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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                   FORM 10-KSB

/X/      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 3, 1999

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

                         COMMISSION FILE NUMBER 0-20845

                       BIG BUCK BREWERY & STEAKHOUSE, INC.
                 (Name of Small Business Issuer in Its Charter)


            MICHIGAN                                     38-3196031
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                       Identification No.)

               550 SOUTH WISCONSIN STREET, GAYLORD, MICHIGAN 49735
          (Address of Principal Executive Offices, including Zip Code)

                                 (517) 731-0401
                (Issuer's Telephone Number, including Area Code)

    SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE

      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:

                          COMMON STOCK ($.01 PAR VALUE)
                                (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 / /

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /

         The issuer's revenues for its most recent fiscal year were $15,561,753.

         The aggregate market value of the voting stock held by non-affiliates
of the issuer as of March 1, 1999 was approximately $8,242,820.

         The number of shares of the common stock of the issuer outstanding as
of March 1, 1999 was 5,285,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.


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                                         TABLE OF CONTENTS
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<S>               <C>                                                                                           <C>
PART I ..........................................................................................................  1

                     ITEM 1  DESCRIPTION OF BUSINESS ............................................................  1
                     ITEM 2  DESCRIPTION OF PROPERTY ............................................................  8
                     ITEM 3  LEGAL PROCEEDINGS .................................................................. 10
                     ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................................ 10

PART II ......................................................................................................... 11

                     ITEM 5  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS............................ 11
                     ITEM 6  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................... 12
                     ITEM 7  FINANCIAL STATEMENTS ............................................................... 18
                     ITEM 8  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                             ACCOUNTING AND FINANCIAL DISCLOSURE ................................................ 29

PART III ........................................................................................................ 30

                     ITEM 9  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                             COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT..................................  30
                     ITEM 10 EXECUTIVE COMPENSATION ............................................................  32
                     ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                             MANAGEMENT ......................................................................... 34
                     ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................................... 36
                     ITEM 13 EXHIBITS, LIST AND REPORTS ON FORM 8-K ............................................. 36

SIGNATURES ...................................................................................................... 39

INDEX TO EXHIBITS ............................................................................................... 40

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                                  PART I

ITEM 1 DESCRIPTION OF BUSINESS

         THE FOLLOWING DESCRIPTION OF BIG BUCK'S BUSINESS CONTAINS CERTAIN
FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND
"INTENDS," OR COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. POTENTIAL PURCHASERS OF BIG BUCK'S SECURITIES ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS WHICH
ARE QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONS AND RISKS DESCRIBED HEREIN.

OVERVIEW

         The business of Big Buck Brewery & Steakhouse, Inc. is to develop, 
own and operate microbrewery/restaurants under the name "Big Buck Brewery & 
Steakhouse=SM=." In May 1995, Big Buck opened its first unit in Gaylord, 
Michigan, adjoining I-75 approximately 200 miles north of Detroit. In March 
1997, Big Buck opened its second unit in Grand Rapids, Michigan, and in 
October 1997, Big Buck opened its third unit in Auburn Hills, Michigan, a 
suburb of Detroit. Big Buck plans to open a fourth unit in Grapevine, Texas, 
a suburb of Dallas. Scheduled to open in the summer of 1999, this unit will 
be operated by Buck & Bass, L.P. pursuant to a joint venture agreement 
between Big Buck and Bass Pro Outdoor World, L.P., the nation's premier 
retailer of outdoor sports equipment.

         Big Buck Brewery & Steakhouses offer a casual dining atmosphere 
featuring moderately priced steaks, ribs, hamburgers, chicken, fish, pasta 
and other food and a distinctive selection of beers which are microbrewed 
on-site. Each unit features a two-story stainless and copper microbrewery, 
contained behind glass walls, which serves as an integral part of the 
restaurant "theme." Big Buck features over ten beers ranging from a light 
golden ale to a dark full-bodied stout, designed to satisfy the tastes of a 
broad spectrum of customers.

         Big Buck also sells its microbrewed beer in its retail stores and
off-site through wholesale distributors in order to promote customer interest in
Big Buck Brewery & Steakhouses. A key element of Big Buck's strategy is to
capitalize on the growing interest of consumers in high quality, more flavorful
microbrewed beer. Big Buck believes it will generate customer loyalty to its
beers and its restaurant operations through customer identification with each
local unit.

         In December 1998, the State of Michigan approved Big Buck's small 
winemaker license applications for the Auburn Hills and Gaylord units. Big 
Buck intends to produce wines using its own equipment on each such site 
under the label Auburn Hill Winery.

         Big Buck was incorporated under the Michigan Business Corporation Act
in November 1993. Big Buck's executive office is located at 550 South Wisconsin
Street, Gaylord, Michigan 49735. Its telephone number is (517) 731-0401. Its
World Wide Web site address is www.bigbuck.com. Its Common Stock is quoted on
the Nasdaq SmallCap Market and trades under the ticker symbol "BBUC."

THE CRAFTBREWED AND SPECIALTY BEER MARKET

         Big Buck's brewing operations are in the small but growing craftbrewing
segment of the United States brewing industry, which includes microbreweries
such as Big Buck, contract brewers, regional specialty brewers and brewpubs (a
field into which Big Buck intends to expand). Craftbrewed beers are
distinguishable from other domestically produced beers by their flavor and
brewing styles. Consumer interest in higher quality, more flavorful beer has
resulted in significant growth in the craftbrewed beer market during the last
several years. According to industry sources, the United States craftbrewed beer
segment increased at an annual growth rate of approximately 5.2% while the 
national brewers experienced no meaningful growth during 1998.


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BUSINESS STRATEGY--EXPANSION PLANS

         Big Buck intends to develop and open units throughout the upper
Midwest, the Southeast and eventually across the United States, using its Auburn
Hills unit as a model. Development is currently underway for the fourth Big Buck
Brewery & Steakhouse in Grapevine, Texas, a suburb of Dallas. Scheduled to open
in the summer of 1999, this unit will be operated by Buck & Bass, L.P. pursuant
to a joint venture agreement between Big Buck and Bass Pro. During 1998, Big
Buck contributed approximately $891,000 to the limited partnership for
construction and equipment costs at the Grapevine unit. Based on its effective
89.9% interest in the joint venture (Big Buck holds an 89.1% interest in the
limited partnership and an 80% interest in the general partner which currently
owns 1% of the limited partnership), Big Buck may be required to contribute up
to an additional $4.5 million, upon ten business days' notice, to complete
construction of the Grapevine unit. Without additional financing, Big Buck will
be unable to complete construction of this unit.

         If such funds are not available when required by the joint venture, Big
Buck may be in material default under the joint venture agreement. In the event
of material default, Bass Pro would be entitled to purchase Big Buck's interest
in the joint venture at 40% of book value, thereby eliminating Big Buck's
interest in the Grapevine unit. Further, Bass Pro has the right to purchase up
to 15% of Big Buck's interest in the joint venture, at 100% of Big Buck's
original cost, within 24 months of the opening of the Grapevine unit; provided,
however, that Big Buck's interest in the joint venture may not be reduced below
51%.

         Big Buck is exploring the possibility of expanding its joint venture
agreement with Bass Pro to develop and open Big Buck Brewery & Steakhouses
adjacent to Bass Pro Outdoor World superstores in several other cities in the
Southeast, including, but not limited to, each of the following markets: Ft.
Lauderdale, Nashville and Charlotte. There can be no assurance that Big Buck
will enter into agreements to develop and operate additional units with Bass Pro
or any other joint venture partner. Big Buck must raise substantial proceeds to
complete construction of the Grapevine unit and to finance any expansion beyond
the Grapevine unit. See "Management's Discussion and Analysis or Plan of
Operation--Liquidity and Capital Resources."

         Big Buck believes that one of the primary causes for the popularity to
date of its Big Buck Brewery & Steakhouse concept is the development of customer
loyalty to its craftbrewed beers. Big Buck believes its patrons, who may order a
Big Buck beer with a meal or sample a Big Buck beer at the bar, have developed a
loyalty to one of the distinctive Big Buck beers for a variety of reasons
including (a) the opportunity to identify their favorite Big Buck beer with
their local unit, (b) the opportunity to sample any of the handcrafted beers
available at the units and to select a favorite beer, and (c) the quality of Big
Buck beer. Increased customer loyalty to Big Buck beers results in repeat
business at each unit, thereby increasing revenues from restaurant operations
and off-site retail sales.

         Sites for future units will be selected by management after
consideration of various strategic, regulatory, physical and demographic
attributes. Management believes that locations like that of the Gaylord unit,
adjacent to a major expressway; the Grand Rapids unit, located on a street with
an average daily vehicle count of approximately 52,000; and the Auburn Hills
unit, accessible to Detroit metro area residents, significantly increase
restaurant patronage. Management also reviews other demographic attributes of
potential communities into which it may expand. These attributes include traffic
counts, population, sales tax revenues, alcohol consumption and hotel capacity
and occupancy rates. In addition, management will consider the laws of each
state applicable to Big Buck before expanding into any new state. It is expected
that units located in metropolitan areas will be larger than those located
outside metropolitan areas and are expected to achieve higher revenues.

RESTAURANT OPERATIONS

         GENERAL. A Big Buck Brewery & Steakhouse offers craftbrewed beer 
brewed on-site along with a menu featuring steaks, ribs, hamburgers, chicken, 
fish, pasta and other food in a unique, architecturally spacious setting. 

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The units offer over ten different types of beers ranging from a light golden 
ale to a full-bodied stout. Big Buck attempts to create an exciting yet 
casual restaurant where patrons can have fun and feel comfortable.

         DESIGN AND LAYOUT. Big Buck Brewery & Steakhouses are built around the
microbrewery theme and feature large, open and visually stimulating dining
areas, highlighted by gleaming stainless steel and copper brewing
equipment. The Gaylord unit features a 4,000 square foot dining area and a 1,600
square foot bar area, with combined seating capacity of approximately 420. It is
decorated with a rustic wood-finished interior, mounted deer racks, 36-foot high
vaulted ceilings and warm lighting. The specially commissioned Amish hand-carved
wooden furniture and overhead genuine Tennessee whisky barrel lighting fixtures
add character to the building's decor. The layout is flexible, permitting tables
to be rearranged to accommodate customer demand. A wall of television sets,
including a ten-foot screen television set, adjacent to the bar area provides
customers the opportunity to watch sporting and other special events. The
friendly and attentive staff, on-site brewing, summertime outdoor seating and
live music are designed to create an appealing atmosphere for lunch, dinner and
bar customers. The Grand Rapids unit's seating capacity is approximately 250 in
the restaurant and bar combined. The brewing and fermenting tanks of this unit
front directly on 28th Street, a street with an average daily vehicle count of
approximately 52,000. The Auburn Hills unit, which houses a 15-barrel brewing
system, encompasses approximately 26,700 square feet including brewery, bar and
restaurant, with a total seating capacity of approximately 650. This unit is
accessible to Detroit metro area residents. Each unit's interior follows the
same motif with a warm, cozy atmosphere utilizing soft lighting and Amish
furniture. The menu and beer styles are the same at each unit. Big Buck intends
to use the Auburn Hills unit as a model for future units.

         MENU AND PRICING. The menu at each unit consists of appetizers, soups,
meal-sized salads, and entrees, including steaks, ribs, hamburgers, chicken,
fish, pastas as well as a variety of desserts. Management analyzes menu items
for popularity, profitability and ease of preparation. The menu items are
selected to complement Big Buck's craftbrewed beers. The menu is designed to
offer a broad range of prices that convey value to the customer. Entrees range
in price from $4.95 to $28.00 with an average entree price of $12.00. During
1998, on-site sales of beer, including gift shop sales, accounted for 20.5%,
18.4% and 22.7% of the Gaylord, Grand Rapids and Auburn Hills unit sales,
respectively.

         CUSTOMERS. Big Buck believes its restaurants appeal to a wide range of
customers and will draw clientele from throughout the region in which they are
located.

BREWING OPERATIONS

         GENERAL. The brewery at the Gaylord unit presently has the capacity to
brew 10,000 barrels of beer per year, and is designed to produce 20,000 barrels
per year with the installation of additional fermentation tanks. The Grand
Rapids unit features a 7.5-barrel brewing system which can produce 7,000 barrels
per year with the installation of additional fermentation tanks. The Auburn
Hills unit features a 15-barrel brewing system which can produce 15,000 barrels
per year with the installation of additional fermentation tanks. Future units
will be built with initial brewing capacities of 2,000 to 5,000 barrels of beer
per year and are expected to have production capacities of 7,000 to 15,000
barrels per year with the installation of additional fermentation tanks. Big
Buck intends to purchase and install additional fermentation tanks as demand for
its beers requires increased production. Each brewery will be custom-designed to
be integrated into the restaurant layout in the most efficient and aesthetically
pleasing manner possible.

         OFF-SITE DISTRIBUTION. Big Buck sells its microbrewed beer off-site
through wholesale distributors in order to promote customer interest in the Big
Buck Brewery & Steakhouse concept. Big Buck transports its beer from the Gaylord
unit to each distributor for redistribution to retailers which include bars,
pubs, restaurants and supermarkets. The beer is available by the keg to be
served on draft at restaurants, bars and pubs and is available in bottles for
retail sales. Presently, off-site sales of Big Buck's beer are generally limited
to within 200 miles of



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the Gaylord unit. Off-site sales of beer accounted for approximately 0.9% of
revenues during 1998. The Gaylord unit presently has the capacity to meet
additional demand for off-site sales of beer.

         PROMOTION OF PRODUCTS WITHIN LOCAL MARKETS. Big Buck markets its beer
locally with the use of point of sale materials as well as several forms of
other promotional materials including coasters, tap handles and color brochures.
These items are, for the most part, used by retailers to promote Big Buck beers
within their establishment. In addition, Big Buck offers guided tours of its
units to further increase consumer awareness of Big Buck beers. Big Buck
believes that its educational and promotional methods are more effective in
communicating with consumers than broad-based, less flexible national beer
advertising campaigns.

