UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB/A


[x]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

                   For the fiscal year ended December 31, 1998

[ ]  TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

              For the transition period from _________ to _________
                        Commission file number 001-13559

                      Restaurant Teams International, Inc.
                 (Name of small business issuer in its charter)

          Texas                                            75-2337102
(State of other jurisdiction of                        (I.R.S. Employer 
 incorporation or organization)                           Identification No.)

 1705 E. Whaley, Longview, Texas                               75605
 (Address of principal executive offices)                    (Zip Code)

                    Issuer's telephone number: (903) 758-2811

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

       Title of each class             Name of each exchange on which registered

           None

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

                          Common Stock, par value $.01
                                (Title of class)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No[ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

The Issuer's revenues for the most recent fiscal year:  $3,705,013.

Part III, Items 9 through 12, of Form 10KSB will be incorporated by reference to
the Issuer's  definitive  proxy statement for its annual meeting of shareholders
to be held in May 1999.

The  aggregate  market  value of  common  stock  held by  non-affiliates  of the
registrant  based on the sale trade price of the common stock as reported on the
OTC-BB on April 1, 1999 was $15,730,489.  For purposes of this computation,  all
officers,  directors,  and 10% beneficial  owners of registrant are deemed to be
affiliates.  Such  determination  should  not be deemed an  admission  that such
officers,  directors or 10%  beneficial  owners are, in fact,  affiliates of the
registrant.  Number of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of April 1, 1999:  7,936,966  shares of common stock, par value
$.01.

Transitional Small Business Disclosure Format:  Yes [ ]  No [X]


<PAGE>


                                                

                                     PART I

Item 1.  DESCRIPTION OF BUSINESS

History

         Fresh'n Lite, Inc. (the "Company") is a Texas  corporation. The Company
originally was incorporated as a Delaware  corporation on May 9, 1990, under the
name "Bosko's,  Inc." On November 9, 1992, the Bosko's, Inc. name was changed to
"Fresh'n Lite, Inc."

         In October 1995, the Delaware  corporation merged into its wholly-owned
subsidiary,  F'NL,  Inc., a Texas  corporation.  F'NL,  Inc.  was the  surviving
corporation  in the merger.  F'NL,  Inc. then changed its name to "Fresh'n Lite,
Inc." The purpose of the merger was to convert the Delaware  corporation  into a
Texas corporation.

         On September 15, 1998 the Company changed its name to Restaurant  Teams
International,  Inc. in order to more properly  reflect  management's  desire to
position the Company as a restaurant holding company.

         The Company was formed in connection  with the creation of a restaurant
in Marshall,  Texas,  which was named  "Bosko's 3 N 1 D-Lite." In the past,  the
Company  has  operated  restaurants  in the  Texas  cities of  Marshall,  Tyler,
Longview,  Nacogdoches and Texarkana.  Each of these restaurants has been closed
or sold as the Company has developed its  restaurant  concept and as the Company
has focused on middle class urban markets in the Dallas/Fort Worth  metropolitan
area.

Company Business

         The Company currently operates three full-service  restaurants  located
in the Texas cities of Addison, The Colony and Richardson under the name "Street
Talk Cafe."

         The Company's  restaurants  offer a variety of food items,  including a
wide selection of sandwiches, salads, pizzas, steaks, seafood, Tex-Mex and other
food items and desserts that appeal to health-conscious  customers.  The Company
believes that its restaurants'  offerings do not sacrifice taste and represent a
health-conscious alternative to traditional restaurant fare.

         The  majority of the  Company's  food items are prepared to order using
fresh meats,  cheeses, and vegetables.  While the restaurants offer full-service
casual  dining,  the menus are  designed to permit quick food  preparation.  The
restaurants offer take-out service.


         The key  strategic  elements of the Street  Talk Cafe  concept are:

o    Providing  guests  a broad  menu  with 50% of the  "tie  breakers"  of each
     segment in low fat, yet good tasting versions to enhance frequency;

o    Pricing  menu  offerings  at  levels  comparable  to  other  casual  dining
     restaurants while providing more wholesome and nutritious selections;

o    Selecting,  training and motivating cast members to enhance customer dining
     experiences by delivering a level of service that is a product unto itself;

o    Reinforcing  perceived  value through  unique  concept  elements to provide
     guests with a superior "total dining"  experience in a fun and entertaining
     atmosphere.

Menu

         The menu  features  a wide  variety of  entrees  including  sandwiches,
salads, pizzas, steaks,  seafood,  Tex-Mex and special dinner items and desserts
that  have  nonfat or  low-fat  content.  Alcoholic  beverages  are  served as a
complement to meals and average approximately 10% of restaurant revenues.


                                       2

<PAGE>

         The  Company  targets  urban   white-collar   markets  and  focuses  on
increasing customer value by providing more wholesome and nutritional  offerings
than other  casual  dining  restaurants  at  comparable  prices in a relaxed and
entertaining atmosphere.

         The Company's  strategy is to continually  deliver broad menu appeal by
offering patrons selections from all dining segments in low-fat,  nutritious yet
good tasting  versions.  In addition,  the Company's efforts to assure the broad
appeal  of its  menu,  combined  with its  emphasis  on  affordability  and food
quality, promotes frequent return visits by restaurant guests.

         To  accomplish  these  objectives,  the  Company  identifies  the "tie"
breaking and "forerunner" products in each restaurant segment.  Management feels
these "best sellers" are the single most important reason guests select a casual
dining  restaurant.  The Company  offers about 50% of its  selections in low-fat
versions.

         Dinner  entrees  presently  range in price  from  $6.95 to  $12.95.  An
assortment of sandwiches, baked potatoes, salads, burgers, soups and pizza round
out the menu and are priced  between $3.25 and $8.50.  The concept uses the same
menu for lunch and  supper.  Nutritional  information  is printed on its healthy
offerings and menus are changed quarterly to encourage frequency.


Ambiance/Design

         The  design  elements  of Street  Talk Cafe  convey  the  "street"  and
"outdoor" ambiance  associated with the name. Guests walk into the restaurant on
brick  streets  and  wait to be  seated  in a  Trolley  Car area  complete  with
authentic benches.

         Guests can dine in a variety of rooms that  reflect  the type of shops,
stores and surroundings  normally  associated with a "street  experience."  This
makes  dining at Street  Talk Cafe a true  event and helps the  concept  deliver
greater value by offering an interesting and entertaining environment.

         The  restaurant's  design is  sufficiently  flexible to  accommodate  a
variety  of  available  sites  and  development  opportunities,  such as  malls,
end-caps  of strip  shopping  centers  and free  standing  buildings,  including
conversions.  The physical plant is designed to serve a high volume of guests in
a relatively limited period of time. Restaurants typically average approximately
4,500 square feet.

Competition

         Street  Talk  Cafe  operates  in  the  casual  dining  segment  of  the
foodservice industry.  This segment is estimated to be $36 billion per year with
another  $10  billion   estimated  in  the  Bar  and  Grill   segment.   Brinker
International  operates more brands in the casual dining  segment than any other
company with a total of seven different concepts.

         Casual operators agree that continued  expansion of core concepts and a
more aggressive  pursuit of acquisitions are the two prevailing trends that will
characterize the casual-theme segment in the near term.

         Despite the category's matured status,  wide spread labor shortages and
competitive  saturation  in dozens of  suburban  markets,  leading  casual-theme
operators  are  confident  there  is  plenty  of room  for  domestic  expansion.
Operators  are  looking  to the fact that Baby  Boomers  are  growing  older and
wealthier as their Echo Boom offspring grow "hipper".

         Fragmentation  is happening in the casual  segment.  Casual Diners have
historically  tried to be all things to all people by carrying Tex-Mex,  steaks,
ribs, and a bar. Today,  if people want steak,  they will go to operators in the
steak house niche like Outback or Lone Star. If they want Mexican,  they will go
to El Chico or Rio Bravo.

                                       3

<PAGE>


Suppliers

         The Company's primary supplier of goods is Consolidated Companies, Inc.
("Conco").  On  February  17,  1995,  Conco  entered  into a  five-year  primary
distribution agreement with the Company (the "Primary Distribution  Agreement"),
pursuant  to which  Conco has agreed to  provide  90% of the  products  that are
required  by the  Company  and that Conco can  provide.  The  Company  currently
purchases  approximately  90% of its inventory from Conco. The Company purchases
items from Conco,  as-needed,  on a net-30 day basis.  The Company is current in
its account with Conco.  The Company also has accounts  with other  suppliers to
ensure  product  availability  in the  event  that  Conco is  unable to meet the
Company's  needs in the future.  In  connection  with  entering into the Primary
Distribution  Agreement,  Conco purchased 133,332 shares of the Company's common
stock,  par value $.01 per share  (the  "Common  Stock"),  in March,  1995,  for
$199,999.

         In May and June of 1998 the Company  issued in a private  placement  to
three  Investors,  tranches of debentures  raising  $3,000,000 in gross proceeds
($2,670,000  in net  proceeds).  The Company  intends to use the proceeds of the
issuance to pursue the Company's business strategy. See AC Liquidity and Capital
Resources" and "Litigation".


