U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10QSB


        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 2001

                         Commission File Number: 0-24058

                              ATOMIC BURRITO, INC.
             (Exact name of registrant as specified in its charter)

           Oklahoma                                   73-1571194
----------------------------------       --------------------------------
  (State or other jurisdiction of        (IRS Employer Identification No.)
  incorporation or organization)

  1601 NW Expressway, Suite 1910
  Oklahoma City, Oklahoma                          73118
  (Address of principal executive offices)       (Zip Code)

  Registrant's telephone number, including area code:  (405) 848-0996


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


  Shares of Common Stock, $.001 par value,
  outstanding as of May 14, 2001                        5,107,121

  Traditional Small Business Disclosure Format: Yes  [X]  No [ ]



                              ATOMIC BURRITO, INC.



                                      INDEX


PART I.  FINANCIAL INFORMATION

    Item 1     Financial Statements

               Consolidated Balance Sheets  -  March 31, 2001 (unaudited)
               and December 31, 2000......................................  4-5

               Consolidated Statements of Income (unaudited) -
               For the Three Months Ended March 31, 2001 and 2000.........    6

               Consolidated Statements of Stockholders' Equity (unaudited) -
               For the Three Months Ended March 31, 2001 and 2000........     7

               Consolidated Statements of Cash Flows (unaudited) -
               For the Three Months Ended March 31, 2001 and 2000........   8-9

               Notes to Consolidated Financial Statements................ 10-13

    Item 2     Management's Discussion and Analysis of Financial
               Condition and Results of Operations....................... 13-16

PART II. OTHER INFORMATION

    Item 1     Legal Proceedings.........................................    17

    Item 2     Exhibits and Reports on Form 8-K..........................    17


                                       2





                              ATOMIC BURRITO, INC.


                          PART I. FINANCIAL INFORMATION
                          Item 1. Financial Statements
                             March 31, 2001 and 2000



              Forming a part of Form 10-QSB Quarterly Report to the
                       Securities and Exchange Commission

This quarterly  report on Form 10-QSB should be read in conjunction  with Atomic
Burrito,  Inc.'s  Annual  Report on Form 10-KSB for the year ended  December 31,
2000.

                                       3



                              ATOMIC BURRITO, INC.
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2001 AND DECEMBER 31, 2000
                                   Page 1 of 2




                                                          March 31,    December 31,
                                                            2001          2000
                                                         (Unaudited)
                                                         ----------   ----------
                                     ASSETS
CURRENT ASSETS:
                                                               
  Cash                                                   $   66,761  $   78,925
  Accounts receivable                                        17,829       1,918
  Accounts receivable due from related party                 24,509       9,514
  Current portion of notes receivable                        37,266      37,266
  Inventories                                                61,815      61,815
  Prepaid expenses                                           73,846      64,169
  Deferred income taxes                                     100,000     100,000
                                                         ----------   ---------

   Total current assets                                     382,026     353,607
                                                         ----------   ---------

PROPERTY AND EQUIPMENT                                    2,899,795   2,900,795
  Accumulated depreciation and valuation reserve         (1,946,237) (1,901,884)
                                                         ----------   ---------
                                                            953,558     998,911
                                                         ----------   ---------

OTHER ASSETS:
  Notes receivable from affiliate                           630,000     630,000
  Notes receivable, net of current portion shown above      367,734     367,734
  Goodwill, net of accumulated amortization of $13,456       76,248      80,734
  Covenant not to compete, net of accumulated
   amortization of $18,333                                   41,668      46,667
  Deposits and other                                         62,938      62,938
  Investments                                               177,400     177,400
                                                         ----------   ---------
                                                          1,355,988   1,365,473
                                                         ----------   ---------
                                                         $2,691,572  $2,717,991
                                                         ==========   =========




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

                                       4


                              ATOMIC BURRITO, INC.
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2001 AND DECEMBER 31, 2000
                                   Page 2 of 2


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                          March 31,    December 31,
                                                            2001          2000
                                                         (Unaudited)
                                                         ----------   ----------

