UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 NOVEMBER 30, 2001

                                       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 294339

                           TWISTEE TREAT CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                          43-1796135
(State of other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                         Identification Number)

                               710 W. 24th Street
                          Kansas City, Missouri 64108
                                 (816) 842-1116
   (Registrant's address and telephone number of principal executive offices
                        and principal place of business)

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

           Title                 Shares Outstanding as of November 30, 2001

Common Stock, par value $.001         20,227,950


            As of November 30, 2001,  the  aggregate  market value of the voting
stock held by  non-affiliates  of the registrant,  based on the closing price on
that date, was approximately $106,368.



<PAGE>

                            TWISTEE TREAT CORPORATION
                                    FORM 10-K
                      FOR THE YEAR ENDED NOVEMBER 30, 2001

Table of Contents

PART I
Item 1.  BUSINESS                                                             4

Item 2.  PROPERTIES                                                           7


Item 3.  LEGAL PROCEEDINGS                                                    8

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  8

PART II

Item 5.  MARKET FOR REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                 8

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                             10

Item 7.  FINANCIAL STATEMENTS                                                14

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE                                          14

PART III

Item 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                  15

Item 10.  EXECUTIVE COMPENSATION                                             17

Item 11.  SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT                                             17

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                     17

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K                                   18


<PAGE>


PART I

CAUTIONARY  STATEMENT.  Statements  contained  herein  that  are  not  based  on
historical fact, including without limitation,  statements  containing the words
"believes," "may," "will,"  "estimate,"  "continue,"  "anticipates,"  "intends,"
"expects" and words of similar import, constitute "forward-looking statements."

Such forward-looking  statements involve known and unknown risks,  uncertainties
and other factors that may cause actual  results,  events or  developments to be
materially different from any future results,  events or developments  expressed
or implied by such  forward-looking  statements.  Such  factors  include,  among
others, the following: general economic and business conditions, both nationally
and in the regions in which Twistee Treat  Corporation ("us" or "Twistee Treat")
operates;  competition;  changes in our business strategy or development  plans;
changes in  consumer  tastes and  trends;  our  ability to attract  capital  for
development;  the high  leverage  of Twistee  Treat;  the ability to attract and
retain qualified personnel; existing governmental regulations and changes in, or
the failure to comply with, governmental regulations; liability and other claims
asserted  against  us; and other  factors  referenced  in our  filings  with the
Securities and Exchange Commission.

GIVEN THESE UNCERTAINTIES,  READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS.

We disclaim any obligation to update information  concerning any such factors or
to publicly  announce the result of any revisions to any of the  forward-looking
statements  contained  in this  report  to  reflect  future  results,  events or
developments.

ITEM 1:  THE BUSINESS OF TWISTEE TREAT CORPORATION

GENERAL

            Twistee Treat (the "Company") was  incorporated in Missouri on April
27, 1995 and  redomiciled in Delaware in June 1997.  The original  Twistee Treat
Corporation  was  formed in the early  1980's as a  Colorado  corporation  doing
business primarily in Florida. By the mid 1980's it had opened  approximately 35
company stores,  but no franchise units. The original Twistee Treat  Corporation
utilized  proprietary  cone-shaped  buildings  to sell its products and obtained
certain  federal and state  patents,  trademarks and service marks in connection
with its business. In 1989, Twistee Treat's original founder retired and Twistee
Treat filed for bankruptcy protection (U.S. Bankruptcy Court, Middle District of
Florida, Ft. Myers Division,  Case No.  89-4700-9P1).  On August 6, 1990, Andrew
Brennan, a founder and former principal stockholder of Twistee Treat,  purchased
the assets of the original Twistee Treat  Corporation from the Bankruptcy Court,
including  its patent,  trademark  and service  mark rights.  Subsequently,  Mr.
Brennan sold 50% of his interests in such assets to Don Matthews,  owner of Soft
Serve System, Inc., a Missouri corporation.  In 1996, Messrs. Matthews and Wells
formed  the  Company,  with  Mr.  Matthews  contributing  his 50% of the  assets
obtained  from the  original  Twistee  Treat  Corporation.  On May 6, 1997,  Mr.
Brennan  sold to us his 50%  interest in the assets  obtained  from the original
Twistee Treat  Corporation.  Of the  approximately  35 original  stores,  all or
nearly  all are  still  open as  independently-owned  businesses.  These  stores
continue to use the  cone-shaped  building and the name "Twistee  Treat," but do
not use any of our  products  and they  are not  affiliated  with  us.  There is
currently  one  franchise  owned  and  operated  Twistee  Treat,  but  it is not
currently  paying us  royalties  as the  Company  has not been in a position  to
provide any services to the franchisee.  The Company expects to resume franchise
expansion and building the business upon raising capital.
<PAGE>

We have had limited operations resulting in limited revenue.  During fiscal year
2001, the Company entered into an agreement with HD Brous, an investment banking
firm,  to develop  business  concepts  and expand the  Company's  business.  The
Company  pursued  acquiring at least 10 of the existing  Twistee  Treat  stores.
However,  HD  Brous  did  not  move  forward  with  the  Company  due to  market
conditions. Therefore, the Company has had to refocus its direction.

During our  fiscal  year 2000,  we  continued  to  develop  our  business  plan,
franchise  program,  franchise circular and operating manual, as well as operate
three pilot stores, and open and test two kiosk pilot units. We closed our three
test pilot stores and closed the two kiosk units for several  months in order to
evaluate  the  information  obtained  during  such  test  periods  and  to  make
adjustments to menus,  equipment and operating  procedures.  We then refurbished
the three pilot  stores,  changed the menus,  ordered  additional  equipment and
reopened two of them: one in Eustis,  Florida and one in Branson West, Missouri.
Twistee Treat sold the Branson West store as a franchise  store to Danny Hammond
LLP. Mr. Hammond also became a Regional  Developer for Branson and  Springfield,
Missouri.  Twistee Treat's Eustis,  Florida store became a franchise store also.
Twistee Treat licensed the rights in Canada to a group who collectively  have 37
years of  experience  in the ice cream  franchise  business  with Good Humor and
Breyers Ice Cream. One of the principals of our Canadian  franchisee  previously
owned 5  franchises,  and became  regional  franchise  manager  and  another was
national  operations manager  responsible for product  distribution and sales in
support of 300  distribution  units  across  Canada.  The group opened its first
Twistee  Treat  store in July  2000,  and has since  opened an  additional  four
franchise stores.

Twistee  Treat signed a  co-branding  agreement  with  Gourmet's  Choice  Coffee
Company,  Inc., and opened a first co-branded store in Warrensburg,  Missouri on
February 21, 2000.

