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.
                                       OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  
               SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

                         Commission file number 0-23026

                           PARAMARK ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)


             Delaware                                 22-3261564  
  (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                  Identification No.)


           One Harmon Plaza
         Secaucus, New Jersey                            07094 
         (Address of principal                         (Zip Code)
           executive offices)

Registrant's telephone number including area code: (201) 422-0910

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act:

                                  Common Stock
                                (Title of Class)

                                Class A Warrants
                                (Title of Class)

                                Class B Warrants
                                (Title of Class)

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<PAGE>
         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 is contained in this Form, and no disclosure  will be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendments to this Form 10-KSB. Yes X No

         The issuer's  revenues for the fiscal year ended December 31, 1998 were
$4,575,668.

         As of March 17,  1999,  there were  3,373,883  shares of Common  Stock,
1,453,000 Class A Warrants,  and 557,750 Class B Warrants outstanding.  Based on
the average high and low bid prices of the Common  Stock on March 17, 1999,  the
approximate  aggregate market value of Common Stock held by non-affiliates was $
1,370,000 (1).


                      DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's  1999 Definitive  Proxy  Statement,  which
statement will be filed not later that 120 days after the end of the fiscal year
covered by this Report, are incorporated by reference in Part III hereof.

         Certain  exhibits are  incorporated  by  reference to the  Registrant's
Registration  Statement  on  Form  SB-2  and  the  amendments  thereto,  and the
Registrant's  Annual  Reports on Form 10-KSB for the fiscal years ended December
31, 1995,  December 31, 1996 and December 31, 1997 as listed in response to Item
13(a)(2).

   Transitional Small Business Disclosure Format (check one):  Yes      No   X  


(1)  The aggregate  dollar value of the voting stock set forth equals the number
     of shares of the Company's Common Stock outstanding,  reduced by the amount
     of Common  Stock held by officers,  directors  and  shareholders  owning in
     excess of 10% of the Company's  Common Stock,  multiplied by the average of
     the high and low bid prices  for the  Company's  Common  Stock on March 25,
     1999. The information provided shall in no way be construed as an admission
     that any officer, director or 10% stockholder in the Company may or may not
     be deemed an  affiliate  of the  Company,  or that he/it is the  beneficial
     owner  of the  shares  reported  as  being  held by  him/it,  and any  such
     inference is hereby disclaimed. The information provided herein is included
     solely  for   recordkeeping   purposes  of  the   Securities  and  Exchange
     Commission.

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                                     PART I

ITEM 1. BUSINESS

General

         For a  discussion  of certain  factors  which should be  considered  in
evaluating the Company and its business, see "Risk Factors".

         Paramark  Enterprises,   Inc.,  formerly  T.J.  Cinnamons,   Inc.  (the
"Company"),  a Delaware  corporation was originally formed in December 1985. The
Company was one of the first  operators and  franchisors in the United States of
retail  bakeries  specializing in gourmet  cinnamon rolls and related  products.
Current management acquired the Company from its founders in 1992,  subsequently
sold the T.J.  Cinnamons  retail bakeries and franchise system in 1996 to Triarc
Restaurant  Group,  and developed the Company into a wholesale  manufacturer and
distributor of specialty  bakery products.  The Company's Common Stock,  Class A
Warrants  and Class B Warrants are  publicly  traded on the OTC  Bulletin  Board
under the symbols "TJCI", "TJCIW", and "TJCIZ"

         The Company currently owns and operates an approximately  18,000 square
foot bakery  production  facility in El Cajon,  California,  and distributes its
products  through  wholesale  channels  of  distribution  throughout  the United
States.   The  Company's  business  plan  is  centered  on  building  sales  and
distribution  by  implementing   three  interrelated   strategies:   (1)  expand
opportunities  to offer the Company's  specialty bakery products in supermarkets
and other  grocery  outlets,  (2) explore  opportunities  to offer the Company's
products in alternative forms of distribution including mass merchandisers, food
service,  convenience stores, vending outlets, airline catering and food service
environments,  and (3)  continue  to expand the sales and  distribution  of T.J.
Cinnamons  branded  products  focusing  primarily  on the unique T.J.  Cinnamons
CinnaChips pursuant to a licensing agreement with Triarc Restaurant Group.

         The Company is currently  selling its line of products in approximately
1,500  supermarket  and wholesale  club stores  including  Ralphs  Supermarkets,
Walmart Super  Centers,  Lucky's  Supermarkets,  H.E. Butt  Supermarkets,  Giant
Supermarkets,  Sams Wholesale  Club's and Costco  Wholesale  Club's.  During the
fiscal year ended December 31, 1998,  approximately  85% of the Company's  sales
were to Ralph's  Supermarkets and Walmart. See "Risk Factors Dependence on Major
Customers."

         The Company's products include:  (a) "T.J.  Cinnamons" branded cinnamon
rolls and CinnaChips,  and (b) a full line of specialty  gourmet bakery products
including  rugalach  sold in four  flavor  varieties,  bundt  cakes sold in four
flavor  varieties,  upside down pineapple  cakes,  pull-apart  cakes,  chocolate
brownies  branded under the Hershey's  label,  7" chocolate and white iced layer
cakes,  4" mini  chocolate and white iced layer cakes,  1/4" chocolate and white
iced sheet cakes, cobblers, assorted Danish and other specialty bakery products.

         Management  believes  that  the  Company  is  favorably  positioned  to
participate in a growing trend among  supermarket  chain's in-store  bakeries to
discontinue  on-premises  baking,  and to  purchase  products  that are made off
premises and delivered to them frozen. After delivery, such products are 

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<PAGE>
thawed, date coded, and placed on the shelves for sale to customers.  This "thaw
and sell" strategy eliminates the need to employ experienced bakers, and develop
extensive  cost  control  systems and  operating  systems to ensure  quality and
consistency of bakery products, all of which are extremely costly.

         The  Company's  executive  offices  are  located at One  Harmon  Plaza,
Secaucus, New Jersey 07094 and its telephone number is (201) 422-0910.

         The Triarc  Transactions.  In August 1996,  the Company sold to Arby's,
Inc. d/b/a/ Triarc Restaurant Group ("Triarc")  certain of its operating assets,
comprised of the "T.J.  Cinnamons"  and other related  trade names,  trademarks,
service marks, logos, signs, emblems,  distinctive recipes,  secret formulas and
technical  information ( the "Intellectual  Property"),  and also assigned to it
various manufacturer and distributor agreements.

         In consideration for the sale of the Intellectual Property, the Company
received (i) a 99 year  royalty free license to produce and sell T.J.  Cinnamons
branded products through  wholesale  channels of distribution  (see below),  and
(ii) a base purchase price of $3,540,000,  with  $1,790,000 paid at the closing,
$1,650,000 paid in the form of a 15 month  promissory note, and $100,000 paid in
the form of a 24 month  promissory note. In addition,  the transaction  provided
for  contingent  additional  payments of up to $5.5 million over time  dependent
upon the amount of T.J.  Cinnamons  product sales by Triarc  exceeding a minimum
base system wide sales of $26.3 million.

         Under the terms of the Triarc  license  agreement,  Triarc  granted the
Company the rights to use the Intellectual  Property for (a) the sale of certain
T.J.  Cinnamons branded products to supermarket  chains approved by Triarc,  and
(b) to continue to operate a T.J. Cinnamons bakery located in Poughkeepsie,  New
York.  The Company also  continued to act as franchisor  under the existing T.J.
Cinnamons franchise agreements,  although day-to-day management responsibilities
were  assumed by Triarc  pursuant  to a  management  agreement.  The term of the
license  agreement  aggregated  99 years,  consisting  of an initial  term of 20
years,  together  with three 20 year  renewal  options,  and one 19 year renewal
option.  Each renewal  option is subject to the  Company's  compliance  with the
terms of the  license  agreement  and  executing  a general  release in favor of
Triarc.

         In August 1998, the Company restructured its agreements with Triarc and
entered  into a new  agreement  pursuant  to which the  Company  sold all of its
rights and interests  under the existing T.J.  Cinnamons  franchise  agreements,
terminated the purchase  agreement with Triarc dated June 3, 1996 which provides
for contingent  additional payments of up to $5.5 million, and terminated the 99
year royalty free license  agreement and management  agreement entered into with
Triarc  and  affiliates  dated  August  29,  1996.  Under the terms of this 1998
agreement with Triarc, the Company received payments  aggregating  $4,000,000 of
which  $3,000,000 was paid in cash at closing and $1,000,000 was tendered in the
form of a noninterest bearing promissory note payable over 24 months. The Triarc
agreement  further  provided  for  a  contingent  additional  payment  of  up to
$1,000,000 conditioned upon the Company's attainment of certain sales targets of
T.J.  Cinnamons  products for the fiscal year ended December 31, 1998.  Based on
actual sales for the fiscal year ended  December  31, 1998,  the Company did not
meet these sales targets and as a result, the Company did not receive any of the
conditional additional payments under the Triarc agreement.

                                       4
<PAGE>
         The  Company  is  continuing  to  manufacture  and sell T.J.  Cinnamons
products  pursuant to a short term license  agreement with Triarc.  This license
agreement  allows the Company to sell certain  products to approved  supermarket
accounts  based on a 5% royalty on net sales with an original term which expired
on December 31, 1998.  Triarc has granted the Company two 3 month  extensions of
the term of this  license  agreement  through  June 30,  1999,  and the  Company
anticipates that Triarc will continue to renew this license agreement at the end
of its current term. In addition, the Company is currently negotiating a license
agreement  with Triarc  whereby the Company  will be licensed to market and sell
CinnaChips in bags (similar to bagel chips and cookies) for distribution to mass
merchandisers,  food service outlets,  convenience  stores,  vending outlets and
airline  catering.  For the fiscal year ending December 31, 1998,  sales of T.J.
Cinnamons  branded  products  accounted for  approximately  47% of the Company's
total  wholesale  sales.  See "Risk Factors - Potential Loss of Wholesale  Sales
Resulting from a Termination of the Triarc License Agreement."

         Industry  Overview.  There are 8,000  supermarket  companies  operating
24,000 in-store  bakeries and generating  annual sales in excess of $15 billion.
Growth  can  attributed  to the  addition  of new  stores  and the entry of mass
merchandisers such as Wal-Mart and Kmart into the grocery industry. Though gross
profit  margins  remain high for the  in-store  bakeries,  1997 saw a decline of
gross  profit  margins  to 51.8% down from 52.3% in 1996.  This  decline  can be
attributed to the increased use of finished  baked goods in the in-store  bakery
departments.  Management  believes that these trends in the  supermarket  bakery
industry will provide the Company with an opportunity for growth.

         The "sweet goods" and "cookie"  categories  each  represent 7.9% of the
industry-wide  bakery sales and combined  represent 15.8% of such sales. As this
industry grows and as the need for high quality value-added  products increases,
the Company believes that  manufacturers  who position  themselves as leaders in
the upscale, gourmet bakery market will be capturing more of the total sales.

         Management believes that the shift from full time to part time labor in
the in-store bakery  departments of  supermarkets  and wholesale club stores has
created a shortage of skilled bakers and is fostering a climate that is ripe for
"new"  products  the  preparation  of which  requires  little  or no  expertise.
Management  further  believes that all of the trends and barometers point toward
new product  development in "fully baked",  "thaw and sell",  and  "prepackaged"
product lines that meet the quality profile of today's in-store bakery products.
The Company's goal is to capitalize on these trends and market dynamics in order
to become a leader in the off  premises  manufacture  of finished  thaw and sell
bakery  products for sale to  supermarket  and  wholesale  club  customers.  The
Company  believes  that  this  trend is very  likely to  continue  into the next
decade, resulting in the Company's ideal positioning of its "thaw and sell" line
of gourmet bakery products. There can, however, be no assurance that the Company
can achieve its sales and earnings goals. See "Risk Factors - Competition."

         Business  Strategy.  To develop the wholesale  sales of its non-branded
specialty bakery products, the Company will focus its selling effort in specific
geographic  areas contiguous to the bakery and its trading area. The Company has
hired a Regional Sales Manager located in California to further develop sales in
Southern  California through an alliance with Le Grand Marketing,  a food broker
specializing in bakery  products,  and to develop sales in Northern  California,
Arizona,  Oregon, Utah, Washington,  Nevada and Colorado through the appointment
of new food  brokerage  firms to cover each of these  areas.  

                                       5
<PAGE>
In addition, the Company will continue to expand nationwide sales in membership
club stores through an alliance with American Sales and Marketing.