CURRENT LIABILITIES:
                                                               
  Accounts payable                                       $  727,681  $  573,067
  Accrued liabilities                                       174,722     196,010
  Note payable                                               40,007          -
  Note payable - related party                               28,005      28,005
  Current portion of long-term debt                         798,290     798,290
  Current portion of capital leases                          45,692      45,692
                                                         ----------   ---------
   Total current liabilities                              1,814,397   1,641,064
                                                         ----------   ---------
LONG-TERM DEBT, net of current portion shown above          366,612     366,612
                                                         ----------   ---------
OBLIGATION UNDER CAPITAL LEASE,
  net of current portion shown above                        140,325     146,648
                                                         ----------   ---------
MINORITY INTERESTS                                            4,962       4,962
                                                         ----------   ---------
COMMITMENTS AND CONTINGENCIES                                    -           -
                                                         ----------   ---------
STOCKHOLDERS' EQUITY:
  10% convertible preferred stock, Series A, $10 par
    value, 500,000 shares authorized, 40,000 shares
    issued and outstanding at March 31, 2001 and
    December 31, 2000                                       400,000     400,000
  10% convertible preferred stock, Series B, $10 par
   value, 100,000 shares authorized, no shares
   issued and outstanding at March 31, 2001 and
   December 31, 2000                                              -           -
  10% convertible preferred stock, Series C, $10 par
   value, 6,000 shares authorized, 6,000 shares
   issued and outstanding at March 31, 2001 and
   December 31, 2000                                         60,000      60,000
  10% convertible preferred stock, Series D, $10 par
   value, 80,000 shares authorized, no shares
   issued and outstanding at March 31, 2001 and
   December 31, 2000                                              -           -
  Common stock, $.001 par value, 25,000,000 shares
   authorized; 5,107,121 and 4,915,621 shares issued
   and outstanding as of March 31, 2001 and
   December 31, 2000, respectively                            5,107       4,916
  Additional paid-in capital                              5,120,129   5,106,595
  Accumulated deficit                                    (5,219,960) (5,012,806)
                                                         ----------   ---------
   Total stockholders' equity                               365,276     558,705
                                                         ----------   ---------
                                                         $2,691,572  $2,717,991
                                                         ==========   =========



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

                                       5


                              ATOMIC BURRITO, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000




                                                        2001           2000
                                                    (Unaudited)     (Unaudited)
                                                    ----------      ----------
REVENUES:
                                                              
  Beverage and food sales                           $  914,338      $1,099,729
  Admission fees                                       119,541         151,018
  Other income                                          75,464          85,728
                                                    ----------      ----------
                                                     1,109,343       1,336,475
                                                    ----------      ----------
COSTS AND EXPENSES:
  Cost of products and services                      1,088,073       1,077,002
  General and administrative expense                   133,670         197,489
  Depreciation and amortization                         53,838          75,467
  Interest expense                                      40,916          25,704
                                                    ----------      ----------
                                                     1,316,497       1,375,662
                                                    ----------      ----------
INCOME (LOSS) BEFORE INCOME TAXES
  AND MINORITY INTERESTS                              (207,154)        (39,187)

INCOME TAX (EXPENSE)                                        -               -
                                                    ----------      ----------
INCOME (LOSS) BEFORE MINORITY INTERESTS               (207,154)        (39,187)

MINORITY INTERESTS IN (INCOME) LOSS OF
  CONSOLIDATED SUBSIDIARIES                                 -           11,575
                                                    ----------      ----------
NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS      (207,154)        (27,612)

LOSS ON DISCONTINUED OPERATIONS                             -         (107,717)
                                                    ----------      ----------
NET INCOME (LOSS)                                     (207,154)       (135,329)

PREFERRED STOCK DIVIDENDS                                   -               -
                                                    ----------      ----------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK        $ (207,154)     $ (135,329)
                                                    ==========      ==========
BASIC EARNINGS PER SHARE                            $    (0.04)     $    (0.03)
                                                    ==========      ==========
DILUTED EARNINGS PER SHARE                                N/A             N/A
                                                    ==========      ==========
AVERAGE COMMON AND COMMON EQUIVALENT:
  BASIC SHARES                                       5,107,121       4,277,313
                                                    ==========      ==========


                 See accompanying notes and accountants' report.