The Business: Twistee Treat offers our specialty ice cream and food products. We
are designed to be a high  profile,  soft-serve  ice cream retail  merchant.  We
believe  that there is a strong  market  for  soft-serve  ice cream,  especially
roadside or  curbside.  One of our  principal  marketing  tools is our ice cream
cone-shaped  building  design.  The 22 foot  tall cone  creates a strong  visual
image. The building is large enough to carry a good variety of our Twistee Treat
products, yet small enough to fit in smaller areas.

We believe that our products and our process for dispensing products are unique.
The product consists of Twistee Treat's special firm-serve mix, formulated to be
rich and creamy but with  relatively  low fat content.  The  dispensing  process
produces a rich texture  that is more like custard than ice cream.  Each Twistee
Treat store offers six flavors, consisting of the three basic flavors - vanilla,
chocolate and  strawberry - as well as three  additional  flavors  rotated every
other week from our  inventory of 91 flavors.  The stores also sell a variety of
other  food and  beverage  products  such as donuts,  hot dogs,  sodas and other
"snack"  type  items.  The kiosk  units  offer two to four  flavors of ice cream
depending on the size of the kiosk.
<PAGE>

In addition to the  free-standing  cone-shaped  building,  Twistee  Treat offers
in-line stores, for regional malls and strip centers, a "kiosk" program designed
to be located in  convenience  stores,  stores,  malls,  food  courts,  business
facilities and colleges,  "Express Grills",  which are larger,  more traditional
fast-food  restaurants,  and  mobile  concession  trailers  which  are  designed
primarily for outdoor  venues such as fairs.  We intend to introduce a table-top
dispenser  unit  designed  for  restaurants,  convenience  stores and fast- food
locations.  There are no assurances that we will be able successfully to develop
or market those products.

Our free-standing  cone-shaped  buildings are designed to attract  drive-through
and walk-up customers only, as they have no indoor seating,  and primarily serve
only ice cream  products  and soft drinks.  Our in-line  stores are designed for
inclusion in existing strip malls, and consist  generally of approximately  1600
square feet of space.  They include  inside seating and have a broader menu than
our cone-shaped  buildings,  including ice cream cakes. Our "Express Grills" are
designed to be more  traditional,  full-service  fast food restaurants with very
broad  menus,  including  steak  burgers,  hot dogs,  etc.,  with the ability to
accommodate  approximately 40 people in indoor seating.  These are free-standing
buildings,  encompassing 3000 to 3500 square feet, which look like a traditional
fast food  restaurant,  rather than Twistee  Treat's unique looking  cone-shaped
stores.  Our kiosk units are small and designed to be set up in  airports,  food
courts and malls, and offer primarily ice cream products.  Our mobile concession
trailers  are also shaped like an ice cream cone and give  Twistee  Treat a good
marketing vehicle.

We  believe  that the  location,  layout  and  cone-shaped  design of our stores
contribute  to the  success  of  our  operations.  Twistee  Treat's  stores  are
typically located near strip shopping centers, malls, amusement centers or other
areas  of  population   density  that  provide   visibility,   curb  appeal  and
accessibility.  A variety of factors are  considered in selecting  sites for our
stores,  including population density,  traffic patterns,  area demographics and
competition. Our stores are configured to facilitate a smooth flow of carry-out,
curbside and "drive-thru" traffic.

One of our  primary  goals  is to  maintain  strict  quality  controls  over our
products  and  stores.   Twistee  Treat   requires  that  all   franchised   and
company-owned  stores be built in conformity with our specific  guidelines.  The
buildings and kiosks are  assembled and packaged at Glasstech,  Inc.'s plant for
shipment  to  the  store  site.  We  are  currently  pursuing  other  fiberglass
manufacturers who are able of producing quality parts in larger quantities.

However,  Twistee Treat  presently  operates at a loss, and we have not received
revenues from operations  sufficient to maintain our operations.  We have raised
funds for operations through the sale of our securities, and will continue to do
so. Of course,  there can be no assurance  that we will be successful in raising
any funds for our continued operations.
<PAGE>

ITEM 2: PROPERTIES

            Our principal  executive  offices are located at 710 W. 24th Street,
Kansas City,  Missouri,  which is the office space of Gourmet  Coffee,  of which
Stephen Wells is a current  officer and  director.  The Company does not pay any
rent for use of such  facilities.  The  Company  is  seeking a new  location  in
Florida or Missouri on reasonable terms.

<PAGE>

ITEM 3: LEGAL PROCEEDINGS

            Except as  disclosed  below,  we are not  involved  in any  material
pending  legal  proceedings,  other than routine  litigation  incidental  to our
business, to which we are a party or of which any of our property is subject.

            Twistee  Treat was named as a  defendant  in a  collections  lawsuit
filed by an  individual  in the amount of $10,000.  In response,  Twistee  Treat
filed a third party  complaint  against the  individual  for various  fraudulent
transactions.  The case is  currently  in the  discovery  stage  and  management
believes  that we will be  successful  in our defense  against  the  litigation,
although there can be no assurance of that.

            The Company has a dispute  with a lawfirm  regarding  past due fees.
The lawfirm is seeking  approximately $18,000 for services rendered and interest
fees. The Company disputes the amount of compensation  owed for the services and
has been  negotiating  with an individual to resolve the dispute and settle on a
mutually agreeable compensation amount. The Company is confident that it will be
able to come to a  satisfactory  settlement.  As of the date of this report,  no
amount has been agreed upon.

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

            None.
PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

            Our  common  stock is traded in the  Over-the-Counter  market and is
quoted on the electronic  Bulletin Board under the symbol "TWTE".  The following
table  represents  the  range  of the high and low bid  prices  of our  stock as
reported by the NASDAQ  Trading and Market  Services for each fiscal quarter for
the last two fiscal years ending  November  30,  2000,  and 2001,  respectively.
These  quotations  represent  prices  between  dealers,  may not include  retail
markups,  markdowns,  or commissions,  and may not necessarily  represent actual
transactions.


<PAGE>

            Year              Quarter               High             Low
           ------             --------             -------          ------
            2000              First Quarter         $.875            $.375
                              Second Quarter        $1.50            $.56
                              Third Quarter         $.50             $.07
                              Fourth Quarter        $.345            $.07

            2001              First Quarter         $.20             $.07
                              Second Quarter        $.16             $.03
                              Third Quarter         $.033            $.01
                              Fourth Quarter        $.016            $.006

            Twistee  Treat has  authorized a total of  50,000,000  shares of its
Common  Stock,  $0.001 par value per share.  As of November 30,  2001,  we had a
total of 20,227,950  shares of our Common Stock issued and outstanding.  We have
also authorized 10,000,000 shares of preferred stock, $0.001 par value, but none
of them have been issued to date.  Management controls  approximately 12% of our
outstanding  shares.  We have  910,000  common  shares  subject to  warrants  to
purchase shares at a price of $.075 per share at any time until their expiration
in January 2007.

