U.S. SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

                             FORM 10-KSB

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934
 For the fiscal year ended December 31, 1998   Commission File No. 333-4066

[  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
 For the transition period from           to           .

                       KAYENTA KREATIONS, INC.            
            (Name of small business issuer in its charter)

           Nevada                                      87-0554463    
State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization                          Identification No.)

           1020 Belmont Avenue, Salt Lake City, Utah 84105  
         (Address of principal executive offices)  (zip code)

Issuer's telephone number, including area code:  (801) 521-4128


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

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

Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Issuer 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 no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be 
contained, to the best of the Issuer'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.     $      282 

As of March 31, 1999, the aggregate market value of voting stock held by
non-affiliates was approximately $109,450. (See Item 5 herein).

The number of shares outstanding of the Issuer's common stock at 
March 31, 1999: 1,018,900
<PAGE>
                                PART I

ITEM 1.   DESCRIPTION OF BUSINESS

     (A)  BUSINESS DEVELOPMENT.

     Kayenta Kreations, Inc. (the "Company") was incorporated under the laws
of the State of Nevada on December 26, 1995.  In connection with the
organization of the Company, the President and founders of the Company
contributed $8,000 cash to initially capitalize the Company in exchange for
800,000 shares of Common Stock.  The Company then registered a public offering
of its securities to raise funds from such offering with which to commence
business operations.  The Company filed with the Securities and Exchange
Commission a registration statement on Form SB-2, Commission File No. 333-
4066, which became effective October 21, 1996.  Pursuant thereto the Company
sold 218,900 shares of its common stock to the public at $.25 per share and
raised gross proceeds of $54,725.  The offering was completed in February,
1997.  The Company then used the net proceeds from this offering to provide
the working capital necessary to commence business operations.  However, the
Company has not yet generated any signigicant revenues from operations and is
still considered a development stage company. 

     (B)  BUSINESS OF COMPANY.

     The Company is engaged in the business of producing and marketing
specialty children's coloring art books and art coloring pencils.  The Company
is using the funds derived from the public offering of its securities
primarily to pay for the costs of printing copies of the coloring art books
which the Company has created, and for marketing.

     The Company creates specialty children's coloring art books that depict
various aspects of Southwestern and Western heritage, traditions and culture
of the United States.  Drawings characterize various features and aspects of
the Colorado Plateau and its history, recreation, geography, archeology,
pictographs, flora and fauna.  Different editions of the coloring art book are
being produced and distributed throughout the Colorado Plateau and Great Basin
area.  The different editions are tailored to specific events or areas within
the Colorado Plateau and Great Basin and feature drawings that depict such
events or some aspects of the heritage, culture and traditions that represent
the uniqueness of a particular area.

     For instance, an example of an edition featuring a specific event is the
coloring art book known as the Safari edition, with drawings depicting the
Annual Easter Jeep Safari held in Moab, Utah, which was featured in
demonstration copies which were used by the President in initial, informal
marketing surveys, and is now featured in a regular production edition.  This
event brings over 5,000 participants and visitors from several states in the
U.S.  The Jeep Safari is just one of forty-five organized 4x4 events held
throughout the United States.  Families with children of all ages attend these
events and contribute to the large numbers of participants.  Another edition,
the Southwest edition, features places and events such as the Glen Canyon
National Recreation Area (Lake Powell), Grand Canyon National Park and other
national and state parks in Utah, Arizona, Colorado and New Mexico.  Each area
featured offers different and distinctive scenic attractions and recreational
activities, including water sports, river running, hiking and mountain biking.
The Southwestern U.S. is also rich in Native American cultural influences, and
                                       2
<PAGE>
another edition known as the Pow-Wow edition features items associated with
those cultures. 

     In conjunction with marketing coloring art books, the Company plans to
create and market its own specialized assortment of art quality colored
pencils.  The pencil assortment will feature colors and shades specially
selected by management to match the colors and shades of soils, rocks, plants,
animals and other items commonly seen in the desert Southwest.  The pencils
will be marketed using the Company's own color names as an alternative to
crayons, which can be quite messy and are subject to melting, particularly in
the hot summer temperatures of the desert. 

MARKETING, DISTRIBUTION AND ADVERTISING STRATEGIES

     Management of the Company believes that with the dramatic increases seen
in recent years in the numbers of tourists and other visitors coming to
national and state parks and other tourist attractions in the Southwestern
U.S., particularly in the area of the Colorado Plateau, increased
opportunities are presented to market as souvenirs, a variety of products
which feature the distinctive places and events which attract people to these
destinations and/or have themes associated with such destinations.  In
addtition to the usual products marketed as souvenirs, management believes
that a potential market exists for a specialty children's coloring art book
which depicts items, places and events in or associated with the Southwestern
U.S.  However, the Company has not conducted any formal marketing surveys and
there is no assurance of any market interest or demand for such a product. 

