MIKES ORIGINAL INC, SB-2, 1998-11-13

MIKES ORIGINAL INC
SB-2, 1998-11-13
ICE CREAM & FROZEN DESSERTS

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As filed with the Securities and Exchange Commission on November 13, 1998

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------

Form SB-2

Registration Statement Under The Securities Act of 1933

MIKE'S ORIGINAL, INC.
(Exact name of small business issuer as specified in its charter)

Delaware 2024 11-3214529
(State or Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)

Arthur Rosenberg, President
Mike's Original, Inc.
366 N. Broadway 366 N. Broadway
Jericho, NY 11753 Jericho, NY 11753
(516) 942-8068 (516) 942-8068
(Address and telephone number of principal (Name, address and telephone number
executive offices and principal place of of agent for service)
business)
Copies to:

David H. Lieberman, Esq. Michael Beckman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C. Beckman, Millman & Sanders, P.C.
100 Jericho Quadrangle, Suite 225 116 John Street
Jericho, New York 11753 New York, New York 10038
(516) 822-4820 (212) 227-6777
(516) 822-4824 Fax (212) 227-1486 Fax

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement for the same offering.[ ]____________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]___________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [X].

<PAGE>

CALCULATION OF REGISTRATION FEE

Title of Each Class of Proposed Proposed Maximum
Securities to be Amount to be Maximum Offering Aggegate Offering Amount of
Registered(1) Registered Price Per Security Price Registration Fee
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 5,060,000 shs. $.625 $3,162,500 $882.00

(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
</TABLE>

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE>

The information in this prospectus is not complete and may not be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities in any state where the offer or sale is not permitted.

<PAGE>

SUBJECT TO COMPLETION, DATED NOVEMBER 13, 1998

PRELIMINARY PROSPECTUS

5,060,000 Shares

MIKE'S ORIGINAL, INC.

Common Stock

This is an offering of shares of Common Stock of Mike's Original, Inc., a
Delaware corporation. The Company is offering to sell 3,500,000 shares of Common
Stock. Certain stockholders of the Company are offering to sell 1,560,000 shares
of Common Stock. The Company will not receive any of the proceeds from the sale
of shares by the selling stockholders.

The Company's Common Stock is quoted on the OTC Bulletin Board. On November
10, 1998, the last reported sale price of the Company's Common Stock was $.625
per share. See "Price Range of Common Stock."

INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS AND IMMEDIATE
SUBSTANTIAL DILUTION IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS. SEE "RISK
FACTORS" ON PAGE 4 AND "DILUTION" ON PAGE 8.

<TABLE>
<CAPTION>
Total Assuming Exercise of
Per Share Total Over-Allotment Option (1)
--------- ----- ---------------------------

<S> <C> <C> <C>
Public Price . . . . . . . . . . . $ $ $
Underwriting Discounts (2) . . . . $ $ $
Proceeds to the Company. . . . . . $ $ $
Proceeds to Selling Stockholders . . $ $ $

(1) The Underwriter has a 30-day option to purchase an additional 525,000 shares
of Common Stock solely to cover any over-allotments.
(2) $350,000 of which is payable by the Company and $156,000 of which is payable
by the selling stockholders.
</TABLE>

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

MILLENNIUM SECURITIES CORP.

The date of this Prospectus is , 1998

<PAGE>
PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this
Prospectus. It is not complete and may not contain all of the information that
is important to you. To understand this offering fully, you should read the
entire Prospectus carefully, including the risk factors and financial
statements.

The Company

Offices: Mike's Original, Inc. (the "Company," which includes its
predecessors), 366 N. Broadway, Suite 410, Jericho, New York
11753 and its telephone number is (516) 942-8068.

The Business: From its inception, the Company marketed, sold and distributed
Mike's Original Cheesecake Ice Cream, an all natural blend
of ice cream with cheesecake ingredients. This product line
was offered in a variety of flavors mainly to supermarkets and
grocery stores and also, to a lesser extent, to convenience
stores and food service outlets. Since March 1998, sales of
Mike's ice cream have been nominal. In June 1998, the Company
curtailed the sale of Mike's ice cream and began distributing
Veryfine Frozen Juice Bars under an agreement with Veryfine.

Strategy: Management has changed the Company's operations from
manufacturing, marketing and distributing its own line of
ice cream products to marketing and distributing a variety
of ice cream products and other frozen desserts. The frozen
desserts which the Company intends to market and distribute
include nationally known brands of super- premium ice cream
products and may also include the Company's ice cream products.
Management intends to accomplish this plan by acquiring
distribution companies concentrated in large metropolitan
areas. These acquisitions are expected to provide the Company
with new brands and customers, distribution expertise and an
operations center that can absorb any future acquisitions. As
part of this plan, the Company has recently acquired the rights
to purchase the assets of New Yorker Ice Cream Corp. ("NYIC")
and Jerry's Ice Cream Co., Inc ("Jerry's). NYIC and Jerry's
provide full service distribution and marketing services of ice
cream and frozen novelties including Haagen-Dazs, Good Humor,
and Edy's. These companies had combined 1997 revenues of
approximately $6,800,000 (See Pro Forma Financial Statements).
The Company intends to use part of the proceeds of this offering
to purchase these assets.

<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company..................3,500,000 shares
Common Stock Offered by the Selling Stockholders.....1,560,000 shares
Price Per Share of Common Stock......................$___
Shares Outstanding Prior to Offering.................5,152,908 shares
Shares to be Outstanding after the Offering..........11,902,908 shares. This includes all
transactions subsequent to June 30, 1998 as if
they occurred on that date, including the
acquisitions of NYIC and Jerry's. This does
not include 1,669,999 shares of Common
Stock issuable upon the exercise of
outstanding stock options at an average
exercise price of approximately $1.43 per
share and 1,400,000 shares issuable upon the
exercise of warrants at an exercise price of
$5.00 per share. It also assumes the
Underwriter does not exercise its over-
allotment option, which is described in
"Underwriting."

This Prospectus gives effect to the
.153846- for-1 reverse stock split of the
Common Stock effective in June 1996 and the
.667-for-1 reverse stock split of the
Common Stock effective in February 1997.
This Prospectus does not give effect to a
proposed reverse stock split to be voted on
at the Company's annual meeting of
stockholders to be held in December,
1998. If approved by stockholders, the
ratio of the reverse stock split will be
either 1-for-4 or 1-for-5, and result in
shares of Common Stock outstanding of
2,975,727 or 2,380,582, respectively, after
giving effect to this offering.
Over-allotment...................................... Up to 525,000 shares; if the full over-
allotment option is exercised, the total public
offering price will be $____, the total
underwriting discount will be $____, the total
proceeds to the Company will be $______
and the total price to the selling stockholders
will be $___________.
Use of Proceeds..................................... The Company intends to use its portion of the
proceeds to repay indebtedness, to acquire
two ice cream distributors, and for working
capital and general corporate purposes.
OTC Bulletin Board Symbols.......................... MIKS, MIKSW
Risk Factors........................................ For a discussion of the risks you should
consider before investing in the Common
Stock, see "Risk Factors."
</TABLE>

<PAGE>

SUMMARY FINANCIAL INFORMATION

The following financial information has been derived from the Company's
consolidated financial statements included elsewhere in this Prospectus. This
data should be read in conjunction with those consolidated financial statements
and the related notes. See "Financial Statements".

<TABLE>
<CAPTION>
Statement of Operations Data:

Fiscal Year Ended Six Months Ended
December 31, June 30,
1997 1996 1998 1997
---- ---- ---- ----

<S> <C> <C> <C> <C>
Net sales $384,348 $2,392,258 $129,623 $345,801
Net loss (4,502,645) (4,050,547) (362,922) (3,498,476)
Loss per Common Share (1) $ (1.69) $ (2.54) $ (0.11) $ (1.59)
Weighted Average Common
Shares Outstanding (1) 2,662,013 1,592,106 3,285,429 2,197,050

</TABLE>

Balance Sheet Data:
As of June 30, 1998
Pro Forma
Actual Pro Forma (3) As Adjusted (4)
------ ------------- ---------------
<S> <C> <C> <C>
Total assets $282,116 $ 602,116 $ 4,540,530
Current liabilities (2) 1,607,294 1,472,294 1,226,958
Long-term liabilities net of
current portion - - 363,750
Stockholders' equity (deficit) (1,325,178) (870,178) 2,949,822
- -------
(1) Does not include 3,069,999 shares of Common Stock reserved for
issuance upon the exercise of outstanding stock options and warrants
at a weighted average exercise price of $3.06 per share.
(2) Reflects the repayment of the Private Placement Notes. See
"Use of Proceeds."
(3) Includes certain transactions subsequent to June 30, 1998 as if they
occurred on June 30, 1998. Specifically included are the issuance of
private placement notes, shares issued for services rendered and the
settlement and restructure of certain debt obligations.
(4) Reflects the sale of 3,500,000 shares of Common Stock by the Company
At an assumed offering price of $1.00 per share, after deducting the
underwriting discount, estimated offering expenses and the application
of the net proceeds as described in "Use of Proceeds," including the
acquisition of NYIC and Jerry's.
</TABLE>

Unless otherwise stated, this Prospectus does not give effect to the proposed
reverse stock split to be voted on by stockholders at the Company's annual
meeting to be held in December 1998. If approved, the ratio of the reverse
stock split will be either 1-for-4 or 1-for-5, which will result in shares of
common stock outstanding of 1,288,227 or 1,030,581, respectively as of June 30,
1998 and 2,975,727 or 2,380,582, respectively, after giving effect to this
offering.
<PAGE>

RISK FACTORS

Investing in the Company's shares is very risky. You should be able to bear
a complete loss of your investment . Before making an investment, you should
carefully read this Prospectus and consider, along with other matters discussed
in this Prospectus, the following risk factors:

Losses Since Start of Operations. The Company has had limited revenue since
its incorporation in May 1994. For the six months ended June 30,1998 and the
years ended December 31, 1997 and 1996, the Company had net losses of $362,922,
$4,502,645 and $4,050,547, respectively. The Company recognized $129,623,
$384,348 and $2,392,258 in revenue for the six months ended June 30, 1998 and
the years ended December 31, 1997 and 1996, respectively. As of June 30, 1998,
the Company had total assets of $282,116, a working capital deficit of
$1,394,513 and stockholders' deficit of $1,325,178. The Company continues to
experience losses and depends upon the acquisitions of NYIC and Jerry's to
continue its business. Even after these acquisitions, there is no guarantee that
the Company will become profitable.

Going Concern Opinion. As indicated in the Company's 1997 Annual Report on
Form 10-KSB, the Company's financial statements have been prepared assuming that
the Company will continue as a going concern. However, the Company has had
losses since it started operations and requires additional working capital.
These factors among others raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

Security Interest in the Company's Assets. The Company presently owes one
of its former manufacturers approximately $211,000. Pursuant to agreements, as
amended, with this manufacturer, this debt is secured by all of the assets of
the Company. The Company is in default on a payment of approximately $135,000
which was due in December 1997. The balance of the debt is payable in December
1998. If this debt is not paid, this manufacturer could foreclose on all of the
assets of the Company which would materially adversely affect the Company's
business plans and financial condition.

Reliance on Supplier of Products. For the year ended December 31, 1997 and
for the six months ended June 30, 1998, approximately 30% of the combined
revenues of NYIC and Jerry's were from the sale of Haagen-Dazs products. While
these companies enjoy long term relationships with Haagen-Dazs, the loss of
Haagen-Dazs as a supplier could have a material adverse effect upon the business
of NYIC and Jerry's.

Competition. The Company's business is highly competitive. Many companies
distribute ice cream and related products. Many of these competitors are well
established and have substantially greater financial and other resources than
the Company. With respect to NYIC and Jerry's, there are several other
distributors of ice cream and related products with whom the companies compete
in the New York Metropolitan area. Several of these competitors are well
established and have greater financial and other resources than NYIC and
Jerry's.

Seasonality. The ice cream industry generally experiences its highest
volume during the spring and summer months and its lowest volume in the winter
months.

Product Liability. The Company may be liable if the consumption of any of
its products causes injury, illness or death. This is a risk related to

<PAGE>

marketing and distributing food products. The Company currently maintains
$2,000,000 of product liability insurance. The Company also maintains $1,000,000
of general and personal injury insurance per occurrence and $5,000,000 in the
aggregate. Any product liability judgement against the Company which is not
covered by insurance could have a material adverse effect on the Company's
business and prospects.

No Guarantee of Profitability. The Company has been unprofitable since it
started operating. Although the Company believes that its plan to change its
business by acquiring other companies will be successful and result in the
Company becoming profitable, there is no guarantee of future profits.

Limitations on Acquisition and Change in Control. Certain provisions of
Delaware law and the Company's Certificate of Incorporation and By-laws could
make more difficult a merger, tender offer or proxy contest involving the
Company, even if those events could benefit the Company's stockholders.

These provisions include:

- Section 203 of the Delaware General Corporation Law,
- the fact that the Company's Board of Directors is divided into three
classes, and
- the requirement that certain transactions, including
mergers and sales or transfers of all or substantially all the
Company's assets, must be approved by two-thirds of the stockholders
of the Company.

These provisions could limit the price that certain investors might be
willing to pay in the future for shares of the Company's Common Stock or
preferred stock.

The Company's Certificate of Incorporation also permits the Board of
Directors to issue up to 500,000 shares of preferred stock. The Board of
Directors can issue the preferred stock without stockholder approval and may
determine the terms of the preferred stock. The issuance of preferred stock
could have the effect of delaying or preventing someone from taking control of
the Company, even though the ability to issue other classes of preferred stock
may provide flexibility in possible acquisitions. Your rights as a holder of
Common Stock and the rights of holders of preferred stock will be subject to the
rights of the holders of additional or other classes of preferred stock that may
be issued in the future. Your rights as a holder of Common Stock may be
adversely affected by the issuance of additional or other classes of preferred
stock that may be issued in the future . The Company has not issued any shares
of preferred stock and has no current plans to issue any shares of any classes
of capital stock other than as described in this Prospectus.

Additional Issuances of Common Stock Without Shareholder Approval. After
this offering, the Company will have approximately 5,027,093 shares of Common
Stock authorized but unissued and not reserved for specific purposes, an
additional 1,669,999 shares and 1,400,000 shares of Common Stock unissued but
reserved for issuance under the Company's option plans and warrants,
respectively. All of such shares may be issued without any action or approval by
the Company's stockholders. The Company has no present plans, agreements,
commitments or undertakings to issue additional Common Stock or securities
convertible into Common Stock. Any issuance of additional shares of Common Stock
would further dilute the percentage ownership of the Company held by the
investors in this offering. See "Description of Securities" and "Shares Eligible
for Future Sale."

Limits on Directors' Liability. The Company's Certificate of Incorporation
and By-laws have provisions which reduce the potential personal liability of
directors for certain monetary damages. They also provide for indemnification of

<PAGE>

directors and other persons. The Company does not know of any pending or
threatened litigation against the Company or its directors that would result in
any liability for which a director would want indemnification. The Company has
entered into Indemnification Agreements with certain of its officers and
directors. The Indemnification Agreements provide for reimbursement for all
direct and indirect costs of any type (including attorneys' fees and related
disbursements) actually and reasonably incurred in connection with the
investigation, defense or appeal of a proceeding, (as defined) including amounts
paid in settlement by or on behalf of the person indemnified.

Governmental Regulation. As a marketer and distributor of ice cream, the
Company's products are subject to regulation by the FDA and other government
agencies relating to the safety of its products. The Company believes that its
marketing and distributing operations substantially comply with all existing
applicable laws and regulations. However, there is no guarantee that the
Company's compliance with current laws, regulations or other restrictions, as
well as any new laws or regulations, will not impose additional costs on the
Company which could adversely affect its financial performance and results of
operations.

Risks of Low-Priced Shares. The Securities and Exchange Commission (the
"Commission") has adopted rules that regulate broker-dealer practices in
transactions in "penny stocks." Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the Nasdaq system, provided that
current price and volume information regarding transactions in such securities
is provided by the exchange or system). The penny stock rules require a
broker-dealer to deliver to the customer a standardized risk disclosure document
prepared by the Commission that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with other information. The penny stock rules require that
prior to a transaction in a penny stock, the broker-dealer must determine in
writing that the penny stock is a suitable investment for the purchaser and
receive the purchaser's written agreement to the transaction. These disclosure
requirements may reduce the level of trading activity in the secondary market
for a stock that becomes subject to the penny stock rules. Consequently, if the
Company's Common Stock is subject to the penny stock rules, investors in this
offering may find it more difficult to sell their Common Stock.

Forward Looking Statements. Some of the statements in this Prospectus discuss
future expectations, contain projections of results of operations or financial
condition or contain other forward-looking statements. Words such as
"anticipate," "believe," "estimate," "expect," "intend" and similar expressions
identify forward-looking statements. Forward-looking statements are based on the
beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. Such statements
reflect the current views of the Company with respect to future events and are
subject to risks, uncertainties and assumptions relating to the operations,
results of operations, growth strategy and liquidity of the Company. Actual
results could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, including but not limited to:

- competitive factors and pricing pressures;
- relationships with its manufacturers;
- distributors and vendors;
- legal and regulatory requirements;
- general economic conditions; and
- other risk factors which may be described in the Company's future
filings with the Commission. The Company does not promise to update
forward-looking information to reflect actual results or changes in
assumptions or other factors that could affect those statements.
<PAGE>

All written and oral forward-looking statements by the Company or persons acting
on its behalf are expressly qualified by this paragraph.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
by the Prospectus (after deducting underwriting discounts and estimated offering
expenses) are estimated to be $2,900,000 ($3,356,750 if the Underwriter's
over-allotment is exercised in full). The Company will not receive any of the
proceeds of the sale of Common Stock by the selling stockholders ("Selling
Stockholders"). The proceeds to be received by the Company are intended to be
utilized substantially as follows:

<TABLE>
<CAPTION>
Approximate Approximate
Application of Proceeds Amount Percentage
----------------------- ------------ -----------

<S> <C> <C>
Repayment of Indebtedness (1). . . . . . . $ 466,600 16.1%
Acquisition of the assets of NYIC. . . . . 725,000 25.0
Acquisition of the assets of Jerry's . . . 255,000 8.8
Working capital (2). . . . . . . . . . . . 1,453,400 50.1
----------- ------
$ 2,900,000 100.0%
=========== ======
</TABLE>

The Company intends to use approximately $390,000 of the proceeds of this
offering to repay its Private Placement Notes on the closing of this offering,
$725,000 to purchase all of the assets of NYIC and $255,000 to purchase all of
the assets of Jerry's. The Company expects to use the balance of the proceeds of
the offering for general corporate purposes, including working capital and
capital expenditures. See "Business --Acquisition of Distributors."

Pending use of the proceeds from this offering as set forth above, the
Company may invest all or a portion of such proceeds in short-term,
interest-bearing securities, U.S. Government securities, money market
investments and short-term, interest-bearing deposits in major banks.
- -------------
(1) Includes the repayment of $390,000 of its 12% Private Placement Notes. The
terms of the Notes require their repayment upon the earlier of December,
1999 or the closing of this offering. See "Description of Securities."

(2) The Company presently anticipates that the balance of the proceeds
attributable to working capital will be used to fund current operations
through a substantial portion of calendar 1999, when the Company
anticipates being able to generate positive cash flow from operations.
See "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

<PAGE>

DILUTION

As of June 30, 1998, the net pro forma negative tangible book value, after
giving to certain transactions as if they occurred on June 30, 1998, of the
Company was ($872,399) or ($.17 ) per share of Common Stock. Net negative
tangible book value per share represents the amount by which the liabilities
exceed the amount of total tangible assets divided by 5,152,908, the number of
shares of Common Stock outstanding on a pro forma basis on June 30, 1998 . See
"Capitalization". Thus, as of June 30, 1998, the pro forma net negative tangible
book value per share of Common Stock owned by the Company's current stockholders
would have increased by $2,900,000 or $.35 per share after giving effect to this
offering without any additional investment on their part and the purchasers of
the Common Stock offered hereby would have incurred an immediate dilution of
$.81 per share from the offering price. The following table illustrates this per
share dilution:

<TABLE>
<S> <C> <C>
Public Offering price per share of
Common Stock Offered hereby . . . . . . . . . . . . . $1.00
Net tangible book value per share before offering (1). . (.17)
Increase per share attributable to new investors (2) . . .35
Increase per share attributable to acquisition (3) . . . .01
Adjusted net tangible book value per share
after this offering. . . . . . . . . . . . . . . . . . $ .19
-----
Dilution per share to new investors. . . . . . . . . . . $ .81
=====
</TABLE>

The following table summarizes the relative investments of investors
pursuant to this offering and the current shareholders of the Company:

<TABLE>
<CAPTION>
Common Shares Average
Acquired Total Consideration Price
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Current Stockholders 5,252,908(1) 44.1% $12,309,029 65.6% $2.34
Purchasers of Common
Shares in the Offering 3,500,000(2) 29.4% $ 3,500,000 18.7% $1.00
Shares issued in connection
with acquisitions 3,150,000(3) 26.5% $ 2,942,500 15.7% $ .93
---------- ------ ----------- ------ -----
Total 11,902,908 100.0% $18,751,529 100.0%
---------- ------ ----------- ------
- --------
(1) Gives effect to certain transactions subsequent to June 30, 1998 as if they
occurred on that date: the issuance of 1,560,000 shares with respect to the
Private Placement Notes, 297,479 shares for services rendered and 100,000
shares in exchange for outstanding related party debt.
(2) Assumes no exercise of the Underwriter's over-allotment option. See
"Underwriting".
(3) Gives effect to the issuance of 650,000 shares as partial payment for the
acquisition of NYIC, 170,000 shares as partial payment for the acquisition
of Jerry's, 1,500,000 shares to an unrelated third party as a finder's fee
in connection with the acquisition of NYIC and Jerry's and 830,000 shares
for services rendered, which issuances will occur simultaneously with
the closing of this offering.
</TABLE>

If the over-allotment option is exercised in full, the new Common Stock
investors will have paid $4,025,000 and will hold 4,025,000 shares of Common
Stock, representing 20.9% of the total consideration and 32.4% of the total
number of outstanding shares of Common Stock. See "Description of Securities"
and "Underwriting".

<PAGE>

CAPITALIZATION

The following table sets forth the cash and capitalization of the Company
as of June 30 , 1998, proforma capitalization and the as adjusted capitalization
which gives effect to the consummation of this offering as if it occurred on
June 30, 1998. This table should be read in conjunction with the financial
statements and related notes included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
June 30, 1998
Pro Forma
Actual Pro Forma (1) As Adjusted (2)
------ ------------- -----------

<S> <C> <C> <C>
Cash and cash equivalents $ 1,366 $321,366 $1,674,780
=======================================
Accounts payable and accrued expenses $684,140 $334,140 $ 334,140
Notes payable to related parties 351,586 336,586 340,000
Notes payable (including private placement)520,243 750,243 380,243
Current portion - long-term debt - - 121,250
Accrued interest on notes 51,325 51,325 51,325
-----------------------------------------
Total short-term liabilities 1,607,294 1,472,294 1,226,958
-----------------------------------------
Long-term notes payable - - 363,750
-----------------------------------------
Stockholders' equity (deficit):
Preferred Stock $.01 par value;
500,000 shares authorized, no
shares issued or outstanding
(actual, pro forma and pro forma
as adjusted)
Common Stock, $.001 par value;
20,000,000 shares authorized,
3,295,429 shares (actual),
5,152,908 shares (pro forma)
and 11,902,908 shares (pro forma
as adjusted) 3,295 5,152 11,902
Additional paid-in capital 10,176,097 11,506,636 17,442,386
Accumulated deficit (11,504,570) (12,381,966) (14,504,466)
-----------------------------------------
Total stockholders' equity (deficit) (1,325,178) (870,178) 2,949,822
-----------------------------------------
Total capitalization $ 282,116 $ 602,116 $ 4,540,530
-----------------------------------------
(1) Includes transactions subsequent to June 30, 1998 as if they occurred on
June 30, 1998. Specifically, the issuance of Private Placement Notes and
related shares, shares issued for services rendered and the settlement and
restructure of certain debt obligations.
(2) Reflects the sale of 3,500,000 shares of Common Stock by the Company at an
assumed offering price of $1.00 per share and the application of the net
proceeds as described in "Use of Proceeds", including the acquisition of
NYIC and Jerry's.
</TABLE>

<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has traded on the OTC Bulletin Board under the
symbol "MIKS" since July 31, 1997. The following table sets forth the high and
low closing prices for the Common Stock for the periods indicated:

High Low
---- ---
<S> <C> <C>
1998
Fourth Quarter (through November 10) . . 1 5/8
Third Quarter . . . . . . . . . . . . . . 1 5/32 5/8
Second Quarter. . . . . . . . . . . . . . 2 5/8 3/4
First Quarter . . . . . . . . . . . . . . 4 1/2 2 1/4

1997
Fourth Quarter. . . . . . . . . . . . 5 11/16 2 9/16
Third Quarter . . . . . . . . . . . . 12 5 1/8

</TABLE>
- --------

As of November 10, 1998, there were approximately 195 holders of record of
the Common Stock. On November 10, 1998, the closing sales price of the Company's
Common Stock was $.625 per share.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends. The Company
currently does not intend to pay cash dividends in the foreseeable future on the
shares of Common Stock. Management intends to reinvest earnings, if any, in the
development and expansion of the Company's business. Cash dividends, if any,
that may be paid in the future to holders of shares of Common Stock will be
payable when, as and if declared by the Board of Directors of the Company, based
upon the Board's assessment of :

- the financial condition of the Company;
- its earnings;
- need for funds;
- capital requirements;
- prior claims of preferred stock to the extent issued and outstanding;
and
- other factors, including any applicable laws.

Therefore, there can be no assurance that any dividends on the Common Stock
will ever be paid.

<PAGE>

SELECTED FINANCIAL DATA

The following selected financial information concerning the Company, other
than the pro forma and the pro forma as adjusted balance sheet and statement of
operations data, has been derived from the financial statements included
elsewhere in this Prospectus and should be read in conjunction with such
financial statements and the notes thereto. See "Financial Statements".

The selected financial data should be read in conjunction with and is
qualified in its entirety by, the Company's financial statements, related notes
and other financial information included elsewhere in this Prospectus.

Statement of Operations Data:

Fiscal Year Ended Six Months Ended
December 31, June 30,
1997 1996 1998 1997
---- ---- ---- ----

<S> <C> <C> <C> <C>
Net sales $ 384,348 $2,392,258 $129,623 $ 345,801
Net loss (4,502,645) (4,050,547) (362,922) (3,498,476)
Loss per Common Share (1) $ (1.69) $ (2.54) $ (0.11) $ (1.59)
Weighted Average Common
Shares Outstanding (1) 2,662,013 1,592,106 3,285,429 2,197,050

Balance Sheet Data:

</TABLE>
<TABLE>
<CAPTION>
As of June 30, 1998
Pro Forma
Actual Pro Forma (3) As Adjusted (4)
------ ------------- ---------------

<S> <C> <C> <C>
Total assets $282,116 $ 602,116 $ 4,540,530
Current liabilities (2) 1,607,294 1,472,294 1,226,958
Long-term liabilities net of
current portion 363,750
Stockholders' equity
(deficit) (1,325,178) (870,178) 2,949,822
- -------
(1) Does not include 3,069,999 shares of Common Stock reserved for
issuance upon the exercise of outstanding stock options and warrants
at a weighted average exercise price of $3.06 per share.
(2) Reflects the repayment of the Private Placement Notes. See "Use of
Proceeds."
(3) Includes certain transactions subsequent to June 30, 1998 as if they
occurred on June 30, 1998. Specifically included are the issuance of
private placement notes, shares issued for services rendered and the
settlement and restructure of certain debt obligations.
(4) Reflects the sale of 3,500,000 shares of Common Stock by the Company
at an assumed offering price of $1.00 per share, after deducting the
underwriting discount, estimated offering expenses and the application
of the net proceeds as described in "Use of Proceeds," including the
acquisition of two ice cream distributors.
</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the historical
financial statements of the Company included elsewhere in this Prospectus.

Results of Operations

Six Months Ended June 30, 1998 and June 30, 1997

The Company's sales for the six months ended June 30, 1998 and 1997 were
$129,623 and $345,801 respectively. The limited volume for the current year was
primarily due to insufficient working capital and the limited usage of the
Mike's Original brand. The Company plans to expand its sales by the acquisition
of strategic distributors, primarily in the New York Metropolitan area. In June,
1998 the Company began selling Veryfine frozen juice bars under a license
agreement with Veryfine.

Gross profit for the six months ended June 30, 1998 was $(90,741) and
$9,071 for the comparable six months ended June 30, 1997. The decrease and
elimination of gross profit dollars is primarily attributable to the lack of
sales due to limited operations and the limited usage of the Mike's Original
brand. Remaining finished goods inventories were sold at significantly reduced
prices in the second quarter.

General and administrative expenses (G&A) for the six months ended June 30,
1998 and June 30, 1997 were approximately $358,800 and $1,512,200 respectively.
The decrease was primarily due to a reduction in other professional fees
including accounting ($640,000), legal expenses ($460,000) and salaries
($100,000).

Selling, marketing and shipping expenses for the six months ended June 30,
1998 and June 30, 1997 were approximately $99,400 and $567,900 respectively. The
sharp decline for the 1998 period was primarily from decreases in retail
introductory programs, advertising, and in store promotions as a result of
limited operations.

Interest expense, net of interest income for the six months ended June 30,
1998 and June 30, 1997 were approximately $17,200 and $1,408,300 respectively.
The reduction in the amount charged to profit and loss was created by the
conversion of debt in 1997 to equity and the reduction of other interest bearing
debt through the application of proceeds from the initial public offering.

Net loss for the six months ended June 30, 1998 was $ 362,922 as compared
to $3,498,476 for the comparable prior year period. The net loss in 1998 was
offset by the forgiveness of debt by Michael Rosen (former President of the
Company) and other related parties in the amount of $216,882. The net loss in
1997 was attributable to the high cost of debt prior to the initial public
offering and the lack of volume.

Years Ended December 31, 1997 and December 31, 1996

The Company's net sales for the years ended December 31, 1997 and 1996
were $384,348 and $2,392,258, respectively, a decrease of 84%. This decrease
resulted from the initial fill of product into the distributor pipeline which
occurred early in 1996, as well as the Company's limited capital in 1997, which
limited capital has adversely impacted its ability to purchase product from its

<PAGE>

manufacturer to fill existing customer orders and has limited its ability to
engage in marketing and advertising programs to promote additional sales. Net
sales for 1997 were also adversely affected by the determination by Kraft to
terminate its distributorship agreement with the Company. Net sales for 1997 was
further reduced by approximately $129,000, representing net returns from this
distributor.

Gross (loss) profit for the year ended December 31, 1997 as compared to
1996 declined 107% to ($66,850) from $952,623, taking into account the return of
product previously described. Gross profit as a percentage of sales (before the
effect of the sales returns) for the year ended December 31, 1997 declined to a
deficit of 17.4% of net sales compared to 39.8% for the year ended December 31,
1996. The decrease in gross profit dollars is primarily attributable to the
decline in net sales and gross profit percentage. Gross profit as a percentage
of net sales declined partly as a result of higher raw material costs associated
with the manufacture of the Company's ice cream products, reduced selling prices
to certain area retailers and the very limited volume.

General and administrative expenses (G&A) for the years ended December 31,
1997 and December 31, 1996 were approximately $2,178,000 and $2,194,000
respectively. The major components of these expenses for the years ended
December 31, 1997 and December 31, 1996 were payroll and related taxes of
$399,000 and $361,000, respectively, legal and accounting fees of $597,000 and
$413,000, respectively (of which $450,000 was paid in Common Stock during
calendar year 1997) and consulting fees of $948,000 and $1,178,000, respectively
(of which $855,000 and $180,000, respectively was paid in Common Stock). The
shares issued during the year ended December 31, 1997, though restricted
securities, were valued by the Company at $1,311,000, based upon 25% discounts
from the initial public offering ("IPO") price on transactions occurring prior
to the IPO and the closing bid price on the date authorized for transactions
occurring after the IPO.

Selling and shipping expenses for the years ended December 31, 1997 and
December 31, 1996 were approximately $724,000 and $2,597,000 respectively. The
decline for the 1997 period was primarily from decreases in retail introductory
programs from $602,000 to $131,000 and store and media price reduction coupons
and media events from $983,000 to $314,000, as well as decreases in advertising
programs with store chains from $305,000 to $64,000.

Research and development costs for the year ended December 31, 1997 was
$28,594 as compared to $70,632 for the year ended December 31, 1996. This
decrease of $42,038 or 60% is a direct result of the limited capital available
for such expenditures.

Interest expense, net of interest income for the years ended December 31,
1997 and December 31, 1996 were approximately $1,506,000 and $142,000
respectively. $169,000 of the net interest cost for the year ended December 31,
1997 was attributable to the conversion of open accounts payable into
interest-bearing accounts, and additional borrowings from related parties and
other creditors. These additions to interest-bearing obligations began in mid
1996 and continued in 1997 until completion of the Company's IPO. The remainder
of interest charges for the years December 31, 1997 and 1996 resulted from
non-cash imputed interest charges of $1,327,000 and $15,000, respectively,
primarily in connection with the issuance of Common Stock to the Company's
manufacturer, and the issuance of convertible debt and/or warrants to lenders,
including vendors. The imputed interest charges attributable to the shares
issued and issuable to these various creditors in 1997 were charged to
operations in the period the shares or convertible securities were initially
issued. The shares, though restricted securities, were valued by the Company
based upon a 25% discount from the IPO price.

<PAGE>

Net loss for the years December 31, 1997 and 1996 amounted to approximately
$4,503,000 and $4,051,000, respectively. The primary reason for the net loss in
1997 was the lack of sales volume, the lack of cash flow through the date of the
IPO and the high interest costs associated with the high debt levels prior to
the IPO. The 1996 net loss was attributable to the high selling, general and
administrative expenses combined with lower gross profits.

Seasonality

The Company typically experiences more demand for its products during the
summer than during the winter.

The ice cream industry generally experiences its highest volume during the
spring and summer months and the lowest volume in the winter months. In this
regard, according to statistics published by the International Ice Cream
Association, 35.5% of sales of novelty ice cream products and 29.5% of sales of
packaged ice cream products were made during the third quarter (July -
September) of calendar 1996 while only 18.0% of sales of novelty ice cream
products and 22.4% of sales of packaged ice cream were made during the first
quarter (January - March) of calendar 1996.