Dividends.

            We have  not  declared  dividends  on our  common  stock  and do not
anticipate paying dividends on our common stock in the foreseeable future.

Private Equity Transactions.

            On November 20, 2000,  Steve Wells sold 1,275,000  shares of Twistee
Treat's  common stock to James Tilton.  Mr. Wells decided to transfer the shares
to induce Mr. Tilton to become CFO of Twistee Treat.  Mr. Wells did not want the
shareholders of Twistee Treat to experience any further dilution,  and therefore
he sold his own shares of stock  rather than  through an issuance  from  Twistee
Treat.

<PAGE>

ITEM 6: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

CAUTIONARY STATEMENT.  Statements contained or incorporated by reference in this
document that are not based on historical fact are "forward-looking statements."
Forward-looking   statements  may  be  identified  by  use  of   forward-looking
terminology such as "believe," "intends," "may," "will," "expects,"  "estimate,"
"anticipate,"  "continue,"  or similar  terms,  variations of those terms or the
negative of those terms.

Overview.

Twistee  Treat  operates and  franchises  soft-serve  ice cream  desserts and an
assortment  of  other  foods  and  beverages  in  our  proprietary,  cone-shaped
buildings  and  kiosks.  Incorporated  under the laws of  Missouri  in 1997,  we
redomiciled by merger into a Delaware  corporation in June of 1999 with the name
Twistee Treat Corporation.  On April 6, 2000, we purchased a  publicly-reporting
Nevada  corporation,  Perfection Plus, Inc., as described more fully in our Form
8-K filed with the Securities  and Exchange  Commission on April 8, 2000, and as
subsequently  amended.  In 1998,  Stephen  Wells,  formerly the president of our
largest franchisee (Twistee Treat of the Southeast,  Inc.), became our President
and Chief Executive Officer.  Mr. Wells continued the testing program,  begun in
1999, of our "Express  Grill" unit, a full-service  restaurant  loosely based on
the design of the Brazier  units  operating  by "Dairy  Queen."  Our  management
believes  that the "Express  Grill" unit will help us expand our  business  into
cooler climates,  offering a broader menu and inside seating capability. We have
also been  testing the products and  processes,  as described  elsewhere in this
Report,  in  anticipation  of expanding our  franchising and other marketing and
sales activities.

Net Sales.

Our net sales are historically derived from two separate sources, namely (1) the
sale of ice cream products at retail through our  corporate-owned  locations and
to  existing  franchisees  of  Twistee  Treat,  and (2) the  sale of  licensing,
regional  development and franchise  rights to third parties desiring to own and
operate  individual  Twistee  Treat  franchises or to develop  larger,  regional
franchise areas. For the fiscal year ended November 30, 2001, our net sales were
$11,190  compared to $139,166 for the same period ended November 30, 2000.  This
resulted in a decrease in net sales of $127,876 or 92%.

<PAGE>

Cost of Sales.

Cost of sales were  $9,532 for the year ended  November  30, 2001 as compared to
$190,442 for the year ended  November 30, 2000.  The decrease of $180,910 or 95%
was due to our decreased operations.

Gross Profit (Loss).

We  generated a loss of ($1,658)  for the fiscal  year ended  November  30, 2001
compared to a loss of ($51,276) for the fiscal year ended November 30, 2000. The
decrease  of our net loss by $49,618  or 97% is  attributable  to the  decreased
operations.

Operating Expenses.

            Operating  expenses  for the fiscal  year ended  November  30,  2001
equaled  $752,522 as compared to $1,443,753  for the same period ended  November
30, 2000. The decrease in operating expenses is primarily due to the decrease in
professional fees, consulting fees, general and administrative  expenses and the
loss on the disposal of franchise  stores during fiscal year 2000.  For the year
ended November 30, 2001,  the Company  reported an impairment of $235,890 of the
value  of  its  assets  due to  the  decreased  operations.  Other  general  and
administrative  expenses  incurred by us for the fiscal year ended  November 30,
2001 were $98,917 as compared to $219,457 for the fiscal year ended November 30,
2000.  This   represented  a  decline  of  $120,540  or  55%  over  general  and
administrative  expenses we incurred  for the period  ended  November  30, 2000.
Management   attributes  this  percentage   decline  to  the  reduction  of  our
operations.  Our consulting fees were $85,071 for the fiscal year ended November
30, 2001 as compared to $312,799  for the year ended  November  30,  2000.  This
resulted  in a  decrease  of  $227,728  or 73%  attributable  to the  decline in
operations.  Our legal and  professional  fees were  $70,792  for the year ended
November 30, 2001 as compared to $406,381 for the year ended  November 30, 2000.
The decrease of $335,589 or 83% was largely  attributable  to efforts during the
year ended November 30, 2000 to become a reporting  company.  As a result of our
operating  expenses,  we experienced a total loss from  operations of ($750,864)
for the fiscal year ended November 30, 2001, compared to ($1,495,029) for fiscal
year 2000, a decrease of 50%. The largest  factors  attributable to the decrease
in loss from operations are the decrease in professional fees and the consulting
fees. There were no extraordinary  gains or losses recorded by Twistee Treat for
fiscal year 2001.

<PAGE>

Net Loss Per Share.

Twistee  Treat's net loss per common share and  equivalence -- basic and diluted
for the fiscal year ended November 30, 2001 equaled ($.04).  This  represented a
decrease of $.07 over the comparable  net loss per common share and  equivalence
-- basic and diluted for the same period ended November 30, 2000.

Liquidity and Capital Resources.

            As of November 30, 2001, we had cash of $2,322. A cash overdraft was
recorded  during  fiscal year 2000 in the amount of  ($3,370).  Net cash used in
operations  in fiscal year 2001 was  $156,799,  a decrease of 81% from  $828,189
(representing  the amount of net cash used in operations  during the same period
in 2000).  Non-cash  adjustments for fiscal year 2001 primarily  consisted of an
impairment of our assets of $235,890 and accounts  payable and accured  expenses
of $190,682.

            Our debt structure includes total current liabilities of $697,098 at
November 30, 2001, an increase from $417,286 at November 30, 2000.  The increase
is due to accounts payable, accrued expenses, and notes payable.

            Cash flows  from  financing  activities  by  Twistee  Treat  totaled
$159,121 the fiscal year ended  November 30, 2001,  consisting  of proceeds from
notes  payable  and the sale of  stock,  a  decrease  of 81% from the  amount of
$835,613 which is recorded for the same period in 2000.

