrants described in (b), above.

                                     49
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE Q.  STOCK OPTIONS AND WARRANTS (CONTINUED)

In September and October 1997, the Company issued 2,250,000 "A" and "B" 
Warrants to purchase shares of the Company's common stock at $1.60 and $2.00, 
respectively.  These Warrants were issued in connection with a private equity 
placement.  As of March 31, 1998 430,000 and 150,000, A and B Warrants, 
respectively had been exercised.   

In December 1997, the Company granted Warrants to purchase 45,000 shares of 
common stock at $1.80 per share.  As of March 31, 1998, all of these Warrants 
had been exercised.

In November 1997, the Company granted Warrants to purchase 10,000 shares of 
common stock at $0.50 per share.  As of March 31, 1998 all of these Warrants 
had been exercised.

In December 1997, the Company issued Warrants to purchase 1,250,000 shares of 
common stock at $0.50 per share.  As of March 31, 1998, 630,000 Warrants had 
been exercised.   


NOTE R.  LEASE COMMITMENTS, RENT EXPENSE AND DEPOSIT

The Company has entered into a five and one-half year lease of office space 
for its corporate headquarters commencing on March 31, 1996, and ending July 
31, 2001.

Future minimum rents for each of the years ending March 31, are as follows:

<TABLE>
<CAPTION>
                                                 Capital             Operating
                                                  Lease                Lease
------------------------------------------------------------------------------
<S>                                            <C>                 <C>>
1999.......................................    $ 42,000            $ 1,135,000
2000.......................................      42,000              1,064,000
2001.......................................      42,000                817,000
2002.......................................        -                   394,000
2003.......................................        -                   291,000
Thereafter.................................        -                   526,000
------------------------------------------------------------------------------
Future minimum lease payments..............     126,000            $ 4,227,000
                                                                   -----------
Amounts representing interest..............      25,000
-------------------------------------------------------
Present value of minimum lease payments....   $ 101,000
------------------------------------------------------------------------------
</TABLE>

Total minimum future operating lease payments have not been reduced by 
$539,000 of sublease payments to be received in the future under subleases.

All amounts due under capital lease obligations are a result of arrangements 
made with former franchisees related to their cafe equipment.  As of March 
31, 1998, the net book value of these assets was zero.

In addition to minimum rents, the Company is required to pay its share of 
taxes, insurance, common area maintenance, and percentage rents of 1% to 2% 
of sales.

Rent expense for facilities leased by the Company for the years ended March 
31, 1998, 1997 and 1996 was $1,594,000, $1,970,000, and $1,214,000, 
respectively. 

                                     50
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE S.  INCOME TAXES

As of March 31, 1998, the Company has accumulated net operating losses of 
approximately $15,169,000. These losses can be carried forward and applied 
against future income of the Company for federal and state income tax 
purposes. The net operating losses will begin to expire in 2008 for federal 
purposes and in 2002 for state purposes, if not previously utilized.  For 
state income tax purposes, the use of the net operating loss is limited to 
approximately 50% of the federal net operating loss.  Under U.S. tax rules, 
the Company, as a result of the Paradise acquisition is subject to certain 
limitations as to the use of net operating losses in any one year.  A 
valuation allowance totally offsets the balance of the deferred tax asset 
related to these net operating losses, as it is more likely than not that the 
Company will not realize the deferred tax assets.

<TABLE>
<CAPTION>
                                                 1998             1997
-------------------------------------------------------------------------
<S>                                       <C>                <C>
Deferred tax assets:.....................  $ 6,068,000        $ 5,120,000
   Net operating losses    
   Temporary differences:
     Bad debt and impairment reserve.....    1,540,000               -
     Franchise fees collected............       14,000            208,000
     Depreciation and other..............       89,000             40,000
   Valuation allowance...................   (7,711,000)        (5,368,000)
-------------------------------------------------------------------------
                                           $     -             $    -
-------------------------------------------------------------------------
</TABLE>


NOTE T.  COMMITMENTS

The Company has employment agreements with four key employees, with annual 
salary requirements totaling $398,000.  Annual increases are tied to economic 
indicators, and include potential bonuses at the discretion of the Board of 
Directors

The Company is involved in litigation in the normal course of business.  
These suits relate to past due rent, mitigation and legal fees associated 
with real property leases that the Company is a party to and other claims 
under the normal course of business.  Management believes that it has 
substantial defenses against any real property claims and that all other 
litigation is without merit. The final disposition of this litigation, which 
if Management is not successful in all of its defenses, could ultimately 
result in losses in excess of $2.4 million.

The Company has guaranteed the lease payments of facilities operated by 
certain franchisees.


NOTE U.  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

As a result of the Company's decision to sell the assets of Paradise (see 
"NOTE V.  SUBSEQUENT EVENTS") the recorded goodwill has been determined to be 
impaired (see "NOTE C. REALIZATION OF ASSETS").  Accordingly, goodwill was 
written down by $1,850,000 on March 31, 1998.

                                      51
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE V.  SUBSEQUENT EVENTS

On May 8, 1998, Paradise Holdings, Inc., a Delaware corporation (the 
"Registrant") and Java Centrale, Inc., a California corporation and the 
Registrant's previous corporate parent, ("Java" and, together with the 
Registrant, the "Company"), effected a merger, pursuant to which the 
Registrant was the surviving corporation and Java ceased to exist as a 
separate entity (the "Reincorporation"). Prior to the Reincorporation, the 
Registrant was a wholly-owned subsidiary of Java formed to facilitate the 
merger transaction, and the purpose of the Reincorporation was to change the 
Company's state of incorporation from California to Delaware.  The 
Reincorporation was approved by the shareholders of Java at its Annual 
Meeting of Shareholders held on November 25, 1997.

On May 12, 1998 the Company signed a conditional letter of intent for the 
sale of its Paradise Bakery & Cafe retail operations to AFC Enterprises of 
Atlanta, Georgia ("AFC"), for $5,000,000 in cash and an additional amount, 
potentially as much as $2,000,000, in the form of either cash or stock in AFC 
at the Company's election, to be paid on an earn-out basis tied to store 
level contributions, two years after the closing date.  The sale would 
include all 15 company-owned cafes, its 34 franchised units, and a commissary 
that is a fulfillment house of proprietary items for use in the cafes. The 
transaction is expected to be structured as an asset purchase, to include all 
of the assets of the Company's wholly-owned operating subsidiary, Paradise 
Bakery, Inc. Certain of the liabilities of Paradise Bakery, Inc. would also 
be assumed, including primarily those arising under its franchise agreements 
and real estate leases.

The conditions to closing the transaction include: the completion of a 
satisfactory due diligence review by AFC; receipt of all necessary consents 
from the Boards of the Company and AFC, and any other necessary third 
parties, including the shareholders of the Company, negotiation of a mutually 
acceptable asset purchase agreement; and receipt of a favorable fairness 
opinion.

The parties have agreed to work towards a closing date in August 1998. Prior 
to that date, the Company has agreed not to solicit or initiate discussions 
or negotiations with any other party regarding a sale of its Paradise Bakery 
assets.  Because of the conditional nature of the letter of intent, and 
because some of the conditions to closing the foregoing transactions are not 
within the Company's control, there can be no assurance that this transaction 
will in fact take place, or if it does that the final terms of such a 
transaction will not vary, in material respects, from those disclosed above.  
Based on the offer, the Company has recognized an impairment of $1,850,000 
relating to the goodwill recorded for Paradise Bakery, Inc.

On May 15, 1998 the Company signed a conditional letter of intent to purchase 
the Internet publications known collectively as the "FinancialWeb" from 
Axxess, Inc. of Altamonte Springs, Florida.  The FinancialWeb family of 
investor sites are distributed over the Internet and include free real-time 
quotes; technical analysis, charting and portfolio analysis; news and market 
data; fundamental research; recommendations and analysis from Wall Street; 
financial humor; EDGAR filings; investigative reporting; short selling 
strategies and a site devoted to the Small Cap market or derive income from 
banner advertising sales, syndication of editorial content, licensing of data 
and technology, list rentals and sales of premium services.

                                     52
<PAGE>

                  PARADISE HOLDINGS,INC., AND SUBSIDIARY
               (Formerly Java Centrale, Inc. and Subsidiary)

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      March 31, 1998, 1997 and 1996



NOTE V.  SUBSEQUENT EVENTS (CONTINUED)

The transaction is expected to be structured as an asset purchase. The assets 
to be purchased by the Company include various domain names, technology, 
hardware, software, trademarks, clients, customers, etc. Additionally, the 
Company would assume certain contractual obligations with respect to data and 
technology providers, and key programmers and consultants necessary to the 
operation of the web sites. The purchase price is to be a combination of 
$750,000 in cash and 2,000,000 shares of the Company's common stock, payable 
at closing, plus an additional 2,000,000 shares of common stock if the a 
specified number of additional websites are open and operating as of one year 
after the closing, and the average daily traffic of page impressions on the 
"Financial Web" websites being acquired increases to certain specified 
benchmarks.