                                       6





                              ATOMIC BURRITO, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)





                     Series A      Series B     Series C      Series D
                        10%          10%           10%          10%       Common
                     Preferred    Preferred     Preferred    Preferred     Stock
                       Value        Value         Value        Value       0.001         Additional                     Total
                        of            of           of            of         par           Paid-In    Accumulated     Stockholders'
                      Shares        Shares       Shares        Shares      Value (1)      Capital      Deficit         Equity
                     ------------------------------------------------------------------------------------------------------------
Balance,
                                                                                             
  December 31, 1999   $400,000    $   -          $   -         $   -       $4,236        $4,754,851  $(3,427,127)    $ 1,731,960

Exercise of stock          -          -              -             -           53            39,696            -          39,749

Cash dividends:
  Preferred -
  $1 per share             -          -              -             -            -                 -      (10,000)        (10,000)

Net loss for the
  three months
  March 31, 2000           -          -              -             -            -                -      (135,329)       (135,329)
                      -----------------------------------------------------------------------------------------------------------
Balance,
  March 31, 2000      $400,000    $   -          $   -         $   -       $4,289        $4,794,547  $(3,572,456)    $ 1,626,380
                      ===========================================================================================================
Balance,
  December 31, 2000   $400,000    $   -          $60,000       $   -       $4,916        $5,106,595  $(5,012,806)    $   558,705
Common stock issued
  to purchase interest
  in Boots, Inc.           -          -              -             -          100              (100)           -               -

Issuance of stock for
  services rendered        -          -              -             -           91            13,634            -          13,725

Net loss for the
  three months ended
  March 31, 2001           -          -              -             -            -                 -      (207,154)      (207,154)
                      -----------------------------------------------------------------------------------------------------------
Balance,
  March 31, 2001      $400,000    $   -          $60,000       $   -       $5,107        $5,120,129  $(5,219,960)    $   365,276
                      ===========================================================================================================



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

                                       7

                              ATOMIC BURRITO, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   Page 1 of 2



                                                                    2001             2000
                                                                 (Unaudited)      (Unaudited)
                                                               -------------      -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                            
  Net loss                                                      $(207,154)        $ (135,329)
  Adjustments to reconcile net loss to net cash
   used in operating activities -
   Depreciation and amortization                                   53,838            141,617
   Minority interests in earnings of subsidiaries                       -            (11,575)
   Changes in assets (increase) decrease -
    Accounts receivable                                           (15,911)            (5,515)
    Due from related parties                                      (14,995)                 -
    Inventories                                                         -              5,456
    Prepaid expenses                                                4,048             11,289
    Deposits and other assets                                           -            (52,470)
   Changes in liabilities increase (decrease) -
    Accounts payable                                              154,614            (74,634)
    Accrued expenses                                              (21,289)            42,386
                                                               -------------      -----------
      Net cash (used in)
            operating activities                                  (46,849)           (78,775)
                                                               -------------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Disposal of property and equipment                                1,000
  Acquisition of property and equipment                                 -           (174,940)
                                                               -------------      -----------
   Net cash provided by (used in) investing activities              1,000           (174,940)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Partnership distributions to minority interests                       -             (1,249)
  Sale of common stock                                                  -             39,750
  Repayments of notes payable, related parties                          -            (67,260)
  Borrowings under notes payable and capital leases                214,280           303,243
  Repayments of notes payable and capital leases                  (180,595)           (2,634)
                                                               -------------      -----------
   Net cash provided by financing activities                        33,685           271,850
                                                               -------------      -----------
NET (DECREASE) INCREASE IN CASH                                    (12,164)           18,135

CASH, BEGINNING OF PERIOD                                           78,925           172,622
                                                               -------------      -----------
CASH, END OF PERIOD                                             $   66,761        $  190,757
                                                               =============      ===========



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

                                       8


                              ATOMIC BURRITO, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   Page 2 of 2



                                                                    2001             2000
                                                                (Unaudited)       (Unaudited)
                                                               -------------      -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                                                                            
  Cash paid for interest                                        $   40,916        $   29,980
                                                               =============      ===========


SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
During January 2001, the Company issued 91,500 shares of common stock for public
relations services to be rendered.  This transaction was valued at $13,725.