            Twistee  Treat  has no  credit  line or  other  bank  debt,  and has
generated cash for operations from internally-generated revenues and the sale of
our common  stock,  $.0001 par value.  For the year ended  November 30, 2001 and
2000, the Company incurred losses totaling $765,858 and $1,508,624, respectively
and at November 30, 2001 had an accumulated  deficit of  $3,928,137.  We require
equity or debt  financing  to  continue  our  operations.  To the extent that we
cannot obtain such  financing on terms that we would consider  favorable,  or at
all,  it  could  have a  materially  adverse  impact  on  our  ability  to  have
operations,  if at all, and take advantage of the opportunities we would like to
develop  during fiscal year 2002 and beyond.  There can be no assurance  that we
will be able successfully to raise the cash proceeds we require to implement our
business plan as currently envisioned.

<PAGE>

Risk Factors.

Substantial Doubt about Company's Ability to Continue as a Going Concern. Malone
& Bailey,  PLCC, the Company's auditor,  have issued an opinion that the current
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  The Company requires working capital to maintain  operations and
pursue a business strategy.  In the event the Company is unable to raise capital
it will be  forced  to  curtail  operations  and it may  cease  to  perform  any
business.

            Dependence Upon External  Financing.  It is imperative that we raise
capital to stay in  business.  If we are  unable to obtain  debt  and/or  equity
financing upon terms that our management  deems  sufficiently  favorable,  or at
all,  it would have a  materially  adverse  impact  upon our ability to maintain
operations, or to implement our business plan as we envision it today.

            Reliance on Key Management. Our success is highly dependent upon the
continued  services of Stephen  Wells,  our  President and CEO, who has been the
primary  person  responsible  for  building  our  renewed  franchise,   regional
development and licensing business. If Mr. Wells were to leave Twistee Treat, it
could have a materially adverse effect upon our business and operations.

Factors Affecting Future Operations.

            Our operating results may fluctuate substantially in the future as a
result of a  variety  of  factors,  many of which are  outside  of our  control,
including  those  discussed  elsewhere  in  this  filing.  We  plan,  if we  are
successful  in obtaining  increased  access to capital at reasonable  terms,  to
increase significantly our operating expenses and capital expenditures to expand
our sales and marketing efforts, promote our brand name, continue to enhance the
variety of our product line,  pursue new franchise  distribution  channels,  and
hire new  personnel  across all levels of our  organization.  We  determine  our
operating  expenses largely on the basis of anticipated  growth in our revenues,
however,  some of our  expenses  are  fixed in the short  term.  There are risks
associated  with the timing and  achievement of revenue targets due to a variety
of  factors,  and  there  can  be  no  assurance  that  revenues  will  increase
commensurately  with  expenses.  We believe  that our  expenses  will exceed our
revenues for the foreseeable future. As a result of these and other factors, our
operating results may vary substantially from quarter to quarter.

<PAGE>

Seasonal Aspects.

            Our business is highly seasonal,  because  customers are more likely
to purchase our ice cream and frozen dessert products in months when the weather
is warmer.  We are planning to continue to diversify  our product lines to offer
additional  menu items, as well as a new line of coffee products to mitigate the
impact of seasonality on our overall cash flow requirements.

            In  February  2001,  we  entered  into a  marketing  and  production
agreement  for the  production of a  thirty-minute  television  show,  hosted by
William  Shatner.  Video and CD  promotional  segments  will also be produced to
introduce  Twistee Treat to potential  franchisees and investors.  We will pay a
total purchase  price of $50,000 and 950,000  warrants with an exercise price of
$.075 per share as  consideration.  Due to the Company  not  raising  additional
capital, the Company has not moved forward with the agreement.

ITEM 7: FINANCIAL STATEMENTS

            The audited  financial  statements,  together  with the  independent
accountants  report  thereon  of  Malone &  Bailey,  PLLC  appears  herein.  See
financial statements beginning on pages F-1 of this report.

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

            On  July  11,  2001,  Weinburg  &  Company,  P.A.  resigned  as  our
independent  accountants.  The audit report of Weinburg & Company,  P.A. for the
year ended  November  30, 2000  contained  an  unqualified  opinion with a going
concern uncertainty  explanatory paragraph because of Weinburg & Company, P.A.'s
doubt about our ability to continue as a going concern based on our difficulties
in meeting our financial  needs,  our recurring  losses from  operations and our
negative working capital. The audit reports of Weinburg & Company,  P.A. for the
past two years did not  contain  any other  adverse  opinion  or  disclaimer  of
opinion,  or  qualification  or modification  as to uncertainty,  audit scope or
accounting principals.

            During  our two most  recent  fiscal  years and the  interim  period
through July 11, 2001 we did not have any disagreements with Weinburg & Company,
P.A. on any matter of accounting  principals or practices,  financial  statement
disclosure or auditing scope or procedure.

            We  appointed  Malone  &  Bailey,   PLLC,  as  our  new  independent
accountants on July 11, 2001. We have not consulted Malone & Bailey, PLLC at any
time prior to their appointment  concerning either the application of accounting
principals to a specific  completed or  contemplated  transaction or the type of
audit opinion that might be rendered on our financial statements.
<PAGE>

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

            The  names,  ages  and  positions  of the  directors  and  executive
officers of Twistee Treat are set forth below. Biographical information for each
of these persons is also presented below.  Our executive  officers are appointed
by our Board of Directors and serve at its discretion.

Directors and Officers.

Name                              Age        Position Held
-----                            -----       --------------
Stephen Wells                     43         President and Chairman of the Board
James Tilton                      40         Chief Financial Officer,
                                             Secretary, and Director
Howard Hochrad                    49         Vice President
Paul McMahon                      44         Director

Stephen B. Wells has been  directly  involved  with  Twistee  Treat for the last
three years,  first as a Regional  Developer for the Southeast Region,  and more
recently  in  his  capacity  as  President,  Chief  Executive  Officer  and as a
director.  Mr.  Wells  was a 50%  owner of TTS and one of the  three  principals
involved in the revival of the Twistee  Treat  concept.  Mr. Wells has spent the
past three years  refinancing  and  restructuring  Twistee Treat in an effort to
position us for future growth. He has been actively involved with the management
of the three pilot stores that we opened in Florida.  Mr. Wells bring with him a
strong  background  and  experience in sales and marketing  from his role in the
development of the licensing and  merchandising  division of First National Film
Corporation.  In his capacity as Vice  President of Licensing and  Merchandising
for that  company,  from 1988 to 1992,  Mr. Wells  negotiated  the marketing and
licensing rights for animated film characters to domestic and foreign production
and manufacturing companies.  From 1992 to 1996, Mr. Wells started and developed
Key Management Services,  Inc., a full service vending distribution business. In
addition to his marketing  background,  Mr. Wells has also been heavily involved
in the  commercial  and retail  real  estate  development  business.  Mr.  Wells
received his Bachelor of Arts degree in Political  Science from Central Missouri
State University in 1980.