     Management intends to pursue marketing efforts in at least two different
areas.  Presently, the Company intends to place its emphasis on advertising on
the Internet, using various search engines and links to arts and crafts home
pages. Management also intends to attend small, local fairs and other events
of this nature where booths are offered to potential vendors for a nominal
fee.  Management of the Company will contact the organizers of such special
events to obtain booth space or otherwise acquire rights of distribution
during such events, and intends to market the products on a retail basis to
the participants and others attending such events. 

     The Company intends to prepare flyers and brochures advertising its
products, which will be distributed by mail and dropped off in direct
contacts.  Management will also prepare demonstration copies of the books for
use in direct contacts.  Management anticipates that distribution of the
Company's products will be handled through mail order or by direct delivery
for the most part.  Management intends to have printed on each copy of any
edition or version of the books, ordering information and/or forms, and
possibly a toll free 800 number for convenience in ordering. Inasmuch as the
Company's products will be targeted mainly toward tourist traffic, management
anticipates that the seasonality of the business will coincide with the
tourist season in the Colorado Plateau area, which basically begins in March
or April and continues into October or November, with its peak during the
summer months. 

COMPETITION

     The proposed business of the Company is very specialized and there is no
assurance of market interest or demand.  The tourist industry in general and
the marketing of souvenirs and other specialty items of interest to tourists
is highly competitive and most of the Company's competitors have substantially
greater financial and personnel resources than the Company.  
                                       3
<PAGE>
Management is aware of limited numbers of tourist oriented coloring books or
similar specialty items, but is not aware of anyone marketing a coloring art
book exactly like the Company intends to market. 

EMPLOYEES

     The Company presently has no salaried employees, and does not presently
anticipate the need to hire employees upon completion of the offering.  The
sole officer of the Company will not be employed full time initially and will
not receive a regular salary, wage or other cash compensation for her time,
unless and until the Company's business operations develop to the point where
a full time or other extensive time commitment is required.  

ITEM 2.   PROPERTIES

     The Company presently has no office facilities but for the time being
will use the home office facilities of Ms. Michelle Barlow, its President, in
Salt Lake City, Utah, on a rent free basis as its principal place of business.

Management does not intend to seek other office arrangements immediately upon
completion of the offering, but will seek such arrangements at such time in
the future as the Company's business requires more extensive facilities, which
is not anticipated in the immediate future.  The Company may use a portion of
the proceeds of this offering for such purpose, if and as needed.  

ITEM 3.   LEGAL PROCEEDINGS.

     The Company is not a party to any material pending legal proceedings and,
to the best of its knowledge, no action has been threatened by or against the
Company.

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 the fiscal
year covered by this report.  

                               PART II

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     (A)  MARKET INFORMATION.  

     The Company's public offering was not closed until late February, 1997
and the Common Stock of the Company was not eligible for trading in the over-
the-counter market until after that time.  There were not any published
quotations for the securities of the Company until the 2nd quarter of 1997,
and the quoted bid price has been at $.50 since that time. 

     (B)  HOLDERS.  

     As of March 30, 1999, there were approximately 23 record holders of the
Company's Common Stock. 
                                       4
<PAGE>
     (C)  DIVIDENDS.  

     The Company has not previously paid any cash dividends on common stock
and does not anticipate or contemplate paying dividends on common stock in the
foreseeable future.  It is the present intention of management to utilize all
available funds for the development of the Company's business.  The only
restrictions that limit the ability to pay dividends on common equity or that
are likely to do so in the future, are those restrictions imposed by law. 
Under Nevada corporate law, no dividends or other distributions may be made
which would render the Company insolvent or reduce assets to less than the sum
of its liabilities plus the amount needed to satisfy any outstanding
liquidation preferences.

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

     The Company was incorporated on December 26, 1995.  The Company has not
yet generated any significant revenues from operations and is considered a
development stage company.  To date, activities have been limited to
organizational matters, the preparation and filing of the registration
statement to register a public offering of its securities, pursuant to which
the Company offered and sold 218,900 shares of common stock and raised gross
proceeds of $54,725, the closing of such offering and the initial commencement
of limited operations.  The Company has no assets other than those acquired
with the net proceeds from the offering, and the balance of proceeds
remaining. 