         The Company has focused its  marketing  efforts on the  following  core
products:  (a) T.J.  Cinnamons  gourmet cinnamon rolls and gourmet sticky rolls;
(b) T.J.  Cinnamons  CinnaChips;  (c) private label rugalach;  (d) private label
bundt cakes,  (e) gourmet brownies sold under the Hershey's label, and (d) other
private label specialty cakes. The private label rugalach are made utilizing the
Company's own recipe in the following flavor varieties: chocolate chip, cinnamon
apple,  raspberry  walnut and apricot  pecan.  The  gourmet  bundt cakes in four
flavor  varieties,  and the specialty cakes include upside down pineapple cakes,
pull-apart  cakes, 7" chocolate and white iced layer cakes, 4" mini 7" chocolate
and white iced layer cakes,  and 1/4" chocolate and white iced sheet cakes.  All
of these  products  are sold in various  packaging  and sizes,  and are  shipped
through both fresh and frozen distribution.  For the fiscal year ending December
31, 1998,  sales of T.J.  Cinnamons  branded  products  accounted for 47% of the
Company's  total  wholesale  sales.  In the event that Triarc fails to renew the
license agreement,  management believes that it will be able to replace the T.J.
Cinnamons  product sales with sales of other private label and branded products.
However,  no  assurance  can be given that the  Company  will be  successful  in
replacing the sales generated by the T.J. Cinnamons branded products.  See "Risk
Factors - Potential  Loss of Wholesale  Sales  Resulting from a Failure to Renew
the Triarc License Agreement."

         The  Company is  targeting  its  product  line to  in-store  bakery and
in-store  deli  areas  of  supermarket  chains,  focusing  on  large  multi-unit
accounts.  The Company is supporting  all initial sales with a marketing  budget
for in-store sampling and demonstrations and store circular promotions.

         The Company is currently  selling its products in  approximately  1,500
locations including the following accounts:  Ralph's  Supermarkets,  Food-4-Less
Supermarkets,   Walmart   Super   Centers,   Luckys   Supermarkets,   H.E.  Butt
Supermarkets,  Giant  Supermarkets,  Costco  Wholesale Clubs and Sam's Wholesale
Clubs. During the fiscal year ended December 31, 1998,  approximately 85% of the
Company's sales were to Ralph's  Supermarkets  and Walmart.  See "Risk Factors -
Dependence on Major Customers."

         Management believes that the continuous development and introduction of
new gourmet  bakery  products at  attractive  pricing will  further  develop the
Company's  sale of its "private  label"  specialty  bakery  products to both the
retail grocery and food service trade.  However,  there can be no assurance that
the Company will be able to implement its business strategy,  or if implemented,
that the business  strategy will permit the Company to accomplish  its sales and
earnings goals. See "Risk Factors - Management of Growth."

         Mix  manufacturers  have seen a decline in the use of their products in
the in-store bakeries. Most chains staff their bakeries with retail clerks union
employees  rather than paying the high hourly  labor rates of the retail  bakers
union employees. This shift in union affiliation has forced supermarket bakeries
to switch  from  scratch or mix formula  products to bake-off  and thaw and sell
products.  Most mix  manufacturers  are  looking to increase  their  business by
aligning with bakeries that can finish their  products in a finished  form.  The
Company believes that by strategically  aligning itself with these manufacturers
will provide an opportunity for growth.

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         The Company plans, as an integral part of its competitive  posture,  to
introduce new products rapidly and continuously. The Company believes that a key
to  its  success  is  its  ability  to  develop   innovative  new  products  and
merchandising  programs  reacting to demand of its  customers  and trends in the
in-store  baking  industry.  Some  of the new  products  under  development  are
biscotti, mandel toast, puff pastries, bread and rice puddings, crumb cakes, and
yogurt cakes. See "Risk Factors - Competition; New Product Development."

         CinnaChips.  Company has developed a mass production process to produce
the CinnaChip products which are similar to bagel chips made from cinnamon rolls
utilizing a double bake process.  The  CinnaChips  are currently sold in plastic
tub  containers  ranging  in size from 8 ounces  to 20 ounces  which are sold in
in-store  bakeries of large  supermarket  chains and wholesale club stores.  The
Company  has  developed  a paper bag  packaging  system to  compete  in the same
category  as bagel chips and  cookies.  The  Company is  developing  a 5.5 ounce
CinnaChip  bag for a  retail  price  point  of  $2.49  to be  utilized  for mass
merchandisers,  food service accounts,  and convenience stores, and a 1.75 ounce
CinnaChip bag with a suggested  retail selling price of $1.00 to be utilized for
food service  accounts,  airline catering and vending  outlets.  The Company has
also developed two additional  flavor  varieties of the CinnaChip:  Butter Pecan
and Raisin Nut. The Company has retained a consultant  to develop the  packaging
and  marketing  materials  and pursue the marketing and sales effort of this new
product.

         In addition, the Company has entered into a verbal co-packing agreement
with La Francaise  Bakeries,  Inc., a licensee of the T.J.  Cinnamons  brand for
grocery  distribution,  to produce  T.J.  Cinnamon  CinnaChips  in 8 ounce tubs.
LaFrancaise  is a large  manufacturer  of sweet  bakery  products  with  current
distribution  in over 7,000  grocery  stores.  LaFrancaise  has developed a T.J.
Cinnamons  display unit which will be placed in the in-store  bakery sections of
supermarkets.  This display  unit will have four T.J.  Cinnamons  SKU's,  one of
which will be the Company's CinnaChip products.  To date,  LaFrancaise has began
testing the display unit in 20 grocery stores in various markets nationwide.

         Plan of  Operation.  The Company's  plan of operations  for fiscal year
1999 calls for the  implementation  of the Company's  overall  strategy to build
substantial  sales of new and existing  gourmet bakery  products sold as private
label products to major supermarket chains,  wholesale club stores,  convenience
stores, specialty stores, vending outlets and food service accounts.

         The  Company   anticipates  further  automation  of  its  manufacturing
facility in California during 1999. Furthermore,  the Company intends to explore
the  possible  acquisition  of  an  existing  bakery  business  located  in  the
northeast.  The  most  likely  acquisition  candidate  will  be a  company  that
manufactures and distributes specialty bakery products, and whose manufacturing,
marketing, sales, distribution and administrative operations complement those of
the Company, although no specific acquisitions are currently contemplated.

         The Company's  executive  offices are located in Secaucus,  New Jersey.
Management  believes  that  its  office  space  will be  sufficient  to meet the
Company's  forecasted  administrative  needs and its bakery will have sufficient
capacity to meet its  forecasted  production  capacity based on the sales volume
anticipated for fiscal year 1999. See "Properties."

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         The Company  believes that its current working  capital,  together with
its  anticipated  lines of  credit,  and the  Company's  anticipated  cash  from
operations,  should be sufficient  to satisfy the  Company's  cash needs through
June 30,  2000.  This  expectation  is,  however,  based in part on  anticipated
increases in revenues. Should such revenue increases not occur or should they be
materially   smaller  than  anticipated,   or  should  demand  be  greater  than
anticipated, the Company might find it necessary to seek additional financing or
to reduce planned  expenditures on marketing and product  expansion if efficient
financing  cannot be  obtained  or obtained  timely on terms  acceptable  to the
Company. See "Risk Factors - Need for Additional Financing."

         Manufacturing  and  Distribution.  The  Company's  existing  production
facility is located in El Cajon, California. The lease for this facility expires
in April 2001.  The  facility  is  approximately  18,000  square foot and has an
annual  capacity  estimated to be  approximately  $10 million.  The facility has
blast freezers, freezers, refrigerators, proofers, ovens, mixers, depositors and
other  equipment  necessary for the  production of the Company's  products.  The
Company also has an automated bakery production line which sheets, forms, fills,
rolls and cuts the various bakery  products,  as well as an automated  packaging
line which cools and packages the fully baked products.  Management  anticipates
that further automation of the production and packaging processes will result in
a substantial  reduction in labor costs thereby  increasing the Company's  gross
margins.

         The Company intends to explore the possibility of acquiring an existing
bakery  business  and/or  entering  into  a  co-packing   relationship   with  a
manufacturer located in the Northeast. The Company is continuing to have ongoing
merger  discussions  with Creative  Bakeries,  Inc.  located in  Fairfield,  New
Jersey,  however,  the Company has not completed its due diligence and given the
current level of the Company's  stock price,  it appears that plans to merge the
two companies on not proceeding on the previously announced schedule.

         All products sold are delivered via outside trucking companies, and the
Company has a minimum half truck load order requirement for all products shipped
to areas of the country  other than  California.  The Company has set up a daily
distribution  system for the Ralphs  Supermarket chain. The Company has a leased
truck and  delivers  its fresh baked  cinnamon  rolls and brownies to the Ralphs
central distribution  warehouse five days a week. These products are baked fresh
and have a 5 to 7 day shelf life. All other products sold to Ralphs Supermarkets
and other accounts, excluding CinnaChips, are blast frozen immediately following
baking  and  packaging,  and are  distributed  in master  cases  through  frozen
distribution.  These products are thawed at the  supermarket and sold as a fresh
product in the in-store bakery section of the supermarkets.  The CinnaChips have
a six to nine  month  shelf life  depending  on the type of  packaging,  and are
distributed fresh at room temperature due to their extended shelf life, and sold
as a shelf stable product by the end users.

         Quality Control. The Company's products are produced in accordance with
the Company's recipes, quality standards and proprietary formulations.  In order
to maintain  the high  quality of its bakery  products,  the  Company  maintains
specifications for its ingredients and periodically reviews the standards of its
purchased ingredients against these specifications. The Company is not dependent
on any one supplier for its  ingredients  and only those  ingredients  that meet
specified  criteria are selected.  Ingredients  are  carefully  inspected by the
Company  before  they  enter  its  plant.  Product  consistency  is 

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ensured by inspection at critical flow points by quality assurance employees,
although all workers are responsible for monitoring the quality of the product
and may stop the production process, if necessary. Product sampling occurs on
the production floor to ensure that products are consistent with the Company's
standards.

         Provisions  and Supplies.  The Company  purchases its core  ingredients
from a number of different  suppliers.  The Company negotiates directly with its
suppliers  for all  primary  food and paper  ingredients,  to ensure an adequate
supply  and  to  obtain  competitive  prices.  Pursuant  to the  Triarc  license
agreement,  the  Company  purchases  its  cinnamon  roll dry mix from  Dawn Food
Products, Inc. in accordance with the T.J. Cinnamons proprietary secret formulas
and quality standards.  The T.J. Cinnamon proprietary cinnamon spice formulation
is purchased  from  McCormick & Company,  Inc. and various other T.J.  Cinnamons
proprietary  blends  are  produced  by Dawn Food  Products,  Inc.  Although  the
Company's  relationship  with its  suppliers is  generally on an  order-by-order
basis, the Company believes  alternate  sources of supply for all essential food
and paper products are available,  or on short notice can be made available,  at
comparable prices.

         Governmental  Regulations.  The Company is subject to various  federal,
state,  and local  laws  affecting  its  business.  The  Company  is  subject to
regulation by the Food and Drug Administration,  the United States Department of
Agriculture,  the Federal Trade Commission,  the Environmental Protection Agency
and various state agencies with respect to the production,  packaging,  labeling
and  distribution  of its  food  products,  and  believes  that  it is  material
compliance  with all applicable  rules and regulations of such federal and state
agencies.  The principal  federal laws that regulate the Company with respect to
the  production,  packaging,  labeling  and  distribution  of its food  products
include:  (i) The Food, Drug and Cosmetic Act of 1938,  which ensures that foods
are produced under sanitary  conditions and are properly labeled;  (ii) the Fair
Packaging and Labeling Act, which  regulates  trade  practices and requires that
consumers  receive  accurate  information  regarding  the  quality  and value of
products;  (iii) the National Label Education Act, which  regulates  information
which must be included on food  labels;  and (iv) the Federal  Trade  Commission
Act, which regulates methods of competition, advertising and trade practices

         The  Company's  bakery is also subject to  regulation  by various other
governmental  agencies,  including state and local licensing,  zoning, land use,
construction and environmental  regulations and various health,  safety and fire
standards.  The  Company is also  subject to the Fair  Labor  Standards  Act and
various state laws governing such matters as minimum wages, overtime and working
conditions.

         The Company  has not made nor does it  anticipate  making any  material
capital  expenditures in order to comply with environmental  regulations.  There
can be no assurance,  however, that new environmental regulations may be adopted
which would require the Company to make material capital  expenditures to comply
therewith. See "Risk Factors - Governmental Regulations; Minimum Wages."

         Employees.  The Company has a total of  approximately  71 employees.  4
employees are employed in executive and administrative  functions principally at
the Company's  corporate  offices in Secaucus,  New Jersey;  and 7 employees are
employed  in  the  Company's  wholesale  bakery  in El  Cajon,  California.  The
remaining 60 employees are full time hourly  employees  employed in the El Cajon
manufacturing  facility. The Company is not a party to any collective bargaining
agreements, and considers its labor relations to be satisfactory.