The closing of this transaction is subject to the completion of a due 
diligence review by the Company; receipt of all requisite board, shareholder 
and other approvals; and the negotiation of a mutually acceptable asset 
purchase agreement. The parties to the agreement are contemplating the 
closing of the transaction described herein prior to July 31, 1998. Axxess 
has agreed not to initiate any discussions or negotiations with any third 
parties regarding the sale of the Financial Web family of web sites and the 
related assets. Because of the conditional nature of the letter of intent, 
and because some of the conditions to closing the foregoing transactions are 
not within the Company's control, there can be no assurance that this 
transaction will in fact take place, or if it does that the final terms of 
such a transaction will not vary, in material respects, from those disclosed 
above.

Effective as of May 12, 1998, Richard J. Crosby, the Company's Chairman of 
the Board, resigned from the Company. The Company has accepted the 
resignation, effective June 30, 1998, of its Vice President and Chief 
Financial Officer, Jeffrey W. Dudley.

On May 14, 1998 the Company completed the acquisition of a franchised 
location in Sacramento, California.  The cafe was acquired for $30,000 cash, 
a $60,000 note payable in five equal installments, due October 1, 1998 and 
111,667 in Common Stock of the Company.

On June 24, 1998, the Company was notified of Chart House Enterprises, Inc. 
demand for arbitration under the certain Amended and Restated Promissory Note 
dated January 17, 1996.  This note is currently due and payable (See "NOTE M. 
LONG-TERM DEBT"), however the Company's management believes that there may 
have been material omissions on the part of Chart House Enterprises related 
to the acquisition of Paradise Bakery, Inc. in December 1995.  The 
arbitration date has yet to be set.  The Company's management believes that 
the ultimate outcome of the arbitration will not have a material adverse 
effect on the Company.

                                      53
<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

In April of 1998, the Company dismissed Grant Thornton, LLP ("GT") as the
Company's independent auditor, and appointed Burnett Umphress & Company, LLP
("Burnett") to serve in its place as the Company's independent accountant.
Burnett accepted this appointment on April 27, 1998.

The decision to dismiss GT and replace it with Burnett was made by the Company's
Board of Directors, which does not have a separate Audit Committee as such.  

The Company and GT have not, in connection with the audit of the Company's
financial statements for each of the prior two years ended March 31, 1997 and
1996 or for any subsequent interim period prior to and including April 27, 1998,
had any disagreement on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to GT's satisfaction, would have caused GT to make
reference to the subject matter of the disagreement in connection with its
reports.

The reports of GT on the Company's financial statements for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
modified as to uncertainty, audit scope or accounting principles, except that
the report of GT on the Company's financial statements for the year ended March
31, 1997 included an explanatory paragraph relating to an uncertainty about the
Company's ability to continue as a going concern.


                                          54
<PAGE>

                                           
PART III
-------------------------------------------------------------------------------
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICER OF THE REGISTRANT

     The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>

     NAME                   AGE   POSITION WITH COMPANY
     <S>                    <C>   <C>
     Gary C. Nelson         55    Director, President and Chief Executive
                                  Officer

     Bradley B. Landin      47    Director, Senior Vice President Operations
                                  And Secretary

     Thomas A. Craig        65    Vice President -- Marketing and Real Estate

     Jeffrey W. Dudley      40    Vice President and Chief Financial Officer

     Philip E. Pearce       69    Director

</TABLE>

GARY C. NELSON, a founding shareholder of the Company, has been a Director,
President and Chief Executive Officer of the Company since its incorporation in
March 1992.  During the period from November 1991 until the Company's
incorporation in March 1992, Mr. Nelson devoted his time to the planning
development and initial funding of the Company's incorporation and commencement
of operations.  From September 1990 through October 1991 Mr. Nelson was both
Senior Vice President and President International Division and a founding
shareholder of CNY International, a company, which was formed to acquire and
operate the retail businesses of American Confectionery Corporation.  From March
1990 until August 1990, Mr. Nelson was Vice President of American Confectionery
Corporation, a company which both owned and franchised over two hundred candy
and yogurt outlets.  From February 1983 until February 1990 Mr. Nelson was a
founding shareholder and served as President and Chief Executive Officer of
publicly traded J. Higby's, Inc. and its privately held predecessor, Gamma
Industries, whose business was franchising J. HIGBY'S YOGURT AND TREAT SHOPPES
in the United States and internationally in Canada and five countries in
southeast Asia.  Mr. Nelson holds a BA in Business Administration from the
California State University.

BRADLEY B. LANDIN, a founding shareholder has been a Director and Vice President
Operations of the Company since its incorporation in March 1992.  From September
1990 until February 1992, Mr. Landin was Vice President International Division
of CNY International, a company that was formed to acquire and operate the
retail businesses of American Confectionery Corporation.  From March 1990
through August 1990, Mr. Landin was Vice President International Development of
American Confectionery Corporation, which both owned and franchised over two
hundred candy and yogurt outlets.  From September 1986 until February 1990, Mr.
Landin held various positions with publicly traded J. Higby's Inc., the
franchisor of J. HIGBY'S YOGURT AND TREAT SHOPPES where he was responsible for
franchised and company-owned operations, product development, store planning and
turn-key construction and equipment programs.  Mr. Landin did undergraduate work
in business at both Loyola University in Chicago and the University of
Wisconsin, Green Bay Campus.


                                          55
<PAGE>

THOMAS A CRAIG, a founding shareholder, has been Vice-President--Marketing and
Real Estate of the Company since its incorporation in March 1992.  Mr. Craig has
29 years of experience in advertising, design, marketing and real estate.  From
November 1987 until the incorporation of the Company in March 1992, he was
associated with Century 21, a real estate brokerage firm in Carmichael,
California specializing in the sale and leasing of new and existing commercial
properties.  From May 1962 through July 1987 Mr. Craig served as president of
two advertising and marketing firms located in Sacramento, California.  Mr.
Craig is a graduate of the Hollywood Center of Art and Design in Hollywood,
California.

JEFFREY W. DUDLEY became the Company's Vice President and Chief Financial
Officer on October 1, 1997. Prior to joining the Company, Mr. Dudley was the
Chief Financial Officer of Greenhorn Creek Associates, LP, a California limited
partnership engaged in residential real estate and golf course development, from
January to October of 1997. From July through December of 1996, Mr. Dudley acted
as an independent consultant, reporting to the Controller, for A. Teichert &
Sons, Inc., a California-based construction company, where he was responsible
for financial reporting and management of the budgeting process, among other
duties. In May and June of 1996, Mr. Dudley was a consultant for HiTec Sports
USA, Inc., a California-based distributor of outdoor footwear. From November of
1994 through April of 1996, Mr. Dudley was the Chief Financial Officer for Jason
& Son, Inc., a manufacturer and distributor of snack foods. Mr. Dudley was with
KPMG Peat Marwick from January of 1991 through November of 1994, first as an
assistant accountant and beginning in January of 1993 as a Supervising Senior
Accountant. Mr. Dudley is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants. He
received a Master of Science degree in Accountancy from California State
University, Sacramento, in 1991.

PHILLIP E. PEARCE has been Director of the Company since November 25, 1997. 
Previous to that time he held no offices with, and had not been employed by, the
Company. Since 1984, Mr. Pearce has been an independent investment banker and
consultant, working through his company Phil Pearce & Associates of Charlotte,
North Carolina. Prior to that, Mr. Pearce was a Senior Vice President of E.F.
Hutton Company from 1969 to 1987, and a director of E. F. Hutton from 1969 until
1982. He was the Chairman of the Board of Governors of the National Association
of Securities Dealers, Inc. from 1968 to 1969, and a member of the Board of
Governors of the New York Stock Exchange from 1970 to 1971, and has been a
member of the Advisory  Council to the United States Securities and Exchange
Commission on the Institutional Study of the Stock Markets. Mr. Pearce is also a
director of three publicly-traded corporations: Xybernaut Corporation, Starbase
Corporation, and Rx Medical Services Corporation, and has been nominated by
management for election to the Board of Directors of United Digital Network,
Inc. Mr. Pearce is a graduate of the University of South Carolina and graduated
from the Wharton School of the University of Pennsylvania.

Effective as of May 12, 1998, Richard J. Crosby, the Company's Chairman of the
Board and a Director, resigned from the Company.  The Company is currently
searching for a candidate to replace Mr. Crosby as Chairman of the Board.   On
May 8, 1998, the Company accepted the resignation of Mr. Dudley, the Company's
Vice President and Chief Financial Officer, effective June 30, 1998.