James  Tilton was  appointed  as a Director in  November  2000.  Mr.  Tilton has
extensive business and marketing  experience in the Far East and has worked with
his wife, Jane Zheng, in partnership with Metallic  Building  Company("MBC"),  a
subsidiary  of NCI  Building  Systems,  to market  its  pre-engineered  building
materials in the People's  Republic of China  ("PRC")  since 1992.  For the last
five years,  he and Jane Zheng have  assisted  Star Brite,  a division of Oceans
Bio-Tech,  in  establishing  a  sales  distribution  system  in the  PRC for its
Chemical  products.  Mr. Tilton is also a director of Tianrong Building Material
Holdings, Ltd., a Utah corporation.

Howard Hochrad is the vice president of Twistee Treat.  Prior to joining Twistee
Treat, Mr. Hochrad was the  vice-president  and treasurer of TTC since March 28,
1997. He was employed with BF Goodrich Aerospace prior to his tenure at TTC in a
variety of financial, planning, marketing and management positions.

Paul McMahon has served as our director since February 2002.
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The following  table is a summary of annual  compensation  paid to the Company's
executives  during the two fiscal years ended November 30, 2000 and November 30,
2000.

Name and Principal                                                  Other Annual
Position at 11/30/01                    Year    Salary     Bonus    Allowance(1)
--------------------                    ----    -------    -----    ------------

Stephen Wells                           2001  $150,000(2)    None        -
President                               2000  $150,000(3)    None        -
James Tilton                            2001         -       None        -
Chief Financial Officer and Secretary   2000         -       None        -
Howard Hoctrad                          2001         -       None        -
Vice-President                          2000         -       None        -


(1)  The named executive officers did not receive  perquisites or other benefits
     valued in excess of 10% of the total reported annual salary and bonus.

(2)  We have accrued  $130,000 for Mr. Wells through November 30, 2001 which has
     not been paid.

(3)  We have accrued  $62,000 for Mr. Wells through  November 30, 2000 which has
     not been paid.


<PAGE>

EMPLOYMENT AGREEMENTS

Effective January 1, 1999, the Company entered into an employment agreement with
Stephen Wells, our President and Chief Executive  Officer,  for five years at an
annual   salary  of  $90,000,   $150,000,   $150,000,   $175,000  and  $175,000,
respectively. The agreement contains a severance clause for early termination of
$250,000 and a death  benefit of $25,000.  As of November 30, 2001,  the Company
owed Mr. Wells $212,000.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of November 30, 2001,  information  regarding
the beneficial ownership of shares of Common Stock by each person known by us to
own five percent or more of the  outstanding  shares of Common Stock, by each of
our Officers,  by each of our Directors,  and by our Officers and Directors as a
group. On November 30, 2001 there were 20,227,950  shares issued and outstanding
of record.

Name and Address of                        Shares of           Percentage as of
Beneficial Owners                       Common Stock          November 30, 2001
-----------------                       ------------          -----------------
Stephen Wells (1)                          1,250,000                       6.2%
James Tilton (1)                           1,250,000                       6.2%
Howard Hochrad (1)                                 -                          *
John McMahon (1)                                   -                          *
Andrew Bennan                              1,624,800                       8.0%
Calder Investments                         1,477,300                       7.3%
Korkor Holdings LLC                        1,640,000                       8.1%
Terry Rapp                                 1,402,300                       6.9%
All Executive Officers and Directors
As a group (4 persons)                     2,500,000                      12.4%

*    Less than one percent

(1)  The business  address of each  individual is the same as the address of the
     Company's principal executive offices.

ITEM 12.  CERTAIN PARTIES AND RELATED TRANSACTIONS.

            In June 2000,  the Company issued  2,500,000  shares of common stock
for cash  proceeds of $50,000 and  consulting  services  rendered  having a fair
market  value of  $262,500 to Stephen  Wells,  our Chief  Executive  Officer and
President.  The fair value of the  shares  issued for  consulting  services  was
determined based upon the fair value of the shares at the issuance date.
<PAGE>

Stephen Wells, our Chief Executive Officer and President, has loaned the Company
funds on several  occasions.  One loan in the  amount of $4,363 is  non-interest
bearing and has been in default  since June 2000.  Another loan in the amount of
$27,000 bears interest at 12% and is due in February 2002.

James Tilton,  our Chief  Financial  Officer and  Secretary,  loaned the Company
$26,000 evidenced by a note bearing interest at 12% due in March 2002.

Howard Hochrad,  our  Vice-President,  loaned the Company $39,547 evidenced by a
note bearing interest at 9% which is in default and was due in September 2001.

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K

A. Financial Statements

      INDEPENDENT AUDITORS' REPORT                                          F-1

      BALANCE SHEET AS OF NOVEMBER 30, 2001                                 F-2

      STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
      NOVEMBER 30, 2001 AND 2000                                            F-3

      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
      FOR THE YEARS ENDED NOVEMBER 30, 2001 AND 2000                        F-4

      STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
      NOVEMBER 30, 2001 AND 2000                                            F-5

      NOTES TO FINANCIAL STATEMENTS                                         F-6

B. Reports on Form 8-K

We filed a  current  year  report  on Form 8-K on July 16,  2001 and an  amended
report on August 13,  2001  relating to the  resignation  of Weinburg & Company,
P.A. as our independent auditors.


<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.




                                                  TWISTEE TREAT CORPORATION

                                                  By: /s/ Stephen Wells
                                                     -----------------------
                                                     Stephen Wells
                                                     President and Chief
                                                     Executive Officer

Dated: March 15, 2002

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

Signature              Title                                          Date
---------              -----                                        ---------
/s/ Stephen Wells      President, Chief Executive Officer
Stephen Wells          and Chairman                             March 15, 2002

/s/ James Tilton       Chief Financial Officer, Secretary
James Tilton           and  Director                            March 15, 2002

/s/ Howard Hochrad     Vice-President
Howard Hochrad                                                  March 15, 2002

/s/ Paul McMahon       Director
Paul McMahon                                                    March 15, 2002

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Twistee Treat Corporation
Kansas City, Missouri

We have audited the accompanying  balance sheet of Twistee Treat  Corporation as
of November 30, 2001, and the related  statements of  operations,  stockholders'
equity  (deficit),  and cash flows for each of the two years then  ended.  These
financial  statements are the responsibility of Twistee Treat's management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Twistee Treat Corporation as of
November 30, 2001,  and the results of its operations and its cash flows for the
each of the two years then  ended,  in  conformity  with  accounting  principles
generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred losses for the years
ended November 30, 2001 and 2000 totaling $765,858 and $1,508,624  respectively,
and at November  30, 2001 had a capital  deficit of  $517,095.  The Company will
require  additional  working  capital to develop its business  until the Company
either (1)  achieves a level of revenues  adequate to generate  sufficient  cash
flows from operations;  or (2) obtains additional financing necessary to support
its working capital requirements. These conditions raise substantial doubt about
the  Company's  ability to continue as a going  concern.  Management's  plans in
regard  to  this  matter  are  also  described  in  Note  2.  The   accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of these uncertainties.