                                       9
<PAGE>
         Competition.  The retail bakery  industry and the restaurant  industry,
particularly the quick-service  segment,  is highly  competitive with respect to
price,  service,  food quality  (including taste,  freshness,  healthfulness and
nutritional value) and location. There are numerous well-established competitors
possessing  substantially  greater  financial,  marketing,  personnel  and other
resources  than the Company.  These  competitors  include  national and regional
bakeries,  supermarkets  with in-store  bakeries and  quick-service  restaurants
chains, many of which specialize in or offer bakery products. Many quick-service
restaurant chains are expanding their menus to include products competitive with
the Company's  cinnamon rolls and other specialty bakery  products.  The Company
can also be expected to face competition from a broad range of other restaurants
and food service establishments.

         Many of the Company's  competitors have achieved significant  national,
regional  and local brand name and product  recognition  and engage in extensive
advertising and promotional programs,  both generally and in response to efforts
by additional competitors to enter new markets or introduce new products.

         The retail bakery industry and the  quick-service  restaurant  industry
are characterized by the frequent introduction of new products,  accomplished by
substantial  promotional campaigns. In recent years, numerous companies in these
industries have introduced products positioned to capitalize on growing consumer
preference  for  food  products  that  are or  are  perceived  to be  healthful,
nutritious,  low in calories and low in fat content. It can be expected that the
Company will be subject to increasing  competition from companies whose products
or marketing strategies address these consumer preferences.

         A majority of the  Company's  revenue is derived from sales of products
to grocery retail outlets.  The wholesale food  distribution  business is highly
competitive. The principal competitive factors include price, service, extent of
product offered,  strength of brand offered and store promotional support. These
intense  competitive  factors may result in a reduction in the  Company's  gross
margins which could have a materially adverse effect on the Company's  financial
condition and results of operations.

         There can be no assurance  that consumers will regard the products sold
under the Company's name by in-store  bakeries as  sufficiently  distinguishable
from competitive  products,  that substantially  equivalent products will not be
introduced by the Company's  other  competitors or that the Company will be able
to compete successfully. See "Risk Factors - Competition."

Forward Looking Statements

         When used in this  Annual  Report,  the words or phrases  "will  likely
result",  "are expected to",  "will  continue",  "is  anticipated",  "estimate",
"projected",  "intends  to" or similar  expressions  are  intended  to  identify
"forward  looking  statements"  within  the  meaning of the  Private  Securities
Litigation  Reform Act of 1995. Such statements are subject to certain risks and
uncertainties,  including but not limited to the Company's history of losses and
cash flow deficit;  possible loss of wholesale sales resulting from a failure to
extend the Triarc  License  Agreement;  need for additional  financing;  dietary
trends; consumer preferences;  competition; new product development;  management
of growth;  non-exclusivity of Triarc license agreement;  trademarks and service
marks;  limited  manufacturing  and  warehouse  facilities;  dependence on major
customers;  dependence  upon key and other  personnel; 

                                       10
<PAGE>
government regulations;  minimum wages; insurance and potential liability;  lack
of liquidity;  volatility of market price of common stock and warrants; possible
adverse  effect of penny stock rules and liquidity of the Company's  securities;
dividend  policy;  and control by directors and executive  officers,  that could
cause the Company's actual results to differ materially from historical earnings
and those presently anticipated or projected.  Such factors, which are discussed
in "Risk  Factors",  "Business"  and  "Management's  Discussion  and Analysis of
Financial  Condition and Results of  Operations"  and the notes to  consolidated
financial statements, could affect the Company's financial performance and could
cause the Company's actual results for future periods to differ  materially from
any opinions or statements expressed with respect to future periods expressed in
the Annual Report. As a result,  potential  investors are cautioned not to place
undue reliance on any such  forward-looking  statements,  which speak only as of
the date made. See "Risk Factors"  "Business" and  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

Risk Factors

In addition to the other information in this report,  the following  information
should be considered  carefully by investors in  evaluating  the Company and its
business.

         (a) History of  Operating  Losses;  Operating  Cash Flow  Deficit.  The
Company  has had net  operating  losses  since  1988.  For the fiscal year ended
December 31, 1998, the Company's net operating loss was $1,226,111, however, due
to a gain from the sale of assets  resulting  from the Triarc  transaction,  the
Company's net income for the fiscal year ended December 31, 1998 was $1,811,770.
The  Company  has been and is  currently  experiencing  an  operating  cash flow
deficit primarily  because its current expenses exceed its current revenues.  At
December  31, 1998 the Company had a working  capital  balance of  approximately
$1,214,000.  There can be no assurance that the Company will achieve  profitable
operations and a positive cash flow. See  "Management's  Discussion and Analysis
of Financial Conditions and Results of Operations."

         (b) Potential Loss of Wholesale Sales Resulting from a Failure to Renew
the Triarc License Agreement. The Triarc license agreement pursuant to which the
Company is licensed to  manufacture  and sell T. J. Cinnamons  branded  products
expired on  December  31,  1998.  Triarc has granted the Company two three month
extensions  through June 30, 1999. T.J. Cinnamons branded products accounted for
approximately  47% of  wholesale  sales for the fiscal year ending  December 31,
1998. The failure of the Company to replace such sales with other products could
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.

         (c) Need for Additional Financing.  The Company will require additional
capital in connection with the manufacture,  marketing and sale of its products.
In order to develop new products, manufacture, merchandise, market, and sell its
new and existing  product line, and otherwise  implement its plan of operations,
the Company will be required,  among other things, to raise additional  capital.
While the Company has existing  lines of credit,  there can be no assurance that
such debt  financing will be available to the Company in the future or that such
debt  financing  will be available in the amounts  required by the Company or on
terms acceptable to the Company.  The failure of the Company to obtain financing
in adequate  amounts and on acceptable terms could have an adverse effect on the
Company's business, financial condition and results of operations.

                                       11
<PAGE>
         (d) Dietary Trends;  Consumer  Preferences.  In recent years,  numerous
companies in the retail bakery industry have introduced  products  positioned to
capitalize on growing  consumer  preference for bakery products that are, or are
perceived to be, healthy,  nutritious, and low in calories,  cholesterol and fat
content.  The  Company's  primary  products  are  relatively  high in  calories,
cholesterol and fat content. A decline in the sale of cinnamon rolls and related
products, due to industry trends, changing consumer preferences including taste,
eating habits,  demographic  trends and traffic  patterns,  or because of health
related or other dietary concerns or other reasons, could have an adverse effect
on the Company's business, financial condition and results of operations.

         (e) Competition; New Product Development. The retail bakery industry is
highly  competitive  with  respect to price and food  quality  including  taste,
freshness,   healthfulness  and  nutritional  value.  A  number  of  established
companies with  significant  brand name recognition  currently  compete with the
Company in the various  markets for market share.  Many of these  companies have
far more available  capital,  broader product lines,  and greater  marketing and
sales  resources  than does the  Company,  and many  devote  significantly  more
resources to the development of new products than does the Company.  The Company
will seek to  compete  on the  basis of the  Company's  innovation  and speed of
execution in expanding  its existing  product line and  launching  new products.
However, there can be no assurance that such competitors will not develop direct
competing  brands  with more  market  acceptance,  or which can be sold at lower
prices than products that have been, or may be, developed by the Company.  These
intense  competitive  factors may result in a reduction in the  Company's  gross
margins which could have a materially adverse effect on the Company's  business,
financial condition and results of operations.

         (f)  Management  of Growth.  The  Company's  ability  to manage  growth
effectively and expand its operations will be dependent on its ability to expand
and improve its  operational,  technical,  financial and sales  systems,  and to
develop the skills of its managers and  supervisors,  and to hire,  motivate and
manage  its  employees.  Expansion  of the  Company's  manufacturing,  sales and
distribution operations will be dependent upon, amongst other things,  continued
growth in the bakery industry,  the Company's ability to withstand intense price
competition,  its ability to obtain new  customers,  and retain  sales and other
personnel.  There can be no  assurance  that the Company will be  successful  in
managing its growth and expanding its business.  The Company's failure to manage
its growth or expand its business  could have a material  adverse  effect on its
business, financial condition and results of operations.

         (g)  Non-Exclusivity  of the  Triarc  License  Agreement.  The  Company
manufactures  and  sells  T.J.   Cinnamons   branded  products   pursuant  to  a
non-exclusive  license  agreement  with Triarc.  Triarc,  or other  licensees of
Triarc,  may sell T.J.  Cinnamons branded products through wholesale channels of
distribution,  and as a result, the Company may be forced to compete with Triarc
and/or  Triarc's other  licensees for  supermarket  sales of the T.J.  Cinnamons
branded products. Triarc's resources greatly exceed the Company's resources, and
it is anticipated that Triarc's  resources will continue to exceed the Company's
resources  in the near  future.  Accordingly,  if  Triarc,  either  directly  or
indirectly, attempt to enter into the Company's trading area, the Company may be
unable  to  compete  effectively  which may limit  the  Company's  growth.  T.J.
Cinnamons  branded products  accounted for 47% of wholesale sales for the fiscal
year ending  December 31, 1998.  The failure of the Company to replace  sales of
T.J. 

                                       12
<PAGE>
Cinnamons branded products with other products could have an adverse effect
on the Company's business, financial condition and results of operations.

         (h) Trademarks and Service Marks.  The Company's  business is dependent
upon its license of the  trademarks  and services  marks  pursuant to the Triarc
license agreement . The Company believes these trademarks and service marks have
significant  value and are important to the marketing of its products.  However,
in addition to the non-exclusivity of the Triarc license agreement, there can be
no assurance  that the Company  will be able to retain these rights  pursuant to
its  license  agreement,  that  these  marks  do not or  will  not  violate  the
proprietary  rights of others,  that the marks would be upheld if  challenged or
that the Company would not be prevented  from using these marks.  The occurrence
of any of  the  aforementioned  events  could  have  an  adverse  effect  on the
Company's business, financial condition and results of operations.

         (i) Limited  Manufacturing  and Warehouse  Facilities.  The Company has
only one manufacturing and warehouse  facility located in El Cajon,  California,
with limited  production  capacity.  The Company plans to improve its production
capability by  implementing  further  automation of its production and packaging
processes  through new equipment  purchases.  There can be no assurance that the
Company,  will, in the future, be able to manufacture and warehouse  products in
adequate quantities to meet future demand. Accordingly,  the Company may have to
seek additional manufacturing capacity and warehouse facilities.

         (j)  Dependence  on Major  Customers.  The Company's  current  revenues
consist  primarily  of sales  to a  limited  number  of  large  supermarket  and
wholesale  club  chains.  During  the  fiscal  year  ended  December  31,  1998,
approximately  85% of the  Company's  sales  were to  Ralph's  Supermarkets  and
Walmart.  The Company's  success will depend upon a continuous  stream of orders
for its various products from existing customers and an increasing number of new
customers. There can be no assurance, however, that the Company's prior sales to
existing  accounts  will  result in any new and/or  repeat  orders from these or
other  similar  accounts.  The failure of such  accounts to carry the  Company's
products  or to place  repeat  orders for the  Company's  products  would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

         (k) Dependence Upon Key and Other Personnel. The success of the Company
will be largely dependent on the efforts of certain key personnel of the Company
including Charles Loccisano,  its Chairman and Chief Executive Officer, and Alan
Gottlich its President and Chief Financial  Officer.  The loss of the service of
any such  persons  would  have a material  adverse  effect on the  Company.  The
Company maintains  "key-man" insurance on Charles Loccisano and Alan Gottlich in
the amount of  $1,000,000  and $500,000,  respectively.  The Company has entered
into  three  year  employment  agreements  with each of  Messrs.  Loccisano  and
Gottlich. The Company will also be dependent upon its ability to retain existing
and hire additional qualified personnel. The competition for qualified personnel
in the food industry is intense and, accordingly, there can be no assurance that
the Company  will be able to retain or hire other  necessary  personnel.  If the
Company is required to provide its employees  higher wages or more  extensive or
costly  benefits as a result of competitive  reasons or changes in  governmental
regulations,  the expenses  associated  with the Company's  operations  could be
substantially   increased  without  an  offsetting  increase  in  the  Company's
revenues.

                                       13
<PAGE>
         (l) Government Regulations;  Minimum Wages. The Company also is subject
to various federal,  state and local laws affecting its business.  The Company's
wholesale  bakery is subject to  regulation  by various  governmental  agencies,
including  state  and  local  licensing,  zoning,  land  use,  construction  and
environmental  regulations  and  various  health,  sanitation,  safety  and fire
standard laws and  regulations.  In addition,  suspension of certain licenses or
approvals, or failure to comply with applicable regulations or otherwise,  could
interrupt the  operations of the Company's  manufacturing  facility or otherwise
adversely  affect  the   manufacturing   facility  of  the  Company.   Any  such
interruption  could have a material adverse effect on the Company's revenues and
results of  operations.  The  Company is also  subject to federal and state laws
establishing minimum wages and regulating overtime and working conditions. Since
a substantial portion of the Company's manufacturing facility personnel are paid
or expected to be paid at rates based on the federal minimum wage,  increases in
such minimum wage will  increase the  Company's  labor costs.  If the Company is
required to pay higher wages to its employees,  the expenses associated with the
Company's  operations  could be increased  without a  corresponding  increase in
revenues.