During  January 2001,  the Company  issued an additional  100,000  shares of its
common stock to complete the  exchange for the 20% interest in  Incahoots,  Ltd.
not owned by the Company. This transaction resulted in a reduction of additional
paid-in capital of $100.



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




                                       9




                              ATOMIC BURRITO, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 1 - GENERAL

In the  opinion  of Atomic  Burrito,  Inc.  (the  "Company"),  the  accompanying
unaudited consolidated financial statements contain all adjustments  (consisting
of only normal  recurring  accruals)  necessary to present  fairly the Company's
financial  position as of March 31, 2001 and the results of its  operations  and
cash flows for the three months ended March 31, 2001 and 2000.  These statements
are  condensed  and,  therefore,  do not  include  all of  the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  The statements  should be read in  conjunction  with the
consolidated financial statements and footnotes included in the Company's Annual
Report on Form  10KSB for the year  ended  December  31,  2000.  The  results of
operations  for  the  three  months  ended  March  31,  2001  and  2000  are not
necessarily indicative of the results to be expected for the full year.

Operating  results  were  reclassified  for 2000 to segregate  the  discontinued
operations of the Atomic Burrito Restaurants from continuing operations.

Note 2 - NOTES RECEIVABLE

        The Company had the  following  notes receivable at March 31, 2001:

           9% note receivable due from a
           corporation, due October 2005                              $  75,000


           9% note receivable due from a
           corporation, due October 2005                                150,000

           9% note receivable due from a
           corporation, due October 2005                                160,000

           8%  note  receivable  due  from
           an individual, payable in monthly
           installments of $3,536, including
           interest, due September 2007                                 370,000
                                                                     ----------

                                                                        755,000
               Less: Reserve for doubtful
               collectibility                                          (350,000)
                                                                     ----------
           Total, net of reserve for collectibility                     405,000

           Current portion                                               37,266
                                                                     ----------
           Long-term portion                                        $   367,734

                                                                     ===========
                                       10



Note 3 - NOTES RECEIVABLE FROM AFFILIATES

        The Company had the following  notes  receivable  due from affiliates as
        of March 31, 2001:

           6% note receivable due from a
           corporation in March 2001                                  $ 100,000

           6% note receivable due from
           a corporation in April 2002                                   50,000

           8% note receivable due from a
           corporation in April 2001                                    480,000
                                                                      ---------

               Total notes receivable - affiliates                    $ 630,000
                                                                      =========

        As approved by the Board of Directors,  interest  income on these  notes
        has been waived  through  April,  2003,  contingent  upon the  continued
        waiver  of dividends on the  40,000 shares  of 10% convertible  series A
        preferred stock held by the affiliate.  The Company may also  accept the
        conversion of a $35,000 note payable to the  affiliate  to equity in the
        Company, or the waiver of interest due by the  affiliate  to the Company
        on the said note.  The Board  of Directors  has approved  a plan  by the
        affiliate to pay, offset, or otherwise reduce amounts  owed by it to the
        Company  during  the second  quarter of 2001,  in addition to a previous
        agreement to pay at  least 5% of the principle  balance on the  $480,000
        receivable note annually beginning in 2002 until maturity.