Two of the Company's directors and officers, Gary C. Nelson and Bradley B.
Landin, were former vice presidents of American Confectionery Corporation and/or
of a subsidiary thereof (collectively, "ACC").  Their duties involved only the
retail, franchising and marketing operations of ACC.  They had no responsibility
for ACC's candy manufacturing business, which it carried on through Pacific
Candy Company, another subsidiary.  In September 1990, they participated in a
successful management buy-out of ACC's retail and franchising operations, which
included Morrow's Fine Candies, House of Almond's, the House of Almond's
Catalog, and J. HIGBY'S YOGURT AND TREAT SHOPPES.  They both resigned from ACC
to help run the new enterprise.  ACC thereafter remained in business only as a
candy manufacturer, through Pacific Candy Company, and under substantially
different management.  Approximately six months after Mr. Nelson and Mr. Landin
resigned, ACC and its subsidiaries all filed voluntary petitions for
reorganization under Chapter 


                                          56
<PAGE>

11 of the Bankruptcy Code (Case Nos. SB-91-13970, 13971 and 13972, U.S.
Bankruptcy Court, Central District of California, filed April 12, 1991).  The
candy-manufacturing business encountered liquidity problems in 1991, leading ACC
to seek protection from creditors.  Mr. Nelson and Mr. Landin had no part in
that decision or in the problems of the candy business, which led to it.  On
June 16, 1992, ACC's plan of reorganization was confirmed and approved by the
bankruptcy court.  As of that date, ACC emerged from its Chapter 11 bankruptcy
proceedings and has now resumed operations as a national wholesale candy
manufacturer.

Directors of the Company are elected at each annual meeting of the shareholders
of the Company and hold office until the next annual meeting; provided, however,
that if any annual meeting is not held or the directors are not elected at any
annual meeting, they may be elected at any special shareholders' meeting held
for that purpose.  Each director, including a director elected to fill a vacancy
or elected at a special shareholders' meeting, holds office until the expiration
of the term for which elected and until a successor has been elected and
qualified.  Officers of the Company are appointed by its Board of Directors, and
serve at the pleasure of the Board.

The Company is not aware of any family relationship, among its Directors and/or
executive officers.

ITEM 11.   EXECUTIVE COMPENSATION

Executive Compensation

The following table sets forth the cash compensation paid by the Company to, as
well as any other compensation paid to or earned by, the Company's Chief
Executive Officer and the four most highly compensated executive officers other
than the Chief Executive Officer during each of the fiscal years ended March 31,
1998, 1997 and 1996.  The Company's President and Chief Executive Officer, Mr.
Gary C. Nelson, was the only officer of the Company whose total annual salary
and bonus exceeded $100,000 during fiscal years 1998 or 1997.  Mr. Nelson and
Mr. Steve J. Orlando (The Company's former Chief Financial Officer), and Mr.
Shannon (the Company's former Chairman of the Board), were the officers of the
Company whose total annual salary and bonus exceeded $100,000 during the 1996
fiscal year.

     Summary Compensation Table
<TABLE>
<CAPTION>
 

Summary Compensation Table

                                 -----------------------------------------------------------------------------
                                                                                Long Term Compensation
                                                   Annual Compensation                    Awards 
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Securities
   Name of Individual                                                             Restricted       Underlying
     and Principal       Fiscal                                Other Annual         Stock           Options/          All Other
        Position          Year      Salary       Bonus         Compensation         Awards          SARS (#)         Compensation
--------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>            <C>         <C>                  <C>           <C>                <C>
 Gary C. Nelson           1998    $116,488       $    -      $      -                None       $        -           $     -
  President/Chief         1997     121,634            -             -                None                -                 -
  Executive Officer       1996     158,065       35,000             -                None          167,000                 -
--------------------------------------------------------------------------------------------------------------------------------
 Steve J. Orlando         1998     $79,127       $    -      $      -                None       $        -           $     -
  Former Chief            1997      89,900            -             -                None                -                 -
  Financial Officer       1996      97,050       35,000             -                None          175,000                 -
--------------------------------------------------------------------------------------------------------------------------------
 Richard D. Shannon       1998      56,098       $    -      $      -                None       $        -           $     -
  Former Chairman         1997      99,603            -             -                None                -                 -
  of the Board            1996      94,328       35,000             -                None          174,250                 -
--------------------------------------------------------------------------------------------------------------------------------
 

</TABLE>


                                          57
<PAGE>

COMPENSATION PURSUANT TO PLANS

STOCK OPTION PLAN.  Effective November 1993, the Board of Directors of the
Company (the "Board") adopted the Java Centrale, Inc. Stock Option Plan (the
"Stock Option Plan").  Under the terms of the Stock Option Plan, options to
purchase up to 50,000 Common Shares may be granted to officers, key employees
and non-employee directors of the Company.  In September 1995, the Company
proposed to shareholders an amendment to increase the option plan to 125,000
Common Shares.  The amendment was approved and the Company has amended the plan
to a total of 125,000 Common Shares.  Under the Stock Option Plan, the Board, or
a committee appointed by the Board, is authorized to grant options which are
intended to qualify as incentive stock options under Section 422 of the Internal
Revenue Code ("incentive stock options") to employees (including
employee-directors) of the Company, and to grant options not intended to qualify
as incentive stock options ("non-qualifying stock options") to employees and
non-employee directors of the Company, and to determine the participants, the
number of options to be granted and other terms and provisions of each option.
   
The exercise price of any incentive stock option granted under the Stock Option
Plan may not be less than 100 percent of the fair market value of the Common
Shares of the Company at the time of the grant.  In the case of incentive stock
options granted to holders of more than ten percent of the voting power of the
Company, the exercise price may not be less than 110% of the fair market value
of the Common Shares, nor shall the option by its terms be exercisable more than
5 years after the date the option is granted.
   
Under the terms of the Stock Option Plan, the aggregate fair market value
(determined at the time of grant) of shares issuable upon exercise of incentive
stock options exercisable for the first time during any one calendar year may
not exceed $100,000.  Options granted under the Stock Option Plan become
exercisable in whole or in part from time to time as determined by the Board of
the committee; provided, however, that in no event may any option become
exercisable earlier than the date six months following the date on which the
option is granted.  Options granted under the Stock Option Plan may have a
maximum term of ten years from the date of grant. The option price must be paid
in full on the date of exercise, and is payable in cash or in Common Shares of
the Company having a fair market value on the date the option is exercised equal
to the option price.
   
As of March 31, 1995, the Company had granted options to purchase 29,875 Common
Shares, at prices ranging from $21.20 to $30.00 per share, to employees of the
Company in accordance with the Stock Option Plan. 
   
As of March 31, 1996, the Company had granted options to purchase 110,000 Common
Shares, at prices ranging from $17.50 to $20.00 per share, to employees of the
Company in accordance with the Stock Option Plan.
   
Effective July 31, 1996, the Board re-priced 51,200 shares of options granted
for purchase to $7.50 per share.
   
Effective July 31, 1996 the Board issued 120,000 Warrants for the purchase price
of $7.50 per share to certain directors and officers outside the plan.  These
same directors and officers surrendered 57,200 stock options within the plan.
   
As of March 31, 1997 the Company had canceled 10,050 stock options due to
terminated employees.
   
As of March 31, 1997, the Company had granted options to purchase 104,250
shares, at $7.50 per share, to employees of the Company in accordance with the
Stock Option Plan.


                                          58
<PAGE>

Pursuant to the placement agreement with E. C. Capital, Ltd., dated July 30,
1997 and discussed under Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS above, all outstanding Warrants
and options granted to employees as of July 30, 1997 were canceled.
   
As of March 31, 1998, there were no outstanding options to employees of the
Company.
   
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values

The following table sets forth certain information concerning all options held
by certain of the Company's most highly compensated executive officers at the
end of the Company's 1998 fiscal year (March 31, 1998). The Company has never
granted any stock appreciation rights ("SARs"). All of the options listed in the
table below are currently exercisable.
  

<TABLE>
<CAPTION>
 

--------------------------------------------------------------------------------------------------------------
                                                               Number of Securities
                         Number of Shares                            underlying         Value of Unexercised 
                           Acquired on                           unexercised options         in-the-Money
        Name                 Exercise        Value Realized       at March 31, 1998             Options   
--------------------------------------------------------------------------------------------------------------
<S>                             <C>          <C>               <C>                      <C>   
Gary C. Nelson                  None               N/A                  None                     N/A

Richard D. Shannon (1)(2)       None               N/A                  None                     N/A

Steven J. Orlando (3)           None               N/A                  None                     N/A
--------------------------------------------------------------------------------------------------------------
 

</TABLE>
--------------------


EMPLOYMENT AGREEMENTS
  
The Company has entered into employment agreements with Richard D. Shannon, the
Company's former Chairman of the Board; Gary C. Nelson, its President and Chief
Executive Officer; Bradley B. Landin, its Senior Vice President--Operations and
Secretary; Thomas A. Craig, its Vice President--Marketing and Real Estate;
Jeffrey W. Dudley, its Vice President and Chief Financial Officer, and Steven J.
Orlando, its former Chief Financial Officer and Secretary. Mr. Shannon declined
to stand for re-election at the 1997 Annual Meting held on November 25, 1997,
and Mr. Orlando resigned from his positions with the Company in September of
1997; consequently neither of their employment agreements remain in effect.
  