Liquidity and Capital Resources

The Company's cash requirements have been significantly exceeding its
resources due to the limited operations of the Company. At June 30, 1998 the
Company had a working capital deficit of $1,394,513. In addition, the cash
balance of $1,366 and collection of receivables was anticipated to fund the
Company until proceeds from the Private Placement were received. The Private
Placement raised net proceeds of $355,000. It is anticipated that the proceeds
of the Private Placement should sustain the Company until the completion of this
offering. Upon the completion of this offering, the Company plans to consummate
the acquisitions currently assigned to the Company and to seek out additional
acquisitions to shift the Company's business to more of a distributorship rather
than a manufacturer. These acquisitions and the proceeds of this offering are
anticipated to generate sufficient cash flow to meet the Company's needs through
1999. See "Description of Securities - Private Placement," "Use of Proceeds" and
"Business - Acquisitions of Distributors."

Impact of the Year 2000 on Information Systems

The Year 2000 issue arises as the result of computer programs having been
written, and systems having been designed, using two digits rather than four to
define the applicable year. Consequently, such software has the potential to
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.

The Company is not expected to be affected by Year 2000 as it does not rely
on date-sensitive software or affected hardware. The Company's current
accounting and other systems were purchased "off- the-shelf". The Company
intends to timely update its accounting and other systems which are determined
to be affected by Year 2000 by purchasing Year 2000 compliant software and
hardware available from retail vendors at reasonable cost.

<PAGE>

The Company has not yet contacted other companies on whose services the
Company depends to determine whether such companies' systems are Year 2000
compliant. If the systems of the Company or other companies on whose services
the Company depends, including the Company's customers, are not Year 2000
compliant, there could be a material adverse effect on the Company's financial
condition or results of operations.

BUSINESS
General

According to the International Ice Cream Association, ice cream was part of
a $10.5 billion nationwide frozen dessert industry in 1995 and has wide appeal,
with over 93% of households in the United States consuming these products. From
its inception, the Company marketed, sold and distributed Mike's Original
Cheesecake Ice Cream, an all natural blend of ice cream with cheesecake
ingredients. This product line was offered in a variety of flavors mainly to
supermarkets and grocery stores and also, to a lesser extent, to convenience
stores and food service outlets. Since March 1998, sales of Mike's ice cream
have been nominal. In June 1998, the Company curtailed the sale of Mike's ice
cream and began distributing Veryfine Frozen Juice Bars under an agreement with
Veryfine.

Management has changed the Company's operations from manufacturing,
marketing and distributing its own line of ice cream products to marketing and
distributing a variety of ice cream products and other frozen desserts. The
frozen desserts which the Company will market and distribute include nationally
known brands of super-premium ice cream products and may also include the
Company's ice cream products. Management intends to accomplish this plan by
acquiring distribution companies concentrated in large metropolitan areas. These
acquisitions are expected to provide the Company with new brands and customers,
distribution expertise and an operations center that can absorb any future
acquisitions. As part of this plan, the Company has recently acquired the rights
to purchase the assets of New Yorker Ice Cream Corp. ("NYIC") and Jerry's Ice
Cream Co., Inc ("Jerry's). NYIC and Jerry's provide full service distribution
and marketing services of ice cream and frozen novelties including Haagen-Dazs,
Good Humor, and Edy's. These companies had combined 1997 revenues of
approximately $6,800,000. The Company intends to use part of the proceeds of
this offering to purchase these assets.

The Company was incorporated in New York in March 1993 and reincorporated
in Delaware in May 1994. It maintains its principal offices at 366 N. Broadway,
Jericho, New York 11753 and its telephone number is (516) 942-8068.

Agreement with Veryfine Products

The Company has entered into a license agreement with Veryfine Products,
Inc. effective April 1, 1998 for the sale of Veryfine Frozen Juice Bars. The
agreement grants the Company's wholly-owned subsidiary, New Yorker Frozen
Desserts, Inc., an exclusive license to manufacture and sell frozen juice bars
in certain flavors, sizes and packaging for a two year period in the New York
Metropolitan area, including Nassau, Suffolk, Westchester, Putnam and Rockland
counties, and certain counties in New Jersey and in the State of Connecticut.
The Company has the right to manufacture these products at facilities designated
by the Company pursuant to quality assurance procedures established by Veryfine.
These products have been manufactured in the Fieldbrook facility in Buffalo, New
York and the Company has been selling these products since June 1998. The
agreement further provides that the licensed products shall be the only branded
frozen juice bar manufactured or sold by the Company.

<PAGE>

Acquisition of Distributors

The Company will be using a portion of the proceeds of this offering to
purchase the assets of NYIC and Jerry's, two full service distributors and
marketers of ice cream and frozen novelties. In July 1998, the Company was
assigned all right, title and interest from Multi Venture Partners Ltd., a New
York corporation to acquire the assets of NYIC and Jerry's. These agreements,
which have since been amended, provide for an aggregate purchase price of
approximately $2,500,000, of which

- $980,000 is payable in cash at closing, $820,000 is payable in
- restricted Common Stock at closing, $200,000 is payable over six
- months at an 8% annual interest rate; and $485,000 is payable over
- four years at an 8% annual interest rate.

Each agreement further provides: (i) for a price guarantee on the Common
Stock issued at closing which is exercisable by the purchaser eighteen months
from the closing date; and (ii) for the Company to have the right to call all or
part of such Common Stock at any time during such eighteen month period, at the
closing price of the Common Stock on the closing date of the acquisition.

At closing Mr. Ted Ketsoglou and Mr. Gerald Schneider, the principals of
NYIC and Jerry's, respectively, will become directors and officers of the
Company and will be employed by the Company pursuant to written employment
agreements. See "Management - Proposed Employment Agreements."

Some of the products currently being distributed by NYIC and Jerry's are
Haagen Dazs, Good Humor, Baskin Robbins, Snickers, Edy's, Veryfine Juice Bars
and American Classics. NYIC and Jerry's own in the aggregate approximately 2,000
freezers which they have placed in approximately 1,500 locations throughout the
New York Metropolitan area, including Connecticut and New Jersey. The
institutions serviced by these companies include grocery stores, bodegas,
restaurants, delicatessens, supermarkets, parks, beaches and airports. Their
combined revenues for the year ended December 31, 1997 were approximately
$6,800,000.

Principal Supplier

For the year ended December 31, 1997 and for the six months ended June 30,
1998, approximately 30% of the combined revenues of NYIC and Jerry's were from
the sale of Haagen-Dazs products. While these companies enjoy long term
relationships with Haagen-Dazs, the loss of this company as a supplier could
have a material adverse effect upon the business of NYIC and Jerry's.

Manufacturing

The Company's products are presently manufactured by Fieldbrook Farms, an
independent FDA approved facility located in Buffalo, New York, under a two-year
exclusive manufacturing agreement expiring in March 1999. The manufacturing
agreement, dated as of March 20, 1997, provides that Fieldbrook shall be the
exclusive supplier of all products manufactured by Fieldbrook and distributed by
the Company east of the Mississippi River for a period of two years.

The products distributed by NYIC and Jerry's are manufactured either by the
ice cream company themselves, ie Haagen Dazs, or by third party manufacturers,
and sold to NYIC and Jerry's.

<PAGE>

Distribution and Marketing

The Company, through its officers, consultants and other representatives,
currently markets the Mike's Original products on a limited basis to
supermarkets, grocery stores, convenience stores and food service outlets. While
the Company incurred substantial promotional expenses for freezer space in
connection with entering new markets, maintaining existing markets, entering new
retailers and maintaining shelf space in existing retailers, it has received no
assurance that these retailers will continue to allocate freezer space for the
Company's products even after the payment of these fees and, in fact, many
supermarkets have discontinued selling the Company's products.

NYIC and Jerry's employees primarily distributes their products to grocery
stores, bodegas and restaurants in their own trucks. NYIC and Jerry's have
placed their own freezers at these locations at no expense to the store owner.
NYIC and Jerry's currently have placed approximately 2,000 freezers in
approximately 1,500 locations in the New York City Metropolitan area.

Competition

In the distribution of products, NYIC and Jerry's compete with many
distributors in the New York City Metropolitan area, several of which have
greater financial and other resources. In order to maintain and increase its
market position, NYIC and Jerry's must maintain the condition of their freezers,
effectively compete in the selling price of their products, and seek additional
locations for freezers.

Government Regulation

The Company is subject to regulation by various governmental agencies
regarding the distribution and sale of food products, including the FDA and
various state agencies. The Company believes that its marketing and distributing
operations comply with all existing applicable laws and regulations.

The Company cannot predict the impact of possible changes that may be
required in response to future legislation, rules or inquiries made from time to
time by governmental agencies. FDA regulations may, in certain circumstances,
affect the ability of the Company, as well as others in the industry, to develop
and market new products. However, the Company does not presently believe that
existing applicable legislative and administrative rules and regulations will
have a significant impact on its operations.

Trademarks and Patents

The Company owns registered trademarks and service marks under the names
"Mike's Original ", "GRAMWICH " and "Graham Cracker Delight ". The Company has
common law trademarks for "Strawberry Fantasy ", "Chocolate Tidbits ", Sorbet
Blends , Raspberry Romance and Lemon Lace . It also has filed a patent
application on its formulated process to manufacture cheesecake ice cream.

All trademarks and service marks appearing in this Prospectus that do not
relate to the Company's products are the property of their respective holders.

<PAGE>

Insurance

The Company's business exposes it to potential liability which is inherent
in the marketing and distribution of food products. The Company currently
maintains $2,000,000 of product liability insurance. The Company also maintains
$1,000,000 of general and personal injury insurance per occurrence and
$5,000,000 in the aggregate. Any product liability judgement against the Company
which is not covered by insurance could have a material adverse effect on the
Company's business and prospects.

Employees

The Company employs two persons, who serve in administrative capacities.
NYIC and Jerry's employ an aggregate of approximately 30 persons, of whom
approximately 5 are in executive and administrative operations and approximately
25 in warehouse, selling and distribution. None of the employees are represented
by a labor union. The Company, NYIC and Jerry's consider their relationships
with their employees to be satisfactory.

Seasonality

Legal Matters

J.W. Messner, Inc. v. Mike's Original, Inc. On May 22, 1997, the parties
entered into a Stipulation of Settlement, wherein the Company agreed to pay J.
W. Messner the sum of $125,935.82, in three installments as follows: $40,000 on
June 30, 1997; $42,967.91, plus accrued interest, on or before June 30, 1998;
and $42,967.91, plus accrued interest, on or before December 31, 1998.

Universal Folding Box Co., Inc. v. Mike Original, Inc., et al. On April 2,
1998, the Company was served with a complaint in an action pending in the
Supreme Court of New York, Nassau County and seeks damages in the amount of
$82,037, arising from the Company's alleged failure to pay for certain inventory
purchased. The Company disputes the allegations of the complaint and intends to
file to answer an answer and vigorously defend against the allegations raised in
the compliant.

Except as set forth above, the Company is not involved in any material
pending legal proceedings.

<PAGE>

MANAGEMENT

Directors and Executive Officers

The By-Laws of the Company provide for a Board of Directors of between
three and nine members classified into three classes as nearly equal in number
as possible, whose terms expire in successive years.

The directors and executive officers of the Company are as follows:

Name Age Position(s) with the Company
---- --- ----------------------------

Arthur G. Rosenberg 59 President and Director
Marc P. Palker 46 Secretary
Frederic D. Heller 60 Director
Myron Levy 56 Director

Arthur G. Rosenberg, Esq. has been a director of the Company since
September 1995 and President since September 1, 1998. Mr. Rosenberg has been the
Vice President of Acquisitions for The Associated Companies, a real estate
developer, in Bethesda, Maryland since June 1987 and is a principal of
Millennium Development Group, LLC, a real estate developer in Frederick,
Maryland. Mr. Rosenberg is an attorney admitted to practice in the State of New
York and has practiced law for over 30 years. Mr. Rosenberg is a director of
Phar-mor Inc., which operates a chain of retail drug stores.

Marc P. Palker has been a financial consultant to the Company since
December, 1997 and Secretary of the Company since September 1, 1998. From
January, 1997 to the present, Mr. Palker has been an independent financial
consultant. From February, 1989 through December, 1996 Mr. Palker was Chief
Financial Officer of Firetector Inc. a publicly owned business involved in the
design, manufacture and service of life safety communications equipment. From
1994 through 1995, Mr. Palker served as National Vice President of the Institute
of Management Accountants. Mr. Palker is a Certified Management Accountant.

Frederic D. Heller was Vice President of Finance and director of the
Company from January 1997 until November 14, 1997 when he resigned as an officer
of the Company. Since November 1997, Mr. Heller has been Chief Financial Officer
of J & W Management Corp., a commercial real estate management company. Mr.
Heller is a CPA licensed in the State of New York for over the last ten years.
Prior to joining the Company, from November 1994 through January 1997, he
practiced as an independent financial consultant including rendering such
services to the Company in that capacity from August 1996 to January 1997. From
September 1992 through October 1994, Mr. Heller was Vice President of Finance
and director of Vasomedical, Inc., formerly Future Medical Products, Inc., a
publicly owned business involved in the merchandising of certain medical
technology. From October 1990 through September 1992, Mr. Heller was president
and chief operating officer of FDH Enterprises, Inc., a company rendering
financial consulting services to business clients.

<PAGE>

Myron Levy has been a director of the Company since July 1997. Since June
1993, Mr. Levy has been President of Herley Industries, Inc., a publicly owned
designer and manufacturer of flight instrumentation products. From May 1991 to
June 1993, Mr. Levy served as Executive Vice President and Treasurer of Herley
Industries, Inc. Mr. Levy also has been a director of Herley since 1992.

The Company's Board of Directors is classified into three classes. The
directors in each class serve for three-year terms. Arthur Rosenberg is a member
of Class I which serves until the Company's 1998 Annual Meeting of Stockholders.
Myron Levy is a member of Class II which serves until the Company's 1999 Annual
Meeting of Stockholders. Frederic D. Heller is a member of Class III which
serves until the Company's 2000 Annual Meeting of Stockholders. Directors who
are not employees of the Company receive no cash compensation for their services
to the Company as directors, but are reimbursed for expenses actually incurred
in connection with attending meetings of the Board of Directors. All members of
the Board of Directors are eligible to participate in the Company's stock option
plans. Each director attended or participated in at least 75% of the meetings of
the Board of Directors during his tenure in fiscal 1997.

Executive Compensation

The following table sets forth the cash and other compensation paid or
accrued by the Company during the year ended December 31, 1997 and 1996 and the
nine months ended December 31, 1995 to the Company's Chief Executive Officer.
Michael Rosen ceased to be the Company's Chief Executive Officer effective in
May 1998. No other executive officer earned over $100,000 in any fiscal year.

Long Term
Annual Compensation Compensation
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(2) Options Compensation
- ------------------ ---- ------ ----- --------------- ------------ ------------

<S> <C> <C> <C> <C> <C> <C>
Michael Rosen 1997 $ 98,083 - - 50,000(3) -
Chairman of the Board, 1996 112,250(1) - - 200,000(3) -
President, Chief 9/30/95(4) 81,000(1) - - - -
Executive Officer

(1) Does not include an aggregate of $89,565 of salary which was accrued and
not paid to Mr. Rosen during the period from inception through September
30, 1996, to which Mr. Rosen has waived all rights.
(2) The value of all perquisites provided to the Company's officers did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(3) Represents ten-year options granted in May 1996 and September 1996
pursuant to the Company's 1995 Long Term Incentive Plan.
(4) Represents the nine-month period ended December 31,1995.
</TABLE>

<PAGE>

Option/SAR Grants in Last Fiscal Year

The following table sets forth all stock options granted to the executive
officers named in the Executive Compensation table during the fiscal year ended
December 31, 1997 and 1996.

<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------------

Number of % of Total
Securities Options/SARS
Underlying Granted to Exercise or
Options/SARS Employees in Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---- ------------ ------------- ------------ -----------

<S> <C> <C> <C> <C>
Michael Rosen 33,333 12.5% $3.00 May 31, 2006 (1)
166,667 62.5% $1.50 September 11, 2006 (2)
50,000 42.9% $1.50 May 1, 2007(3)
- ------
(1) Represents ten year options granted in May 1996, pursuant to the Company's
1995 Long Term Incentive Plan. Options became fully vested on November 30,
1996.
(2) Represents ten year options granted in September 1996, pursuant to the
Company's 1995 Long Term Incentive Plan. Options became fully vested on
March 12, 1997. Represents ten year options granted in May 1997 pursuant to
the Company's 1995 Long Term Incentive Plan. Options became fully vested
on November 1, 1997.
</TABLE>

Consulting Agreements

In October 1998, the Company entered into a five-year consulting agreement
with its President, Arthur G. Rosenberg which becomes effective upon the
acquisition of NYIC and Jerry's, at which time Mr. Rosenberg will be resigning
as President of the Company and continuing in his position as Chief Executive
Officer. Mr. Rosenberg is to provide management, sales and marketing services to
the Company for a monthly fee of $5,000.

The Company has entered into a consulting agreement with Alma Management
Corp. ("Alma"), as of November 1, 1996. Under this agreement, which is for a
term ending October 31, 1998, Alma has agreed to cause its two principals (the
"Principals"), to provide sales and marketing advisory and consulting services
to the Company. Alma receives an annual consulting fee of $50,000 payable at the
Company's option in either cash or Common Stock. In addition, Alma has received
30,000 shares of Common Stock and options to purchase 133,333 shares of Common
Stock at an exercise price of $1.50 per share. One-third of the options vest on
May 1, 1997, one-third six months thereafter and the balance vest on May 1,
1998. The Company may terminate the services of either Principal under the
consulting agreement with Alma if such Principal cannot adequately perform his
duties thereunder because of mental or physical disability, death or for "Just
Cause" (as defined). The consulting agreement provides that if one of the
Principals is terminated by the Company, the consulting fee paid to Alma will be
reduced by one half and if both Principals are terminated by the Company, no
further compensation will be paid to Alma. The consulting agreement restricts
Alma and the Principals from engaging in competition with the Company for the
term thereof and for one year thereafter and contains provisions protecting the
Company's trade secrets and proprietary rights and information.

<PAGE>

Proposed Employment Agreements

Ted Ketsoglou has entered into a five year employment agreement, commencing
on the closing of the NYIC acquisition, wherein he has agreed to serve as
President of the Company. The term of the agreement may be extended for an
additional five year period at the sole option of the Company. As compensation
for his services, Mr. Ketsoglou is to receive $126,000 annually and an annual
bonus equal to 2% of the Company's pretax profits. He is also to receive annual
salary increments of 5% during the initial five year term and 10% thereafter.
Upon the effectiveness of the agreement, the Company will be issuing to Mr.
Ketsoglou 200,000 shares of its Common Stock, of which half shall vest on
January 15, 1999 and half on January 15, 2000. His employment agreement also
provides for the granting of certain options upon the closing of future
acquisitions by the Company and for certain payments following death or
disability. During the term of his employment, the Company has also represented
that it will use reasonable efforts to cause the appointment or election of Mr.
Ketsoglou to the Company's Board of Directors.

Gerald Schneider has entered into a five year employment agreement,
commencing on the closing of the Jerry's acquisition, wherein he has agreed to
serve as Vice President of Sales of the Company. The term of the agreement may
be extended for an additional five year period at the sole option of the
Company. As compensation for his services, Mr. Schneider is to receive $115,500
annually and an annual bonus equal to 2% of the Company's pretax profits. He is
also to receive annual salary increments of 5% during the initial five year term
and 10% thereafter. Upon the effectiveness of the agreement, the Company will be
issuing to Mr. Schneider 200,000 shares of its Common Stock on which half shall
vest on January 15, 1999 and half on January 15, 2000. His employment agreement
also provides for the granting of certain options upon the closing of future
acquisitions by the Company and for certain payments following death or
disability. During the term of his employment, the Company has also represented
that it will use reasonable efforts to cause the appointment or election of Mr.
Schneider to the Company's Board of Directors.

Stock Plans

1995 Long Term Incentive Plan

In August 1995, the Company adopted The Mike's Original, Inc. 1995 Long
Term Incentive Plan (the "1995 Incentive Plan") in order to motivate qualified
employees of the Company, to assist the Company in attracting employees and to
align the interests of such persons with those of the Company's stockholders.

The 1995 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal Revenue Code of 1986, as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to officers, key employees, consultants and independent
contractors of the Company and its affiliates.

The 1995 Incentive Plan, which is administered by the Board of Directors,
authorizes the issuance of a maximum of 433,333 shares of Common Stock. If any
award under the 1995 Incentive Plan terminates, expires unexercised, or is
canceled, the Common Stock that would otherwise have been issuable pursuant
thereto will be available for issuance pursuant to the grant of new awards. To
date, the Company has granted an aggregate of 306,667 options to purchase Common
Stock under the 1995 Incentive Plan, of which 250,000 options have been granted
to Michael Rosen, the Company's former Chairman of the Board and Chief Executive

<PAGE>

Officer. 33,333 of these options are exercisable for ten years from the date of
grant at a price of $3.00 per share and 216,667 of these options are exercisable
for ten years from the date of grant at a price of $1.50 per share. Another
56,667 options have been granted to Steven A. Cantor. Each of the options
granted to Mr. Cantor are exercisable for a ten year term at a price of $1.50
per share. As of June 30, 1998, none of these options had been exercised.

1996 Non-Qualified Stock Option Plan

In October 1996, the Company's Board of Directors approved a 1996
Non-Qualified Stock Option Plan (the "Non-Qualified Plan") which covers 500,000
shares of the Company's Common Stock. The options become exercisable in
installments as determined at the time of grant by the Board of Directors. As of
the date of this registration statement, the Company had granted 478,332 options
to purchase shares of Common Stock under the Non-Qualified Plan at an exercise
price of $1.50 per share. Arthur G. Rosenberg, Martin Pilossoph and Myron Levy
have been granted options to purchase 23,333 shares of Common Stock each at the
exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Frederic
D. Heller has been granted options to purchase 58,333 shares of Common Stock at
the exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Alma
has been granted options to purchase 133,333 shares of Common Stock at an
exercise price of $1.50 per share pursuant to the Non-Qualified Plan. Steven A.
Cantor has been granted options to purchase 76,667 shares of Common Stock at an
exercise price of $1.50 per share. As of June 30, 1998, none of these options
had been exercised.

Personal Liability and Indemnification of Directors

The Company's Certificate of Incorporation and By-laws contain provisions
which reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors, although the
Company may attempt to acquire such insurance in the future. The Company
believes that the substantial increase in the number of lawsuits being
threatened or filed against corporations and their directors and the general
unavailability of directors liability insurance to provide protection against
the increased risk of personal liability resulting from such lawsuits have
combined to result in a growing reluctance on the part of capable persons to
serve as members of boards of directors of companies, particularly of companies
which intend to become public companies. The Company also believes that the
increased risk of personal liability without adequate insurance or other
indemnity protection for its directors could result in overcautious and less
effective direction and management of the Company. Although no directors have
resigned or have threatened to resign as a result of the Company's failure to
provide insurance or other indemnity protection from liability, it is uncertain
whether the Company's directors would continue to serve in such capacities if
improved protection from liability were not provided.

<PAGE>

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its stockholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interests of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.

The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future,
although the Company may attempt to obtain such insurance.

These provisions diminish the potential rights of action which might
otherwise be available to shareholders by limiting the liability of officers and
directors to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company's stock may be adversely affected.

The Company has entered into Indemnification Agreements with certain of its
officers and directors. The Indemnification Agreements provide for reimbursement
for all direct and indirect costs of any type or nature whatsoever (including
attorneys' fees and related disbursements) actually and reasonably incurred in
connection with either the investigation, defense or appeal of a Proceeding, (as
defined) including amounts paid in settlement by or on behalf of an indemnitee
thereunder.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that such indemnification, in the opinion of the Commission, is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of shares of voting
stock of the Company, as of October 15, 1998, of (i) each person known by the
Company to beneficially own 5% or more of the shares of outstanding Common
Stock, based solely on filings with the Securities and Exchange Commission, (ii)
each of the Company's executive officers and directors and (iii) all of the
Company's executive officers and directors as a group. Except as otherwise
indicated, all shares are beneficially owned, and investment and voting power is
held by, the persons named as owners.

<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Shares Percentage
Beneficial Owner Beneficially Owned Ownership
- --------------------- ------------------- -----------

<S> <C> <C>
Steven A. Cantor (1) 283,333 (2) 5.4%
Annette Cantor (1) 298,650 5.8%
Arthur G. Rosenberg (1) 33,333 (3) *
Frederic D. Heller (1) 160,000 (4) 3.1%
Myron Levy (1) 125,833 (3) 2.4%
All officers and directors
as a group (3 persons) 319,166 (5) 6.1%
- ----------
* less than one percent (1%) unless otherwise indicated.

(1) The address for each of these persons is 366 N. Broadway, Jericho, NY 11753
(2) Includes options to purchase 56,667 shares of Common Stock granted under
the 1995 Long-Term Incentive Plan and options to purchase 76,666 shares of
Common Stock granted under the 1996 Non-Qualified Plan.
(3) Includes options to purchase 23,333 shares of Common Stock granted under
the 1996 Non-Qualified Plan.
(4) Includes options to purchase 58,333 shares of Common Stock granted under
the 1996 Non-Qualified Plan.
(5) Includes 104,999 shares issuable upon the exercise of options granted
pursuant to the Company's stock option plans.
</TABLE>

<PAGE>
CERTAIN TRANSACTIONS

In October 1998, the Company authorized the issuance of 475,000 shares of
Common Stock to Arthur G. Rosenberg, which shares are issuable upon the closing
of NYIC and Jerry's, in consideration for prior management services, and 85,000
shares were issued at such time to each of Myron Levy and Frederic D. Heller as
directors' compensation.

In August 1998, the Company issued 97,500 shares of Common Stock to Marc P.
Palker in consideration for financial consulting services rendered for the
Company through July 1998.

In May 1998, the Company entered into a settlement and general release
("Settlement Agreement") with Michael Rosen, its then Chairman of the Board and
President, Rachelle Rosen, its then Secretary and Treasurer, Martin Pilossoph,
the father of Rachelle Rosen and father-in-law of Michael Rosen and then a
director and Elizabeth Pilossoph, the mother of Rachelle Rosen and mother-in-law
of Michael Rosen. Pursuant to the terms of the Settlement Agreement, (i) Michael
Rosen, Rachelle Rosen and Martin Pilossoph voluntarily resigned as officers and
directors of the Company, (ii) the employment agreements of each of Michael
Rosen and Rachelle Rosen were terminated, (iii) the Company agreed to repay
certain outstanding indebtedness to each of Michael Rosen and Elizabeth
Pilossoph and (iv)each of the Company on the one hand, and the Rosens and
Pilossophs on the other hand, gave the other a general release.

In April 1997, the Company issued 150,000 shares of Common Stock to Steven
A. Cantor as consideration for the termination of his three year consulting
agreement providing for payments of $125,000 annually, which would have
commenced on the Company's initial public offering.

In October 1996, the Company issued 16,667 shares of Common Stock to
Frederic D. Heller, the Company's former Vice President-Finance, Treasurer and a
director, as payment for services rendered during the year ended December 31,
1996. These shares were valued at $3.00 per share, the estimated fair market
value of the Common Stock at the date of issuance.

On August 28, 1996, Michael Rosen was issued a promissory note in the
principal amount of $206,250. The funds that Mr. Rosen loaned the Company were
the proceeds of a sale by Mr. Rosen to investors of 183,333 shares of his Common
Stock at a price of $1.12 per share. This loan bears interest at a rate of 8%
and initially was payable the earlier of (i) thirteen (13) months from the date
of the loan, or (ii) the date the Company successfully consummates an initial
public offering of securities of the Company, but only to the extent that the
over-allotment option is exercised in such offering and only from the proceeds
received by the Company from the exercise of the over-allotment option. In
September 1996, the maturity date of this promissory note was revised to
September 30, 1998. In addition, the revised promissory note provides that
one-half of the outstanding principal amount of the note will be paid with
accrued interest thereon in the event the Company successfully consummates an
initial public offering of securities of the Company, but only to the extent
that the over-allotment option was exercised in such offering and only from the
proceeds received by the Company from the exercise of the over-allotment option.
This loan was part of the May 1998 settlement agreement with Mr. Rosen.

In August, September and October 1996, the Company received three loans
from Steven A. Cantor aggregating $253,750. A portion of the funds that this
stockholder loaned the Company was a result of the stockholder selling shares of
his Common Stock to an investor. In August 1996, this stockholder sold 38,889
shares of his Common Stock at a price of $1.12 per share. In September 1996,
this stockholder sold 23,333 shares of his Common Stock at a price of $1.50 per
share. These loans, which were consolidated into one note in September 1997,
bear interest at a rate of 8% and are payable the earlier of (i) June 1, 1997,
or (ii) with respect to $123,750 of the principal amount, the date the Company
successfully consummates an initial public offering of securities of the
Company, but only to the extent that either the over-allotment option is
exercised in such offering or within ninety (90) days after the underwriter
elects not to exercise the over-allotment option. This loan was repaid in 1997.

As a general rule, all transactions among the Company and its officers,
directors or stockholders have been, and in the future will be, made on terms no
less favorable to the Company than those available from unaffiliated parties.

<PAGE>

SELLING STOCKHOLDERS

This Prospectus will also be used for the offering of additional shares of
Common Stock owned by persons who have participated in a recent private offering
of the Company's securities (the "Selling Stockholders"). Except for 342,136
shares owned by the Selling Stockholders, the Selling Stockholders have agreed
that the remaining shares of Common Stock owned by them which are registered for
resale hereunder may not be sold for sixty (60) days from the date of this
Prospectus without the prior written consent of the Representative. The Company
will not receive any proceeds from such sales. The Representative may release
such restriction at any time after completion of this offering, although there
are no understandings or arrangements in this regard. The resale of the
securities by the Selling Stockholders is subject to Prospectus delivery and
other requirements of the Securities Act.

The Shares are being offered by the following persons in the amounts set
forth below:

Beneficial Ownership Number of Shares Beneficial Ownership
Stockholder Prior to Offering Offered After Offering
----------- --------------------- ----------------- ---------------------
<S> <C> <C> <C>
Arthur & Janet Wolfman - 200,000 -
Barney & Madeline Shapiro - 100,000 -
David Lieberman 178,577 80,000 98,577
Vosavu Pty, Ltd. 163,559 80,000 83,559
Nader D. Rashti - 200,000 -
Sean Desmond - 100,000 -
Gary L. Spieler - 200,000 -
Shawn Campbell - 400,000 -
Ted & Phyllis Cohen - 100,000 -
Barry Gerston - 100,000 -
</TABLE>

<PAGE>

DESCRIPTION OF SECURITIES

Capital Stock

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, $.001 par value per share and 500,000 shares of Preferred Stock,
$.01 par value per share.

Common Stock

Holders of the Common Stock do not have subscription, redemption,
conversion or preemptive rights. The shares of Common Stock sold by the Company
in this offering will be, when issued and paid for, fully paid and
non-assessable. Each share of Common Stock is entitled to participate pro rata
in distribution upon liquidation, subject to the rights of holders of Preferred
Stock, and to one vote on all matters submitted to a vote of stockholders. The
holders of Common Stock may receive cash dividends as declared by the Board of
Directors out of funds legally available therefor, subject to the rights of any
holders of Preferred Stock. Holders of the Common Stock are entitled to elect
all directors. The Company's Board consists of three classes each of which
serves for a term of three years. At each annual meeting of the stockholders the
directors in only one class will be elected. The holders of the Common Stock do
not have cumulative voting rights, which means that the holders of more than
half of the shares voting for the election of a class of directors can elect all
of the directors of such class and in such event the holders of the remaining
shares will not be able to elect any of such directors.

Preferred Stock

The Company's certificate of incorporation, as amended, authorizes the
issuance of up to 500,000 shares of preferred stock, par value $.01 per share.

The issuance of additional Series A Preferred Stock or Preferred Stock by
the Board of Directors could adversely affect the rights of holders of shares of
Common Stock by, among other things, establishing preferential dividends,
liquidation rights or voting power. The issuance of Series A Preferred Stock or
Preferred Stock could be used to discourage or prevent efforts to acquire
control of the Company through the acquisition of shares of Common Stock.

Warrants

Class A Warrants were issued in connection with the Company's July 31, 1997
initial public offering. The following summary of the provisions of the
Warrants.

Each Warrant entitles the registered holder thereof to purchase one share
of Common Stock (subject to certain adjustments) through June 30, 2000, at a
price of $5.00 per share. A holder of Warrants may exercise such Warrants by
surrendering the certificate evidencing such Warrants to the Company, together
with the form of election to purchase on the reverse side of such certificate
properly completed and executed and the payment of the exercise price and any
transfer tax. If less than all of the Warrants evidenced by a Warrant
certificate are exercised, a new certificate will be issued for the remaining
number of Warrants.

<PAGE>

For a holder to exercise the Warrants, there must current registration
statement on file with the United States Securities and Exchange Commission and
various state securities commissions. The Company will be required to file
post-effective amendments to the registration statement when events require such
amendments. While it is the Company's intention to file post-effective
amendments when necessary, there is no assurance that the registration statement
will be kept effective. If the registration statement is not kept current for
any reason, the Warrants will not be exercisable, and holders thereof may be
deprived of value. Moreover, if the shares of Common Stock underlying the
Warrants are not registered or qualified for sale in the state in which a
Warrant holder resides, such holder might not be permitted to exercise the
Warrants. If the Company is unable to qualify the Common Stock underlying such
Warrants for sale in certain states, holders of the Company's Warrants in those
states will have no choice but to either sell such Warrants or allow them to
expire.

The Company has authorized and reserved for issuance a number of underlying
shares of Common Stock sufficient to provide for the exercise of the Warrants.
When issued, each share of Common Stock will be fully paid and nonassessable.

Warrant holders do not have any voting or other rights as shareholders of
the Company unless and until Warrants are exercised and shares issued pursuant
thereto.

The exercise price and the number of shares of Common Stock issuable upon
the exercise of each Warrant are subject to adjustment in the event of a stock
dividend, recapitalization, merger, consolidation or certain other events.

Redemption Rights. Any or all of the Class A Warrants may be redeemed by
the Company at a price of $.01 per warrant, upon the giving of not less than
thirty (30) days' nor more than sixty (60) days' written notice at any time,
provided that the average closing bid price of the Common Stock for twenty (20)
consecutive trading days ending three (3) days of the notice of redemption has
equaled or exceeded $10.00 per share. The right to purchase the Common Stock
represented by the Class A Warrants so called for redemption will be forfeited
unless the Class A Warrants are exercised prior to the date specified in the
foregoing notice of redemption.

Adjustments. The exercise price and the number of shares of Common Stock
issuable upon the exercise of each Class A Warrant are subject to adjustment in
the event of a stock dividend, recapitalization, merger, consolidation or
certain other events.