Note 4 - PROPERTY AND EQUIPMENT

        Property and equipment as of March 31, 2001, include the following:

           Leasehold and other improvements                          $1,832,453
           Restaurant and club equipment                                653,155
           Furniture and fixtures                                       328,785
           Signage                                                       85,402
                                                                     ----------

                                                                      2,899,795
           Less accumulated depreciation                             (1,946,237)
                                                                     ----------
                Total property and equipment                         $  953,558
                                                                     ==========

        Certain property and equipment located at the AB of OKC-I restaurant has
        been  reduced  to  net  realizable   value  by  a  reserve  of  $200,000
        established by management.



                                       11


Note 5 - DISCONTINUED OPERATIONS

        On August 30, 2000, the Company  announced its intentions to discontinue
        its Atomic  Burrito  Restaurant  operations.  Accordingly  the following
        sales occurred prior to December 31, 2000:

        (1)The Company president resigned and formed Three B's Restaurant Group,
           Inc.(Three  B's),  which  bought  from  the  Company  its  subsidiary
           company,  which  held the  restaurant  concept,  Atomic  Development,
           Inc.(Development)  and two companies which held the majority interest
           in two restaurant locations,  AB of Tulsa-I,  L.L.C.(Tulsa) and AB of
           Wichita-I,  L.L.C.(Wichita)  for $425,000 on November 30, 2000. Three
           B's  acquired  the leases for the two  restaurant  locations  and all
           assets and liabilities of the entities sold. However, the Company was
           required  to reduce  accounts  payable of Tulsa by  $40,000  and loan
           Wichita  $40,000  which is to be repaid  beginning May 30, 2001 at an
           interest rate of 9% per annum with a first payment of $4,000 and $550
           monthly  thereafter until October 31, 2005 with the remaining balance
           being due at that  time.  At  December  31,  2000,  no funds had been
           advanced to Three B's on this note.

           Three B's issued  three  notes as  consideration  for the sale of the
           above mentioned entities, as follows:  Development - $75,000, Tulsa -
           $160,000 and Wichita - $150,000. All notes bear interest at a rate of
           9% per annum,  have monthly  payments  scheduled to commence  June 1,
           2001 with  final  payment  due on  October  31,  2005.  The notes are
           collateralized by all of the assets of the entities acquired by Three
           B's with  requirements  of the  Company  to provide  satisfaction  on
           certain  liabilities of the entities sold to Three B's. In connection
           with this  transaction,  the  Company has  provided  for a reserve of
           $250,000  to cover  future  possible  losses  which  could arise from
           disputes  resulting  in  adjustments  in  amounts  paid on the  notes
           receivable.

        (2)The Company sold its Norman restaurant  location to Atomic Restaurant
           Group,  L.L.C.  (ARG) on September  15,  2000.  The sales price was a
           $370,000 note payable in  installments  at 8% beginning  November 15,
           2000 for  $3,535.91  until paid in full on September  15,  2007.  The
           Company  sold all its  assets at the  Norman  location  but was still
           liable for the  liabilities  in the AB of  Norman-I,  L.L.C.  entity,
           which included the obligations on the Norman location equipment.  The
           Company  has  provided a $100,000  reserve to cover  future  possible
           losses,  which could arise from disputes  resulting in adjustments in
           amounts paid on the note receivable.

        The Houston location and the Oklahoma City locations  ceased  operations
        and the  equipment  at the Houston  location  has been  written  down to
        $120,000, which is the anticipated sales price of the equipment to Three
        B's.  The Oklahoma  City  property has been written down by $200,000 and
        the  Company is  currently  paying the  rental on this  location  and is
        responsible for the liabilities of the Oklahoma City location.

                                       12


Note 6 - SUBSEQUENT EVENTS

        On  March 7,  2001,  the  Company  agreed  to the sale of its  nightclub
        business in Wichita,  Kansas for  $1,200,000 in cash.  The sale includes
        the equipment and improvements,  the lease, permits and licenses at this
        location  together  with  certain  other  assets at this  location.  The
        Company  closed  on this  sale on April 11,  2001,  realizing  a gain of
        approximately $682,000 in connection with this transaction.