Malone & Bailey, PLLC
Houston, Texas
www.malone-bailey.com

March 4, 2002


<PAGE>


                            TWISTEE TREAT CORPORATION
                                  BALANCE SHEET
                                November 30, 2001




                                     ASSETS

Current assets
  Cash                                                                  $2,322
  Notes receivable                                                      17,484
                                                                     ----------
    Total current assets                                                19,806

Property and equipment, net                                            120,080

Other                                                                    1,150

                                                                     ----------
                                                                     $ 141,036
                                                                     ==========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable                                                   $ 197,082
  Accrued expenses                                                     248,107
  Notes payable                                                        112,309
  Notes payable - shareholders                                         139,600
                                                                     ----------
    Total current liabilities                                          697,098
                                                                     ----------

STOCKHOLDERS' EQUITY (DEFICIT):
  Preferred stock, $.0001 par value, 10,000,000
  authorized, no shares issued and outstanding                               -
  Common stock, $.0001 par value, 50,000,000 shares authorized,
  20,227,950 shares issued and outstanding                                2,023
Additional paid in capital                                            3,545,052
Accumulated deficit                                                  (3,928,137)
                                                                     ----------
                                                                       (381,062)
Less: subscriptions receivable                                         (175,000)
                                                                     ----------
  Total Stockholders' Equity (Deficit)                                 (556,062)
                                                                     ----------

                                                                     ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                 $ 141,036
                                                                     ==========


           See accompanying summary of accounting policies and notes
                            to financial statements.

<PAGE>

                            TWISTEE TREAT CORPORATION
                            STATEMENTS OF OPERATIONS


                                               For the Years Ended November 30,

                                               2001                  2000
                                            --------------    ---------------

Net sales                                          $11,190          $ 139,166
Cost of goods sold                                   9,532            190,442
                                            --------------    ---------------
Gross margin (loss)                                  1,658            (51,276)
                                            --------------    ---------------

Operating expenses:
  Payroll and contractual compensation             211,198            224,706
  Other general and administrative                  98,917            219,457
  Consulting                                        85,071            312,799
  Legal and professional                            70,792            406,381
  Depreciation                                      50,654             52,286
  Loss on disposal of franchise stores                   -             83,983
  Impairment                                       235,890             89,900
  Loss on notes receivable franchisee                    -             24,698
  Loss on disposal of fixed assets                       -              5,918
  Settlement expense                                     -             23,625
                                            --------------    ---------------
                                                   752,522          1,443,753
                                            --------------    ---------------

Loss from operations                              (750,864)        (1,495,029)

Other income (expense):
  Interest (expense)                               (15,160)           (22,831)
  Interest income                                      166              7,190
  Other                                                  -              2,046
                                            --------------    ---------------
                                                   (14,994)           (13,595)
                                            --------------    ---------------

                                            --------------    ---------------
Net loss                                        $ (765,858)       $(1,508,624)
                                            ==============    ===============

Net loss per share:
  Basic and diluted                                $ (0.04)           $ (0.11)
                                            ==============    ===============

Weighted average shares outstanding:
  Basic and diluted                            20,068,887         13,572,690
                                            ==============    ===============



           See accompanying summary of accounting policies and notes
                            to financial statements.

<PAGE>


                            TWISTEE TREAT CORPORATION
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                      For the Years Ended November 30, 2001

<TABLE>

                                         Common Stock               Add. paid in         Accumulated         Subs.
                                     Shares            Amount          capital             deficit        Receivable
                                    --------         ----------    --------------       -------------    ------------
<S>                               <C>                <C>           <C>                  <C>              <C>

  November 30, 1999                 6,769,950            677          $1,363,815         $(1,653,655)           $ -

Issuance of common stock for
services                              450,000             45              52,455                  -               -

Recapitalization                      200,000             20                (25)                  -               -

Issuance of common stock
                                    8,000,000            800             999,200                  -         (175,000)

Issuance of common stock
                                    1,350,000            135             164,010                  -          (50,000)

Issuance of common stock to
officers for services
                                    2,500,000          2,500             312,250                  -               -

Issuance of common stock for
settlement                            250,000             27              23,598                  -               -

Net loss                                    -              -                   -          (1,508,624)             -
                               ---------------    -----------    ---------------- ------------------   -------------
                                            3
Balance,
  November 30, 2000                19,519,950          1,952           3,480,737          (3,162,279)       (225,000)

Recapitalization                       50,000              5                  (5)                -               -

Issuance of common stock for
settlement                             20,000              2                  (2)                -               -

Stock subscription collections
                                            -              -                   -                  -          50,000

Issuance of common stock for
services                              638,000             64              64,322                  -               -

Net loss                                    -              -                   -            (765,858)             -
                               ---------------    -----------    ---------------- ------------------   -------------

Balance,
  November 30, 2000                20,227,950          2,023          $3,545,052         $(3,928,137)      $(175,000)
                               ===============    ===========    ================ ==================   =============

</TABLE>

           See accompanying summary of accounting policies and notes
                            to financial statements.

<PAGE>

                            TWISTEE TREAT CORPORATION
                            STATEMENTS OF CASH FLOWS
<TABLE>

                                                               For the Years Ended November 30,
                                                                  2001                   2000
                                                           ------------------    -------------------
<S>                                                         <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITES:
Net loss                                                     $ (765,858)           $(1,508,624)
Adjustments to reconcile net loss to cash used in
  operating activities:
  Depreciation and amortization                                  50,654                 52,286
  Provision for bad debt                                         97,431                 67,615
  Common stock for services                                      64,386                315,000
  Loss on disposal of franchise stores                                -                 83,983
  Impairment                                                    235,890                 89,900
  Common stock issued for settlement                                  -                 23,625
  Loss on disposal of fixed assets                                    -                  5,918
  Loss on note receivable                                             -                 24,698
Changes in operating assets and liabilities:
  Note receivable                                                (9,984)                    -
  Inventory                                                           -                (59,395)
  Accounts payable and accrued expenses                         190,682                 92,831
  Deferred revenue                                              (20,000)               (16,018)
                                                         ---------------        ----------------
NET CASH USED IN OPERATING ACTIVITIES                          (156,799)              (828,181)
                                                         ---------------        ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Funds advances with letter of intent                                -                 (50,000)
  Purchase of property and equipment                                  -                 (40,214)
  Payments on notes receivable                                        -                  (2,139)
                                                         ---------------        ----------------
NET CASH USED IN INVESTING ACTIVITIES                                 -                 (92,353)
                                                         ---------------        ----------------

CASH FLOWS FROM FINANCING ACTIVITES:
Payments on capital leases                                            -                    (507)
Proceeds from notes payable                                     109,121                      -
Payments on notes payable                                             -                (153,004)
Issuance of common stock                                         50,000                 989,124
                                                         ---------------        ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                       159,121                 835,613
                                                         ---------------        ----------------

NET (INCREASE) DECREASE IN CASH                                   2,322                 (84,921)
Cash, beg. of period                                                  -                  84,921
                                                         ---------------        ----------------
Cash, end of period                                             $ 2,322                   $   -
                                                         ===============        ================

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid                                                      $  -                 $ 5,209
Income taxes paid                                                  $  -                    $  -
</TABLE>



           See accompanying summary of accounting policies and notes
                            to financial statements.