For the life of the Class A Warrants, the holders thereof are given the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock of the Company. The exercise of the Class A Warrants will result in
the dilution of the then book value of the Common Stock of the Company held by
the public investors and would result in a dilution of their percentage
ownership of the Company. The terms upon which the Company may obtain additional
capital may be adversely affected through the period that the Class A Warrants
remain exercisable. the holders of these Class A Warrants may be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain equity capital on terms more favorable than those provided for by the
Class A Warrants.

<PAGE>

Private Placement

From July through August 1998, the Company issued an aggregate of 7.8
Private Placement Units, each Private Placement Unit consisting of a $50,000
principal amount of Private Placement Notes and 200,000 Private Placement
Shares. The proceeds from the sale of the Private Placement Units were used
primarily to fund working capital and general corporate purposes until such time
as the Company uses the proceed from this offering to acquire the assets of NYIC
and Jerry's, although a portion of the proceeds from the sale of the Private
Placement Units was used to repay certain indebtedness. The Company has
registered under the registration statement of which this Prospectus forms a
part all of the 1,560,000 Private Placement Shares included in the Private
Placement Units. The Private Placement Shares are not transferable until the
earlier of sixty (60) days following the date of this Prospectus or at such
earlier date as may be permitted by the Representative. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Underwriting".

The Private Placement Notes bear interest at a rate equal to 12% per annum,
payable at maturity. The Private Placement Notes mature on the earlier of (i)
December 1, 1999, or (ii) the closing date of this offering; provided, that the
maturity of the Private Placement Notes will be accelerated upon an Event of
Default (as defined therein).

The purchasers of the Private Placement Units also received 4 shares of
Common Stock for each $1,000 principal amount of Private Placement Units
purchased. These shares of Common Stock are registered for resale hereunder and
also have piggyback registration rights with respect to all other registration
statements filed by the Company with the SEC (other than on forms S-4 or S-8),
subject to customary underwriter's or board of director's rights to limit such
participation. However, all holders of Private Placement Shares are prohibited
from selling these Private Placement Shares for sixty (60) days after the date
of this Prospectus, subject to the prior consent of the Representative.

Certain Provisions of the Certificate of Incorporation

The Company's Certificate of Incorporation contains certain provisions
which may be deemed to be "anti-takeover" in nature in that such provisions may
deter, discourage or make more difficult the assumption of control of the
Company by another entity or person. In addition to the ability to issue
Preferred Stock, these provisions are as follows:

A vote of 66-2/3% of the stockholders is required by the Certificate of
Incorporation in order to approve certain transactions including mergers and
sales or transfers of all or substantially all of the assets of the Company.

The Company's Certificate of Incorporation also provides that the members
of the Board of Directors of the Company have been classified into three
classes. The term of each class will run for three years and expire at
successive annual meetings of stockholders. Accordingly, it is expected that it
would take a minimum of two annual meetings of stockholders to change a majority
of the Board of Directors.

The Delaware General Corporation Law further contains certain anti-takeover
provisions. Section 203 of the Delaware General Corporation Law provides, with
certain exceptions, that a Delaware corporation may not engage in any of a broad
range of business combinations with a person who owns 15% or more of the

<PAGE>

corporation's outstanding voting stock (an "interested stockholder") for a
period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting, excluding shares owned by the interested stockholder.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 11,942,908 shares
of Common Stock outstanding 12,467,908 shares if the Representative's
over-allotment option is exercised in full). Of these shares, the 3,500,000
shares sold in this offering (4,025,000 shares if the Representative's
over-allotment option is exercised in full) will be freely tradeable without
restriction or further registration under the Securities Act, except for any
shares purchased by an "affiliate" of the Company (in general, a person who has
a control relationship with the Company) which will be subject to the
limitations of Rule 144 adopted under the Securities Act. Another 1,560,000
shares are registered under the registration statement of which this Prospectus
forms a part and are freely saleable under the Securities Act, but may not be
transferred for sixty (60) days from the date of this Prospectus or at such
earlier date as may be permitted by the Representative. All of the remaining
shares are deemed to be "restricted securities," as that term is defined under
Rule 144 promulgated under the Securities Act.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least one year is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of (i) 1% of the total number of outstanding shares of the same class or
(ii) the average weekly trading volume of the Company's Common Stock on all
exchanges and/or reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding the date on
which notice of the sale is filed with the Commission. Sales under Rule 144 are
also subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person who has
not been an affiliate of the Company for at least the three months immediately
preceding the sale and who has beneficially owned shares of Common Stock for at
least two years is entitled to sell such shares under Rule 144 without regard to
any of the limitations described above.

Pursuant to the terms of the Underwriting Agreement, certain Selling
Stockholders owning an aggregate of 1,560,000 shares of Common Stock have agreed
not to sell such shares for a period of sixty (60) days following the date of
this Prospectus without the prior written consent of the Representative. The
sale of any substantial number of these shares in the public market could
adversely affect prevailing market prices following the offering.

No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on

<PAGE>

the market, if any, prevailing from time to time. Sales of substantial amounts
of the Common Stock pursuant to Rule 144 or otherwise may adversely affect the
market price of the Common Stock or the Warrants offered hereby.

Transfer Agent

The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer and Trust Company, 6201 15th Avenue, Brooklyn, New York 11219.

UNDERWRITING

Subject to the terms and conditions contained in the underwriting agreement
between the Company and the Underwriters named below, for which Millennium
Securities Corp. is acting as Representative (a copy of which agreement is filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part), the Company has agreed to sell to each of the Underwriters named below,
and each of such Underwriters has severally agreed to purchase the number of
shares of Common Stock set forth opposite its name. All 3,500,000 shares of
Common Stock offered must be purchased by the several Underwriters if any are
purchased. The shares of Common Stock are being offered by the Underwriters
subject to prior sale, when, as and if delivered to and accepted by the
Underwriters and subject to approval of certain legal matters by counsel and to
certain other conditions.

<TABLE>
<CAPTION>
Number
Underwriter of Shares
- ----------- ----------
<S> <C>
Millennium Securities Corp.

Total..............................
</TABLE>

The Underwriter proposes to offer the shares of Common Stock directly to
the public at the offering price set forth on the cover page of this Prospectus
and at such price less a concession of not in excess of $ per share to certain
securities dealers, of which a concession of not in excess of $ per share may be
reallowed to certain other securities dealers. After this offering, the public
offering price, allowances, concessions and other selling terms may be changed
by the Representative.

The Underwriting Agreement provides that the obligations of the Underwriter
to purchase Common Stock are subject to certain conditions, including that if
any of the Common Stock is purchased by the Underwriter pursuant to the
Underwriting Agreement, such shares must be so purchased.

<PAGE>

The Company has granted options to the Underwriter, exercisable within 30
days after the date of this Prospectus, to purchase from the Company and such
Selling Stockholders up to an aggregate of 525,000 additional shares of Common
Stock to cover over-allotments, if any, at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Company will be obligated, pursuant to the over-allotment option, to sell shares
of Common Stock to the Underwriter to the extent such over-allotment option is
exercised.

Certain of the Company's officers, directors and significant stockholders
have agreed that they will not, without the prior written consent of Millennium
Securities Corp., offer, sell or dispose of any shares of Common Stock or
securities exchangeable or convertible into shares of Common Stock until 90 days
after this offering. Subject to certain limitations, the Company has also agreed
that it will not, without consent of Millennium Securities Corp. , offer, sell
or dispose of any shares of Common Stock, options or warrants to acquire shares
of Common Stock or securities exchangeable for or convertible into shares of
Common Stock until 90 days after this offering (except for (i) shares issued
pursuant to stock options outstanding on the date hereof and (ii) stock options
issued pursuant to employee benefit or incentive compensation plans in effect on
the date hereof).

The Company and the Selling Stockholders have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, and to contribute to certain payments that the Underwriter may
be required to make in respect thereof.

The Representatives do not intend to confirm sales of the Common Stock
to any account over which they exercise discretionary authority. The
Representatives may engage in transactions that stabilize, maintain, or
otherwise effect the price of the common stock, including over-allotment and
other stabilizing transactions.

This section is not a complete statement of the terms and conditions of the
Underwriting Agreement and related documents, copies of which are on file at the
offices of the Representative, the Company and the Commission, and forms of
which have been filed as an exhibit to the Registration Statement of which this
Prospectus is a part.

The Representative has informed the Company that the Representative does
not intend to confirm sales to any accounts over which it exercises
discretionary authority.

In connection with the Private Placement, the Company paid Millennium
Securities Corp., one of the underwriters, as Placement Agent, 3% of the gross
proceeds of the entire offering as a non-accountable expense allowance and a 10%
commission on the sales of the Second Private Placement Units.

LEGAL MATTERS

The validity of the issuance of the securities offered hereby will be
passed upon for the Company by the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C., Jericho, New York. The law firm of Beckman & Millman, P.C.,
New York, New York will pass on certain aspects of this offering on behalf of
the Representative. Employees of Blau, Kramer, Wactlar & Lieberman, P. C. own an
aggregate of 228,507 shares of Common Stock, 80,000 of which are registered for
resale hereunder, and options to purchase 73,333 shares of Common Stock at $1.50
per share issued under the 1996 Non-Qualified Stock Option Plan.

<PAGE>
EXPERTS

Grant Thornton LLP served as the Company's independent auditors for the
nine month period ended December 31, 1995, and the year ended December 31, 1996.
On September 10, 1997, the Company received a letter from Grant Thornton LLP in
which they advised the Company in writing that they had resigned as the
Company's independent auditors.

On January 15, 1998, with the approval of the Company's Board of Directors,
the Company retained Lazar Levine & Felix LLP as its independent accountants for
the year ending December 31, 1997.

WHERE TO FIND ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement under the Securities
Act of 1933, as amended (the "Act"), with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits relating thereto. For further
information with respect to the Company and the shares of Common Stock offered
by this Prospectus, reference is made to such Registration Statement and the
exhibits thereto. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement for a full statement of the provisions
thereof; each such statement contained herein is qualified in its entirety by
such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained at the office
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's Regional Offices at Suite 788, 1375 Peachtree St.,N.E.,
Atlanta, Georgia 30367; Northwestern Atrium Center, 500 W. Madison Street, Suite
1400, Chicago, Illinois 60621-2511; and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates, and from the Securities and Exchange Commission's Web site at the address
http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:

(1) The Company's Annual Report on Form 10-KSB for the year ended December
31, 1997.

(2) The Company's Quarterly Report on Form 10-QSB for the quarters
ended March 31, 1998 and June 30, 1998.

<PAGE>

(3) The description of the class of securities to be offered which is
contained in Registration Statements filed under Section 12 of the
Securities and Exchange Act of 1934 (Registration No. 333-21575),
including any amendments or reports filed for the purpose of updating
such descriptions.

All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
this offering of Common Stock shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
in any subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference (except for
exhibits thereto unless specifically incorporated by reference therein).
Requests for such copies should be directed to the Secretary, Mike's Original,
Inc., 366 N. Broadway, Jericho, New York 11753.

<PAGE>
INDEX TO FINANCIAL STATEMENTS

Page
----
- - Pro Forma Financial Statements:
Mike's Original, Inc.
Introduction to Pro Forma Financial Statements F-2
Pro Forma Balance Sheet as of June 30, 1998 F-3
Pro Forma Statement of Operations Six Months Ended June 30, 1998 F-4
Pro Forma Statement of Operations Year Ended December 31, 1997 F-5
Notes to Pro Forma Financial Statements F-6

- - Historical Interim Financial Statements:
Mike's Original, Inc. Financial Statements - June 30, 1998
Balance Sheet F-7
Statements of Operations F-8
Statements of Cash Flows F-10
Notes to Financial Statements F-12

New Yorker Ice Cream Corp. Financial Statements - June 30, 1998
Report of Independent Certified Public Accountants F-14
Balance Sheet F-15
Statements of Operations F-16
Statements of Cash Flows F-17

Jerry's Ice Cream, Inc. Financial Statements - June 30, 1998
Report of Independent Certified Public Accountants F-18
Balance Sheet F-19
Statements of Operations F-20
Statements of Cash Flows F-21

- - Historical Year End Financial Statements:
Mike's Original, Inc. Financial Statements - December 31, 1997
Report of Independent Certified Public Accountants - Current Auditor F-22
Report of Independent Certified Public Accountants - Prior Auditor F-23
Financial Statements:
Balance Sheets F-24
Statements of Operations F-25
Statement of Changes in Stockholders' Deficit F-26
Statements of Cash Flows F-27
Notes to Financial Statements F-29

New Yorker Ice Cream Corp. Financial Statements - December 31, 1997
Report of Independent Certified Public Accountants F-47
Balance Sheet F-48
Statements of Operations F-49
Statements of Stockholders' Equity F-50
Statements of Cash Flows F-51
Notes to Financial Statements F-52

Jerry's Ice Cream, Inc. Financial Statements - December 31, 1997
Report of Independent Certified Public Accountants F-56
Balance Sheet F-57
Statements of Operations F-58
Statements of Cash Flows F-59
Notes to Financial Statements F-60

F-1
<PAGE>

MIKE'S ORIGINAL, INC.
INTRODUCTION TO PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)

The following unaudited pro forma financial statements have been prepared
based upon certain pro forma adjustments to the historical financial statements
of Mike's Original, Inc., set forth elsewhere in this prospectus. The pro forma
financial statements should be read in conjunction with the notes thereto and
the historical financial statements of the Company.

The accompanying pro forma balance sheet has been presented as if the
transactions described below occurred at the Company's balance sheet date. The
accompanying pro forma statements of operations have been prepared as if the
transactions occurred at the beginning of the year ended December 31, 1997 and
six months ended June 30, 1998. These pro forma financial statements do not
purport to be indicative of the results which would actually have been obtained
had the pro forma transactions been completed as of the beginning of the year
ended December 31, 1997 and the six months ended June 30, 1998.

The pro forma transactions (see notes to pro forma financial statements)
are as follows:

- Private Placement Notes in the amount of $390,000 ($355,000 net of
commissions) and the issuance of 1,560,000 shares of the Company's
Common Stock.

- The restructure of certain of the Company's debt.

- The issuance of shares in exchange for services rendered

- The sale of 3,500,000 shares of the Company's Common Stock

- The acquisition of two ice cream distributors

F-2
<PAGE>
MIKE'S ORIGINAL, INC.
PRO FORMA BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
Adjustments
As Reported ----------------------------- Pro Forma
June 30, 1998 Debit Credit June 30, 1998
------------- ----- ------ -------------
<S> <C> <C> <C> <C>
ASSETS

Current Assets:
Cash $ 1,366 $ 320,000(1) $1,070,000(5) $ 1,674,780
2,423,414(4)
Accounts Receivable 65,398 65,398
Inventories 89,332 100,000(5) 189,332
Prepaid expenses and other current assets 56,685 56,685
------------ ---------- ---------- ------------

Total current assets 212,781 2,843,414 1,080,000 1,986,195

Fixed assets 3,114 1,849,675(5) 1,852,789

Intangible assets 2,221 698,325(5) 700,546
Other assets 64,000 63,000(5) 1,000

------------ ---------- ---------- ------------
TOTAL ASSETS $ 282,116 $5,391,414 $1,133,000 $ 4,540,530
============ ========== ========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Notes payable - related parties $ 351,586 $ 15,000(1) $ 200,000(5) $ 340,000
96,586(4)
100,000(2)
Accounts payable and accrued expenses 684,140 350,000(2) 334,140
Accrued interest-related party notes 51,325 51,325
Current portion long-term debt 520,243 370,000(4) 380,000(1) 501,493
140,000(2) 121,250(5)
------------ ---------- ---------- ------------

Total current liabilities 1,607,294 1,071,586 701,250 1,226,958

Notes payable - acquisition 363,750(5) 363,750

------------ ---------- ---------- ------------
Total liabilities 1,607,294 1,071,586 1,065,000 1,590,708
------------ ---------- ---------- ------------

Stockholders' equity (deficit):
Common stock 3,295 1,560(1) 11,902
3,500(4)
100(2)
2,320(5)
1,127(3)

Additional paid-in capital 10,176,097 1,133,440(1) 17,442,386
2,896,500(4)
99,900(2)
2,317,680(5)
818,769(3)

Accumulated deficit (11,504,570) 1,170,000(1) 490,000(2) (14,504,466)
1,500,000(5)
819,896(3)
------------ ---------- ---------- ------------

Total stockholders' equity (deficit) (1,325,178) 3,489,896 7,764,896 2,949,822
------------ ---------- ---------- ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 282,116 $4,561,482 $8,819,896 $ 4,540,530
============ ========== ========== ============
</TABLE>

F-3
<PAGE>
MIKE'S ORIGINAL, INC.
PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
Adjustments
As Reported ------------------------------ Pro Forma
June 30, 1998 Debit Credit June 30, 1998
------------- ----- ------ -------------
<S> <C> <C> <C> <C>
Sales, net $ 129,623 $2,949,667(5) $ 3,079,290

Cost of sales 220,364 2,633,275(5) 2,945,639
92,000(6)
----------- ----------- ---------- -----------

Gross profit (90,741) 2,725,275 2,949,667 133,651
----------- ----------- ---------- -----------

Operating expenses
Selling, marketing and shipping 99,376 99,376
Research & development 13,754 13,754
General and administrative 358,757 283,899(5) 117,000(6) 2,892,252
46,700(6)
1,500,000(5)
819,896(3)
----------- ----------- ---------- -----------

Total operating expenses 471,887 2,650,495 117,000 3,005,382
----------- ----------- ---------- -----------

Loss from operation (562,628) 5,375,770 3,066,667 (2,871,731)

Interest expense (net) 17,176 7,838(5) 1,195,014
1,170,000(1)
----------- ----------- ---------- -----------

Net loss before extraordinary item (579,804) 6,553,608 3,066,667 (4,066,745)

Extraordinary item - forgiveness of debt 216,882 490,000(2) 706,882
----------- ----------- ---------- -----------

Net loss $ (362,922) $ 6,553,608 $3,556,667 $(3,359,863)
=========== =========== ========== ===========

Weighted average common shares outstanding 3,285,429 11,902,908
=========== =========== ========== ===========

Basic loss per share before extraordinary item $ (0.17) $ (0.34)

Basic loss per share from extraordinary item 0.06 0.06
----------- -----------

Basic loss per share $ (0.11) $ (0.28)
=========== ===========
</TABLE>

F-4
<PAGE>
MIKE'S ORIGINAL, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
Adjustments
As Reported ------------------------------- Pro Forma
December 31, 1997 Debit Credit December 31, 1997
----------------- ----- ------ -----------------
<S> <C> <C> <C> <C>
Sales, net $ 384,348 $6,790,641(5) $ 7,174,989

Cost of sales 451,198 $ 6,132,604(5) 6,767,802
184,000(6)

----------- ----------- ---------- ------------
Gross profit (66,850) (6,316,604) 6,790,641 407,187
----------- ----------- ---------- ------------

Operating expenses
Selling, marketing and shipping 723,861 723,861
Research & development 2,177,698 2,177,698
General and administrative 28,594 554,823(5) 256,127(6) 2,740,586
93,400(6)
1,500,000(5)
819,896(3)
----------- ----------- ---------- ------------

Total operating expenses 2,930,153 2,968,119 256,127 5,642,145
----------- ----------- ---------- ------------

Loss from operation (2,997,003) (9,284,723) 7,046,768 (5,234,958)

Interest expense (net) 1,505,642 25,084(5) 2,700,726
1,170,000(1)
----------- ----------- ---------- ------------

Net loss before extraordinary item (4,502,645) (8,139,807) 7,046,768 (7,935,684)

Extraordinary item - forgiveness of debt 490,000(2) 490,000
----------- ----------- ---------- ------------

Net loss $(4,502,645) $(8,139,807) $7,536,768 $ (7,445,684)
=========== =========== ========== ============

Weighted average common shares outstanding 2,662,013 11,902,908
=========== =========== ========== ============

Basic loss per share before extraordinary item $ (1.69) $ (0.67)

Basic loss per share from extraordinary item 0.04
----------- ------------

Basic loss per share $ (1.69) $ (0.63)
=========== ============
</TABLE>

F-5

<PAGE>
MIKE'S ORIGINAL, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
(UNAUDITED)

(1) Commencing July, 1998, the Company sold 7.8 units of Private Placement
Notes consisting of $50,000 12% debt and 200,000 shares of the Company's Common
Stock. This resulted in net proceeds of $355,000 and 1,560,000 common shares
issued. These notes must be repaid from the proceeds of the offering.

(2) The Company is offering 3,500,000 shares of its Common Stock at an assumed
price of $1.00 per share with estimated net proceeds of $2,900,000.

(3) The Company has and will restructure certain debt which includes (i)
conversion of related party notes in the amount of $100,000 to common stock;(ii)
forgiveness of trade notes payable of $140,000; and (iii) settlement and
reduction of accounts payable in the amount of $350,000.

(4) The Company has acquired the rights to acquire assets of New Yorker Ice
Cream Corp. and Jerry's Ice Cream, Inc. in exchange for $1,030,000 in cash,
$200,000 8% notes payable in six months, assumption of debt of $485,000 payable
at 8% over four years and $820,000 in the Company's Common Stock. In addition,
inventory will be purchased currently estimated at $100,000.

The acquisition has been accounted for as a purchase and therefore fixed assets
have been recorded at fair market appraisal value resulting in the recording of
additional equity and reducing goodwill.

(5) The Company has issued 1,127,470 of its common shares in exchange for
services rendered.

(6) Preparation of the pro forma statements of operations gives effect to the
depreciation of fixed assets and amortization of goodwill as if they were
acquired at the beginning of the period. In addition, a management fee payable
by New Yorker Ice Cream Corp. to a party not being acquired has been eliminated
since it will not continue to be paid after closing.

F-6
<PAGE>

MIKE'S ORIGINAL, INC.
BALANCE SHEET
(Unaudited)

June 30, 1998
-------------

ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 1,366
Accounts receivable, less allowance for
doubtful accounts of $24,149 65,398
Inventories 89,332
Prepaid expenses & other current assets 56,685
--------
Total current assets 212,781
--------

Fixed assets, net of accumulated depreciation of
$33,846 3,114
Trademarks and organization costs, net of accumulated
amortization of $16,595 2,221

Security deposits 1,000
Other assets 63,000
--------
TOTAL ASSETS $282,116
========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities $684,140
Notes payable to related parties (NOTE D) 351,586
Notes payable-trade 520,243
Accrued interest-Related party notes 51,325
--------
Total current liabilities 1,607,294

STOCKHOLDERS' EQUITY (DEFICIT) (NOTES B and D)
Common stock, $.001 per value;
20,000,000 shares authorized; 3,295,429
shares issued and outstanding 3,295
Additional paid-in capital 10,176,097
Accumulated deficit (11,504,570)
----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,325,178)
----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 282,116
==========
</TABLE>

F-7
<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENT OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
---- ----

<S> <C> <C>
Sales, net $ 129,623 $ 345,801

Cost of sales 220,364 336,730
---------- ----------

Gross profit (90,741) 9,071

Operating expenses
Selling, marketing and shipping 99,376 567,942
Research and Development 13,754 19,108
General and administrative 358,757 1,512,191
---------- -----------

Total operating expenses 471,887 2,099,241
---------- -----------

Loss from operations (562,628) (2,090,170)

Interest expense (net) 17,176 1,408,306
---------- -----------

Net loss before extraordinary item (579,804) (3,498,476)

Extraordinary item - forgiveness of debt 216,882 -
----------- -----------
Net loss $ (362,922) $(3,498,476)
=========== ===========
Weighted average common
shares outstanding 3,285,429 2,197,050
=========== ===========

Basic loss per share before extraordinary item $ (.17) $ (1.59)

Basic income per share from extraordinary item .06 -
----------- -----------

Basic loss per share $ ( .11) $ (1.59)
=========== ===========
</TABLE>

F-8
<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENT OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended June 30,
1998 1997
---- ----

<S> <C> <C>
Sales, net $ 80,613 $ (10,513)

Cost of sales 166,864 31,366
--------- ---------

Gross profit (86,251) (41,879)

Operating expenses
Selling, marketing and shipping (7,032) 318,177
Research and Development 6,000 9,388
General and administrative 116,656 1,069,510
--------- -----------
Total operating expenses 115,624 1,397,075
--------- -----------

Loss from operations (201,875) (1,438,954)

Interest expense (net) 10,097 574,305
--------- -----------

Net loss before extraordinary item (211,972) (2,013,259)

Extraordinary item - forgiveness of debt 216,882 -
--------- -----------
Net income (loss) $ 4,910 $(2,013,259)
========= ===========
Weighted average common
shares outstanding 3,295,429 2,197,050
========= ===========
Basic loss per share before extraordinary item $ (.06) $ (.80)

Basic income per share from extraordinary item .06 -
--------- -----------
Basic income (loss) per share $ NIL $ (.80)
========= ===========
</TABLE>

F-9

<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended June 30,
1998 1997
---- ----

<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 4,910 $(2,013,259)
Adjustments to reconcile net loss to net cash
used in operating activities
Imputed interest on stock issued 513,861
Provision for doubtful accounts 8,233
Depreciation and amortization 1,469 3,680
Compensation expense attributable to the
issuance of common stock for services rendered 1,125,000
Forgiveness of related party debt (216,882)
Changes in operating assets and liabilities
Accounts receivable (60,416) 171,851
Inventories 2,297 (64,661)
Prepaid expenses & other current assets (9,684) -
Accounts payable and accrued liabilities 169,199 55,673
---------- ----------
Net cash used in operating activities (100,874) (207,855)
---------- ----------

Cash flows from investing activities
Security deposit 3,068
Other assets (62,000) -
---------- ----------
Net cash (used by) provided by investing activities (58,932) -
---------- ----------

Cash flows from financing activities
Proceeds from notes payable to related parties 35,000 20,000
Proceeds from notes payable 200,000
Payment of notes payable (5,000)
Payment of deferred offering costs (11,475)
Payment of line of credit 1,179
Payment of capital lease obligation (2,908)
---------- ----------
Net cash (used) provided by financing activities 35,000 201,796
---------- ----------

Net Increase (Decrease) in Cash (124,806) (6,059)
Cash at beginning of period 126,172 15,636
---------- ----------
Cash at end of period $ 1,366 $ 9,577
========== ==========
</TABLE>

F-10

<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (362,922) $(3,498,476)
Adjustments to reconcile net loss to net cash
used in operating activities
Imputed interest on stock issued 1,293,301
Provision for doubtful accounts 8,233
Depreciation and amortization 3,010 7,360
Compensation expense attributable to the
issuance of common stock for services rendered 88,800 1,125,000
Forgiveness of related party debt (216,882)
Changes in operating assets and liabilities
Accounts receivable (61,031) 41,653
Inventories 54,567 94,150
Prepaid expenses & other current assets (39,382) 16,589
Accounts payable and accrued liabilities 123,822 593,475
---------- ----------
Net cash used in operating activities (401,785) (326,948)
---------- ----------

Cash flows from investing activities
Purchases of office equipment (1,513)
Security deposit 3,068 6,023
Other assets (62,306) 1,000
---------- ----------
Net cash (used by) provided by investing activities (60,751) 7.023
---------- ----------

Cash flows from financing activities
Proceeds from notes payable to related parties 35,000 20,000
Proceeds from convertible note 100,000
Proceeds from notes payable 250,000
Payment of notes payable (45,263)
Payment of deferred offering costs (21,067)
Payment of line of credit (9,375) (76)
Payment of capital lease obligation (6,615)
---------- ----------
Net cash (used) provided by financing activities 25,625 296,979
---------- ----------

Net Increase (Decrease) in Cash (436,911) (22,946)
Cash at beginning of period 438,277 32,523
---------- ----------
Cash at end of period $ 1,366 $ 9,577
========== ==========
</TABLE>

F-11

<PAGE>

MIKE'S ORIGINAL INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)

NOTE A - BASIS OF PRESENTATION

The balance sheet as of June 30, 1998 and the related statements of
operations for the three-month and six month periods ended June 30, 1998 and
1997 and changes in cash flow for the three month and six month periods ended
June 30, 1998 and 1997 and have been prepared by Mike's Original, Inc. (the
"Company") without audit. In the opinion of management, all adjustments (which
include only normal, recurring accrual adjustments) necessary to present fairly
the financial position as of June 30, 1998 and for all periods presented have
been made.

Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report filed on Form 10-KSB. Results of operations for the
period ended June 30, 1998 are not necessarily indicative of the operating
results expected for the full year.

NOTE B STOCKHOLDERS' EQUITY

During February 1998, the Company issued 30,000 shares of common stock
to one of its marketing consultants in exchange for services to be performed
during 1998. These shares were valued at $ 2.96 per share, the estimated fair
value of the stock at the date of issuance and accordingly $ 88,800 is charged
to operations during the six month period ended June 30, 1998.

NOTE C - COMMITMENT AND CONTINGENCIES

Legal Proceedings

The Company is subject to various legal proceedings, claims and
liabilities which arise in the ordinary course of its business. In the opinion
of management , the amount of ultimate liability with respect to these actions
will not have a material adverse effect on the Company's results of operations,
cash flow or financial position.

The Company has entered into a settlement with Darigold, Inc. in the
amount of $33,574 plus interest payable in equal monthly installments of
$4,125.45 commencing in April, 1998 after the Company made an initial payment of
$10,000. In July , 1998 the Company defaulted and the unpaid balance of
approximately $14,000 was demanded by Darigold, Inc.. The Company is currently
negotiating to make a final payment in full settlement of all amounts due.

On April 2, 1998, the Company was served with a complaint in an action
pending in the Supreme Court of New York, Nassau County and seeks damages in the
amount of $82,037, arising from the Company's alleged failure to pay for certain
inventory purchased. The Company disputes the allegations of the complaint and
intends to file an answer and vigorously defend against the allegations raised
in the complaint.

F-12

<PAGE>

In the opinion of management, the amount of any additional liability in
connection with the aforementioned matters, in excess of amounts provided for in
the normal course of business, will not materially affect the Company.

NOTE D - NOTES PAYABLE TO RELATED PARTIES

Effective May 1, 1998, the Company entered into an agreement with
Michael Rosen and Rachelle Rosen and certain other family members. Pursuant to
the agreement, Michael Rosen resigned as Chairman of the Board and President of
the Company and Rachelle Rosen as Secretary and Treasurer. Michael Rosen and his
father-in-law, Martin Pilossoph, also resigned as directors of the Company. The
agreement provides, among other things, for the termination of Mr. Rosen's
employment agreement, which would otherwise have expired May 31, 2001 and which
provided for an annual base salary of $125,000 together with pre-tax incentives.
The agreement further provides that the outstanding indebtedness to Michael
Rosen and Rachelle Rosen in the approximate sum of $280,000 is reduced to
$130,336. In addition, $25,000 of indebtedness due to Elizabeth Pilossoph, Mr.
Rosen's mother-in-law, is reduced to $6,250. The Company recorded extraordinary
income of approximately $217,000 in the quarter ended June 30, 1998 as a result
of the aforementioned forgiveness of debt.

On May 22, 1998, a shareholder advanced the Company $35,000 for working
capital. This advance bears interest at the rate of 10% and is due on demand.
The shareholder has the option to convert this debt into units, or fractions of
units, associated with the private placement (See Subsequent Events). In July,
1998 this same shareholder advanced the Company an additional $5,000 bringing
the total demand loan to $40,000.

NOTE E - SUBSEQUENT EVENTS

On July 27, 1998, the Company commenced a private placement of its
securities to provide gross proceeds of up to $500,000. The securities are being
offered in units consisting of $50,000 12% Notes due on December 1, 1999 and
200,000 shares of common stock. This offering expires on September 1, 1998,
unless extended by the Company, and is being offered through Millennium
Securities Corp. As of August 14, 1998, $75,000 has been received by the Company
representing the sale of one and one-half units. This private placement states
that the Company plans to make a secondary offering of its securities of at
least $3,000,000 of gross proceeds in the fall of 1998. Although the Company
feels such an offering can be accomplished, there is no assurance that such an
offering will be consummated.

In July, 1998, the Company acquired, from Multi Venture Partners Ltd.,
an unrelated third party, the rights to purchase the assets of New Yorker Ice
Cream Corp. and Jerry's Ice Cream Co., Inc. in exchange for $50,000 in cash
(which will be credited to the purchase price of the acquired entities at
closing), 1,500,000 shares of the Company's common stock and 750,000 options to
purchase additional shares of the Company's common stock at an exercise price of
$1.00. The agreements, previously executed to acquire these entities expired in
April, 1998 and were extended to June 30, 1998 when they were terminated. The
terms of the acquisitions are similar to the original agreements.

F-13

<PAGE>

LAWRENCE COHEN
Certified Public Accountant

2631 Merrick Road, Suite 201
Bellmore, New York 11710

TEL: (516) 679-1970
FAX: (516) 679-1964

To The Stockholder of
New Yorker Ice Cream Corp.

I have compiled the accompanying balance sheets of New Yorker Ice Cream
Corp., as of June 30, 1998 and June 30, 1997, and the related statements of net
income and cash flows for the six (6) months ended, June 30, 1998 and June 30,
1997, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.

Management has elected to omit substantially all financial statement
disclosures. If the omitted disclosures were included in the financial
statements, they might influence the user's conclusions about the Company's
financial status. Accordingly, these financial statements are not designed for
those who are not informed about such matters.

/s/ Lawrence Cohen, C.P.A.
______________________________
Lawrence Cohen, C.P.A.