         (m) Insurance and Potential Liability. The Company maintains insurance,
including  insurance  relating to personal  injury,  in amounts that the Company
currently considers adequate.  Nevertheless, a partially or completely uninsured
or  underinsured  claim  against the Company,  if  successful  and of sufficient
magnitude,  could  have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

         (n) Lack of  Liquidity;  Volatility of Market Price of Common Stock and
Warrants.  The Common Stock and Warrants of the Company were  delisted  from the
Nasdaq SmallCap Market on January 7, 1998 and are presently quoted and traded on
the OTC Bulletin Board. As a result, the purchaser may find it more difficult to
dispose  of, or to obtain  accurate  quotations  as to the  market  value of the
Common  Stock and  Warrants.  Consequently,  there can be no  assurance  that an
active and liquid market for the Common Stock or the uniform quotation of prices
for the Common Stock can be sustained. The market price for the Company's Common
Stock and  Warrants  may also be  significantly  affected by such factors as the
introduction of new products by the Company or its competitors. Additionally, in
recent years,  the stock market has experienced a high level of price and volume
volatility,  and  market  prices  for many  companies,  particularly  small  and
emerging growth companies, the securities of which trade in the over-the-counter
market,  have experienced wide price fluctuations not necessarily related to the
operating  performance of such companies.  The market price and liquidity of the
Company's  Common Stock and Warrants may also be  significantly  affected by the
general business condition of the Company.

         As a result  of the  delisting  of the  Company's  securities  from the
Nasdaq SmallCap Market,  sales of the Company's  securities are within the scope
of  Securities  and  Exchange  Commission  rules that imposes  additional  sales
practice  requirements  on  broker-dealers  who sell such  securities to persons
other that their  established  customers  and  accredited  investors  (generally
institutions  with assets in excess of $5,000,000 or individuals  with net worth
in excess of in excess of  $1,000,000  or annual  income  exceeding  $200,000 or
$300,000 jointly with their spouses). For transactions covered by that rule, the
broker-dealer must make a special suitability determination with respect to each
purchaser,  and receive the  purchaser's  written  agreement to the  transaction
prior  to  the  sale.   Consequently,   the  rule  may  affect  the  ability  of
broker-dealers to sell the Company's  securities and also may affect the ability
of 

                                       14
<PAGE>
current  shareholders to sell their securities in the secondary market. There
can be no  assurance  that  trading  of the  Company's  securities  will  not be
adversely  affected  by the  Company's  failure  to comply  with  these or other
regulations that could adversely effect the market for such securities.

         (o)  Effect  of  Penny  Stock  Rules  on  Liquidity  for the  Company's
Securities.   The  Securities  and  Exchange   Commission   (the   "Commission")
regulations  define a "penny stock" to be an equity security not registered on a
national securities exchange, or for which quotation information is disseminated
on the Nasdaq  SmallCap  Market that has a market price (as therein  defined) of
less than  $5.00 per share or an  exercise  price of less than  $5.00 per share,
subject to certain  exemptions.  For any  transaction  involving a penny  stock,
unless  exempt,  the rules require  delivery,  prior to a transaction in a penny
stock, of a disclosure schedule prepared by the Commission relating to the penny
stock market.  Disclosure is also required to be made about commissions  payable
to  both  the  broker-dealer  and  the  registered  representative  and  current
quotations for the securities.  Finally,  monthly  statements are required to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

         The foregoing  required penny stock restrictions apply to the Company's
securities if such  securities  continue to be listed on the OTC Bulletin Board,
and have  certain  price  and  volume  information  provided  on a  current  and
continuing  basis or meet certain  minimum net tangible assets or average return
criteria.  In any event, even if the Company's  securities were exempt from such
restrictions,  the  Company  would  remain  subject to Section  15(b)(6)  of the
Securities  Exchange Act of 1934,  as amended,  which gives the  Commission  the
authority  to  prohibit  any person that is engaged in  unlawful  conduct  while
participating  in a  distribution  of a  penny  stock  from  associating  with a
broker-dealer  or  participating  in a  distribution  of a penny  stock,  if the
Commission finds that such a restriction would be in the public interest. If the
Company's  securities  were  subject  to the rules on penny  stocks,  the market
liquidity  for the  Company's  securities  could  be  materially  and  adversely
affected.  Any  disruption in the liquid  market of the  Company's  Common Stock
could limit the Company's access to the equity markets in the future,  and could
have a materially adverse effect on the Company's business, financial conditions
and results of operations.

         (p) Dividend Policy. To date, the Company has not paid any dividends on
its Common Stock. The Board of Directors does not anticipate  declaring any cash
dividends on its Common Stock in the foreseeable  future.  Future dividends,  if
any, will be dependent upon the results of operations and financial condition of
the  Company,  tax  considerations,  industry  standards,  economic  conditions,
general business practices and other factors.

         (q)  Control  by  Directors  and  Executive  Officers.  The  directors,
executive  officers and their affiliates own  approximately 42% of the Company's
outstanding Common Stock excluding  currently  exercisable stock options and 49%
of the Company's  outstanding Common Stock including currently exercisable stock
options  and,  therefore,  are in a  position  to  elect  all  of the  Company's
directors  who,  in  turn,  elect  all  of  the  Company's  executive  officers.
Accordingly, such stockholders are able to, directly or indirectly,  control all
of the affairs of the Company.

         (r) Year 2000 Compliance. Many currently installed computer systems and
software products use two digits rather than four to define the applicable year.
In other words,  date-sensitive  

                                       15
<PAGE>
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions or engage in normal business activity.

         The Company retained outside computer consultants to update its network
system in order to address Year 2000 issues.  The upgrades  were  installed  and
tested in September 1998 at a cost of approximately $6,000. The Company believes
that as a  result  of  these  upgrades,  its  computer  systems  are  Year  2000
compliant.

         As part of its Year 2000 compliance  program,  the Company will contact
and  survey  all of its  vendors  and  suppliers  with whom the  Company  does a
material amount of business to determine whether these parties' systems (insofar
as they relate to the Company's  business) are subject to Year 2000 issues.  The
failure of the  Company's  vendors and  suppliers to convert  their systems on a
timely basis may have a material adverse effect on the Company's operations. The
Company has not  developed  a  contingency  plan in the event these  vendors and
suppliers are not Year 2000 compliant on a timely basis.





                                       16
<PAGE>
ITEM 2. PROPERTIES

         The Company leases its executive offices at One Harmon Plaza, Secaucus,
New Jersey. The offices occupy approximately 2,200 square feet with a lease term
expiring May 31,  1999.  The lease  provides  for a fixed rent of  approximately
$3,800 per month.

         The Company leases its wholesale bakery production  facility located in
El Cajon, California with the lease term expiring in April 2001. The lease has a
minimum  base  occupancy   charge  of  $7,967  per  month  plus  charges  for  a
proportionate  share of building  operating expenses and real estate taxes. with
an increase of 4% per annum, plus charges for a proportionate  share of building
operating expenses and real estate taxes.





                                       17
<PAGE>
ITEM 3. LEGAL PROCEEDINGS


         In November  1998, the Company filed a civil action against Sweet Goods
LLC, Gary Kleinman and Robert Statman (the  "Defendants")  in the Superior Court
of New  Jersey.  The  claim  is  for  the  collection  of  invoices  aggregating
approximately  $115,000  representing the value of certain baked goods delivered
to  the   defendants.   On   February   1,  1999,   the   Defendants   filed  an
answer/counterclaim  related to the alleged  defective nature of the baked goods
provided and the resultant  loss of certain  alleged key customer  accounts.  No
specific damages were outlined in the  counterclaim,  which the Company believes
are without merit. the Company and the defendants have serves interrogatories to
one another, and the Company intends to depose the defendants in the near future
as part of its discovery  process.  The Company intends to vigorously pursue its
claims and defend the Defendants counterclaims.

         In addition, the Company from time to time has been involved in routine
litigation,  including  litigation with various  vendors and creditors.  None of
these  litigation  matters in which the Company has been involved is material to
its financial condition or results of operations.




                                       18
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The  Company  did not submit any  matters to vote of its  stockholders,
through the  solicitation  of proxies or otherwise  during the fourth quarter of
fiscal 1998.











  
                                     19
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

         The Company's  Common Stock,  Class A Warrants and Class B Warrants are
currently  traded on the OTC Bulletin  Board ("OTC")  under the symbols  "TJCI",
"TJCIW",  and "TJCIZ".  Prior to January 7, 1998,  the  Company's  Common Stock,
Class A Warrants and Class B Warrants were traded on the Nasdaq  SmallCap Market
under the same symbols.

         The following table sets forth, for the periods indicated, the range of
high and low bid prices of the Common Stock as reported by Nasdaq for the twelve
months ended  December 31, 1997 and  December  31,  1998.  These prices  reflect
interdealer   prices  and  do  not  include  retail   mark-ups,   mark-downs  or
commissions, and do not necessarily represent actual transactions.

                                     High                 Low 
Quarters Ending:
March 31, 1997 ....................  $3 1/8            $1 9/16
June 30, 1997 .....................  2 7/16              1 3/8
 September 30, 1997 ...............  2 3/16             1 5/16
December 31, 1997 ................. 1 11/16               7/16

Quarters Ending:
March 31, 1998 ....................   $7/16               $1/4
June 30, 1998 .....................    9/16                3/8
         September 30, 1998........     3/4               9/16

December 31, 1998 .................  1 1/16                .08

         The approximate number of stockholders of the Common Stock on record at
December 31, 1997 was approximately  500, not including  beneficial owners whose
shares are held by banks, brokers and other nominees.

         The  Company has not paid any  dividends  in the past.  Declaration  of
dividends in the future will remain within the discretion of the Company's Board
of  Directors.  As a Delaware  corporation,  the Company may not declare and pay
dividends  on its  capital  stock if the  amount if the amount  paid  exceeds an
amount equal to the excess of the Company's net assets over paid-in-capital, or,
if there is no  excess,  its net  profits  for the  current  and/or  immediately
preceding  fiscal year.  Future  dividends,  if any, will be dependent  upon the
results  of   operations   and   financial   condition  of  the   Company,   tax
considerations,   industry  standards,  economic  conditions,  general  business
practices and other factors.

Sales of Unregistered Securities

         The following  sales of  unregistered  securities  occurred  during the
Company's fiscal years ended December 31, 1996, 1997 and 1998:

                                       20
<PAGE>
1. In 1996, the Company authorized the issuance of 5,000 shares of the Company's
Common Stock to Philip  Friedman,  a member of the Company's Board of Directors.
These  shares  were  issued  without  an  underwriter  or  placement   agent  in
consideration for consulting services rendered.  The exemption from registration
for the grant was claimed  pursuant  to Section  4(2) of the  Securities  Act of
1933,  as amended,  in  reliance  upon the fact that such sale did not involve a
public offering.

2. In 1996,  the  Company  authorized  the  issuance  of  12,000  shares  of the
Company's  Common Stock to Harry  Goldberg.  These shares were issued without an
underwriter  or  placement  agent  in  consideration  for  consulting   services
rendered.  The exemption from registration for the grant was claimed pursuant to
Section 4(2) of the  Securities  Act of 1933,  as amended,  in reliance upon the
fact that such sale did not involve a public offering.

3. In 1996, the Company authorized the issuance of 1,000 shares of the Company's
Common Stock to Alan Weingarden. These shares were issued without an underwriter
or placement  agent in  consideration  for  consulting  services  rendered.  The
exemption from  registration  for the grant was claimed pursuant to Section 4(2)
of the Securities  Act of 1933, as amended,  in reliance upon the fact that such
sale did not involve a public offering.

4. In November  1996,  the Company  authorized the issuance of 125,000 shares of
the Company's Common Stock to the Charles N. Loccisano  Irrevocable  Trust f/b/o
Michael  Loccisano  and to the  Charles N.  Loccisano  Irrevocable  Trust  f/b/o
Marissa Loccisano.  These shares were issued without an underwriter or placement
agent in consideration for shares previously conveyed by the Trust, on behalf of
the Company,  to Dan Feldman, a past member of the Company's Board of Directors,
in  exchange  for his  agreement  to serve as a  Director.  The  exemption  from
registration  for  the  grant  was  claimed  pursuant  to  Section  4(2)  of the
Securities Act of 1933, as amended, in reliance upon the fact that such sale did
not involve a public offering.

5. In 1997, the Company authorized the issuance of 1,250 shares of the Company's
Common Stock to Kaya Yurtkuran.  These shares were issued without an underwriter
or placement  agent in  consideration  for  consulting  services  rendered.  The
exemption  from  registration  for the issuance was claimed  pursuant to Section
4(2) of the Securities  Act of 1933, as amended,  in reliance upon the fact that
such sale did not involve a public offering.