         BREWING EQUIPMENT. Big Buck's brewing equipment was designed and built
by J.V. Northwest, Inc. of Wilsonville, Oregon, and is automated wherever
possible. The Gaylord unit's system begins with a 47-foot tall, stainless steel
grain silo fabricated to replicate a giant beer bottle. The silo is painted
"beer bottle brown" and the label was hand painted by a commissioned artist. The
Gaylord unit houses a 20-barrel mash tun; lauter tun; a brew kettle; 50-barrel
hot liquor tank; 50-barrel cold liquor tank; six 40-barrel fermenters; three
80-barrel fermenters; two 40-barrel conditioning tanks and seven 10-barrel
bright beer serving tanks. Filtering is done through a diatomaceous earth
filtering system which removes yeast and other naturally occurring material
resulting in a clear final product. The brewery permits the production of a wide
range of beer styles which can be adapted to market demand for various beer
styles today and into the future. The Grand Rapids unit features a 7.5-barrel
brewing system with four 15-barrel fermenters and five 15-barrel conditioning
tanks which also serve as bright beer serving tanks. The Auburn Hills unit
features a 15-barrel brewing system with seven 30-barrel fermenters and twelve
15- barrel conditioning tanks which also serve as bright beer serving tanks. It
is contemplated that Big Buck will use similar equipment at all breweries built
in future units.

         BOTTLING, KEGGING AND PACKAGING. Big Buck uses a technologically
advanced bottling line to bottle its beer for off-site retail sales at its
Gaylord unit. The bottle filler utilizes a carbon dioxide environment during the
bottling process to extend shelf life. Kegs are filled by a keg rack system and
then stored pending shipment to wholesale distributors in a specially designed
cooler. Big Buck's kegs have the Big Buck Brewery & Steakhouse name and logo
stamped onto the top rail for easy identification and a handsome appearance. Big
Buck also sells its beer in a container called a "party pig," a plastic
pressurized unit holding 2.25 gallons (one case) of beer. The pressurization
allows the beer to be served from the customer's refrigerator, boat or golf
cart. Party pigs are sold through each unit's gift shop.

         QUALITY CONTROL. Quality control of each brewery is under the
supervision of Big Buck's brewmaster. As with the current units, each future
brewery will contain a laboratory to monitor and maintain quality assurance in
the brewing and packaging processes.

         INGREDIENTS AND RAW MATERIALS. Big Buck currently purchases its malted
barley from market sources on a competitive bid basis. Raw materials such as
hops are available from multiple sources at competitive prices. Big Buck also
uses competitive sources for its supply of packaging materials such as bottles,
labels, six pack carriers and shipping cases.

BREWING PROCESS

         Beer is made primarily from four natural ingredients: malted barley,
hops, yeast and water. Big Buck uses only the finest barley, primarily two row,
in its production. The universal spice of beer is hops. Hops, like the grapes
used in wine, are varietal. Brewers select hops based on specific varieties
grown in select areas around the world. Some hop varieties are selected for
their bittering qualities, while others are chosen for their ability to impart
distinctive aromas to the beer. Yeast is a uni-cellular organism whose
metabolism converts sugar into alcohol and carbon dioxide. Big Buck uses only
specially selected yeast. The entire brewing process from



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mashing through filtration typically is completed in 14 to 21 days, depending on
the formulation and style of the beer being brewed.

BEER VARIETIES

         Big Buck believes that its diverse and high quality beer varieties
encourage the trial of new beer and, over time, help to create more
knowledgeable and sophisticated beer drinkers. Big Buck's beers cover a full
range of flavors from very light, to medium, to very dark and heavy.

         BIG BUCK BEER-Registered Trademark-: Big Buck's flagship brand and 
its top seller is a standard American-style beer with a small amount of corn 
added to the grist to give the brew a smooth, easy-drinking character that 
most American consumers have come to expect in a beer. Big Buck Beer has a 
rich golden color and a light malt character balanced with a mild dose of 
hops.

         BUCK NAKED: This American-style, low-calorie or "light" beer is
formulated to appeal to those who prefer a low-calorie brew. Buck Naked is an
all malt brew with a touch of imported Czechoslovakian Saaz hops.

         WOLVERINE WHEAT: This American wheat beer is made from a blend of
malted barley and malted wheat. The wheat imparts a unique, refreshing flavor to
the beer. Wolverine Wheat is straw in color, lightly hopped, crisp and
refreshing.

         RASPBERRY WHEAT: A version of Wolverine Wheat, this beer is flavored
with pure fruit to impart a subtle raspberry nose, a delicate fruit flavor and a
slight pink hue.

         ANTLER ALE: This amber ale, formulated as a transitional flavor between
lighter and darker beers, has a light amber color while maintaining a mild,
clean flavor and a low hopping rate.

         REDBIRD ALE: Similar to a traditional pale ale, Redbird Ale has a
reddish copper appearance, medium body and is well hopped. This is a heartier
beer with a medium body and a pleasant hop bitterness.

         DOC'S ESB: This full-bodied bock beer gets its distinctive character
from a blend of four different grains and three hop varieties. Doc's ESB has a
deep reddish brown color and is generously hopped to balance the full body and
complex character.

         BLACK RIVER STOUT: This cream stout is slightly sweet with a moderate
hop bitterness. The rich flavor and black color of this brew comes from six
different grains. Deep flavors of coffee and caramel are present in this brew.

         BLACK'N BERRY: A Black'n Tan is generally a stout mixed with pale or
amber ale. Black'n Berry is a new twist, Black River Stout and Raspberry Wheat.
The delicate fruit qualities are accented by the heavy stout flavor.

         CHERRY SHANDY: Cherry Shandy is a uniquely blended mixture of our
homemade black cherry soda and Buck Naked. This is a light, refreshing,
low-alcohol libation.

         Big Buck also brews various seasonal beers, including Winter Warmer,
Alpenfest, Oktoberfest and 10 pt. Porter. Such beers are offered for limited
periods of time throughout the year.

SALES AND MARKETING

         Big Buck's primary sources of advertising include television, outdoor
billboards, radio and newspapers, which generally cover the local markets of
each unit, with the exception of billboards which cover more distant

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geographical areas of Michigan. In addition to these sources, Big Buck uses
local travel publications, including golf and vacation planners which are
distributed free of charge, as well as inquiries via local travel information
centers and tourism bureaus. Big Buck also distributes four-color brochures
promoting its units to major corporations and various travel welcome centers
throughout Michigan as well as local hotels and resorts. During 1998, Big Buck
incurred approximately $556,000 in advertising expenses.

         Big Buck strives to provide its customers with a dining experience that
will encourage repeat business and promote "word-of-mouth" advertising. To
supplement its service-oriented marketing efforts, Big Buck sells merchandise
including hats, t-shirts, sweatshirts and other items bearing the Big Buck
Brewery & Steakhouse name and logo.

COMPETITION

         The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness and nutritional value) and
location. New restaurants have a high failure rate. The restaurant industry is
also generally affected by changes in consumer preferences, national, regional
and local economic conditions, and demographic trends. The performance of
individual restaurants may also be affected by factors such as traffic patterns,
demographic considerations, an the type, number and location of competing
restaurants. In addition, factors such as inflation, increased food, labor and
employee benefit costs, and the lack of availability of experienced management
and hourly employees may also adversely affect the restaurant industry in
general and Big Buck's units in particular. Restaurant operating costs are
further affected by increases in the minimum hourly wage, unemployment tax rates
and similar matters over which Big Buck has no control. There are numerous
well-established competitors, including national, regional and local restaurant
chains, possessing substantially greater financial, marketing, personnel and
other resources than Big Buck. Big Buck also competes with a large variety of
locally owned restaurants, diners, and other establishments that offer
moderately priced food to the public and with other microbrewery/restaurants in
a highly competitive and developing microbrewery and brewpub restaurant market.

         The domestic beer market is highly competitive due to the enormous
advertising and marketing expenditures by national and major regional brewers;
the continuing proliferation of microbreweries, regional craft breweries,
brewpubs, and other small craftbrewers; the introduction of fuller-flavored
products by certain major national brewers; and a general surplus of domestic
brewing capacity, which facilitates existing contract brewer expansion and the
entry of new contract brewers. Although domestic demand for craftbrewed beers
has increased dramatically over the past decade, there can be no assurance that
this demand will continue. Big Buck anticipates intensifying competition in the
craftbrewed and fuller-flavored beer markets.

GOVERNMENT REGULATION

         BEER AND LIQUOR REGULATION. A significant percentage of Big Buck's
revenue is derived from beer sales. On-site sales of beer, including gift shop
sales, accounted for 20.5% of revenues and off-site sales of beer accounted for
an additional 0.9% of revenues during 1998. Big Buck must comply with federal
licensing requirements imposed by the Bureau of Alcohol, Tobacco and Firearms of
the United States Department of Treasury, as well as the licensing requirements
of states and municipalities where its units are or will be located. Failure to
comply with federal, state or local regulations could cause Big Buck's licenses
to be revoked and force it to cease brewing and/or selling its beer. Typically,
licenses must be renewed annually and may be revoked or suspended for cause at
any time. Management believes Big Buck is operating in substantial compliance
with applicable laws and regulations governing its operations.

         RESTAURANT REGULATION. The restaurant industry is subject to numerous
federal, state and local government regulations, including those relating to the
preparation and sale of food and to building and zoning requirements. Big Buck
is subject to regulation by air and water pollution control divisions of the
Environmental



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Protection Agency of the United States and by certain states and municipalities
in which its units are or will be located. Big Buck is also subject to laws
governing it relationship with employees, including minimum wage requirements,
overtime, working and safety conditions and citizenship requirements. Restaurant
operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar matters, such as any government
mandated health insurance, over which Big Buck has no control. Management
believes Big Buck is operating in substantial compliance with applicable laws
and regulations governing its operations.

         Big Buck is subject to "dram-shop" laws in Michigan and will be subject
to such statutes in other states into which it expands. These laws generally
provide someone injured by an intoxicated person the right to recover damages
from the establishment which wrongfully served alcoholic beverages to such
person. Big Buck carries liquor liability coverage as part of its existing
comprehensive general liability insurance.

         The federal government imposes an excise tax of $18.00 on each barrel
of beer produced for domestic consumption in the United States. However, each
brewer with production under 2,000,000 barrels per year is granted a small
brewer's excise tax credit in the amount of $11.00 per barrel on its first
60,000 barrels produced annually. To the extent Big Buck's production increases
to amounts over 60,000 barrels per year, there will be an increase in the
average federal excise tax rate of Big Buck. Big Buck is not aware of any plans
by the federal government to reduce or eliminate the small brewer's credit.

         Michigan imposes an excise tax of $6.30 per barrel on each barrel of
beer sold in Michigan. However, each brewer which is a "microbrewery" under
Michigan law (presently with production of not more than 30,000 barrels per
year) is granted a microbrewer's excise tax credit in the amount of $2.00 per
barrel. To the extent Big Buck's production increases to amounts over 30,000
barrels per year, there will be an increase in the average Michigan excise tax
rate of Big Buck.

         Big Buck is licensed under Michigan law as a "microbrewery." A
microbrewery in Michigan is limited to the production of not more than 30,000
barrels of beer per year by all breweries owned or controlled by the same
entity, whether within or outside Michigan. Without a change in current law, Big
Buck will limit its sales of beer off-site so as to reserve its brewing capacity
for sales of beer on-site which provides Big Buck higher margins but do not
reach the same customer base. Based on production at its units during 1998, Big
Buck believes it could operate up to approximately ten units at historical
production levels without exceeding the 30,000 barrel production ceiling.

EMPLOYEES

         At January 3, 1999, Big Buck employed 443 persons at its units,
including 136 full-time employees. Of Big Buck's total number of employees, 12
served in executive and corporate administrative capacities, 24 served as
restaurant management personnel, and the remainder were hourly personnel. No
employee is covered by a collective bargaining agreement and Big Buck has never
experienced an organized work stoppage, strike or labor dispute. Big Buck
considers relations with its employees to be satisfactory.

TRADEMARKS AND SERVICE MARKS

         Big Buck claims trademark and service mark rights to, and ownership in,
a number of marks including, but not limited to, BIG BUCK BREWERY & STEAKHOUSE
and BIG BUCK BEER. Big Buck's service mark for BIG BUCK BREWERY & STEAKHOUSE
expires in September 2007 and its trademark for BIG BUCK BEER expires in March
2007. There can be no assurance that Big Buck's marks will be enforceable
against prior users in the areas where Big Buck conducts, or will conduct, its
operations. Big Buck regards its marks as having substantial value and as being
an important factor in the marketing of its microbrewery/restaurants and beer.
Big Buck's policy is to pursue registration of its marks whenever possible and
to oppose vigorously any infringement of its marks.

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ITEM 2   DESCRIPTION OF PROPERTY

         Big Buck owns the Gaylord unit, including the real property on which it
is located. See "Description of Business--Restaurant Operations" for a
description of the Gaylord unit. Big Buck currently owes NBD Bank approximately
$1.9 million and Crestmark Bank approximately $1.4 million. A first priority
lien in favor of NBD and a second priority lien in favor of Crestmark on
substantially all of Big Buck's assets, including the Gaylord unit, secure this
indebtedness.

         Big Buck purchased the Grand Rapids site in December 1996. The site
included an existing structure of approximately 8,200 square feet and is located
on 28th Street in Grand Rapids. Seating capacity is approximately 250 for
restaurant and bar combined. The Grand Rapids unit opened in March 1997.