August 6, 1998

F-14
<PAGE>

NEW YORKER ICE CREAM CORP. PAGE (2)
BALANCE SHEETS
AS AT: JUNE 30, 1998 AND JUNE 30, 1997
- ----------------------------------------
(Unaudited)

ASSETS
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ - $ -
Accounts receivable - net 268,163 472,221
Merchandise inventory 213,172 219,475
Other current assets 24,531 -
---------- -----------
Total current assets 505,866 691,696

FIXED ASSETS
Furniture and fixtures -
Net of accumulated depreciation
of $511,717 and $478,213
at June 30, 1998 and 1997 108,763 122,919

OTHER ASSETS
Intercompanies 23,871 -
---------- ----------

TOTAL ASSETS $638,500 $814,615
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank overdraft $ 74,329 $ 9,697
Loans payable - bank 100,000 65,000
Accounts payable and accrued expenses 284,312 670,635
---------- ----------
Total current liabilities 458,641 745,332

OTHER LIABILITIES
Loans payable 106,000 100,000
Officer Loans 66,503 -
Intercompanies - 83,656
---------- ----------
172,503 183,656
STOCKHOLDERS' EQUITY
Capital stock -
83.25 shares authorized,
issued and outstanding 26,750 26,750
Additional Paid-In-Capital 117,897 117,897
Treasury Stock (147,808) (147,808)
Retained Earnings (deficit) 10,517 (111,212)
---------- ----------
Total stockholders' equity (deficit) 7,356 (114,373)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $638,500 $814,615
---------- ----------

See accountant's compilation report.
</TABLE>

F-15
<PAGE>

NEW YORKER ICE CREAM CORP. PAGE (3)
STATEMENTS OF NET INCOME
FOR THE SIX (6) MONTHS ENDED: JUNE 30, 1998 AND JUNE 30, 1997
- --------------------------------------------------------------
(Unaudited)

<TABLE>
<CAPTION>
June 30, 1998 June 30, 1998
------------- -------------

<S> <C> <C>
NET SALES $2,763,986 $2,084,589

COST OF GOODS SOLD 2,212,551 1,571,124
---------- -----------

GROSS PROFIT 551,435 513,465

OPERATING EXPENSE 517,453 506,539
---------- -----------

INCOME BEFORE OTHER EXPENSES 33,982 6,926

OTHER EXPENSES:
Interest Expense 4,090 4,669
---------- -----------

NET INCOME $ 29,892 $ 2,257
---------- -----------

See accountant's compilation report.
</TABLE>
F-16
<PAGE>

NEW YORKER ICE CREAM CORP. PAGE (4)
STATEMENTS OF CASH FLOWS
FOR THE SIX (6) MONTHS ENDED: JUNE 30, 1998 AND JUNE 30, 1997
- --------------------------------------------------------------
(Unaudited)

<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------

CASH FLOWS FROM OPERATING ACTIVITIES:

<S> <C> <C>
Net Income $ 29,892 $ 2,257

Adjustments to reconcile net income to
net cash provided (used in) by operating
activities

Depreciation and Amortization 16,802 16,804

(Increase) in accounts receivable (16,199) (250,647)

(Increase) Decrease in merchandise
inventory (28,560) 17,487

(Increase) in other current assets (13,552) -

(Decrease) Increase in accounts payable
and accrued expenses (63,380) 237,392
-------- -------

Net cash provided by (used in) operating
activities (74,997) 23,293
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:

Fixed Assets (14,379) (5,366)
-------- -------

Net cash used in investing activities (14,379) (5,366)
-------- -------

CASH FLOWS FROM FINANCING ACTIVITIES:

Intercompany (22,477) (31,755)

Officer Loans 66,503 -
-------- -------

Net cash provided by (used in)
financing activities 44,026 (31,755)
-------- -------
NET (DECREASE) IN CASH (45,350) (13,828)

CASH (BANK OVERDRAFT)
AT BEGINNING OF YEAR (28,979) 4,131
-------- -------

CASH (BANK OVERDRAFT)
AT END OF PERIOD $ (74,329) $ (9,697)
-------- -------

See accountant's compilation report.
</TABLE>
F-17
<PAGE>

LAWRENCE COHEN
CERTIFIED PUBLIC ACCOUNTANT

2631 Merrick Road, Suite 201
Bellmore, New York 11710

TEL: (516) 679-1970
FAX: (516) 679-1964

To The Stockholder of
Jerry's Ice Cream, Inc.

I have compiled the accompanying balance sheets of Jerry's Ice Cream, Inc.,
as of June 30, 1998 and June 30, 1997, and the related statements of net income
(loss) and retained earnings (deficit) and cash flows for the six (6) months
ended, June 30, 1998 and June 30, 1997, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants.

/s/ Lawrence Cohen, C.P.A.
______________________________
Lawrence Cohen, C.P.A.

August 7, 1998
F-18
<PAGE>

JERRY'S ICE CREAM INC. PAGE (2)
BALANCE SHEETS
AS AT: JUNE 30, 1998 AND JUNE 30, 1997
- ---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ - $ -
Accounts receivable - net 8,628 7,538
Merchandise inventory 6,612 6,010
Other current assets 1,500 8,052
--------- ---------
Total current assets 16,740 21,600

FIXED ASSETS
Furniture and fixtures -
Net of accumulated depreciation
of $58,235 and $42,644
at June 30, 1998 and 1997 34,696 41,622

INTANGIBLE ASSETS
Net of accumulated amortization
Of $64,779 and $45,818
At June 30, 1998 and 1997 195,924 214,884

-------- ---------
TOTAL ASSETS $247,360 $278,106
-------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Bank overdraft $ 9,278 $ 3,122
Accounts payable and accrued expenses 20,133 15,829
Notes payable 31,716 31,716
-------- ---------
Total current liabilities 61,127 50,667

OTHER LIABILITIES
Loans payable - stockholder 56,563 63,597
Notes payable 51,123 59,755
-------- ---------
107,686 123,352

STOCKHOLDERS' EQUITY
Capital stock - 10 shares authorized, 138,890 138,890
Issued and outstanding - no par value
Deficit (60,343) (34,803)
-------- ---------
Total stockholders' equity 78,547 104,087
-------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $247,360 $278,106
-------- ---------

See accountant's compilation report.
</TABLE>

F-19
<PAGE>

JERRY'S ICE CREAM, INC. PAGE (3)
STATEMENTS OF NET INCOME (LOSS)
AND RETAINED EARNINGS (DEFICIT)
FOR THE SIX (6) MONTHS ENDED: JUNE 30, 1998 AND JUNE 30, 1997
- ---------------------------------------------------------------
(Unaudited)

<TABLE>
<CAPTION>
June 30, 1998 June 30, 1998
------------- -------------

<S> <C> <C>
NET SALES $393,344 $330,895

COST OF GOODS SOLD 335,086 266,014
-------- --------

GROSS PROFIT 58,258 64,881

OPERATING EXPENSES 59,747 55,647
-------- --------

INCOME (LOSS) BEFORE OTHER EXPENSES (1,489) 9,234

OTHER EXPENSES:
Interest Expense 3,748 4,896

-------- --------
NET INCOME (LOSS) $ (5,237) $ 4,338

RETAINED EARNINGS (DEFICIT)
Beginning of year $ (55,106) $(39,141)

NET INCOME (LOSS) (5,237) 4,438
-------- --------
RETAINED EARNINGS (DEFICIT)
End of period $ (60,343) $ (34,803)
-------- --------

See accountant's compilation report.
</TABLE>

F-20
<PAGE>

JERRY'S ICE CREAM INC. PAGE (4)
STATEMENTS OF CASH FLOWS
FOR THE SIX (6) MONTHS ENDED: JUNE 30, 1998 AND JUNE 30, 1997
- --------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>

June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss) $ (5,237) $ 4,338

Adjustments to reconcile net income (loss) to
net cash provided by operating activities

Depreciation and Amortization 17,568 16,666

(Increase) Decrease in accounts receivable (3,160) 962

(Increase) in inventory (2,435) (3,460)

(Increase) in other current assets (1,500) -

(Decrease) Increase in accounts payable and
accrued expenses (3,692) 3,320
-------- ---------
Net cash provided by operating activities 1,544 21,826
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:

Fixed Assets (1,987) (1,814)
-------- ---------
Net cash used in investing activities (1,987) (1,814)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:

Loans - Shareholder (2,310) (7,757)

Notes Payable (12,110) (10,963)
-------- ---------
Net cash used in financing activities (14,420) (18,720)
-------- ---------
NET (DECREASE) INCREASE IN CASH (14,863) 1,292

CASH (BANK OVERDRAFT)
AT BEGINNING OF YEAR 5,585 (4,414)
-------- ---------
CASH (BANK OVERDRAFT)
AT END OF PERIOD $ (9,278) $ (3,122)
-------- ---------
See accountant's compilation report.
</TABLE>

F-21
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
Mike's Original, Inc.

We have audited the balance sheet of Mike's Original, Inc. (a Delaware
corporation) as of December 31, 1997, and the related statements of
operations, changes in stockholders' equity, and cash flows for the
year then ended. 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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the 1997 financial statements referred to above
present fairly, in all material respects, the financial position of
Mike's Original, Inc. as of December 31, 1997, and the results of its
operations and its cash flows for the year then ended in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2
to the financial statements, the Company has incurred a net loss of
$4,502,645 for the year ended December 31, 1997 and as of that date
current liabilities exceeded current assets by $1,062,651 and the
stockholders' deficit aggregated $1,051,056. These factors, among
others, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans regarding these
matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

/s/ Lazar Levine & Felix LLP
LAZAR LEVINE & FELIX LLP

New York, New York
February 25, 1998, except for Note 14,
the date of which is March 4, 1998

F-22

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
Mike's Original, Inc.

We have audited the accompanying balance sheet of Mike's Original, Inc. as of
December 31, 1996, and the related statements of operations, changes in
stockholders' deficit and cash flows for the year then ended. 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 audit.

We conducted our audit 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 audit provides 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 Mike's Original, Inc. as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $4,050,547 during the year ended December 31,
1996, and, as of that date, the Company's current liabilities exceeded its
current assets by $2,539,788 and the Company's stockholders' deficit was
$2,996,411. These factors, among others, as discussed in Note 2 to the financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ GRANT THORNTON LLP
GRANT THORNTON LLP

Melville, New York
April 17, 1997 (except for Note 8, as to
which the date is June 20, 1997)

F-23

<PAGE>

MIKE'S ORIGINAL, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996

- ASSETS (Note 8) -

1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 438,277 $ 32,523
Accounts receivable, less allowance for doubtful
accounts of $15,916 and $20,751 for 1997 and
1996, respectively 12,600 61,219
Inventories (Notes 3b and 4) 143,899 247,608
Prepaid expenses 17,303 16,589
-------- --------
TOTAL CURRENT ASSETS 612,079 357,939
-------- --------
FIXED ASSETS - NET (Notes 3c and 5) 3,505 14,478
-------- --------
OTHER ASSETS:
Trademarks and organization costs, net of accumulated
amortization of $15,489 and $11,787 for 1997 and
1996, respectively (Note 3d) 3,022 6,724
Security deposits and other assets 5,068 19,091
Deferred offering costs - 45,000
-------- --------
8,090 70,815
-------- --------
$623,674 $443,232
======== ========

- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) -

CURRENT LIABILITIES:
Accounts payable - trade $500,453 $1,104,336
Accrued payroll and payroll taxes 20,587 28,000
Other accrued liabilities (Note 6) 137,822 118,607
Capital lease obligations - current portion - 9,957
Notes payable - related parties (Note 7) 486,250 253,750
Current portion of long-term debt (Notes 8 and 13d) 529,618 1,383,077
--------- ---------
TOTAL CURRENT LIABILITIES 1,674,730 2,897,727
--------- ---------
LONG-TERM LIABILITIES:
Notes payable - related parties (Note 7) - 486,250
Capital lease obligations - 3,611
Accrued interest - related parties - 52,055
--------- ---------
- 541,916
--------- ---------

COMMITMENTS AND CONTINGENCIES (Notes 2, 12, 13 and 14)

STOCKHOLDERS' EQUITY (DEFICIT) (Notes 10 and 11):
Preferred stock, $.01 par value; 500,000 shares
authorized; none issued or outstanding - -
Common stock, $.001 par value; 20,000,000 shares
authorized; 3,265,429 and 1,892,641 shares issued
and outstanding for 1997 and 1996, respectively 3,265 1,892
Additional paid-in capital 10,087,327 4,000,700
Deferred financing costs - (360,000)
Accumulated deficit (11,141,648)(6,639,003)
---------- ----------

(1,051,056)(2,996,411)
---------- ----------
$ 623,674 $ 443,232
========== ==========
See accompanying notes
</TABLE>

F-24
<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

1997 1996
---- ----
<S> <C> <C>
SALES - NET (Notes 3e) $ 384,348 $2,392,258

COST OF SALES 451,198 1,439,635
---------- ----------

GROSS PROFIT (LOSS) (66,850) 952,623
---------- ----------
OPERATING EXPENSES:
Selling, marketing and shipping (Note 3f) 723,861 2,596,500
General and administrative 2,177,698 2,193,602
Research and development (Note 3h) 28,594 70,632
---------- ----------

2,930,153 4,860,734
---------- ----------

LOSS FROM OPERATIONS (2,997,003) (3,908,111)

Interest expense - net of interest income of
$30,744 and $547 for 1997 and 1996, respectively (1,505,642) (142,436)
---------- ----------
LOSS BEFORE INCOME TAXES (4,502,645) (4,050,547)
Provision for income taxes (Notes 3i and 9) - -
---------- ----------
NET LOSS $(4,502,645) $(4,050,547)
========== ==========
BASIC LOSS PER SHARE (Note 3j) $(1.69) $(2.54)
====== ======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (Note 3j) 2,662,013 1,592,106
========== ==========
</TABLE>

See accompanying notes

F-25

<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Additional Deferred Total
Common Common Paid-in Financing Accumulated Stockholders'
Shares Amount Capital Costs Deficit Deficit
------ ------ ----------- ---------- ----------- --------------

<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 1,362,160 $1,362 $ 829,742 $ - $(2,588,456) ($1,757,352)

Issuance of common stock for
services rendered 69,231 69 207,623 - - 207,692
Sale of common stock to
investors, net of issuance
costs of $330,437 461,250 461 1,052,853 - - 1,053,314
Compensation attributable to
the transfer of common stock
owned by the founder for
services rendered - - 100,000 - - 100,000
Compensation attributable to the
issuance of stock options - - 812,000 - - 812,000
Compensation attributable to the
release of shares held in escrow - - 265,000 - - 265,000
Waiver of compensation payable to
stockholders and founders - - 358,482 - - 358,482
Imputed interest - convertible
debt - - 375,000 (375,000) - -
Amortization of imputed interest
- convertible debt - - - 15,000 - 15,000
Net loss - - - - (4,050,547) (4,050,547)
-------- -------- -------- -------- ----------- -----------

Balance at December 31, 1996 1,892,641 1,892 4,000,700 (360,000) (6,639,003) (2,996,411)

Amortization of imputed
interest - convertible debt - - - 360,000 - 360,000
Conversion of debt into common
stock by creditor 320,288 320 455,938 - - 456,258
Imputed interest -
convertible debt - - 426,715 - - 426,715
Issuance of common stock
for imputed interest 67,000 67 301,433 - - 301,500
Issuance of common stock
for services rendered 285,500 286 1,330,964 - - 1,331,250
Waiver of compensation payable to
founder - - 27,333 - - 27,333
Imputed interest attributable to
warrants issued and loans - - 202,500 - - 202,500
Proceeds from Company's initial
public offering 700,000 700 3,341,744 - - 3,342,444

Net loss - - - - (4,502,645) (4,502,645)
--------- -------- ---------- -------- ------------ ------------
BALANCE AT DECEMBER 31,
1997 3,265,429 $3,265 $10,087,327 $ - $(11,141,648) $(1,051,056)
========= ======== ========== ======== ============ ============

See accompanying notes
</TABLE>

F-26

<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,502,645) $(4,050,547)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 14,675 14,718
Allowance for doubtful accounts (4,835) 13,863
Imputed interest 1,327,051 15,000
Compensation expense attributable to issuance of
common stock for services rendered 1,325,250 207,692
Compensation expense attributable to the release
of common stock from escrow account - 265,000
Compensation expense attributable to issuance of
common stock and stock options 6,000 812,000
Compensation expense attributable to the
transfer of common stock by founder for
services rendered - 100,000
Changes in operating assets and liabilities:
Decrease in accounts receivable 53,454 78,320
Decrease (increase) in inventories 103,709 (70,723)
(Increase) in prepaid expenses and other current assets (714) (21,089)
(Decrease) increase in accounts payable (130,986) 812,163
(Decrease) increase in accrued expenses and other
liabilities (12,920) 79,717
---------- ----------
Net cash used in operating activities (1,821,961) (1,743,886)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Refund (payment) of security deposits 14,023 (1,000)
---------- ----------
Net cash provided by (used in) investing activities 14,023 (1,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible note payable - 225,000
Proceeds from 12% subordinated notes payable - stockholders - 153,750
Repayment of 12% subordinated notes payable - stockholders (123,750) -
Net proceeds from issuance of common stock 3,387,444 1,053,314
Proceeds from notes payable to related parties - 560,000
Payment of notes payable to related parties (253,750) -
Payment of capital lease obligations (13,568) (9,147)
Payment of notes payable - (244,730)
Proceeds from line of credit - 24,134
Payment of line of credit (14,130) (628)
Proceeds from short-term loans 440,000 -
Repayment of short-term loans (315,000) -
Repayment of notes payable - trade creditors (893,554) -
------------ -----------
Net cash provided by financing activities 2,213,692 1,761,693
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 405,754 16,807

Cash and cash equivalents, at beginning of year 32,523 15,716
----------- -----------
CASH AND CASH EQUIVALENTS, AT END OF YEAR $ 438,277 $ 32,523
=========== ===========

See accompanying notes
</TABLE>

F-27
<PAGE>

MIKE'S ORIGINAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
(a) Interest paid $267,369 $64,685
Taxes paid - -

(b) During 1997 and 1996, the Company converted
$432,077 and $1,176,437 of trade accounts
payable to notes payable, respectively. During
1997, the Company also converted $39,920 of
accounts payable and $380,000 of notes
payable into common stock

See accompanying notes
</TABLE>

F-28

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 1 - ORGANIZATION:

Mike's Original, Inc. (the "Company") was incorporated in Delaware in
May 1994 as successor to Melanie Lane Farms, Inc. ("Melanie Farms"), a
New York corporation formed in 1993. In June 1994, Melanie Farms was
merged into the Company. As both entities were under common control, the
merger was accounted for in a manner similar to a pooling of interests.
On December 31, 1997, a new entity, New York Frozen Desserts, Inc., was
incorporated in New York, as a wholly-owned subsidiary of the Company,
for the purpose of making acquisitions.

Effective December 31, 1995, the Company changed its fiscal year-end
from March 31 to December 31.

Since April 1, 1993, the Company has been engaged in the marketing and
distribution of super- premium ice cream products. The Company markets,
sells and distributes Mike's Original Cheesecake Ice Cream, a blend of
ice cream and cheesecake ingredients. This product line is offered in a
variety of flavors mainly to supermarkets and grocery stores and also,
to a lesser extent, to convenience stores, food service outlets and
warehouse clubs. The Company's products are sold in approximately
fourteen states, including New York, California, Pennsylvania and New
Jersey with sales generally concentrated on the East and West Coasts of
the United States (see Note 12).

NOTE 2 - BASIS OF PRESENTATION:

The Company has incurred losses from operations since its inception in
1993 and, at December 31, 1997, has a stockholders' deficit and a
working capital deficit of $1,051,056 and $1,062,651, respectively. At
December 31, 1996, the Company had a stockholders' deficit and a working
capital deficit of $2,996,411 and $2,539,788, respectively. A
significant portion of these amounts were incurred as a result of
intense marketing by the Company. Payments were made for introductory
programs with supermarkets and other food chain retailers of
approximately $201,000 and $622,000 for the years ended December 31,
1997 and 1996, respectively. Payments for product advertising, promotion
and marketing were also made aggregating $326,000 and $1,526,000 for the
years ended December 31, 1997 and 1996, respectively. Further, net sales
for the year ended December 31, 1997 were minimal and the Company is
continuing to incur losses from operations. The Company has relied
extensively on borrowings to finance its operations and in 1997,
successfully completed an initial public offering of its common stock
(see Note 10), the proceeds of which were used primarily to repay debt.

The circumstances described above raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in
regard to this matter are to change the emphasis of the Company's
operations from marketing and distributing super-premium ice cream
products to marketing and distributing frozen desserts that will include
a line or lines of super- premium ice cream products. Management hopes
to accomplish this plan through the strategic acquisition of
distribution companies, concentrated in large metropolitan areas, which
will provide new brands and customers, distribution expertise and an
operations center that can absorb future acquisitions. The Company is
engaged in discussions with nationally known companies to obtain
to market and distribute product bearing the name of the licenser. See
Notes 13f and 14.

F-29
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 2 - BASIS OF PRESENTATION (Continued):

These acquisitions and distribution licenses would be financed from an
additional offering of securities planned for the second quarter of
1998. If an offering cannot be consummated or other financing obtained,
the Company would be hard pressed to continue. The Company has
sufficient cash on hand and product to sell to last until the end of the
second quarter of 1998. The financial statements do not include any
adjustments that might result from this uncertainty.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Use of Estimates in Financial Statement Presentation:

The preparation of these financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that could affect the amounts reported in
these financial statements and related notes. Actual results could
differ from these estimates.

(b) Inventories:

Inventories are stated at the lower of cost or market value, with cost
determined on a first-in, first out basis.

Fixed assets are stated at cost less accumulated depreciation.
Depreciation of fixed assets is recorded on a straight-line basis over
their estimated useful lives ranging from three to five years. Certain
leased computer equipment with future rental payments for periods
through 1998 have been capitalized. These amounts are included in fixed
assets within the accompanying balance sheets and are being depreciated
over the estimated useful life of the equipment or term of the lease,
whichever is shorter.

(d) Other Assets:

Costs related to trademark and organizational expenditures have been
deferred and are being amortized on a straight-line basis over five
years.

(e) Revenue Recognition:

Revenue from the sale of ice cream products is recognized upon shipment.
Sales are presented net of distribution fees of $95,679 and $527,540 for
the years ended December 31, 1997 and 1996, respectively. A significant
portion of the Company's sales is made to one distributor pursuant to a
distribution agreement which provides for the payment of distribution
fees based upon a percentage of sales, price protection and certain
rights of return on product unused by third parties. A provision for
such costs is made as revenue is recognized; however, costs relating to
price protection have not been material to date. This distribution
agreement was terminated by the distributor in September 1997.

F-30

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

(f) Advertising:

Advertising costs are charged to operations when incurred. Advertising
costs charged to operations were $93,000 and $346,000 for the years
ended December 31, 1997 and 1996, respectively.

(g) Introductory Programs:

Payments for introductory programs are made to certain customers
(supermarkets and other food chain retailers) in exchange for the
Company obtaining retail shelf space and are charged to operations when
the Company initially ships products to customers under such agreement.
No costs of introductory programs are deferred as of December 31, 1997
and 1996.

(h) Research & Development:

Research & development expenditures, primarily for product development,
are expensed as incurred.

(i) Income Taxes:

Deferred income taxes are recognized for temporary differences between
the financial statement and income tax bases of assets and liabilities
and loss carryforwards for which income tax benefits are expected to be
realized in future years. A valuation allowance has been established to
offset the deferred tax assets since it is not more likely than not that
such deferred assets will be realized. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes
the enactment date.

(j) Income Per Common Share:

The Company has adopted SFAS 128 "Earnings Per Share" ("SFAS 128"),
which has changed the method of calculating earnings per share. SFAS 128
requires the presentation of "basic" and "diluted" earnings per share on
the face of the income statement. Prior period earnings per share data
has been restated in accordance with Statement 128. Loss per common
share is computed by dividing the net loss by the weighted average
number of common shares and common equivalent shares outstanding during
each period.

(k) Statements of Cash Flows:

For the purpose of the statements of cash flows, the Company considers
all highly liquid investments purchased with a remaining maturity of
three months or less to be cash equivalents.

(l) New Accounting Pronouncements:

SFAS 130 "Reporting Comprehensive Income" is effective for years
beginning after December 15, 1997 and early adoption is permitted. This
statement prescribes standards for reporting comprehensive income and
its components. Since the Company currently does not have any items of
other comprehensive income a statement of comprehensive income is not
yet required.

F-31
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

(l) New Accounting Pronouncements (continued):

SFAS 131 "Disclosures About Segments of an Enterprise and Related
Information", is effective for years beginning after December 15, 1997
and early adoption is encouraged. The Company does not presently believe
that it operates in more than one identifiable segment.

See also Income Per Common Share, above.

(m) Impact of the Year 2000 Issue:

The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of
the Company's computer programs that have date- sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could potentially result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or engage in
other similar normal business activities. The Company had already
planned on upgrading its computer software to increase operational
efficiencies and information analysis and will ensure that the new
systems properly utilize dates beyond December 31, 1999. The cost of
this upgrade project, as it relates to the year 2000 issue, is not
expected to have a material effect on the operations of the Company.

NOTE 4 - INVENTORIES:

Inventories consist of the following as of December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---- ----

<S> <C> <C>
Finished goods $143,899 $ 97,536
Raw materials - 150,072
-------- --------
$143,899 $247,608
======== ========
</TABLE>

NOTE 5 - FIXED ASSETS:

Fixed assets consist of the following as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>

1997 1996
---- ----
<S> <C> <C>
Computer equipment $29,447 $29,447
Office equipment 6,000 6,000
------- -------
35,447 35,447
Less: accumulated depreciation 31,942 20,969
------- -------
$ 3,505 $14,478
======= =======
</TABLE>

F-32
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 6 - OTHER ACCRUED LIABILITIES:

Other accrued liabilities consisted the following as of December 31,
1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Accrued distribution fee $ 1,499 $ 7,921
Distributors' deposits - 46,739
Accrued interest payable (Notes 7 and 8) 124,288 18,947
Professional fees payable 12,035 45,000
-------- --------
$137,822 $118,607
======== ========
</TABLE>

NOTE 7 - NOTES PAYABLE TO RELATED PARTIES:

During the fiscal year ended March 31, 1994, the Company obtained loans
from the founder and issued promissory notes of $40,000 and $15,000
which are payable in May and June 1998, respectively. Interest accrues
at an annual rate of 8% and is payable at the maturity date of the
notes. Accrued interest payable related to these notes amounts to
$18,957 and $14,557 at December 31, 1997 and 1996, respectively.

During the fiscal year ended March 31, 1994, the Company borrowed
$100,000 from a shareholder of the Company. The loan, which was
originally due on demand, was formalized in the form of a promissory
note during September 1995. In April 1996, the maturity date of the
$100,000 obligation was revised to occur subsequent to the repayment of
the promissory note issued in April 1996 as further described in Note 8.
The loan was non-interest bearing through April 1994. From May 1994
through maturity, interest accrues at an annual rate of 6% and is
payable upon maturity. In September 1996, the maturity date of this
promissory note was revised to occur the earlier of: (i) February 1,
1998 or (ii) upon the occurrence of events defined by the note as a
"Change in Control." Accrued interest payable related to this note
amounts to $27,491 and $21,491 at December 31, 1997 and 1996,
respectively.

During the fiscal year ended March 31, 1995, the Company issued two
promissory notes of $25,000 each to an investor, who is related to the
founder of the Company, which were originally due in November and
December 1998, respectively. The Company repaid $25,000 of these notes
in April 1995. In September 1995, the maturity date of the outstanding
promissory note was revised to occur the earlier of the Company
receiving proceeds from a securities offering or June 1, 1996. In April
1996, the maturity date of the outstanding promissory note was revised
to occur subsequent to the repayment of the promissory note issued in
April 1996 as further described in Note 8. In September 1996, the
maturity date of this promissory note was revised to occur the earlier
of: (i) February 1, 1998 or (ii) upon the occurrence of events defined
by the note as a "Change in Control." Interest accrues at an annual rate
of 6% and is payable at the maturity date of the note. Accrued interest
payable related to this note amounts to $6,174 and $4,674 at December
31, 1997 and 1996, respectively.

F-33
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 7 - NOTES PAYABLE TO RELATED PARTIES (Continued):

On May 30, 1996, the Company received loans aggregating $100,000 from
two stockholders. The loans were originally due on demand bearing
interest at a rate of 10%. In September 1996, the maturity date of these
promissory notes was revised to occur the earlier of: (i) twenty-four
months from the date of the loans, or (ii) the date the Company
successfully consummates an initial public offering of securities of the
Company, but only to the extent that the overallotment option is
exercised in such offering and only from the proceeds received by the
Company from the exercise of the overallotment option. These notes are
still outstanding at December 31, 1997. Accrued interest payable related
to these notes amounts to $15,833 and $5,833 at December 31, 1997 and
1996, respectively.

On August 28, 1996, the founder of the Company was issued an additional
promissory note of $206,250. The funds that the founder loaned the
Company were a result of the founder selling 183,333 shares of his stock
to an investor at a price of $1.12 per share. This loan bears interest
at a rate of 8% and was originally payable the earlier of: (i) thirteen
months from the date of the loan, or (ii) the successful consummation of
an initial public offering of securities of the Company, but only to the
extent that the overallotment option is exercised in such offering and
only from the proceeds received by the Company from the exercise of the
overallotment option. In September 1996, the maturity date of this
promissory note was revised to occur twenty-four months from September
30, 1996. In addition, the revised promissory note provides that
one-half of the note will be paid with accrued interest in the event the
Company successfully consummates an initial public offering of
securities of the Company, but only to the extent that the overallotment
option is exercised in such offering and only from the proceeds received
by the Company from the exercise of the overallotment option. Accrued
interest related to this borrowing amounts to $22,000 and $5,500 at
December 31, 1997 and 1996, respectively.

In August and September 1996, the Company received three loans from a
stockholder aggregating $253,750. A portion of the funds that this
shareholder loaned the Company was a result of the shareholder selling
shares of his stock to investors. In August 1996, this shareholder sold
38,889 shares of his stock at a price of $1.12 per share. In September
1996, the shareholder sold 23,333 shares of his stock at a price of
$1.50 per share. These loans each bear interest at a rate of 8% per
annum and were originally payable the earlier of: (i) thirteen months
from the date of the loans, or (ii) the date the Company successfully
consummates an initial public offering, but only to the extent that the
overallotment option is exercised in such offering and only from the
proceeds received by the Company from the exercise of the overallotment
option. In September 1996, the maturity date of these promissory notes
was revised to June 1, 1997. In the event that the Company successfully
consummates an initial public offering prior to June 1, 1997, $123,750
will be payable from such proceeds and $130,000 will be payable 90 days
therefrom. In the event the underwriter exercises its overallotment
option, the balance otherwise payable in 90 days will be payable from
such proceeds. Accrued interest payable related to these borrowings
amounted to $5,978 at December 31, 1996. During 1997 the Company repaid
the entire balance of $253,750 plus interest accrued to the date of
repayment of $18,162.

As of December 31, 1997 and 1996, loans payable to related parties
aggregated $486,250 and $740,000, respectively. Interest accrued and
unpaid at December 31, 1997 and 1996 aggregated $90,455 and $58,033,
respectively.

F-34
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 8 - NOTES PAYABLE:

In April 1996, the Company issued a promissory note in the amount of
$830,275 in exchange for certain trade accounts payable. The Company was
required to make payments in monthly installments beginning May 1996
consisting of: (i) accrued interest, and (ii) principal in the amount of
$12,000. In addition to these monthly installments, the Company was
required to pay additional amounts upon the occurrence of certain
events. In the event the Company did not complete an initial public
offering, the note was due in full on December 31, 1996. Interest on the
promissory note accrues at the prime rate plus 1% per annum. This note
is collateralized by substantially all of the assets of the Company. The
balance of this note was $710,275 at December 31, 1996. Accrued interest
payable related to this note amounted to $2,738 at December 31, 1996. In
April 1997 the terms of the note were amended to provide for payments to
the lender, from the proceeds of the Company's initial public offering,
in the amount of $575,000 with the balance of $135,275 payable on
December 31, 1997. In the event that the initial public offering is not
completed by June 1, 1997, all amounts outstanding will then become
immediately due and payable in full. Further, in April 1997, the Company
issued a $221,550 convertible note due December 31, 1998 in exchange for
a like amount of trade payables. The convertible note bears interest at
10% per annum, payable at maturity, and is convertible by the holder
into the Company's common stock at a conversion rate of $3.00 principal
amount for each share of common stock at the option of the holder at any
time prior to maturity. In June 1997, the Company renegotiated the terms
of this agreement. The renegotiated terms provide that if the Company's
initial public offering is not completed by July 15, 1997, all amounts
will then become immediately due and payable in full. In addition, the
balance due to the lender from the proceeds of the Company's initial
public offering was increased from $575,000 to $595,000 and the
principal balance of the convertible note due December 31, 1998 was
reduced to $201,000. On August 8, 1997, at the closing of the initial
public offering, the principal amount plus all accrued interest was
paid. At December 31, 1997, $115,275 plus accrued interest of $4,328 of
the convertible note remains unpaid.

On August 20, 1996, the Company issued a promissory note in the amount
of $289,482 in exchange for certain trade accounts payable and
inventories. The note bears interest at a rate of 10% per annum and was
payable on or before November 15, 1996. The balance of this note was
$210,283 at December 31, 1996. On December 31, 1996, the Company was not
in compliance with the terms of the subject loan agreement. However, the
lender involved has amended the agreement to permit the Company to be in
compliance with such terms at December 31, 1996. In February 1997, the
Company issued a promissory note in the amount of $20,000 in exchange
for a like amount of trade payables. In April 1997, the lender agreed to
extend the due date of such notes to the earlier of June 1, 1997 or the
closing of the Company's initial public offering. In the event the
Company completes its initial public offering by June 1, 1997, the
lender agreed to extend the due date of the then outstanding $96,000 of
principal to December 31, 1998. If such amount is extended, the lender
has the right to convert such amount into 32,000 shares of the Company's
common stock at any time prior to maturity. The lender agreed to extend
the maturity date of the promissory notes originally due on June 1, 1997
to July 31, 1997. At December 31, 1997, $96,000 of the convertible note
plus accrued interest of $3,794 remain unpaid.

F-35
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 8 - NOTES PAYABLE (Continued):

In December 1996, the Company issued two additional short-term
promissory notes in exchange for certain trade accounts payable
aggregating $56,680. One promissory note bears interest at the rate of
10% per annum. Principal and interest are payable in installments as
follows: the sum of $500, or more, semimonthly beginning on December 5,
1996, and payable thereafter on the 20th and 5th day of each month,
until principal and interest have been paid in full. The second
promissory note bears interest at the rate of 8% per annum. Payment of
principal will be made at the rate of $5,000 per month commencing on
January 1, 1997 and monthly, thereafter until the earlier of: (i) May 1,
1997 or (ii) the date the Company successfully consummates an initial
public offering of its securities, at which time this note will be paid
in full with interest. The balance of these notes was $55,680 at
December 31, 1996. The Company has fully paid these notes during the
year ended December 31, 1997.

In December 1996, the Company issued a $225,000 promissory note to an
investor bearing interest at the rate of 8% per annum. This note is
payable in full the earlier of: (i) December 31, 1997 or (ii) five days
after the closing date of an initial public offering. In lieu of
receiving payment, the investor has the right to convert this promissory
note within five days of the closing of such initial public offering
into 200,000 shares of common stock of the Company, par value $.001 per
share. Imputed interest resulting from the difference between the
estimated fair value of the Company's common stock and the conversion
price has been provided for and was charged to operations over the
period this note first became convertible. Interest expense of $360,000
was recognized by the Company during the three months ended March 31,
1997, which represented the amortization of the imputed interest
associated with this transaction. In April 1997, the investor elected to
convert this note.

In January 1997, the Company issued a convertible promissory note to an
investor bearing interest at the rate of 8% per annum, in the principal
amount of $100,000. This convertible note is to be paid in full the
earlier of five days after the closing of an initial public offering or
January 31, 1998. In April 1997, the investor converted the note into
78,431 shares of the Company's common stock. Interest expense of
$252,940 representing the difference between the estimated fair value of
the Company's common stock and the conversion price was recognized
during the three months ended March 31, 1997.