The Company entered into a three-year employment agreement in February 1994 with
Gary C. Nelson. The Company's Board of Directors amended this agreement
effective January 1, 1996, extending the term two years to January 31, 1999. The
Board of Directors further amended this agreement in May of 1996 reducing the
base salary to $116,000 as a result of the Company's financial performance. The
Board of Directors further amended this agreement in April of 1998 increasing
the base salary to $133,000 and extending the term to January 31, 2001. Pursuant
to the employment agreement, Mr. Nelson will act as President and Chief
Executive Officer of the Company, will serve on the Board of Directors and will
be entitled to receive, among 

-------------------------------
(1)  On October 30, 1995, Baycor Ventures, Inc., a company of which Mr. Shannon
     is a Director and 50% shareholder, exercised options to purchase 30,000 
     shares of the Company's Common Stock at a purchase price of $4.00 per
     share. The value recognized on these shares was approximately $742,500.

(2)  Mr. Shannon did not stand for re-election at the 1997 Annual Shareholders'
     Meeting held November 25, 1997.

(3)  Mr. Orlando resigned as the Company's Vice President and Chief Financial
     Officer as of September 30, 1997.


                                          59
<PAGE>

other things, (a) during the first year thereof, a base salary of $145,000, (b)
during the second and third years thereof, a base salary in an amount equal to
the amount of the previous year's salary plus the greater of (i) 7% of the base
salary in effect for the previous 12 month period and (ii) the percentage
increase in the Consumer Price Index for the prior 12-month period as reported
by the Department of Labor, (c) during each year thereof, a bonus, equal to the
amount determined by the Board of Directors of the Company under such incentive
compensation plan as shall be adopted by the Board of Directors of the Company,
and (d) such options to purchase Common Shares of the Company as may be granted
pursuant to the terms of the Stock Option Plan. There was no increase in salary
since the last amendment.
  
The Company entered into a three-year employment agreement in February 1994 with
Bradley B. Landin. The Board of Directors amended this agreement in May of 1996
reducing the base salary to $73,000 as a result of the Company's financial
performance. In February 1997, the employment contract was extended to January
1999. The Board of Directors further amended this agreement in April of 1998
increasing the base salary to $90,000 and extending the term to January 31,
2001.  Pursuant to the employment agreement, Mr. Landin will act as Senior Vice
President Operations of the Company, will serve on the Board of Directors and
will be entitled to receive among other things, (a) during the first year
thereof, a base salary of $80,000, (b) during the second and third years
thereof, a base salary in an amount equal to the amount of the previous year's
salary plus the greater of (i) 7% of the base salary in effect for the previous
12 month period and (ii) the percentage increase in the Consumer Price Index for
the prior 12-month period as reported by the Department of Labor, (c) during
each year thereof, a bonus, equal to the amount determined by the Board of
Directors of the Company under such incentive compensation plan as shall be
adopted by the Board of Directors of the Company, and (d) such options to
purchase Common Shares of the Company as may be granted pursuant to the terms of
the Stock Option Plan. There was no salary increase since the last amendment.
  
The Company entered into a three-year employment agreement in February 1994 with
Thomas A. Craig. The Board of Directors amended this agreement in May of 1996
reducing the base salary to $73,000 as a result of the Company's financial
performance.  In February 1997, the employment contract was extended to January
1999.  In April 1998, the Company reinstated the annual Consumer Price Index
increases, as provided for under the employment agreement, retroactive to
January 1, 1997.  Pursuant to the employment agreement, Mr. Craig will act as
Vice President - Marketing and Real Estate of the Company, and will be entitled
to receive, among other things, (a) during the first year thereof, a base salary
of $80,000, (b) during the second and third years thereof, a base salary in an
amount equal to the amount of the previous year's salary plus the greater of (i)
7% of the base salary in effect for the previous 12 month period and (ii) the
percentage increase in the Consumer Price Index for the prior 12-month period as
reported by the Department of Labor, (c) during each year thereof, a bonus,
equal to the amount determined by the Board of Directors of the Company under
such incentive compensation plan as shall be adopted by the Board of Directors
of the Company, and (d) such options to purchase Common Shares of the Company as
may be granted pursuant to the terms of the Stock Option Plan. There was no
salary increase since the last amendment.
  
The Company entered into a three-year employment agreement in February 1998 with
Jeffrey W. Dudley. Pursuant to the employment agreement, Mr. Dudley will act as
Vice President and Chief Financial Officer of the Company, and will be entitled
to receive, among other things, (a) during the first year thereof, a base salary
of $90,000, (b) during the second and third years thereof, a base salary in an
amount equal to the amount of the previous year's salary plus the greater of (i)
7% of the base salary in effect for the previous 12 month period and (ii) the
percentage increase in the Consumer Price Index for the prior 12-month period as
reported by the Department of Labor, (c) during each year thereof, a bonus,
equal to the amount determined by the Board of Directors of the Company under
such incentive compensation plan as shall be adopted by the Board of Directors
of the Company, and (d) such options to purchase Common Shares of the Company as
may be granted pursuant to the terms of the Stock Option Plan.  On May 8, 1998,
the Company agreed to the resignation and termination of Mr. Dudley's employment
agreement, effective June 30, 1998.  Mr. Dudley is eligible to receive an
incentive bonus of Seven Thousand (7,000) shares of the Company's common stock
upon the timely filing of the Company's March 31, 1998 Form 10-K.


                                          60
<PAGE>

COMPENSATION OF DIRECTORS

Directors of the Company do not currently receive any compensation for serving
as Directors.
  
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
  
The Company maintains a Compensation Committee consisting of the Chairman of
the Board and the President.  All decisions relating to the compensation of its
executive officers are approved by the Company's Board of Directors.
  
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
The following table sets forth, as of June 22, 1998, the number and percentage
of shares of the Company's outstanding common stock beneficially owned, directly
or indirectly, by (a) any person (or "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")) who or
which is known to the Company to be the beneficial owner of more than five
percent of the Company's Common Stock, based on information filed by such
persons with the Securities and Exchange Commission, (b) each of the Company's
Directors and the executive officers identified in Item 11, above, and the
Company's Directors and executive officers as a group.  The shares listed as
"beneficially owned" are determined under Securities and Exchange Commission
Rules, and do not necessarily indicate ownership for any other purpose.  
  
In general, beneficial ownership includes shares over which such principal
shareholder, director, or executive officer has sole or shared voting or
investment power and shares which such person has the right to acquire within 60
days of June 22, 1998.  Unless otherwise indicated, the persons listed have sole
voting and investment powers of the shares beneficially owned.  Management is
not aware of any arrangements, which may, at a subsequent date, result in a
change of control of the Company. 


                                          61
<PAGE>


<TABLE>
<CAPTION>
 

         Name and address of             Amount and Nature of       Percent of
          Beneficial Owner             Beneficial Ownership (1)        Class
----------------------------------------------------------------------------------
<S>                                    <C>                          <C>
 Thomas A. Craig                          18,403                      0.4%
    1610 Arden Way, Suite #145
    Sacramento,  CA  95815

 Jeffery W. Dudley                             -                      0.0%
    1610 Arden Way, Suite #145
    Sacramento,  CA  95815

 Bradley B. Landin                        12,500                      0.3%
    1610 Arden Way, Suite #145
    Sacramento,  CA  95815

 Gary C. Nelson                           65,902                      1.6%
    1610 Arden Way, Suite #145
    Sacramento,  CA  95815

 Philip E. Pearce                              -                      0.0%
    1610 Arden Way, Suite #145
    Sacramento,  CA  95815

 European Community Capital, Ltd. (2)    420,000                      9.2%
    300 Old Country Road, Suite 241
    Mineola, NY  11501

 Mustang '65 LP  (3)                     320,000                      7.2%
    2101 Corporate Blvd., Suite 204
    Boca Raton, FL  33431

 All Directors and Officers 
         as a Group (5 persons)           96,805                      2.3%
----------------------------------------------------------------------------------

 

</TABLE>

Mr. Nelson and Mr. Landin failed to file Form 5 - Annual Statement of Changes in
Beneficial Ownership within 45 days of March 31, 1998, and to date pursuant to
the requirements of Section 16(a) of the Securities and Exchange Act of 1934.



-------------------
(1)  All shares are owned directly by the individual(s) indicated, unless
     otherwise indicated.

(2)  Includes 420,000 shares, which European Community Capital has the right to
     acquire at any time during the 60 days following June 22, 1998 through the
     exercise of warrants at $2.00 per share.

(3)  Includes 320,000 shares, which Mustang '65 LP has the right to acquire at
     any time during the 60 days following June 22, 1998 through the exercise of
     warrants at $0.50 per share.