<PAGE>


                            TWISTEE TREAT CORPORATION
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Twistee Treat Corporation ("the Company") was originally  incorporated under the
laws of Missouri in 1995. The Company merged with Twistee Treat  Corporation,  a
Delaware Corporation, in June 1997.

The Company  operates and franchises  soft-serve ice cream,  non-fat  soft-serve
yogurt,  non-dairy  soft-serve  desserts  and an  assortment  of other foods and
beverages  in  distinctive  freestanding  Twistee  Treat  cone-shaped  buildings
designed  for  both  "drive-thru"  and  walk-up  service.  In  addition  to  the
freestanding  building,  the Company offers specialty kiosk units designed to be
located in stores, malls, food courts, business facilities,  colleges and mobile
trailer units  (concession  units) designed for short-term events such as fairs,
carnivals and sporting events.

As of November 30, 2001, the Company had one active franchise and three inactive
franchises.  The Company is in the process of  developing a new product line and
has not focused on the sale of its  franchises  or its current line of ice cream
products.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions  that affect the reported  amounts of assets and liabilities at
the date of the balance sheet. Actual results could differ from those estimates.

Cash Equivalents

Cash  equivalents  include highly  liquid,  temporary  cash  investments  having
original  maturity dates of three months or less. For reporting  purposes,  such
cash  equivalents  are stated at cost plus accrued  interest which  approximates
fair value.

Long-lived Assets

Property and equipment are stated at cost less accumulated  depreciation.  Major
renewals and improvements are capitalized;  minor replacements,  maintenance and
repairs are charged to current operations.  Depreciation is computed by applying
the  straight-line  method over the estimated useful lives of five to ten years.
Twistee Treat performs reviews for the impairment of long-lived  assets whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.

<PAGE>

Revenue Recognition and Deferred Revenue

In connection  with its  franchising  operations,  the Company  sells  franchise
facilities on a turnkey basis,  receiving  income from initial  franchise  fees,
development fees, royalties and product sales.

Revenue from the sale of  franchise  equipment  and  leasehold  improvements  is
recognized when delivery takes place and adequate consideration is received.

Initial franchise fees are recognized as income when  substantially all services
and  conditions  relating to the sale of the franchise  have been  performed and
adequate consideration has been received.

Development  fees are  non-refundable  and  recognized  when  received,  and the
development agreements call for additional franchise fees as franchises are sold
in the  development  regions.  These fees are  recognized  as income on the same
basis as franchise fees.

Royalties,  which are based upon a percentage of each  franchise's  gross sales,
are  recognized  as income  when the fees are earned and become  receivable  and
collectable. Revenue from the sales of products to the franchisees is recognized
when the merchandise is shipped.

Advertising Costs

Twistee Treat expenses advertising costs as incurred.  During 2001 and 2000, the
Company expensed $0 and $8,149, respectively.

Income Taxes

Twistee Treat accounts for income taxes under the asset and liability  approach.
The asset and  liability  approach is used to recognize  deferred tax assets and
liabilities  for the expected future tax  consequences of temporary  differences
between  the  carrying  amounts  and the tax  bases of assets  and  liabilities.
Twistee Treat records a valuation allowance to reduce the deferred tax assets to
the amount that is more likely than not to be realized.

Basic Loss Per Share

Basic loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.

Recent Accounting Pronouncements

Twistee  Treat  does not expect  the  adoption  of  recently  issued  accounting
pronouncements  to have a  significant  impact on  Twistee  Treat's  results  of
operations, financial position or cash flow.

NOTE 2 - Financial Condition And Going Concern

For the years ended  November  30, 2001 and 2000,  the Company  incurred  losses
totaling $765,858 and $1,508,624,  respectively,  and at November 30, 2001 had a
capital deficit of $677,292. Because of these recurring losses, the Company will
require additional working capital to develop and renew its business operations.

<PAGE>

The  Company  intends  to  raise  additional  working  capital  through  private
placements,  public  offerings  and/or bank financing.  As of March 4, 2002, the
Company  is  in  discussions  with  several  investors,  however  no  definitive
agreements have been reached.

There are no assurances  that the Company will be able to either (1) restart its
operations and achieve a level of revenues adequate to generate  sufficient cash
flow from operations;  or (2) obtain additional financing through either private
placement,  public  offerings  and/or bank  financing  necessary  to support the
Company's working capital requirements.  To the extent that funds generated from
operations and any private  placements,  public  offerings and/or bank financing
are insufficient,  the Company will have to raise additional working capital. No
assurance  can be given  that  additional  financing  will be  available,  or if
available,  will be on terms  acceptable  to the  Company.  If adequate  working
capital is not available the Company may not renew its operations.

These conditions raise substantial doubt about the Company's ability to continue
as a going concern.  The  consolidated  financial  statements do not include any
adjustments  relating to the recoverability and classification of asset carrying
amounts or the amount and  classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

NOTE 3 - Property and Equipment

Property and equipment consisted of the following at November 30:

                                                                2001
                                                          ------------
    Furniture and fixtures                                    $16,856
    Equipment                                                 118,098
    Restaurant equipment                                       15,634
    Molds                                                     215,000
                                                          ------------
                                                              365,588
    Less: Accumulated depreciation                            245,508
                                                          ------------
                                                            $ 120,080
                                                          ============

Depreciation expense totaled $50,654 and $52,286 in 2001 and 2000, respectively.

NOTE 4 - Impairment

The Company has suspended its  operations  and  accordingly  has  considered the
values  of its  assets  as well as  offers  and bids  and as a  result  of those
recorded an  impairment  of inventory of $178,617 and equipment of $57,273 for a
total of $235,890 as of November 30, 2001.

On May 22,  1998,  the  Company  entered  into a  purchase  agreement  with  the
president and another  officer of the Company who own Twistee  Treat  Southeast,
Inc. ("TTSE").  The Company acquired the rights,  title and interest to the TTSE
franchise  regional  developer  rights  and  franchise   agreements  within  the
territory being purchased for $277,811.  The original cost to TTSE was $110,000.
The excess purchase price of $167,811 was recognized as compensation  expense to
the officer during 1998. The intangible  asset of $110,000 was amortized using a
formula based on revenue.