6. In  November  1997,  in order to  bring  the  Company  into  compliance  with
requirements  necessary for  continued  listing on the Nasdaq  SmallCap  Market,
Charles Loccisano,  the Company's Chairman and Chief Executive Officer, and Alan
Gottlich,  the Company's  President and Chief  Financial  Officer,  purchased an
aggregate of 20,000 shares of redeemable  Series B preferred stock at a price of
$5.00  per  share.  In  January  1998,  following  delisting  of  the  Company's
securities from the Nasdaq  SmallCap Market and as a result of additional  funds
loaned to the Company by Messrs.  Loccisano and Gottlich, these shares of Series
B preferred stock were redeemed by the Company at a price of $5.00 per share.

7. In 1998, the Company authorized the issuance of 3,000 shares of the Company's
Common Stock to Gelt Financial Corporation.  These shares were issued without an
underwriter or placement agent in consideration for providing the Company with a
working capital line of credit. The exemption from 

                                       21
<PAGE>
registration for the issuance was claimed pursuant to Section 4(2) of the
Securities Act of 1933, as amended, in reliance upon the fact that such sale did
not involve a public offering.

8. In 1998,  the Company  authorized the issuance of 800 shares of the Company's
Common Stock to KenTech, Inc. These shares were issued without an underwriter or
placement agent in consideration for consulting services rendered. The exemption
from  registration  for the issuance was claimed pursuant to Section 4(2) of the
Securities Act of 1933, as amended, in reliance upon the fact that such sale did
not involve a public offering.

9. In 1998,  the  Company  authorized  the  issuance  of  300,000  shares of the
Company's Common Stock to Charles  Loccisano,  the Company's  Chairman and Chief
Executive  Officer,  and  Alan  Gottlich,  the  Company's  President  and  Chief
Financial Officer.  These shares were issued without an underwriter or placement
agent in  consideration  for providing the Company with a working line of credit
in the amount of $500,000.  The exemption from registration for the issuance was
claimed  pursuant to Section 4(2) of the Securities Act of 1933, as amended,  in
reliance upon the fact that such sale did not involve a public offering.





                                       22
<PAGE>
ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following  discussion and analysis  should be read in  conjunction  with the
financial statements and notes thereto appearing elsewhere in this report.

         RESULTS OF  OPERATIONS  (for the fiscal  year ended  December  31, 1998
compared to the fiscal year ended December 31, 1997).

         The following tables set forth the components of the Company's revenue:


                                        Fiscal Year Ended December 31,
                                          1998                 1997

Wholesale sales                       $4,409,441          $3,475,463

Company-owned bakery sales                86,227             202,998
Royalties and licensing fees              80,000             199,920
                                      ----------          ----------
Total Revenue                         $4,575,668          $3,878,381



         Wholesale  sales  increased  by 27% to  $4,409,441  for the fiscal year
ended  December 31, 1998 from  $3,475,463 for the fiscal year ended December 31,
1997.  This  increase  in  wholesale  sales  was  primarily  the  result  of the
successful  launching of a variety of new bakery  products (both T.J.  Cinnamons
branded and  non-branded  products) and  penetration  into  approximately  1,500
grocery store and wholesale  club  accounts.  T.J.  Cinnamons  branded  products
accounted  for  approximately  47% of wholesale  sales for the fiscal year ended
December 31, 1998.  See "Risk  Factors - Loss of Sales from Failure to Renew the
Triarc License Agreement."

         Company-owned bakery sales decreased 58% to $86,227 for the fiscal year
ended  December 31, 1998 from  $202,998  for the fiscal year ended  December 31,
1997.  This decrease  resulted  primarily  from the closing of the retail bakery
located  in the  Poughkeepsie  Galleria  Mall in July 1999.  The  closing of the
Poughkeepsie bakery was one of the conditions of the Triarc agreement.

         Royalty and  licensing  fee revenues  decreased  60% to $80,000 for the
fiscal  year ended  December  31, 1998 from  $199,920  for the fiscal year ended
December  31, 1997.  This  decrease  was  primarily  the result of a decrease in
franchise royalty fees which resulted from the closing of the Triarc transaction
in August 1998, whereby the Company sold all of its rights in the T.J. Cinnamons
retail franchise system.

         Cost of goods sold  increased to  $3,645,956  for the fiscal year ended
December 31, 1998, as compared to $3,043,984  for the fiscal year ended December
31, 1997.  This increase was primarily the result of the increased cost of goods
sold  associated  with  increased  wholesale  sales to  supermarkets  chains and
membership club chains.

                                       23
<PAGE>
         Selling,  general  and  administrative  expenses  decreased  by  6%  to
$2,155,823 for the fiscal year ended  December 31, 1998 from  $2,283,036 for the
fiscal year ended  December 31, 1997.  This decrease was primarily the result of
decreases in corporate selling, general and administrative costs.

         Gain from sale of assets was  $3,312,410 for fiscal year ended December
31, 1998 as compared to $0 for the fiscal year ending  December  31,  1997.  The
gain from sale of assets  in  fiscal  1998  resulted  from the sale of assets to
Triarc in August 1998. See "Business - Triarc Transactions."

         Loss from the  relocation  of bakery was  $129,192  for the fiscal year
ended December 31, 1998 as compared to $0 for the fiscal year ended December 31,
1997.  The loss from  relocation of bakery  resulted  from expenses  incurred in
connection  with the  relocation  of the Company's  manufacturing  facility from
Santa Ana,  California to El Cajon,  California in June 1998  resulting from the
expiration of the lease term. These expenses included moving costs,  training of
new employees,  additional  rent and storage costs and other costs incurred as a
direct result of the move.

         Interest  expense for the fiscal year ended December 31, 1998 increased
to $145,337 as compared to $8,106 for the fiscal year ended  December  31, 1997.
This increase in interest expense resulted primarily from the increased interest
expenses associated with the Company's  short-term loans and accounts receivable
financing  from  Gelt  Financial  Corporation  and  credit  lines  from  Charles
Loccisano,  the  Company's  Chairman and CEO, and Alan  Gottlich,  the Company's
President and CFO,  offset by the interest  earned on the notes  receivable from
Triarc  Restaurant  Group.  All short term and credit line funding was repaid in
full out of the proceeds of the Triarc transaction in August 1998.

         Extraordinary item - forgiveness of debt decreased to $0 for the fiscal
year ended December 31, 1998 from $80,088 for the fiscal year ended December 31,
1997.  The  forgiveness  of debt for the fiscal year ended December 31, 1997 was
due to reductions in accounts  payable and accrued  liabilities  resulting  from
discounted settlements and write-offs of certain accounts payable.

         The  Company  had a net gain of  $1,811,770  for the fiscal  year ended
December  31, 1998 as compared to a net loss of  $1,376,657  for the fiscal year
ended December 31, 1997.

Liquidity and Capital Resources

         At December  31,  1998,  the Company had a working  capital  balance of
approximately $1,214,000.  During the twelve months ended December 31, 1998, the
Company experienced cash flow deficits from its operating  activities  primarily
because its  operating  expenses  exceeded its operating  revenues.  The Company
believes that its current working capital,  together with its anticipated  lines
of  credit,  and the  Company's  anticipated  cash  from  operations,  should be
sufficient  to satisfy the  Company's  cash needs  through June 30,  2000.  This
expectation  is,  however,  based in part on anticipated  increases in revenues.
Should such revenue  increases  not occur or should they be  materially  smaller
than  anticipated,  or should  demand be greater than  anticipated,  the Company
might  find it  necessary  to seek  additional  financing  or to reduce  planned
expenditures on marketing and product expansion if efficient financing cannot be
obtained or obtained timely on terms acceptable to the Company.


                                       24
<PAGE>
         The  Company  used net cash in  operating  activities  in the amount of
$1,734,544  for the  fiscal  year  ended  December  31,  1998,  as  compared  to
$1,076,277 for the fiscal year ended December 31, 1997. The Company received net
cash from  investing  activities in the amount of $2,661,401 for the fiscal year
ended  December  31,  1998,  as compared  to net cash  received  from  investing
activities  in the amount of $1,113,156  for the fiscal year ended  December 31,
1997.  The  Company  used net cash in  financing  activities  in the  amount  of
$258,545  for the fiscal  year ended  December  31, 1998 as compared to net cash
provided by  financing  activities  in the amount of $36,015 for the fiscal year
ended December 31, 1997.

         In September  1997, the Company entered into a loan agreement with Gelt
Financial  Corporation  for a credit  line in the amount of  $200,000  which was
subsequently increased to $300,000 secured by Wal-Mart accounts receivable.  The
terms of this loan agreement  provided for a service fee of 1.5% of each advance
together  with  interest at a rate of 675 basis points above the prime rate.  In
addition, the Company granted Gelt 3,000 shares of the Company's Common Stock as
a loan origination fee. The credit line balance was $0 on December 31, 1998.

         In October  1997,  the Company  offered for sale units in a convertible
preferred stock private  placement with  Commonwealth  Associates  acting as the
placement agent.  This offering was held open to investors through January 1998,
and was not  consummated  as orders for the  minimum  number of shares  were not
obtained.  Without  alternative  sources  of  financing  to fund  the  Company's
operating deficits,  in January 1998, Charles Loccisano,  the Company's Chairman
and Chief  Executive  Officer,  and Alan Gottlich,  the Company's  President and
Chief Financial Officer,  provided the Company with loans aggregating  $282,500.
In March  1998,  based on the need for  additional  funding  resulting  from the
receipt of large  purchase  orders from  Walmart  Super  Centers,  the  previous
Loccisano  and  Gottlich  loans were  repaid in full and Messrs.  Loccisano  and
Gottlich  agreed to provide  the  Company  with a credit line for up to $500,000
with  interest  payable  quarterly at the  applicable  federal rate of 5.39% per
annum.  The credit line had a term of one year,  or such  shorter  period if the
Company obtains  alternative  sources of funds to fund its  operations,  and was
secured by payments due to the Company under its purchase agreement with Triarc.
In  consideration  for providing this credit line facility,  the Company granted
Messrs.  Loccisano and Gottlich an aggregate of 300,000  unregistered  shares of
Common  Stock.  This  credit  line was repaid in full in August  1998 out of the
proceeds of the Triarc agreement.

         In November 1997, Charles  Loccisano,  the Company's Chairman and Chief
Executive  Officer,  and  Alan  Gottlich,  the  Company's  President  and  Chief
Financial Officer,  purchased an aggregate of 20,000 shares of redeemable Series
B preferred  stock at a price of $5.00 per share.  In January 1998,  following a
delisting of the Company's  securities  from the Nasdaq SmallCap Market and as a
result of  additional  funds  loaned to the  Company  by Messrs.  Loccisano  and
Gottlich,  these shares of Series B preferred stock were redeemed by the Company
at a price of $5.00 per share.

         In July  1998,  the  Company  borrowed  $150,000  from  Gelt  Financial
Corporation.  The loan  provided  for interest at the rate of 5% above the prime
rate,  and was secured by all the  payments  due the Company  under the purchase
agreement dated June 3, 1996 entered into with Triarc Restaurant Group. In order
to induce Gelt  Financial  Group to enter into this loan,  the Company paid Gelt
Financial  Group a  placement  fee in the amount of $15,625  and agreed to issue
Gelt Financial Group 15,000 shares of the Company's  

                                       25
<PAGE>
unregistered common stock. This loan was repaid in full in August 1998 out of
the proceeds of the Triarc agreement.

         In August 1998,  Charles  Loccisano,  the Company's  Chairman and Chief
Executive  Officer,  and  Alan  Gottlich,  the  Company's  President  and  Chief
Financial Officer, provided the Company with short term bridge loans aggregating
$100,000.  These loans  provided for a loan fee of 5%  representing  the initial
loan fees and  interest  on the loan.  These loans were repaid in full in August
1998 out of the proceeds of the Triarc agreement.

         In August 1998, the Company closed an agreement with Triarc pursuant to
which the Company sold all of its rights and  interests  under the existing T.J.
Cinnamons franchise agreements and terminated the purchase agreement with Triarc
dated June 3, 1996 and the license  agreement and management  agreement  entered
into with Triarc and affiliates  dated August 29, 1996.  Under the terms of this
agreement,  the  Company  received  payments  aggregating  $4,000,000  of  which
$3,000,000  was paid in cash at closing and $1,000,000 was paid in the form of a
noninterest bearing promissory note payable over 24 months. The Triarc agreement
further  provided  for a  contingent  additional  payment  of  up to  $1,000,000
conditioned  upon the  Company's  attainment  of certain  sales  targets of T.J.
Cinnamons  products for the fiscal year ended December 31, 1998. Based on actual
sales for the fiscal year ended  December 31, 1998,  the Company did not achieve
these  sales  targets,  and as a result,  the Company did not receive any of the
conditional additional payments under the Triarc agreement.