PENDING ACQUISITION

         On March 12, 1999 the Company  entered  into  definitive  documents  to
acquire the Fatburger  hamburger  chain. The Company is to close the acquisition
in May 1999.  Fatburger,  founded in 1952,  currently  operates 13 company owned
Fatburger  restaurants in the Los Angeles,  California market and franchisees 22
restaurants  in Southern  California  and Las Vegas,  Nevada under the Fatburger
brand. Three additional  franchised  restaurants are under construction with two
units  expected  to open in June  1999  and the  third to open in  August  1999.
Currently, there are commitments and deposits for another 24 franchised units.

History

         The  Fatburger  brand,  which first  appeared in 1952,  is a well-known
trademark  that has come to represent the classic Los Angeles  hamburger  stand.
The original  restaurant on Western Avenue and the well-known La Cienga unit are
still  operating.  Many LA  hamburger  fans have had a Fatburger  experience  to
relate,  and for many out-of-town  visitors,  a stop at Fatburger is a necessary
part of their itinerary. In becoming synonymous with the LA lifestyle, Fatburger
has become a frequent dining spot for athletes and celebrities as well.

         Today the chain is experiencing  resurgence  with  same-store  sales at
Company owned units up 20% during the last year and franchise  division sales up
30% for the year.


Concept & Strategy

         Fatburger is in the quick service,  cooked to order hamburger business.
Critical to the overall taste and quality of the finished product is Fatburger's
absolute  commitment  to a "cook to order"  method that ensures  every burger is
served hot off the grill.  Fatburger operates in two distinct  industry  niches:
themed  restaurants  and  hamburger.  Fatburger  offers  an  experience  between
traditional fast feeders and casual dining concepts.

         While 45% of sales come from the varied forms of Fatburger  hamburgers,
the core items are  supported by other menu items that are  consistent  with the
taste and quality standards of the concept.  French fries and hand-breaded onion
rings make up 18% of sales;  beverages,  including hand scooped,  real ice cream
milkshakes and fresh lemonade are 17%.  Additional  items include fresh all beef
hot dogs,  marinated  chicken breast sandwich and ground turkey  burgers.  Guest
check averages for Fatburger are $6.25.

         Over the past 47 years,  this "high quality" quick service niche of the
hamburger  segment has made  Fatburger  one of the favorite  restaurants  in LA.
Fatburger's unique blend of entertainment,  value and product quality delineates
the concept from other  operators in the  hamburger  segment and provides a more
memorable dining  experience than other operators in the segment.  Fatburger was
voted best hamburger in Las Vegas and has won that  distinction in several polls
taken in the LA area.


                                       4

<PAGE>


Ambiance/Design

         The ambiance of the  restaurant  helps  Fatburger  achieve its motto as
"The Last Great  Hamburger  Stand."  The  design,  decor and  atmosphere  of the
restaurants  include  distinctive  rhythm and blues  jukebox and a high  quality
sound system that contribute to an upbeat, but sophisticated environment,  tying
Fatburger back to the community juke joints and great burger joints of the past.

Restaurant Operations

         Fatburger  requires its hourly team members to  participate in a formal
training program carried out at the individual restaurants,  with the on-the-job
training  program varying from three days to two weeks.  Managers are trained at
one of the Company's specified training restaurants by that restaurant's general
manager and then  certified  upon  completion of an eight to twelve week program
that encompasses all aspects of quality control and customer relations. Managers
at restaurants prepare daily reports of cash, deposits,  sales,  operating costs
and profits. In addition, they submit weekly payroll reports and profit and loss
statements  and perform  weekly  inventories  of all food,  beverage  and supply
items.  Monthly profit and loss statements are provided to field  management for
analysis and comparison to Company budgets. Fatburger's objective is to maintain
quality and  consistency in its restaurants  through the careful  supervision of
personnel  and the  establishment  of  standards  relating to food  handling and
preparation,  facility maintenance, and employee conduct. Fatburger maintains an
electronic POS system that links each store to a centralized system.  Individual
restaurants are polled daily for sales, cash control and operational data.

         A  typical  Fatburger  operates  with a staff  of  12-26,  including  a
restaurant  manager,  four shift  leaders,  and 7-21  hourly  employees  who are
predominately  full time.  Training  is ongoing  and a great deal of emphasis is
placed on team-oriented behavior and interaction with guests. All new management
personnel go through a five to eight week training  program  conducted at one of
two designated training stores.

         Restaurants are open from 10:30 to midnight most days of the week, with
later hours on weekends.  Hours are set by management based on local conditions.
In some circumstances, Fatburger restaurants are open for 24-hour service.

         Fatburger  restaurants  range in size from 950-2000  square feet.  This
small format and flexibility  permits a broader range of site selection  options
and helps  reduce  the cost of  opening  new  units.  Fatburger  has  opened six
restaurants  in the last 48 months.  For the four in-line or end cap units,  the
total cost to open a new unit  averaged  approximately  $385,000,  including all
leasehold  improvements,  equipment,  and  beginning  inventory  as  well as all
expenses for design, site selection, lease negotiation, construction supervision
and permitting.

         For the two newly constructed, freestanding units with drive-thrus, the
average cost was approximately  $675,000.  Management expects future restaurants
will  cost  approximately  $450,000  to  open  based  on  design  modifications,
management experience, and emphasis on smaller units and buying economies.



Franchising

         Under  the  franchise-licensing  program  that has been in place  since
September  1995,   Fatburger  offers  single  unit  and  multi-unit   franchises
throughout the United States.  Under a single unit agreement,  a franchisee must
pay a deposit of $30,000 that is applied towards their franchise fee.

         Multi-unit  franchise agreements and development awards are the primary
form of franchise  awards and are used  exclusively  when  entering new markets.

                                       5

<PAGE>

They must pay a $10,000 deposit for each  restaurant  they plan to develop.  The
balance  of the  franchise  fee  must be paid  upon  lease  execution  for  each
location.

         Development  agreements  conferring  exclusive  territory  rights for a
specified  period of time require a $10,000  non-refundable  development fee for
each unit, as well as the $30,000  franchise  fee per unit. If the  pre-approved
development schedule is not adhered to the exclusive rights may be forfeited.

         Ongoing  royalty  fees are 5% of gross  sales.  The initial term of the
agreements is 15 years with 2 successive  10-year renewal options.  Royalty fees
are paid semi-monthly.

         The  Company  provides  initial  training  and  ongoing  field  support
services to its franchisees in an effort to help maximize business and financial
management,  maintain  quality control and customer service  excellence,  and to
promote an active partnership between the Company and franchisees.

         The Company  administers a marketing fund for the purposes of promoting
and building  brand  identity,  advertising  and promotion,  building  community
relations,  and supporting the growth and development of the Fatburger system as
a whole.

Terminated Acquisition

         In October 1998 the Registrant  signed an asset  Purchase  Agreement to
acquire  all of the  properties  and  assets  comprising  the Old San  Francisco
Restaurant chain ("OSF").  The OSF acquisition was for all cash at closing,  and
Registrant  was  unable  to obtain  financing  for the  purchase  price on terms
acceptable  to it.  Registrant  therefore  declined to pursue its  agreement  to
purchase OSF, and the agreement was  terminated  without  penalty on February 1,
1999.  Registrant  instead  concentrated its efforts on pursuit of the Fatburger
transaction.

Employees

         Registrant  employed  74  persons  as of April  1,  1999,  including  9
executive and office personnel and 65 restaurant operational managers and staff.











                                       6

<PAGE>


Item 2: DESCRIPTION OF PROPERTY

Restaurant Locations

         The following  table provides  information  with respect to each of the
Company's restaurant properties.  The Dallas, Irving, The Colony, and Richardson
buildings are owned,  with a lease on the land. The Company's current plan is to
secure a 20-year  lease with an option to purchase on any land to be used for an
additional restaurant.
         
<TABLE>

                                                   Square Feet        Lease Expiration Date
<S>                                               <C>                 <C>

         Location
         Dallas, Texas............................4,500 sq. ft.       February 21, 2015
         
         Irving (Valley Ranch), Texas.............4,700 sq. ft.       November 15, 2016
         
         The Colony, Texas........................4,700 sq. ft.       October 15, 2017
         
         Richardson, Texas .......................4,700 sq. ft.       December 15, 2017
         
         Addison, Texas ..........................4,500 sq. ft.       November 30, 2006

</TABLE>

         
         The  Company no longer  operates  restaurants  in the Dallas and Irving
locations, which were closed after year-end.

Headquarters Location

         The Company owns a building located at  1705 Whaley,  Longview,  Texas.
The  Company  utilizes  approximately  5,000  sq.  ft. of the  building  for its
administrative  operations.  The  Company  leases the  remainder  (approximately
15,000 sq. ft.) to another company.  The Company purchased the headquarters land
and building in December 1997 from a company that is partially  owned by Messrs.
Stanley L. Swanson ("Mr.  Stan  Swanson")  and Curtis A.  Swanson  ("Mr.  Curtis
Swanson"), who are both directors and officers of the Company.


Item 3. LEGAL PROCEEDINGS

         Restaurant   Teams  International,  Inc.  vs.  Dominion  Capital  Fund,
Ltd. et. al, Civil Action no.  6:98-CV-679 in the U.S.  District Court,  Eastern
District of Texas,  Tyler  Division.  Registrant  filed suit on November 6, 1998
against three investment funds and their principals alleging fraud and violation
of federal and state securities laws in connection with a $3 million  investment
in  Registrant's  convertible  debentures.  The debentures had a conversion rate
based on 80% of the market price of Registrant  common stock,  which  Registrant
alleges was  manipulated  downward by illegal short selling in order to obtain a
larger number of conversion  shares.  Defendants  have  counterclaimed  alleging
default of the debentures,  breach of contract,  securities fraud and common law
fraud. The case is in the early stage of discovery.