                                          62
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Baycor Ventures, Inc. ("Baycor"), one of the Company's larger single
shareholders, has entered into a series of transactions with the Company since
it was incorporated in March of 1992. 
  
Any future transactions between the Company and its officers, directors,
principal stockholders or other affiliates will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties on an
arms-length basis and will be approved by a majority of the Company's
disinterested directors.  Any loans to officers, directors, principal
stockholders or affiliates of any of them will be made for bona fide business
purposes, will be on terms no less favorable than could be obtained from
unaffiliated third parties, and will be approved by a majority of the Company's
disinterested directors.
  
In September 1995, the Company advanced to Baycor a loan in the amount of 
$185,000.  The loan has a two-year term at a rate of prime rate plus 2% in 
interest and became due and payable in September 1997.  This note has been 
extended for one additional year and will become due and payable September 
1998. 
  
In May 1995, the Company advanced to Bradley Landin, Vice President Operations
and Director a loan in the amount of $59,000.  The loan has a term of five years
at a rate of principal plus 1% in interest with monthly principal and interest
payments of $1,200. The balance at March 31, 1998 is $40,000.
  
In July 1996, Baycor, Gary Nelson, President and Chief Executive Officer, and
Steven J. Orlando, Chief Financial Officer, agreed to loan the Company an
aggregate of $175,000 at an interest rate of prime plus 2% per annum. The
lenders received a general lien on the Company's assets. This line of credit
became due and payable in April of 1997.  In replacement of the then-remaining
outstanding principal balance on these loans, in April 1997 Gary C. Nelson
loaned the Company $50,000 in exchange for a note secured by the Company's
assets and interest at the rate of prime plus 2%.  The balance of this loan was
paid in full as of March 31, 1998.

Steven J. Orlando deferred salary for the period from December 1996 through
March 1997 totaling $31,000, at March 31, 1998, the balance of this loan had
been paid in full.
  
In October 1996, Lyle Edwards was elected as a director to the Company.  At that
time, Mr. Edwards served as a Vice President to Alta Petroleum, which provided
the Company a short-term loan of $200,000 in April 1996. This Loan was paid in
full in December 1996.  Alta Petroleum provided additional financing of $300,000
in January 1997, $125,000 in April 1997 and $150,000 in June 1997.  Baycor was
paid a $40,000 fee in association with the placement of this financing. These
loans, which are now in default, are secured by 100% of the stock and assets of
the Company's wholly owned subsidiary Paradise Bakery, Inc.  They bear an annual
interest rate of 14% and a default rate of 16%. The Company is required to pay
these loans by proceeds in excess of $500,000 in capital raised or assets sold.

As of June 22, 1998, the private placement agent ECC (see "Item 7.  MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
LIQUIDITY AND CAPITAL RESOURCES") is currently owed approximately $71,000 in
Warrant solicitation fees for Warrants exercised to date from these private
placement efforts.


                                          63
<PAGE>

ESCROW AGREEMENT
  
Pursuant to an Amended and Restated Security Escrow Agreement (the "Escrow
Agreement"), by and between each of Baycor, Gary C. Nelson, Thomas A. Craig,
Bradley B. Landin, Richard D. Shannon, Richard M.H. Thompson & Associates, Inc.
and the Manry Company (such entities and persons being hereinafter collectively
referred to as the "Security Holders"), the Company, the Representative and
American Stock Transfer & Trust Company, as escrow agent (the "Escrow Agent"),
Baycor Ventures, Gary C. Nelson and Bradley B. Landin, directors and officers of
the Company and Thomas A. Craig, an officer of the Company, placed an aggregate
of 85,530 of their currently outstanding Common Shares in escrow (the "Escrowed
Shares") in connection with the Company's public offering of its Common Stock in
May of 1994.
  
If any Security Holder exercises Warrants or options to acquire additional
Common Shares of the Company (the "Additional Shares"), one-third (33 1/3%) of
such Additional Shares must immediately be delivered to the Escrow Agent, and
will be held and released pursuant to the Escrow Agreement as if they were 
original Escrowed Shares.


                                          64
<PAGE>

PART IV
-------------------------------------------------------------------------------

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



FINANCIAL STATEMENTS.

The Company's Balance Sheets as of March 31, 1998 (the end of its most recent
fiscal year), and the related statements of operations, stockholders' equity and
cash flows for the years ended March 31, 1998, 1997 and 1996, are included
herewith under Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA above.


FINANCIAL STATEMENT SCHEDULES.

          None.


CURRENT REPORTS ON FORM 8-K.
  
During the first quarter of the fiscal year ending March 31, 1999, the Company
filed the following Form 8-K reports:

1.   On May 1, 1998 notifying the change in the Companies independent
     accountants to Burnett Umprhess and Company, LLP.
   
2.   On May 1, 1998 announcing the signing of letters of intent to sell the
     assets of Paradise Bakery, Inc. to AFC Enterprises and acquire the assets
     of Axxess Media, Inc. and to announce the resignation of the Company's
     Chairman of the Board, Richard J. Crosby.

3.   On May 8, 1998 announcing the change of domicile from California to
     Delaware and the Company's name to Paradise Holdings, Inc.

4.   On May 1, 1998 announcing various press releases related to the strategic
     business direction of the Company.

5.   On May 22, 1998 announcing the amendment of its current prospectus, dated
     February 10, 1998, with a supplement dated May 21, 1998.


                                          65

<PAGE>


EXHIBITS.

The following documents are included or incorporated by reference in this Annual
Report.

Exhibits marked with an asterisk (*) represent management contracts or
compensatory plans or arrangements.


    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     2.1      Stock Purchase Agreement dated December 14, 1995 between Java
                 Centrale, Inc. and Chart House Enterprises, Inc. (filed as
                 Exhibit 2.3 to the Registrant's Registration Statement on Form
                 8-K dated December 31, 1995, and by this reference
                 incorporated herein.)

     2.2      Merger Agreement dated December 15, 1995, between Java Centrale,
                 Inc., Paradise Bakery, Inc. and Founders Venture, Inc. (filed 
                 as Exhibit 2.4 to the Registrant's Registration Statement on 
                 Form 8-K dated January 17, 1996, and by this reference 
                 incorporated herein.)

     2.3      Purchase Agreement dated November 22, 1996, between Java
                 Centrale, Inc. and Good Food Fast Companies, Inc., (filed as
                 Exhibit No. 2.3 to the Registrant's Registration Statement on
                 Form 8-K dated December 16, 1996, and by this reference
                 incorporated herein.)

     2.4      Letter of Intent dated May 15, 1998 between Paradise Holdings, 
                 Inc. and Axxess Media, Inc. (Filed as Exhibit No. 2.4 to the 
                 Registrant's Form 8-K dated May 19, 1998 and by this 
                 reference incorporated herein.)

     2.5      Letter of Intent dated May 12, 1998 between Paradise Holdings, 
                 Inc. and AFC Enterprises. (Filed as Exhibit No. 2.5 to the 
                 Registrant's Form 8-K dated May 19, 1998 and by this 
                 reference incorporated herein.)

     3.1      Amended and Restated Articles of Incorporation (filed as Exhibit
                 3.1 to the Registrant's Annual Report on Form 10-K for the
                 fiscal year ended March 31, 1994, and by this reference
                 incorporated herein).

     3.2      Bylaws, as amended January 10, 1995 (filed as Exhibit 3.1 to the
                 Registrant's Quarterly Report on Form 10-Q for the quarterly
                 period ended December 31, 1994, and by this reference
                 incorporated herein).

     3.3      Certificate of Incorporation of the Registrant.  (Filed as 
                 Exhibit No. 3.1 to the Registrant's Form 8-K dated May 8, 
                 1998 and by this reference incorporated herein.)

     3.4      Bylaws of the Registrant. (Filed as Exhibit No. 3.2 to the 
                 Registrant's Form 8-K dated May 8, 1998 and by this 
                 reference incorporated herein.)

     4.1      Warrants issued by the Company to Richard M.H. Thompson &
                 Associates, Inc. (filed as Exhibit No. 4.1 to the Registrant's
                 Registration Statement on Form S-1 dated March 17, 1994
                 (Commission File No. 33-76528), and by this reference
                 incorporated herein).

     4.2      Warrants issued by the Company to The Manry Company (filed as
                 Exhibit No. 4.2 to the Registrant's Registration Statement on
                 Form S-1 dated March 17, 1994 (Commission File No. 33-76528),
                 and by this reference incorporated herein).

     4.3      Warrants issued by the Company to Argent Securities, Inc. (filed
                 as Exhibit No. 4.5 to the Registrant's Registration Statement
                 on Form S-1 dated March 17, 1994 (Commission File No.
                 33-76528), and by this reference incorporated herein).