     Management's plan of operation for the next twelve months is to continue
to use the remaining net proceeds from the offering primarily to pay for the
costs of printing copies of the specialty children's coloring art books which
the Company has completed artwork for, and attempt to market them.  The
Company also used offering proceeds to make initial equipment purchases and
other capital expenditures for a computer system, a digitized scanner software
program, a plain paper laser fax machine, a laser printer and a photocopy
machine.  The remaining portion of the proceeds provides working capital for
the operation of the Company's proposed business.  
     There is absolutely no assurance that the Company will be able, with the
proceeds of the offering, to successfully develop its business. At this time,
no assurances can be given with respect to the length of time that it will be
necessary to fund operations from proceeds of this offering.  If the marketing
of the printed books is successful, management intends for the foreseeable
future to reinvest the revenues derived therefrom for additional printings and
editions of the coloring art books, and for development and marketing costs
relating to a line of colored pencils which the Company also intends to
eventually market.  

     Management believes that the net proceeds of the offering will be
sufficient for initial printing and marketing of the coloring art books, after
which time management anticipates that the Company will begin generating
revenues from sales to cover ongoing expenses.  However, there is absolutely
no assurance of this.  If the initial marketing of the coloring art books is
unsuccessful, investors will have lost their money and management will not
attempt to pursue further marketing efforts with respect to such product, and
it is unlikely the Company would have the financial ability to do so in any
event.  Instead management will call a shareholders meeting to decide whether
to liquidate the Company or what direction the Company will pursue, if any. 
                                       5
<PAGE>
However, the Company presently has no plans, commitments or arrangements with
respect to any other potential business venture and there is no assurance the
Company could become involved with any other business venture, especially any
business venture requiring significant capital. 

ITEM 7.   FINANCIAL STATEMENTS.
     
     See attached Financial Statements and Schedules.

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

     There are not and have not been any disagreements between the Company
and their accountants on any matter of accounting principles or practices or
financial statement disclosure. 

                               PART III

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

     (A)  IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS. 
     
     The following table sets forth the sole director and executive officer
of the Company, her age, and all offices and positions with the Company.  A
director is elected for a period of one year and thereafter serves until his
or her successor is duly elected by the stockholders and qualifies.  Officers
and other employees serve at the will of the Board of Directors. 
<TABLE>
<S>                      <C>  <C>          <C>
                              Term Served   Positions
Name of Director         Age  As           With Company
                              Director/Officer
Michelle Barlow          35                President &
                              Since        Secretary/Treasurer 
                              inception    
                                           
                                           
</TABLE>

     This individual serves as management of the Company.  A brief
description of her background and business experience is as follows:

     MICHELLE BARLOW serves as President, Secretary/Treasurer and Director of
the Company.  Ms. Barlow has completed two years of college coursework
majoring in accounting and business at the University of Utah and Salt Lake
Community College, and is currently self employed as the small business owner
of an accounting service.  Ms. Barlow owned and operated Plants by Design, a
business engaged in interior landscaping, from 1986 to 1989.  From 1989 to
1995, she was employed at the University of Utah as an Administrative
Assistant, where she was involved in various bookkeeping and accounting
procedures, including payroll, general ledger, year end tax return preparation
and submitting financial reports, as well as writing governmental proposals
and securing grants and private funds for research.  Ms. Barlow also has
operating experience in various computer software programs for both Macintosh
and IBM PC compatible systems.  Because of her personal interests, she has
travelled in and studied as a hobby the geology of the Colorado Plateau and
also its plant and animal life, culture and traditions.
                                       6
<PAGE>
     Ms. Barlow holds no directorships in any other company subject to the
reporting requirements of the Securities Exchange Act of 1934.

     (B)  IDENTIFY SIGNIFICANT EMPLOYEES.

     None other than the person previously identified.

     (C)  FAMILY RELATIONSHIPS.

     None

     (D)  INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. 

     Except as described hereinabove, no present officer or director of the
Company; 1) has had any petition filed, within the past five years, in Federal
Bankruptcy or state insolvency proceedings on such person's behalf or on
behalf of any entity of which such person was an officer or general partner
within two years of filing; or 2) has been convicted in a criminal proceeding
within the past five years or is currently a named subject of a pending
criminal proceeding; or 3) has been the subject, within the past five years,
of any order, judgment, decree or finding (not subsequently reversed,
suspended or vacated) of any court or regulatory authority involving violation
of securities or commodities laws, or barring, suspending, enjoining or
limiting any activity relating to securities, commodities or other business
practice.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     The Issuer is not subject to the provisions of Section 16(a). 

ITEM 10.  EXECUTIVE COMPENSATION.