         The Company has an interoffice  network of personal computers operating
under a Novell  network.  All of the  Company's  PC's  utilize  the  Windows  95
operating  system  and the  Company  runs its  accounting  system on MAS 90. The
Company retained  outside  computer  consultants to update its network system in
order to address  Year 2000 issues  including  upgrading  the MAS 90  accounting
system and other  spreadsheet  and word processing  programs.  The upgrades were
installed  and  tested  in  September  1998  at a cost of  approximately  $6,000
including  consulting  fees.  The  Company  believes  that as a result  of these
upgrades,  its computer systems are year 2000 compliant  (meaning they recognize
years in the Year 2000 and beyond).

         As part of its Year 2000 compliance  program,  the Company will contact
and  survey  all of its  vendors  and  suppliers  with whom the  Company  does a
material  amount of business to determine  whether  these  parties'  systems are
subject to Year 2000 issues.  The failure of the Company's vendors and suppliers
to convert their systems on a timely basis may have a material adverse effect on
the  Company's  operations.  The  Company  is in the  process  of  developing  a
contingency  plan in the event  these  vendors and  suppliers  are not Year 2000
compliant  on a  timely  basis,  however,  no such  contingency  plan  has  been
developed to date.

                                       26
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See Item 13(a)(1) in Part IV.













                                       27
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         On January 31, 1997, the Company dismissed Goldstein,  Golub, Kessler &
Co. P.C. ("GGK") as its independent auditors. Such dismissal was approved by the
Company's  Board  of  Directors.  GGK's  report  upon  the  Company's  financial
statements  for its  fiscal  year ended  December  31,  1995 did not  contain an
adverse  opinion or a disclaimer  of opinion,  nor was such report  qualified or
modified as to audit scope or  accounting  principles.  The report was  prepared
assuming that the Company will continue as a going concern. During the Company's
fiscal  years ended  December 31, 1995 and to the date of GGK's  dismissal  (the
"Interim  Period"):  (i) there were no disagreements (of nature  contemplated by
Item 304 (a) (1) (iv) of  Regulation  S-B) between the Company and GGK; and (ii)
there were no reportable events of nature  contemplated by Item 304 (a) (1) (iv)
(B) of Regulation S-B.

On January 31,  1997,  the Company  engaged  Arthur  Andersen  LLP ("AA") as its
independent  public accountants for the Company's fiscal year ended December 31,
1996.  During the Company's  fiscal year ended December 31, 1995 and the Interim
Period,  the Company did not consult  with AA with respect to any of the matters
contemplated by Item 304 (a) (1) (iv) (B) of Regulation S-B.

On February 14, 1997,  AA resigned  its  position as the  Company's  independent
auditors.  Such resignation was necessitated  because AA concluded that it had a
conflict of interest in reporting on the Company's financial  statements for the
fiscal  year ended  December  31,  1996 due to the fact that  during 1996 AA had
rendered financial advisory services to the Company for which it received a fee.
During the Company's  engagement of AA through the date of AA's  withdrawal (the
"Second  Interim   Period"):   (i)  there  were  no  disagreements   (of  nature
contemplated by Item 304 (a) (1) (iv) of Regulation S-B) between the Company and
GGK; and (ii) there were no reportable events of nature contemplated by Item 304
(a) (1) (iv) (B) of Regulation S-B.

         On February 21, 1997, the Company  engaged  Amper,  Politziner & Mattia
("AP&M") as its independent  public  accountants  for the Company's  fiscal year
ended  December 31, 1996.  During the Company's  fiscal year ended  December 31,
1995,  the Interim  Period and the Second  Interim  Period,  the Company did not
consult  with AP&M with respect to any of the matters  contemplated  by Item 304
(a) (2) (i) - (ii) of Regulation S-B.









                                       28
<PAGE>
                                    Part III

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

         The information  required for this item is incorporated by reference to
the Company's  Definitive  Proxy  Statement which the Company will file with the
Securities and Exchange Commission no later than 120 days subsequent to December
31, 1998.











                                       29
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION

The  information  required  for this item is  incorporated  by  reference to the
Company's  Definitive  Proxy  Statement  which  the  Company  will file with the
Securities and Exchange Commission no later than 120 days subsequent to December
31, 1998.










                                       30
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required  for this item is  incorporated  by  reference to the
Company's  Definitive  Proxy  Statement  which  the  Company  will file with the
Securities and Exchange Commission no later than 120 days subsequent to December
31, 1998.










                                       31
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required  for this item is  incorporated  by  reference to the
Company's  Definitive  Proxy  Statement  which  the  Company  will file with the
Securities and Exchange Commission no later than 120 days subsequent to December
31, 1998.













                                       32
<PAGE>
                                    PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

                                                                            PAGE

(a)     Documents filed as part of this report.

        1. Financial Statements

            Independent Auditor's Report                                   F-2

            Consolidated Balance Sheet                                     F-3

            Consolidated Statements of Operations                          F-4

            Consolidated Statement of Stockholders' Equity                 F-5

            Consolidated Statements of Cash Flows                          F-6

            Notes to Consolidated Financial Statements              F-7 - F-15
<TABLE>
<CAPTION>
        2. Exhibits
<S>     <C>                                         <C>                         
        1.1 *              ................          Underwriting Agreement with Paragon Capital Corporation

        2.1 *              ................          Certificate  of Ownership  and Merger  regarding the merger of
                                                     Signature  Acquisition  Corp.  with and into  T.J.  Cinnamons, Inc.

        2.2 *              ................          Certificate  of Ownership  and Merger  regarding the merger of
                                                     Signature Foods, Inc. with and into T.J. Cinnamons, Inc.

        2.3 ***            ................          Purchase   Agreement   between  the   Registrant   and  Triarc
                                                     Restaurant Group

        3.1 *              ................          Restated Certificate of Incorporation of the Registrant

        3.2 *              ................          By-Laws of the Registrant

        9.1 *              ................          Modification  Agreement (the  "Modification  Agreement") among
                                                     Signature  Foods,  Inc., The Charles N. Loccisano  Irrevocable
                                                     Trust  f/b/o  Michael  Loccisano,  The  Charles  N.  Loccisano

                                       33
<PAGE>
                                                     Irrevocable  Trust f/b/o  Marissa  Loccisano,  The Ted H. Rice
                                                     and Joyce Rice Family Trust,  U/T/I dated August 8, 1986,  The
                                                     Roger L. Cohen  Trust  U/T/D/  dated  January 26, 1984 and the
                                                     Kenneth D. Hill  Revocable  Trust U/T/I dated march 29,  1989,
                                                     Signature  Acquisition  Corp.,  the  Registrant,   Charles  N.
                                                     Loccisano  and Alan S. Gottlich  relating to a Stock  Purchase
                                                     Agreement (the "Stock Purchase Agreement") among them

        9.2 *              ................          Waiver  of  Default  under  the  Modification   Agreement,  as
                                                     amended

        9.3 *              ................          Amendment to Stock Purchase Agreement

        9.4 *              ................          Stock Purchase Agreement

        10.1 *             ................          Trademark and Technology  License and Manufacturing  Agreement
                                                     ("License  Agreement")  by and between  Signature  Acquisition
                                                     Corp. and Pro Bakers Ltd.

        10.1(a) *          ................          Amendment to License Agreement

        10.1(b) *          ................          Second Amendment to License Agreement

        10.1(c)  **        ................          Termination of the License Agreement

        10.2 *             ................          1993 Stock Option Plan

        10.3 *             ................          1996 Amended and Restated Stock Option Plan

        10.4 *             ................          Employment Agreement with Charles Loccisano

        10.5 *             ................          Employment Agreement with Alan Gottlich

        10.9 *             ................          Lease regarding the Company's principal executive offices

        10.13 *            ................          License agreement with Triarc Restaurant Group

        10.14 **           ................          Management Agreement with TJ Holding Company, Inc.

        10.15 **           ................          Lease regarding the Santa Ana bakery facility

        10.16 *            ................          Lease regarding the El Cajon bakery facility

                                       34
<PAGE>

        10.17 ***          ................          Agreement  between and among TJ Holding Company,  Inc.,  Arby's,  Inc.,
                                                     d/b/a Triarc Restaurant Group and Paramark Enterprises, Inc.

        10.18 ***          ................          Wholesale  License   Agreement  between  Arby's,   Inc.,  d/b/a  Triarc
                                                     Restaurant Group and Paramark Enterprises, Inc.

        16.1 **            ................          Letter from  Goldstein  Golub and  Kessler,  the  Registrant's
                                                     former independent accountant

        16.2 **            ................          Letter from Arthur Andersen LLP

        21                 ................          Subsidiaries of the Company
                                                     Interbake Brands, Inc.

        27                 ................          Financial Data Schedule

---------------------
<FN>
     *    Incorporated by reference to the Company's Registration Statement on
          Form SB-2 and the amendments thereto.

     **   Incorporated by reference to the Company's Annual Reports on Form
          10-KSB for the fiscal years ended December 31, 1997, 1996 and 1995.

     ***  Incorporated by reference to the Company's Current Reports on Form 8-K
          dated June 18, 1996 and July 9, 1998.

(b) The Company did not file any Current  Reports on Form 8-K during the quarter
ended December 31, 1998.
</FN>
</TABLE>

                                       35
<PAGE>
                                   SIGNATURES

        In  accordance  with  Section  13 or  15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.



                                     PARAMARK ENTERPRISES, INC.


                                     By: /s/ Charles N. Loccisano
                                        Charles N. Loccisano, Chairman




        In accordance  with the Exchange Act, this report has been signed by the
following person on behalf of the Company and in the capacities and on the dates
stated.


Signature                         Title(s)                       Date



/s/ Charles N. Loccisano        Chairman, Chief              March 29, 1999
Charles N. Loccisano            Executive Officer
                                and Director
                                (Principal Executive
                                Officer)


/s/ Alan S. Gottlich            President, Chief             March 29, 1999
Alan S. Gottlich                Financial Officer
                                and Director
                                (Principal Accounting
                                Officer)


/s/ Philip Friedman             Director                     March 29, 1999
Philip Friedman


/s/ Paul Bergrin                Director                     March 29, 1999
Paul Bergrin


                                       36
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (Formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY

                               For the Years Ended
                           December 31, 1998 and 1997







                                                                       Page

Independent Auditors' Report                                            F-1

Consolidated Balance Sheets                                             F-2

Consolidated Statements of Operations                                   F-3

Consolidated Statements of Stockholders' Equity                         F-4

Consolidated Statements of Cash Flows                                   F-5

Notes to Consolidated Financial Statements                           F-6 - F-13


<PAGE>
                  [Amper, Politziner & Mattia P.A. letterhead]



                          Independent Auditors' Report


To the Board of Directors and Stockholders of
Paramark Enterprises, Inc.
 (formerly T. J. Cinnamons, Inc.) and Subsidiary

We have  audited  the  accompanying  consolidated  balance  sheets  of  Paramark
Enterprises,  Inc.  (formerly T. J. Cinnamons,  Inc.) and Subsidiary at December
31,  1998 and 1997,  and the  related  consolidated  statements  of  operations,
stockholders'  equity,  and cash flows for the years ended December 31, 1998 and
1997.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our 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 consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  Paramark
Enterprises, Inc. (formerly T. J. Cinnamons, Inc.) and Subsidiary as of December
31, 1998 and 1997 and the results of their  operations  and their cash flows for
the years ended December 31, 1998 and 1997 in conformity with generally accepted
accounting principles.

                                  /s/ Amper, Politziner & Mattia P.A.

                                     AMPER, POLITZINER & MATTIA P.A.