         Thomas Kernaghan & Co. Limited and Mark Valentine v. Restaurant   Teams
International,  Inc.  et. al.  Cause  No. 98-CV-16128  in the  General  Court of
Ontario,  Canada.  Two of the defendants in the Dominion Capital case filed suit
in Canada in December 1998 charging defendant with defamation and libel in press
releases made at the time the Dominion Capital case was filed,  claiming damages
in excess of $3 million.  The  Registrant is defending the case through  Toronto
counsel.

         Sovereign  Partners  Limited  Partnership, et. al  v.  Restaurant Teams
International,  Inc. Cause No.  99-CIV-564  (RJW),  U.S.  District Court for the
Southern District of New York.  Certain  defendants in the Dominion Capital case
filed by  Registrant  have  filed  suit  against  Registrant  and  others in the
Southern  District of New York alleging  defamation  and libel based on the same
facts contained in the Toronto case.



                                       7

<PAGE>



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

         A special meeting of shareholders was held on December 16 to approve an
amendment to the Registrant's  Articles of Incorporation to authorize a class of
preferred stock. No other matter was submitted at the meeting,  and the proposal
was  approved by a vote of  4,356,282  shares for,  5,811  shares  against and 0
shares abstained.
















                                       8

<PAGE>


                                     PART II

Item 5:  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The  Company's  Common Stock began  trading on the OTC  Bulletin  Board
under the symbol  "FLTT" on May 9,  1997.  Such  symbol  was  changed to RTIN in
September  1998. The following  table sets forth for the quarters  indicated the
high  and low bid  prices  of the  Company's  Common  Stock as  reported  by the
National Quotation Bureau, Inc. The prices reflect inter-dealer prices,  without
retail  mark-up,   mark-down  or  commissions  and  may  not  represent   actual
transactions.             

                                                              High       Low
                               1997
       

       First Quarter.....................................        N/A       N/A
       Second Quarter....................................    $ 3.000   $ 2.500
       Third Quarter.....................................      3.750     2.500
       Fourth Quarter....................................      3.625     2.125
                       


                               1998                           High       Low
      

       First Quarter ....................................    $ 3.000   $ 1.649
       Second Quarter ...................................      4.469     1.656
       Third Quarter.....................................       4.00     1.875
       Fourth Quarter....................................       5.00     1.375

         As of  December  15,  1998,  the  Company  estimates  that  there  were
approximately   568  beneficial  owners  of  the  Company's  Common  Stock,  and
approximately  280 holders of record.  The Company has never declared a dividend
on its Common Stock.

Item 6:  MANAGEMENT'S DISCUSSION AND ANALYSIS ON PLAN OF OPERATION

Forward-Looking Statements

         This Annual Report on Form 10-KSB includes  forward-looking  statements
within the meaning of Section 27A of The Securities Act of 1933, as amended (the
Securities  Act),  and Section 21E of the  Securities  Exchange Act of 1934,  as
amended  (the   Exchange   Act),   which  can  be   identified  by  the  use  of
forward-looking  terminology such as may, believe,  expect, intend,  anticipate,
estimate or  continue or the  negative  thereof or other  variations  thereon or
comparable terminology.  All statements other than statements of historical fact
included in this Form  10-KSB,  are  forward-looking  statements.  Although  the
Company  believes  that  the  expectations  reflected  in  such  forward-looking
statements  are  reasonable,  it can give no  assurance  that  such  statements,
including  certain risks and  uncertainties  that could cause actual  results to
differ materially from the Company's  expectations  (Cautionary  Statements) are
disclosed in this Form 10-KSB. Important factors that could cause actual results
to  differ  materially  from  those  in the  forward-looking  statements  herein
include,  but are not  limited  to,  the  newness of the  Company,  the need for
additional  capital and additional  financing,  the Company's limited restaurant
base, lack of geographic diversification, the risks associated with expansion, a
lack  of   marketing   experience   and   activities,   risks  of   franchising,
seasonability,  the  choice  of site  locations,  development  and  construction
delays, need for additional personnel, increases in operating and food costs and
availability  of  supplies,   significant   industry   competition,   government
regulation,  insurance  claims and the ability of the Company to meet its stated
business  goals.  All  subsequent  written and oral  forward-looking  statements
attributable  to the  Company  or persons  acting on its  behalf  are  expressly
qualified in their entirety by the Cautionary Statements.

         The following  discussion  of the results of operations and financial 
condition should be the Financial  Statements and related Notes thereto included
herein.


                                       9

<PAGE>

Overview

The Company was  organized in June 1990 as Bosko's,  Inc.  under the laws of the
State of  Delaware.  In November  1992 the  Company  changed its name to Fresh'n
Lite,  Inc.,  and in November 1995 the Company  merged into a Texas  corporation
also  bearing the name  Fresh'n  Lite,  Inc. On  September  15, 1998 the Company
changed its name to  Restaurant  Teams  International,  Inc. to more  accurately
reflect the  direction  management  is taking with  respect to  positioning  the
Company as a  multi-concept  holding  company.  The Company  currently  owns and
operates  three Street Talk Cafe  restaurants in  Richardson,  Addison,  and The
Colony, Texas.

Results of Operations

Comparison of Year Ended December 31, 1997 and December 31, 1998.

         Revenues.  Operating  revenues for fiscal year ended  December 31, 1997
were $3,106,144, with an operating income of $179,020.

         Operating  revenues  for  fiscal  year  ended  December  31,  1998 were
$3,705,013,  a 19.3% increase from 1997, with an operating loss of $89,126.  The
19.3%  increase  in  revenues  over 1997 is  attributed  to the  opening  of the
Richardson Texas facility and the remodel of The Colony, Texas facility.

         Costs and  Expenses.  Costs and  expenses  for the  fiscal  year  ended
December 31, 1998  increased by $867,015 or 22.9% to  $3,794,139  as compared to
$2,927,124  for the  corresponding  period ended  December  31,  1997.  This was
primarily due to opening of higher volume restaurants in the Dallas market area.
General  and  Administrative  Costs in 1998  increased  by 318% to  $905,079  as
compared to $284,304 in 1997. This increase was primarily due to the development
of  infrastructure  in  anticipation  of the  future  growth  and  acquisitions.
Additionally the Company realized  increased  professional  fees associated with
the proposed  acquisition  of the OSF chain,  (see  "PENDING  ACQUISITIONS)  and
acquisition  costs  which  were  expensed  in  1998.  Interest  expense  in 1998
increased by  $1,561,238 to  $1,560,699  over a gain of $539 in 1997,  which was
attributed to the  reclassification of capitalized leases into operating leases.
The  increase  in  interest  expense  is almost  exclusively  attributed  to the
issuance by the company of the A & B convertible  debentures  dated May 29, 1998
and June 30, 1998 respectively. (see "EXPLANATION OF DEBENTURES" below)

         Net  Income.  The  Company  had a net loss for the  fiscal  year  ended
December  31, 1998 of  $1,320,303  compared to net income of $119,386 for fiscal
year ended  December 31, 1997,  representing  less than$.21  and $.02 per share,
respectively.  The net loss in 1998 was  primarily  due to the costs  associated
with the issuance of the debentures in May and June of 1998. See "EXPLANATION OF
DEBENTURES" - below and "Litigation" - Item 3.

Comparison of Year Ended December 31, 1996 and December 31, 1997.

         Revenues.  Operating  revenues for fiscal year ended  December 31, 1996
were $2,602,533, with a gross profit of $1,862,111 (71.5%), and operating income
of  $282,327,  before  adding  royalty  revenues  of  $34,744,  which  increased
operating income to $317,101.

         Operating  revenues  for  fiscal  year  ended  December  31,  1997 were
$3,106,144,  a 19.4%  increase from 1996, an operating  income of $166,862 which
included a one time charge of $169,075 for the accelerated amortization of start
up  costs  associated  with  the  closing  of the  Nacogdoches,  Texarkana,  and
Longview, Texas facilities. Prior to this charge, operating income was $335,937.
The Company  discontinued  its franchise  operation in early 1996,  therefore no
royalty revenues or franchise fees are reflected in the 1997 numbers.  The 19.4%
increase  in  revenues  over 1996 is  attributed  to the  opening  of the Irving
(Valley Ranch), and The Colony, Texas facilities.


                                       10

<PAGE>


         Costs and  Expenses.  Costs and  expenses  for the  fiscal  year  ended
December 31, 1997  increased by $594,388 or 25.5% to  $2,926,758  as compared to
$2,332,370  for the  corresponding  period ended  December  31,  1996.  This was
primarily due to opening of higher volume restaurants in the Dallas market area.

         Net  Income.  The  Company  had a net income for the fiscal  year ended
December 31, 1997 of $119,386 compared to net income of $234,937 for fiscal year
ended December 31, 1996, representing $.02 and $.04 per share, respectively.

Liquidity and Capital Resources

         Historically,  the Company has required  capital to fund the operations
and capital expenditure requirements of its Company-owned restaurants.