     The sole officer/director is entitled to reimbursement of any out of
pocket expenses reasonably and actually incurred on behalf of the Company. 
Presently, the officer only devotes a portion of her time to the affairs of
the Company.  She is not employed full time and does not receive a regular
salary, wage for her time, and will not unless and until the Company's
business operations develop to the point where a full time or other extensive
time commitment is required.  The Company presently has no formal employment
agreements or other arrangements or understandings with the officer regarding
the commitment of time or the payment of salaries or other compensation. 
However, the officer is prepared to devote such time as may be necessary to
the development of the Company's business.  The amounts of compensation and
other terms of any full time employment arrangements with Ms. Barlow would be
determined if and when such arrangements become necessary.  

COMPENSATION OF DIRECTORS

     None
                                       7
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     The Company has not entered into any contracts or arrangements with any
named executive officer which would provide such individual with a form of
compensation resulting from such individual's resignation, retirement or any
other termination of such executive officer's employment with the Company or
its subsidiary, or from a change-in-control of the Company or a change in the
named executive officer's responsibilities following a change-in-control.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock with respect to each
director of the Company, each person known to the Company to be the beneficial
owner of more than five percent (5%) of said securities, and all directors and
executive officers of the Company as a group:
<TABLE>
<S>                  <C>       <C>              <C>
                     Title of  Amount and Natureof BeneficialPercent
Name and Address      Class    Ownership        of Class
                                                
Michelle Barlow       Common     250,000 shares 25%
1020 Belmont Ave.                               
Salt Lake City, UT                              
84105                                           
                      Common     275,000 shares 27%
Eslie Barlow                                    
1354 S. 1000 W.                                 
Salt Lake City, UT                              
84104                 Common     275,000        27%
                               shares           
Lynn Dixon                                      
311 S. State, #460                              
Salt Lake City, UT    Common                    25%
84111                            250,000 shares 
                                                
All officers and                                
directors as a                                  
group (1                                        
person)                                         
</TABLE>

     The foregoing amounts include all shares these persons are deemed to
beneficially own regardless of the form of ownership.  See "Certain
Transactions."

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company has entered into certain transactions with officers,
directors or affiliates of the Company which include the following:

     In connection with the organization of the Company, its founding
shareholders paid an aggregate of $8,000 cash to purchase 800,000 shares of
Common Stock of the Company.  Upon incorporation, $5,000 was initially
contributed in exchange for 500,000 shares of Common Stock.  Subsequently in
March of 1996, an additional $3,000 was contributed in exchange for 300,000
shares of Common Stock.  See "Principal Shareholders."  
                                       8
<PAGE>
     It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company which may involve
conflicts of interest in that they will not be arms' length transactions. 
These transactions include the following:

     The Company presently has no office facilities but for the time being
will use as its business address the home of Ms. Michelle Barlow on a rent
free basis, until such time as the business operations of the Company may
require more extensive facilities and the Company has the financial ability to
rent commercial office space.  There is presently no formal written agreement
for the use of such facilities, and no assurance that such facilities will be
available to the Company on such a basis for any specific length of time.  

     The Company has no formal written employment agreement or other
contracts with its President, and there is no assurance that the services and
facilities to be provided by Ms. Barlow will be available for any specific
length of time in the future.  Ms. Barlow anticipates initially devoting up to
approximately 20% of her time to the affairs of the Company.  If and when the
business operations of the Company increase and a more extensive time
commitment is needed, Ms. Barlow is prepared to devote more time to the
Company, in the event that becomes necessary.  The amounts of compensation and
other terms of any full time employment arrangements with Ms. Barlow would be
determined if and when such arrangements become necessary.  

CONFLICTS OF INTEREST

     In addition to the conflicts of interest that are inherent in the
foregoing transactions, conflicts of interest may also arise from the fact
that the President and director of the Company will not be employed full time
and will have other activities and business interests, to which she will also
devote time and attention.  Inasmuch as the President will not receive any
regular salary or wage from the Company, at least initially, these other
activities include other employment or business activities to obtain her
livelihood, as well as schooling activities, inasmuch as the President is
still continuing to pursue her educational goals.  These other activities
could give rise to a conflict with respect to certain operations of the
Company, particularly with respect to the amount of time management devotes to
the Company and to these other activities.  

     A director of the Company owes fiduciary duties to the Company which may
conflict with these other interests.  The Company has not entered into any non
compete, confidentiality or similar agreements with the director.  The
fiduciary duties that directors owe to a Company include the duty not to
withhold from the Company, or appropriate, any corporate opportunity which the
Company may be able to exploit, the duty not to use for their personal benefit
or the benefit of any other individual or entity any information not generally
known which they acquire through their association with the Company, and in
short, the duty to deal fairly with the Company.  The Company's current
director intends to submit to the Company any potential business she becomes
aware of which may constitute a corporate opportunity to the Company.  The
Company's policy is that all transactions between the Company and any
affiliates be on terms no less favorable to the Company than could be obtained
from unaffiliated parties.

