<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 28, 2003
                           COMMISSION FILE NO. 1-12134
                              CUSIP NO. 286199-20-3

                          ELEPHANT & CASTLE GROUP INC.
                                (NAME OF ISSUER)
                                ----------------

PROVINCE OF BRITISH COLUMBIA                         NOT APPLICABLE
----------------------------                         --------------
(State or other                                      (IRS Employer Identifi-
jurisdiction of                                       cation Number)
incorporation)

1190 Hornby Street
VANCOUVER, B.C. CANADA                               V6Z 2K5

(Address of principal                                (Zip Code)
 executive offices)

Registrant's telephone number including area code: (604) 684-6451

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

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). YES                   NO    X
                                       -----                 -----

State the Aggregate market value of the voting and non-voting Common Equity held
by non-affiliates of the Registrant computed by reference to the price at which
the Common Equity was last sold, or the overage bid and asked price of such
Common Equity, as of the

                                      -1-

<PAGE>

last business day of the registrant's most recently completed second quarter: US
$1,138,000(CDN $1,532,000).

Number of shares of Issuer's  Common Stock  outstanding as of December 28, 2003:
5,146,604.

Issuer's  revenues  during  the fiscal  year  ended  December  28,  2003:  CDN $
37,453,000 (converts at applicable exchange rates to US $ 26,725,000).

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

         None.

Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>

                                            OTCBB        NUMBER OF
      TITLE OF EACH CLASS                   SYMBOL       SHARES OUTSTANDING
--------------------------------            ------       ------------------

<S>                                         <C>          <C>
Common Stock, without par value             PUBSF        5,228,504 (a)
</TABLE>

(a)   Calculated as of February 2, 2004

FORWARD-LOOKING STATEMENTS

         This annual report on Form 10-K contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including statements made with respect to the results of operations and
businesses of the Company. Words such as "may," "should," "believe,"
"anticipate," "estimate," "expect," "intend," "plan" and similar expressions are
intended to identify forward-looking statements. These forward-looking
statements are based upon management's current plans, expectations, estimates
and assumptions and are subject to a number of risks and uncertainties that
could significantly affect current plans, anticipated actions and the Company's
financial condition and results of operations. Factors that may cause actual
results to differ materially from those discussed in such-forward looking
statements include, among other, the following possibilities: (i) fluctuations
in foreign currency exchange rates; (ii) heightened competition, the entry of
new competitors; (iii) the inability to carry out development plans or to do so
without delays; (iv) loss of key executives; and (v) general economic and
business conditions. The Company does not intend to update these cautionary
statements.

         AVAILABLE INFORMATION. The Company files annual and quarterly reports
with the Securities and Exchange Commission ("SEC"). Its Commission file number
is 1-12134. The public may read and copy any materials filed by the Company with
the SEC at the SEC's public reference room, 450 5th Street, N.W., Washington,
D.C. The public may obtain information on the operation of the public reference
room by calling the SEC at 1-800-SEC-0330. The Company's internet website

                                      -2-

<PAGE>

address is: www.elephantcastle.com
            ----------------------

         The Company also makes available, free of charge, through its internet
website, its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports, each as soon as reasonably
practicable after the same are electronically filed with, or furnished to the
SEC. The Board of Directors has recently adopted a Code of Ethics which will be
printed as an exhibit to the Company's Proxy Statement in connection with its
2004 Annual Meeting of Shareholders.

                                      -3-


<PAGE>

ITEM 1   DESCRIPTION OF BUSINESS

GENERAL

         The Company owns and operates pub and casual dining restaurants in the
United States and Canada, and is actively engaged in restaurant franchising
activities. As of the date of this report, the Company currently owns and
operates a chain of 16 full-service casual dining restaurants and pubs, 11 of
which are located in Canada and 5 of which are located in the United States.

         Fifteen of the Company's sixteen owned restaurants are operated under
the name "Elephant & Castle", an English pub concept, five of which are in the
United States. The sixteenth owned restaurant, located in Canada, operates under
the name "Rosie's on Robson" but is regarded by management as an Elephant &
Castle location for internal financial reporting purposes.