         From January 4, 1995 through  December 12, 1997,  the Company  received
gross proceeds from an intrastate offering of $2,219,500. Approximately $287,600
of the proceeds was used to cover offering-related costs, including underwriting
discounts  and  commissions.  The  net  proceeds  were  used  primarily  for the
acquisition of the Company's corporate offices. The remaining proceeds were used
to develop additional restaurants and for general corporate purposes.

         The Company met fiscal 1997 capital requirements with cash generated by
operations,  the proceeds from the  intra-state  offering and borrowing on notes
payable.  In  fiscal  1997  the  Company's  operations  generated  approximately
$644,352 in cash,  as compared to $551,804 in fiscal 1996 and $461,811 in fiscal
1995. The Company's  restaurant  operations are labor  intensive and do not have
significant  receivables or inventory.  The Company  receives trade credit based
upon negotiated  terms in purchasing  food and supplies and ordinarily  operates
with a relatively small level of working capital.

         The Company's   principal  capital  requirements  are  the  funding  of
acquisitions. During fiscal 1997, the Company constructed and opened one unit in
the Colony, Texas, and began construction of a second unit in Richardson, Texas,
and a third  facility in Addison,  Texas,  and purchased  its corporate  offices
facility. The total capital outlay for the year was.

         The Company is currently  operating  out of cash flow from  operations.
The Company completed two private placements of A Debentures and B Debentures on
May 29, 1998 and June 29,  1998,  respectively,  providing  net  proceeds to the
Company of  $2,670,000.  The proceeds were used to fund the Company's  expansion
strategy of opening additional Street Talk Cafe restaurants in the Dallas market
area. The Company is currently  seeking a recision of said debentures  through a
lawsuit  filed  in  Federal  court  on  November  9,  1998.  See  Item 3 - Legal
Proceedings.

Explanation of Debentures

         On  May 29,  1998,  the Company  entered into an agreement to issue two
tranches of  convertible  debentures to accredited  investors  with a total face
amount of  $3,000,000.  The Company  received net proceeds of  $2,670,000  after
paying  certain costs of the  purchasers.  The  debentures  bear interest at 6%,
mature on May 29, 2000, and are  convertible  into shares of common stock of the
Company. Conversion is at the option of the holders, and the number of shares of
common stock to be received upon  conversion is based upon the lesser of (a) the
closing bid price on the day immediately preceding the agreement ($4.00), or (b)
the average closing bid price for the Company's  stock for the  five-trading-day
period  immediately  preceding the date of conversion,  multiplied by a discount
ranging from 17.5% to 25%, which is considered a beneficial  conversion  feature
(BCF).  In accordance with generally accepted accounting principles, the Company
valued  the BCF by  multiplying  the  difference  between  the fair value of the
Company's  stock  as of the  transaction  date  and the  conversion  price  most
beneficial  to the  investor,  by the  number  of  shares  to be  received  upon

                                       11

<PAGE>

conversion by the investor under the most beneficial  terms.  This resulted in a
decrease in the carrying value of the Convertible Debentures and a corresponding
increase in stockholder's  equity of $1,000,000.  The related discount  recorded
upon the  issuance of the  Convertible  Debenture  was  accreted  into  interest
expense over a sixty-one  day period,  beginning on the issuance date and ending
on the first date at which the most beneficial  conversion to the investor could
be realized.  This resulted in additional  interest  expense of $1,000,000 and a
corresponding  increase in the carrying value of the  Convertible  Debentures of
$1,000,000 in 1998. The Company has the option of paying  accrued  interest upon
conversion  and at maturity in cash or through the  issuance of an equal  dollar
value  of  additional  shares.  If the  entire  principal  amount  has not  been
converted  by the maturity  date,  the Company  will  automatically  convert the
remaining  principal  using the same conversion  formula  described  above.  The
Company has the right to redeem the  debentures for the cash value of the shares
that would be received upon conversion as of the redemption date,  multiplied by
the  closing  bid  price on the  last  trading  day  immediately  preceding  the
redemption date.

          If an event of  default,  as defined  by the  agreement,  occurs,  the
holder may consider the Convertible Debentures to be immediately due and payable
in cash, at an amount equal to the number of shares  issuable  upon  conversion,
including  related  discounts as described above,  multiplied by the closing bid
price of the day  immediately  preceding  the  notice  of  default.  An event of
default could result in the Company  paying  amounts to the holders in excess of
the amounts recorded on the balance sheet.

          In  connection  with the  issuance  of these  debentures,  the Company
issued to the investors and the  placement  agent  warrants to purchase up to an
aggregate of 150,000 and 50,000  shares,  respectively,  of the Company's  stock
with an exercise  price  equal to 110% of the average  closing bid price for the
five trading days  immediately  preceding  the  agreement  date or $4.40.  These
warrants have a five-year life. The warrants were valued on the date of issuance
at $2.00 per warrant which  resulted in a decrease in the carrying  value of the
Convertible  Debentures and a corresponding  increase in stockholder's equity of
$400,000.  The resulting  discount upon the issuance of  Convertible  Debentures
will be accreted into interest expense over the life of the debentures, adjusted
for conversions to common stock.

          During the year,  the  investors  made two  conversions  of  principal
totaling $675,000,  plus accrued interest.  The Company issued 408,388 shares of
common stock in connection with the conversions.  No additional conversions have
been made.

Year 2000 Disclosure

         The Company uses current  versions of widely used,  publicly  available
software  for its  accounting,  data  processing,  and  point  of sale  computer
requirements.  The providers of the software utilized by the Company have stated
that there will be no failures  in the  programs  used by the Company  resulting
from the year 2000.  The Company does not utilize any customized  software.  The
Company has not yet  determined  the impact,  if any,  that year 2000 issued may
have  on  its  vendors.   However,  the  Company  believes  there  are  adequate
alternative  vendors  that can supply  products  and  services to the Company if
necessary.  Finally,  the  Company's  business  is  not  highly  dependent  upon
electronic data processing. In conclusion, the Company does not believe it is at
a material risk from year 2000 issues.


Item 7.  FINANCIAL STATEMENTS


                                       12

<PAGE>


                









                                    Restaurant Teams International, Inc.  
                                    Financial Statements                  
                                    As of December 31, 1998 and           
                                    Years Ended December 31, 1998 and 1997
                                    with Report of Independent Auditors   
                                                                          
                                   

















                                       13

<PAGE>


                      Restaurant Teams International, Inc.

                              Financial Statements


                           As of December 31, 1998 and
                     Years Ended December 31, 1998 and 1997




                                    Contents

Report of Independent Auditors ..............................................1


Financial Statements

Balance Sheet ...............................................................3
Statements of Operations ....................................................5
Statements of Stockholders' Equity ..........................................6
Statements of Cash Flows ....................................................7
Notes to Financial Statements ...............................................9















                                       14


<PAGE>


Ernst & Young LLP
                              Texas Bank Tower               Phone: 210 228 9696
                              Suite 1900                       Fax: 210 242 7252
                              100 West houston Street
                              San Antonio, Texas 78205-1457
                              Mail Address:
                              P.O. Box 2938
                              San Antonio, Texas 78205-2938 

                         
                         Report of Independent Auditors



Board of Directors and Stockholders
Restaurant Teams International, Inc.

We  have  audited  the   accompanying   balance   sheet  of   Restaurant   Teams
International,  Inc.  (formerly Fresh'n Lite, Inc.) as of December 31, 1998, and
the related 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 financial position of Restaurant Teams International,
Inc. as of December  31,  1998 and the  results of its  operations  and its cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.


                                             Ernst & Young LLP

                         
San Antonio, Texas
April 9, 1999


       Ernst & Young LLP is a member of Ernst & Young International, Ltd.

                                                                               1
<PAGE>


                        T.G. PROTHRO & COMPANY, P.L.L.C.
                        --------------------------------

                          Independent Auditors' Report



Board of Directors,
Restaurant Teams International, Inc.
Longview, Texas


We have audited the statement of operations, changes in shareholders' equity and
cash flows of Restaurant Teams  International,  Inc. for the year ended December
31, 1997.  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  results  of  operations  of  Restaurant   Teams
International,  Inc.  (formerly  Fresh`n Lite,  Inc.) and its cash flows for the
year ended December 31, 1997, in conformity with generally  accepted  accounting
principles.



/s/ T.G. Prothro & Company, PLLC
    ----------------------------
    
    Certified Public Accountants




Tyler, Texas
March 3, 1998, except for Note 11 as to
which the date is August 12, 1998



          Members, American Institute of Certified Public Accountants
             Members, Texas Society of Certified Public Accountants

                                                                               2
<PAGE>



                      Restaurant Teams International, Inc.