February 5, 1999
Edison, New Jersey


<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                           Consolidated Balance Sheets
                                  December 31,

                                     Assets
<TABLE>
<CAPTION>
                                                                            1998              1997
                                                                            ----              ----
Current assets
<S>                                                                    <C>              <C>        
    Cash                                                               $   790,873      $   122,561
    Accounts receivable, less allowance for
     doubtful accounts of $57,500 and $64,000                              326,217          259,271
    Current maturities of notes receivable                                 500,000           69,837
    Inventory                                                              167,956          234,822
    Prepaid expenses and other current assets, net                          44,352           35,291
                                                                       -----------      -----------
                                                                         1,829,398          721,782

Property and equipment, net                                                517,140          453,296

Note receivable, net of current maturities                                 375,000               --

Goodwill, net                                                                   --          476,667
                                                                       -----------      -----------

                                                                       $ 2,721,538      $ 1,651,745
                                                                       ===========      ===========


Liabilities and Stockholders' Equity


Current liabilities
    Accounts payable and accrued expenses                              $   601,593      $ 1,142,415
    Current maturities of long-term debt                                    13,938          258,545
                                                                       -----------      -----------
                                                                           615,531        1,400,960

Long-term debt, net of current maturities                                   55,522           69,460

Commitments and contingencies

Stockholders' equity
    Preferred stock - $.01 par value; authorized 1,000,000 shares,
     none issued                                                                --               --
    Common stock - $.01 par value; authorized 10,000,000 shares,
     issued and outstanding 3,373,883 and 3,070,083 shares                  33,740           30,702
    Additional paid-in capital                                           6,813,704        6,759,352
    Accumulated deficit                                                 (4,796,959)      (6,608,729)
                                                                       -----------      -----------
       Total stockholders' equity                                        2,050,485          181,325
                                                                       -----------      -----------
                                                                       $ 2,721,538      $ 1,651,745
                                                                       ===========      ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-2
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                      Consolidated Statements of Operations
                        For the Years Ended December 31,

<TABLE>
<CAPTION>
                                                                              1998                         1997
                                                                              ----                         ----

Revenue
<S>                                                                   <C>                            <C>             
    Wholesale sales                                                   $      4,409,441               $      3,475,463
    Sales from Company-owned stores                                             86,227                        202,998
    Royalties, licensing fees and other                                         80,000                        199,920 
                                                                      -----------------              -----------------
                                                                             4,575,668                      3,878,381

Cost of goods sold                                                           3,645,956                      3,043,984 
                                                                      -----------------              -----------------

Gross margin                                                                   929,712                        834,397

Selling, general and administrative                                          2,155,823                      2,283,036 
                                                                      -----------------              -----------------

Loss from operations                                                        (1,226,111)                    (1,448,639)

Other income (expense)
    Gain on sale of assets                                                   3,312,410                              -
    Loss on relocation of bakery                                              (129,192)                             -
    Interest, net                                                             (145,337)                        (8,106)
                                                                      -----------------              -----------------

Income (loss) before extraordinary item                                      1,811,770                     (1,456,745)

Extraordinary item - forgiveness of debt                                             -                         80,088 
                                                                      -----------------              -----------------

Net income (loss)                                                     $      1,811,770               $     (1,376,657)
                                                                      =================              =================
</TABLE>
<TABLE>
<CAPTION>
                                                                      Basic       Diluted            Basic         Diluted
                                                                       EPS          EPS              EPS             EPS

<S>                                                                 <C>          <C>                 <C>          <C>      
Income (loss) before extraordinary item                             $   .57      $    .56            $  (.48)     $   (.48)

Extraordinary item                                                        -             -                .03           .03 
                                                                    --------     ---------           --------     ---------

Net income (loss)                                                   $   .57      $    .56            $  (.45)     $   (.45)
                                                                    ========     =========           ========     =========
</TABLE>
<TABLE>
<CAPTION>
Weighted-average common shares
  outstanding
<S>                                                                   <C>                            <C>             
       Basic                                                          $      3,287,156               $      3,069,775
       Diluted                                                               3,328,892                      3,069,775
</TABLE>


                 See notes to consolidated financial statements.
                                       F-3
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                 Consolidated Statements of Stockholders' Equity
                        For the Years Ended December 31,
<TABLE>
<CAPTION>
                                                                           Additional                               Total
                                                   Common Stock              Paid-In            Accumulated     Stockholders'
                                             Shares          Amount          Capital              Deficit          Equity
<S>                                       <C>           <C>             <C>                 <C>               <C>          
Balance at December 31, 1996                3,068,833     $   30,689      $   6,757,491       $ (5,232,072)     $   1,556,108

    Issuance of common stock
      for services                              1,250             13              1,861                  -              1,874

    Net loss                                        -              -                  -         (1,376,657)        (1,376,657)
                                        --------------    -----------     --------------      -------------     --------------

Balance at December 31, 1997                3,070,083         30,702          6,759,352         (6,608,729)           181,325

    Issuance of common stock
      for services                              3,800             38              1,102                  -              1,140

    Issuance of common stock for
      consideration for officer loan
      to Company (Note 8)                     300,000          3,000             53,250                  -             56,250

    Net income                                      -              -                  -          1,811,770          1,811,770 
                                        --------------    -----------     --------------      -------------     --------------

Balance at December 31, 1998                3,373,883     $   33,740      $   6,813,704       $ (4,796,959)     $   2,050,485 
                                        ==============    ===========     ==============      =============     ==============
</TABLE>

                 See notes to consolidated financial statements.
                                       F-4
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                        For the Years Ended December 31,
<TABLE>
<CAPTION>
                                                                                              1998                  1997
                                                                                              ----                  ----
Cash flows from operating activities
<S>                                                                                    <C>                   <C>              
    Net income (loss)                                                                  $       1,811,770     $     (1,376,657)
                                                                                       ------------------    -----------------
    Adjustments to reconcile net income (loss) to net
     cash from operating activities
      Depreciation and amortization                                                              129,477              114,273
      Provision for doubtful accounts                                                             (6,500)               1,760
      Noncash interest expense                                                                    57,150                    -
      Gain on sale of assets                                                                  (3,312,410)                   -
      Loss on relocation of bakery                                                               129,192                    -
      Gain from forgiveness of debt                                                                    -              (80,088)
    (Increase) decrease in
      Accounts receivable                                                                        (60,206)              76,166
      Inventories                                                                                 66,866             (152,621)
      Prepaid expenses and other current assets                                                   (9,061)               5,089
    Increase (decrease) in
      Accounts payable and accrued expenses                                                     (540,822)             389,184
      Other current liabilities                                                                        -              (53,383)
                                                                                       ------------------    -----------------
        Total adjustments                                                                     (3,546,314)             300,380 
                                                                                       ------------------    -----------------
                                                                                              (1,734,544)          (1,076,277)
                                                                                       ------------------    -----------------
Cash flows from investing activities
    Purchases of property and equipment                                                         (201,739)            (240,518)
    Proceeds from sale of assets                                                               3,668,303                    -
    Issuance of note receivable                                                               (1,000,000)                   -
    Principal payments received on notes receivable                                              194,837            1,353,674 
                                                                                       ------------------    -----------------
                                                                                               2,661,401            1,113,156 
                                                                                       ------------------    -----------------
Cash flows from financing activities
    Principal payments on long-term debt                                                        (858,545)            (830,215)
    Proceeds from issuance of long-term debt                                                     600,000              866,230 
                                                                                       ------------------    -----------------
                                                                                                (258,545)              36,015 
                                                                                       ------------------    -----------------

Net change in cash                                                                               668,312               72,894

Cash - beginning                                                                                 122,561               49,667 
                                                                                       ------------------    -----------------

Cash - ending                                                                          $         790,873     $        122,561 
                                                                                       ==================    =================
</TABLE>

                 See notes to consolidated financial statements.
                                       F-5
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

Note  1 -     Principal Business Activity and Sale of Assets
              Operations

              Paramark  Enterprises,  Inc. (formerly T. J. Cinnamons,  Inc.) and
              Subsidiary   (the   "Company"),   is  engaged  in  the   wholesale
              manufacturing  and  distribution  of specialty  bakery products in
              supermarket  and  wholesale  club  stores  throughout  the  United
              States.  In 1996, the Company formed Interbake  Brands,  Inc. as a
              wholly-owned   subsidiary   to  conduct   all   wholesale   bakery
              operations.

              Sale of Assets
              In August  1996,  the Company  closed a purchase  agreement  ("the
              Transaction")  with Triarc  Restaurant  Group d/b/a  Arby's,  Inc.
              ("Triarc")  through  which (a) Triarc  purchased  the  trademarks,
              service  marks,  recipes and secret  formulas of the Company,  (b)
              Triarc licensed back to the Company the rights to operate existing
              franchised  bakery  locations and to  distribute  T. J.  Cinnamons
              branded  products  through  retail  grocery  outlets,  and (c) the
              Company entered into a management  agreement with Triarc to manage
              the franchise system.

              The sales price of the transaction  was $3,470,000,  for which the
              Company  has  received  payment.  In  addition,   the  Transaction
              provided the potential for  contingent  payments to the Company up
              to a maximum of an additional  $5,500,000 over time dependent upon
              the amount of T. J. Cinnamons  product sales by Triarc exceeding a
              minimum base system-wide  sales of $26.3 million.  The Company has
              not received any additional payments as of December 31, 1998.

              Additionally,  major stockholders of the Company, with holdings of
              1,013,390  shares of the Company's common stock as of December 31,
              1997, signed a stock sale restriction  agreement.  Under the terms
              of this agreement,  these  stockholders  were prohibited,  through
              August 1998, without prior written consent of Triarc, to sell more
              than  2.5% of the  total  issued  and  outstanding  shares  of the
              Company.  Subsequent  to August 1998,  and during the existence of
              the license  agreement  with Triarc,  the  threshold was increased
              from 2.5% to 10%.

              Following the closing of the Transaction, the Company's operations
              have been  concentrated  exclusively on its wholesale  development
              activities.

              Assignment of the T. J. Cinnamons, Inc.'s License Agreements
              In August  1998,  the Company  restructured  its  agreements  with
              Triarc and  entered  into a new  agreement  pursuant  to which the
              Company sold all of its rights and interests under the existing T.
              J.  Cinnamons  franchise  agreements  and  terminated the purchase
              agreement with Triarc dated June 3, 1996 and the license agreement
              and management agreement entered into with Triarc dated August 29,
              1996.  Under the terms of this  agreement,  the  Company  received
              $4,000,000, the total sales price, of which $3,000,000 was paid in
              cash at closing and  $1,000,000  was in the form of a non-interest
              bearing  promissory  note receivable over 24 months (Note 4). This
              resulted in a gain, net of goodwill (Note 3) and related costs, of
              approximately  $3,300,000.  The Triarc agreement  further provided
              for  a  contingent   additional   payment  of  up  to   $1,000,000
              conditioned upon the Company's attainment of certain sales targets
              of T. J. Cinnamons products for the fiscal year ended December 31,
              1998. Based on actual sales for the fiscal year ended December 31,
              1998,  the  Company  did not meet these  sales  targets  and, as a
              result,  the  Company  did  not  receive  any  of  the  contingent
              additional payments under the Triarc agreement.

                                       F-6
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

Note  1 -     Principal Business Activity and Sale of Assets - (continued)
              Assignment of the T. J. Cinnamons, Inc.'s License Agreements -
              (continued)
              The Company is continuing to manufacture  and sell T. J. Cinnamons
              products pursuant to a license agreement with Triarc. This license
              agreement  allows the Company to sell certain products to approved
              supermarket  accounts  based on a 5%  royalty  on net sales with a
              term which  expired on December 31,  1998.  Triarc has granted the
              Company two three  month  extensions  of the term of this  license
              agreement through June 30, 1999, and the Company  anticipates that
              Triarc will continue to renew this license agreement at the end of
              its current term.

Note  2 -     Liquidity
              In August 1998, the Company  restructured (see Note 1) and entered
              into a new agreement with Triarc to provide working capital.

              Although the Company anticipates operating losses during 1999, the
              Company believes that the available cash on hand and the operating
              plan for 1999 will provide  sufficient working capital to meet its
              needs for the current year.

Note  3 -     Summary of Significant Accounting Policies
              Principles of Consolidation
              The consolidated  financial statements include the accounts of the
              Company  (formerly  T. J.  Cinnamons,  Inc.) and its  wholly-owned
              subsidiary  Interbake  Brands,  Inc.,  after  elimination  of  all
              significant intercompany balances and transactions.

              Revenue Recognition
              In conjunction  with the  Transaction,  the Company entered into a
              management  agreement  with  Triarc  for  the  management  of  the
              franchise system.  Under this agreement which terminated in August
              1998,  royalty  fees  collected  were  recorded as revenue paid to
              Triarc via a management fee.

              Royalty  revenue  was  based  upon a  percentage  of  sales of the
              Company's franchisees and was recognized by the Company when sales
              were  made by the  franchisee.  Licensing  fees  were  based  on a
              percentage of sales for using the Company's trademark and/or trade
              name.  Licensing fees were recognized when the sale is made by the
              licensor.

              Cash and Cash Equivalents
              The Company considers all highly liquid debt instruments purchased
              with a maturity of three months or less to be cash equivalents.

              Concentration of Credit Risk
              Financial  instruments  that  potentially  subject  the Company to
              concentrations   of  credit   risk   consist   of  cash  and  cash
              investments.  The Company  restricts cash and cash  investments to
              financial institutions with high credit standings. At November 30,
              1998,  the Company had  approximately  $700,000  invested with one
              financial institution.

              Inventory
              Inventory  is  stated at the  lower of cost  (first-in,  first-out
              basis) or market, and consists principally of raw materials.

                                       F-7
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

Note  3 -     Summary of Significant Accounting Policies - (continued)
              Property and Equipment
              Depreciation   of  property  and  equipment  is  provided  by  the
              straight-line  method  over  the  estimated  useful  lives  of the
              related assets or the term of lease, whichever is shorter.

              Goodwill
              The  excess  of  cost  over  fair  value  of net  assets  acquired
              ("goodwill")  is a result of the  Transaction  dated  August 1996.
              This transaction  resulted in Paramark obtaining the rights to use
              the TJCI trademark and recipes.  Goodwill has been amortized using
              the straight-line  method over a ten-year life. As a result of the
              termination  of the Triarc  license  agreement in August 1998, the
              Company wrote off the net goodwill of $440,000.