INDEMNIFICATION

     The general corporation law of Nevada permits provisions in the
                                       9
<PAGE>
articles, by-laws or resolutions approved by shareholders which limit
liability of directors and officers for breach of fiduciary duty to certain
specified circumstances, namely, breaches of their duties of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, acts involving unlawful payment of dividends or unlawful
stock purchases or redemptions, or any transaction from which a director or
officer derives an improper personal benefit.  The Company's by-laws indemnify
its officers and directors to the full extent permitted by Nevada law.  The
by-laws with these exceptions eliminate any personal liability of an officer
or director to the Company or its shareholders for monetary damages for the
breach of fiduciary duty and therefore an officer or director cannot be held
liable for damages to the Company or its shareholders for gross negligence or
lack of due care in carrying out his or her fiduciary duties.  The Company's
Articles provide for indemnification to the full extent permitted under law
which includes all liability, damages and costs or expenses arising from or in
connection with service for, employment by, or other affiliation with the
Company to the maximum extent and under all circumstances permitted by law. 
Nevada law permits indemnification if a director or officer acts in good faith
in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation.  A director or officer must be indemnified as to
any matter in which he or she successfully defends himself or herself. 
Indemnification is prohibited as to any matter in which the director or
officer is adjudged liable to the corporation.  Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers, and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.

     Except as disclosed in this item, in notes to the financial statements
or elsewhere in this report, the Company is not aware of any indebtedness or
other transaction in which the amount involved exceeds $60,000 between the
Company and any officer, director, nominee for director, or 5% or greater
beneficial owner of the Company or an immediate family member of such person;
nor is the Company aware of any relationship in which a director or nominee
for director of the Company was also an officer, director, nominee for
director, greater than 10% equity owner, partner, or member of any firm or
other entity which received from or paid the Company, for property or
services, amounts exceeding 5% of the gross annual revenues or total assets of
the Company or such other firm or entity.


                               PART IV

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

     (A)  EXHIBITS to this report are all documents previously filed which
are incorporated herein as exhibits to this report by reference to
registration statements and other reports previously filed by the Company
pursuant to the Securities Act of 1933 and the Securities Exchange Act of
1934.

     (B)  REPORTS ON FORM 8-K have not been filed during the last quarter of
the fiscal year ended December 31, 1998.
                                      10
<PAGE>
                              SIGNATURES


In accordance with Section 12 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


KAYENTA KREATIONS, INC.



By:     /s/ Michelle Barlow                        Date: March 31, 1999
     Michelle Barlow, President and Secretary/Treasurer
     Chief Executive Officer and 
     Chief Financial Officer


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



By:     /s/ Michelle Barlow                        Date: March 31, 1999  
     Michelle Barlow, President and Secretary/Treasurer
     Chief Executive Officer and 
     Chief Financial Officer



<PAGE>

Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Exchange Act by Non Reporting Issuers

No annual report or proxy statement has been sent to security holders.

<PAGE>
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                      KAYENTA KREATIONS, INC.
                   (A Development  Stage Company)
  
                        FINANCIAL STATEMENTS
                                  
           FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                  
                                WITH
  
                   INDEPENDENT  AUDITOR'S REPORT
                                  
<PAGE>
                                  
                      KAYENTA KREATIONS, INC.
                   (A Development Stage Company)
  
  
                              CONTENTS
                                                                  
                                                                  
                                                                PAGE
                                  
  Independent Auditor's Report                                    1
  
  Balance Sheets, December 31, 1998 and 1997                      2
  
  Statements of Operations, for the years ended
       December 31, 1998 and 1997                                 3
  
  Statement of Stockholders' Equity, for the years
       ended December 31, 1998 and 1997                           4
                                  
  Statements of Cash Flows, for the year ended
       December 31, 1998 and 1997                                 5
  
  Notes to Financial Statements                                  6-7
  
  
  
  
  
<PAGE>
  
  
  
  
  
  
  Independent Auditor's Report
  
  Board of Director
  KAYENTA KREATIONS,  INC.
  Salt Lake City, Utah
  
  I have audited the accompanying balance sheets of Kayenta Kreations,
  Inc. (a development stage company) as of December 31, 1998 and 1997 and
  the related statements of operations, stockholders' equity and cash
  flows for the years then ended and from inception (December 26, 1995) to
  December 31, 1998.  These financial statements are the responsibility of
  the Company's management.  My responsibility is to express an opinion on
  the financial statements based on my audits.
  