         In April 1997, Big Buck sold the Grand Rapids site, including all
improvements thereto, to an unrelated third party, Eyde Brothers Development
Co., pursuant to a real estate purchase and leaseback agreement for $1.4
million. Pursuant to a separate lease agreement, Big Buck leases the Grand
Rapids site at a minimum annual base rent of $140,000 and a maximum annual base
rent of $192,500 over a ten-year term. The lease may be extended at the option
of Big Buck for two additional five-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent in the amount of 5%
on gross sales at the site in excess of $2.9 million per year. In the event that
such annual gross sales do not exceed $2.9 million for any two consecutive years
during the lease term, Big Buck will be obligated to repurchase the Grand Rapids
site for $1.4 million, plus $70,000 for each lease year on a pro rata basis.
Annual gross sales for the period from April 11, 1997 through April 10, 1998 did
not exceed $2.9 million. In the event that annual gross sales for the period
from April 11, 1998 through April 10, 1999 do not exceed $2.9 million, Big Buck
will be obligated to repurchase the Grand Rapids site for $1,540,000. Big Buck
has the option to purchase the Grand Rapids site from the lessor after the
seventh full lease year for $1.4 million, plus $70,000 for each lease year on a
pro rata basis. Should a repurchase be required, Big Buck believes that it would
be able to obtain mortgage financing sufficient to pay the required purchase
price. There can be no assurance that such mortgage financing, in the event
repurchase were required, would be available on terms acceptable to Big Buck or
at all. Big Buck pays average effective annual base rent of $16.67 per square
foot at the Grand Rapids unit.

         Big Buck purchased the Auburn Hills site in August 1996. The site is
just off of Interstate 75 at exit 79. The unit constructed on this site
encompasses approximately 26,700 square feet including brewery, bar and
restaurant. Seating capacity is approximately 650 for the restaurant and bar
combined. The Auburn Hills unit opened in October 1997.

         In August 1997, Big Buck entered into a real estate purchase and
leaseback agreement providing for the sale of the Auburn Hills site to an
unrelated third party, Michael G. Eyde, for $4.0 million. In connection with
this transaction, Big Buck granted a five-year stock option, exercisable at
$5.00 per share, for 50,000 shares of its Common Stock to Mr. Eyde. Big Buck
leases the Auburn Hills site pursuant to a separate lease agreement which
provides for a minimum annual base rent of $400,000, and a maximum annual base
rent of $550,000. The lease has a 25-year term and Big Buck is able to extend
such term for two additional ten-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent of 5.25% of gross
sales at the site in excess of $8.0 million per year. In the event that such
annual gross sales do not exceed $8.0 million for any two consecutive years
during the lease term, Big Buck will be obligated to repurchase the Auburn Hills
site for $4.0 million, plus $200,000 for each lease year on a pro rata basis.
Big Buck was required to pay Mr. Eyde an annual percentage rent of $46,000 based
upon annual gross sales for the period from October 1, 1997 through September
30, 1998. The lessor has the ability to require that Big Buck issue Common Stock
(valued at $5.00 per share) in payment of such repurchase price. Big Buck has
the option to purchase the Auburn Hills site from the lessor after the seventh
full lease year for $4.0 million, plus $200,00 for each lease year on a pro rata
basis. Independent of annual gross sales, the lessor has the option to require
Big Buck to purchase the Auburn Hills site before the third 



                                       8
<PAGE>

full lease year at the same price. Big Buck pays average effective annual base
rent of $15.00 per square foot at the Auburn Hills unit.

         The Grand Rapids and Auburn Hills lessors may terminate in the event 
of a default which is not cured within the applicable grace period. A default 
is defined as (a) Big Buck's failure to make a rental payment within 30 days 
after receipt of written notice that a payment is past due or (b) Big Buck's 
failure to perform its obligations under the lease (other than rent payments) 
within 30 days after written notice of a curable violation; provided, 
however, that if such default cannot be cured within the 30-day period, a 
default will be deemed to have occurred only if Big Buck has failed to 
commence a cure within such 30-day period.

         Annual percentage rent is required whether the Grand Rapids and Auburn
Hills units are profitable or not. In the event that Big Buck is required to pay
annual percentage rent, the funds available to Big Buck for working capital and
development plans will be reduced. In the event that annual percentage rent is
not required over two consecutive years, Big Buck may be forced to repurchase
such sites at a premium over their respective sale prices. There can be no
assurance that Big Buck will have sufficient funds to repurchase the Grand
Rapids site or the Auburn Hills site. In the event of a default and termination
of either lease, Big Buck would be unable to continue to operate the related
unit, which would have a material adverse impact on Big Buck's business,
operating results and financial condition.

         Big Buck plans to operate the Grapevine unit pursuant to a joint
venture agreement with Bass Pro. The Grapevine unit is currently under
construction just off Highway 121, the major artery between downtown Dallas and
the Dallas/Fort Worth airport. Plans call for the Grapevine site to house a
15-barrel brewing system and to encompass approximately 22,500 square feet
including brewery, bar and restaurant, with a total seating capacity of
approximately 500. During 1998, Big Buck contributed approximately $891,000 to
the limited partnership for construction and equipment costs at the Grapevine
unit. Big Buck may be required to contribute up to an additional $4.5 million,
upon ten business days' notice, to complete construction of the Grapevine unit.
Without additional financing, Big Buck will be unable to complete construction
of this unit. If such funds are not available when required by the joint
venture, Big Buck may be in material default under the joint venture agreement.
In the even of material default, Bass Pro would be entitled to purchase Big
Buck's interest in the joint venture at 40% of book value, thereby eliminating
Big Buck's interest in the Grapevine unit. Further, Bass Pro has the right to
purchase up to 15% of Big Buck's interest in the joint venture, at 100% of Big
Buck's original cost, within 24 months of the opening of the Grapevine unit;
provided, however, that Big Buck's interest in the joint venture may not be
reduced below 51%.

         Pursuant to a separate commercial sublease agreement, the limited
partnership created by the joint venture leases the Grapevine site from Bass Pro
over a 15-year term. The lease may be extended at the option of Bass Pro for
seven additional five-year terms. The sublessee is obligated to pay an annual
percentage rent in the amount of 5.5% on gross sales less than $11.0 million per
year and 6.5% on gross sales in excess of $11.0 million per year (with a minimum
annual base rent of $385,000). Bas Pro may terminate in the event of a default
which is not cured within the applicable grace period. A default is defined to
include, but is not limited to, (a) the sublessee's failure to open the unit for
business on the same date as the sublessor's Outdoor World superstore is open
for business, (b) the sublessee's failure to remain open during all business
days, (c) the sublessee's failure to maintain on duty a fully trained service
staff, (d) the sublessee's failure to provide high quality food of the type
provided at the Gaylord unit, (e) the sublessee's failure to achieve gross sales
in the first full calendar year immediately following the opening and for each
calendar year thereafter of $7.0 million, (f) the sublessee encumbering in any
manner any interest in the subleased premises, or (g) the sublessee's failure to
conduct full and complete customer surveys no less frequently than each calendar
quarter.

         The minimum annual base rent is required whether the Grapevine unit is
profitable or not. In the event that the sublessee is required to pay in excess
of the minimum annual base rent, the funds available to Big Buck for working
capital and development plans will be reduced. In the event of a default and
termination of the joint 



                                       9
<PAGE>

venture agreement, Big Buck's interest in the Grapevine unit would be
eliminated. This would have a material adverse impact on Big Buck's business,
operating results an financial condition.

         In the opinion of management, Big Buck's properties are adequately
covered by insurance.

ITEM 3   LEGAL PROCEEDINGS

         Big Buck is involved in routine legal actions in the ordinary course of
its business. Although the outcomes of any such legal actions cannot be
predicted, in the opinion of management there is no legal proceeding pending
against or involving Big Buck for which the outcome is likely to have a material
adverse effect upon the financial position or results of operations of Big Buck.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of Big Buck's
most recently completed fiscal year.

EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table provides information with respect to Big Buck's
executive officers as of March 1, 1999. Each executive officer has been
appointed to serve until his successor is duly appointed by the Board of
Directors or his earlier removal or resignation from office. See "Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act."

<TABLE>
<CAPTION>
                                                                                                                    
Name                                Age              Position With Big Buck                                         
----                                ---              ----------------------                                         
<S>                                <C>          <C>                                                                 
William F. Rolinski                 51               Chief Executive Officer, President and Chairman of the Board   
Gary J. Hewett                      36               Chief Operating Officer, Executive Vice President and Director 
Anthony P. Dombrowski               38               Chief Financial Officer and Treasurer                        
</TABLE>


                                       10
<PAGE>

                                 PART IIPART II

ITEM 5  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The Common Stock of Big Buck has been included in the Nasdaq SmallCap
Market under the symbol "BBUC" since the completion of the its initial public
offering in June 1996. The following table sets forth the approximate high and
low closing prices for Big Buck's Common Stock for the periods indicated as
reported by the Nasdaq SmallCap Market. Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.


<TABLE>
<CAPTION>
PERIOD                                                        High                      Low
------                                                        ----                      ---
<S>                                                        <C>                      <C> 
1997
    First Quarter.....................................        $ 3-1/8                   $ 1-3/4
    Second Quarter....................................        $ 4-1/2                   $ 1-7/8
    Third Quarter.....................................        $ 4-3/4                   $ 3-1/8
    Fourth Quarter....................................        $ 7-1/4                   $ 4-3/4
1998
    First Quarter.....................................        $ 5-7/8                   $ 2-1/8
    Second Quarter....................................        $ 5                       $ 3-1/4
    Third Quarter.....................................        $ 4-1/4                   $ 3-1/2
    Fourth Quarter....................................        $ 4-13/16                 $ 3-7/8
</TABLE>


         As of March 1, 1999, Big Buck had 270 shareholders of record and
approximately 3,000 beneficial owners.

         Big Buck has never declared or paid cash dividends on its Common Stock
and does not intend to declare or pay cash dividends on its Common Stock in the
foreseeable future. Big Buck presently expects to retain its earnings to finance
the development and expansion of its business. The declaration or payment by Big
Buck of dividends, if any, on its Common Stock in the future is subject to the
discretion of the Board of Directors and will depend on Big Buck's earnings,
financial condition, capital requirements and other relevant factors. The
declaration or payment by Big Buck of dividends is also subject to the terms of
Big Buck's credit facility with NBD Bank and the terms of the loan agreement
governing Big Buck's promissory note with Crestmark Bank.

SALES OF UNREGISTERED SECURITIES

         On November 5, 1998, Big Buck issued a warrant, exercisable at $2.625
per share, for 50,000 shares of its Common Stock to Bass Pro. This issuance was
made in connection with the joint venture agreement between Big Buck and Bass
Pro pursuant to which the Grapevine unit will be operated. This warrant expires
on the third anniversary of the opening of the Grapevine unit. Such unit is
scheduled to open in the summer of 1999. On November 20, 1998, Big Buck issued a
five-year warrant, exercisable a $2.7625 per share, for 14,582 shares of its
Common Stock to Seger Financial, Inc. This issuance was made in connection with
the $1.4 million debt financing which Seger obtained for Big Buck from Crestmark
Bank.

         These issuances were made in reliance upon the exemption provided in
Section 4(2) of the Securities Act. The foregoing securities are restricted as
to sale or transfer, unless registered under the Securities Act, and
certificates representing such securities contain restrictive legends preventing
sale, transfer or other disposition unless registered under the Securities Act.
In addition, the recipients of such securities received, or had access to,
material information concerning Big Buck, including, but not limited to, Big
Buck's reports on Form 10-KSB, Form 10-QSB and Form 8-K, as filed with the SEC.
No underwriting commissions or discounts were paid with respect to the issuances
of such securities.

                                       11
<PAGE>

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

         THIS DISCUSSION AND ANALYSIS CONTAINS CERTAIN FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND "INTENDS," OR
COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. POTENTIAL PURCHASERS OF BIG BUCK'S SECURITIES ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS WHICH ARE QUALIFIED IN
THEIR ENTIRETY BY THE CAUTIONS AND RISKS DESCRIBED HEREIN.

OVERVIEW

         Big Buck develops, owns and operates microbrewery/restaurants under the
name "Big Buck Brewery & Steakhouse." Until May 1995 when Big Buck opened its
first unit in Gaylord, Michigan, it had no operations or revenues and its
activities were devoted solely to development. In March 1997, Big Buck opened
its second unit in Grand Rapids, Michigan, and in October 1997, Big Buck opened
its third unit in Auburn Hills, Michigan, a suburb of Detroit. Big Buck plans to
open its fourth unit in Grapevine, Texas, a suburb of Dallas. Scheduled to open
in the summer of 1999, this unit will be operated by Buck & Bass, L.P. pursuant
to a joint venture agreement between Big Buck and Bass Pro.

         Future revenues and profits will depend upon various factors, including
market acceptance of the Big Buck Brewery & Steakhouse concept and general
economic conditions. Big Buck's present sources of revenue are the Gaylord,
Grand Rapids and Auburn Hills units. There can be no assurances that Big Buck
will successfully implement its expansion plans, in which case Big Buck will
continue to depend on revenues from the existing units. Big Buck also faces all
of the risks, expenses and difficulties frequently encountered in connection
with the expansion and development of a new business. Furthermore, to the extent
that Big Buck's expansion strategy is successful, it must manage the transition
to multiple site, higher volume operations, control increased overhead expenses
and hire additional personnel.

         Big Buck uses a 52-/53-week fiscal year ending on the Sunday nearest
December 31. All references herein to "1998" and "1997" represent the 53-week
and 52-week fiscal years ended January 3, 1999 and December 28, 1997,
respectively.