                                  Balance Sheet

                                December 31, 1998


Assets
Current assets:
   Cash and cash equivalents                            $1,606,245
   Inventories                                              43,035
   Prepaid expenses                                          7,415
   Federal income tax receivable                            38,030
                                                        ----------
Total current assets                                     1,694,725

Property and equipment:
   Land                                                    135,000
   Buildings                                             4,094,554
   Furniture, fixtures, and restaurant equipment           807,945
   Vehicles                                                130,691
   Leasehold improvements                                   30,113
                                                        ----------
                                                         5,198,303
   Less accumulated depreciation                           350,505
                                                        ----------
                                                         4,847,798

Deferred income taxes                                      223,155

Assets held for sale, net of accumulated depreciation    1,073,240

Notes receivable from related parties                    1,087,243

Debenture issuance costs                                   194,798

Other assets                                                50,526

                                                        ----------

Total assets                                            $9,171,485
                                                        ==========

                                                                               3

<PAGE>


                   
Liabilities and Stockholders' Equity Current liabilities:
   Accounts payable                                              $    89,835
   Accrued interest payable                                          121,911
   Income taxes payable                                               10,000
   Other accrued liabilities                                         195,110
   Current portion of long-term debt                                 121,862
                                                                 -----------
Total current liabilities                                            538,718

Long-term debt, net of current portion                             2,043,961
Deferred income taxes                                                269,945
Deferred liabilities                                                  63,141
Deferred gain on sale of assets                                      193,502

Commitments and contingencies

Convertible debentures (less discount of $222,302)                 2,102,698

Stockholders' equity:
   Preferred stock, par value of $.01, 10,000,000 shares
      authorized, -0- issued and outstanding                           --
   Common stock, par value of $.01, 50,000,000 authorized 
      shares; 6,833,328 shares issued and 6,552,888 outstanding       68,334
   Additional paid-in capital                                      5,718,252
   Treasury stock, 280,440 shares at cost                           (761,150)
   Retained earnings (deficit)                                    (1,065,916)
                                                                 -----------
Total stockholders' equity                                         3,959,520
                                                                 -----------

Total liabilities and stockholders' equity                       $ 9,171,485
                                                                 ===========


See accompanying notes.


                                       4

<PAGE>

<TABLE>

<CAPTION>

                      Restaurant Teams International, Inc.

                            Statements of Operations


                                                         Year Ended December 31
                                                            1998           1997
                                                       --------------------------
<S>                                                    <C>            <C>

Revenues                                               $ 3,705,013    $ 3,106,144
Cost and expenses:
   Cost of sales                                           968,382        890,944
   Restaurant labor and benefits                           971,727        744,910
   Other restaurant operating expenses                     690,527        584,546
   General and administrative expenses                     905,079        284,304
   Depreciation and amortization                           258,424        422,420
                                                       --------------------------
Total cost and expenses                                  3,794,139      2,927,124
                                                       --------------------------
Income from operations                                     (89,126)       179,020

Nonoperating income (expense):
   Interest, net                                        (1,560,699)           539
   Gain (loss) on disposal of property and equipment
                                                           208,282           (173)
                                                       --------------------------
                                                        (1,352,417)           366
                                                       --------------------------
(Loss) income before income taxes                       (1,441,543)       179,386

Income tax expense (benefit):
   Federal:
     Current                                               (46,830)
     Deferred                                              (74,410)
                                                       --------------------------
                                                          (121,240)        60,000
                                                       --------------------------
                                                       --------------------------

Net (loss) income                                      $(1,320,303)   $   119,386
                                                       ==========================

Net (loss) income per common share                     $      (.21)   $       .02
                                                       ==========================

</TABLE>



See accompanying notes.


                                                                               5

<PAGE>

<TABLE>

<CAPTION>

                      Restaurant Teams International, Inc.

                       Statements of Stockholders' Equity


                                                 Additional         Retained                           Total
                                   Common         Paid-In           Earnings         Treasury      Stockholders'
                                   Stock          Capital          (Deficit)          Stock            Equity
                               -------------------------------------------------------------------------------------
<S>                               <C>           <C>               <C>               <C>             <C>     

Balances at
   December 31, 1996              $   54,911    $   1,768,610     $     135,001     $     (1,250)   $   1,957,272
     Sale of common stock              6,674        1,509,889                 -                -        1,516,563
     Net income                            -                -           119,386                -          119,386
                               -------------------------------------------------------------------------------------
Balances at
   December 31, 1997                  61,585        3,278,499           254,387           (1,250)       3,593,221
     Sale of common stock              2,215          260,347                 -                -          262,562
     Issuance of common stock
       for compensation
                                         450           95,175                 -                -           95,625
     Value assigned to
       beneficial conversion
       rights and warrants                 -        1,400,000                 -                -        1,400,000
     Stock issued upon
       conversions of
       debentures                      4,084          684,231                 -                -          688,315
     Treasury stock purchased
                                           -                -                 -         (809,900)        (809,900)
     Issuance of treasury
       stock for property and
       equipment                           -                -                 -           50,000           50,000
     Net (loss)                            -                -        (1,320,303)               -       (1,320,303)
                               -------------------------------------------------------------------------------------

Balances at
   December 31, 1998              $   68,334    $   5,718,252     $  (1,065,916)    $   (761,150)   $   3,959,520
                               =====================================================================================

</TABLE>



See accompanying notes.

                                                                               6


<PAGE>

<TABLE>
<CAPTION>

                      Restaurant Teams International, Inc.

                            Statements of Cash Flows


                                                                       Year Ended December 31
                                                                     1998                   1997
                                                           ------------------------------------------------
<S>                                                            <C>                    <C>

Operating Activities
Net (loss) income                                              $      (1,320,303)      $         119,386
Adjustments to reconcile net (loss) income to net cash
   provided by operating activities:
     Depreciation                                                        253,111                 233,881
     Amortization of discount and issuance costs on
       convertible debentures                                          1,312,900                       -
     Amortization                                                          5,313                 188,539
     (Gain) on sales and retirements of property and
       equipment                                                        (208,282)                      -
     Provision (benefit) for deferred income taxes
                                                                         (74,410)                 51,200
     Issuance of common stock for compensation
                                                                          95,265                       -
     Change in net capital lease                                               -                 (19,750)
     Changes in operating assets and liabilities:
       (Increase) decrease in inventories                                (16,464)                    618
       (Increase) in prepaid expenses                                     (7,415)                      -
       (Increase) in other assets                                        (23,188)                      -
       (Increase) in prepaid federal income tax
         receivable                                                      (38,030)                      -
       (Decrease) increase in accounts payable                           (11,133)                 53,957
       Increase in accrued interest payable                              135,226                       -
       (Decrease) increase in other accrued liabilities
                                                                        (145,525)                 45,824
       Increase in deferred liabilities                                   63,141                       -
       Increase in federal and state taxes, net                            1,200                   8,800
                                                           ------------------------------------------------
Net cash provided by operating activities                                 21,406                 682,455

Investing Activities
Purchase of property, equipment, and leasehold
   improvements                                                       (1,503,299)             (2,288,392)
(Increase) in notes receivable from related parties,
   net                                                                  (922,700)               (133,198)
Proceeds from sale of property, equipment, and
   leasehold improvements                                              1,450,000                       -
                                                           ------------------------------------------------
Net cash (used in) investing activities                                 (975,999)             (2,421,590)


</TABLE>


See accompanying notes
                                                                               7

<PAGE>

<TABLE>

<CAPTION>

                      Restaurant Teams International, Inc.

                      Statements of Cash Flows (continued)


                                                                       Year Ended December 31
                                                                     1998                   1997
                                                           ------------------------------------------------
<S>                                                            <C>                     <C>

Financing Activities
Proceeds from issuance of common stock, net
                                                               $         262,562       $       1,168,500
Principal payments on long-term debt                                  (1,356,928)               (877,871)
Proceeds from issuance of convertible debentures
                                                                       1,600,000                       -
Issuance costs of convertible debentures                                (330,000)                      -
Payments to purchase treasury stock                                     (809,900)                      -
Proceeds from issuance of warrants and beneficial
   conversion                                                          1,400,000                       -
Principal payments on capital leases                                    (171,679)                      -
Proceeds from issuance of long-term debt                               1,946,050               1,451,239
                                                           ------------------------------------------------
Net cash provided by financing activities                              2,540,105               1,741,868
                                                           ------------------------------------------------
Net increase in cash and cash equivalents                              1,585,872                   2,733

Cash and cash equivalents at beginning of year                            20,373                  17,640
                                                           ------------------------------------------------
                                                           ------------------------------------------------

Cash and cash equivalents at end of year                       $       1,606,245       $          20,373
                                                           ================================================


Noncash transactions:
   Conversion of debentures plus accrued interest to
     common stock                                              $         688,315       $               -
   Issuance of treasury stock for property and
     equipment                                                            50,000                       -

Supplementary cash flow information:
   Interest paid                                                         112,573                 126,659

</TABLE>



See accompanying notes.

                                                                               8

<PAGE>


                      Restaurant Teams International, Inc.

                          Notes to Financial Statements

                           December 31, 1998 and 1997


1.  Organization and Significant Accounting Policies

Organization and Description of Business

Fresh'n Lite,  Inc. (the Company) (a Texas  Corporation  since October 1995) was
incorporated as Bosko's, Inc. in May 1990 as a Delaware Corporation. In December
1992 the corporate  title was changed to Fresh'n Lite, Inc. in order to make its
restaurants' names more reflective of its products.  In 1995, the Company merged
from a Delaware  Corporation into F'NL, Inc., a Texas Corporation.  Immediately,
the Company  changed its name to Fresh'n Lite, Inc. In 1998, the Company changed
its name to Restaurant Teams International, Inc. to reflect the Company's desire
to become a multiconcept restaurant holding company.

Prior to 1994, the Company's restaurants provided healthy foods and beverages in
a "fast food" deli atmosphere. During 1994, the Company expanded all restaurants
into "full service" casual dining restaurants,  offering dinner menus and a wait
staff. The Company operates four casual dining restaurants, in the Dallas, Texas
area, under the name "Street Talk Cafe."