  I conducted my audits in accordance with generally accepted auditing
  standards.  Those  standards require that I 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.  I believe that
  my audits provide a reasonable basis for my opinion.
  
  In my opinion, the financial statements referred to above present
  fairly, in all material respects, the financial position of Kayenta
  Kreations, Inc. (a development stage company) as of December 31, 1998
  and 1997 and the results of its operations and its cash flows for the
  years then ended and from inception (December 26, 1995) to December 31,
  1998, in conformity with generally accepted accounting principles.
  
  The accompanying financial statements have been prepared assuming that
  the Company will continue as a going concern.  As shown in the financial
  statements, the Company is in the development stage and has incurred a
  net loss of $10,755 for 1998 and has incurred net losses since
  inception.  At December 31, 1998, the Company has  $5,052 of cash
  available to pay operating expenses.  These factors, and the others
  discussed in Note 5 raise substantial doubt about the Company's ability
  to continue as a going concern.  The financial statements do not include
  any adjustment relating to the recoverability and classification of
  recorded assets, or the amounts and classification of liabilities that
  might be necessary in the event the Company cannot continued in
  existence.
  
  
                                                   David T. Thomson, P.C.
  
  
  
  Salt Lake City, Utah
  March 17, 1999
  
  


<PAGE>
                            KAYENTA KREATIONS, INC.
                         (A Development Stage Company)

                                BALANCE SHEETS

                                    ASSETS
                                                    December 31, December 31,
                                                           1998    1997
CURRENT ASSETS
  Cash in bank                                            $5,052 $16,777
  Inventory                                                1,015   1,113
                                                        ________________

    Total Current Assets                                   6,067  17,890
                                                        ________________
EQUIPMENT AND DISPLAYS                                
  Office equipment                                         8,914   5,379
  Displays                                                 3,931   3,931
                                                        ________________

                                                          12,845   9,310
  Less depreciation                                       (3,146)   (930)
                                                        ________________

                                                           9,699   8,380
                                                        ________________
OTHER ASSETS
  Organization costs, less amortization of $602 and $402     398     598
                                                        ________________

    Total Other Assets                                       398     598
                                                        ________________

TOTAL ASSETS                                             $16,164 $26,868
                                                        ================

LIABILITIES AND STOCKHOLDERS' EQUITY 

CURRENT LIABILITIES 
  Accounts payable and accrued expenses                     $579    $542
  State franchise tax payable                                200     100
                                                        ________________

    Total current Liabilities                                779     642
                                                        ________________
NONCURRENT LIABILITIES
  Deferred taxes payable                                       0      86
                                                        ________________
STOCKHOLDERS' EQUITY 
  Preferred stock; $.001 par value, 5,000,000 shares 
   authorized, no shares issued and outstanding                0       0
  Common stock; $.001 par value, 50,000,000 shares
   authorized, 1,018,900 and 1,018,900 shares issued       1,019   1,019
   and outstanding respectively 
  Capital in excess of par value                          47,193  47,193
  Earnings (deficit) accumulated during the development  (32,827)(22,072)
   stage                                                ________________

    Total Stockholders' Equity                            15,385  26,140
                                                        ________________

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $16,164 $26,868
                                                        ================

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

                                       2
<PAGE>
                            KAYENTA KREATIONS, INC.
                         (A Development Stage Company)

                           STATEMENTS OF OPERATIONS

                                           For the    Cumulative
                                         Year Ended   During the
                                         December 31, Development
                                         1998    1997    Stage

SALES
  Sales - net                            $282    $654     $936
  Less cost of Sales                     (154)   (358)    (512)
                                     _________________________

    Gross Margin                          128     296      424
                                     _________________________

SELLING, GENERAL AND ADMINISTRATIVE                    
  Accounting and legal                  3,790   2,895    6,685
  Amortization                            200     200      602
  Travel                                  184   1,873    2,057
  Wages                                   661   2,017    2,678
  Marketing                               758   5,307    6,065
  Equipment rental                          0   2,171    2,171
  Administrative                        1,332   1,865    3,369
  Office supplies                       1,138   3,091    4,229
  Utilities                                 0     743      743
  Meals and entertainment                  96     721      817
  Depreciation                          2,216     930    3,146
  Taxes                                   100     200      300
  Equipment repairs                       555     283      838
  Miscellaneous                           245     137      382
                                     _________________________

    Total Selling, General and         11,275  22,433   34,082
      Administrative                 _________________________

NET INCOME FROM OPERATIONS            (11,147)(22,137) (33,658)

OTHER INCOME (EXPENSE)                                 
  Interest income                         321     534      862
  Interest expense                        (16)    (15)     (31)
                                     _________________________