PART 1 - Item 2


Management's Discussion and Analysis of
Financial Condition and Results of Operations


PART I

Special Note Regarding Forward-Looking Statements

Certain  statements in this Form 10-QSB under "Item 1. Description of Business",
"Item 3. Legal Proceedings",  "Item 6. Management's Discussion and Analysis" and
elsewhere  constitute  "forward-looking  statements"  within the  meaning of the
Private  Securities  Litigation  Reform  Act of 1995 (the  "Reform  Act").  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other facts which may cause the actual  results,  performance or achievements of
Western Country Clubs,  Inc. (the "Company") and its subsidiaries and affiliated
partnerships to be materially different from any future results,  performance or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
factors  include,  among others,  the following:  general  economic and business
conditions;  competition;  success of  operating  initiatives;  development  and
operating  costs;   advertising  and  promotional  efforts;  adverse  publicity;
customer  appeal and  loyalty;  availability,  locations  and terms of sites for
nightclub  development;  changes in  business  strategy  or  development  plans;
quality of management;  availability, terms and development of capital; business
abilities and judgment of personnel;  availability of qualified personnel; food,
labor and  employee  benefit  costs;  changes  in, or the failure to comply with
government regulations; regional weather conditions; construction schedules; and
other factors referenced in the Form 10-QSB. The use in this Form 10-KSB of such
words as "believes", "anticipates", "expects", "intends" and similar expressions
are intended to identify forward-looking  statements,  but are not the exclusive
means of identifying such statements. The success of the Company is dependent on
the efforts of the Company and its  management  and  personnel and the manner in
which they operate and develop stores.

                                       13


General

The Company  owns and  operates  two country and western  nightclubs,  one in St
Louis, Missouri and one in Wichita Kansas.

In June 1998, the Company formed a subsidiary corporation, Atomic Burrito, Inc.,
through which to develop a new restaurant concept. Subsequently, Atomic Burrito,
Inc. entered into license agreements for two "Atomic Burrito"  restaurants to be
located in  Stillwater  and Norman,  Oklahoma,  and entered into a third license
agreement  for a restaurant  in Longview,  Washington.  In addition,  in October
1998,  the Company  entered into a joint venture  agreement  with New York Bagel
Enterprises,  Inc.,  ("New York  Bagel")  for the joint  development  of "Atomic
Burrito"  restaurants.  The agreement  provides for New York Bagel to contribute
certain of its restaurant locations,  including leases,  leasehold improvements,
and  equipment  for a 40%  interest in the  operation,  while the Company  would
contribute up to $150,000 for the remodel and conversion  costs,  as well as for
additional  equipment.  The first unit opened in March 1999 in Tulsa,  Oklahoma,
while the second unit opened in April 1999 in Wichita, Kansas.

In September  1999, the Company and New York Bagel agreed to terminate the joint
venture  agreement as it related to additional  development,  and New York Bagel
agreed to sell its  interest in the two  operations  in Tulsa and Wichita to the
Company.  New York Bagel's  stated reasons or the  termination  were the lack of
expansion capital on the part of either of the parties, and their desire to move
in a different  direction.  Subsequently,  New York Bagel  filed for  protection
under  Chapter  13 of the  Federal  Bankruptcy  Statutes.  The  Company  did not
exercise its option to purchase New York Bagel's  interest in these  restaurants
and as described  below,  subsequently  sold its interest in these operations to
its former president.

In December,  1999,  the original  licensees  who had  previously  opened Atomic
Burrito units in Stillwater and Norman, Oklahoma,  approached the Company with a
plan to sell their Norman restaurant to the Company.  They had previously closed
their  Stillwater  restaurant  and were in the process of expanding  their other
restaurant and brew pub operations in both Oklahoma and Texas.  Thereafter,  the
Company entered into an agreement,  effective December 31, 1999, to purchase the
Norman  restaurant  from the  licensee  for the  issuance of 360,000  (valued at
$270,000)  shares of the  Company's  common stock as well as the  assumption  of
certain  liabilities  totaling $60,967,  giving the transaction a total value of
$330,967.