                                       12
<PAGE>



RESULTS OF OPERATIONS

The operating results of Big Buck expressed as a percentage of total revenue
were as follows:


<TABLE>
<CAPTION>
                                                                                          JANUARY 3,   DECEMBER 28,
                                                                                             1999          1997
                                                                                         -----------  -------------
<S>                                                                                      <C>          <C>  
REVENUE
     Restaurant sales ................................................................         95.4%        93.5%
     Wholesale and retail sales ......................................................          4.6          6.5
                                                                                         -----------  -----------
          Total revenue ..............................................................        100.0        100.0
                                                                                         -----------  -----------
COSTS AND EXPENSES:
         Cost of sales ...............................................................         33.9         33.7
         Restaurant salaries and benefits ............................................         29.9         28.8
         Operating expenses ..........................................................         21.0         20.2
         Depreciation and amortization ...............................................          5.0          7.2
                                                                                         -----------  -----------
           Total costs and expenses ..................................................         89.8         89.9
                                                                                         -----------  -----------
RESTAURANT OPERATING INCOME ..........................................................         10.2         10.1

GENERAL AND ADMINISTRATIVE EXPENSES ..................................................         11.5         18.0
                                                                                         -----------  -----------
LOSS FROM OPERATIONS .................................................................         (1.3)        (7.9)
                                                                                         -----------  -----------
OTHER INCOME (EXPENSE):
     Interest expense ................................................................         (5.2)        (4.5)
     Interest income .................................................................           .1          1.1
     Other ...........................................................................          (.1)        (0.2)
                                                                                         -----------  -----------
       Other income (expense), net ...................................................         (5.2)        (3.6)
                                                                                         -----------  -----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPAL ......................         (6.5)       (11.5)

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPAL FOR PREOPENING COSTS .............         (2.2)      --
                                                                                         -----------  -----------
NET LOSS .............................................................................         (8.7)%      (11.5)%
                                                                                         -----------  -----------
                                                                                         -----------  -----------
</TABLE>


RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED JANUARY 3, 1999 AND 
DECEMBER 28, 1997

REVENUES

         Total revenues for Big Buck increased 71% to $15,561,753 in 1998 from
$9,096,580 in 1997. The increase is primarily attributable to the Grand Rapids
and Auburn Hills units being open for the entire year.

COSTS OF SALES

         Costs of sales which consist of food, merchandise and brewery supplies
increased 72% to $5,270,518 in 1998 compared to $3,065,523 in 1997. The increase
is primarily due to the increased sales. Costs of sales as a



                                       13
<PAGE>

percentage of revenues increased to 33.9% in 1998 from 33.7% in 1997. The
percentage increase is the result of higher produce cost and a higher percentage
of sales from food in 1998 than in 1997.

RESTAURANT SALARIES AND BENEFITS

         Restaurant salaries and benefits, which consist of restaurant
management and hourly employee wages and benefits, payroll taxes and workers'
compensation insurance, increased 78% to $4,659,949 in 1998 compared to
$2,619,194 in 1997. As a percentage of revenues, restaurant salaries and
benefits increased to 29.9% in 1998 compared to 28.8% in 1997 due primarily to
the implementation of the unit-level manager incentive bonus policy.

OPERATING EXPENSES

         Operating expenses, which include supplies, utilities, repairs and 
maintenance, advertising and occupancy costs increased 78% to $3,267,568 in 
1998 compared to $1,833,330 in 1997. Operating expenses as a percentage of 
revenues increased to 21.0% in 1998 as compared to 20.2% in 1997. This 
increase is due to increased maintenance and promotional expenses in 1998 
compared to 1997.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses increased 9% to $1,787,633 in 1998
compared to $1,640,047 in 1997. As a percentage of revenue, these expenses
decreased to 11.5% in 1998 as compared to 18.0% in 1997. The decreased expenses
as a percentage of revenues reflect increased total sales. As additional units
are opened by Big Buck, management believes that these expenses will continue to
grow at a slower rate than total revenues, resulting in a continued decrease in
these expenses as a percentage of revenues.

DEPRECIATION AND AMORTIZATION

         Depreciation and amortization expenses increased 19% to $780,054 in
1998 compared to $655,474 in 1997. As a percentage of revenues, these expenses
decreased to 5.0% in 1998 as compared to 7.2% in 1997. The percentage decrease
was the result of the Grand Rapids and Auburn Hills units being open for the
entire year.

INTEREST EXPENSES/INTEREST INCOME

         Interest expense increased 99% to $815,984 during 1998 compared to
$410,964 in 1997. This increase is due to the sale and leaseback of the Grand
Rapids and Auburn Hills sites, which are accounted for as long-term capital
lease obligations.

         Interest income decreased 85% to $15,266 during 1998 compared to
$102,343 in 1997. The decrease in interest income is due to the sale of
short-term investments during 1997 for use in the completion of the Auburn Hills
units and due to working capital needs.

LIQUIDITY AND CAPITAL RESOURCES

         Big Buck used $336,910 in cash for operating activities during 1998 and
generated $101,309 in cash from operating activities during 1997. Big Buck had a
working capital deficit of $1,978,841 at January 3, 1999 and working capital of
$255,000 at December 28, 1997. In order to fund operations in the short-term,
Big Buck intends to use cash provided by the operations of its three existing
units. Big Buck is also exploring the possible issuance of debt and equity
securities to increase its workin capital.

         Since inception, Big Buck's principal capital requirements have been
the funding of (a) its operations and promotion of the Big Buck Brewery &
Steakhouse format and (b) the construction of units and the acquisition of


                                       14
<PAGE>

furniture, fixtures and equipment for such units. Total capital expenditures for
the Gaylord, Grand Rapids and Auburn Hills units were approximately $5.8
million, $3.2 million and $9.7 million, respectively.

         During 1998, Big Buck contributed $891,000 to the limited partnership
which will own and operate the Grapevine unit. Big Buck may be required to
contribute up to an additional $4.5 million, upon ten business days' notice, to
complete construction of the Grapevine unit. Without additional financing, Big
Buck will be unable to complete construction of this unit. If such funds are not
available when required by the joint venture, Big Buck may be in material
default under the joint venture agreement. In the event of material default,
Bass Pro would be entitled to purchase Big Buck's interest in the joint venture
at 40% of book value, thereby eliminating Big Buck's interest in the Grapevine
unit. Further, Bass Pro has the right to purchase up to 15% of Big Buck's
interest in the joint venture, at 100% of Big Buck's original cost, within 24
months of the opening of the Grapevine unit; provided, however, that Big Buck's
interest in the joint venture may not be reduced below 51%. Big Buck expects
that it will continue to require significant capital resources to fund new unit
development and construction.

         Big Buck generated $1,759,432 in cash from financing activities during
1998. Such financing activities included short-term borrowing from Crestmark
Bank of $1,400,000 and collection of proceeds from a sale and leaseback
financing receivable of $749,650.

         The completion of the Grapevine unit and the development of any
additional units will require Big Buck to obtain additional financing. The
amount of financing required for new units depends on the definitive locations,
site conditions, construction costs and size and type of units to be built.
There can be no assurance that financing will be available on terms acceptable
or favorable to Big Buck, or at all. Without such financing, Big Buck's
development plans will be slower than planned or even unachievable.

SEASONALITY

         Big Buck's sales and earnings are expected to fluctuate based on
seasonal patterns. Big Buck anticipates that its highest earnings will occur in
the second and third calendar quarters due to the milder climate during those
quarters in Michigan. Big Buck believes, however, that future expansion into 
markets outside Michigan, if any, will mitigate the effect of seasonality on 
its business.

YEAR 2000 READINESS DISCLOSURE

         The term "Year 2000" is used to describe general problems that may
result from improper processing of dates and date-sensitive calculations by
computers or other machinery as the year 2000 is approached and reached. This
problem stems from the fact that many of the world's computer hardware and
software applications have historically used only the last two digits to refer
to a year. As a result, many of these computer programs do not or will not
properly recognize a year that begins with "20" instead of the familiar "19." If
not corrected, many computer applications could fail or create erroneous
results. The following information was prepared to comply with the guidelines
for Year 2000 disclosure that the SEC issued in an Interpretative Release,
effective August 4, 1998.

STATE OF READINESS

         To operate its business, Big Buck relies on many third party
information technology ("IT") systems, including its point of sale, table
seating and reservation management, inventory management, credit card
processing, payroll, accounts payable, fixed assets, banking and general ledger
systems. Big Buck does not maintain any proprietary IT systems and has not made
any modifications to any of the IT systems provided to it by its IT vendors. Big
Buck is in the process of requesting each of its hardware and software vendors
to complete a Year 2000 compliance questionnaire. Based on the results of such
questionnaires Big Buck will determine those IT systems that need to be upgraded
or replaced to function properly in the year 2000.

                                       15
<PAGE>

         Big Buck is also in the process of assessing its non-IT systems (i.e.
embedded technology such as microprocessors in kitchen equipment, brewery
equipment, elevators, etc.). Big Buck plans to complete its assessment by July
1, 1999 and will then determine the best approach for remedying any
non-compliant system.

         Big Buck also relies upon suppliers of raw materials and packaging for
beer, suppliers of food and retail products and other third party product and
service providers, over which it can assert little control. Big Buck is in the
process of contacting all critical suppliers and service providers to assess the
readiness of such parties and to determine the extent to which Big Buck may be
vulnerable to such parties' failure to resolve their own Year 2000 issues. This
effort is expected to be completed by July 1, 1999.

COSTS TO ADDRESS YEAR 2000 ISSUES

         Big Buck expenses costs associated with its Year 2000 compliance
efforts as the costs are incurred, but has not yet incurred any costs in
connection with its Year 2000 compliance efforts. Big Buck estimates that its
future cost of assessing and remedying Year 2000 issues will approximate
$40,000. Such estimate does not consider any additional costs incurred due to
the failure of any third party vendor, supplier or service provider to achieve
Year 2000 compliance.

RISKS OF YEAR 2000 ISSUES                                                      

         Big Buck recognizes that Year 2000 issues constitute a material 
known uncertainty. Big Buck also recognizes the importance of ensuring that 
Year 2000 issues will not adversely affect its operations. Big Buck believes 
that the processes described above will be effective to manage the risks 
associated with the problem. However, there can be no assurance that the 
processes can be completed on the timetable described above or that 
remediation will be fully effective. The failure to identify and remediate 
Year 2000 issues, or the failure of key vendors, suppliers and service 
providers or other critical third parties who do business with Big Buck to 
timely remediate their Year 2000 issues could cause system failures or 
errors, business interruptions and, in a worst case scenario, the inability 
to engage in normal business practices for an unknown length of time. Big 
Buck's business, operating results, financial condition and cash flows could 
be materially adversely affected. At this time, however, Big Buck does not 
possess information necessary to estimate the overall potential financial 
impact of Year 2000 compliance issues. Specific risks Big Buck faces with 
regard to Year 2000 issues include the following:

         1. Disruption of Internal Computer Systems. If our internal computer
systems should fail, it could disrupt our accounting, restaurant management and
other systems. We believe that the failure of our internal computer systems is
unlikely. However, we expect that minor Year 2000 compliance issues will
continue to be identified through our discussions with our hardware and software
vendors. We intend to address these compliance issues no later than the second
calendar quarter of 1999.

         2. Disruption of Supply Materials. The inability of our suppliers and
service providers to be Year 2000 ready could result in delays in product
delivery, disruption in the distribution channels and disruption in services
required to operate. We are in the process of surveying our suppliers and
service providers with regard to their Year 2000 readiness. We are hopeful of
receiving adequate responses from critical suppliers and service providers and
many non-critical suppliers and service providers by the second quarter of 1999.
Where ultimate survey results show that the need arises, we will arrange for
back-up suppliers and service providers before the change-over date.

CONTINGENCY PLANS

         Big Buck recognizes the need for Year 2000 contingency plans in the 
event that remediation is not fully successful or that the remediation 
efforts of Big Buck's vendors, suppliers and service providers are not timely 
completed. Big Buck intends to address contingency planning during calendar 
1999. To the extent that Big 

                                       16
<PAGE>

Buck's vendors, suppliers, and service providers are unable to provide 
sufficient evidence of Year 2000 readiness by July 1, 1999, Big Buck will 
seek to arrange for their replacement.

                                       17
<PAGE>

ITEM 7 FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                           <C>
BIG BUCK BREWERY & STEAKHOUSE, INC.
Report of Independent Public Accountants..................................... 19
Financial Statements
         Balance Sheets...................................................... 20
         Statements of Operations............................................ 21
         Statements of Shareholders' Equity.................................. 22
         Statements of Cash Flows............................................ 23
         Notes to Financial Statements....................................... 24
</TABLE>

                                       18
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Big Buck Brewery & Steakhouse, Inc.:

         We have audited the accompanying balance sheets of Big Buck Brewery &
Steakhouse, Inc. (a Michigan corporation) as of January 3, 1999 and December 28,
1997, and the related statements of operations, shareholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of Big Buck's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Big Buck Brewery &
Steakhouse, Inc. as of January 3, 1999 and December 28, 1997, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

         As explained in Note 1 to the financial statements, effective December
29, 1997 the Company changed its method of accounting for preopening costs.

                                                /s/ ARTHUR ANDERSEN LLP


Minneapolis, Minnesota,
February 19, 1999



                                       19
<PAGE>



                                        BIG BUCK BREWERY & STEAKHOUSE, INC.