NET INCOME BEFORE TAXES               (10,842)(21,618) (32,827)

INCOME TAX (PROVISION) BENEFIT             87     (87)       0
                                     _________________________

NET INCOME (LOSS)                   $(10,755)$(21,705)$(32,827)
                                     ================ ========
EARNINGS (LOSS) PER SHARE           $  (0.01)$  (0.02)$  (0.04)
                                     ================ ========

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

                                       3
<PAGE>
                            KAYENTA KREATIONS, INC.
                         (A Development Stage Company)

                       STATEMENT OF STOCKHOLDERS' EQUITY
                                                                   Earnings
                                                                    (Loss)
                                                                  Accumulated
                                                       Capital in During the 
                                          Common Stock  Excess of Development
                                          Shares Amount Par Value    Stage

BALANCE, December 26, 1995 (Inception)         0    $0      $0        $0

Shares issued to initial stockholders for
  cash December 26,1995 at $.01 per share 500,000   500  4,500         0

Net income (loss) from December 21, 1995
  (inception) to December 31, 1995              0     0       0       (2)
                                          ______________________________

BALANCE, December 31, 1995                500,000   500  4,500       (2)

Additional shares issued to initial
  stockholders for cash March 6, 
   1996 at $.01 per share                 300,000   300  2,700         0

Capital contributed by officer and              0     0     20         0
  shareholder

Net income (loss) for the year ended
  December 31, 1996                             0     0      0     (365)
                                          ______________________________

BALANCE, December  31, 1996               800,000   800  7,220     (367)

Shares issued persuant to a sale of 
  common to the public for cash 
  February 1997 at $.25 per share         218,900   219 54,506         0

Direct costs of offering                        0     0 (14,533)       0

Net income (Loss) for the year ended
  December 31, 1997                             0     0       0  (21,705)
                                          ______________________________

BALANCE, December  31, 1997              1,018,900 1,019 47,193 (22,072)
                                         ==============================
Net income (Loss) for the year ended 
  December 31, 1998                              0     0      0 (10,755)

BALANCE, December 31, 1998               1,018,900$1,019$47,193$(32,827)
                                         ========= ===== ====== ========


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

                                       4
<PAGE>
                            KAYENTA KREATIONS, INC.
                         (A Development Stage Company)

                           STATEMENTS OF CASH FLOWS
                                                   For the      Cumulative
                                                  Year Ended    During the
                                                  December 31,  Development
                                                 1998     1997    Stage
CASH FLOWS FROM OPERATING ACTIVITIES
  Cash from sales                                $282     $654     $936
  Cash paid for organization costs                  0        0   (1,000)
  Cash from interest                              321      534      862
  Cash paid for interest                          (16)     (15)     (31)
  Cash paid for supplies and employee services (8,777) (22,033) (30,982)
  Cash paid for taxes                               0    (100)    (100)
                                             ________ ________ ________

    Net Cash (Used) by Operating Activities    (8,190) (20,960) (30,315)
                                             ________ ________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of equipment                     (3,535)  (9,310) (12,845)
                                             ________ ________ ________

    Net cash (Used) by Investing Activities    (3,535)  (9,310) (12,845)
                                             ________ ________ ________
CASH FLOWS FROM FINANCING ACTIVITIES                    
  Sale of common stock                              0   54,725   62,725
  Direct offering costs                             0   (8,714) (14,533)
  Contributed capital                               0        0       20
                                             ________ ________ ________

    Net Cash Provided (Used) By Financing           0   46,011   48,212
      Activities                             ________ ________ ________

NET INCREASE (DECREASE) IN CASH               (11,725)  15,741    5,052

CASH - BEGINNING OF PERIOD                     16,777    1,036        0
                                             ________ ________ ________

CASH - END OF PERIOD                           $5,052  $16,777   $5,052
                                             ======== ======== ========
RECONCILIATION OF NET INCOME TO NET CASH 
  PROVIDED (USED) BY OPERATING ACTIVITIES 

NET INCOME (LOSS)                            $(10,755)$(21,705)$(32,827)
                                             ________ ________ ________
Adjustments to reconcile net income (loss)
  to net cash provided (used) by operating
  activities
    Amortization of organization costs            200      200      602
    Depreciation                                2,216      930    3,146
    Deferred taxes                                (86)      86        0
    Change in assets and liabilities
      Organization costs                            0        0   (1,000)
      Inventory                                    98   (1,113)  (1,015)
      Accounts payable                             37      542      579
      Franchise taxes payable                     100      100      200
                                             ________ ________ ________

        Total Adjustments                       2,565      745    2,512
                                             ________ ________ ________