During  November  2000,  the Company wrote down the remaining  carrying value of
expenses of $89,9000  since the Company had only sold the rights to one regional
development area within the past three years.
<PAGE>

NOTE 6 - Notes Payable

Notes payable consisted of the following at November 30, 2001:
<TABLE>

                                                                                                    Amount
                                                                                               -----------------
<S>                                                                                            <C>

    Note payable to an individual, non-interest bearing, due on demand, secured by
    700,000 shares of stock                                                                             $54,000

    Note payable to an individual, bearing interest at 8%, due on January 15, 2001,
    unsecured, in default                                                                                14,253

    Note  payable to an  unrelated  company  owned by an officer,  non  interest
    bearing, due on June 1, 2000, secured by building, in default
                                                                                                          4,363

    Note payable to an individual,  bearing  interest at 9%, due on September 1,
    2000, secured by Southeast Regional Development Rights, in default
                                                                                                         39,547

    Note payable to an individual, non-interest bearing, due on demand, unsecured
                                                                                                            146

    Note payable to a shareholder, bearing interest at 9%, due on demand, unsecured
                                                                                                         41,600

    Notes payable to the CEO and shareholder, bearing interest at 12%, due in February
    2002, unsecured                                                                                      27,000

    Notes payable to a shareholder, bearing interest at 12%, due in March 2002, unsecured
                                                                                                         26,000

    Notes payable to a shareholder, bearing interest at 12%, due in April 2002, unsecured
                                                                                                         45,000
                                                                                               -----------------
                                                                                                        251,909
    Less: Notes payable -shareholders                                                                   139,600
                                                                                               -----------------
    Notes payable                                                                                     $ 112,309
                                                                                               =================
</TABLE>


NOTE 7 - Stockholders' Equity

Common and Preferred Stock

The Company has  authorized  10,000,000  shares of preferred  stock,  $.0001 par
value and  50,000,000  shares of common stock,  $.0001 par value.  The preferred
stock  will  have such  right  and  preferences  as  determined  by the Board of
Directors.

In March 2001,  the Company issued 638,000 shares of common stock for consulting
services having a fair value of $64,386.

In  March  2000,  the  Company  offered  subscriptions  pursuant  to Rule 504 of
Regulation D of the Securities Act of 1933, as amended,  of 8,000,000  shares of
common stock to accredited investors. The purchase price is $0.125 per share. As
of March 31, 2000,  subscriptions for 8,000,000 shares totaling  $1,000,000 were
received  at which time the offer was closed.  As of March 4, 2002,  the Company
has received cash consideration of $825,000 for the common stock subscribed.

In June 2000,  the  Company  issued  2,500,000  shares of common  stock for cash
proceeds of $50,000 and consulting  services  having a fair value of $262,500 to
an Officer and Director of the Company.  The fair value of the shares issued for
consulting  services was  determined  based upon the fair value of the shares at
the issuance date.

During  2000,  the Company  issued  450,000  shares of common stock for services
having a fair  value of  $52,500  to  consultants.  The fair value of the shares
issued for consulting  services was determined  based upon the fair value of the
shares at the agreement date.

During 2000,  the Company  issued  1,137,500  shares of common stock for cash of
$114,124 and a subscription receivable of $50,000 to investors.

During 2000, the Company  settled a lawsuit  whereby the Company agreed to issue
270,000 shares of common stock valued at $23,625 to the litigants. Of the shares
issued, 250,000 shares were issued and 20,000 shares will be issued in 2001.

Warrants

During January 2002, the Company issued  warrants to purchase  910,000 shares of
common stock at an exercise price of $0.075 per share for a term of 5 years. The
warrants were for past services and were valued at $5,000.  The Company  accrued
$5,000 as of November 31, 2001.
<PAGE>

NOTE 8 - Income Taxes

The  provision  for federal  income tax consists of the  following for the years
ended November 30,:
<TABLE>


                                                         2001             2000
                                                      --------------    --------------
<S>                                                   <C>               <C>

    Current provision                                          $  -              $  -
    Deferred provision                                            -                 -
                                                      --------------    --------------
                                                               $  -              $  -
                                                      ==============    ==============

Deferred income taxes consist of the following at
November 30,:

                                                         2001             2000
                                                      --------------    --------------
    Long-term:
      Deferred tax assets                                $1,244,000        $1,074,470
      Valuation allowance                                (1,244,000)       (1,074,470)
                                                      --------------    --------------
                                                               $  -              $  -
                                                      ==============    ==============
</TABLE>


For the years ended  November  30, 2001 and 2000,  Twistee  Treat  incurred  net
losses  and,  therefore,  has no tax  liability.  The  net  deferred  tax  asset
generated by the loss carry-forward has been fully reserved.  The cumulative net
operating loss  carry-forward is approximately  $2,731,000 at November 30, 2001,
and will expire in the years 2016 through 2020.

NOTE 9 - Commitments

The  Company has  terminated  its prior  leases and now an officer has  provided
office  services  without  charge.  Such costs are  immaterial  to the financial
statements and accordingly are not reflected herein

Rent expense was $42,845 for the years ending November 30, 2000.


Employment Agreements

Effective January 1, 1999,  Twistee Treat entered into an employment  agreement
with a principal shareholder and former franchise developer. The agreement calls
for the  shareholder  to become Chief  Executive  Officer (CEO) of Twistee Treat
Corporation for five years at an annual salary of $90,000,  $150,000,  $150,000,
$175,000 and $175,000,  respectively.  The agreement contains a severance clause
for early termination of $250,000 and a death benefit of $25,000. As of November
30,  2001,  Twistee  Treat  owed the CEO  $212,000 in accrued  salary  which is
included as a current liability on the balance sheet.

Litigation, Claims, Assessments

During 2000, Twistee Treat was named as a defendant in another lawsuit filed by
an  individual  in the amount of $10,000.  In response,  Twistee  Treat filed a
third  party   complaint   against  the   individual   for  various   fraudulent
transactions.  The case is  currently  in the  discovery  stage  and  management
believes that it will be successful in defending itself against the litigation.

An individual  claims to be owed 750,000  shares of common stock for  consulting
services provided to Twistee Treat  in early 2000.  Twistee  Treat disputes  the
amount of compensation  owed for the services and has been  negotiating with the
individual   to  resolve  the  dispute  and  settle  on  a  mutually   agreeable
compensation amount. Twistee Treat  is confident that it will be able to come to
a  satisfactory  settlement.  As of the date of this report,  no amount has been
agreed upon.

Twistee  Treat  has  various  other  lawsuits  and claims  asserted  against it.
Management believes the lawsuits and/or claims are not material to the Company.