                                                   Balance Sheets


<TABLE>
<CAPTION>

                                                                        January 3,         December 28,
                                                                            1999               1997
                                                                    ----------------  -----------------
<S>                                                                 <C>                <C>         
                      ASSETS
CURRENT ASSETS:
   Cash                                                             $    500,236       $    354,015
   Lease receivable (Note 2)                                                --              749,650
   Accounts receivable                                                   216,147            170,460
   Inventories                                                           308,286            289,805
   Preopening expenses, net                                                 --              348,581
   Prepaids and other                                                    274,819            171,766
                                                                    ------------       ------------
        Total current assets                                           1,299,488          2,084,277

PROPERTY AND EQUIPMENT, net                                           18,847,968         18,340,043

OTHER ASSETS, net                                                        672,530            383,301
                                                                    ------------       ------------
                                                                    $ 20,819,986       $ 20,807,621
                                                                    ------------       ------------
                                                                    ------------       ------------

                     LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable                                                 $    925,031       $    843,430
   Accrued expenses                                                      709,070            735,727
   Current maturities of long-term obligations                         1,644,228            249,824
                                                                    ------------       ------------
        Total current liabilities                                      3,278,329          1,828,981
LONG-TERM OBLIGATIONS, less current maturities                         7,030,329          7,274,558
                                                                    ------------       ------------
        Total liabilities                                             10,308,658          9,103,539
COMMITMENTS AND CONTINGENCIES (Notes 2 and 6)

SHAREHOLDERS' EQUITY:
   Common stock, $.01 par value, 20,000,000 shares authorized;
        5,285,000 shares issued and outstanding                           52,850             52,850
   Warrants                                                              153,650            153,650
   Additional paid-in capital                                         13,407,694         13,240,694
   Accumulated deficit                                                (3,102,866)        (1,743,112)
                                                                    ------------       ------------
        Total shareholders' equity                                    10,511,328         11,704,082
                                                                    ------------       ------------
                                                                    $ 20,819,986       $ 20,807,621
                                                                    ------------       ------------
                                                                    ------------       ------------
</TABLE>

      The accompanying notes are an integral part of these balance sheets.

                                       20
<PAGE>




                       BIG BUCK BREWERY & STEAKHOUSE, INC.
                            Statements of Operations






<TABLE>
<CAPTION>
                                                     For the Years Ended
                                               -------------------------------
                                                January 3,       December 28,
                                                   1999              1997
                                               -------------    --------------
<S>                                        <C>                <C>         
REVENUE:
   Restaurant sales                            $ 14,843,860       $  8,500,828
   Wholesale and retail sales                       717,893            595,752
                                               ------------       ------------
        Total revenue                            15,561,753          9,096,580
                                               ------------       ------------
COSTS AND EXPENSES:
   Cost of sales                                  5,270,518          3,065,523
   Restaurant salaries and benefits               4,659,949          2,526,586
   Operating expenses                             3,267,568          1,925,938
   Depreciation and amortization                    780,054            655,474
                                               ------------       ------------
        Total costs and expenses                 13,978,089          8,173,521
                                               ------------       ------------
RESTAURANT OPERATING INCOME                       1,583,664            923,059

GENERAL AND ADMINISTRATIVE EXPENSES               1,787,633          1,640,047
                                               ------------       ------------
LOSS FROM OPERATIONS                               (203,969)          (716,988)
                                               ------------       ------------
OTHER INCOME (EXPENSE):
   Interest expense                                (815,984)          (410,964)
   Interest income                                   15,266            102,343
   Other                                             (8,520)           (13,911)
                                               ------------       ------------
        Other income (expense), net                (809,238)          (322,532)
                                               ------------       ------------
LOSS BEFORE CUMULATIVE EFFECT
   OF CHANGE IN ACCOUNTING PRINCIPLE             (1,013,207)        (1,039,520)

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
   PRINCIPLE FOR PREOPENING COSTS                  (346,547)                --
                                               ------------       ------------
NET LOSS                                       $ (1,359,754)      $ (1,039,520)
                                               ------------       ------------
                                               ------------       ------------
BASIC AND DILUTED LOSS PER COMMON SHARE        $      (0.26)      $      (0.20)
                                               ------------       ------------
                                               ------------       ------------
BASIC AND DILUTED WEIGHTED AVERAGE
   SHARES OUTSTANDING                             5,285,000          5,277,033
                                               ------------       ------------
                                               ------------       ------------
</TABLE>


   The accompanying notes are an integral part of these financial statements.




                                       21
<PAGE>



                       BIG BUCK BREWERY & STEAKHOUSE, INC.

                       Statements of Shareholders' Equity
                               For the Years Ended


<TABLE>
<CAPTION>
                                                                                                                 
                                                     COMMON STOCK                        ADDITIONAL             
                                              -------------------------                   PAID-IN         ACCUMULATED
                                                  SHARES       AMOUNT      WARRANTS       CAPITAL           DEFICIT         TOTAL
                                              -------------   --------- --------------  -------------    ------------ --------------
<S>                                         <C>            <C>          <C>            <C>             <C>           <C>         
BALANCE, December 29, 1996                      5,275,000   $   52,750   $    153,650   $ 13,034,544   $   (703,592)   $ 12,537,352
    Issuance of common stock for services
        rendered...........................        10,000          100           --           56,150           --            56,250
    Issuance of stock options for services
        rendered...........................          --           --             --          150,000           --           150,000
    Net loss...............................          --           --             --             --       (1,039,520)     (1,039,520)

                                              -------------   --------- --------------  -------------    ------------ --------------
BALANCE, December 28, 1997.................     5,285,000       52,850        153,650     13,240,694     (1,743,112)     11,704,082
    Issuance of warrants for services
        rendered...........................          --           --             --          167,000           --           167,000
    Net loss...............................          --           --             --             --       (1,359,754)     (1,359,754)
                                              -------------   --------- --------------  -------------    ------------ --------------
BALANCE, January 3, 1999...................     5,285,000   $   52,850   $    153,650   $ 13,407,694   $ (3,102,866)   $ 10,511,328
                                              -------------   --------- --------------  -------------    ------------ --------------
                                              -------------   --------- --------------  -------------    ------------ --------------
</TABLE>






   The accompanying notes are an integral part of these financial statements.





                                       22
<PAGE>



                       BIG BUCK BREWERY & STEAKHOUSE, INC.

                            Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                                         For the Years Ended
                                                                                 -------------------------------------
                                                                                    January 3,         December 28,
                                                                                       1999                1997
                                                                                 -----------------  ------------------
<S>                                                                               <C>               <C>           
OPERATING ACTIVITIES:
   Net loss                                                                       $  (1,359,754)    $  (1,039,520)
   Adjustments to reconcile net loss to cash flows used in
     operating activitiesA
       Cumulative effect of change of accounting for preopening costs                   346,547                --
       Depreciation and amortization                                                    780,054           655,474
       Loss on sale of property                                                           8,520                --
       Change in operating assets and liabilities:
         Accounts receivable                                                            (45,687)         (130,460)
         Inventories                                                                    (18,481)         (134,020)
         Prepaids and other                                                            (103,053)         (410,206)
         Accounts payable                                                                81,601           556,613
         Accrued expenses                                                               (26,657)          603,428
                                                                                  -------------     -------------
            Net cash (used in) provided by operating activities                        (336,910)          101,309
                                                                                  -------------     -------------
INVESTING ACTIVITIES:
   Purchases of property and equipment, net                                          (1,276,301)       (9,084,325)
   Sale of short-term investments, net                                                       --         4,910,000
                                                                                  -------------     -------------
            Net cash used in investing activities                                    (1,276,301)       (4,174,325)
                                                                                  --------------    -------------
FINANCING ACTIVITIES:
   Borrowings under long-term debt and capital lease obligations                      2,149,650         4,649,351
   Payments on long-term debt and capital lease obligations                            (249,825)         (250,788)
   Payment of deferred financing costs                                                 (140,393)                -
                                                                                  -------------     -------------
            Net cash provided by financing activities                                 1,759,432         4,398,563
                                                                                  -------------     -------------
INCREASE IN CASH                                                                        146,221           325,547
CASH, beginning of year                                                                 354,015            28,468
                                                                                  -------------     -------------
CASH, end of year                                                                 $     500,236     $     354,015
                                                                                  -------------     -------------
                                                                                  -------------     -------------
SUPPLEMENTAL CASH FLOW INFORMATION:
   Interest paid                                                                  $     813,074     $     415,306
   Income taxes paid                                                                         --                --
NONCASH TRANSACTION:
   Issuance of common stock, stock options and warrants for property 
     and services                                                                       167,000           206,150
</TABLE>


  The accompanying notes are an integral part of these financial statements.



                                       23
<PAGE>



                       BIG BUCK BREWERY & STEAKHOUSE, INC.

                          Notes to Financial Statements

                      January 3, 1999 and December 28, 1997

1.       NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF BUSINESS

Big Buck Brewery & Steakhouse, Inc. (f/k/a Michigan Brewery, Inc.) develops,
owns and operates microbrewery/restaurants under the name "Big Buck Brewery &
Steakhouse." As of January 3, 1999, the Company owned and operated three units
in the state of Michigan. The first unit opened in Gaylord, Michigan, on May 26,
1995. The Gaylord unit is utilized for bottling and wholesale distribution of
its private label beer. Subsequent units opened on March 17, 1997 in Grand
Rapids, Michigan, and on October 1, 1997 in Auburn Hills, Michigan, a suburb of
Detroit. The Company plans to open a fourth unit in Grapevine, Texas, a suburb
of Dallas. Scheduled to open in the summer of 1999, this unit will be operated
by Buck & Bass, L.P. pursuant to a joint venture agreement between the Company
and Bass Pro Outdoor World, L.P.

The Company incurred a net loss of $1,359,754 in 1998 and $1,039,520 in 1997.
The losses for these periods are primarily attributable to costs and expenses
incurred in the completion of the development and start-up of operations at the
Grand Rapids and Auburn Hills units and the costs associated with the hiring of
management to position the Company for its future expansion plans. The Company
has a limited operating history, and future revenues and results from operations
will depend upon various factors including market acceptance of the Big Buck
Brewery & Steakhouse concept and general economic conditions. The Company's
ability to meet its expansion plan and achieve profitability depends on its
ability to obtain substantial financing for the development of additional units.
There are no assurances that such financing will be available on terms
acceptable or favorable to the Company.

FISCAL YEAR

The Company has adopted a 52-/53-week fiscal year ending on the Sunday nearest
December 31 of each year. All references herein to "1998" and "1997" represent
the 53-week and 52-week fiscal years ended January 3, 1999 and December 28,
1997, respectively.

INVENTORIES

Inventories consist primarily of restaurant food and beverage items, raw
materials used in the brewing process, finished goods, including beer in kegs
and beer held in fermentation prior to the filtration and packaging process, and
retail goods for resale. Inventories are stated at the lower of cost or market
as determined by the first-in, first out inventory method and consisted of the
following at:
<TABLE>
<CAPTION>

                                                                                January 3,        December 28,
                                                                                  1999                1997
                                                                            -------------------  ---------------
<S>                                                                           <C>                <C>       
Food.....................................................................     $  116,966         $   88,820
Brewery..................................................................         95,180             83,032
Retail goods.............................................................         96,140            117,953
                                                                              ----------         ----------
                                                                              $  308,286         $  289,805
                                                                              ----------         ----------
                                                                              ----------         ----------
</TABLE>

PREOPENING EXPENSES

During April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5 



                                       24
<PAGE>

requires companies to expense as incurred all start-up and preopening costs that
are not otherwise capitalizable as long-lived assets. The Company has elected
early implementation of the new accounting standard retroactive to the beginning
of 1998. The effect of this accounting change was to charge operations the
unamortized balance of preopening costs as of December 28, 1997 of $346,547.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Improvements are capitalized, while
repair and maintenance costs are charged to operations when incurred. Property
and equipment are depreciated using the straight-line method for financial
reporting purposes and accelerated methods for income tax reporting purposes
over their estimated useful lives of 5 to 40 years. In the event that facts and
circumstances indicate that the carrying amount of property may not be
recoverable, an evaluation would be performed using such factors as recent
operating results, projected cash flows and management's plans for future
operations.

Property and equipment consisted of the following at:

<TABLE>
<CAPTION>
                                                                  January 3,        December 28,         Estimated
                                                                    1999              1997              Useful Lives
                                                              ------------------ ------------------- ------------------
<S>                                                           <C>               <C>                 <C>         
Land and improvements......................................   $   5,057,914     $   4,713,545       20 years for
                                                                                                    improvements
Building and improvements..................................       9,261,213         9,245,345           40 years
Brewery equipment..........................................       2,011,015         2,000,276        12-30 years
Restaurant equipment.......................................       1,827,540         1,807,032           10 years
Furniture, fixtures and equipment..........................       1,575,592         1,479,898          5-7 years
Construction in progress...................................         772,235                --
                                                              -------------     -------------
                                                                 20,505,509        19,246,096
Accumulated depreciation...................................      (1,657,541)         (906,053)
                                                              -------------     -------------
                                                              $  18,847,968     $  18,340,043
                                                              -------------     -------------
                                                              -------------     -------------
</TABLE>


INCOME TAXES

Deferred tax assets and liabilities are computed based on the difference between
the financial reporting and tax bases of the Company's assets and liabilities
using currently enacted tax rates.

LOSS PER SHARE

The Company adopted in 1997, Statement of Financial Accounting Standards (SFAS)
No. 128 "Earnings per Share" which requires disclosure of basic earnings per
share (EPS) and diluted EPS, which replaces the existing primary EPS and fully
diluted EPS, as defined by APB No. 15. Basic EPS is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted EPS is computed similarly to EPS as previously reported
provided that, when applying the treasury stock method to common equivalent
shares, the Company must use its average share price for the period rather than
the more dilutive greater of the average share price or end-of-period share
price required by APB No. 15. Substantially all of the warrants and options
outstanding at January 3, 1999 had exercise prices in excess of the market price
of the Company's common stock.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and



                                       25
<PAGE>

disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Ultimate results could differ from those estimates.