During  February,  2000,  the Company  opened an Atomic  Burrito  restaurant  in
Oklahoma City in which it owned a 100% interest.

During  September,  1999,  the Company  opened an Atomic  Burrito  restaurant in
Houston, Texas in which it owned a 50% interest.

During September,  2000, The Company's Board of Directors decided to discontinue
its efforts to develop and expand the Atomic Burrito Restaurant concept.

                                       14


In September  2000,  the Company sold the  property,  equipment,  and  leasehold
improvements  on its Norman Atomic Burrito  restaurant to an LLC in which one of
the  principals is a former  Company  employee.  In connection  with the sale of
these assets, the LLC agreed to sublease land and building  associated with this
restaurant.  This  property  was  sold  in  exchange  for  a  $370,000  8%  note
receivable.

In  November,  the Company  sold its  interest  in the Tulsa and Wichita  Atomic
Burrito  restaurant  operations to a company  controlled by the Company's former
president for $180,000 and $170,000 respectively.  The sale was consummated with
a $40,000 down payment and the issuance of 8% notes receivable in the amounts of
$160,000 for the Tulsa operations and $150,000 for the Wichita operations.

Also in  November  the Company  sold its stock in Atomic  Development,  Inc.,  a
wholly owned subsidiary  established to oversee the development and franchise of
the Atomic Burrito concept,  for $75,000, to the same company that purchased the
Tulsa and Wichita Atomic Burrito restaurants.

At December 31,  2000,  the Company  recorded an allowance  for bad debts in the
amount of $350,000  associated with the above described  notes.  This charge was
taken to the losses on discontinued operations for financial reporting purposes.

In September,  2000, the Company closed its Houston Atomic Burrito location. The
leasehold  improvements  on this  location  were  forfeited  to the  landlord in
release from any future lease obligations.  The Company is attempting to sell or
lease this equipment as of year-end.

In September, 2000, the Company closed its Oklahoma City Atomic Burrito location
and is  currently  seeking a buyer to take over this  location  and  assume  the
lease.  As of December 31, 2000,  the Company has reduced the carrying  value of
these  assets by an  additional  $150,000  to reflect  the  anticipated  loss on
ultimate  disposition.  This  charge was also taken to the loss on  discontinued
operations.

Liquidity and Capital Resources

As of March 31, 2001, the Company had cash of $66,731,  which was generated from
operating activities, financing activities and investing activities. This amount
represented  a  decrease  $12,164  or 6.38% from cash at  year-end  2000,  and a
decrease of $123,996 from the first  quarter of 2000.  The decrease in cash from
year-end is a result of operating  losses  incurred  during the first quarter of
2001.

As of March 31, 2001, the Company's  working  capital  position  (current assets
minus current  liabilities) was a negative  $(1,432,371)  compared to a negative
$(1,287,457)  at year-end  2000.  The  decrease of $144,914 was due to operating
losses incurred during the first quarter of 2001.  Because of the sale of the In
Cahoots  night  club in  Wichita,  Kansas,  as  discussed  in the  Notes  to the
Financial  Statements,  management  does not  believe  the  decrease  in working
capital  position  will have any  material  effect on its ability to service its
debts and continue the expansion of its restaurant division.

                                       15


Property and  equipment  is made up primarily of assets  required to operate the
St. Louis and Wichita clubs and certain  restaurant  equipment which the Company
was attempting to dispose of.

The  deferred  income tax asset  remains at a balance  of  $100,000.  This asset
resulted  from  the  net  operating  loss  carryforwards  from  the  loss on the
write-off  of the  Tucson  nightclub  in a prior  year,  as  well as from  other
operating  losses  contributing  to the net  operating  loss  carryforward.  The
Company  anticipates  that this  credit  will be  utilized  upon the sale of the
Wichita  night club which  occurred on April 10, 2001.  At December 31, 2000 the
Company had approximately an additional  $2,800,000 in deferred tax assets which
were fully  reserved and not  reflected on the  Company's  balance sheet at that
date.  At December  31, 2000 the Company  had  approximately  $4,400,000  in net
operating losses which will expire commencing in 2013 if not utilized.