F-36
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 8 - NOTES PAYABLE (Continued):

In March 1997, the Company issued a $50,000 promissory note to an
investor bearing interest at the rate of 10% per annum. This note is
payable on demand on or after May 12, 1997. As additional consideration
for this loan, the Company issued the lender 2,000 shares of its common
stock. These shares were valued at $4.50 per share, the estimated fair
market value of the stock at the date of issuance. On April 3, 1997, the
lender converted $25,000 of the outstanding note balance into 12,500
shares of the Company's common stock. An interest charge of $31,000
representing the difference between the estimated fair value of the
Company's common stock and the value the Company ascribed to these
shares on the date of issuance was recognized by the Company upon
conversion. In June 1997, the lender agreed to extend the maturity date
of the outstanding note balance to the earlier of July 31, 1997 or the
completion of the Company's initial public offering. This note was fully
repaid in August 1997, together with interest accrued to the date of
payment.

In May 1997, the Company negotiated with a creditor in connection with
trade accounts payable balances owed to this creditor aggregating
$60,000. The creditor agreed that the Company would repay $30,000 of
this balance upon completion of an initial public offering. The Company
issued a convertible promissory note for the remaining outstanding
balance of $30,000 bearing interest at the rate of 10% per annum. The
note is payable in full on December 31, 1998. In lieu of receiving
payment, the creditor has the right to convert this promissory note, at
any time prior to the maturity date, into 10,000 shares of common stock
of the Company.

In May and June 1997, the Company issued three promissory notes to
investors bearing interest at the rate of 12% per annum in the aggregate
principal amount of $150,000. These notes are payable in full the
earlier of: (i) July 31, 1997 or (ii) on the date of an initial public
offering. In connection with these transactions, the Company issued an
aggregate of 75,000 warrants, expiring July 31, 2000, to these investors
to purchase 75,000 shares of the Company's common stock at a price of
$3.00 per share. These notes were paid in full in August 1997, together
with interest accrued to the date of payment.

NOTE 9 - INCOME TAXES:

A reconciliation between actual income tax (benefit) and the amount
computed by applying the statutory Federal income tax rate to the loss
before taxes is as follows:

1997 1996
---- ----
<S> <C> <C>
Tax expense (benefit) at statutory
Federal income tax $(1,532,000) $(1,377,000)
Nondeductible compensation 450,000 128,000
Net operating loss not currently
utilizable 1,082,000 1,249,000
----------- -----------
$ - $ -
=========== ===========
</TABLE>

F-37
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 9 - INCOME TAXES (Continued):

The tax effects of temporary differences and loss carryforwards giving
rise to deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>

1997 1996
---- ----
<S> <C> <C>
Net operating loss and other carryforwards $ 2,890,000 $ 1,814,000
Bad debts 5,000 7,000
Depreciation/amortization 1,000 2,000
Deferred compensation 276,000 276,000
Other deferred assets - 20,000
---------- ----------
3,172,000 2,119,000
Valuation allowance (3,172,000) (2,119,000)
----------- -----------
$ - $ -
=========== ===========
</TABLE>

The Company anticipates that for the foreseeable future it will continue
to be required to provide a 100% valuation allowance for the tax benefit
of its net operating loss carryforward and temporary differences as the
Company cannot presently predict when it will generate sufficient
taxable income to utilize such deferred tax assets.

At December 31, 1997 and 1996, Company had net operating losses
available to carry forward of approximately $8,500,000 and $5,320,000
respectively, for tax purposes. Such net operating loss carryforwards
expire through the year ending 2013. No benefit has been recorded for
such loss carryforwards since realization cannot be assured. The
Company's use of its net operating loss carryforwards is limited as the
Company is deemed to have undergone an ownership change as defined in
Internal Revenue Code Section 382.

NOTE 10 - STOCKHOLDERS' EQUITY:

In September 1995, pursuant to a Shareholders' Agreement and associated
Escrow Agreement, a shareholder of the Company placed 88,513 shares of
his common stock in an escrow account. The Escrow Agreement was
terminated in February 1996 and the subject shares were returned to the
shareholder. Compensation expense of $265,000 was recognized based upon
the estimated fair value of the shares by the Company upon the release
of the shares from escrow.

On May 30, 1996, the Board of Directors authorized a reverse stock split
in the ratio of one common share for every six and one-half common
shares outstanding as of that date. In addition, on such date, the Board
of Directors approved an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of the
Company's common stock from 3,076,923 to 20,000,000 shares. On February
6, 1997, the Board of Directors authorized a reverse stock split in the
ratio of two common shares for every three common shares outstanding as
of February 7, 1997. The reverse splits and changes in authorized
capital have been retroactively reflected for all periods presented.

F-38

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 10 - STOCKHOLDERS' EQUITY (Continued):

In May 1996, the Company issued 50,000 shares of its common stock to
certain individuals for services rendered on behalf of the Company.
These shares were valued at $3.00 per share, the estimated fair value of
the stock at the date of issuance and accordingly, $150,000 was charged
to operations.

During June 1996 through September 1996, the Company completed a Private
Placement Offering pursuant to Rule 506 of the Securities Act of 1933
consisting of the sale of 61.5 units (the "Second Private Placement").
Each unit consisted of a $2,500, 12% subordinated promissory note and
7,500 shares of common stock at an offering price of $25,000 per unit.
The note balance at December 31, 1996 which resulted from this Second
Private Placement was $153,750. These notes mature on the earlier of:
(i) July 31, 1997, or (ii) the closing date of the initial public
offering. Accrued interest payable related to these notes amounted to
$7,688 at December 31, 1996. In April 1997, $30,000 of such notes, as
well as $2,100 of accrued interest, were converted to 16,050 shares of
the Company's common stock. The balance was repaid upon the successful
completion of the Company's IPO in July 1997.

In September 1996, the founder of the Company transferred 33,333 shares
of his common stock to certain individuals for services rendered on
behalf of the Company. These shares were valued at $3.00 per share, the
estimated fair value of the stock at the date of the transfer. As the
Company implicitly benefitted from this transaction, the value of the
shares transferred was reflected as an expense in the accompanying
financial statements with a corresponding credit of $100,000 to
additional paid-in capital.

In October 1996, the Company issued 19,231 shares of its common stock to
certain individuals for services rendered during the year ended December
31, 1996. These shares were valued at $3.00 per share, the estimated
fair market value of the stock at the date of issuance, and $57,692 was
charged to operations.

In March 1997, the Company in connection with entering into a two-year
exclusive East coast manufacturing agreement, issued 35,000 shares of
its common stock. These shares were valued at $4.50 per share, the
estimated fair market value of the stock at the date of issuance.
Pursuant to the agreement, the manufacturer agreed to provide $250,000
of 21-day credit terms. Further, the Company was obligated to pay the
manufacturer $150,000 against existing amounts owed by April 30, 1997.
In the event such amount was not paid, the Company is obligated to issue
an additional 30,000 shares of its common stock to the manufacturer.
These additional shares were issued to the manufacturer in May 1997.

In May 1997, the Company issued 100,000 shares of its common stock to
its legal counsel for services rendered during March and April of 1997.
These shares were valued at $4.50 per share, the estimated fair value of
the stock at the date of issuance and, accordingly, $450,000 was charged
to operations during the year ended December 31, 1997.

F-39
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 10 - STOCKHOLDERS' EQUITY (Continued):

In June 1997, the Company issued 13,307 shares of its common stock to
certain individuals in settlement of amounts owed to these individuals
aggregating $39,921. An interest charge of $19,961 representing the
difference between the estimated fair value of the Company's common
stock and the value the Company ascribed to these shares on the date of
issuance was recognized by the Company in the year ended December 31,
1997.

On July 31, 1997. the Company completed its Initial Public Offering
("IPO") of 700,000 units sold to investors on the OTC Bulletin Board at
$6.20 per unit for aggregate gross proceeds of $4,340,000. Each unit
contained one share of common stock and two Class A warrants to purchase
one share of Common Stock each at $5.00 per share. The Company realized
net proceeds of $3,342,444.

In August 1997, the Company issued 35,500 shares of common stock as
compensation for professional fees rendered aggregating $206,250.

See also Notes 8 and 13c for additional share issuances.

NOTE 11 - STOCK OPTION PLANS:

At December 31, 1997 the Company has two stock-based compensation plans,
which are described below. The Company applies APB Opinion 25,
"Accounting for Stock Issued to Employees" and related interpretations
in accounting for stock options issued to employees. The Company applies
Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"),
"Accounting for Stock- Based Compensation", in accounting for stock
options issued to non-employees. The compensation cost that has been
charged against income for stock options issued to non-employees was
$812,000 for the year ended December 31, 1996. No options were granted
under this plan during 1997.

Had compensation cost for employees been determined based on the fair
value at the grant dates consistent with the methodology of SFAS No.
123, the Company's net loss and net loss per share would have been
increased to the pro forma amounts indicated:

Year Ended December 31,
1997 1996
---- ----
<S> <C> <C>
Net loss:
As reported $(4,502,645) $(4,050,547)
Pro forma (4,732,943) (4,581,047)
Net loss per share:
As reported $(1.69) $(2.54)
Pro forma (1.78) (2.88)
</TABLE>

F-40

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 11 - STOCK OPTION PLANS (Continued):

In August 1995, the Company formally adopted a Long-Term Incentive Plan
(the "1995 Plan"), which provides that the Company may grant certain key
employees or consultants either stock options, stock appreciation
rights, restricted stock, performance grants or other Company securities
(the "Awards"). The 1995 Plan, as amended, authorizes the issuance of a
maximum of 433,333 shares of common stock. As of December 31, 1997 and
1996, respectively, the Company has granted an aggregate of 306,667 and
256,667 options to purchase common stock with exercise prices ranging
from $1.50 to $3.00 under this Plan. At December 31, 1997 and 1996,
options exercisable under this plan were 306,667 and 33,333,
respectively. None of these options have been exercised to date. During
the year ended December 31, 1996, compensation cost recognized in income
for the issuance of options under the 1995 Plan to non-employees totaled
$119,000. To date, options granted under this plan are exercisable six
months from date of grant and expire 10 years from date of grant.

On October 15, 1996, the Company's Board of Directors approved a 1996
Non-qualified Stock Option Plan ("Non-qualified Plan") for officers,
directors, employees and consultants of the Company. The Plan, as
amended, authorizes the issuance of up to 500,000 shares of common
stock. As of December 31, 1997, the Company has granted 478,332 options
to purchase shares of common stock under the Non-qualified Plan at an
exercise price of $1.50. None of the stock options granted have been
exercised to date. During the year ended December 31, 1996, compensation
cost recognized for the issuance of options under the Non-qualified Plan
to non-employees totaled $693,000. To date, options granted under this
plan are exercisable six months from date of grant and expire 10 years
from date of grant.

A summary of stock option activity related to the Company's Plans is as
follows:

<TABLE>
<CAPTION>
Weighted
Average 1996
1995 Plan Exercise Non-qualified Plan
Shares Price Range Price Shares Price Range
------ ----------- --------- ------ -----------

<S> <C> <C> <C> <C> <C>
Outstanding at January 1, 1996 - -
Granted during 1996 256,667 $1.50 - $3.00 $1.69 396,666 $1.50
------- -------
Outstanding at December 31, 1996 256,667 $1.50 - $3.00 1.69 396,666 1.50
Granted during 1997 50,000 1.50 1.50 81,666 1.50
------- -------

Outstanding at December 31, 1997 306,667 1.66 478,332 1.50
======= =======

Exercisable at December 31, 1996 256,667 1.50 - 3.00 1.69 -
======= =======

Exercisable at December 31, 1997 306,667 1.50 - 3.00 1.69 478,332 1.50
======= =======
</TABLE>

F-41
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF
CREDIT RISK:

The carrying amounts of cash, accounts receivable, accounts payable and
other accrued liabilities are estimated to approximate their fair value.
The Company believes that it is not practicable to estimate the value of
its debt obligations due to its current financial condition.

Concentration of credit risk with respect to trade accounts receivable
exists as the Company sells products primarily to one distributor. The
Company performs periodic credit evaluations of its customers' financial
condition and does not require collateral or other security. The
distributor referred to in Note 3e accounted for approximately 91% and
79% of the Company's sales for the years ended December 31, 1997 and
1996, respectively. This distributor accounted for 57% of the Company's
net accounts receivable at December 31, 1996. As of December 31, 1997,
the Company no longer sells to this distributor and there are no amounts
uncollected.

The Company's products have historically been manufactured by
independent facilities. Certain of these facilities have ceased
manufacturing on behalf of the Company due to the fact that these
facilities are owed substantial sums of money by the Company and the
Company's products are currently manufactured at only one facility. If
this manufacturer elects to suspend the manufacturing of the Company's
products, the Company's operating results may be adversely affected.

NOTE 13 - COMMITMENTS AND CONTINGENCIES:

(a) Lease Commitments:

Future minimum payments under noncancellable operating leases for office
space, equipment and vehicles, with initial terms of one or more years,
consist of the following at December 31, 1997:

Operating
Leases
----------

F-42
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(b) Employment Contracts:

The Company had an employment agreement with its former President which
provided for an annual base salary and bonuses. The agreement also
provided for the granting of 5,101 of immediately exercisable and fully
vested options to purchase shares of the Company's common stock at an
exercise price of $3.00. This agreement was to expire in February 1999.
In addition, the former President was granted an incentive stock option
to purchase 73,205 shares of the Company's common stock at an exercise
price of $3.00 which vested ratably over the three years beginning
February 1995. On September 15, 1996, the then President resigned his
employment with the Company. At the time of the resignation, 29,530
options to purchase shares of the Company's common stock at an option
price of $3.00 per share were exercisable and the balance was canceled.
The exercisable options expired on December 15, 1996, three months from
the date of the then President's resignation.

During the year ended December 31, 1996, the Company hired a Vice
President of Sales and Marketing and entered into an employment
agreement with this individual. The agreement provided for an annual
base salary of $100,000, plus an incentive bonus. This agreement was for
an initial term of one year from the earlier of the effective date of an
initial public offering of the Company's securities or March 1, 1997. On
June 20, 1997, this employee resigned his employment with the Company.
At the time of the resignation, 66,667 options to purchase shares of the
Company's common stock at an option price of $1.50 were canceled.

In addition, the Company has employment agreements with the founder and
another employee which provide for annual base salaries of $125,000 and
$40,000, respectively, and expire, as amended, in June 2001 and June
1998, respectively. During the year ended December 31, 1996, these
individuals voluntarily waived all rights to receive the accrued
salaries payable to them aggregating $110,565 and, accordingly, such
amount has been presented as a contribution to the Company's additional
paid-in capital. Further, in April 1997, the founder agreed to waive an
additional $27,333 of accrued salary through February 28, 1997. In
December 1997 the employee whose contract expires in June 1998, agreed
to modify the agreement and be compensated on an hourly basis which is
anticipated to produce substantially lower compensation. All other terms
of the contract remain in effect. The agreement with the founder,
currently serving as the Chairman of the Board and Chief Executive
Officer, provides for bonuses based on the Company's pretax income, and
also includes non-compete and change of control clauses.

In March 1997, the Company entered into a two-year employment agreement
with its Vice- President - Finance which provided for an annual base
salary of $95,000 for the first year and $105,000 for the second year.
In November 1997, this employee resigned, however remained as a member
of the Board of Directors.

F-43
<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(b) Employment Contracts (continued):

On July 16, 1997, the Company entered into an employment agreement with
its Vice-President Marketing. The agreement provides for an annual base
salary of $115,000, plus an incentive bonus. This agreement is for an
initial term of one year from the effective date of the initial public
offering of the Company's securities. Options were granted to purchase
66,667 shares of the Company's common stock at an exercise price of
$1.50 per share. The Company is responsible for up to $25,000 of
expenses related to the employee traveling to and from Buffalo, NY,
temporary living and other such amounts necessary for the employee to
devote his full time employment to the Company. The agreement also
provides for an automobile allowance of $650 per month.

On March 1, 1994, the Company entered into a consulting agreement with
an investor (the "Investor"), whereby the Company shall pay the Investor
$75,000 for the first year ended March 31, 1995, $100,000 for the second
year and $125,000 for the third year. The Company recorded accrued
consulting expense of $89,585 during the year ended December 31, 1996.
In September 1996, this investor voluntarily waived all rights to
receive the consulting fee payable to him and accordingly, the aggregate
amount waived, $247,917 has been reflected as a contribution to
additional paid-in capital.

In November 1996, this consulting agreement was superseded by a new
agreement. The new agreement provides that beginning January 1, 1997,
the Company will pay consulting fees to the Investor at the rate of
$125,000 per annum for a three-year period. However, no monies will be
paid to this Investor until such time as the Company shall consummate a
private or public offering of its securities for not less than
$2,000,000 in gross proceeds.

In April 1997, the November 1996 consulting agreement was terminated
and, in consideration for such termination, the Company issued 150,000
shares of its common stock to the consultant. At March 31, 1997, accrued
compensation payable to this consultant aggregated approximately
$31,000. In April 1997 the Company recognized a charge to operations of
approximately $644,000 based upon the estimated fair market value of the
shares issued to the consultant.

During the year ended December 31, 1996, the Company entered into a
consulting agreement with an entity that will provide sales and
marketing advisory and consulting services to the Company. This entity
will receive 30,000 shares of common stock (see Note 14), an annual
consulting fee of $50,000 and has received options to purchase 133,333
shares of the Company's common stock at $1.50 per share expiring October
15, 2006. One third of such options become exercisable at the end of
each successive six-month period. At December 31, 1997, options to
purchase 88,889 common shares were exercisable.

(d) Line of Credit:

In December 1995, the Company obtained an unsecured line of credit for
$25,000. Borrowings under this line bear interest at 15% per annum.
Borrowings outstanding under this line at December 31, 1997 and 1996,
were $9,374 and $23,506, respectively.

F-44

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued):

(e) Legal Proceedings:

The Company is subject to various legal proceedings, claims and
liabilities which arise in the ordinary course of its business. In the
opinion of management, the amount of any additional liability in excess
of amounts already provided for with respect to these actions, will not
have a material adverse effect on the Company's results of operations,
cash flow or financial position. As of December 31, 1997, the Company
has provided for approximately $130,000 in connection with known legal
proceedings and claims.

(f) Acquisitions:

On December 18, 1997, the Company entered into two agreements (letters
of intent) to acquire companies engaged in the full service distribution
of ice cream in the New York Metropolitan area, through its wholly-owned
subsidiary, New York Frozen Desserts, Inc. In exchange for all the
assets of New Yorker Ice Cream Corp., the Company will pay (i) $465,000
at closing, (ii) $800,000 over three years with interest at 8% per annum
and (iii) will assume an existing obligation of $735,000, paying
$200,000 at closing, and the remaining $535,000 over four years with
interest at 8% per annum. In exchange for all the assets of Jerry's Ice
Cream Co., Inc., the Company will pay $245,000 at closing, and $220,000
over three years with interest at 8% per annum.

In connection with these acquisitions, the Company entered into an
agreement with a company whose shareholders consist of an investor and a
Director of the Company. The agreement provides for a finder's fee in
the amount of $200,000 and 200,000 shares of the Company's common stock
together with piggy back registration rights to be delivered at the
closing of the above transactions. All future acquisitions introduced by
this company, will involve similar fee arrangements to be negotiated
prior to the closing of each transaction.

(g) Government Regulation:

The Company is subject to regulation by various governmental agencies
regarding the distribution and sale of food products, including the FDA
and various state agencies. The Company believes that its marketing and
distributing operations comply with all existing applicable laws and
regulations.

(h) Insurance:

The Company's business exposes it to potential liability which is
inherent in the marketing and distribution of food products. The Company
currently maintains $2,000,000 of product liability insurance. The
Company also maintains $1,000,000 of general and personal injury
insurance per occurrence and $5,000,000 in the aggregate. If any product
liability claim is made and sustained against the Company and is not
covered by insurance, the Company's business and prospects could be
materially adversely affected.

F-45

<PAGE>

MIKE'S ORIGINAL, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996

NOTE 14 - SUBSEQUENT EVENTS:

On February 6, 1998, the Company issued 30,000 shares of its common
stock to a consultant in exchange for 1998 services. These shares are in
addition to a monthly fee that the Company has the option of paying in
either cash or the Company's common stock. These shares, and any
subsequently issued shares, bear a restrictive legend pursuant to Rule
144 governing such securities. See Note 13c.

On February 15, 1998, the Company signed a lease for a three-month term,
renewable monthly, for new office space in Rye, New York. This office
will serve as the corporate office of the Company until such time as the
Company and the planned acquisitions can be relocated to an appropriate
facility. The lease in Jericho, New York expired without any additional
costs.

On March 4, 1998, the Company, through its wholly-owned subsidiary,
signed a license agreement to sell and distribute frozen juice bars
under the name of a nationally known licensor. This agreement is for a
limited territory in the eastern part of the country and for a period of
two years. The Company has the option to obtain two sub-licensees to
operate under the main agreement on behalf of the Company.

F-46

<PAGE>
SIDNEY NEUHOF
CERTIFIED PUBLIC ACCOUNTANT
1101 STEWART AVENUE, SUITE 302
GARDEN CITY, NEW YORK 11530

Report of Independent Accountant

To the Stockholders of
New Yorker Ice Cream Corp.

I have audited the accompanying balance sheets of New Yorker Ice Cream Corp., as
of December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of New Yorker Ice Cream Corp., as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

/s/ Sidney Neuhof
- ---------------------------
Sidney Neuhof

February 9, 1998

F-47

<PAGE>

PAGE (2)
NEW YORKER ICE CREAM CORP.
BALANCE SHEETS
AS AT: DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS
------
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ - $ 4,131
Accounts receivable - net 251,964 221,574
Merchandise inventory 184,612 236,962
Other current assets 10,979 -
--------- ---------
Total current assets 447,555 462,667

FIXED ASSETS
Furniture and fixtures -
net of accumulated depreciation 111,187 134,357
$494,915 for 1997 and
$461,409 for 1996

OTHER ASSETS -
Intercompanies - Note 2 1,394 -
-------- --------
$560,136 $597,024
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
----------- --- ------------- ------
CURRENT LIABILITIES
Bank overdraft $ 28,979 $ -
Loans payable - Note 3 100,000 65,000
Accounts payable and accrued expenses 347,692 433,243
-------- --------
Total current liabilities 476,671 498,243

OTHER LIABILITIES
Loans payable long-term portion 106,000 100,000
Intercompanies Note 2 - 115,411
-------- --------
106,000 215,411

STOCKHOLDERS' EQUITY
Capital stock - 26,750 26,750
83.25 shares authorized, issued
and outstanding
Additional Paid-In-Capital 117,897 117,897
Treasury Stock (147,808) (147,808)
Deficit (19,374) (113,469)
-------- --------
Total stockholders' equity (deficit) (22,535) (116,630)
-------- --------
$560,136 $597,024
======== ========
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-48

<PAGE>
PAGE (3)

NEW YORKER ICE CREAM CORP.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED: DECEMBER 31, 1997 AND 1996
- -----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----

<S> <C> <C>
NET SALES $6,498,430 $6,343,242

COST OF GOODS SOLD 5,412,912 5,106,476
---------- ----------

GROSS PROFIT 1,085,518 1,236,766

OPERATING EXPENSES 975,571 1,183,257
--------- ----------

INCOME BEFORE OTHER EXPENSES 109,947 53,509

OTHER EXPENSES:
Interest expense 15,852 14,179
--------- ----------

NET INCOME $94,095 $39,330
========= ==========

<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-49

<PAGE>

PAGE (4)
NEW YORKER ICE CREAM CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED: DECEMBER 31, 1997 AND 1996
- -----------------------------------------------

Additional Retained
---------- --------
Capital Paid In Treasury Earnings
--------- --------- ---------- --------
Stock Capital Stock (Deficit) Total
--------- --------- ---------- --------- --------

<S> <C> <C> <C> <C> <C>
Balance - Jan. 1, 1996 $26,750 $117,897 $(147,808) $107,543 $104,382

Prior Period Adjustment - - - (260,342) (260,342)

Net Income - - - 39,330 39,330
------- -------- -------- --------- --------
Balance - Dec. 31, 1996 26,750 117,897 (147,808) (113,469) (116,630)

Net Income - - - 94,095 94,095
------- -------- -------- --------- --------

Balance - Dec. 31, 1997 $26,750 $117,897 $(147,808) $(19,374) $(22,535)
======= ======== ========= ======== ========

<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-50

<PAGE>

PAGE (5)
NEW YORKER ICE CREAM CORP.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED: DECEMBER 31, 1997 AND 1996
- -----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income $ 94,095 $ 39,330

Adjustments to reconcile net income to net
cash provided by operating activities

Depreciation and Amortization 33,506 54,545

(Increase) Decrease in accounts receivable (39,770) 112,262

Decrease (Increase) in inventory 52,350 (49,061)

(Increase) Decrease in other current assets (10,979) 20,564

Increase in bank overdraft 28,979 -

(Decrease) in accounts payable and
accrued expenses (85,551) (129,132)
--------- --------
Net cash provided by operating activities 72,630 48,508
--------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Fixed Assets (10,336) (23,112)
Other Assets - 21,910
-------- --------
Net cash used in investing activities (10,336) (1,202)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:

Intercompany - net (107,425) (72,703)

Loans - Net 41,000 (28,996)
------- --------
Net cash used in financing activities (66,425) (43,707)
------- --------
NET (DECREASE) INCREASE IN CASH (4,131) 3,599

CASH AT BEGINNING OF YEAR 4,131 532
------- -------
CASH AT END OF YEAR $ - $ 4,131
======= =======
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-51
<PAGE>

PAGE (7)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------- -- ----------- ---------- --------

NOTE I
- ---- -
HISTORY AND BUSINESS DESCRIPTION
- ------- --- -------- -----------
New Yorker Ice Cream Corp., was incorporated under the laws of the state of New
York on December 1, 1966.

The company distributes various types of ice cream products such as Haagen Dazs
and Baskin Robbins to retail stores and for food servicing.

All of the shares of the company were purchased by Theodore Ketsoglou on May 13,
1991 from the estate of Joseph K. Ketsoglou.

In 1993 Mr. Theodore Ketsoglou sold all his stock to The Kerry Group, Inc,, with
The Kerry Group, Inc., assuming the outstanding note obligation due to the
estate in return for the ownership of New Yorker.

The Kerry Group is a management consulting company whose primary client is New
Yorker Ice Cream. These financials do not include the financial information of
The Kerry Group, Inc. Mr. Theodore Ketsoglou is the 100% shareholder of The
Kerry Group, Inc.

USE OF ESTIMATES
- --- -- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect the amounts reported in the financial statement and accompanying notes.
Actual results could differ from those estimates.

INVENTORIES
- -----------
Inventories are valued at the lower of cost or market, cost being determined
using the first in, first out (FIFO) method. All inventory are prepackaged units
which are available for sale.

F-52
<PAGE>

PAGE (8)

PROPERTIES, RENTAL EQUIPMENT, AND DEPRECIATION
- ----------- ------ ---------- --- ------------
Properties and rental equipment are carried at cost and are depreciated over the
estimated lives of such assets using the straight-line method. Leasehold
improvements are amortized over the shorter of the asset lives or the terms of
the respective leases.

Properties, Rental Equipment And
---------- ------ --------- ---
Depreciation Schedule
------------ --------
<TABLE>
<CAPTION>

1997 1996
---------------------- ----------------------
Asset Accum. Asset Accum.
Value Deprec. Value Deprec.
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Freezer Cabinets $294,052 $244,988 $283,716 $221,445

Machinery 61,481 61,481 61,481 58,771

Office Equipment 8,997 8,901 8,997 8,901

Vehicles 55,122 52,765 55,122 51,569

Improvements 186,450 126,780 186,450 120,723
-------- -------- -------- --------
$606,102 $494,915 $595,766 $461,409
======== ======== ======== =======
</TABLE>

NOTE 2
- ---- -
INTERCOMPANIES - PARENT AND RELATED COMPANIES
- -------------- ------ --- ------- ---------
All intercompany loans are noninterest bearing and have no specified repayment
date. The outstanding balances are as follows:
<TABLE>
<CAPTION>
1997 1996
----------------- ----------------
Due From Due To Due From Due To
--- ---- --- -- --- ---- --- --
<S> <C> <C> <C> <C>
(1) The Kerry Group, Inc. $104,483 $72,702
(2) American-Classic, Inc. 105,323 22,399
(2) Tri K Realty, Inc. $100,000 $100,000
(2) Silver Crown Ice
Cream, Inc. 108,412 110,512
-------- -------- ------- --------
$209,806 $208,412 $95,101 $210,512
======== ======== ======= ========

</TABLE>

F-53

<PAGE>

PAGE (9)

NOTE 3
- ---- -
LOANS PAYABLE - BANK OF NEW YORK
- ----- ------- ---- -- --- ----
The company has a $100,000.00 line of credit with interest of 1% over existing
prime. The bank has taken through a UCC filing collateral on all New Yorker's
receivables and fixed assets. There is no due date on the loan as the bank makes
a business evaluation each year on the credit worthiness of the loan. Mr.
Theodore Ketsoglou is a personal guarantor.

NOTE 4
- ---- -
PROVISION FOR INCOME TAXES
- --------- --- ------ -----
No provision for income taxes were made due to carry over tax losses.
<TABLE>
<CAPTION>
Schedule Of Federal Net Operating Loss

<S> <C> <C>
Net Operating Loss 1/l/96 $(199,073)
Loss Used - 1996 $40,031
Loss Used - 1997 94,095
134,216
---------
Carry Forward $ (64,947)
=========
</TABLE>

The value of the net operating loss carry forward at a federal tax rate of 34%
would be $22,082.00.

NOTE 5
- ---- -
LEASES
- ------
The company has no lease at their current premises. The company occupies
premises from a related corporation Tri-K Realty, Inc. As no fair market value
rental has been arrived at, this would be considered a non arm's-length
transaction.

NOTE 6
- ------
LITIGATION
- ----------
There is one lawsuit that has been brought or asserted against the company.
Corporate attorney has indicated that, although the ultimate result of this
lawsuit is not currently determinable, management does not expect that this
matter will have a material adverse effect on the company=s consolidated
financial position, statement of income or liquidity.

F-54

<PAGE>

PAGE (10)

NOTE 7
- ---- -
GOODWILL - PRIOR PERIOD ADJUSTMENT
- -------- ----- ------ ----------
Goodwill from original incorporation of December 1, 1966 has never been
amortized. The goodwill would have been written off in prior years. Accordingly,
$260,342.00 of goodwill was charged against retained earnings as a prior period
adjustment.

F-55

<PAGE>

SIDNEY NEUHOF
CERTIFIED PUBLIC ACCOUNTANT
1101 STEWART AVENUE, SUITE 302
GARDEN CITY, NEW YORK 11530
(516) 222-2239
Fax (516) 222-2327

Report of Independent Accountant

To the Stockholders of
Jerry's Ice Cream, Inc.
- ----------------------

I have audited the accompanying balance sheets of Jerry's Ice Cream, Inc., as of
December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Jerry's Ice Cream, Inc., as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.

/s/ Sidney Neuhof
- ------------------------
Sidney Neuhof

February 9, 1998

F-56

<PAGE>
JERRY'S ICE CREAM INC. PAGE (2)
BALANCE SHEETS
AS AT: DECEMBER 31, 1997 AND 1996
- ---------------------------------
<TABLE>
<CAPTION>
ASSETS
------
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash in banks $ 5,585 $ -
Accounts receivable - net 5,468 8,500
Merchandise inventory 4,177 2,550
Other current assets - 8,052
------- -------
Total current assets 15,230 19,102

FIXED ASSETS
Furniture and fixtures -
net of accumulated depreciation 40,798 46,995
of $50,147 for 1997
and $35,458 for 1996

INTANGIBLE ASSETS - Goodwill
Net of accumulated amortization 205,403 224,363
of $55,299 for 1997
and $36,339 for 1996 -------- --------
$261,431 $290,460
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
----------- --- ------------- ------
CURRENT LIABILITIES
Bank overdraft $ - $ 4,414
Accounts payable and accrued expenses 23,825 12,509
Notes payable - Note 2 31,716 31,716
-------- -------
Total current liabilities 55,541 48,639

OTHER LIABILITIES
Loans payable - stockholder 58,873 71,354
Notes Payable - Note 2 63,233 70,718
-------- -------
122,106 142,072
STOCKHOLDERS' EQUITY
Capital stock - 10 shares authorized, 138,890 138,890
issued and outstanding - no par value
Deficit (55,106) (39,141)
-------- --------
Total stockholders' equity 83,784 99,749
-------- --------
$261,431 $290,460
======== ========
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
F-57

<PAGE>

PAGE (3)
JERRY'S ICE CREAM, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
FOR THE YEARS ENDED: DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----

<S> <C> <C>
NET SALES $807,310 $727,371

COST OF GOODS SOLD 656,922 614,363
-------- --------
GROSS PROFIT 150,388 113,008

OPERATING EXPENSES 157,121 119,016
-------- --------
INCOME (LOSS) BEFORE OTHER EXPENSES (6,733) (6,008)

OTHER EXPENSES:
Interest expense 9,232 11,363
--------- ---------
NET INCOME (LOSS) $(15,965) $(17,371)
========= =========

RETAINED EARNINGS (DEFICIT)
Beginning of Year $(39,141) $(21,770)

NET LOSS (15,965) (17,371)
-------- --------
RETAINED EARNINGS (DEFICIT)
End of Year $(55,106) $(39,141)
========= =========

<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-58

<PAGE>

JERRY'S ICE CREAM, INC. PAGE (4)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED: DECEMBER 31, 1997 AND 1996
- -----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss) $(15,965) $(17,371)

Adjustments to reconcile net income to net
cash provided by operating activities

Depreciation and Amortization 33,649 31,107

(Increase) Decrease in accounts receivable 3,032 (800)

Decrease (Increase) in inventory (1,627) (1,047)

(Increase) Decrease in other current assets 8,052 (8,052)

(Decrease) in accounts payable and
accrued expenses 11,316 (17)
-------- -------
Net cash provided by operating activities 38,457 3,820
-------- -------

CASH FLOWS FROM INVESTING ACTIVITIES:

Fixed Assets (8,492) (26,029)
-------- -------
Net cash used in investing activities (8,492) (26,029)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:

Loans - Shareholder (12,481) 40,687

Loans - Net (7,485) (20,353)
-------- -------
Net cash used in (provided by)
financing activities (19,966) 20,334
-------- -------
NET (DECREASE) INCREASE IN CASH 9,999 (1,875)

CASH AT BEGINNING OF YEAR (4,414) (2,539)
-------- -------

CASH AT END OF YEAR $ 5,585 $ (4,414)
======= ========

<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

F-59
<PAGE>

PAGE (5)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------- -- ----------- ---------- --------

NOTE 1
- ---- -
HISTORY AND BUSINESS DESCRIPTION
- ------- --- -------- -----------
Jerry's Ice Cream Inc., was incorporated under the laws of the state of New York
on September 1, 1994. The company is owned 100% by Gerald Schneider.