Use of Estimates

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 these estimates.

Cash and Cash Equivalents

The Company  considers  all highly liquid  investments  with a maturity of three
months or less when purchased to be cash equivalents.

Inventories

Inventories  consist of food and beverage items and paper supplies.  Inventories
are stated at the lower of cost (first-in, first-out method) or market.

                                                                               9

<PAGE>



1.  Organization and Significant Accounting Policies (continued)

In 1995, the Company sold common stock to the Company's largest food distributor
pursuant to a food purchase/stock  purchase  agreement.  The agreement binds the
Company to  purchase  90% of its food  products  from the  distributor  for five
years.  The  Company is  continuing  to satisfy  its  obligation  under the food
purchase portion of the agreement.

Long-Lived Assets

Long-lived assets (including  related goodwill and other intangible  assets) are
reviewed on a regular  basis for the existence of facts or  circumstances,  both
internally and externally,  that may suggest  impairment.  If such impairment is
identified,  the  impairment  loss will be measured by comparing  the  estimated
future undiscounted cash flows to the asset's carrying value.

Assets Held for Sale

In accordance with Statement of Financial  Accounting  Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," the Company has reclassified  certain assets from "Property and
Equipment" to "Assets Held for Sale" in the accompanying  financial  statements.
Management   identified   assets   totaling   $1,426,831,   net  of  accumulated
depreciation  totaling $353,591, as being held for sale as of December 31, 1998.
Management  is unable to provide an  expected  disposal  date,  but is  actively
pursuing sale of the assets as quickly as possible  while  maximizing  potential
sales proceeds.  Depreciation on the reclassified assets was ceased at the point
that management committed to a plan to dispose of the assets.

Property and Equipment

Property  and  equipment   are  stated  at  cost.   Major   improvements   which
significantly extend the useful lives of the equipment are capitalized. Property
and  equipment  depreciation  is computed  on an  accelerated  or  straight-line
method.  Leasehold  improvements are amortized over the lesser of the lease term
or the estimated useful life

                                                                              10

<PAGE>


1.  Organization and Significant Accounting Policies (continued)

of the  improvements.  Maintenance  and repair  costs are  expensed as incurred.
Estimated service lives are as
follows:


     Buildings                                                      20 years
     Furniture, fixtures, and restaurant equipment              5 - 10 years
     Vehicles                                                   5 - 10 years
     Leasehold improvements                                    10 - 15 years

Certain  construction  overhead costs are capitalized and included in buildings.
In 1998, the Company  issued 20,833 shares as payment for  restaurant  equipment
with a value of $50,000.

Debenture Issuance Costs

Debenture  issuance  costs,  which  are  being  amortized  using a  method  that
approximates  the  effective  interest  method over the life of the  Convertible
Debentures,  adjusted for  conversions,  are included in the balance sheet.  The
Company incurred  approximately  $330,000 in debenture issuance costs related to
the  Convertible  Debentures in 1998 (see Note 4).  Accumulated  amortization of
debenture issuance costs was approximately $135,202 at December 31, 1998.

Revenue Recognition

Sales and related costs are  recognized by the Company upon the sale of products
at restaurant locations.

Income Taxes

The Company  accounts for income taxes using the  liability  method.  Under this
method,  deferred tax assets and liabilities are determined based on differences
between the financial  reporting basis and tax basis of assets and  liabilities,
and are  measured  using the  enacted tax rates and laws which will be in effect
when the differences are expected to reverse.






                                                                              11

<PAGE>


1.  Organization and Significant Accounting Policies (continued)

Stock-Based Compensation

SFAS No. 123, "Accounting for Stock-Based  Compensation,"  encourages,  but does
not require,  companies to record  compensation  cost for  stock-based  employee
compensation  plans at fair value. The Company has chosen to continue to account
for  stock-based  compensation  using the intrinsic  value method  prescribed in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees,"  and related  interpretations.  Accordingly,  compensation  cost for
stock  options is measured as the excess,  if any, of the quoted market price of
the  Company's  stock at the date of the grant over the amount an employee  must
pay to acquire the stock (see Note 8).

Preferred Stock

In 1998 the Company's stockholders approved the creation of a class of preferred
stock.  The preferred stock has a par value of $.01, and 10,000,000  shares were
authorized.  The  Company  has not  assigned  any rights or  preferences  to the
preferred stock as of December 31, 1998.

Advertising Costs

All advertising and  promotional  costs are expensed when incurred.  The Company
incurred  approximately  $97,000  and  $129,000  in  marketing  and  advertising
expenses in 1998 and 1997, respectively.

Reclassifications

Certain  prior year  amounts have been  reclassified  to conform to current year
presentation.

2.  Other Accrued Liabilities

Other accrued liabilities consist of the following at December 31, 1998:

     Accrued employee compensation and related items    $       35,492
     Sales taxes payable                                        31,360
     Professional fees                                          52,568
     Ad valorem taxes                                           75,690
                                                        ------------------

                                                        $      195,110
                                                        ==================


                                                                              12

<PAGE>


<TABLE>

<S>                                                                             <C>      <C>


3.  Long-Term Debt

Long-term debt consists of the following at December 31, 1998:

     Note payable to bank,  interest at 9.5%,  monthly  principal  and  interest
       payments of $3,594, remaining unpaid principal and interest due June 30,
       2000, secured by certain real property                                            $      269,531

     Note payable to bank,  interest at 9.5%,  monthly  principal  and  interest
       payments of $7,310, remaining unpaid principal and interest due April 9,
       2001, secured by certain real property                                                   698,338

     Note payable to bank,  interest at 9.5%,  monthly  principal  and  interest
       payments of $7,310, remaining unpaid principal and interest due April 9,
       2001, secured by certain real property                                                   696,727

     Note payable to bank, interest at 9.5%, monthly principal and interest
       payments of $5,430, remaining unpaid principal and interest due October 28,
       2000, secured by certain real property                                                   463,541

     Note payable to insurance company, interest at 9.44%, monthly payments of
       $3,009, due April 28, 1999, unsecured                                                     17,073

     Note payable to bank,  interest at 9.85%,  monthly  principal  and interest
       payments of $474, due May 9, 2002, secured by automobile
                                                                                                 17,213

     Note payable to bank,  interest at 11.75%,  monthly  principal and interest
       payments of $240, due March 15, 2000, secured by automobile
                                                                                                  3,400
                                                                                     ----------------------
     Total long-term debt                                                                     2,165,823

     Less current installments                                                                  121,862
                                                                                     ----------------------
                                                                                     ----------------------

     Long-term debt, excluding current installments                                      $    2,043,961
                                                                                     ======================

</TABLE>


                                                                              13

<PAGE>


3.  Long-Term Debt (continued)

Principal requirements on long-term debt for the succeeding fiscal years are:

     1999                                       $         121,862
     2000                                                 751,552
     2001                                               1,290,098
     2002                                                   2,311
                                                ---------------------

                                                $       2,165,823
                                                =====================

The carrying amount of long-term debt  approximates  the fair value.  During the
year ended December 31, 1997, the Company  capitalized as building and equipment
costs $124,199 in interest related to notes payable.

4.  Convertible Debentures

On May 29, 1998, the Company  entered into an agreement to issue two tranches of
convertible debentures (the Convertible Debentures) to accredited investors with
a total  face  amount of  $3,000,000.  The  Company  received  net  proceeds  of
$2,670,000  after  paying  certain  costs  of the  purchasers.  The  Convertible
Debentures bear interest at 6%, mature on May 29, 2000, and are convertible into
shares  of  common  stock of the  Company.  Conversion  is at the  option of the
investors,  and the  number  of  shares  of  common  stock to be  received  upon
conversion  is based  upon the  lesser of (a) the  closing  bid price on the day
immediately  preceding the  agreement  ($4.00),  or (b) the average  closing bid
price  for the  Company's  stock  for the  five-trading-day  period  immediately
preceding the date of conversion, multiplied by a discount ranging from 17.5% to
25%, which is considered a Beneficial  Conversion  Feature (BCF).  In accordance
with generally  accepted  accounting  principles,  the Company valued the BCF by
multiplying  the difference  between the fair value of the Company's stock as of
the transaction  date and the conversion price most beneficial to the investors,
by the number of shares to be received upon  conversion  by the investors  under
the most beneficial  terms. This resulted in a decrease in the carrying value of
the Convertible  Debentures and a corresponding increase in stockholder's equity
of  $1,000,000.   The  related  discount  recorded  upon  the  issuance  of  the
Convertible  Debentures was accreted into interest  expense over a sixty-one-day
period, beginning on the issuance date and ending on the first date at which the
most beneficial conversion to the investors could be realized.  This resulted in
additional  interest  expense of $1,000,000 and a corresponding  increase in the
carrying value of the

                                                                              14

<PAGE>


4.  Convertible Debentures (continued)

Convertible  Debentures  of  $1,000,000  in 1998.  The Company has the option of
paying accrued  interest upon  conversion and at maturity in cash or through the
issuance of an equal dollar value of additional  shares. If the entire principal
amount  has  not  been   converted  by  the  maturity  date,  the  Company  will
automatically  convert the remaining principal using the same conversion formula
described above. The Company has the right to redeem the Convertible  Debentures
for the cash value of the shares that would be received  upon  conversion  as of
the redemption date, multiplied by the closing bid price on the last trading day
immediately preceding the redemption date.