     4.4*     Amended and Restated Security Escrow Agreement by and between the
                 Company and each of Baycor Ventures, Inc., Gary C. Nelson,
                 Thomas A. Craig, Bradley B. Landin, Richard D. Shannon,
                 Richard M.H. Thompson & Associates, Inc., The Manry Company,
                 American Stock Transfer & Trust Company, and Argent
                 Securities, Inc. (filed as Exhibit No. 4.6 to Amendment No. 1
                 to the Registrant's Registration Statement on Form S-1 dated
                 March 17, 1994 (Commission File No. 33-76528), and by this
                 reference incorporated herein).


                                          66
<PAGE>


    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.5*     Java Centrale, Inc. 1993 Stock Option Plan (filed as Exhibit No.
              10.33 to the Registrant's Registration Statement on Form S-1
              dated March 17, 1994 (Commission File No. 33-76528), and by this
              reference incorporated herein).

     4.6*     Incentive Stock Option Agreement between the Registrant and
                 Stephen J. Orlando, dated August 15, 1994,  (filed as Exhibit
                 No. 4.6 to the Registrant Annual Report on form 10-K for the
                 year ended March 31, 1995, and by this reference incorporated
                 herein).

     4.7*     Stock Purchase Warrant Agreement between the Registrant and Oh La
                 La!, Inc., dated March 30, 1995, (filed as Exhibit No. 4.7 
                 to the Registrant Annual Report on form 10-K for the year ended
                 March 31, 1995, and by this reference incorporated herein).

     4.8      Series B Stock Purchase Warrant, issued to Oh La La!, Inc.
                 pursuant to the Stock Purchase Warrant Agreement between the
                 Registrant and Oh La La!, Inc. dated March 30, 1995, (filed as
                 Exhibit No. 4.8 to the Registrant Annual Report on form 10-K
                 for the year ended March 31, 1995, and by this reference
                 incorporated herein).

     4.9      Series C Stock Purchase Warrant, issued to Oh La La!, Inc.
                 pursuant to the Stock Purchase Warrant Agreement between the
                 Registrant and Oh La La!, Inc. dated March 30, 1995, (filed as
                 Exhibit No. 4.9 to the Registrant Annual Report on form 10-K 
                 for the year ended March 31, 1995, and by this reference 
                 incorporated herein).

     4.10     Consulting Agreement between Java Centrale, Inc. and Franchise
                 Development Corporation, dated as of July 2, 1995 (filed as
                 Exhibit 4.1 to the Registrant's Registration Statement on Form
                 S-8 dated August 28, 1995, and by this reference incorporated
                 herein.)

     4.11     Consulting Agreement between Java Centrale, Inc. and Alcott
                 Simpson & Co., dated as of July 2, 1995 (filed as Exhibit 4.2
                 to the Registrant's Registration Statement on Form S-8 dated
                 August 28, 1995, and by this reference incorporated herein.)

     4.12     Amendment No. 1 to Consulting Agreement between Registrant and
                 Alcott Simpson & Co, Inc., dated as of July 2, 1995 (filed as
                 Exhibit 4.8 to the Registrant's Registration Statement on Form
                 S-8 dated October 23, 1995, and by this reference incorporated
                 herein.)

     4.13     Stock Purchase Warrant, dated as of July 2, 1995, issued by the
                 Registrant to Alcott Simpson & Co, Inc., (filed as Exhibit 4.9
                 to the Registrant's Registration Statement on Form S-8 dated
                 October 23, 1995, and by this reference incorporated herein.)

     4.14     Note Purchase Agreement, dated January 22, 1996, between the
                 Registrant and Gross Foundation, Inc. (filed as Exhibit No.
                 4.1 to the Registrant's Registration Statement on Form S-3
                 dated February 21, 1996, [Commission File No.333-1526], and by
                 this reference incorporated herein.)

     4.15     Form of Convertible Note, dated January 29, 1996, issued to Gross
                 Foundation, Inc. (filed as Exhibit No. 4.2 to the Registrant's
                 Registration Statement on Form S-3 dated February 21, 1996,
                 [Commission File No.333-1526], and by this reference
                 incorporated herein.)


                                          67

<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.16     Registration Rights Agreement, dated January 22, 1996, between
                 the Registrant and Gross Foundation, Inc., (filed as Exhibit
                 No. 4.3 to the Registrant's Registration Statement on Form S-3
                 dated February 21, 1996, [Commission File No.333-1526], and by
                 this reference incorporated herein.)

     4.17     Note Purchase Agreement, dated January 22, 1996, between the
                 Registrant and Santina Holding, Inc. (filed as Exhibit No. 4.4
                 to the Registrant's Registration Statement on Form S-3 dated
                 February 21, 1996, [Commission File No.333-1526], and by this
                 reference incorporated herein.)

     4.18     Form of Convertible Note, dated January 29, 1996, issued to
                 Santina Holding, Inc., (filed as Exhibit No. 4.5 to the
                 Registrant's Registration Statement on Form S-3 dated February
                 21, 1996, [Commission File No.333-1526], and by this reference
                 incorporated herein.)

     4.19     Registration Rights Agreement, dated January 22, 1996, between
                 the Registrant and Santina Holding, Inc. (filed as Exhibit No.
                 4.6 to the Registrant's Registration Statement on Form S-3
                 dated February 21, 1996, [Commission File No.333-1526], and by
                 this reference incorporated herein.)

     4.20     Stock Purchase Agreements covering the issuance of 876,000 Common
                 Shares for net proceeds to the Company of $3,561,837 (filed as
                 Exhibit No. 10(3) to the Registrant's Registration Statement
                 on Form 10-Q dated September 30, 1995, and by this reference
                 incorporated herein.)

     4.21*    Incentive Stock Option Agreement between the Company and its
                 officers, Steven J. Orlando for 100,000 shares at $2.00, Gary
                 C. Nelson for 140,000 shares at $2.20, Thomas A. Craig for
                 50,000 shares at $2.00, Bradley B. Landin for 50,000 shares at
                 $2.00, and Richard D. Shannon for 163,000 shares at $2.20, all
                 dated October 27, 1995, are omitted, as they are identical in
                 form to previous agreements filed as Exhibit 4.6 to the
                 Company's Annual Report or Form 10-K dated June 27, 1995,
                 which by this reference are incorporated, (filed as Exhibit
                 No. 10.19 to the Registrant's Registration Statement on Form
                 10-Q dated December 31, 1995, and by this reference
                 incorporated herein.)

     4.22*    Incentive Stock Option Agreement between the Company and its
                 officers, Steven J. Orlando for 75,000 shares at $1.75, Gary C.
                 Nelson for 27,000 shares at $1.93, Thomas A. Craig for 15,000
                 shares at $1.75, Bradley B. Landin for 20,000 shares at $1.75
                 and Richard D. Shannon for 11,250 shares at $1.93 all dated
                 May 11, 1995, are omitted, as they are identical in form to
                 previous agreements filed as Exhibit No. 4.6 to the Company's
                 Annual Report or Form 10-K dated June 27, 1995, which by this
                 reference are incorporated herein (filed as Exhibit No. 10 to
                 the Registrant's Registration Statement on Form 10-Q dated
                 June 30, 1995, and by this reference incorporated herein.)

     4.23     Note Purchase Agreement, dated December 15, 1995, between the
                 Registrant and Legong Investments, N.V., (filed as Exhibit No.
                 4.1 to the Registrant's Registration Statement on Form S-3
                 dated January 2, 1996, [Commission File No.333-42], and by
                 this reference incorporated herein.)


                                          68

<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.24     Form of Convertible Note, dated December 15, 1995, between
                 Registrant and Legong Investments, N.V., (filed as Exhibit No.
                 4.2 to the Registrant's Registration Statement on Form S-3
                 dated January 2, 1996, [Commission File No.333-42], and by
                 this reference incorporated herein.)

     4.25     Registration Rights Agreement, dated December 15, 1995, between
                 the Registrant and Legong Investment, N.V., (filed as Exhibit
                 No. 4.3 to the Registrant's Registration Statement on Form S-3
                 dated January 2, 1996, [Commission File No.333-42], and by
                 this reference incorporated herein.)

     4.26     Stock Purchase Warrant, dated as June 12, 1996, issued by the
                 Registrant to Growth Science Venture, Inc., (filed as Exhibit
                 No. 4.2 to the Registrant's Registration Statement on Form S-8
                 dated June 28, 1996, [Commission File No.333-07261], and by
                 this reference incorporated herein.)

     4.27     Stock Purchase Warrant, dated as June 12, 1996, issued by the
                 Registrant to Hayden Group, (filed as Exhibit No. 4.4 to the
                 Registrant's Registration Statement on Form S-8 dated June 28,
                 1996, [Commission File No.333-07261], and by this reference
                 incorporated herein.)