On January 20, 1995, Mr. Schneider through a stock redemption agreement sold all
of his stock interest back to the Ennis Ice Cream Co., Inc., and received
certain fixed and intangible assets in exchange. Mr. Schneider transferred his
share (28.57) of the assets and liabilities of Ennis Ice Cream to Jerry's Ice
Cream, Inc., pursuant to a tax free exchange.

The estate of Ron Ennis sold stock of Ennis Ice Cream, Inc., to three
stockholders. The remaining stockholders after the stock redemption were Ron
Kissel and Michael Chase (both nonrelated to Mr. Schneider). Mr. Schneider
agreed not to sell certain accounts of Ennis Ice Cream, Inc., and Ennis Ice
Cream, Inc., agreed not to sell accounts of Gerald Schneider or Jerry's Ice
Cream, Inc.

PROPERTY, RENTAL EQUIPMENT, AND DEPRECIATION
- -------- ------ --------- --- ------------
Properties and rental equipment are carried at cost and are depreciated over the
estimated lives of such assets using the straight-line method.

F-60

<PAGE>

PAGE (6)

Properties, Rental Equipment And
---------- ------ --------- ---
Depreciation Schedule
------------ --------
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
Asset Accum. Asset Accum.
Value Deprec. Value Deprec.
------- ------- ------ -------
<S> <C> <C> <C> <C>
Computers $ 4,644 $ 1,328 $ 500 $ 500
Auto and Truck 15,190 13,939 15,190 13,250
Freezer Cabinets 70,274 34,712 66,763 21,708
Furniture Fixtures 837 168 - -
------- ------- ------- -------
$90,945 $50,147 $82,453 $35,458
======= ======= ======= =======
</TABLE>

NOTE 2
- ---- -
NOTES PAYABLE
- ----- -------

The company has two notes payable:
<TABLE>
<CAPTION>
1997 1996
------------------- -------------------
Short Long Short Long
Term Term Term Term
<S> <C> <C> <C> <C>
1) Note Payable - Schneider
Management - Long term
note - 7% interest $15,000 -

2) Note Payable - Estate
of Ron Ennis - Self
Amortizing Loan -
Interest Rate 10% $31,716 $48,233 $31,716 $70,718
------- ------- ------- -------
$31,716 $63,233 $31,716 $70,718
======= ======= ======= =======
<FN>
1) Schneider Management is a corporation owned by Gerald Schneider's brother.
Gerald Schneider has no interest in Schneider Management. The loan is
unsecured and Mr. Gerald Schneider is a personal guarantor. The loan was
made on December 17, 1997 and repayment date is January 1, 1999 with
interest at 7% per annum. There is no prepayment penalty.

2) Notes Payable - Estate of Ron Ennis - Represent a portion of loan that Mr.
Gerald Schneider and two other original stockholders of Ennis Ice Cream,
Inc., agreed to, upon purchasing Ennis Ice Cream, Inc. Jerry's Ice Cream,
Inc., assumed 28.57% of the loan in which the monthly payments are
$2643.00. Mr. Gerald Schneider is a personal guarantor on this obligation.
</FN>
</TABLE>

F-61

<PAGE>

PAGE (7)

NOTE 3
- ---- -
AMORTIZATION OF INTANGIBLE ASSETS
- ------------ -- ---------- ------
The company is amortizing route values (goodwill) acquired as part of a stock
redemption (see note 1) of $248,057.00 over 15 years.

NOTE 4
- ---- -
PROVISION FOR INCOME TAXES
- --------- --- ------ -----
Provision for income taxes - Jerry's Ice Cream Inc., has elected to be taxed
under the provision of Subchapter S of the internal Revenue Code and New York
State tax laws. Accordingly, there is only a provision for minimum taxes of 625
which is included in operating expenses.

NOTE 5
- ---- -
LEASES
- ------
The company has no leases.

NOTE 6
- ---- -
LITIGATION
- ----------
Management has indicated that as of report date there are no lawsuits pending.

F-62
<PAGE>

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus and, if given or made, must not be
relied upon as having been authorized by the Company, the Selling Stockholders
or the Underwriter. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Common Stock offered
by this Prospectus, nor does it constitute an offer to sell or a solicitation of
an offer to buy the securities by any person in any jurisdiction where such
offer or solicitation is not authorized, or in which the person making such
offer is not qualified to do so, or to any person to whom it is unlawful to make
such offer or solicitation. The delivery of this Prospectus shall not, under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof.
- ---------------

TABLE OF CONTENTS
Page
----
Prospectus Summary . . . . . . . . 1
Risk Factors . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . 7
Dilution . . . . . . . . . . . . . 8
Capitalization . . . . . . . . . . 9
Price Range of Common Stock. . . . 10
Dividend Policy. . . . . . . . . . 10
Selected Financial Data. . . . . . 11
Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . 12
Business . . . . . . . . . . . . . 15
Management . . . . . . . . . . . . 19
Principal Stockholders . . . . . . 25
Certain Transactions . . . . . . . 26
Selling Stockholders . . . . . . . 28
Description of Securities. . . . . 29
Shares Eligible for Future Sale. . 32
Underwriting . . . . . . . . . . . 33
Legal Matters. . . . . . . . . . . 34
Experts. . . . . . . . . . . . . . 35
Where to Find Available Information. 35
Incorporation of Certain Documents by
Reference . . . . . . . . . . 35
Index to Financial Statements. . . . F-1
Independent Auditor's Report . . . . F-22
Independent Auditor's Report . . . . F-23
<PAGE>

5,060,000 Shares

MIKE'S ORIGINAL, INC.

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

PROSPECTUS
---------------

MILLENNIUM SECURITIES CORP.

, 1998

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Offices

See "Management -- Personal Liability and Indemnification of Directors".

Item 25. Other Expenses of Issuance and Distribution

The estimated expenses of the distribution, all of which are to be borne by
the Company, are as follows:

SEC Registration Fee. . . . . . . . . . . . . . . . . $882.00
NASD Filing Fee . . . . . . . . . . . . . . . . . . .
Blue Sky Fees and Expenses. . . . . . . . . . . . . .
Transfer Agent Fees . . . . . . . . . . . . . . . . .
Accounting Fees and Expenses. . . . . . . . . . . . .
Legal Fees and Expenses . . . . . . . . . . . . . . .
Printing and Engraving. . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . ---------
Total. . . . . . . . . . . . . . . . . . . . . . . $

Item 26. Recent Sales of Unregistered Securities

1. In May 1994, the Company issued an aggregate of 1,133,333 shares of
Common Stock to its two founding stockholders. This was a transaction by the
issuer not involving any public offering which was exempt from the registration
requirements under the Securities Act pursuant to Section 4(2) thereof.

2. From November 1994 to May 1995, the Company issued an aggregate of
approximately 180,667 shares of Common Stock to 206 purchasers. These
transactions by the Company did not involve any public offering and were exempt
from the registration requirements under the Securities Act pursuant to Section
3(b) thereof and Rule 504 of Regulation D promulgated pursuant thereto.

3. In April 1995, the Company issued 5,128 shares of its Common Stock to a
consultant in consideration of his efforts in assisting in various matters for
the Company during the fiscal year ended March 31, 1994 and 1995. This
transaction by the Company did not involve any public offering and was exempt
from the registration requirements under the Securities Act pursuant to Section
4(2) thereof.

4.In September 1995, the Company issued 7,179 shares of its common stock to
two individuals for services rendered on behalf of the Company during the nine
month period ending December 31, 1995. These transactions by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.

5. In February 1996, the Company issued $325,000 principal amount of 12%
convertible notes payable in August 1996 to four purchasers thereof. These

<PAGE>

transactions by the Company did not involve any public offering and were exempt
from the registration requirements under the Securities Act pursuant to Section
4(2) thereof.

6. In October 1996, the Company issued 19,231 shares of Common Stock to two
consultants as payment for services rendered during the year ended December 31,
1996. These transactions by the Company did not involve any public offering and
were exempt from the registration requirements under the Securities Act pursuant
to Section 4(2) thereof.

7. In May 1996, the Company issued two 10% notes each in the amount of
$50,000 to two purchasers. These transactions by the Company did not involve any
public offering and were exempt from the registration requirements under the
Securities Act pursuant to Section 4(2) thereof.

8. In May 1996, the Company issued 20,000 shares of Common Stock to two
persons for services rendered. These transactions by the Company did not involve
any public offering and were exempt from the registration requirements under the
Securities Act pursuant to Section 4(2) thereof.

9. In June through September 1996, the Company sold $1,537,500 principal
amount of Second Private Placement Units, each Second Private Placement Unit
consisting of one $2,500 principal amount of 12% promissory notes and 7,500
shares of Common Stock, to 36 persons, all of whom are deemed accredited
pursuant to Rule 501 of Regulation D, including the exchange of the notes
referred to in paragraph 3, in private transactions by the issuer not involving
any public offering which were exempt from registration requirements under the
Securities Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D
promulgated pursuant thereto.

10. In December 1996, the Company issued an 8% convertible promissory note
in the amount of $225,000 to one purchaser, which was convertible into 200,000
shares of Common Stock in April 1997. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.

11. In January 1997, the Company issued an 8% convertible promissory note
in the amount of $100,000 to one purchaser, which was convertible into 78,431
shares of Common Stock in April 1997. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.

12. In March 1997, the Company issued 35,000 shares of Common Stock to its
East coast product manufacturer pursuant to the terms of a credit agreement by
and among the Company, the product manufacturer and Michael Rosen. This
transaction by the Company did not involve any public offering and was exempt
from the registration requirements under the Securities Act pursuant to Section
4(2) thereof.

13. In March 1997, the Company issued a 10% promissory note in the amount
of $50,000 together with 2,000 shares of Common Stock, to one purchaser. In
April 1997, this person exchanged $25,000 of such note into 12,500 shares of
Common Stock. This transaction by the Company did not involve any public
offering and was exempt from the registration requirements under the Securities
Act pursuant to Section 4(2) thereof.

14. In April 1997, the Company issued 150,000 shares of Common Stock in
payment of obligations under a consulting agreement. This transaction by the

<PAGE>

Company did not involve any public offering and was exempt from the registration
requirements under the Securities Act pursuant to Section 4(2) thereof.

15. In February 1998, the Company issued 30,000 shares of Common Stock to
one of its marketing consultants in exchange for services to be performed during
1998. This transaction by the Company did not involve any pubic offering and was
exempt from the registration requirements under the Securities Act pursuant to
Section 4(2) thereof.

16. From July through November 11, 1998, the Company sold $400,000
principal amount of Private Placement Units, each Private Placement Unit
consisting of one $50,000 principal amount of 12% promissory note and 200,000
shares of Common Stock, to 9 persons, all of whom are deemed accredited pursuant
to Rule 501 of Regulation D, including the exchange of the notes referred to in
paragraph 3, in private transactions by the issuer not involving any public
offering which were exempt from registration requirements under the Securities
Act pursuant to Section 4(2) thereof and Rule 506 of Regulation D promulgated
pursuant thereto.

17. In August 1998, the Company issued 97,500 shares of Common Stock to one
of its financial consultants in exchange for services performed through July,
1998. This transaction by the Company did not involve any pubic offering and was
exempt from the registration requirements under the Securities Act pursuant to
Section 4(2) thereof.

18. In October 1998, the Company issued 85,000 shares of Common Stock to
each of its two outside directors. This transaction by the Company did not
involve any pubic offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.

Item 27. Exhibits.

1.1 Form of Underwriting Agreement (**).
1.2 Form of Agreement Among Underwriters (**).
1.3 Form of Selling Agreement (**).
3.1 Restated Certificate of Incorporation of the Registrant (*).
3.2 By-laws of the Registrant (*).
5.1 Form of Opinion of Blau, Kramer, Wactlar & Lieberman, P. C. regarding the
legality of the securities being registered (**).
10.1 1995 Long Term Incentive Plan (*).
10.2 1996 Non-Qualified Stock Option Plan (*).
10.3 Employment Agreement dated June 1, 1995 between the Registrant and
Michael Rosen, as amended (*).
10.4 Consulting Agreement dated November 1, 1996 between the Registrant and
Alma Management Corp. (*)
10.5 Form of Second Private Placement Note (*).
10.6 Form of Second Private Placement Unit Subscription Agreement (*).
10.7 Form of Indemnification Agreement between the Registrant and its officers
and directors (*).
10.8 Credit Agreement dated April 10, 1996, as amended, between the
Registrant and The Penn Traffic Company (*).
10.9 Manufacturing, Delivery & Pricing Agreement dated as of September 11,
1996 between the Registrant and Fieldbrook Farms (*).
10.10 Credit Agreement with Fieldbrook Farms dated March 20, 1997 (*).
10.11 Modification Agreement with The Penn Traffic Company dated April 15,
1997 (*).
10.12 Asset Purchase Agreement among New Yorker Ice Cream Corp., Kerry Group
Ltd., Ted Ketsoglou and the Registrant dated as of July 20, 1998.
<PAGE>

10.13 Asset Purchase Agreement between Jerry's Ice Cream, Inc. and the
Registrant dated as of July 20, 1998.
10.14 Proposed Employment Agreement with Ted Ketsoglou.
10.15 Proposed Employment Agreement with Gerald Schneider.
21 Subsidiaries of Registrant

Name State of Incorporation
---- ----------------------
New York Frozen Desserts, Inc. New York
Natco Brands, Inc. New York

23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P. C. (included in Exhibit
5.1).**
23.2 Consent of Lazar, Levine & Felix
23.3 Consent of Grant Thornton LLP
25.1 Powers of Attorney
- -------

(*) Incorporated by reference to Registration Statement on Form SB-2
(No. 333-21575) filed July 23, 1997.
(**) To be filed by amendment

Item 28. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

Registrant hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information
in the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

Registrant further undertakes that it will:

(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1), or
(4) or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
<PAGE>

(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.

<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form SB-2 and authorized this registration statement
to be signed on its behalf by the undersigned, in Jericho, New York on the 10th
day of November, 1998.

MIKE'S ORIGINAL, INC.

By: /s/ Arthur Rosenberg
Arthur Rosenberg
President
(Chief Executive Officer)

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes an appoints Arthur Rosenberg, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act, this
registration statement was signed by the following persons in the capacities
indicated on November 10, 1998.

Signatures Title
---------- -----

/s/ Arthur G. Rosenberg President, Chief Executive Officer,
Arthur G. Rosenberg Chief Financial Officer, Director

/s/ Frederic D. Heller Director
Frederic D. Heller

/s/ Myron Levy Director
Myron Levy

ASSET PURCHASE AGREEMENT

THIS AGREEMENT, dated as of July 20, 1998 (the "Agreement"), is
entered into by and between MIKE'S ORIGINAL, INC a Delaware corporation
("Purchaser"); and NEW YORKER ICE CREAM CORP., a New York corporation ("NYIC");
and KERRY GROUP LTD., a New York corporation ("Kerry"), the parent corporation
of NYIC; and TED KETSOGLOU, an individual ("Mr. Ketsoglou") and the sole
shareholder of Kerry (Kerry, NYIC and Mr. Ketsoglou shall hereinafter
collectively be referred to as "Seller");

W I T N E S S E T H:

WHEREAS, Seller is engaged in the business of the full service distribution
of ice cream (the "Business"); and

WHEREAS, Seller and Purchaser desire to enter into this Agreement pursuant
to which Seller proposes to sell to Purchaser and Purchaser proposes to purchase
from Seller substantially all of the assets of Seller.

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1
ASSET PURCHASE AND SALE

Section 1.1 Agreement to Sell. At the Closing (as hereinafter defined) and
except as otherwise specifically provided in this Article 1, Seller shall grant,
sell, convey, assign, transfer and deliver to Purchaser, upon and subject to the
terms and conditions of this Agreement, all right, title and interest of Seller
in and to (a) the Business as a going concern, and (b) all of the assets,
properties and rights of Seller, of every kind and description, real, personal
and mixed, tangible and intangible, wherever situated (which Business, assets,
properties and rights are hereinafter collectively referred to as the "Assets
"), free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature except for the
Excluded Assets set forth in Section 1.3 hereof.

Section 1.2 Included Assets. Except as otherwise expressly set forth in
Section 1.3 hereof, the Assets shall include without limitation the following
assets, properties, and rights of Seller:
<PAGE>
(a) All rights under any written or oral contract, agreement, lease,
plan, instrument, registration, license, certificate of occupancy, other permit
or approval of any nature, or other document, commitment, arrangement,
undertaking, practice or authorization except for such agreements that Seller
has notified Purchaser of in writing that Seller cannot transfer to Purchaser
due to Seller's inability to secure the consent to the assignment from the other
party to the Agreement;

(b) All machinery, equipment, tools, vehicles, furniture, furnishings,
leasehold improvements, goods and other tangible personal property, including,
but not limited to, the Assets set forth on Schedule 1.2 annexed hereto;

(c) All technologies, methods, formulations, databases, trade secrets,
know-how, inventions, computer software (including documentation and related
object codes) and other intellectual property;

(d) All office supplies;

(e) All rights under any patent, trademark, service mark, tradename or
copyrights, whether registered or unregistered, and any applications therefor
(the "Marks");

(f) All rights arising under express or implied warranties relating to
the Assets;

(g) All information, files, records, data, plans, contracts and
recorded knowledge, including client and vendor lists related to the foregoing;

(h) An irrevocable option for ten (10) years, which is hereby granted
(i) to purchase all of the issued and outstanding capital stock of NYIC for a
purchase price of One Dollar ($1.00), provided that Seller shall first divest
NYIC of all assets other than contracts for the distribution of ice cream and
other food products, including but not limited to its distribution agreements
with Haagen-Daz, and Baskin-Robbins, which shall be transferred to Purchaser as
an asset of NYIC upon exercise of the option, or (ii) to have NYIC assign to
Purchaser all rights under any or all ice cream or other product distribution
agreements of NYIC with its suppliers, including but not limited to NYIC's
distribution agreements with Haagen-Daz and Baskin-Robbins. This option shall
survive the Closing;

(i) All right, title, licenses and interest in and to all vehicles
identified in Schedule 1.2 that are owned by American Classic Ice Cream Corp., a
New York Corporation, which hereby agrees to transfer the same to Purchaser and
shall execute this Agreement for such purpose.

Section 1.3 Excluded Assets. Notwithstanding anything to the contrary set
forth herein, the Assets shall not include any of the following (hereinafter
collectively referred to as "Excluded Assets"):
<PAGE>
(a) The corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other constituent records relating
to the corporate organization of Seller;

(b) cash and cash equivalents;

(d) The rights which accrue to Seller under this Agreement.

Section 1.4 Agreement to Purchase. At the Closing, Purchaser shall purchase
the Assets from Seller, upon and subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants of
Seller contained herein, in exchange for the Purchase Price (as hereinafter
defined).

Section 1.5 The Purchase Price. The purchase price for the Assets shall be
Two Million Forty- Five ($2,045,000.00) Dollars (the "Purchase Price").

Section 1.6 Payment of Purchase Price. At the Closing, Purchaser shall pay
to NYIC Five Hundred Fifteen Thousand ($515,000.00) Dollars (the "Cash Payment")
of the Purchase Price by certified check which amount reflects a credit against
the Purchase Price equal to $35,000, which represents a sum previously paid by
Purchaser to Seller. The remaining One Million Four Hundred Ninety-Five Thousand
($1,495,000.00) Dollars of the purchase price shall be payable to the NYIC as
follows:

(a) One Hundred Fifty-Six Thousand ($156,000) Dollars shall be payable
in accordance with the terms and conditions of a Promissory Note in
substantially the Form of Exhibit 1.6(a)-1 annexed hereto (the "Note"), which
Note shall have a repayment term of six (6) months and shall not bear interest
and which shall be secured by a purchase money security interest as set forth in
the security agreement (the "Security Agreement") attached hereto as Exhibit
1.6(a)-2.

(b) Six Hundred Fifty Thousand ($650,000) Dollars, plus any additional
amount to be added in accordance with Section 1.6(c) below, shall be payable by
delivery to Seller in shares of Common Stock, par value $.001 per share ("Common
Stock") of the Purchaser, the number of which shall be determined by dividing
$650,000 by 88% of the Market Price of a share of Common Stock (collectively,
the "Shares"). For the purposes of this Agreement, "Market Price" shall mean the
average closing sale price of a share of Common Stock for the ten (10) trading
days prior to the Closing Date.

(c) Purchaser shall pay to the Estate of Joseph Ketsoglou (the
"Creditor"), the holder of the existing $695,000.00 secured loan on the
Business, an amount not to exceed Two Hundred Thousand ($200,000.00) Dollars,
and assume the obligation to repay the Creditor the remainder of such secured
loan (the "Assumed Obligation") over a term of four (4) years at an interest
rate of eight percent (8%) per annum. In the event the unpaid principal balance
on the Assumed Obligation at Closing is less than $695,000.00 as a result of
Seller's payments, the difference shall be added to the cash component of the
Purchase Price.
<PAGE>
Section 1.7 Purchase of Seller's Inventory. In addition to the Purchase
Price, Purchaser shall, withing fifteen (15) days of the Closing, pay NYIC its
cost for the inventory and stock-in-trade of NYIC delivered to Purchaser that is
in good and saleable condition as of the Closing.

Section 1.8 Excluded Liabilities. Notwithstanding anything to the contrary
set forth herein, except as set forth in Schedule 3.4 (b) (Leases), in no event
shall Purchaser assume, incur or become responsible for any liability or
obligation of the Seller of any nature whatsoever, whether now or hereafter
existing. The liabilities and obligations of Seller which Purchaser shall not
assume, incur or become responsible for are referred to herein as "Excluded
Liabilities".

Section 1.9 Prorations. All property and ad valorem taxes, business
licenses, permits, leasehold rentals, utilities and other customarily proratable
expense of Seller relating to the Assets payable prior to or subsequent to the
Closing Date and relating to the period of time both prior to and subsequent to
the Closing Date will be prorated between Purchaser and Seller as of the Closing
Date. If the actual amount of any proratable item is not known as of the Closing
Date, such proration will be based on the previous year's assessment of such
item or such other reasonable basis for estimating such amount as the parties
may select, and the parties agree to adjust such proration and pay any
underpayment or reimburse any overpayment promptly after the actual amount
becomes known. In the event any sales, use, excise, value added or other similar
taxes become due as a result of the transactions contemplated by this Agreement,
Purchaser and Seller shall each be responsible for and shall pay one-half of all
such taxes.

Section 1.10 Allocation of Purchase Price. The parties shall agree on the
allocation for tax purposes of the Purchase Price to be paid for the Assets
prior to or upon the Closing.

ARTICLE 2
CLOSING; ITEMS TO BE DELIVERED; FURTHER ASSURANCES

Section 2.1 Closing. The consummation of the transactions contemplated by
this Agreement is herein referred to as the "Closing". The "Closing Date" shall
be the date on which the Closing occurs. The Closing shall occur within ten (10)
business days of the satisfaction or waiver of the conditions set forth in
Article 6 hereof, but in no event shall the Closing Date be a date which is
later than December 15, 1998. The Closing shall take place at the office of
Purchaser's securities counsel located on Long Island, New York, or at such
other place upon which the Purchaser and Seller shall mutually agree.

Section 2.2 Items to be Delivered at Closing. At the Closing and subject to
the terms and conditions herein contained:
<PAGE>
(a) Seller shall deliver to Purchaser the following:

(i) Such bills of sale with covenants of warranty, assignments,
endorsements, and other good and sufficient instruments and
documents of conveyance and transfer, in form reasonably
satisfactory to Purchaser and its counsel, as shall be
necessary and effective to transfer and assign to, and vest
in purchaser all of Seller's right, title and interest in
and to the Assets, including without limitation, (A) good
and valid title in and to all of the Assets owned by Seller,
(B) good and valid leasehold interest in and to all of the
Assets leased by Seller as lessee, and (C) all of Seller's
rights under all agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments and other
documents included in the Assets to which Seller is a party
or by which it has rights on the Closing Date; and

(ii) All of the agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments, computer
programs and software, data bases whether in the form of
computer tapes or otherwise, related object and (to the
extent available) source code, manuals and guidebooks, price
books and price lists, customer and subscriber lists,
supplier lists, sales records, files, correspondence, legal
opinions, rulings issued by governmental entities, and other
documents, books, records, papers, files, office supplies
and data belonging to Seller which are part of the Assets;

(iii)Audited financial statements for Seller's last two fiscal
years; and

(iv) Estoppel certificates from the Creditor for the Assumed
Obligation and from the applicable lessors set forth in
Schedule 3.4 (b) indicating the total principal and lease
payments due under the Assumed Obligation and such leases;

(v) A Lease in form and substance satisfactory to Purchaser for
the current principal place of business of Seller as
described in Section 6.1 (j) hereof;

(vi) Certificates of the corporate secretaries of NYIC and Kerry
certifying that all transactions contemplated hereby have
been duly approved by the Board of Directors and
shareholders of each corporation and that the officer of
each corporation executing this Agreement is duly authorized
to do so;

(vii)Such other documentation as Purchaser may reasonably require
to assure the continuation of certain franchises which
Purchaser determines to be necessary for the continued
operations of Seller's business;
<PAGE>
and simultaneously with such delivery, all such reasonable steps will be taken
as may be required to place Purchaser in actual possession and operating control
of the Assets.

(b) Purchaser shall deliver to Seller the following:

(i) The Cash Payment;

(ii) The Note;

(iii)The Shares;

(iv) The Security Agreement (as defined in Section 1.6(b)); and

(v) An agreement under which Purchaser assumes the Assumed
Obligation.

Section 2.3 Further Assurances. Seller from time to time after the Closing,
at Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably request in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets. Each of the parties hereto will cooperate with the other and execute and
deliver to the other such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

NYIC represents and warrants to Purchaser as follows:

Section 3.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. Except as set
forth in Schedule 3.1, Seller has no subsidiaries and there are no other
entities which Seller directly or indirectly controls or is controlled by and
Seller is not a party to any joint venture and is not a partner of any
partnership. Seller is duly qualified to transact business, and is in good
standing, as a foreign corporation in each jurisdiction where the character of
its activities requires such qualification.
<PAGE>

Section 3.2 Authorization. Seller has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Seller and the performance by Seller of its
obligations hereunder and the consummation of the transactions provided for
herein have been duly and validly authorized by all necessary corporate action
on the part of Seller. The Board of Directors and shareholders of Seller have
approved the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and constitutes the valid and binding
agreement of Seller, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.

Section 3.3 Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, (i) any term or provision of the
Certificate of Incorporation or Bylaws of Seller; (ii) any contract or lease to
which Seller is a party; (iii) any judgment, decree or order of any court or
governmental authority or agency to which Seller is a party or by which Seller
or any of its respective properties is bound, or (iv) any statute, law,
regulation or rule applicable to Seller. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
agency or public or regulatory unit, agency, body or authority with respect to
Seller is required in connection with the execution, delivery or performance of
this Agreement by Seller or the consummation of the transactions contemplated
hereby.

Section 3.4 Ownership of Assets and Related Matters.

(a) Real Property. The Seller does not own any real property nor is
any ownership interest in real property included in the Assets.

(b) Leases. Schedule 3.4(b) sets forth a true and complete list of all
leases and agreements, including licensing rights, of Seller granting possession
of or rights to real or personal property included in the Assets (the "Scheduled
Leases and Licenses"). All such Scheduled Leases and Licenses are in full force
and effect and constitute the legal, valid, binding and enforceable obligations
of Seller, and are legal, valid, binding and enforceable in accordance with
their respective terms with respect to each other party thereto, in each case to
the extent material to the business and operations of the Business. There are no
existing defaults of Seller with respect to such Scheduled Leases and Licenses
or, to the knowledge of the Seller, of any of the other parties thereto.
<PAGE>
(c) Personal Property. Seller has good and marketable title to all of
the Assets, and Seller owns the Assets free and clear of all liens, pledges,
security interests, charges, claims, restrictions and encumbrances of any nature
whatsoever.

(d) Necessary Assets. The Assets constitute all of the assets
necessary to conduct the operations of the Business in accordance with Seller's
past practices. As of the date hereof, all of the Assets are in good operating
condition and repair subject to normal wear and maintenance, are usable in the
regular and ordinary course of business and conform to all applicable laws,
ordinances, codes, rules and regulations applicable thereto.

(e) No Third Party Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of the Assets or
any interest therein.

Section 3.5 Legal Proceedings. Except as set forth in Schedule 3.5, there
are no suits, actions, claims, proceedings or investigations pending, or, to the
best knowledge of the Seller, threatened against, relating to or involving the
Seller, the Business or the Assets before any court, arbitrator or
administrative or governmental body. The Business is not subject to any
judgment, decree, injunction, rule or order of any court, and, to the knowledge
of the Seller, the Seller is not subject to any governmental restriction, which
is reasonably likely to cause a material limitation on Purchaser's ability to
acquire the Assets or operate the Business after the Closing. All suits,
actions, claims, proceedings or investigations of Seller, including, but not
limited to those set forth in Schedule 3.5, shall remain the sole obligation and
responsibility of Seller before and after the Closing.

Section 3.6 Compliance with Law. Seller has all material authorizations,
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary to carry on the Business as it is currently being
conducted, to own the Assets and to transfer the Assets to Purchaser.

Section 3.7 Insurance. Seller believes that the Assets and the Business
have been and are insured by financially sound and reputable insurers in such
amounts and against such risks as are reasonable in relation to its business.
Seller has made available to Purchaser true and complete copies of all insurance
policies covering the Assets and/or the Business. Seller shall bear all risk of
loss to the Business and the Assets until the Closing.

Section 3.8 Environmental Matters. The operations of the Business are in
compliance in all material respects with all statutes, regulations and
ordinances relating to the protection of human health and the environment. There
has been no release of a hazardous substance into the environment at any
property owned, leased or used by the Seller (the "Premises") including, without
limitation, any such release in the soil or groundwater underlying the Premises.
There is no asbestos, polychlorinated biphenyls or underground storage tanks
located on the Premises and there have been no releases of asbestos,
polychlorinated biphenyls or materials stored in underground storage tanks,
including, without limitation, petroleum or petroleum-based materials. The
Seller has not received notice of any violation of any environmental statute or
regulation nor has it been advised of any claim or liability pursuant to any
environmental statute or regulation brought by any governmental agency or
private party with respect to the Assets or the operation of the Business.
<PAGE>

Section 3.9 Patents, Trademarks, Trade Names. Schedule 3.9 sets forth a
true and complete list of all Marks used or owned by Seller. Seller owns, or has
the right to use pursuant to valid and effective agreements, all Marks, and all
such rights shall be assigned and transferred to Purchaser in connection with
the consummation of the transactions contemplated hereby. To the best knowledge
of the Seller, (i) no claims are pending against Seller by any person with
respect to the use of any Mark or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same, and (ii) the
current use by Seller of the Mark does not infringe on the rights of any third
party.

Section 3.10 Bulk Sales Compliance. Except as set forth in Sections 1.6 and
1.8 hereof, Seller shall be responsible for and shall satisfy all claims of all
creditors of Seller arising out of transactions occurring prior to Closing.

Section 3.11 Brokers, Finders and Investment Bankers. Neither Seller nor
any of its respective officers, directors or employees has employed any broker,
finder or investment banker or incurred any liability for any investment banking
fees, financial advisory fees, brokerage fees or finders' fees in connection
with the transactions contemplated hereby.

Section 3.12 Other Liabilities. Other than the Assumed Obligation, there
are no other obligations, liabilities or claims associated with the Assets or
the Business that shall not remain with Seller and remain Seller's obligation
responsibility before and after the Closing.

Section 3.13 Disclosure. No representation, warranty or covenant made by
Seller in this Agreement, or the Schedules or Exhibits attached hereto contains
an untrue statement of a material fact or omits to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

Section 4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.

Section 4.2 Authorization. Upon the duly and validly obtained approval of
the execution, delivery and performance of this Agreement from the Board of

<PAGE>

Directors of the Purchaser: (i) Purchaser shall have full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby;
(ii) the execution and delivery of this Agreement by Purchaser and the
performance by Purchaser of its obligations hereunder and the consummation of
the transactions provided for herein shall have been duly and validly authorized
by all necessary corporate action on the part of Purchaser; and (iii) this
Agreement shall have been duly executed and delivered by Purchaser and shall
constitute the valid and binding agreement of Purchaser, enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies.

Section 4.3 Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision of
the Certificate of Incorporation or Bylaws of Purchaser, (ii) any contract,
agreement, commitment or understanding to which Purchaser is a party or to which
it or any of its properties is subject, (iii) any judgment, decree or order of
any court or governmental authority or agency to which Purchaser is a party or
by which Purchaser or any of its respective properties is bound, or (iv) any
statute, law, regulation or rule applicable to Purchaser. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental agency or public or regulatory unit, agency, body or authority with
respect to Purchaser is required in connection with the execution, delivery or
performance of this Agreement by Purchaser or the consummation of the
transactions contemplated by this Agreement by Purchaser.

Section 4.4 Disclosure. No representation, warranty or covenant made by
Purchaser in this Agreement or the Schedules or Exhibits attached hereto
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.

Section 4.5 Brokers, Finders Investment Bankers. Neither Purchaser nor any
of its respective officers, directors or employees has employed any broker or
finder in connection with this transaction.

Section 4.6 Legal Proceedings. Except as set forth in Schedule 4.6, there
are no suits, pending, or, to the best knowledge of the Purchaser, threatened
against, relating to or involving the Purchaser, before any court.
<PAGE>

ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS

Section 5.1 Conduct of Business by Seller. From the date hereof to the
Closing Date, Seller will, except as required in connection with the
transactions contemplated by this Agreement or consented to in writing by
Purchaser:

(a) Except and only to the extent necessary to secure new product
distribution opportunities, carry on the Business in the ordinary and regular
course in substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any agreement, transaction or activity
or make any commitment with respect to the Business except those in the ordinary
and regular course of business and not otherwise prohibited under this Section
5.1 and except as otherwise consented to in writing by Purchaser;

(b) Use its reasonable efforts to preserve intact the goodwill and
business organization of the Business, to keep the officers and employees of the
Business available to Purchaser and to preserve the relationships of the
Business with customers, suppliers and others having business relations with the
Business;

(c) Not (i) sell any of the Assets, (ii) create, incur or assume any
indebtedness secured by the Assets, or (iii) grant, create, incur, or suffer to
exist any liens or encumbrances on the Assets which did not exist on the date
hereof;

(d) Not amend, modify or extend in any manner the terms of any
employment agreement with any employee of Seller;

(e) Perform in all material respects all of its obligations under all
Scheduled Leases (except those being contested in good faith) and not enter
into, assume or amend any contract or commitment that would be a Scheduled
Lease;

(f) Use its reasonable efforts to continue to maintain and service the
Assets used in the conduct of the Business in the same manner as has been its
consistent past practice; and

(g) Use its reasonable efforts to maintain its inventory of products
and stock-in-trade at normal levels in the ordinary course of business.

