ITEM 1. BUSINESS

GENERAL

Creative Bakeries, Inc. ("Creative"), offers a broad line of premium quality pastries, cakes, pies, cookies and other assorted desserts which are produced at its baking facility. Such baked goods are marketed and distributed on a wholesale basis to supermarkets, restaurants, and institutional dining facilities.

Creative was incorporated in November 1993. The Company's executive offices are located at 20 Passaic Avenue, Fairfield, NJ 07004 and its telephone number is
(973) 808-8248.

The company had two subsidiaries. The sale of William Greenberg Jr. subsidiary was completed in November 1998. From the remaining subsidiary known as Batter Bake - Chatterley (BBC), the company sold the Batter Bake business in December 2001. The Company changed it's name to Brooklyn Cheesecake and Desserts Company in March 2002.

BUSINESS STRATEGY

The Company's business strategy is comprised of the following:

Institutional/Wholesale: The Company plans to increase its penetration in the institutional/wholesale food market by expanding its marketing efforts to restaurants, hotels and corporate dining facilities and by offering its products to supermarkets on a national basis. The Company plans to expand both its product line and geographic distribution through the following strategies:

Expand geographic distribution by acquiring new food distributors in the Connecticut and Philadelphia areas as well as key distributor areas throughout the United States. To do this, the Company intends to appoint food brokers in various states to handle sales on a commission-only basis.

Continue to expand the fat-free product line targeting existing customers as well as new customers; and

Enter into co-packing arrangements whereby the Company would introduce private label products of other bakery operations.

Kosher Foods. The Company also is seeking to benefit from the growth of the kosher food industry. According to Prepared Foods, the kosher food industry generated approximately $33 billion in sales in 1994 and has been growing at a rate of approximately 15% per annum. The company's Brooklyn Cheesecake and Desserts Subsidiary has a kosher certification and the Company believes that it can benefit from the projected growth of this market.

BUSINESS PHILOSOPHY

High Quality Ingredients. The Company believes that developing and maintaining premium quality products is the key to its future success. The Company uses the highest quality ingredients in its products including, AA creamy butter, whole eggs, premium fruits, nuts, and chocolates blended for the Company's unique recipes. The Company seeks to maintain rigorous standards for freshness, quality, and consistency.

Customer Service. The Company's goal is to provide its customers with warm, courteous and efficient service. The Company depends on and enjoys a high rate of repeat business. The Company believes that the quality of the relationship between its employees and its customers is critical to its success. The Company strives to hire and train well-qualified, highly motivated employees committed to providing superior levels of customer service.

PRODUCTS

Baked Goods

The Brooklyn Cheesecake and Desserts Company Subsidiary markets a full line of premium quality baked products such as cheese cakes, mousse cakes and tart shells as well a complete gourmet line of muffins. The Company continues to develop new products and welcomes customer requests.

Kosher Foods

Kosher foods generally are consumed by persons of the Jewish faith as well as Muslims, Seven Day Adventists and others who perceive kosher certification as a seal of purity. Kosher is a biblical term originally used to denote that which is "fit" and "proper".

The Company's subsidiary has kosher certification and the Company believes that it can capitalize on the projected growth of this market. The Company believes that its kosher certifications will enable it to better penetrate certain market areas. The Company's products are not kosher for Passover.

CUSTOMERS

The Brooklyn Cheesecake and Desserts Company Subsidiary sells its products through food distributors to hotels, hospitals and institutional feeders such as corporate caters, restaurants, coffee shops etc. The products are also sold retail through food distributors and direct to supermarket distribution centers.

INGREDIENTS AND PRINCIPAL SUPPLIERS

The Company seeks to use only the highest quality ingredients available. The Company has a policy of inspecting all raw ingredients before their intended use.

The ingredients used by the Company consist primarily of flour, eggs, sugar, butter and chocolate. All ingredients used by the Company are subject to substantial price fluctuations. The Company historically has been able to pass any significant price increases in its ingredients through to its customers. However, no assurance can be given that the Company will be able to continue this practice in the future. Any substantial increase in the prices of ingredients used by the Company could, if not offset by a corresponding increase in product prices, have a material adverse effect on its business, financial condition or results of operations. The Company does not believe the loss of any of its suppliers would have a material adverse effect on its business and believes that other suppliers could readily provide such products if necessary.

DISTRIBUTION AND MARKETING

The Brooklyn Cheesecake and Desserts Subsidiary bakes all of its products in its 30,000 square foot facility in Fairfield, New Jersey. Although utilization of the facility varies based on seasonal fluctuation, the facility operates on five days a week basis. The Company believes that the Brooklyn Cheesecake and Desserts Company Subsidiary has the capacity to meet future requirements, including those arising out of the consolidation with the Company. The Brooklyn Cheesecake and Desserts Company Subsidiary delivers 90% of its products by common carrier trucks to its institutional/wholesale customers. About 10% of its customers pick up their orders directly at the bakery and utilize their own distribution networks.

Historically, the Company has relied upon word-of-mouth and customer satisfaction to market its products to new customers and to make existing customers aware of new products.

COMPETITION

The baking industry is a highly competitive and highly fragmented industry. The Company competes with national, regional and local bakeries as well as supermarket chains that have in-store bakeries. Many of these competitors are larger, more established and have greater financial and other resources than the Company. Competition in both the retail and institutional/wholesale baking industry is based on product quality, brand name loyalty, price and customer service.

TRADEMARKS

The JMS Subsidiary has a trademark and design registered with the United States Patent and Trademark office for The Healthy BakeryTM (US Registration No. 1,644,559). While the Company believes that the trademarks are valid and enforceable, there can be no assurance as to the degree of protection its registered trademarks will afford the Company.

GOVERNMENT REGULATION

The Company is subject to numerous state regulations relating to the preparation and sale of food. It is also subject to federal and state laws governing the Company's relationship with employees, including minimum wage requirements, overtime, working and safety conditions, and citizenship requirements. The failure to obtain or retain required food licenses or to be in compliance with applicable governmental regulations, or any increase in the minimum wage rate, employee benefits costs (including costs associated with mandated health insurance coverage) or other costs associated with employees, could adversely affect the business, results of operations or financial condition of the Company.

EMPLOYEES

As of March 26, 2003, the Brooklyn Cheesecake and Desserts Company Subsidiary together with Creative had approximately 32 full-time employees, of which 30 are employed in production, and 1 in administration and 1 in an executive position. The Brooklyn Cheesecake and Desserts Company Subsidiary does not have a union and the Company believes that it has good relations with its employees.