On April 10, 2001, the Company sold its Wichita Kansas night club operations for
$1,200,000.  This sale resulted in a gain of approximately $682,000 and provided
cash of  approximately  $1,100,000  to pay down  existing  debts and to  finance
future expansions of the night club operations.

In April,  2001,  certain notes receivable  totaling $480,000 from an affiliated
company  become  due.  Management  anticipates  that  the  interest  due will be
received and that the notes will be renewed.

Results of Operations  - Quarter  Ended March 31, 2001,  Compared to the Quarter
Ended March 31, 2000

For the period ended March 31, 2001,  total revenue of the Company  decreased by
$185,391 or 17% to $1,109,343 compared with total revenues of $1,336,475 for the
first quarter of 2000. This decrease in revenue reflects decreasing beverage and
food sales at the Company's two nightclubs of $185,391, a reduction in admission
fees of $31,477, and a reduction in other income of $10,264.

Total costs and expenses during the current period decreased from $1,375,662 for
the  first  quarter  of 2000 to  $1,316,497.  Costs  of  products  and  services
increased by $11,071 to $1,088,073 for the period compared to $1,077,002 for the
same period in 2000.

Depreciation and amortization decreased by $21,629 or 29% to $53,838 compared to
$75,467 for the same period in 2000.  This  decrease  was due  primarily  to the
disposition of restaurant  leasehold  improvements and equipment associated with
restaurants sold during the fall of 2000.

Interest  expense  increased  by $15,212 to $40,916  from  $25,704 for the first
quarter of 2000.  This  increase is a result of additional  borrowings  incurred
subsequent to March 31, 2000.

                                       16


General and administrative  expense decreased by $63,819 to $133,670 as compared
to $197,489 for the same period in 2000. This is a result of managements efforts
to cut general and administrative costs.

During the quarter ended March 31, 2000, the Company accrued  $107,717 in losses
associated with the discontinuance of its Atomic Burrito restaurant operations.

The Company's net loss for the current period was a $(207,154) compared to a net
loss of $(135,329) for the same period in 2000.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Special Note:  Certain  statements set forth below under this caption constitute
forward-looking  statements"  within the meaning of the Reform Act. See "Special
Note Regarding  Forward Looking  Statements" for additional  factors relating to
such statements.

The Company is  involved in various  legal  actions  associated  with the normal
conduct of its business operations.  No such actions involve known material gain
or loss contingencies not reflected in the consolidated  financial statements of
the Company.

Item 4 - Submission of Matters to a Vote of Security Holders

During the first  quarter of 2001,  the  Company  did not submit any matter to a
vote of its shareholders.

Item 6 - Exhibits and Reports on Form 8-K

(a)  Exhibits:
     11.  Statement Re:  Computation of Per Share Earnings

(b)  Reports on Form 8-K
     No reports 8-K were filed during the quarter ended March 31, 2001.


                                   SIGNATURES


     In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

May 21, 2001                    Atomic Burrito, Inc.

                                By:/s/ Don W. Grimmett
                                   ------------------------
                                   Don W. Grimmett, President


                                       17




EX-11
Computation of Earnings per Share

                              ATOMIC BURRITO, INC.
                        COMPUTATION OF EARNINGS PER SHARE
                                   (UNAUDITED)

                                                   Three Months Ended March 31,
                                                       2000              1999
                                                    ----------        ----------
BASIC EARNINGS PER SHARE:
Net income                                          $(207,154)       $ (135,329)
Dividends on preferred stock                               -                  -
                                                    ----------        ----------

Net income applicable to
    common stock                                    $(207,154)       $ (135,329)
                                                    ==========        ==========

Shares used in computing basic earnings
    per share                                       5,107,121         4,277,313

Basic earnings per common share                        $(0.04)           $ (.03)
                                                    ==========        ==========

DILUTED EARNINGS PER SHARE:
Net income                                                N/A              N/A
                                                    ==========        ==========


                                       18