(h) Cooperate with Purchaser in the consummation of the purchase by
Purchaser of certain other businesses that Purchaser has identified to Seller.

<PAGE>

Purchaser or its affiliate by no later than October 15, 1998. Purchaser will
promptly notify Seller upon its receipt of the Bridge Financing. Purchaser shall
make all reasonable efforts to file with the Securities and Exchange Commission
a Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act") for secondary financing ("Filing Date") in the gross amount of
at least $3,000,000 by not later than October 15, 1998 (hereinafter referred to
as "Secondary Financing"). In the event Purchaser shall fail to make reasonable
efforts to file the Registration Statement on or before the Filing Date, Seller
can either (i) terminate this Agreement pursuant to Section 8.1 pursuant to
written notice delivered on or prior to October 20, 1998 or (ii) accept the
$15,000 payments described below. In the event that the closing for the
Secondary Financing shall not occur on or before November 1, 1998, Purchaser
shall pay to Seller $15,000 on the first business day of every month, commencing
November 1998, pro-rated through the Closing Date.

Section 5.3 Inspection and Access to Information. Between the date of this
Agreement and the Closing Date, Seller will provide Purchaser and its
accountants, counsel and other authorized representatives full access, during
reasonable business hours and under reasonable circumstances to any and all of
its employees, premises, properties, contracts, commitments, books, records and
other information (including tax returns filed and those in preparation) and
will cause its officers to furnish to Purchaser and its authorized
representatives any and all financial, technical and operating data and other
information pertaining to the Business, as Purchaser shall from time to time
reasonably request.

Section 5.4 Reasonable Efforts; Further Assurances; Cooperation. Subject to
the other provisions of this Agreement, the parties hereto shall each use their
reasonable, good faith efforts to perform their obligations herein and to take,
or cause to be taken or do, or cause to be done, all things necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the transactions contemplated herein to be effected on the Closing Date in
accordance with the terms hereof and shall cooperate fully with each other and
their respective officers, directors, employees, agents, counsel, accountants
and other designees in connection with any steps required to be taken as a part
of their respective obligations under this Agreement, including without
limitation:

(a) Each of Seller and Purchaser shall cause to be taken, all actions
and do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to obtain any required approval of any federal,
state, or local governmental agency or regulatory body with jurisdiction over
the transactions contemplated by this Agreement.

(b) Each party shall give prompt written notice to the other parties
hereto of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Closing Date or that will or may result
in the failure to satisfy any of the conditions specified in Article 6 hereof
and (ii) any failure of such party, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
<PAGE>

(c) Seller shall secure all necessary consents of third parties to the
assignment to Purchaser of all Scheduled Leases included in the Assets.

Section 5.5 Maintenance of Seller's Corporate Existence. From the date
hereof to the Closing Date, and thereafter if requested by Purchaser, Seller
shall maintain its corporate existence in good standing with the jurisdiction of
its incorporation and enter into any agreement with Purchaser for no additional
consideration as is reasonably necessary to provide Purchaser with the full
benefit all product distribution and other agreements to which Seller is a party
and Seller shall resell and deliver to Purchaser all products purchased under
any such distribution agreement at Seller's Cost.

Section 5.6. Appointment to Board of Directors. Upon the Closing, the
Purchaser shall use all reasonable efforts to cause its Board of Directors to
appoint Ted Ketsoglou as a member of its Board of Directors and to provide
directors and officers liability insurance to Mr. Ketsoglou and its other
directors.

Section 5.7 Right to Repurchase Common Stock. During the period commencing
on the Closing Date and ending on the date which is 18 months from the Closing
Date, Purchaser shall have the right to repurchase at the Market Price, from
time-to-time, in whole or in part, the Shares delivered to Seller in payment of
the Purchase Price. Purchaser shall exercise this right by delivery of written
notice to Seller (a "Repurchase Notice") which sets forth the number of Shares
Purchaser desires to repurchase and the date on which the repurchase shall be
consummated (a "Repurchase Date"). On any Repurchase Date, Seller shall deliver
to Purchaser the number of Shares specified in the Repurchase Notice and
Purchaser shall deliver to Seller an amount equal to such number of Shares
multiplied by the Market Price, together with a certificate evidencing the
balance, if any, of any Shares not repurchased.

Section 5.8 Price Guarantee. Purchaser agrees that if, on the date which is
18 months following the Closing Date, the Value (as defined below) of a Share is
not at least equal to the Market Price, then Purchaser will issue to Seller
additional shares of Common Stock so that the aggregate Value of the Shares and
such additional shares of Common Stock shall be at least equal to (a) the number
of Shares multiplied by the Market Price minus (b) the number of Shares
repurchased under Section 5.7 multiplied by the Market Price of such repurchased
Shares. In the event that the number of additional shares of Common Stock
required to be issued hereunder pursuant to the terms of this Section 5.8 is not
a whole number, then the number of shares to be issued will be rounded to the
nearest whole number, and no fractional shares will be issued. Purchaser will
issue such additional shares of Common Stock within ten (10) business days
following the date set forth above. For the purposes of this Section 5.8 and in
Section 5.9, the Value of the Shares shall mean the average of the closing sale
price of shares of Common Stock for the ten (10) trading days preceding the
third business day prior to the applicable date. The price guarantee contained
in this Section 5.8 shall be secured by a security interest as set forth in the
Security Agreement.
<PAGE>

Section 5.9 Sale of Shares. Purchaser and Seller agree that if, on the date
which is 18 months following the Closing Date, Seller is still the owner of any
Shares, Seller will sell such Shares and any shares of Common Stock issued to
Seller pursuant to Section 5.8 through a broker designated by Purchaser. In the
event that the average price per share of Common Stock received by Seller upon
such sale is less than the Market Price, Purchaser will deliver to Seller in
cash, within 60 days of such 18-month date, the amount of such difference
multiplied by the number of Shares so sold by Seller. In the event that the
average price per share of Common Stock exceeds the Market Price, Seller shall
be entitled to receive such excess amount.

Section 5.10 Restrictions on Sale. All offers and sales of the Shares prior
to the expiration of the 18-month period commencing on the Closing Date of this
Agreement shall only be made with the written consent of Purchaser in its sole
discretion, provided, that in no event shall any such sale be made other than
pursuant to registration of the Shares under the Securities Act or pursuant to
an exemption from the registration requirements of the Securities Act and
otherwise in compliance with applicable securities laws. Seller shall be
entitled to offer and sell Shares during such 18-month period without
Purchaser's written consent following an "Event of Default" by Purchaser under
the Security Agreement, as defined therein.

ARTICLE 6
CONDITIONS TO CLOSING

Section 6.1 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the acquisition of the Business and the Assets and to assume
the Assumed Obligation shall be subject to the fulfillment at or prior to the
Closing of each of the following additional conditions:

(a) Representations and Warranties. The representations and warranties
of Seller set forth in Article 3 of this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date as through made on and
as of the Closing Date.

(b) Performance of Obligations of Seller. Seller shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement.

(c) Authorization of Transactions. All corporate action necessary by
Seller to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken.

(d) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made.

(e) Authorization by Purchaser's Board of Directors. Purchaser shall
have obtained the approval and authorization of the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby from its Board of Directors.
<PAGE>

(f) Employment Agreement with Ted Ketsoglou. Purchaser shall have
entered into, or shall enter into on the Closing Date, an employment agreement
with Ted Ketsoglou, in substantially the form of Exhibit 6.1(f) attached hereto
(the "Employment Agreement") and the Purchaser shall have obtained the approval
and authorization of the execution, delivery and performance of the Purchaser
Employment Agreement from its Board of Directors.

(g) Financing. On or before October 15, 1998, Purchaser and/or its
affiliate shall have obtained Bridge Financing. In addition, Purchaser shall
have filed for the Secondary Financing as provided for in Section 5.2 and shall
have obtained the Secondary Financing at or prior to Closing.

(h) Due Diligence Period. On or before the date which is forty-five
(45) days subsequent to the date of execution of this Agreement, Purchaser shall
have had access to the financial and business records of Seller for Purchaser's
due diligence investigation of Seller and shall have concluded based on such
records, in its sole and absolute discretion, that there is no circumstance that
would make the transaction contemplated by this Agreement economically and
financially unfeasible for Purchaser.

(i) Certificates. Seller shall furnish Purchaser with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.1(a), (b), (c) and (d).

(j) Leases. Purchaser shall have received consents to assignment of
all Scheduled Leases or written waivers of the provisions of any Scheduled
Leases requiring the consents of third parties and Purchaser shall have entered
into an acceptable one (1) year lease with Seller's landlord at 1122-1130 and
1161-1165 Southern Boulevard, Bronx, New York (the "Premises"), for the lease of
the Premises at a monthly rental of $7,500.00 plus electric. At the end of the
first six months of the lease term the monthly rental shall be increased to a
total monthly rental of $8,400 per month plus electric. The specifics of the
delineation of the respective leases for the various leased premises are as
shown on Schedule 6.1(j) Purchaser shall be entitled to all rents from the
current sub-tenants of such premises during the term of such lease, and Seller
or its landlord shall remain responsible for all taxes, maintenance costs and
other fees and expenses related to such Premises during the term of the lease,
except any and all electrical and freezer maintenance. The parties agree that
the landlord of the Premises may allocate such rental income as it sees fit.

(k) Assumed Obligation. Seller shall have received the consent of the
Creditor to Purchaser's assumption of the Assumed Obligation under the terms set
forth herein.

(l) Audited Financial Statements. Purchaser shall have received
audited financial statements prepared accordance with generally accepted
accounting principles for Seller's last two fiscal years that indicate a sales
volume substantially in accordance with that indicated in the unaudited
financial statements previously made available by Seller to Purchaser. Further,
Purchaser shall have received year-to-date financial statements of Seller for
1998 that indicate an annualized sales volume substantially the same as that of
each of Seller's previous two fiscal years.
<PAGE>

(m) Condition of Assets. All of the Assets shall be in good condition
and shall not have been subject to any loss or casualty, or, in the event of any
loss or casualty, Purchaser, in its sole and absolute discretion, shall elect to
accept substitute assets or reasonable compensation for such loss or casualty
from Seller or Seller's insurer.

Section 6.2 Conditions to Obligations of Seller. The obligations of Seller
to effect the sale of the Business and the Assets and the assignment of the
Assumed Obligation shall be subject to the fulfillment at or prior to the
Closing of each of the following additional conditions:

(a) Representations and Warranties. The representations and warranties
of Purchaser set forth in Article 4 of this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as through made on
and as of the Closing Date.

(b) Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement.

(c) Authorization of Transactions. All corporate action necessary by
Purchaser to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken, including, but not limited to, the approval and
authorization of the execution, delivery and performance of this Agreement and
the Employment Agreement by the Board of Directors of the Purchaser and of
Mikes.

(d) Consents. Except as disclosed in writing to Purchaser by Seller,
all consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made.

(e) Employment Agreement with Ted Ketsoglou. Purchaser shall have
entered into, or shall enter into on the Closing Date, the Employment Agreement
with Ted Ketsoglou in substantially the form of Exhibit 6.1(e) attached hereto.

(f) Financing. Purchaser shall have obtained the Bridge Financing, met
its obligations as to the Registration Statement Filing Date in accordance with
Section 5.2 and shall have received or at Closing will receive the Secondary
Financing.

(g) Certificates. Purchaser shall furnish Seller with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.2(a), (b) and (c).
<PAGE>

ARTICLE 7
ADDITIONAL CLOSING OBLIGATIONS

[INTENTIONALLY OMITTED]

ARTICLE 8
TERMINATION

Section 8.1 Termination and Abandonment. This Agreement may be terminated
at any time prior to the Closing:

(a) by mutual agreement of the Boards of Directors of the Purchaser and
Seller;

(b) by Seller, if the conditions set forth in Section 5.2 or 6.2 hereof
shall not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) by Purchaser on or before the Closing Date;

(c) by Purchaser, if the conditions set forth in Section 6.1 hereof shall
not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by is nature cannot
be cured or eliminated) by Seller on or before the Closing Date;

(d) by either Seller or Purchaser if (i) the Bridge Financing has not been
received by October 15, 1998; (ii) the Registration Statement has not been filed
by the Filing Date; or (iii) the Secondary Financing has not closed by the Date
of Closing.

(e) by Purchaser if Purchaser determines as a result of its due diligence
investigation of Seller that the transaction contemplated by this Agreement is
not economically or financially feasible for Purchaser.

Section 8.2 Specific Performance and Other Rights. The parties hereto each
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that either party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
<PAGE>

Section 8.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8 or as a result of Purchaser's diligence
investigation or due to Purchaser's failure to obtain the Bridge Financing or to
file the Registration Statement in accordance with Section 5.2 or close on
Secondary Financing by the Closing Date, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or its
respective officers, directors or stockholders, except for obligations under
Section 10.10 and this Section, all of which shall survive the termination.
Notwithstanding the foregoing, nothing contained herein shall relieve any party
from liability for any breach of any covenant or agreement in this Agreement.

ARTICLE 9
INDEMNIFICATION

Section 9.1 Indemnification Obligations of Seller. From and after the
Closing, each of NYIC, Kerry and Mr. Ketsoglou shall jointly and severally,
indemnify and hold harmless the Purchaser and its subsidiaries and affiliates
(including Purchaser, each of their respective officers and directors,
employees, agents and representatives and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Purchaser
Indemnified Parties") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:

(a) Any Excluded Liability or any and all other liabilities and
obligations of Seller of any nature whatsoever, including but not limited to
claims under Article 6 (Bulk Transfers) of the New York Uniform Commercial Code;

(b) Any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Purchaser Indemnified Party that relate to Seller, the Assets or the Business to
the extent the principal event giving rise thereto occurred prior to the Closing
Date or which result from or arise out of any action or inaction prior to the
Closing Date of Seller or any affiliate, officer, director, employee, agent,
representative or subcontractor of Seller;

(c) Any breach of any representation, warranty, covenant, agreement or
undertaking made by Seller in this Agreement or in any certificate, agreement,
exhibit, schedule or other writing delivered by Seller to Purchaser in
connection with the matters contemplated hereby or pursuant to the provisions
hereof (collectively, the "Seller Ancillary Documents"); or
<PAGE>

(d) Any fraud, willful misconduct, bad faith or any intentional breach
of any representation, warranty, covenant, agreement or undertaking made by the
Seller in this Agreement or the Seller Ancillary Documents.

Section 9.2 Liquidated Damages. Except as set forth in Sections 1.6 and 1.8
hereof, in the event Purchaser makes any payment to any creditor of Seller,
Seller, in addition to its indemnification responsibilities as provided herein,
shall pay to Purchaser, and shall be jointly and severally liable to Purchaser
for, liquidated damages equal to twenty percent (20%) of the aggregate amount
paid by Purchaser to each creditor of Seller.

Section 9.3 Indemnification Obligations of Purchaser. From and after the
Closing, Purchaser shall indemnify and hold harmless Seller and its subsidiaries
and affiliates, each of their respective officers, directors, employees, agents
and representatives and each of the heirs, executors, successors and assigns of
any of the foregoing (collectively, the "Seller Indemnified Parties") from,
against and in respect of any and all claims, liabilities, obligations, losses,
costs, expenses, penalties, fines and other judgments (at equity or at law) and
damages whenever arising or incurred (including, without limitation, amounts
paid in settlement, costs of investigation and reasonable attorneys' fees and
expenses) arising out of or relating to:

(a) Any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Seller Indemnified Party that relate to Purchaser or the Business to the extent
the principal event giving rise thereto occurred after the Closing Date or which
result from or arise out of any action or inaction after the Closing Date of
Purchaser or any affiliate, officer, director, employee, agent, representative
or subcontractor of Purchaser;

(b) Any breach of any representation, warranty, covenant, agreement or
undertaking made by Purchaser in this Agreement or in any certificate,
agreement, exhibit, schedule or other writing delivered by Purchaser to Seller
in connection with the matters contemplated hereby or pursuant to the provisions
hereof (collectively, the "Purchaser Ancillary Documents"); or

(c) Any fraud, willful misconduct, bad faith or any intentional breach
of any representation, warranty, covenant, agreement or undertaking made by the
Purchaser in this Agreement or the Purchaser Ancillary Documents.

Section 9.4 Notice and Opportunity to Defend. Each party seeking
indemnification hereunder shall provide prompt written notice to the other of
the indemnified party's receipt of a claim for which indemnification is sought
and shall permit the indemnifying party to defend against such claim, provided
that the indemnifying party shall remain liable for all damages, claims, costs
and expenses incurred by the indemnified party notwithstanding the indemnifying
party's defense.

Section 9.5 Jurisdiction and Forum.
<PAGE>

(a) By the execution and delivery of this Agreement, each Indemnifying
Party irrevocably designates and appoints each of the parties set forth under
its name below as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any state or federal court in the State of New York.

Seller: Spanton & Parsoff LLP
------ 425 Broad Hollow Road
Melville, NY 11747
Attention: Neil M. Parsoff, Esq.

Purchaser: Mikes Original, Inc.
--------- 366 North Broadway
Suite 410
Jericho, NY 11753
Attention: Arthur Rosenberg

In addition, each party agrees that service of process upon the above-designated
individuals shall be deemed in every respect effective service of process upon
such party in any such suit or proceeding. The foregoing shall not limit the
rights of any party to serve process in any other matter permitted by law.

(b) The parties hereto hereby agree that the appropriate forum and
venue for any disputes between any of the parties hereto arising out of this
Agreement shall be any state or federal court in the State of New York and each
of the parties hereto hereby submits to the personal jurisdiction of any such
court. The foregoing shall not limit the rights of any party to obtain execution
of judgment in any other jurisdiction. The parties further agree, to the extent
permitted by law, that a final and unappealable judgment against any of them in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.

ARTICLE 10
MISCELLANEOUS PROVISIONS

Section 10.1 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
deemed given or made on the date delivered if delivered in person, on the date
initially sent if delivered by telecopy transmission followed by mailed
confirmation, on the date delivered if delivered by a nationally recognized
overnight courier service or on the date sent if mailed by certified mail
(return receipt requested) (with postage and other fees prepaid) as follows:
<PAGE>

To Purchaser: Mike's Original, Inc.
366 North Broadway
Suite 410
Jericho, NY 11753

With copy to: David H. Lieberman
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11573

To Seller: New Yorker Ice Cream Corp.
1122 Southern Boulevard
Bronx, NY 10459

With copy to: Spanton & Parsoff LLP
425 Broad Hollow Road
Melville, NY 11747
Attention: Neil M. Parsoff, Esq.

or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing.

Section 10.2 Schedules and Exhibits. All Schedules and Exhibits annexed
hereto are hereby incorporated into this Agreement and are hereby made a part
hereof as if set out in full in this Agreement.

Section 10.3 Assignment; Successors in Interest. No assignment or transfer
by Purchaser or Seller of their respective rights and obligations hereunder
prior to the Closing shall be made except with the prior written consent of the
other parties hereto. Notwithstanding the foregoing, Purchaser shall have the
right to assign this Agreement without Seller's consent to any entity whose
capital stock is publicly traded and to whose Board of Directors Mr. Ketsoglou
has been elected or appointed or any entity controlled by the principal
shareholders of Purchaser. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their permitted successors and assigns,
and any reference to a party hereto shall also be a reference to a permitted
successor or assign.

Section 10.4 Investigations; Representations and Warranties. The
representations, warranties and covenants of Seller and Purchaser set forth in
this Agreement shall not be extinguished by the Closing and shall survive the
Closing Date. Notwithstanding anything to the contrary set forth in this Section
10.4, (i) the indemnification obligations of Seller and Purchaser set forth in
Sections 9.1 and 9.5, respectively, shall survive the Closing and shall
terminate on the expiration of the applicable statutes of limitation relative to
the liability relating to such indemnification obligations and (ii) this Section
10.4 shall not limit or restrict Seller or Purchaser's remedy against the other
or any other person for fraud, willful misconduct, bad faith or any other
intentional breach of any representation, warranty, covenant or agreements
contained herein.
<PAGE>

Section 10.5 Captions. The titles and captions contained in this Agreement
are inserted herein only as a matter of convenience and for reference and in no
way define, limit, extend or describe the scope of this Agreement or the intent
of any provision hereof.

Section 10.6 Controlling Law; Integration; Amendment.

(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without reference to
New York's choice of law rules. This Agreement supersedes all negotiations,
agreements and understandings among the parties with respect to the subject
matter hereof and constitutes the entire agreement among the parties hereto.

(b) Amendments to this Agreement may be proposed by the parties hereto
by or pursuant to action taken by their respective Boards of Directors at any
time; provided, however, that this Agreement may not be amended, modified or
supplemented except by written agreement executed by each of the parties hereto.

Section 10.7 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.

Section 10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.

Section 10.9 Waiver. At any time prior to the Closing, the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, may, to
the extent legally permitted: (i) extend the time for the performance of any of
the obligations or other acts of any other party; (ii) waive any inaccuracies in
the representations or warranties of any other party contained in this Agreement
or in any document or certificate delivered pursuant hereto; (iii) waive
compliance or performance by any other party with any of the covenants,
agreements or obligations of such party contained herein; and (iv) waive the
satisfaction of any condition that is precedent to the performance by the party
so waiving of any of its obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. A waiver by one party
of the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty. A waiver
by any party of the performance of any act shall not constitute a waiver of the
performance of any other act or an identical act required to be performed at a
later time.
<PAGE>

Section 10.10 Fees and Expenses. Purchaser shall pay its own fees, costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel. Seller shall pay its own fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel, except that (i) Purchaser shall select and
engage an accounting firm and shall be responsible for the payment of the
accounting fees for the auditing of Seller's financial statements for its last
two fiscal years and (ii) at Closing, Purchaser will pay the reasonable legal
fees of counsel to Seller and to Jerry's Ice Cream Co., Inc. incurred in
connection with the Asset Purchase Agreement dated as of July 20, 1998 between
the Purchaser and Jerry's Ice Cream Co., Inc. in an amount not to exceed an
aggregate $30,000. In the event that Purchaser is unable to secure the Secondary
Financing on or prior to the Closing Date and all other conditions to
Purchaser's obligation to close shall have been satisfied by such date, then, in
such event Purchaser shall pay Seller's actual and reasonable attorneys fees
incurred in preparation of this Agreement in an amount not to exceed $5,000.00.
Purchaser shall be responsible for any reasonable legal fees incurred by Seller
in connection with any enforcement by Seller of its rights under Section 5.8 of
this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the date first above written.

(corporate seal) MIKE'S ORIGINAL, INC.

Attest:
By:_________________________ By:___________________________________

Title:______________________ Title:_________________________________

(corporate seal) KERRY GROUP LTD.

Attest:

By:________________________ By:____________________________________

Title:_____________________ Title:__________________________________

<PAGE>

(corporate seal) NEW YORKER ICE CREAM CORP.

Attest:

By: ________________________ By:___________________________________

Title: _____________________ Title: _________________________________

________________________________________
Ted Ketsoglou, an individual

(corporate seal) AMERICAN CLASSIC ICE CREAM CORP.

Attest:

By:_________________________ By:___________________________________

Title:______________________ Title:__________________________________

<PAGE>

EXHIBITS
--------

EXHIBIT 1.6(a)-1 Promissory Note

EXHIBIT 1.6(a)-2 Security Agreement

EXHIBIT 6.1(e) Employment Agreement between Mike's
Original, Inc. and Ted Ketsoglou

SCHEDULES
---------

SCHEDULE 1.2 Physical Assets

SCHEDULE 3.1 Subsidiaries and Joint Ventures

SCHEDULE 3.4(b) Scheduled Leases and Licenses

SCHEDULE 3.5 Seller's Legal Proceedings

SCHEDULE 3.9 Patents, Trademarks, Service Marks,
Tradenames or Copyrights

SCHEDULE 4.5 Purchaser's Legal Proceedings

SCHEDULE 6.1(j) Lease Schedule

<PAGE>

SCHEDULE 1.2

Physical Assets

New Yorker Ice Cream Corp.

1. 11 Trucks - matching truck bodies (as follows):

<TABLE>
<CAPTION>
TRUCK PLATE VIN MAKE YEAR COMP
<S> <C> <C> <C> <C> <C>
20 77259AE 1HTLAM5HHA16279 INTER 1987 A/C
21 77257AE 1HTLAHM2HH476304 INTER 1987 A/C
23 77261AE 1HTLAZPM5JH534656 INTER 1988 A/C
24 77258AE 1HTLAZPM9JH534658 INTER 1988 A/C
25 77260AE 1HTLAZPM7JH534660 INTER 1988 A/C
26 77259AE 1HTLAZPMOJH53459 INTER 1988 NY
27 XL1687 1HTLAHEK1GHA19984 INTER 1986 NY
29 NU3970 1HTSAZPM2MH381783 INTER 1991 NY
30 LS6133 1HTSAZPM4M381784 INTER 1991 NY
22 DR6455 1HTLAZPM7JH534657 INTER 1988 NY
51 67992AA ZCFEC4259G1500541 IVECO 1986 NY
1HTLAHEM2HH476304 1654 1987
</TABLE>

2. 8 Desks, 10 Chairs and 9 File Cabinets

3. 2 Bookcases and 2 Tables

4. 5 - Compaq 386 Computers

5. 3 Dell Pentium Computers

6. 1 HP Fax

7. 1 Copy Star Copier

8. 3 HP Ink Jet Printers and 1 Okidata 320- Dot Matrix Printer

9. 1 Panasonic Telephone System (with 10 instruments)

10. 6 - Two-way hand held radios (with paging and cell phone capabilities)

11. 1 - Telxon Mobile Computer System

12. 9 Hand Held Telxon Computers
<PAGE>

13. 9 Truck Mounted Telxon Printers (with mounting plates and accessories)

14. Defiant Closed Circuit Security System (with 2 Cameras and Monitor)

15. Walk-in Modular aluminum Freezer Box - 20'x50'x9' (with low temperature
compressor) - 10 HP, with 2 Condensing Units and 2 Fan Blowers

16. Walk-in Modular aluminum Freezer Box - 60'x25'x9' (with 2 low temperature
compressors) - 10 HP, with 2 Condensing Units and 2 Fan Blowers

17. Walk-in Modular aluminum Freezer Box - 45'x25'x9' (with low temperature
compressors)- 10 HP, with a Condensing Unit and 2 Fan Blowers with Pallet
Racks

18. 10 - Mobile Freezer Carts

19. 10 - Chest Freezers 15 CU. FT.

20. 10 - Chest Freezers 22 CU. FT.

21. Lot of Miscellaneous Pallet Jacks Consisting of:
4 - Crown Pallet Jacks-5,000 LB. CAP
5 - Multiton Pallet Jacks - 5,500 LB. CAP.

22. 25 - Aluminum Inventory Carts - 4'x 6'

23. Digital Money Counter

24. 92 - Low Temperature Compressors 3/4 HP(partially inspected)

25. 20 - Counter Top Single Door Display Freezers

26. 25 - Kelvinator Low Temperature Merchandisers - 4'

27. 300 - Kelvinator - 2-Door Low Temperature Merchandisers - 6' (partially
inspected)

28. 300 - 2-Door Low Temperature Merchandisers - 8' (partially inspected)

29. 1 Clark LPG Forklift Truck- 5,000 LB. Cap., 3-Stage Mast. 187" Max. Lift,
Cushion Tires, Over- head Guard

30. Lot - Repair Shop Equipment and Machinery Consisting of :
Delta Bench Top Drill press
Walker Floor Jack - 2 Ton
(2) Floor Jacks - 5 Ton
Dayton Battery Charger
Matco Battery Charger
Matco Mig Welder
Hydrotech Steam Cleaner
Hausfeld Air Compressor - 5 HP
Napa Hydraulic Bumper Jack - 14,000 LB. CAP.
with new parts including valves, indicators, Delay,
Thermostats, Bench Grinder, Assorted Hand and
Power Tools, etc.

<PAGE>

SCHEDULE 3.1

SUBSIDIARIES AND JOINT VENTURES

1. American Classic Ice Cream of Florida, Inc.

<PAGE>

SCHEDULE 3.4(b)

SCHEDULED LEASES AND LICENSES
<TABLE>
<CAPTION>
Monthly Expiration
Lessor Equipment Payments Date
------ --------- ------- ----------

<S> <C> <C> <C>
Great America Leasing Photo copier $ 115.11 Oct-99

First Fed Leasing Pentium Comp. $ 130.76 Jun-99

Rockford Walk in freezer with comp. $1,210.36 2000
</TABLE>

<PAGE>

SCHEDULE 3.5

SELLER'S LEGAL PROCEEDINGS

1. Suit by __________________________________ against Baskin Robins filed in
______________________ on ___________________, 199__, alleging
-------------------------.

2. Suit by __________________________________ against Friendlys filed in
______________________ on ___________________, 199__, alleging
-------------------------.

3. Suit by __________________________________ against Dunkirk ________ in
______________________ on ___________________, 199__, alleging
_______________, and counterclaim by Dunkirk against
________________________________ dated ____________, 199 __, alleging
________________________________.

<PAGE>

SCHEDULE 3.9

PATENTS, TRADEMARKS, SERVICE MARKS, TRADENAMES OR COPYRIGHTS

1. "New Yorker Ice Cream Corp."

2. "American Classic Ice Cream Corp."

<PAGE>

SCHEDULE 4.5

PURCHASER'S LEGAL PROCEEDINGS

1. Darigold, Inc., a manufacturer formerly used by the Company, alleges that the
Company has defaulted under the payment terms of a promissory note and that
$29,753.85, which includes interest and costs, is due immediately. In addition,
Darigold alleges that in connection with the termination of the manufacturing
agreement between the Company and Darigold, $59,379.00, representing the alleged
value of raw materials inventory, is currently also due. To date, Darigold, Inc.
has not commenced litigation.

<PAGE>

SCHEDULE 6.1(j)

LEASE SCHEDULE

1. Landlord: Silver Crown Corp.
Premises: 1122-1130 Southern Boulevard
Rent: Five thousand dollars ($5,000) per month for six (6) months and
for the second six (6) months Six thousand four hundred dollars
($6,400 per month

2. Landlord: Tri-K Realty
Premises: 1165 Southern Boulevard (parking of trucks) (up to 15)
Rent: Two thousand one hundred dollars ($2,100) per month plus
electricity

3. Landlord: Tri-K Realty
Premises: 1/2 of 1161 Southern Boulevard (storage of freezers)
Rent: Four hundred dollars ($400) per month, plus electricity

ASSET PURCHASE AGREEMENT

THIS AGREEMENT, dated as of July 20, 1998 (the "Agreement"), is
entered into by and between MIKE'S ORIGINAL, INC., a Delaware corporation
("Purchaser"); and JERRY'S ICE CREAM CO., INC., a New York corporation
("Seller").

W I T N E S S E T H:

WHEREAS, Seller is engaged in the business of the full service distribution
of ice cream (the "Business"); and

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1
ASSET PURCHASE AND SALE

Section 1.2 Included Assets. Except as otherwise expressly set forth in
Section 1.3 hereof, the Assets shall include without limitation the following
assets, properties, and rights of Seller:

(a) All rights under any written or oral contract, agreement, lease,
plan, instrument, registration, license, certificate of occupancy, other permit
or approval of any nature, or other document, commitment, arrangement,
undertaking, practice or authorization except for such agreements that Seller
has notified Purchaser of in writing that Seller cannot transfer to Purchaser
due to Seller's inability to secure the consent to the assignment from the other
party to the Agreement;
<PAGE>

(c) All technologies, methods, formulations, databases, trade secrets,
know-how, inventions, computer software (including documentation and related
object codes) and other intellectual property;

(d) All office supplies;

(e) All rights under any patent, trademark, service mark, tradename or
copyrights, whether registered or unregistered, and any applications therefor
(the "Marks");

(f) All rights arising under express or implied warranties relating to
the Assets;

(g) All information, files, records, data, plans, contracts and
recorded knowledge, including client and vendor lists related to the foregoing;

(h) An irrevocable option for ten (10) years, which is hereby granted
(i) to purchase all of the issued and outstanding capital stock of Seller for a
purchase price of One Dollar ($1.00), provided that Seller shall first divest
Seller of all assets other than contracts for the distribution of ice cream and
other food products, including but not limited to its distribution agreements
with Haagen-Daz, which shall be transferred to Purchaser as an asset of Seller
upon exercise of the option, or (ii) to have Seller assign to Purchaser all
rights under any or all ice cream or other product distribution agreements of
Seller with its suppliers, including but not limited to Seller's distribution
agreements with Haagen-Daz and Baskin-Robbins. This option shall survive the
Closing.

Section 1.3 Excluded Assets. Notwithstanding anything to the contrary set
forth herein, the Assets shall not include any of the following (hereinafter
collectively referred to as "Excluded Assets"):

(a) The corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other constituent records relating
to the corporate organization of Seller;
<PAGE>

(b) Cash and cash equivalents;

(d) The rights which accrue to Seller under this Agreement.

Section 1.5 The Purchase Price. The purchase price for the Assets shall be
Four Hundred Ninety Thousand Dollars ($490,000.00), (the "Purchase Price"). The
Purchase Price was calculated based upon a Federal tax year showing annual sales
of $705,000 for the calendar year end 1996. Since the date of this Agreement,
Seller's actual annual sales have increased. At Closing, a calculation will be
made as to the increase in sales and as to the allocated portion of the increase
in sales for the years 1997 and 1998 (annualized) and the Seller shall be
entitled to receive as an additional Purchase Price a sum equal to $.55 on each
dollar of increased sales as same is calculated by Purchaser, provided the
accounts are of the same quality. Any increase in the Purchase Price shall be
payable in shares of Purchaser's common stock, in accordance with the terms of
Section 1.6.

Section 1.6 Payment of Purchase Price. At the Closing, Purchaser shall pay
to the Seller Two Hundred Five Thousand ($255,000.00) Dollars (the "Cash
Payment") of the Purchase Price by certified check which amount reflects a
credit against the Purchase Price equal to $15,000, which represents a sum
previously paid by Purchaser to Seller. The remaining Two Hundred Twenty
Thousand ($220,000.00) Dollars of the purchase price shall be payable to the
Seller as follows:

(a) Fifty Two Thousand ($52,000) Dollars shall be payable in
accordance with the terms and conditions of a Promissory Note in substantially
the Form of Exhibit 1.6(a)-1 annexed hereto (the "Note"), which Note shall have
a repayment term of six (6) months and shall not bear interest and which shall
be secured by a purchase money security interest as set forth in the security
agreement (the "Security Agreement") attached hereto as Exhibit 1.6(a)-2.