              Stock Option Plan
              The  Company  has elected to follow  Accounting  Principles  Board
              Opinion  No.  25 ("APB  25"),  "Accounting  for  Stock  Issued  to
              Employees,"  and related  interpretations  in  accounting  for its
              employee   stock   options  and   warrants.   Under  this  method,
              compensation  cost is  measured  as the amount by which the market
              price of the  underlying  stock exceeds the exercise  price of the
              stock option,  at the date that the number of the options  granted
              and the exercise price are known.

              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.

              Earnings Per Share
              The  Company  has  adopted   Statement  of  Financial   Accounting
              Standards  No.  128  ("SFAS   128"),   "Earnings  Per  Share."  In
              accordance  with SFAS 128,  primary  earnings  per share have been
              replaced with basic earnings per share and fully-diluted  earnings
              per share have been  replaced  with  diluted  earnings  per share,
              which   includes   potentially   dilutive   securities,   such  as
              outstanding options and convertible securities.  Net income (loss)
              per common share is  calculated  by dividing net income  (loss) by
              the weighted-average  number of shares of common stock outstanding
              for each period presented.

Note  4 -     Note Receivable

              Note receivable from Triarc,  as a result of the assignment of the
              T. J.  Cinnamons,  Inc.'s License  Agreements  (Note 1), is due in
              monthly installments of $41,667, maturing in September 2000.

                                       F-8
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
Note  5 -     Property and Equipment
<S>                                                                                                <C>            
                    Furniture and fixtures                                                         $        47,624
                    Equipment                                                                              526,678
                    Leasehold improvements                                                                  72,508 
                                                                                                   ----------------
                                                                                                           646,810
                    Less accumulated depreciation and amortization                                         129,670 
                                                                                                   $       517,140 

Note 6 - Accounts Payable and Accrued Expenses

                    Trade accounts payable                                                         $       503,572
                    Other accrued expenses                                                                  98,021 
                                                                                                   ----------------
                                                                                                   $       601,593 

Note  7 -     Long-term Debt
              Note payable to a financing institution, monthly payments
              of $2,184, including interest at 19.4%, due September
              2002, collateralized by production equipment                                         $        69,460

              Less current maturities of long-term debt                                                     13,938 
                                                                                                   ----------------
              Long-term debt, net of current maturities                                            $        55,522 
                                                                                                   ================
</TABLE>

Note  8 -     Related Party Transactions
              Included in accounts  payable and accrued expenses are amounts due
              to  officers,  $7,500 and  $188,000 at December 31, 1998 and 1997,
              respectively,  which  are to be paid  in the  ordinary  course  of
              business.

              In January 1998,  officers of the Company  loaned  $500,000 to the
              Company.  This was  required  to be repaid  within one year,  with
              interest  payable  quarterly at 5.39% per annum. In  consideration
              for the loan,  the  officers  were granted  300,000  shares of the
              Company's  common stock. The fair value of the shares was recorded
              as interest expense.
              The loan was repaid in August 1998.

              In July 1998,  an officer of the  Company  loaned  $100,000 to the
              Company.  This  amount,  plus an  origination  fee of $5,000,  was
              required  to be repaid on the  earlier of October  29, 1998 or the
              day that a closing occurs pursuant to the Triadic Restaurant Group
              agreement.  The loan was repaid in August  1998 due to the closing
              of the agreement.

              Interest expense and fees, related to loans from officers for 1998
              and 1997, were $18,500 and $53,900.

Note  9 -     Forgiveness of Debt
              Forgiveness  of debt of $80,088  for the year ended  December  31,
              1997 resulted from negotiations with vendors.

                                       F-9
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
Note 10 -     Income Taxes
                                                                                         December 31,
                                                                                  1998                  1997
<S>                                                                        <C>                   <C>              
                    Loss carryforwards                                     $         686,000     $       1,100,000
                    Installment gain on sale of assets                               877,000               675,000
                    Allowance for doubtful accounts                                   23,000                     - 
                                                                           ------------------    ------------------

                    Gross deferred tax asset                                       1,586,000             1,775,000
                    Valuation allowance                                           (1,586,000)           (1,775,000)
                                                                           ------------------    ------------------

                    Net deferred tax asset                                 $               -     $               - 
                                                                           ==================    ==================
</TABLE>

              The  provision  for income  taxes for the year ended  December 31,
              1998 was reduced  $450,000 by the  benefit of net  operating  loss
              carryforwards.

              At  December  31,  1998,   the  Company  has  net  operating  loss
              carryforwards  for financial  reporting  purposes of approximately
              $1,700,000  available  to  offset  future  taxable  income.  These
              carryforwards  expire in the years 2009  through  2012 for federal
              income tax  purposes,  and 2001  through 2004 for state income tax
              purposes.  Utilization of the net operating loss carryforwards may
              be  significantly  limited,  based  on  changes  in the  Company's
              ownership.

Note 11 -     Stock Option Plan
              The Company's 1993 Incentive  Stock Option Plan has authorized the
              grant of options to management  personnel for up to 450,000 shares
              of the Company's  common stock.  All options granted have ten-year
              terms,  other than 10%  stockholders  options which have five-year
              terms, and vest and become fully exercisable upon grant.

              The Company's  1996 Stock Option Plan has  authorized the grant of
              options to directors, management and consultants for up to 500,000
              shares of the Company's common stock.

              All  options   granted  have  ten-year   terms,   other  than  10%
              stockholders  options  which have  five-year  terms,  and vest and
              become fully exercisable upon grant.

              Pro forma information  regarding net income and earnings per share
              has  been  determined  as if the  Company  had  accounted  for its
              employee stock options under the fair-value method. The fair value
              for  these  options  was  estimated  at the date of grant  using a
              Black-Scholes    option   pricing   model   with   the   following
              weighted-average assumptions for December 31:
<TABLE>
<CAPTION>
                                                                                       1998                1997
                                                                                       ----                ----
<S>                                                                                      <C>                   <C> 
                      Risk-free interest rate                                            5.7%                  6.0%
                      Expected volatility                                                175%                   73%
                      Dividend yield                                                       -                     -
                      Expected life                                                   5 years               3 years
</TABLE>

                                      F-10
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

Note 11 -      Stock Option Plan - (continued)
               The Black-Scholes option valuation model was developed for use in
               estimating  the  fair  value of  traded  options,  which  have no
               vesting  restrictions  and are fully  transferable.  In addition,
               option-valuation  models  require the input of highly  subjective
               assumptions,  including  the  expected  stock  price  volatility.
               Because the Company's employee stock options have characteristics
               significantly  different from those of traded options and because
               changes in the subjective input assumptions can materially affect
               the fair value estimate,  in management's  opinion,  the existing
               models do not  necessarily  provide a reliable  single measure of
               the fair value of its employee stock options.

               For purposes of pro forma  disclosures,  the estimated fair value
               of the options is amortized to expense over the options'  vesting
               period. The Company's pro forma information follows:
<TABLE>
<CAPTION>
                                                                                     1998                1997
<S>                                                                          <C>                 <C>               
                  Pro forma net income (loss)                                $       1,811,770   $      (1,376,657)

                  Pro forma income (loss) per share
                           Basic                                             $             .44   $            (.45)
                           Diluted                                                         .43                (.45)
</TABLE>

               There was no compensation expense recorded from stock options for
               the years ended December 31, 1998 and 1997.

               A summary of the  Company's  stock option  activity,  and related
               information for the years ended December 31, follows:
<TABLE>
<CAPTION>
                                                             Weighted-Average      Number of     Weighted-Average
                                                 Options      Exercise Price      Exercisable     Exercise Price
                  Outstanding
<S>                                             <C>           <C>                  <C>           <C>        
                    December 31, 1996             405,312       $    1.68            405,312       $      1.68

                      Granted                     752,500            1.59
                      Exercised                         -               -
                      Terminated                  (10,000)           1.94
                                            --------------

                  Outstanding
                    December 31, 1997           1,147,812       $    1.62          1,097,812       $      1.61

                      Granted                     716,672             .50
                      Exercised                         -               -
                      Terminated               (1,051,000)           1.59
                                            --------------

                  Outstanding
                    December 31, 1998             813,484       $     .65            643,484       $       .67

                  Weighted-average fair
                   value of options granted
                   during the year                                  1998            1997

                         Where exercise price
                          equals stock price                    $      .50        $      .38
</TABLE>


                                      F-11
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements


Note 11 -      Stock Option Plan - (continued)
               Following is a summary of the status of stock options outstanding
               at December 31, 1998:
<TABLE>
<CAPTION>
                                            Outstanding Options                             Exercisable Options

                                                      Weighted-
                                                       Average          Weighted-                      Weighted-
                      Exercise                        Remaining          Average                        Average
                     Price Range     Number       Contractual Life   Exercise Price      Number     Exercise Price
<S>               <C>               <C>                <C>            <C>               <C>           <C>     
                  $   .50 - .50      714,484            4.0            $     .50         594,484       $    .50
                  $ 1.50 - 1.94       99,000            7.3            $    1.74          49,000       $   1.21
</TABLE>

               The  Company  has  outstanding   1,453,000   redeemable  Class  A
               warrants,  each to purchase  one share of common  stock,  and one
               Class B warrant for $4; and 557,750  redeemable Class B warrants,
               each to  purchase  one share of common  stock for $5. No warrants
               have  been  redeemed  through  December  31,  1998.  The  Class A
               warrants  expire May 1999,  and the Class B  warrants  expire May
               2001.

Note 12 -      Earnings Per Share
               For 1998,  dilutive  potential common shares, all of which relate
               to the stock options, were 41,736.

Note 13 -      Supplemental Cash Flow Information
               During the year ended  December  31,  1998,  the  Company  issued
               303,800  shares of its  common  stock as payment  for  consulting
               services   rendered   and   interest   expense  on  certain  debt
               obligations in the amount of $240 and $57,150,  respectively, the
               fair value of the shares on the dates of issuance.

               During the years ended  December  31, 1998 and 1997,  the Company
               paid interest of $169,000 and $84,000, respectively.

Note 14-       Major Customers
               The  Company had two major  customers  who  accounted  for 85% of
               wholesale  sales for 1998 and 77% for 1997.  These same customers
               accounted  for  substantially  all  of  the  Company's   accounts
               receivable as of December 31, 1998 and 1997.

Note 15 -      Commitments and Contingencies
               Rent
               The  Company  leases  space for its main  offices  and  wholesale
               bakery operation under noncancelable operating leases.

                                      F-12
<PAGE>
                           PARAMARK ENTERPRISES, INC.
                 (formerly T. J. Cinnamons, Inc.) AND SUBSIDIARY
                   Notes to Consolidated Financial Statements

Note 15 -     Commitments and Contingencies - (continued)
              Rent - (continued)
              Aggregate  minimum annual  payments due under these leases are as
              follows:

                       Year Ending
                      December 31,

                          1999                              $        115,000
                          2000                                        96,000
                          2001                                        32,000 
                                                            -----------------
                                                            $        243,000 

              Rent expense  charged to operations  for the years ended  December
              31, 1998 and 1997 amounted to $129,000 and $168,000, respectively.

              Litigation
              The  Company  is  presently,  and from time to time,  involved  in
              routine litigation,  including litigation with vendors, suppliers,
              and franchisees.  In management's  opinion, none of the litigation
              in which the  Company is  currently  involved  is  material to its
              financial condition or results of operations.

Note 16 -     Year 2000
              The Company recognizes the need to ensure that its operations will
              not be adversely impacted by the Year 2000 software failures.  All
              of the Company's  internal  operating  systems are on schedule for
              compliance and should be completed by August 1999. The Company has
              been  upgrading its systems since  September 1998 and has notified
              all of its customers of the need for upgrade where necessary.  All
              costs to develop these software  changes were expensed as incurred
              during 1998, which represent  approximately  $6,000. The remaining
              costs to modify the Company's systems for Year 2000 compliance are
              expected to be less than $5,000.

              In addition to Year 2000  software  and  equipment  implementation
              activities,  the Company  intends to contact  major  suppliers  to
              assess their  compliance.  The Company cannot assess the effect of
              Year 2000 programs implemented by their customers and suppliers.

Note 17 -     New Accounting Standards
              Derivative Instruments and Hedging Activities
              In June 1998,  the  Financial  Accounting  Standards  Board issued
              Statement of Financial  Accounting Standards No. 133 ("SFAS 133"),
              "Accounting for Derivative  Instruments  and Hedging  Activities."
              SFAS  133  establishes  accounting  and  reporting  standards  for
              derivatives as either assets or  liabilities  and measures them at
              fair value.  Under  certain  conditions,  the gains or losses from
              derivatives  may be  offset  against  those  from  the  items  the
              derivatives  hedge  against.  Otherwise,  gains  and  losses  from
              derivatives are recognized currently in the results of operations.
              The Company will adopt SFAS 133 in the fiscal year ending December
              31, 1999.  Adoption of this statement is not anticipated to have a
              material effect on the Company's  financial position or results of
              operations.

                                      F-13