     4.28     Stock Purchase Warrant, dated as June 12, 1996, issued by the
                 Registrant to Meyers, Pollick, Robbins, Inc., (filed as
                 Exhibit No. 4.6 to the Registrant's Registration Statement on
                 Form S-8 dated June 28, 1996, [Commission File No.333-07261],
                 and by this reference incorporated herein.)

     4.29     Consulting Agreement, dated as June 12, 1996, between the
                 Registrant and Growth Science Ventures, Inc., (filed as
                 Exhibit No. 4.1 to the Registrant's Registration Statement on
                 Form S-8 dated June 28, 1996, [Commission File No.333-07261],
                 and by this reference incorporated herein.)

     4.30     Consulting Agreement, dated as June 12, 1996, between the
                 Registrant and The Hayden Group, (filed as Exhibit No. 4.3 to
                 the Registrant's Registration Statement on Form S-8 dated June
                 28, 1996, [Commission File No.333-07261], and by this
                 reference incorporated herein.)

     4.31     Consulting Agreement, dated as June 12, 1996, between the
                 Registrant and Meyers Pollock Robbins, Inc., (filed as Exhibit
                 No. 4.5 to the Registrant's Registration Statement on Form S-8
                 dated June 28, 1996, [Commission File No.333-07261], and by
                 this reference incorporated herein.)

     4.32     A Stock Purchase Warrant, dated February 20, 1997, issued by the
                 Registrant to One Capital Corporation, Inc., (filed as Exhibit
                 No. 4.2 to the Registrant's Registration Statement on Form S-8
                 dated April 3, 1997, [Commission File No.333-24461], and by
                 this reference incorporated herein.)


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<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.33     B Stock Purchase Warrant, dated February 20, 1997, issued by the
                 Registrant to One Capital Corporation, Inc., (filed as Exhibit
                 No. 4.3 to the Registrant's Registration Statement on Form S-8
                 dated April 3, 1997, [Commission File No.333-24461], and by
                 this reference incorporated herein.)

     4.34     C Stock Purchase Warrant, dated February 20, 1997, issued by the
                 Registrant to One Capital Corporation, Inc., (filed as Exhibit
                 No. 4.5 to the Registrant's Registration Statement on Form S-8
                 dated April 3, 1997, [Commission File No.333-24461], and by 
                 this reference incorporated herein.)

     4.35*    Stock Purchase Warrant, dated July 11, 1996, issued by the
                 Company to Artistic License, Inc. (filed as Exhibit No. 4.1 to
                 the Pre-Effective Amendment No. 2 to the Registrant's
                 Registration Statement on Form S-3 dated March 19, 1997,
                 [Commission File No.333-16575], and by this reference
                 incorporated herein.)

     4.36*    Stock Purchase Warrant, dated October 21, 1996, issued by the
                 Company to Alta Petroleum, Inc., (filed as Exhibit No. 4.2 to
                 the Pre-Effective Amendment No. 2 to the Registrant's
                 Registration Statement on Form S-3 dated March 19, 1997,
                 [Commission File No.333-16575], and by this reference
                 incorporated herein.)

     4.37*    Stock Purchase Warrant, dated September 30, 1996, between the
                 Registrant and Richard D. Shannon for 400,000 Common Shares at
                 $.75 per share, (filed as Exhibit No. 4.30 to the Registrant's
                 Registration Statement on Form 10-Q dated September 30, 1996,
                 and by this reference incorporated herein.)

     4.38*    Stock Purchase Warrant, dated September 30, 1996, between the
                 Registrant and Steven J. Orlando for 400,000 Common Shares
                 (filed as Exhibit No. 4.31 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein.)

     4.39*    Stock Purchase Warrant, dated September 30, 1996, between the
                 Registrant and Gary C. Nelson for 400,000 Common Shares,
                 (filed as Exhibit No. 4.32 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein.)

     4.40     Stock Purchase Warrant, dated July 11, 1996, between the
                 Registrant and Artistic License for 350,000 Common Shares,
                 (filed as Exhibit No. 4.33 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein.)

     4.41     Stock Purchase Warrant, dated October 21, 1996, between the
                 Registrant and Alta Petroleum, Inc., for 50,000 Common Shares,
                 (filed as Exhibit No. 4.34 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein.)


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<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.42     Stock Purchase Warrant, dated September 24, 1996, between the
                 Registrant and H.I.G. Securities Investments, LTD, for 384,615
                 Common Shares, (filed as Exhibit No. 4.35 to the Registrant's
                 Registration Statement on Form 10-Q dated September 30, 1996,
                 and by this reference incorporated herein.)

     4.43     Stock Purchase Warrant, dated September 24, 1996, between the
                 Registrant and Alana Group LTD, for 384,615 Common Shares,
                 (filed as Exhibit No. 4.36 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein.)

     4.44     Corporate Development Agreement dated February 4, 1997, between
                 the Registrant and One Capital Corporation, Inc. (filed as
                 Exhibit 4.1 to the Registrant's Registration Statement on Form
                 S-8 dated April 3, 1997, [Commission File No. 333-24461], and
                 by this reference incorporated herein.)

     4.45     Note Purchase Agreement, dated January 22, 1996, between the
                 Registrant and One Capital Corporation, Inc. (filed as Exhibit
                 4.1 to the Registrant's Registration Statement on Form S-8
                 dated April 3, 1997, [Commission File No. 333-24461], and by
                 this reference incorporated herein.)

     4.46     Stock Purchase Agreements dated September 20, 1996, for the
                 issuance of 1,538,462 Common Shares (filed as Exhibit 4.29 to
                 the Registrant's Registration Statement on Form 10-Q dated
                 September 30, 1996, and by this reference incorporated
                 herein).

     4.47     Stock Purchase Warrants dated September 24, 1996, for 384,615
                 Common Shares between the Registrant and Alana Group, LTD,
                 (filed as Exhibit 4.36 to the Registrant's Registration
                 Statement on Form 10-Q dated September 30, 1996, and by this
                 reference incorporated herein).

     4.48     Stock Purchase Warrant, dated January 1, 1996, issued by the
                 Registrant to Edward T. Peabody (filed as Exhibit 4.4 to the
                 Registrant's Registration Statement on Form S-8, dated
                 November 20, 1996, and by this reference incorporated herein).

     4.49*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Richard D. Shannon for 450,000
                 Common Shares at $0.75 per share.  (filed as Exhibit 4.49 to
                 the Registrant's Registration Statement on Form 10-Q, dated
                 June 30, 1997, and by this reference incorporated herein.)

     4.50*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Gary C. Nelson for 450,000 Common
                 Shares at $0.75 per share. (filed as Exhibit 4.49 to the
                 Registrant's Registration Statement on Form 10-Q, dated June
                 30, 1997, and by this reference incorporated herein.)

     4.51*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Steven J. Orlando for 450,000
                 Common Shares at $0.75 per share. (filed as Exhibit 4.51 to
                 the Registrant's Registration Statement on Form 10-Q, dated
                 June 30, 1997, and by this reference incorporated herein.)


                                          71

<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     4.52*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Thomas A. Craig for 150,000 Common
                 Shares at $0.75 per share. (filed as Exhibit 4.52 to the
                 Registrant's Registration Statement on Form 10-Q, dated June
                 30, 1997, and by this reference incorporated herein.)

     4.53*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Bradley B. Landin for 150,000
                 Common Shares at $0.75 per share. (filed as Exhibit 4.53 to
                 the Registrant's Registration Statement on Form 10-Q, dated
                 June 30, 1997, and by this reference incorporated herein.)

     4.54*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Lyle Edwards for 50,000 Common
                 Shares at $0.75 per share. (filed as Exhibit 4.54 to the
                 Registrant's Registration Statement on Form 10-Q, dated June
                 30, 1997, and by this reference incorporated herein.)

     4.55*    Cancellation of stock options and warrants dated July 31, 1997
                 between the registrant and Kevin Baker for 100,000 Common
                 Shares at $0.75 per share. (filed as Exhibit 4.55 to the
                 Registrant's Registration Statement on Form 10-Q, dated June
                 30, 1997, and by this reference incorporated herein.)

     4.56     Letter of Intent - E.C. Capital Ltd. (filed as Exhibit 4.56 to
                 the Registrant's Registration Statement on Form 10-Q, dated
                 September 30, 1997, and by this reference incorporated
                 herein.)

     10.1*    Employment Agreement, dated February 1, 1994, between the
                 Registrant and Richard D. Shannon (filed as Exhibit No. 10.28
                 to the Registrant's Registration Statement on Form S-1 dated
                 March 17, 1994 (Commission File No. 33-76528), and by this
                 reference incorporated herein).

     10.2*    Employment Agreement, dated February 1, 1994, between the
                 Registrant and Gary C.Nelson (filed as Exhibit No. 10.29 to
                 the Registrant's Registration Statement on Form S-1 dated
                 March 17, 1994 (Commission File No. 33-76528), and by this
                 reference incorporated herein).