(b) One Hundred Seventy Thousand ($170,000) Dollars shall be payable
by delivery to Seller in shares of Common Stock, par value $.001 per share
("Common Stock") of the Purchaser, the number of which shall be determined by
dividing $170,000 by 88% of the Market Price of a share of Common Stock
(collectively, the "Shares"). For the purposes of this Agreement, "Market Price"
shall mean the average closing sale price of a share of Common Stock for the ten
(10) trading days prior to the Closing Date.
<PAGE>

Section 1.7 Purchase of Seller's Inventory. In addition to the Purchase
Price, Purchaser shall, withing fifteen (15) days of the Closing, pay Seller its
cost for the inventory and stock-in-trade of Seller delivered to Purchaser that
is in good and saleable condition as of the Closing.

Section 1.10 Allocation of Purchase Price. The parties shall agree on the
allocation for tax purposes of the Purchase Price to be paid for the Assets
prior to or upon the Closing.

ARTICLE 2
CLOSING; ITEMS TO BE DELIVERED; FURTHER ASSURANCES

Section 2.2 Items to be Delivered at Closing. At the Closing and subject to
the terms and conditions herein contained:

(a) Seller shall deliver to Purchaser the following:
<PAGE>

(iii)Audited financial statements for Seller's last two fiscal
years; and

(iv) Estoppel certificates from the applicable lessors set forth
in Schedule 3.4 (b) indicating the total principal and lease
payments due under such leases;

(v) A Lease in form and substance satisfactory to Purchaser for
the current principal place of business of Seller as
described in Section 6.1 (j) hereof;

(vi) A certificate of the corporate secretary of Seller
certifying that all transactions contemplated hereby have
been duly approved by the Board of Directors and
shareholders of Seller and that the officer of Seller
executing this Agreement is duly authorized to do so;

and simultaneously with such delivery, all such reasonable steps will be taken
as may be required to place Purchaser in actual possession and operating control
of the Assets.

(b) Purchaser shall deliver to Seller the following:

(i) The Cash Payment;

(ii) The Note;

(iii)The Shares; and

(iv) The Security Agreement (as defined in Section 1.6(b).

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser as follows:

Section 3.4 Ownership of Assets and Related Matters.

(a) Real Property. The Seller does not own any real property nor is
any ownership interest in real property included in the Assets.

(c) Personal Property. Seller has good and marketable title to all of
the Assets, and Seller owns the Assets free and clear of all liens, pledges,
security interests, charges, claims, restrictions and encumbrances of any nature
whatsoever.
<PAGE>

(e) No Third Party Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of the Assets or
any interest therein.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

Section 4.2 Authorization. Upon the duly and validly obtained approval of
the execution, delivery and performance of this Agreement from the Board of
Directors of the Purchaser: (i) Purchaser shall have full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby;
(ii) the execution and delivery of this Agreement by Purchaser and the
performance by Purchaser of its obligations hereunder and the consummation of
the transactions provided for herein shall have been duly and validly authorized
by all necessary corporate action on the part of Purchaser; and (iii) this
Agreement shall have been duly executed and delivered by Purchaser and shall
constitute the valid and binding agreement of Purchaser, enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies.

Section 4.5 Brokers, Finders Investment Bankers. Neither Purchaser nor any
of its respective officers, directors or employees has employed any broker or
finder in connection with this transaction.

ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS

(d) Not amend, modify or extend in any manner the terms of any
employment agreement with any employee of Seller;

(f) Use its reasonable efforts to continue to maintain and service the
Assets used in the conduct of the Business in the same manner as has been its
consistent past practice; and

(g) Use its reasonable efforts to maintain its inventory of products
and stock-in-trade at normal levels in the ordinary course of business.

(h) Cooperate with Purchaser in the consummation of the purchase by
Purchaser of certain other businesses that Purchaser has identified to Seller.
<PAGE>

Section 5.2 Financing. Upon the execution of this Agreement, Purchaser
shall diligently and expeditiously make a good faith reasonable effort to obtain
bridge financing (hereinafter referred to as "Bridge Financing") for itself or
an affiliated company in the sum of $250,000 which sum shall be obtained by the
Purchaser or its affiliate by no later than October 15, 1998. Purchaser will
promptly notify Seller upon its receipt of the Bridge Financing. Purchaser
and/or its affiliate Mikes shall make all reasonable efforts to file with the
Securities and Exchange Commission a Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act") for secondary financing ("Filing
Date") in the gross amount of at least $3,000,000 by not later than October 15,
1998 (hereinafter referred to as "Secondary Financing"). In the event Purchaser
shall fail to make reasonable efforts to file the Registration Statement on or
before the Filing Date, Seller can either (i) terminate this Agreement pursuant
to Section 8.1 pursuant to written notice delivered on or prior to October 20,
1998 or (ii) accept the $5,000 payments described below. In the event that the
closing for the Secondary Financing shall not occur on or before November 1,
1998, Purchaser shall pay to Seller $5,000 on the first business day of every
month, commencing November 1998, pro-rated thorough the Closing Date.

(c) Seller shall secure all necessary consents of third parties to the
assignment to Purchaser of all Scheduled Leases included in the Assets.

Section 5.6. Appointment to Board of Directors. Upon the Closing, the
Purchaser shall use all reasonable efforts to cause its Board of Directors to
appoint Gerald Schneider as a member of its Board of Directors and to provide
directors and officers liability insurance to Mr. Schneider and its other
directors.

Section 5.7 Right to Repurchase Common Stock. During the period commencing
on the Closing Date and ending on the date which is 18 months from the Closing
Date, Purchaser shall have the right to repurchase at the Market Price, from
time-to-time, in whole or in part, the Shares delivered to Seller in payment of
the Purchase Price. Purchaser shall exercise this right by delivery of written
notice to Seller (a "Repurchase Notice") which sets forth the number of Shares
which Purchaser desires to repurchase and the date on which the repurchase shall
be consummated (a "Repurchase Date"). On any Repurchase Date, Seller shall
deliver to Purchaser the number of Shares specified in the Repurchase Notice and
Purchaser shall deliver to Seller an amount equal to such number of Shares
multiplied by the Market Price, together with a certificate evidencing the
balance, if any, of any Shares not repurchased.

<PAGE>

repurchased under Section 5.7 multiplied by the Market Price of such repurchased
Shares. In the event that the number of additional shares of Common Stock
required to be issued hereunder pursuant to the terms of this Section 5.8 is not
a whole number, then the number of shares to be issued will be rounded to the
nearest whole number, and no fractional shares will be issued. Purchaser will
issue such additional shares of Common Stock within ten (10) business days
following the date set forth above. For the purposes of this Section 5.8 and in
Section 5.9, the Value of the Shares shall mean the average of the closing sale
price of shares of Common Stock on the ten (10) trading days preceding the third
business day prior to the applicable date. The price guarantee contained in this
Section 5.8 shall be secured by a security interest as set forth in the Security
Agreement.

ARTICLE 6
CONDITIONS TO CLOSING

(b) Performance of Obligations of Seller. Seller shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement.
<PAGE>

(f) Employment Agreement with Gerald Schneider. Purchaser shall have
entered into, or shall enter into on the Closing Date, an employment agreement
with Gerald Schneider, in substantially the form of Exhibit 6.1(f) attached
hereto (the "Employment Agreement") and the Purchaser shall have obtained the
approval and authorization of the execution, delivery and performance of the
Employment Agreement from its Board of Directors.

(i) Certificates. Seller shall furnish Purchaser with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.1(a), (b), (c) and (d).

<PAGE>

taxes, maintenance costs and other fees and expenses related to such Premises
during the term of the lease, except any and all electrical and freezer
maintenance. The parties agree that the landlord of the Premises may allocate
such rental income as it sees fit.

(k) Assumed Obligation. Seller shall have received the consent of the
Creditor to Purchaser's assumption of the Assumed Obligation under the terms set
forth herein.

(l) Audited Financial Statements. Purchaser shall have received
audited financial statements prepared accordance with generally accepted
accounting principles for Seller's last two fiscal years that indicate a sales
volume substantially in accordance with that indicated in the unaudited
financial statements previously made available by Seller to Purchaser. Further,
Purchaser shall have received year-to-date financial statements of Seller for
1997 that indicate an annualized sales volume substantially the same as that of
each of Seller's previous two fiscal years.

(b) Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement.

(e) Employment Agreement with Gerald Schneider. Purchaser shall have
entered into, or shall enter into on the Closing Date, the Employment Agreement
with Gerald Schneider in substantially the form of Exhibit 6.1(e) attached
hereto.

(g) Certificates. Purchaser shall furnish Seller with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.2(a), (b) and (c).

ARTICLE 7
ADDITIONAL CLOSING OBLIGATIONS

[INTENTIONALLY OMITTED]

ARTICLE 8
TERMINATION

Section 8.1 Termination and Abandonment. This Agreement may be terminated
at any time prior to the Closing:

(a) by mutual agreement of the Boards of Directors of the Purchaser and
Seller;

(d) by either Seller or Purchaser if (i) the Bridge Financing has not
been received by October 15, 1998; (ii) the Registration Statement has not been
filed by the Filing Date; or (iii) the Secondary Financing has not closed by the
Date of Closing.

(e) by Purchaser if Purchaser determines as a result of its due
diligence investigation of Seller that the transaction contemplated by this
Agreement is not economically or financially feasible for Purchaser.

ARTICLE 9
INDEMNIFICATION

Section 9.1 Indemnification Obligations of Seller. From and after the
Closing, Seller shall indemnify and hold harmless the Purchaser and its
subsidiaries and affiliates (including Purchaser, each of their respective
officers and directors, employees, agents and representatives and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Purchaser Indemnified Parties") from, against and in respect of any and all
claims, liabilities, obligations, losses, costs, expenses, penalties, fines and
other judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:
<PAGE>

Section 9.5 Jurisdiction and Forum.

Seller: Spanton & Parsoff LLP
------ 425 Broad Hollow Road
Melville, NY 11747
Attention: Neil M. Parsoff, Esq.

Purchaser: Mikes Original, Inc.
--------- 366 North Broadway
Suite 410
Jericho, NY 11753
Attention: Arthur Rosenberg

ARTICLE 10
MISCELLANEOUS PROVISIONS

To Purchaser: Mike's Original, Inc.
366 North Broadway
Suite 410
Jericho, NY 11753

With copy to: David H. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Suite 225
Jericho, New York 11573

To Seller: Jerry's Ice Cream Co., Inc.

<PAGE>

With copy to: Spanton & Parsoff LLP
425 Broad Hollow Road
Melville, NY 11747
Attention: Neil M. Parsoff, Esq.

or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing.

Section 10.2 Schedules and Exhibits. All Schedules and Exhibits annexed
hereto are hereby incorporated into this Agreement and are hereby made a part
hereof as if set out in full in this Agreement.

Section 10.3 Assignment; Successors in Interest. No assignment or transfer
by Purchaser or Seller of their respective rights and obligations hereunder
prior to the Closing shall be made except with the prior written consent of the
other parties hereto. Notwithstanding the foregoing, Purchase shall have the
right to assign this Agreement without Seller's consent to any entity whose
capital stock is publicly traded and to whose Board of Directors Gerald
Schneider has been elected or appointed or any entity controlled by the
principal shareholders of Purchaser. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns, and any reference to a party hereto shall also be a reference to a
permitted successor or assign.

Section 10.6 Controlling Law; Integration; Amendment.
<PAGE>

Section 10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.

<PAGE>

of its accountants and counsel, except that (i) Purchaser shall select and
engage an accounting firm and shall be responsible for the payment of the
accounting fees for the auditing of Seller's financial statements for its last
two fiscal years and (ii) at Closing, Purchaser will pay the reasonable legal
fees of counsel to Seller and to New Yorker Ice Cream Corp., Kerry Group Ltd.
and Ted Ketsoglou incurred in connection with the Asset Purchase Agreement dated
as of July 20, 1998 between the Purchaser and New Yorker Ice Cream Corp., Kerry
Group Ltd. and Ted Ketsoglou in an amount not to exceed an aggregate $30,000. In
the event that Purchaser is unable to secure a Commitment on or prior to the
Commitment Date and all other conditions to Purchaser's obligation to close
shall have been satisfied by such date, then, in such event Purchaser shall pay
Seller's actual and reasonable attorneys fees incurred in preparation of this
Agreement in an amount not to exceed $3,000.00. Purchaser shall be responsible
for any reasonable legal fees incurred by Seller in connection with any
enforcement by Seller of its rights under Section 5.8 of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the date first above written.

(corporate seal) MIKES' ORIGINAL, INC.

Attest:
By:_________________________ By:___________________________________

Title:_____________________ Title:__________________________________

(corporate seal) JERRY'S ICE CREAM CO., INC.

Attest:

By:_________________________ By:___________________________________

Title:______________________ Title:_________________________________

<PAGE>

EXHIBITS

EXHIBIT 1.6(a)-1 Promissory Note

EXHIBIT 1.6(a)-2 Security Agreement

EXHIBIT 6.1(e) Employment Agreement between Multi Venture
Partners Ltd and Gerald Schneider

<PAGE>

SCHEDULE 1.2

Physical Assets

Jerry's Ice Cream Co., Inc.

1. Trucks Vin
1 1990 International Truck 1HTSDTLN7LH249603
1 1981 International Truck 1HTAA18E3BHA17831

2. 50 - Universal 2- Door Low Temperature Merchandisers - 6'

3. 50 - Universal 2- Door Low Temperature Merchandisers- 8'

<PAGE>

SCHEDULE 3.1

SUBSIDIARIES AND JOINT VENTURES

NONE

<PAGE>

SCHEDULE 3.4(b)

SCHEDULED LEASES AND LICENSES

NONE

<PAGE>

SCHEDULE 3.5

SELLER'S LEGAL PROCEEDINGS

NONE

<PAGE>

SCHEDULE 3.9

PATENTS, TRADEMARKS, SERVICE MARKS, TRADENAMES OR COPYRIGHTS

1. "Jerry's Ice Cream Co., Inc."

<PAGE>

SCHEDULE 4.5

PURCHASER'S LEGAL PROCEEDINGS

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of the day of October, 1998, by and between
MIKE'S ORIGINAL, INC., a Delaware corporation (hereinafter the "Company"), and
TED KETSOGLOU an individual residing at 19 Erie Court, Jericho, NY 11753
(hereinafter called the "Employee").

W I T N E S S E T H:

WHEREAS, the Company and the Employee desire to enter into an Employment
Agreement relating to the Company's employment of the Employee;

WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the Employee
relating to such employment.

NOW, THEREFORE, it is agreed as follows:

1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.

2. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be comprised of a five
(5) year period of employment commencing ____________________ ("Effective Date")
and terminating ______________ on ________. The Company, at its sole option, may
elect to renew the Agreement for an additional five (5) year period by providing
written notice of such election to employee prior to expiration of the initial
term of the Agreement.

3. Duties and Extent of Services During Period of Employment.

(a) During the term of Employee's employment, Employee shall be employed as
President of the Company. In such capacity, Employee agrees that he shall serve
the Company under the direction of the Board of Directors of the Company to the
best of his ability, shall devote his full-time efforts to the execution of his
duties for the Company, shall perform all duties incident to his offices on
behalf of the Company, and shall perform such other duties as may from time to
time be assigned to him by the Board of Directors of the Company consistent with
his executive position. Employee shall also serve in similar capacities of such
of the subsidiary corporations of the Company as may be selected by the Board of
Directors. Notwithstanding the foregoing, it is understood and agreed that
during the term hereof Employee shall be responsible for the operations of the
Company and that the duties of Employee during the period of active employment

<PAGE>

shall not be inconsistent therewith or with those duties ordinarily performed by
an executive. The Company shall not require Employee to be employed in any
location other than the New York Metropolitan area unless he consents in writing
to such location.

(b) During the term of Employee's employment, the Company shall use
reasonable efforts to cause the appointment or election of Employee to the
Company's Board of Directors.

4. Remuneration. During the period of employment, Employee shall be
entitled to receive the following compensation for his services:

(a) The Company shall pay to Employee a base salary at the rate of $126,000
per annum, payable in equal weekly installments, or in such other manner as
shall be agreeable to the Company and Employee. On each anniversary of the
Effective Date during the term of Employee's employment with the Company,
Employee shall be entitled to a minimum salary increase equal to five percent
(5%) of his salary in the immediately proceeding one-year period. In the event
the Company elects to renew this Agreement with Employee after the expiration of
the initial five (5) year term, Employee shall be entitled to a minimum salary
increase on the fifth anniversary of the Effective Date equal to ten percent
(10%) of his salary in the immediately preceding one-year period.

(b) The Company shall grant to Employee 200,000 shares of the Company's
Common Stock (prior to any reverse split) which shall vest as follows: 100,000
shares on January 15, 1999 and 100,000 shares on January 15, 2000. The Employee
shall have "Piggy Back" Registration Rights for the shares (other than under an
S-8 or S-4) unless the Underwriter deems that such rights are not in the best
interests of the underwriting. In the event of a termination of this Agreement
by the Company without cause then all of the aforesaid shares shall immediately
vest. In the event of a default by the employee under this Agreement, then all
shares not previously vested shall be returned to the Company.

(c) At the end of each full fiscal year of the Company during the term of
this Agreement, the Company shall pay to Employee a bonus equal to two percent
(2%) of the pre-tax profits of the Company. In addition, upon the closing of
each acquisition by the Company of a business located by the Employee with a
purchase price equal to or less than $750,000.00, the Company shall grant
Employee fully vested options to purchase 25,000 shares of the Company's common
stock at the closing price of such stock on the date of the grant. In addition,
the Company shall grant Employee additional fully vested options upon the
closing of each acquisition of a business located by the Employee with a
purchase price exceeding $750,000, with the number of such additional options
granted to be determined by multiplying the portion of the purchase price
exceeding $750,000.00 by a fraction, the numerator of which shall be 25,000 and
the denominator of which shall be 750,000. In no event, however, shall the total
number of options to purchase the Company's shares granted to Employee for any
acquisition exceed 50,000. All such options that remain unexercised on the tenth
anniversary of the date of grant shall expire on such date.
<PAGE>

5. Employee Benefits; Expenses.

(a) During the period of employment, Employee shall be eligible to
participate in stock option plans, stock purchase plans or other employee
incentive plans of the Company to the extent such plans exist and to the same
extent as the Company's other executives as determined in the sole discretion of
the Board of Directors of the Company or a committee thereof.

(b) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of the an executive of the Company; and he shall be
entitled to regular vacations during each year of four (4) weeks in the
aggregate. The Company shall not pay Employee any additional compensation for
any vacation time not used by Employee nor shall vacation time accrued in any
calendar year be usable in any other calendar year.

(c) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall reimburse Employee
for all reasonable out-of-pocket expenses incurred by Employee in the
performance of his duties hereunder upon submission of reasonable documentation
therefore in accordance with the Company's policies. Notwithstanding and in
addition to the foregoing, in recognition that Employee will be required during
the term of this Agreement to do a considerable amount of driving in connection
with his services hereunder, the Company shall also provide Employee with an
automobile allowance of $520.00 per month, with annual increases of five percent
(5%) per year, and shall reimburse the Employee for all expenses relating to
gasoline, tolls and automobile insurance on a monthly basis upon submission of
receipts, throughout the term of this Agreement. In addition to the foregoing,
the Company shall provide Employee with a special discretionary expense account
equal to One Thousand Five Hundred Dollars ($1,500.00) per month for
entertainment and other expenses related to the conduct and advancement of the
Company's business upon receipt of Employee's monthly invoice for such amount.
In the event that, at the expiration of any automobile lease, Employee is
assessed an excess mileage charge, the Company shall reimburse Employee for such
charge.

(d) All benefits to Employee specifically provided for herein shall be
in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by the Board
of Directors of the Company, or (ii) any rights which Employee may have or may
acquire under any hospitalization, life insurance, pension, profit sharing,
incentive compensation or other present or future employee benefit plan or plans
of the Company.
<PAGE>

(e) In the event of the death of Employee during the course of his
employment hereunder, the Company shall (i) pay Employee's widow the proceeds of
any life insurance policy maintained by the Company that names her as a
beneficiary, or (ii) continue to pay to Employee's widow, or to such other
person or persons as may be designated by Employee in his Will, or to his Estate
in the event of Employee's intestacy, one-half (<<) of the base salary
(excluding bonuses, expenses, stock options and all benefits) to which Employee
is entitled pursuant to paragraph 4(a) hereunder for a period of one year from
the date of death. The Company and Employee shall determine within sixty (60)
days of the Effective Date whether adequate insurance on the life of Employee is
available at a reasonable premium.

6. Disability. If Employee, during the period of employment, becomes unable
for three consecutive months or more, or any 180 days in any twelve-month
period, due to ill health or other physical or mental incapacity, to perform his
services hereunder, the Company may thereafter, upon at least 45 days' written
notice to Employee, place him on disability status. After such action by the
Company, Employee shall continue to receive one-third (1/3) of the last base
salary paid to Employee under Section 4(a) hereof until the end of the period of
employment or until his disability ends.

7. Confidential Information.

(a) In the course of Employee's employment by the Company, Employee
will have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret." Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need-to-know basis and shall comply
with any and all security systems and measures adopted from time to time by the
Company to protect the confidentiality of confidential or proprietary data or
information.

(b) The term "confidential or proprietary data or information" as used
in this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
<PAGE>

(c) Employee will at all times promptly disclose to the Company in
such form and manner as the Company may reasonably require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trademarked, copyrighted or patented) conceived
or developed or created by Employee during or in connection with Employee's
employment hereunder and which relate to the business of the Company
("Intellectual Property"). Employee agrees that all such Intellectual Property
shall be the sole property of the Company. Employee further agrees that Employee
will execute such instruments and perform such acts as may reasonably be
requested by the Company to transfer to and perfect in the Company all legally
protectable rights in such Intellectual Property.

(d) All written materials, records and documents made by Employee or
coming into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.

(e) The provisions of this Section 7 shall survive the termination of
this Employment Agreement.

8. Non-Competition.

(a) During the term of this Agreement (subject to clause (b) of this
Section 8, the "Restricted Period"), the Employee shall not, without the written
consent of the Company, directly or indirectly:

(i) become associated with, render services to, invest in,
represent, advise or otherwise participate in as an officer, employee, director,
stockholder, partner, promoter, agent of, consultant for or otherwise, any
business anywhere which is competitive with the business in which the Company is
engaged or plans to be engaged at the time Employees' employment by the Company
ceased; provided, however, that nothing contained herein will prevent Employee
from owning less than five percent (5%) of any class of equity or debt
securities listed on a national securities exchange or traded in any established
over-the-counter securities market, so long as such involvement with the issuer
of any such securities is solely that of a passive investor;
<PAGE>

(ii) for his own account or for the account of any other person or
entity (A) interfere with the Company's relationship with any of its suppliers,
customers, representatives or agents or (B) transact any business with any
customer or supplier of the Company which transacts or has transacted business
with the Company at any time during the term of this Agreement; or

(iii) employ or otherwise engage, or solicit, entice or induce on
behalf of himself or any other person or entity, the services, retention or
employment of any person who has been an employee, sales representative,
consultant to or agent of the Company within one year of the date of the last
date of such person or entity's employment with the Company.

(b) In the event that the Employee's employment hereunder is
terminated by Employee for any reason or is terminated by the Company with
cause, or the term of Employee's employment expires and is not renewed by the
Company, the covenant contained in Section 8(a) hereof shall extend for a period
of two (2) years beyond the termination of the Employee's employment but shall
be limited in geographic scope to the area within one hundred (100) miles of any
of the Company's or its affiliates' business locations.

(c) The parties hereto intend that the covenants contained in this
Section 8 shall be deemed a series of separate covenants for each country,
state, county and city. If, in any judicial proceeding, a court shall refuse to
enforce all the separate covenants deemed included in this Section 8 because,
taken together, they cover too extensive a geographic area, the parties intend
that those of such covenants (taken in order of the cities, counties, states and
countries therein which are lease populous) which if eliminated would permit the
remaining separate covenants to be enforced in such proceeding shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 8.

(d) With respect to the covenants contained in Sections 7 and 8 of
this Agreement, Employee agrees that any remedy at law for any breach or
threatened or attempted breach of such covenants may be inadequate and that the
Company shall be entitled to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder or any
other relief a court might award without the necessity of showing any actual
damage or irreparable harm or the posting of any bond or furnishing of other
security.

(e) Notwithstanding the foregoing, the provisions of this Paragraph 8
shall be null and void in the event the Company defaults on any of its
obligations to Seller pursuant to the Asset Purchase Agreement dated as of July
20, 1998.
<PAGE>

9. Termination.

(a) The Company and Employee agree that Employee's services hereunder
may be terminated for "cause" by the Company only (i) for an act of fraud or
embezzlement adversely affecting the financial interest of the Company, (ii) in
the event that the Company places Employee on disability status pursuant to
Section 6 hereof more than once during the term hereof, (iii) in the event of a
conviction of the Employee for any felony, (iv) in the event of material breach
by the Employee of this Agreement if such breach remains uncured thirty (30)
days after the Company provides notice of such breach to Employee, (v) in the
event of any willful breach by the Employee of this Agreement if such breach
remains uncured fifteen (15) days after the Company provides notice of such
breach to Employee, or (vi) in the event Employee fails to devote his full time
and efforts to the execution of his duties for the Company, except that
Employee's administration of the business of Tri/K Realty Corp. and Silver Crown
Realty Corp. as real estate investment companies as they exist as of the
Effective Date shall not be deemed a breach of this obligation.

(b) If the Company terminates Employee's employment hereunder for any
reason other than for "cause" as set forth in Section 9(a) hereof, Employee's
compensation shall be paid to him as provided hereunder for the lesser of the
(i) remainder of the term of this Agreement or (ii) six (6) months. If the
Company terminates Employee's employment hereunder for "cause" as set forth in
Section 9(a) hereof, Employee shall not be entitled to receive any further
compensation hereunder which has not already been earned pursuant to the terms
hereof. Employee and the Company acknowledge that the foregoing provisions of
this paragraph 9(b) are reasonable and are based upon the facts and
circumstances of the parties at the time of entering into this Agreement, and
with due regard to future expectations.

(c) All unexercised stock options granted Employee shall expire on the
date Employee ceases to be employed by the Company if the Company terminates
Employee with cause or Employee terminates his employment with the Company.

10. Consolidation or Merger. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.

11. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at
_______________________________________, or such other address as the Company
may hereafter designate, with a copy to
_______________________________________________________________________________.
Any notice to be given to Employee hereunder shall be delivered or mailed by
certified or registered mail to him at 19 Erie Court, Jericho, NY 11753 or such
other address as he may hereafter designate.
<PAGE>

12. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal representatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors of
the Company.

13. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.

14. Prior Agreements Superseded. This Agreement supersedes any employment
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.

15. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.

16. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into and perform his obligations under this
Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

MIKE'S ORIGINAL, INC.

By: ____________________________

Name:_________________________

Title: _______________________

________________________________
Ted Ketsoglou

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of the day of October, 1998, by and between
MIKE'S ORIGINAL, INC., a Delaware corporation (hereinafter the "Company"), and
GERALD SCHNEIDER, an individual residing at 172 The Vale Street, Syosset, NY
11791 (hereinafter called the "Employee").

W I T N E S S E T H:

WHEREAS, the Company and the Employee desire to enter into an Employment
Agreement relating to the Company's employment of the Employee; and

WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the Employee
relating to such employment.

NOW, THEREFORE, it is agreed as follows:

1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.

3. Duties and Extent of Services During Period of Employment.

(a) During the term of Employee's employment, Employee shall be employed as
a Vice President of Sales and Marketing of the Company. In such capacity,
Employee agrees that he shall serve the Company under the direction of the Board
of Directors of the Company to the best of his ability, shall devote his
full-time efforts to the execution of his duties for the Company, shall perform
all duties incident to his offices on behalf of the Company, and shall perform
such other duties as may from time to time be assigned to him by the Board of
Directors of the Company consistent with his executive position. Employee shall
also serve in similar capacities of such of the subsidiary corporations of the
Company as may be selected by the Board of Directors. Notwithstanding the
foregoing, it is understood and agreed that during the term hereof Employee
shall be responsible for the operations of the Company and that the duties of

<PAGE>

Employee during the period of active employment shall not be inconsistent
therewith or with those duties ordinarily performed by an executive. The Company
shall not require Employee to be employed in any location other than the New
York Metropolitan area unless he consents in writing to such location.

4. Remuneration. During the period of employment, Employee shall be
entitled to receive the following compensation for his services:

(a) The Company shall pay to Employee a base salary at the rate of $115,500
per annum, payable in equal weekly installments, or in such other manner as
shall be agreeable to the Company and Employee. On each anniversary of the
Effective Date during the term of Employee's employment with the Company,
Employee shall be entitled to a minimum salary increase equal to five percent
(5%) of his salary in the immediately proceeding one-year period. In the event
the Company elects to renew this Agreement with Employee after the expiration of
the initial five (5) year term, Employee shall be entitled to a minimum salary
increase on the fifth anniversary of the Effective Date equal to ten percent
(10%) of his salary in the immediately preceding one-year period.

(b) The Company shall grant to Employee 200,000 shares of Common Stock
(prior to any reverse split) which shall vest as follows: 100,000 shares on
January 15, 1999 and 100,000 shares on January 15, 2000. The Employee shall have
"Piggy Back" Registration Rights for the shares (other than under an S-8 or S-4)
unless the Underwriter deems that such rights are not in the best interests of
the underwriting. In the event of a termination of this Agreement by the Company
without cause then all of the aforesaid shares shall immediately vest. In the
event of a default by the employee under this Agreement, then all shares not
previously vested shall be returned to the Company.

(c) At the end of each full fiscal year of the Company during the term of
this Agreement, the Company shall pay to Employee a bonus equal to two percent
(2%) of the pre-tax profits of the Company. In addition, upon the closing of
each acquisition by the Company of a business located by the Employee with a
purchase price equal to or less than $750,000.00, the Company shall grant
Employee fully vested options to purchase 25,000 shares of Common Stock at the
closing price of such stock on the date of the grant. In addition, the Company
shall grant Employee additional fully vested options upon the closing of each
acquisition of a business located by the Employee with a purchase price
exceeding $750,000, with the number of such additional options granted to be
determined by multiplying the portion of the purchase price exceeding
$750,000.00 by a fraction, the numerator of which shall be 25,000 and the
denominator of which shall be 750,000. In no event, however, shall the total
number of options to purchase the Company's shares granted to Employee for any
acquisition exceed 50,000. All such options that remain unexercised on the tenth
anniversary of the date of grant shall expire on such date.
<PAGE>

5. Employee Benefits; Expenses.

(c) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall reimburse Employee
for all reasonable out-of-pocket expenses incurred by Employee in the
performance of his duties hereunder upon submission of reasonable documentation
therefore in accordance with the Company's policies. Notwithstanding and in
addition to the foregoing, in recognition that Employee will be required during
the term of this Agreement to do a considerable amount of driving in connection
with his services hereunder, the Company shall also provide Employee with an
automobile allowance of $525.00 per month, with annual increases of five percent
(5%) per year, and shall reimburse the Employee for all expenses relating to
gasoline, tolls and automobile insurance on a monthly basis upon submission of
receipts, throughout the term of this Agreement. In addition to the foregoing,
the Company shall provide Employee with a special discretionary expense account
equal to One Thousand Five Hundred Dollars ($1,500.00) per month for
entertainment and other expenses related to the conduct and advancement of the
Company's business upon receipt of Employee's monthly invoice for such amount.
In the event that, at the expiration of any automobile lease, Employee is
assessed an excess mileage charge, the Company shall reimburse Employee for such
charge.

(e) In the event of the death of Employee during the course of his
employment hereunder, the Company shall (i) pay Employee's widow the proceeds of
any life insurance policy maintained by the Company that names her as a
beneficiary, or (ii) continue to pay to Employee's widow, or to such other
person or persons as may be designated by Employee in his Will, or to his Estate
in the event of Employee's intestacy, one-half (1/2) of the base salary
(excluding bonuses, expenses, stock options and all benefits) to which Employee
is entitled pursuant to paragraph 4(a) hereunder for a period of one year from
the date of death. The Company and Employee shall determine within sixty (60)
days of the Effective Date whether adequate insurance on the life of Employee is
available at a reasonable premium.

7. Confidential Information.

(a) In the course of Employee's employment by the Company, Employee will
have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret." Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need-to-know basis and shall comply
with any and all security systems and measures adopted from time to time by the
Company to protect the confidentiality of confidential or proprietary data or
information.

(b) The term "confidential or proprietary data or information" as used in
this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
<PAGE>

(e) The provisions of this Section 7 shall survive the termination of
this Employment Agreement.

8. Non-Competition.

(a) During the term of this Agreement (subject to clause (b) of this
Section 8, the "Restricted Period"), the Employee shall not, without the written
consent of the Company, directly or indirectly:

9. Termination.

11. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at
_______________________________________, or such other address as the Company
may hereafter designate, with a copy to
_______________________________________________________________________________.
Any notice to be given to Employee hereunder shall be delivered or mailed by
certified or registered mail to him at 172 The Vale Street, Syosset, NY 11791 or
such other address as he may hereafter designate.
<PAGE>

13. Amendments. This Agreement may not be altered, modified, amended
or terminated except by a written instrument signed by each of the parties
hereto.

14. Prior Agreements Superseded. This Agreement supersedes any
employment or consulting agreements, oral or written, entered into between
Employee and the Company prior to the date of this Agreement.

15. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.

16. Acknowledgment. Employee acknowledges that he has carefully read
this Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into and perform his obligations under this
Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

MIKE'S ORIGINAL, INC.

By:__________________________

Name:______________________

Title: ____________________

_____________________________
Gerald Schneider

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We hereby consent to the use in this registration statement on Form SB-2 of
our report dated February 25, 1998, except for Note 14 the date of which is
March 4, 1998, relating to the financial statements of Mike's Original, Inc. and
to the reference to our firm under the caption "Experts" in the prospectus.

/s/ Lazar Levine & Felix LLP

New York, New York
November 10, 1998

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

We have issued our report dated April 17, 1997 (except for Note 8, as to
which the date is June 20, 1997), which contains an explanatory paragraph that
expresses substantial doubt about the Company's ability to continue as a going
concern, accompanying the financial statements of Mike's Original, Inc.
contained in the Registration Statement and Prospectus. We consent to the use of
the aforementioned report on the Registration Statement and Prospectus, and to
the use of our name as it appears under the caption "Experts."

/s/ Grant Thornton LLP
GRANT THORNTON LLP

Melville, New York
November 10, 1998