If an event of default,  as defined by the agreement,  occurs, the investors may
consider the  Convertible  Debentures to be immediately due and payable in cash,
at an amount equal to the number of shares issuable upon  conversion,  including
related discounts as described above, multiplied by the closing bid price on the
day  immediately  preceding  the notice of  default.  An event of default  could
result in the Company  paying  amounts to the investors in excess of the amounts
recorded on the balance sheet.

In  connection  with the  issuance of the  Convertible  Debentures,  the Company
issued to the investors and the  placement  agent  warrants to purchase up to an
aggregate of 150,000 and 50,000  shares,  respectively,  of the Company's  stock
with an exercise  price  equal to 110% of the average  closing bid price for the
five trading days  immediately  preceding  the  agreement  date or $4.40.  These
warrants are  exercisable at any time through May 2003. The warrants were valued
on the date of issuance at $2.00 per warrant which resulted in a decrease in the
carrying value of the  Convertible  Debentures and a  corresponding  increase in
stockholder's  equity of $400,000.  The resulting  discount upon the issuance of
Convertible  Debentures will be accreted into interest  expense over the life of
the debentures, adjusted for conversions to common stock.

During the year,  the  investors  made two  conversions  of  principal  totaling
$675,000,  plus accrued  interest.  The Company  issued 408,388 shares of common
stock in connection  with the  conversions.  As of December 31, 1998 the Company
has  reserved  1,000,000  shares of common  stock to be  applied  toward  future
conversions. No additional conversions have been made. See Note 10.

Due to the  nature  of the  above  items,  the  fair  value  of the  Convertible
Debentures has not been determined.



                                                                              15

<PAGE>


5.  Related Party Transactions

As of December 31, 1998, the Company has notes  receivable  from related parties
as follows:

     A note for $500,000 is from a sister corporation and is related to the sale
     of certain real property.  The note is a  fifteen-year  note due August 31,
     2013, bears interest at 10%, and is secured by the same real property.

     A note for  $468,796 is from the same sister  corporation.  The note is due
     January 1,  2000,  bears  interest  at 10%,  and is  secured by  inventory,
     receivables, and property and equipment of the sister corporation.

     A note for $103,447 is from an entity owned by two  stockholders.  The note
     is due January 1, 2000,  bears interest at 9%, and is secured by all assets
     of the entity including land, building, and equipment.

     A note for $15,000 is from a  stockholder.  The note was due June 30, 1998,
     but has not been collected. The note bears interest at 9% and is unsecured.

In the  current  year,  the  Company  sold two  pieces of  property  to a sister
corporation   for  a  combined  gain  of   approximately   $386,000,   of  which
approximately $194,000 is deferred as of December 31, 1998.

The Company  leases office and retail space in one of its facilities to a sister
corporation  under a  long-term  operating  lease for  approximately  $8,000 per
month.  The Company  waived all rental fees due under this agreement in 1998 and
1997.








                                                                              16


<PAGE>


6.  Income Taxes

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes  and the  amounts  used for  income  tax  purposes.  Components  of the
Company's net deferred tax liabilities at December 31, 1998 are as follows:

     Deferred tax assets:
       Cash to accrual                                   $       101,917
       Net operating loss                                        154,354
       Deferred rent                                              21,468
                                                         -------------------
     Total deferred tax assets                                   277,739
     Valuation allowance for deferred tax assets                 (54,584)
                                                         -------------------
     Net deferred tax assets                                     223,155

     Deferred tax liabilities:
       Depreciable and amortizable property                     (267,542)
       Loan costs                                                 (2,403)
                                                         -------------------
     Total deferred tax liabilities                             (269,945)
                                                         -------------------

     Net deferred tax assets                             $       (46,790)
                                                         ===================

The  Company  has a net  operating  loss of  approximately  $472,000,  of  which
approximately  $163,000  can be carried  back to the prior year,  the benefit of
which has been booked as a federal income tax receivable.

The reconciliation  between the expected tax at the federal U.S. corporate tax 
rate and the Company's consolidated actual tax is as follows:

<TABLE>

                                                                        December 31
                                                               1998                  1997
                                                         ---------------------------------------
<S>                                                       <C>                   <C>

     (Loss) income before income taxes                    $    (1,441,543)      $       179,386
     U.S. corporate tax rate                                           34%                   34%
                                                         ---------------------------------------
                                                                            
     Expected (benefit) expense                                  (490,125)               60,991

     Effects of permanent differences on the current
       and deferred provisions                                    358,868                     -
     Other                                                        (44,567)                 (991)
                                                         ---------------------------------------

     Actual expense                                       $      (175,824)      $        60,000
                                                         =======================================
</TABLE>








                                                                              17

<PAGE>


7.  Operating Leases

The Company has entered into  noncancelable  lease agreements for the land where
its  restaurants are located that expire at various dates through the year 2018.
The Company has options to renew the leases upon  expiration for periods ranging
from five to ten years.  Total rental expense for operating  leases  amounted to
approximately $234,000 and $160,000 in 1998 and 1997, respectively.

The Company also pays real estate taxes,  insurance,  and  maintenance  expenses
related to these leases.  Future minimum rental commitments at December 31, 1998
under operating leases having an initial or remaining  noncancelable term of one
year or more are:

     1999                                         $        295,704
     2000                                                  299,337
     2001                                                  299,926
     2002                                                  314,237
     2003                                                  315,902
     Thereafter                                          3,177,929
                                                  --------------------
                                                  --------------------

     Total minimum rentals                        $      4,703,035
                                                  ====================

8.  Stock Options

The Company has authorized the granting of options covering a total of 1,200,000
shares of the Company's  common stock to managers,  key  employees,  and certain
consultants of the Company.  All options granted have five-year terms and become
fully exercisable when granted.














                                                                              18

<PAGE>


8.  Stock Options (continued)

A summary of the Company's stock option activity and related information for the
two years ended December 31, 1998 follows:


<TABLE>

                                                                                         Weighted-Average
                                                                                             Exercise
                                                                                              Price
                                                                            Options
                                                                       ------------------------------------
<S>                                                                             <C>             <C>

     Outstanding at December 31, 1996                                          103,572        $  1.45
                                                                       ====================================
                                                                       ====================================

     Exercisable at December 31, 1996                                          103,572        $  1.45
                                                                       ====================================

     Exercised                                                                       -        $   -
     Forfeited                                                                       -            -
     Granted                                                                   543,500           2.67
                                                                       ------------------------------------

     Outstanding at December 31, 1997                                          647,072        $  2.47
                                                                       ====================================

     Exercisable at December 31, 1997                                          647,072        $  2.47
                                                                       ====================================

     Exercised                                                                       -        $   -
     Forfeited                                                                       -            -
     Granted                                                                   250,000           2.825
                                                                       ------------------------------------

     Outstanding at December 31, 1998                                          897,072        $  2.57
                                                                       ====================================

     Exercisable at December 31, 1998                                          897,072        $  2.57
                                                                       ====================================


</TABLE>

The  weighted-average  remaining  contractual  life of those options is 3.68 and
4.48 years in 1998 and 1997,  respectively.  The exercise  prices of outstanding
options  range from  $.10-$3.00  as of December 31, 1998 and 1997. In connection
with the Company's  stock  options,  1,200,000  shares of common stock have been
reserved for future issuance.



                                                                              19

<PAGE>


8.  Stock Options (continued)

The  Company  has  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been  recognized  for the  stock  option  plan.  Had  compensation  cost for the
Company's stock option plan been determined based on the fair value at the grant
date for awards in 1995,  consistent  with the  provisions  of SFAS No. 123, the
Company's  net income and  income per share  would have been  reduced to the pro
forma amounts indicated.

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

     Net (loss) income - as reported                 $ (1,320,303)   $  119,386
     Net (loss) - pro forma                            (1,635,283)      (52,884)
     (Loss) income per common share - as reported            (.21)          .02
     (Loss) per common share - pro forma                     (.26)         (.01)

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: dividend yield of 0%; expected volatility of 113.9%
and 74.9% in 1998 and 1997, respectively;  risk-free interest rates of 4.57% and
5.65% in 1998 and 5.57% in 1997; and expected  lives of 3.25 years.  The average
fair value of options granted in 1998 and 1997 was $2.04 and $.42, respectively.

9.  Reconciliation of Per Share Information

<TABLE>

                                                                 December 31
                                                              1998            1997
                                                        ------------------------------
<S>                                                     <C>               <C>

     Numerator
     Net (loss) income                                  $   (1,320,303)   $   119,386
     Effect of dilutive securities:
       Convertible debentures                                        -              -
                                                        ------------------------------

     Numerator for basic and diluted income per share   $   (1,320,303)   $   119,386
                                                        ==============================

</TABLE>




                                                                              20

<PAGE>

<TABLE>

<CAPTION>

9.  Reconciliation of Per Share Information (continued)

                                                                               December 31
                                                                        1998                 1997
                                                                -------------------------------------------
<S>                                                                             <C>          <C>

     Denominator
     Denominator for basic income per share -
       weighted average shares                                           6,218,749            5,807,700
     Effect of dilutive securities:
       Employee stock options                                                    -               47,500
       Convertible debentures                                                    -                    -
       Warrants                                                                  -                    -
                                                                -------------------------------------------

     Denominator for diluted income per share -
       adjusted weighted average shares                                  6,218,749            5,855,200
                                                                ===========================================

     Net (Loss) Income Per Share
     Basic                                                          $        (.21)       $          .02
                                                                ===========================================

     Diluted                                                        $        (.21)       $          .02
                                                                ===========================================


</TABLE>

Stock options,  warrants, and shares issuable upon conversion of the Convertible
Debentures totaling 2,274,263 and 533,500 for 1998 and 1997, respectively,  were
not included as they were antidilutive.