     10.3*    Employment Agreement, dated February 1, 1994, between the
                 Registrant and Bradley B. Landin (filed as Exhibit No. 10.30
                 to the Registrant's Registration Statement on Form S-1 dated
                 March 17, 1994 (Commission File No. 33-76528), and by this
                 reference incorporated herein).

     10.4*    Employment Agreement, dated February 1, 1994, between the
                 Registrant and Thomas A. Craig (filed as Exhibit No. 10.31 to
                 the Registrant's Registration Statement on Form S-1 dated
                 March 17, 1994 (Commission File No. 33-76528), and by this
                 reference incorporated herein).

     10.5     Employment Agreement, dated June 30, 1994, between the Registrant
                 and Steven J. Orlando (filed as Exhibit No. 10.46 to the
                 Registrant's Quarterly Report on Form 10-Q for the quarter
                 ended June 30, 1994, and by this reference incorporated
                 herein).


                                          72

<PAGE>


    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     10.6     Java Centrale, Inc. Incentive Compensation Plan (filed as Exhibit
                 No. 10.34 to the Registrant's Registration Statement on Form
                 S-1 dated March 17, 1994 (Commission File No. 33-76528), and
                 by this reference incorporated herein).

     10.7     Joint Venture Formation Agreement, dated November 14, 1994, among
                 the Registrant, Chamberlin Capital Corp, Java Southeast
                 Partners, L.P., and Java Southeast, Inc., and amendments
                 thereto, (filed as Exhibit No. 10.7 to the Registrant Annual
                 Report on form 10-K for the year ended March 31, 1995, and by
                 this reference incorporated herein).

     10.8     Asset Purchase Agreement, dated as of February 15, 1995, between
                 the Registrant and Oh La La!, Inc. (filed as Exhibit 2.1 to
                 the Registrant's Current Report on Form 8-K dated March 30,
                 1995, and by this reference incorporated herein).

     10.9     First Amendment to Asset Purchase Agreement, dated March 30,
                 1995, between the  Registrant and PSSS, Inc. (filed as Exhibit
                 2.2 to the Registrant's Current Report on Form 8-K dated March
                 30, 1995, and by this reference incorporated herein).

     10.10    Authorized Producer Agreement, dated as of May 1, 1995, between
                 the Registrant and Coffee Bean International, (filed as
                 Exhibit No. 10.10 to the Registrant Annual Report on form 10-K
                 for the year ended March 31, 1995, and by this reference
                 incorporated herein).

     10.11    Lease effective September 1, 1995 between the Company and
                 California Birch Associates (filed as Exhibit No. 10(1) to the
                 Registrant's Registration Statement on Form 10-Q dated
                 September 30, 1995, and by this reference incorporated
                 herein.)

     10.12    Lease effective August 15, 1995 between the Company and Palmdale
                 SISOS G.P. (filed as Exhibit No. 10(2) to the Registrant's
                 Registration Statement on Form 10-Q dated September 30, 1995,
                 and by this reference incorporated herein.)

     10.13*   Indemnification Agreements, dated October 16, 1995, between the
                 Registrant and Richard Shannon, Chairman of the Board; Gary C.
                 Nelson, President; Steven J. Orlando, Chief Financial Officer;
                 Bradley B. Landin, Vice President; Thomas A. Craig, Vice
                 President; Kevin Baker, Director, and Baycor Venture, Inc.,
                 the single largest shareholder.

     10.14*   Employment Agreement, dated January 1, 1996, between the
                 Registrant and Ty Peabody.

     10.15    Asset Purchase Agreement, dated January 9, 1998, between the 
                 Registrant and Massimo Da Milano, Inc. for the sale of the 
                 assets of the Java Centrale franchise system, (Filed as 
                 Exhibit No. 10.15 to the Registrant's Pre-Effective 
                 Amendment No. 1 to Form SB-2 dated January 21, 1998 and by 
                 this reference incorporated herein.)

     10.17    Asset Purchase Agreement, dated December 15, 1995, between the
                 Registrant, Paradise  Bakery, Inc. and Venture 88, Inc.

     10.18    Credit Agreement, dated July 11, 1996, between the Registrant and
                 Alta Petroleum, Inc., (filed as Exhibit No. 10.22 to the
                 Registrant's Registration Statement on Form 10-Q dated
                 September 30, 1996, and by this reference incorporated
                 herein.)

     10.19    Loan Agreement, dated July 11, 1996, between the Registrant and
                 Artistic License, (filed as Exhibit No. 10.21 to the
                 Registrant's Registration Statement on Form 10-Q dated
                 September 30, 1996, and by this reference incorporated
                 herein.)


                                          73

<PAGE>

    Exhibit
    Number     Description
--------------------------------------------------------------------------------

     10.20    Finance Agreement effective December 1, 1996, between the Company
                 and Vision Capital Corporation, (filed as Exhibit No. 10.23 to
                 the Registrant's Registration Statement on Form 10-Q dated
                 December 31, 1996, and by this reference incorporated herein.)

     10.21    Loan Agreement effective January 31, 1997, between the Company
                 and Alta Petroleum, (filed as Exhibit No. 10.24 to the
                 Registrant's Registration Statement on Form 10-Q dated
                 December 31, 1996, and by this reference incorporated herein.)

     10.22    Additional Bridge Loan Agreement, amended April 4, 1997, between
                 the Company and Alta Petroleum, Inc.

     10.23    Additional Bridge Loan Agreement, amended April 7, 1997, between
                 the Company and Alta Petroleum, Inc.

     10.24*   Addendum No. 1 to Employment Agreement between the Company and
                 Bradley B. Landin, dated January 1, 1997.

     10.25*   Addendum No. 1 to Employment Agreement between the Company and
                 Thomas A. Craig, dated January 1, 1997.

     10.26*   Amendment to Employment Agreement between the Company and Steven
                 Orlando effective March 31, 1997.

     10.27    Termination of Credit Line between the Company and Gary Nelson,
                 dated April 7, 1997.

     10.28    Exchange Agreement with Good Food Fast Companies, Inc. and the
                 Company dated March 31, 1997

     10.29    Termination Agreement with Java Southeast, Inc. and the Company
                 dated

     10.30    Amendment to Note Agreement with Legong Investment, N.V., dated
                 July 1997.

     10.31    Warrant Agreement - Legong Investment, N.V., dated July 1997.

     11       Statement re Computation of Per Share Earnings (Loss)

     16.1     Letter from GT regarding its concurrence with the Company's 
                 statement regarding change of accountants. (Filed as Exhibit 
                 No. 16.1 to the Registrant's Form 8-K dated May 1, 1998 and 
                 by this reference incorporated herein.)

     21       Subsidiaries of the Registrant

     27       Financial Data Schedule

     99.1     Press release dated April 27, 1998 (Filed as Exhibit No. 99.1 
                 to the Registrant's Form 8-K dated April 27, 1998 and by 
                 this reference incorporated herein.)

     99.2     Press release dated May 1, 1998. (Filed as Exhibit No. 99.2 to 
                 the Registrant's Form 8-K dated April 27, 1998 and by this 
                 reference incorporated herein.)

     99.3     Letter of transmittal dated May 21, 1998  (Filed as Exhibit No. 
                 99.3 to the Registrant's Form 8-K dated May 21, 1998 and by 
                 this reference incorporated herein.)

     99.4     Supplement No. 1 dated May 21, 1998  (Filed as Exhibit No. 99.4 
                 to the Registrant's Form 8-K dated May 21, 1998 and by this 
                 reference incorporated herein.)

  (d)  EXCLUDED FINANCIAL STATEMENTS

             Not applicable.


                                          74

<PAGE>

                                      SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this Annual Report on 
Form 10-K to be signed on its behalf by the undersigned, thereunto duly 
authorized.

Dated: June 29, 1998               PARADISE HOLDINGS, INC.


                                   By:   /S/ GARY C. NELSON
                                       -----------------------------------
                                          Gary C. Nelson
                                          President and Chief Executive Officer

                                   And By:   /S/ JEFFREY W. DUDLEY
                                           --------------------------------
                                           Jeffrey W. Dudley
                                           Vice President and
                                           Chief Financial Officer
                                          (Principal Financial and Accounting
                                           Officer)


    Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the date indicated.


 /S/ PHILIP E. PEARCE                           June 29, 1998
--------------------------------------
Philip E. Pearce, Director

 /S/ BRADLEY B. LANDIN                          June 29, 1998
--------------------------------------
Bradley B. Landin, Director

 /S/ GARY C. NELSON                             June 29, 1998
--------------------------------------
Gary C. Nelson, President and Director


                                          75

<PAGE>

     INDEX TO EXHIBITS

     Exhibits marked with an asterisk (*) represent management contracts or
compensatory plans or arrangements.


     Exhibit
     Number            Description
     -------           -----------

       11.       Statement Re Computation of Per Share Earnings (Loss).

       21.       Subsidiaries of the Registrant.

       27.       Financial Data Schedule.






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