2.       LONG-TERM OBLIGATIONS:

Long-term obligations consisted of the following as of:
<TABLE>
<CAPTION>
                                                                                    January 3,     December 28,
                                                                                       1999            1997
                                                                                    ----------      ----------

<S>                                                                                 <C>             <C>       
Capital lease obligations (see below)                                               $5,400,000      $5,400,000

Mortgage note payable to bank, monthly principal payments of $5,760 plus
   interest at 10.2%, remaining balance due on October 1, 2000, collateralized
   by all assets of the Company and guaranteed by certain shareholders               1,566,117       1,635,239

Note payable to bank, monthly payments of interest only at 10.0%,
   balance due on May 15, 1999, collateralized by all assets of the Company          1,400,000            --

Note payable to bank, monthly principal payments of $13,333 plus interest at
   10.2%, remaining balance due on October 1, 2000, collateralized by all
   assets of the Company and guaranteed by certain shareholders                        293,333         453,333

Other                                                                                   15,107          35,810
                                                                                    ----------      ----------
                Total                                                                8,674,557       7,524,382

Less-Current maturities                                                              1,644,228         249,824
                                                                                    ----------      ----------
                Long-term obligations                                               $7,030,329      $7,274,558
                                                                                    ----------      ----------
                                                                                    ----------      ----------
</TABLE>


In April 1997, the Company entered into a real estate purchase and leaseback
agreement with an unaffiliated third party for the land and property of its
Grand Rapids unit. The Company received proceeds of $1,400,000 and in return,
entered into a ten-year lease with a minimum annual base rent of $140,000 and a
maximum annual base rent of $192,500 and percentage rent provisions. In the
event gross sales, as defined, do not exceed $2,900,000 for any two consecutive
lease years, the Company is obligated to repurchase the land and property for
$1.4 million, plus $70,000 for each lease year on a pro rata basis. Annual gross
sales for the period from April 11, 1997 through April 10, 1998 did not exceed
$2.9 million. In the event that annual gross sales for the period from April 11,
1998 through April 10, 1999 do not exceed $2.9 million, Big Buck will be
obligated to repurchase the land and property for $1,540,000. Subsequent to the
seventh year, the Company has the option to purchase the land and property a a
predefined price.

In August 1997, the Company entered into a second real estate purchase and
leaseback agreement with an unaffiliated third party for the land of its Auburn
Hills unit. The Company received proceeds of $4,000,000 ($749,650 of which was
received during February 1998) and in return, entered into a 25-year lease with
a minimum annual base rent of $400,000 and percentage rent provisions. In the
event gross sales, as defined, do not exceed $8,000,000 for any two consecutive
lease years, the Company is obligate to repurchase the land for $4.0 million,
plus $200,000 for each lease year on a pro rata basis. Big Buck was required to
pay an annual percentage rent of $46,000 based upon annual gross sales for the
period from October 1, 1997 through September 30, 1998. Subsequent to the
seventh year, the Company has the option to purchase the land at a predefined
price. In lieu of cash payment, the Company may be required to issue shares of
common stock for all or part of the purchase price valued at $5.00 per share.

                                       26
<PAGE>

No gain or loss was recognized on the sale and leaseback transactions.
Management expects that if the Company was required to purchase the land at
these units that these leases could be renewed or replaced by mortgage or other
financing arrangements; however, there can be no assurance that such financing
would be available on acceptable terms or at all.

The note payable to bank agreement requires, among other things, that the
Company maintain certain financial ratios. As of January 3, 1999, the Company
was in compliance with or has received waivers related to all such covenants.

Maturities of long-term obligations as of January 3, 1999 were as follows:

<TABLE>
<CAPTION>
               <S>               <C>       
                  1999                  $1,644,228
                  2000                   1,630,329
                  2001                        --   
                  2002                        --   
                  2003                        --
                  Thereafter             5,400,000
                                        ----------
                                        $8,674,557
                                        ----------
                                        ----------
</TABLE>
              

3. INCOME TAXES:

Effective January 1, 1996, the Company converted from S Corporation status to a
C Corporation. As of January 3, 1999 and December 28, 1997, the Company's
deferred taxes consisted primarily of net operating loss carryforwards,
preopening costs not currently deductible and accelerated methods of
depreciation. The Company has recorded a full valuation allowance against the
net deferred tax asset due to the uncertainty of realizing the related benefits.
As of January 3, 1999, the Company had net operating loss carryforwards of
approximately $4.9 million which expire through the year 2013.

4. SHAREHOLDERS' EQUITY:

INITIAL PUBLIC OFFERING                                            

During June 1996, the Securities and Exchange Commission declared effective a
Registration Statement relating to the IPO of 2,550,000 units at an offering
price of $5.00 per unit, including 100,000 units from the exercise of the
underwriters' overallotment option. Each unit consisted of one share of common
stock and one Redeemable Class A Warrant. The Company received net proceeds of
$10,984,853, after the payment of $1,765,147 in related offering costs. The net
proceeds were used to repay the Nonconvertible Note (Note 2), and the private
placement debt and the remaining proceeds were used to fund operating losses and
to finance a portion of the construction on the Grand Rapids and Auburn Hills
units.

WARRANTS

In connection with its IPO, the Company issued a warrant to the underwriter to
purchase 245,000 shares of common stock at $6.00 per share. The warrant became
exercisable in June 1997 and is exercisable until June 2000.

In connection with the joint venture agreement (Notes 1 and 6), the Company
issued a warrant, exercisable at $2.625 per share, for 50,000 shares of its
common stock to Bass Pro. The Company also issued a five-year warrant to its
private placement agent, exercisable at $2.7625 per share, for 14,582 shares of
its common stock.

                                       27
<PAGE>



5. STOCK OPTION PLANS:

During January 1996, the Company adopted the 1996 Stock Option Plan (the Plan),
pursuant to which options to acquire an aggregate of 600,000 shares, as amended
in June 1997, of the Company's common stock may be granted. Under the Plan, the
board of directors may grant options to purchase shares of the Company's stock
to eligible employees, nonemployees and contractors at a price not less than
100% of the fair market value at the time of the grant for both incentive and
nonstatutory stock options. Option granted under the Plan vest annually over
four years from date of grant and are exercisable for ten years, except that the
term may not exceed five years for incentive stock options granted to persons
who own more than 10% of the Company's outstanding voting stock.

Also, during January 1996, the Company adopted the 1996 Director Stock Option
Plan (the Director's Plan) pursuant to which options to acquire an aggregate of
100,000 shares of the Company's common stock may be granted to outside
directors. Under the Director's Plan, 5,000 options were automatically granted
to each outside director upon the completion of the Company's IPO, and
thereafter 5,000 options are granted annually for each year of continued service
by the outside director. Each option is granted at fair market value on the date
of grant, vests one year after the date of grant and is exercisable for ten
years.

A summary of the status of the Company's two stock option plans at January 3,
1999 and December 28, 1997 and changes during the fiscal years then ended is
presented in the table and narrative below:


<TABLE>
<CAPTION>

                                              Year Ended                                 Year Ended
                                            January 3, 1999                           December 28, 1997
                               ------------------------------------------ ------------------------------------------
                                                     Weighted Average                           Weighted Average
                                     Shares           Exercise Price          Shares             Exercise Price
                                   ----------       ------------------       --------           -----------------
<S>                                   <C>              <C>                     <C>                 <C>    
Outstanding, beginning of
     Period..................         546,000          $    4.55               200,000             $  4.41
Granted......................         125,000               3.38               356,000                4.63
Exercised....................              --                 --                    --                  --
Forfeited....................              --                 --                10,000                2.00
Expired......................              --                 --                    --                  --
                                      -------          ---------             ---------             -------
Outstanding, end of
     Period..................         671,000          $    4.11               546,000             $  4.55
                                      -------          ---------             ---------             -------
                                      -------          ---------             ---------             -------
Exercisable, end of
     Period..................         280,500                                  137,750
                                      -------                                  -------
                                      -------                                  -------
Weighted average fair value
     Of options granted......         $  3.10                                  $  2.97
                                      -------                                  -------
                                      -------                                  -------
</TABLE>



The Company accounts for these plans under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net loss and loss per share would have been
increased to the following pro forma amounts:

<TABLE>
<CAPTION>

                                                                       1998                  1997
                                                                    ----------------      ---------------
<S>                             <C>                                 <C>                    <C>         
Net Loss                           As Reported                        $(1,359,754)           $(1,039,520)
                                   Pro Forma                           (1,710,122)            (1,370,375)
Diluted EPS                        As Reported                              (0.26)                 (0.20)
                                   Pro Forma                                (0.32)                 (0.26)
</TABLE>


                                       28
<PAGE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1998 and 1997, respectively: risk-free interest
rates of 5.20% and 6.01%; no expected dividend yields; expected lives of 7 and 5
years; and expected volatility of 123.47% and 85.06%.

6. COMMITMENTS AND CONTINGENCIES:

LEGAL PROCEEDINGS

The Company is involved in various legal actions rising in the ordinary course
of business. Although the outcomes of any such legal actions cannot be
predicted, in the opinion of management there is no legal proceeding pending
against or involving the Company for which the outcome is likely to have a
material adverse effect upon the financial position or results of operations of
the Company.

JOINT VENTURE

During 1998, the Company contributed $891,000 to the limited partnership which
will own and operate the Grapevine unit. The Company may be required to
contribute up to an additional $4.5 million, upon ten business day's notice, to
complete construction of the Grapevine unit. Without additional financing, the
Company will be unable to complete construction of this unit. If such funds are
not available when required by the joint venture, the Company may be in material
default under the joint venture agreement. In the event of material default,
Bass Pro would be entitled to purchase the Company's interest in the joint
venture at 40% of book value, thereby eliminating the Company's interest in the
Grapevine unit. Further, Bass Pro has the right to purchase up to 15% of the
Company's interest in the joint venture, at 100% of the Company's original cost,
within 24 months of the opening of the Grapevine unit; provided, however, that
the Company's interest in the joint venture may not be reduced below 51%. The
Company expects that it will continue to require significant capital resources
to fund new unit development and construction.

ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
         None.



                                       29
<PAGE>



                                PART III

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

         The following table provides information with respect to Big Buck's
directors and executive officers as of March 1, 1999. Each director serves for a
one-year term expiring in 1999 and until his successor has been duly elected and
qualified. Each executive officer has been appointed to serve until his
successor is duly appointed by the Board of Directors or his earlier removal or
resignation from office. There are no family relationships between any director
or executive officer.


<TABLE>
<CAPTION>

NAME                               AGE   PRINCIPAL OCCUPATION          POSITION WITH BIG BUCK        DIRECTOR SINCE
-----------------------------      ---   --------------------          ----------------------        --------------

<S>                              <C>   <C>                          <C>                              <C> 
William F. Rolinski.........       51    Chief Executive Officer,      Chief Executive Officer,           1993
                                         President and Chairman of     President and Chairman of
                                         the Board of Big Buck         the Board

Gary J. Hewett..............       36    Chief Operating Officer,      Chief Operating Officer,           1998
                                         Executive Vice President      Executive Vice President
                                         and Director of Big Buck      and Director

Anthony P. Dombrowski.......       38    Chief Financial Officer and   Chief Financial Officer            N/A
                                         Treasurer of Big Buck         and Treasurer

Blair A. Murphy, D.O........       45    Self-Employed Physician       Director                           1993

Patrick M. Sidders..........       58    Investment Banker             Director                           1998

Henry T. Siwecki............       54    Sole Owner and President of   Director                           1995
                                         Siwecki Construction, Inc.

Casimer I. Zaremba..........       78    Private Investor              Director                           1993

</TABLE>

         William F. Rolinski is a founder of Big Buck and has been the Chief
Executive Officer, President and Chairman of the Board since its formation in
1993. From 1987 to 1994, Mr. Rolinski was the founder, secretary and corporate
counsel of Ward Lake Energy, Inc., an independent producer of natural gas in
Michigan. While Mr. Rolinski was at Ward Lake, the company drilled and produced
over 500 natural gas wells with combined reserves of over $200 million.

         Gary J. Hewett became the Chief Operating Officer and Executive Vice 
President of Big Buck in April 1996 and a director of Big Buck in December 
1998. From June 1989 to March 1996, he served in various capacities at 
Hooters of America, Inc., a national restaurant chain, including Vice 
President of Franchise Operations where he was responsible for the 
operational support of 84 franchised restaurants and Vice President of 
Company Operations where he was responsible for the operation of 2 
company-owned restaurants. Mr. Hewett's responsibilities at Hooters included 
supervision of site selection, restaurant design and layout, training and new 
restaurant openings. From 1986 to 1989, Mr. Hewett was employed by the 
Marriott Corporation as a restaurant general manager.

         Anthony P. Dombrowski became the Chief Financial Officer and Treasurer
of Big Buck in May 1996. He acted as a consultant to Big Buck, in the capacity
of Chief Financial Officer, from January 1996 to May 1996. From February 1995 to
May 1996, Mr. Dombrowski operated his own financial and consulting business.
From 



                                       30
<PAGE>

May 1989 to January 1995, Mr. Dombrowski was the Chief Financial Officer of Ward
Lake. Mr. Dombrowski began his career with Price Waterhouse LLP in 1982.

         Blair A. Murphy, D.O. is a founder of Big Buck and has been a director
since its formation in 1993. Dr. Murphy has been a urological surgeon since 1990
and is presently a self-employed physician.

         Patrick M. Sidders became a director of Big Buck in December 1998. From
September 1995 to June 1998, Mr. Sidders served as Senior Vice President and
Director of Corporate Finance for R.J. Steichen & Company, the investment
banking firm which acted as the underwriter of Big Buck's initial public
offering. From March 1994 to September 1995, he worked as Executive Vice
President Administration and Chief Financial Officer of Casino Magic, Inc., a
casino management company. From June 1990 to March 1994, Mr. Sidders served as
Senior Vice President and Director of Corporate Finance for John G. Kinnard and
Company, Incorporation, an investment banking firm.