10.  Commitments and Contingencies

Litigation

Restaurant  Teams  International,  Inc. vs.  Dominion  Capital Fund, Ltd. et al.
Civil Action no.  6:98-CV-679 in the U.S.  District Court,  Eastern  District of
Texas,  Tyler Division.  Registrant filed suit on November 6, 1998 against three
investment  funds and their  principals  alleging fraud and violation of federal
and  state  securities  laws  in  connection  with a $3  million  investment  in
Registrant's convertible debentures.  The debentures had a conversion rate based
on 80% of the market price of Registrant common stock,  which Registrant alleges
was  manipulated  downward by illegal  short selling in order to obtain a larger
number of conversion shares.  Defendants have counterclaimed alleging default of
the debentures,  breach of contract, securities fraud, and common law fraud. The
case is in the early stage of discovery.



                                                                              21
<PAGE>


10.  Commitments and Contingencies (continued)

Thomas   Kernaghan  &  Co.  Limited  and  Mark  Valentine  v.  Restaurant  Teams
International,  Inc.  et al.  Cause  No.  98-CV-16128  in the  General  Court of
Ontario,  Canada.  Two of the defendants in the Dominion Capital case filed suit
in Canada in December 1998 charging defendant with defamation and libel in press
releases made at the time the Dominion Capital case was filed,  claiming damages
in excess of $3 million.  The  Registrant is defending the case through  Toronto
counsel.

Sovereign Partners Limited Partnership et al. v. Restaurant Teams International,
Inc. Cause No.  99-CIV-564  (RJW), U.S. District Court for the Southern District
of New York. Certain defendants in the Dominion Capital case filed by Registrant
have filed suit against  Registrant  and others in the Southern  District of New
York  alleging  defamation  and libel based on the same facts  contained  in the
Toronto case.

Management believes the effect of these actions will not have a material adverse
effect on the Company's  financial  position or results of operations;  however,
the ultimate resolution of these matters cannot be presently determined.

11.  Prior Period Adjustments and Restatements

Certain  errors,  resulting  in both the  understatement  and  overstatement  of
previously reported assets, liabilities,  and expenses for 1997, resulted in the
following changes to total assets, beginning retained earnings, and net income:

<TABLE>

                                                                         Beginning
                                                                     Retained Earnings
                                                    Total Assets                           Net Income
                                                -----------------------------------------------------------
<S>                                                 <C>                         <C>        <C>

     As previously reported                         $    8,145,537       $    182,225      $    110,862
     Overstatement of capitalized land
       leases                                           (2,175,000)            (5,951)            4,583
     Overstatement of capitalized franchise
       costs                                               (57,333)           (65,273)            7,941
     Deferred taxes on above items                               -             24,000            (4,000)
                                                -----------------------------------------------------------

     As restated                                    $    5,913,204       $    135,001      $    119,386
                                                ===========================================================



</TABLE>




                                                                              22

<PAGE>


12.  Subsequent Events

Subsequent to December 31, 1998, the Company closed two of its restaurants.  The
decision  to close  one of the  restaurants  was made  prior  to  year-end,  and
accordingly,  the assets  related to this  location  have been  reclassified  to
assets held for sale. The Company also opened a new restaurant in early 1999.

Also subsequent to year-end,  the Company entered into  negotiations to purchase
the stock of another restaurant company.  Management believes these negotiations
will culminate in a significant acquisition in 1999.

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

         On October 19, 1998, the  Registrant  ended its  relationship  with its
independent auditors,  T.G. Prothro & Company,  effective as of that date. There
were no  disagreements  with T.G.  Prothro & Company on any matter of accounting
principles,  practices,  financial  statement  disclosure,  or auditing scope or
procedure or any reportable  event.  The change was made in order to comply with
American  Stock  Exchange  listing  requirements,  which  the  Company  was then
pursuing.

         The registrant's  audit committee then engaged Lane,  Gorman,  Trubitt,
LLP,  effective November 3, 1998. The registrant had not consulted Lane, Gorman,
Trubitt,  LLP prior to such appointment with respect to any matter of accounting
principles or  practices,  financial  statement  disclosure,  auditing  scope or
procedure, or any disagreement with T.G. Prothro & Company.

         On March 4,  1999,  the  Registrant  ended  its  relationship  with its
independent  auditors,  Lane, Gorman,  Trubitt,  LLP, effective as of that date.
There have been no disagreements with Lane, Gorman,  Trubitt,  LLP on any matter
of accounting principles, practices, financial statement disclosure, or auditing
scope or  procedure  or any  reportable  event.  The change was made to maximize
economies of scale relative to acquisitions in process and anticipated.

         The  registrant's  audit  committee  then  engaged  Ernst & Young  LLP,
effective  March 5, 1999.  The  registrant  had not consulted  Ernst & Young LLP
prior to such appointment with respect to any matter of accounting principles or
practices,  financial statement disclosure,  auditing scope or procedure, or any
disagreement with Lane, Gorman, Trubitt, LLP.










                                                                              23

<PAGE>

                               Part III. EXHIBITS

Items 9 through 12. To be set forth in Registrant's  definitive  proxy statement
for its annual meeting to be held in May 1999.

Item 13.  Exhibits and Reports on Form 8-K.  Part III.  EXHIBITS

         (a)  Hereafter  set forth as exhibits to the Form 10-KSB of  Restaurant
Teams  International, Inc. and  incorporated  by  reference  are  the  following
exhibits:


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

  2.1*     Articles of Incorporation

  2.21+    Amendment to Articles of Incorporation

  2.22+    Articles of Amendment

  2.3*     By-Laws

  3.1*     Warrant  Agreement  filed as an  exhibit  to the  Company's  Form
           10-KSB dated February 28, 1997

  6.1**    Primary Distribution  Agreement dated as of February 17, 1995, by
           and  between  Consolidated  Companies,  Inc.  on the one hand and
           Fresh'n Lite Inc. on the other

  6.3CE**  Restaurant Lease dated as of September 15, 1997 by and between
           USRP (Midon),  LLC on the one hand and Fresh'n Lite,  Inc. on the
           other

  6.4CE**  Ground  Lease  dated as of  February  21,  1995 by and between
           Peter D. Fonberg  Investments  on the one hand and Fresh'n  Lite,
           Inc. on the other

  6.5CE**  Ground  Lease  dated  as of  July  15,  1996  by and  between
           MacArthur  Partners,  Ltd. on the one hand and Fresh'n Lite, Inc.
           on the other

  6.6CE**  Ground  Lease  Agreement  dated as of April  11,  1997 by and
           between Robert M. Farrell  Development,  Ltd. on the one hand and
           Fresh'n Lite, Inc. on the other

  6.8CE**  1997 Incentive Stock Option Plan

  6.9**    Franchise  Agreement  dated as of October 1, 1995 by and  between
           Fresh'n Lite, Inc. on the one hand and F'NL  Investments,  LLC on
           the other

  6.10CE** Lease with Option to Purchase dated as of October 15, 1993 by
           and between  Connor Patman and Steve and Ann M.  Raffaelli on the
           one hand and Fresh'n Lite, Inc. on the other

  6.11CE+  Sub-Lease  dated  as of  November  2,  1998  by  and  between
           Restaurant Teams International,  Inc. and the one hand and Zeke's
           Grill,  Inc. on the other 

  27.1+    Financial Data Schedule filed as an exhibit to the Form 10-KSB filed
           April 15, 1999

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


*    Previously filed as an exhibit to the Company's  Registration  Statement on
     Form 10-SB (File No.  001-13559)  filed with the  Securities  and  Exchange
     Commission on November 10, 1997.

**   Filed as a paper exhibit to the Company's Form 10-SB filed October 23, 1997
     and filed in electronic format as exhibits to Amendment No. 1 to Form 10-SB
     filed June 25, 1998 and incorporated herein by reference.

+    Filed  herewith

                  (b)      Reports on Form 8-K




                                                                              24


<PAGE>


                              SIGNATURES   

         The undersigned registrant hereby amends and restates its Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1998.

         In accordance with Section 13 or 15(d) of the Securities  Exchange Act,
the  registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, this 15th day of April, 1999.


                                          Registrant


                                          By: /s/ Stanley L. Swanson
                                              ----------------------------------
                                              Stanley L. Swanson
                                              Chairman of the Board of Directors
                                              and Chief Executive Officer


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

April 15, 1999

                                  By:  /s/ Henry Leonard
                                      ------------------------------------------
                                      Henry Leonard, Director
                                      President and Chief Operating Officer

April 15, 1999


                                  By:  /s/ Curtis A. Swanson
                                      ------------------------------------------
                                      Curtis A. Swanson, Director
                                      Vice President and Chief Financial Officer

April 15, 1999
                                  By:  /s/ Edward Dmytryk
                                       -----------------------------------------
                                       Edward Dmytryk, Director

April 15, 1999
                                  By:  /s/ Robert Lilly
                                       -----------------------------------------
                                       Robert Lilly, Director







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