NET CASH PROVIDED(USED) BY OPERATINGACTIVITIES$(8,190)$(20,960)$(30,315)
                                             ======== ======== ========

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

                                       5
<PAGE>
                      KAYENTA KREATIONS, INC.
                   (A Development Stage Company)

                   NOTES TO FINANCIAL STATEMENTS
  
  NOTE   1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
       Organization  -  The Company was organized under the laws of the
       State of Nevada on December 26, 1995, and has elected a fiscal
       year end of December 31st.  The Company was formed to engage in
       the business of producing and marketing a children's coloring art
       book depicting various aspects of life in the Southwestern and
       Western United States. The Company is considered a development
       stage Company as defined in SFAS No 7.  The Company, has at the
       present time, not paid any dividends and any dividends that may be
       paid in the future will depend upon the financial requirement of
       the Company and other relevant factors.
  
       Net income per Share  -  The computation of net income (loss) per
       share of common stock is based on the weighted average number of
       shares outstanding during the period presented.
  
       Organization Costs  -  The Company is amortizing its organization
       costs, which reflect amounts expended to organize the Company,
       over sixty (60) months using the straight-line method.
  
       Income Taxes  -  Due to losses at December 31, 1998 and 1997 no
       provision for income taxes has been made.  There is deferred
       income taxes resulting from income and expense items being
       reported for financial accounting and tax reporting purposes in
       different periods.
  
       Cash and Cash Equivalents  -  For purposes of the statement of
       cash flows, the Company considers all highly liquid debt
       instruments purchased with a maturity of three months or less to
       be cash equivalents.  At December 31, 1998 and 1997 the Company
       did not have non-cash investing and financing activities.
       
       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 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. Actual results could differ from
       those estimates.
       
       Inventory  -  Inventories are stated at the lower of cost,
       determined by the First-in, First-out method, or market. Cost
       includes materials and conversion costs.
  
       Equipment and displays  -  Equipment and displays are recorded at
       cost. The Company uses the straight line method of computing
       depreciation for financial reporting purposes and generally uses
       accelerated methods for income tax purposes. The estimated lives
       of the equipment and displays is 5 to 7 years.
  
  NOTE   2  -  COMMON STOCK TRANSACTIONS
  
       The Company was formed through the issuance of 800,000 shares of
       common stock for $8,000.
  
       During February 1997, the Company completed an offering of stock
       to the public at a price of $.25 per share. The Company sold
       218,900 shares for a total of $54,725. The direct costs of the
       offering were $14,533.
                                  
                                  
                                 6
<PAGE>
                      KAYENTA KREATIONS, INC.
                   (A Development Stage Company)
                                  
                   NOTES TO FINANCIAL STATEMENTS
  
  NOTE   3  -  RELATED PARTY TRANSACTIONS
  
       The Company is using the home of its President as its office on a
       rent free basis.  As of December 31, 1998 and 1997 no compensation
       has been paid or accrued to any officers or directors of the
       Corporation.
       
  NOTE   4  -  INCOME TAXES
  
       The income tax provision consists of the following:
  
    Current income taxes payable   $      -
    Deferred tax benefit                 87
  
                                   $     87
  
       The income tax provision differs from the expense that would result
       from applying federal statutory tax rates to income before income
       taxes because certain entertainment and business meal expenses are
       not deductible for tax purposes. 
  
       At December 31, 1998 and 1997 the Company had net federal operating
       losses (NOL) of $33,759 and $22,203 respectively which can be
       carried forward to offset operating income. The NOL will expire as
       shown below. Valuation allowances of $5,064 and $3,330 respectively,
       have been established for deferred tax assets associated with the
       above NOL's.  The change in the NOL allowances for 1998 and 1997 was
       $1,734 and $3,275. The net operating losses expire as follows:
       
                Year of 
               Expiration         Amount
                    2010          $     2
                    2011          $   365
                    2012          $21,836
                    2018          $11,556
  
  NOTE   5  -  GOING CONCERN
                                  
                                  
       The company has experienced losses of $10,755 and $21,705 in 1998
       and 1997 and has experienced losses from its inception.  The Company
       has limited operating capital and no income producing assets and
       again sustained losses during its development stage. In light of the
       above circumstances, the ability of the Company to continue as a
       going concern is substantially in doubt.  The financial statements 
       do not include any adjustments that might result from the outcome of
       this uncertainty.
  
       Management believes their plans will provide the corporation with
       the ability to continue in existence.  Management plans to maintain
       its filings and curtail operations and activities  to keep it in
       existence until its Web page is in existence and available for sales
       and marketing of its product through the 1999 holidays.  Management
       believes it has resources currently available to proceed with this
       plan.
  
                                 7
<PAGE>