         Henry T. Siwecki has been a director since August 1995. For more than
the last five years, Mr. Siwecki has been the sole owner and president of
Siwecki Construction, Inc., a commercial and residential contractor.

         Casimer I. Zaremba is a founder of Big Buck and has been a director
since its formation in 1993. Mr. Zaremba has been a private investor for more
than the past five years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Exchange Act requires Big Buck's officers,
directors and persons who own more than 10% of a registered class of Big Buck's
equity securities to file reports of ownership and changes in ownership with the
SEC. Such officers, directors and shareholders are required by the SEC to
furnish Big Buck with copies of all such reports. To Big Buck's knowledge, based
solely on a review of copies of reports filed with the SEC during 1998, all
applicable Section 16(a) filing requirement were met, except that three reports
on Form 5 setting forth the January 1, 1997 automatic grant of stock options for
5,000 shares pursuant to the 1996 Director Stock Option Plan to each of Blair A.
Murphy, D.O., Henry T. Siwecki and Casimer I. Zaremba, Big Buck's non-employee
directors, were not filed on a timely basis.


                                       31
<PAGE>


ITEM 10 EXECUTIVE COMPENSATION

         The following table sets forth information with respect to 
compensation paid by Big Buck to the Chief Executive Officer and the other 
highest paid executive officers (the "Named Executive Officers") during 1998, 
1997 and 1996.

                                             SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                  ANNUAL COMPENSATION             LONG-TERM COMPENSATION
                                                  -------------------             ----------------------
                                                                                          AWARDS
                                                                                  ----------------------
                                                                                        SECURITIES
         NAME AND PRINCIPAL POSITION               YEAR         SALARY              UNDERLYING OPTIONS
         ---------------------------               ----         ------              ------------------
<S>                                                <C>        <C>                           <C>   
William F. Rolinski . . . . . . . . . . . . .  .   1998       $151,586                      30,000
  Chief Executive Officer, President and           1997       $167,308                      75,000
  Chairman of the Board                            1996       $134,038                          --
                                                                                    
Gary J. Hewett . . . . . . . . . . . . . . . . .   1998       $130,845                      25,000
  Chief Operating Officer, Executive               1997       $152,061                     125,000
  Vice President and Director                      1996(1)    $101,445                      55,000
                                                                                    
Anthony P. Dombrowski . . . . . . . . . . . . .    1998       $ 92,885                      20,000
  Chief Financial Officer and                      1997       $102,615                      60,000
  Treasurer                                        1996(2)    $112,516                      33,000
----------------------                           
</TABLE>
                            
(1)   Mr. Hewett became an employee of Big Buck on April 1, 1996. The amount
      reported for 1996 reflects less than a full year's compensation.

(2)   Mr. Dombrowski became an employee of Big Buck on May 1, 1996. From
      January 1996 through April 1996, Mr. Dombrowski served as a consultant
      to Big Buck. The amount reported for 1996 reflects a full year's
      compensation.

         The following table sets forth each grant of stock options during 1998
to the Named Executive Officers. No stock appreciation rights were granted
during 1998.

                                          OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                      NUMBER OF
                                     SECURITIES        PERCENT OF TOTAL
                                     UNDERLYING        OPTIONS GRANTED        EXERCISE OR
                                       OPTIONS         TO EMPLOYEES IN         BASE PRICE          EXPIRATION
              NAME                   GRANTED(1)          FISCAL YEAR          ($/SHARE)(2)            DATE
--------------------------------  ----------------   --------------------  ------------------   ---------------     
<S>                                    <C>                   <C>                    <C>            <C>   
William F. Rolinski.................   30,000                27.3%                  $3.00          12/28/08

Gary J. Hewett......................   25,000                22.7%                  $3.00          12/28/08

Anthony P. Dombrowski...............   20,000                18.2%                  $3.00          12/28/08
----------------------
</TABLE>
(1)   These options became exercisable immediately upon grant. 

(2)   Fair market value per share on the date of grant.


                                       32
<PAGE>


         The following table sets forth information concerning the unexercised
options held by the Named Executive Officers as of the end of 1998. No options
were exercised by the Named Executive Officers in 1998. No stock appreciation
rights were exercised by the Named Executive Officers in 1998 or were
outstanding at the end of that year.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

<TABLE>
<CAPTION>
                                                         NUMBER OF SECURITIES            VALUE OF UNEXERCISED
                                                        UNDERLYING UNEXERCISED           IN-THE-MONEY OPTIONS
                                                          OPTIONS AT FY-END                  AT FY-END(1)
                                                        ----------------------           --------------------
                    NAME                            EXERCISABLE     UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
----------------------------------------------     -------------   ---------------  -------------  ---------------
<S>                                                  <C>             <C>             <C>            <C>
William F. Rolinski. . . . . . . . . . . . .            48,750          56,250          $7,500         $0

Gary J. Hewett . . . . . . . . . . . . . . .            86,250         118,750          $7,500         $0

Anthony P. Dombrowski. . . . . . . . . . . .            53,000          60,000          $5,750         $0
</TABLE>
-----------------------

(1)  Market value of underlying securities at fiscal year end minus the
     exercise price.

COMPENSATION OF DIRECTORS

         Big Buck's non-employee directors receive options pursuant to the 1996
Director Stock Option Plan. Management members of the Board receive no
compensation as Board members. Board members are paid their expenses, if any,
which are incurred solely to participate in meetings of the Board or Board
committees.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS

         Gary J. Hewett, Chief Operating Officer, Executive Vice President and a
director of Big Buck, is entitled to six months' salary upon termination of
employment, unless such termination is for cause. Based on Mr. Hewett's 1998
compensation, he would be entitled to approximately $65,423 upon termination of
employment without cause. To date, Big Buck has not entered into any agreements
providing for the continued employment of its personnel.


                                       33
<PAGE>



ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


         The following table sets forth certain information known to Big Buck
regarding beneficial ownership of its Common Stock as of February 1, 1999, by
(a) each person who is known to Big Buck to own beneficially more than five
percent of the Common Stock, (b) each director, (c) each Named Executive
Officer, and (d) all executive officers and directors as a group. Unless
otherwise noted, each person identified below possesses sole voting and
investment power with respect to such shares. Except as otherwise noted below,
Big Buck knows of no agreements among its shareholders which relate to voting or
investment power with respect to its Common Stock.

<TABLE>
<CAPTION>

                                                                                        SHARES            PERCENT
                                                                                     BENEFICIALLY            OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1)                                               OWNED(1)            CLASS
----------------------------------------                                             ------------        ---------
<S>                                                                                  <C>                 <C>  
William F. Rolinski(2)(3).......................................................        889,358             16.7%

Perkins Capital Management, Inc.(4).............................................        872,500             15.1%
     730 East Lake Street
     Wayzata, Minnesota 55391

Casimer I. Zaremba(2)(5)(6).....................................................        690,007             13.0%

Blair A. Murphy, D.O.(2)(5).....................................................        650,007             12.3%

The Perkins Opportunity Fund(7).................................................        600,000             10.7%
     730 East Lake Street
     Wayzata, Minnesota 55391

FMR Corp.(8)....................................................................        522,500              9.9%
     82 Devonshire Street
     Boston, Massachusetts 02109

Henry T. Siwecki(2)(5)(9).......................................................        151,989              2.9%

Gary J. Hewett(10)..............................................................         86,250              1.6%

Anthony P. Dombrowski(11).......................................................         59,000              1.1%

Patrick M. Sidders(12) .........................................................         19,000              *

All Executive Officers and Directors as a Group (7 persons)(13).................      2,545,611             46.0%
</TABLE>

---------------
*Represents less than one percent.

(1)      Beneficial ownership is determined in accordance with the rules of the
         SEC and includes voting or investment power with respect to securities.
         Securities "beneficially owned" by a person may include securities
         owned by or for, among others, the spouse, children or certain other
         relatives of such person as well as other securities as to which the
         person has or shares voting or investment power or has the option or
         right to acquire Common Stock within 60 days. The number of shares
         beneficially owned includes shares issuable pursuant to warrants and
         stock options that are exercisable within 60 days of February 1, 1999.
         Unless otherwise indicated, the address for each listed shareholder is
         c/o Big Buck Brewery & Steakhouse, Inc., 550 South Wisconsin Street,
         Gaylord, Michigan 49735.

                                       34
<PAGE>

(2)      Substantially all of the shares beneficially owned by Messrs. Rolinski,
         Zaremba, Murphy and Siwecki are subject to a three-year escrow
         agreement with Norwest Bank Minnesota, National Association, Big Buck
         and the Commissioner of Commerce for the State of Minnesota dated June
         7, 1996.

(3)      Includes 48,750 shares of Common Stock subject to currently exercisable
         options.

(4)      As set forth in Schedule 13G filed with the SEC by Perkins Capital
         Management, Inc. and The Perkins Opportunity Fund on February 4, 1999.
         Includes (a) 177,500 shares of Common Stock owned by the clients of
         PCM, (b) 195,000 shares of Common Stock subject to currently
         exercisable warrants owned by the clients of PCM, (c) 200,000 shares of
         Common Stock owned by POF, and (d) 300,000 shares of Common Stock
         subject to currently exercisable warrants owned by POF. PCM has (a)
         sole power to vote 262,000 shares of Common Stock, including 200,000
         shares of Common Stock owned by POF, and (b) sole power to dispose of
         872,500 shares of Common Stock, including 200,000 shares of Common
         Stock owned by POF and 300,000 shares of Common Stock subject to
         currently exercisable warrants owned by POF. PCM disclaims beneficial
         ownership of the securities owned by POF.

(5)      Includes 15,000 shares of Common Stock subject to currently exercisable
         options.

(6)      Beneficial ownership of 450,005 of these shares is shared with Walter
         Zaremba, Casimer Zaremba's brother.

(7)      As set forth in Schedule 13G filed with the SEC by PCM and POF on
         February 4, 1999. Includes 300,000 shares of Common Stock subject to
         currently exercisable warrants. Ownership of ten percent or more of the
         outstanding stock of Big Buck requires the prior approval of the
         Michigan Liquor Control Commission. As a result, the warrants held by
         POF cannot be exercised in their entirety without such approval.

(8)      As set forth in Schedule 13G filed with the SEC by FMR Corp. on
         February 11, 1999. Fidelity Management & Research Company, a
         wholly-owned subsidiary of FMR Corp. and an investment adviser
         registered under the Investment Advisers Act of 1940, is the beneficial
         owner of 522,500 shares as a result of acting as investment adviser to
         various investment companies registered under the Investment Company
         Act of 1940. The ownership of one investment company, Fidelity Capital
         Appreciation Fund, amounted to 522,500 shares. Edward C. Johnson 3d,
         FMR Corp., through its control of Fidelity, and the funds each has sole
         power to dispose of the 522,500 shares owned by the funds. Neither FMR
         Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole
         power to vote or direct the voting of the shares owned directly by the
         Fidelity Funds, which power resides with the funds' Boards of Trustees.
         Fidelity carries out the voting of the shares under written guidelines
         established by the funds' Boards of Trustees. Members of the Edward C.
         Johnson 3d family and trusts for their benefit are the predominant
         owners of Class B shares of common stock of FMR Corp., representing
         approximately 49% of the voting power of FMR Corp. Mr. Johnson 3d owns
         12.0% and Abigail P. Johnson owns 24.5% of the aggregate outstanding
         voting stock of FMR Corp. Mr. Johnson 3d is Chairman of FMR Corp. and
         Ms. Johnson is a Director of FMR Corp. The Johnson family group
         and all other Class B shareholders have entered into a shareholders'
         voting agreement under which all Class B shares will be voted in
         accordance with the majority vote of Class B shares. Accordingly,
         through their ownership of voting common stock and the execution of the
         shareholders' voting agreement, members of the Johnson family may be
         deemed, under the Investment Company Act of 1940, to form a controlling
         group with respect to FMR Corp.

(9)      Includes 6,000 shares of Common Stock subject to currently exercisable
         warrants.

(10)     Represents shares of Common Stock subject to currently exercisable
         options.

(11)     Includes 53,000 shares of Common Stock subject to currently exercisable
         options.

(12)     Includes (a) 1,000 shares of Common Stock owned by Mr. Sidders' spouse,
         (b) 2,000 shares of Common Stock which Mr. Sidders and his spouse own
         jointly, (c) 10,000 shares of Common Stock subject to currently
         exercisable warrants owned by Mr. Sidders, (d) 1,000 shares of Common
         Stock subject to currently exercisable 



                                       35
<PAGE>

         warrants owned by Mr. Sidders' spouse, and (e) 2,000 shares of Common
         Stock subject to currently exercisable warrants which Mr. Sidders and
         his spouse own jointly.

(13)     Includes 233,000 shares of Common Stock subject to currently
         exercisable options and 19,000 shares of Common Stock subject to
         currently exercisable warrants.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Big Buck has entered into a loan agreement with NBD Bank for three
separate loan facilities which aggregate $3.0 million. Messrs. Rolinski, Murphy
and Zaremba, each a director of Big Buck, have personally guaranteed repayment
of all amounts under this loan agreement. Messrs. Rolinski, Murphy and Zaremba
do not intend to personally guarantee future obligations of Big Buck.

         All future transactions between Big Buck and its officers, directors
and principal shareholders and their affiliates will be approved by a majority
of the Board, including a majority of the independent and disinterested
non-employee directors, and will be on terms no less favorable to Big Buck than
could be obtained from unaffiliated third parties.

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

   (a)   Exhibits

         3.1      Restated Articles of Incorporation (incorporated by reference
                  to Big Buck's Current Report on Form 8-K, filed on October 3,
                  1997 (File No. 0-20845)).
         3.2      Amended and Restated Bylaws (incorporated by reference to Big
                  Buck's Registration Statement on Form SB-2, filed on April 15,
                  1996 (File No. 333-3548)).
         4.1      Specimen Form of Big Buck's Common Stock Certificate
                  (incorporated by reference to Big Buck's Registration
                  Statement on Form SB-2, filed on April 15, 1996 (File No.
                  333-3548)).
         4.2      Form of Warrant Agreement (including Form of Redeemable Class
                  A Warrant) (incorporated by reference to Big Buck's
                  Registration Statement on Form SB-2, filed on April 15, 1996
                  (File No. 333-3548)).
         4.3      Form of Subscription and Investment Representation Agreement,
                  dated December 1995, between Big Buck and Pyramid Partners, LP
                  (including Form of Common Stock Purchase Warrant)
                  (incorporated by reference to Big Buck's Registration
                  Statement on Form SB-2, filed on April 15, 1996 (File No.
                  333-3548)).
         10.1     1996 Stock Option Plan (incorporated by reference to Big
                  Buck's Annual Report on Form 10-KSB, filed on March 23, 1998
                  (File No. 0-20845)).
         10.2     1996 Director Stock Option Plan (incorporated by reference to
                  Big Buck's Registration Statement on Form SB-2, filed on April
                  15, 1996 (File No. 333-3548)).
         10.3     Loan Agreement dated July 28, 1995, by and among Big Buck,
                  William F. Rolinski, Dr. Blair A. Murphy, Walter Zaremba,
                  Casimer I. Zaremba and NBD Bank (incorporated by reference to
                  Big Buck's Registration Statement on Form SB-2, filed on April
                  15, 1996 (File No. 333-3548)).
         10.4     Escrow Agreement dated June 7, 1996, by and among Big Buck,
                  William F. Rolinski, Dr. Blair A. Murphy, Casimer I. Zaremba,
                  Henry T. Siwecki, Norwest Bank Minnesota, National
                  Association, and the Commissioner of Commerce for the State of
                  Minnesota (incorporated by reference to Big Buck's Annual
                  Report on Form 10-KSB, filed on March 31, 1997 (File No.
                  0-20845)).
         10.5     Real Estate Purchase and Leaseback Agreement by and between
                  Eyde Brothers Development Co., Landlord, and Big Buck, Tenant,
                  dated April 11, 1997 (incorporated

                                       36
<PAGE>

                  by reference to Big Buck's Quarterly Report on Form 10-QSB,
                  filed on May 9, 1997 (File No. 0-20845)).
         10.6     Lease Agreement by and between Eyde Brothers Development Co.,
                  Landlord, and Big Buck, Tenant, dated April 11, 1997
                  (incorporated by reference to Big Buck's Quarterly Report on
                  Form 10-QSB, filed on May 9, 1997 (File No. 0-20845)).
         10.7     Real Estate Purchase and Leaseback Agreement by and between
                  Michael G. Eyde, Landlord, and Big Buck, Tenant, dated August
                  1, 1997 (incorporated by reference to Big Buck's Quarterly
                  Report on Form 10-QSB, filed on August 12, 1997 (File No.
                  0-20845)).
         10.8     Lease Agreement by and between Michael G. Eyde, Landlord, and
                  Big Buck, Tenant, dated October 1, 1997 (incorporated by
                  reference to Big Buck's Annual Report on Form 10-KSB, filed on
                  March 23, 1998 (File No. 0-20845)).
         10.9     Stock Option Agreement between Big Buck and Michael G. Eyde,
                  dated August 1, 1997 (incorporated by reference to Big Buck's
                  Annual Report on Form 10-KSB, filed on March 23, 1998 (File
                  No. 0-20845)).
         10.10    Limited Partnership Agreement by and among BBBP Management
                  Company, Bass Pro Outdoor World, L.P. and Big Buck, dated
                  November 5, 1998 (incorporated by reference to Big Buck's
                  Quarterly Report on Form 10-QSB, filed on November 12, 1998
                  (File No. 0-20845)).
         10.11    Shareholders' Agreement by and among BBBP Management Company,
                  Bass Pro Outdoor World, L.P. and Big Buck, dated November 5,
                  1998 (incorporated by reference to Big Buck's Quarterly Report
                  on Form 10-QSB, filed on November 12, 1998 (File No.
                  0-20845)).
         10.12    Commercial Sublease Agreement by and between Bass Pro Outdoor
                  World, L.P. and Buck and Bass, L.P., dated November 5, 1998
                  (incorporated by reference to Big Buck's Quarterly Report on
                  Form 10-QSB, filed on November 12, 1998 (File No. 0-20845)).
         10.13    Common Stock Purchase Warrant issued by Big Buck to Bass Pro
                  Outdoor World, L.P., dated November 5, 1998 (incorporated by
                  reference to Big Buck's Quarterly Report on Form 10-QSB, filed
                  on November 12, 1998 (File No. 0-20845)).
         10.14    Loan Agreement dated November 20, 1998, by and between Big
                  Buck, Borrower, and Crestmark Bank, Lender.
         10.15    Real Estate Mortgage Note dated November 20, 1998, by and
                  between Big Buck, Borrower, and Crestmark Bank, Lender.
         10.16    Security Agreement dated November 20, 1998, by and between Big
                  Buck, Borrower, and Crestmark Bank, Lender.
         10.17    Common Stock Purchase Warrant issued by Big Buck to Seger
                  Financial, Inc., dated November 20, 1998.
         10.18    Stock Option Agreement between Big Buck and William F.
                  Rolinski, dated December 29, 1998.
         10.19    Stock Option Agreement between Big Buck and Gary J. Hewett,
                  dated December 29, 1998.
         10.20    Stock Option Agreement between Big Buck and Anthony P.
                  Dombrowski, dated December 29, 1998.
         21.1     Subsidiaries of Big Buck.
         23.1     Consent of Independent Public Accountants.
         24.1     Power of Attorney (included on signature page to Form 10-KSB).
         27.1     Financial Data Schedule.
         99.1     Cautionary Statement.



                                       37
<PAGE>

   (b)   Reports on Form 8-K

         (1)      Big Buck filed no Current Reports on Form 8-K during the
                  quarter ended January 3, 1999.


                                       38
<PAGE>



                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gaylord, State of
Michigan on March 29, 1999.


                                 BIG BUCK BREWERY & STEAKHOUSE, INC.

                                 By /s/ William F. Rolinski
                                    -------------------------------------------
                                          William F. Rolinski
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)

                                POWER OF ATTORNEY

         KNOW ALL BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints William F. Rolinski and Anthony P. Dombrowski as
his or her true and lawful attorney-in-fact and agent, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all amendments to this
report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the SEC, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

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


<TABLE>
<CAPTION>

                  Signature                                       Title                               Date
                  ---------                                       -----                               ----
<S>                                         <C>                                              <C>   
/s/ William F. Rolinski                          President, Chief Executive Officer and          March 29, 1999
-------------------------------------------      Director (Principal Executive Officer)
         William F. Rolinski                     

/s/ Anthony P. Dombrowski                        Chief Financial Officer and Treasurer           March 29, 1999
--------------------------------------------     (Principal Financial Officer and Principal                                
         Anthony P. Dombrowski                   Accounting Officer)                        
                                                 

/s/ Gary J. Hewett                               Chief Operating Officer, Executive Vice         March 29, 1999
--------------------------------------------     President and Director 
         Gary J. Hewett                          

/s/ Blair A. Murphy                              Director                                        March 29, 1999
--------------------------------------------                                                                   
         Blair A. Murphy

/s/ Patrick M. Sidders                           Director                                        March 29, 1999
--------------------------------------------                                                                   
         Patrick M. Sidders

--------------------------------------------     Director                                        March 29, 1999
         Henry T. Siwecki


/s/ Casimer I. Zaremba                           Director                                        March 29, 1999
--------------------------------------------     
         Casimer I. Zaremba
</TABLE>


                                       39
<PAGE>

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit
 Number     Description
-------     -----------
<C>     <S>  
   3.1    Restated Articles of Incorporation (incorporated by reference to Big
          Buck's Current Report on Form 8-K, filed on October 3, 1997 (File No.
          0-20845)).
   
   3.2    Amended and Restated Bylaws (incorporated by reference to Big Buck's
          Registration Statement on Form SB-2, filed on April 15, 1996 (File No.
          333-3548)).
   
   4.1    Specimen Form of Big Buck's Common Stock Certificate (incorporated by
          reference to Big Buck's Registration Statement on Form SB-2, filed on
          April 15, 1996 (File No. 333-3548)).
   
   4.2    Form of Warrant Agreement (including Form of Redeemable Class A
          Warrant) (incorporated by reference to Big Buck's Registration
          Statement on Form SB-2, filed on April 15, 1996 (File No. 333-3548)).
   
   4.3    Form of Subscription and Investment Representation Agreement, dated
          December 1995, between Big Buck and Pyramid Partners, LP (including
          Form of Common Stock Purchase Warrant) (incorporated by reference to
          Big Buck's Registration Statement on Form SB-2, filed on April 15, 1996
          (File No. 333-3548)).
   
   10.1   1996 Stock Option Plan (incorporated by reference to Big Buck's Annual
          Report on Form 10-KSB, filed on March 23, 1998 (File No. 0-20845)).
   
   10.2   1996 Director Stock Option Plan (incorporated by reference to Big
          Buck's Registration Statement on Form SB-2, filed on April 15, 1996
          (File No. 333-3548)).
   
   10.3   Loan Agreement dated July 28, 1995, by and among Big Buck, William F.
          Rolinski, Dr. Blair A. Murphy, Walter Zaremba, Casimer I. Zaremba and
          NBD Bank (incorporated by reference to Big Buck's Registration
          Statement on Form SB-2, filed on April 15, 1996 (File No. 333-3548)).
   
   10.4   Escrow Agreement dated June 7, 1996, by and among Big Buck, William F.
          Rolinski, Dr. Blair A. Murphy, Casimer I. Zaremba, Henry T. Siwecki,
          Norwest Bank Minnesota, National Association, and the Commissioner of
          Commerce for the State of Minnesota (incorporated by reference to Big
          Buck's Annual Report on Form 10-KSB, filed on March 31, 1997 (File No.
          0-20845)).
   
   10.5   Real Estate Purchase and Leaseback Agreement by and between Eyde
          Brothers Development Co., Landlord, and Big Buck, Tenant, dated April
          11, 1997 (incorporated by reference to Big Buck's Quarterly Report on
          Form 10-QSB, filed on May 9, 1997 (File No. 0-20845)).
   
   10.6   Lease Agreement by and between Eyde Brothers Development Co., Landlord,
          and Big Buck, Tenant, dated April 11, 1997 (incorporated by reference
          to Big Buck's Quarterly Report on Form 10-QSB, filed on May 9, 1997
          (File No. 0-20845)).
   
   10.7   Real Estate Purchase and Leaseback Agreement by and between Michael G.
          Eyde, Landlord, and Big Buck, Tenant, dated August 1, 1997
          (incorporated by reference to Big Buck's Quarterly Report on Form
          10-QSB, filed on August 12, 1997 (File No. 0-20845)).
   
   10.8   Lease Agreement by and between Michael G. Eyde, Landlord, and Big Buck,
          Tenant, dated October 1, 1997 (incorporated by reference to Big Buck's
          Annual Report on Form 10-KSB, filed on March 23, 1998 (File No.
          0-20845)).
   
   10.9   Stock Option Agreement between Big Buck and Michael G. Eyde, dated
          August 1, 1997 (incorporated by reference to Big Buck's Annual Report
          on Form 10-KSB, filed on March 23, 1998 (File No. 0-20845)).
   
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 <S>     <C>
   10.10  Limited Partnership Agreement by and among BBBP Management Company,
          Bass Pro Outdoor World, L.P. and Big Buck, dated November 5, 1998
          (incorporated by reference to Big Buck's Quarterly Report on Form
          10-QSB, filed on November 12, 1998 (File No. 0-20845)).

   10.11  Shareholders' Agreement by and among BBBP Management Company, Bass Pro
          Outdoor World, L.P. and Big Buck, dated November 5, 1998 (incorporated
          by reference to Big Buck's Quarterly Report on Form 10-QSB, filed on
          November 12, 1998 (File No. 0-20845)).
   
   10.12  Commercial Sublease Agreement by and between Bass Pro Outdoor World,
          L.P. and Buck and Bass, L.P., dated November 5, 1998 (incorporated by
          reference to Big Buck's Quarterly Report on Form 10-QSB, filed on
          November 12, 1998 (File No. 0-20845)).
   
   10.13  Common Stock Purchase Warrant issued by Big Buck to Bass Pro Outdoor
          World, L.P., dated November 5, 1998 (incorporated by reference to Big
          Buck's Quarterly Report on Form 10-QSB, filed on November 12, 1998
          (File No. 0-20845)).
   
   10.14  Loan Agreement dated November 20, 1998, by and between Big Buck,
          Borrower, and Crestmark Bank, Lender.
   
   10.15  Real Estate Mortgage Note dated November 20, 1998, by and between Big
          Buck, Borrower, and Crestmark Bank, Lender.
   
   10.16  Security Agreement dated November 20, 1998, by and between Big Buck,
          Borrower, and Crestmark Bank, Lender.
   
   10.17  Common Stock Purchase Warrant issued by Big Buck to Seger Financial,
          Inc., dated November 20, 1998.
   
   10.18  Stock Option Agreement between Big Buck and William F. Rolinski, dated
          December 29, 1998.
   
   10.19  Stock Option Agreement between Big Buck and Gary J. Hewett, dated
          December 29, 1998.
   
   10.20  Stock Option Agreement between Big Buck and Anthony P. Dombrowski,
          dated December 29, 1998.
   
   21.1   Subsidiaries of Big Buck.
   
   23.1   Consent of Independent Public Accountants.
   
   24.1   Power of Attorney (included on signature page to Form 10-KSB).
   
   27.1   Financial Data Schedule.
   
   99.1   Cautionary Statement.
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