         In addition to the owned and operated units, there are 7 Elephant &
Castle franchise locations of which 3 are in Canada and 4 are in the United
States, and one Elephant & Castle restaurant operated under a joint venture
agreement in the US. On March 28, 2003, the Company opened its first managed
joint venture Elephant & Castle restaurant at the Club Quarters hotel in San
Francisco, California. The Company has a one-third ownership stake in this
operation, and is responsible for the day to day management of the restaurant.
The Company is actively considering other managed unit opportunities.

         In January 2003, the Company closed its only owned and operated "Alamo
Steakhouse & Grill" red meat steakhouse at the Mall of America, Bloomington,
Minnesota. Following this decision, in early 2003, two of the Company's three
Alamo franchises gave notice that they wished to cancel their franchise
agreements. These two Alamo franchises re-branded in early 2003. The Company is
in negotiations with the one remaining Alamo franchisee regarding the continued
use of the Alamo name, or the re-branding of this restaurant. The Company has no
future plans to expand the "Alamo Steakhouse & Grill" brand.

2003 RESULTS OF OPERATIONS

         In 2003, the Company's sales were CDN $37,453,000 compared to CDN
$43,520,000 for 2002, a decline of CDN $6,067,000 or 13.9%. Of the sales decline
reported, CDN $2,167,000 was due to sales from US operations being translated at
a lower exchange rate than that applied in 2002. On a same store basis, revenues
for 5 US owned and operated locations opened throughout both periods were US
$12,077,000, an increase of 1.1%, while revenues for 11 Canadian corporate
locations open throughout both periods were CDN $18,730,000, down 2.6%. CDN
$4,346,000 of the overall sales decline related to the closure of stores during
2003. These closures

                                      -4-

<PAGE>

included the Company's  only owned "Alamo  Steakhouse & Grill" and the two Alamo
franchises.  During 2003 the Company  also closed one Company  owned  Elephant &
Castle  restaurant at BCIT,  Burnaby,  Vancouver,  BC, and announced the planned
closure of its  Elephant & Castle  restaurant  in the West  Edmonton  Mall,  AB,
closed in January 2004. One new joint venture restaurant,  in San Francisco, CA,
and one new franchise in Springfield,  NJ, were opened in March 2003, adding CDN
$630,000 to sales.

         During the fiscal year ended December 28, 2003, the Company generated a
net profit of CDN $319,000 compared to a net loss of CDN $(2,111,000) for the
corresponding period in 2002. The net profit for the year ended December 28,
2003 included a gain on foreign exchange of CDN $952,000 (2002 = CDN $278,000).
The net loss for the year ended December 29, 2002 included CDN $2,382,000 of
costs resulting from the write-down of goodwill and other intangible assets in
accordance with current recommendations of the Canadian Institute of Chartered
Accountants.

         General and administrative expenses increased from 8.1% of sales in
2002 to 10.1% of sales in 2003. This reflects increased insurance costs,
building head office infrastructures, the costs of the Company's vacant former
offices in Vancouver, and a lower sales base. Interest on long term debt
decreased to CDN $763,000 in 2003 from CDN $899,000 in 2002 as a result of
reducing debt levels and a favorable movement in the value of the Canadian
dollar versus the US dollar.

FINANCINGS

         The Company has been financed principally by General Electric
Investment Private Placement Partners II ("GEIPPPII"). The Company first entered
into a financial relationship with GEIPPPII in 1995. GEIPPPII invested US
$1,000,000 in the Company's Common Shares, and ultimately provided US $9,000,000
in exchange for Convertible Subordinated Notes. In October, 1999 the Company
granted a security interest to GEIPPPII over substantially all of its assets in
exchange for a waiver of certain interest payments, waiver of existing defaults
and a relaxation of certain financial covenants. In 2001, the Company agreed to
a restructuring of its indebtedness to GEIPPPII. Under this Agreement, the
Company issued 2,600,000 Shares of Common Stock and issued US$5,000,000 of
Senior Notes plus US$5,000,000 of Junior Notes in exchange for the cancellation
of the US$10,000,000 of pre-existing debt to GEIPPPII.

         As a consequence of such restructuring, GEIPPPII is currently the owner
of 62% of the Company's Common Shares, and holds certain conversion rights to
increase its ownership percentage. GEIPPPII currently has two representatives on
the Company's Board of Directors, and the capacity to elect a majority of the
members of the Board. During 2003, GEIPPPII agreed to postpone repayment of four
quarterly installments on the Senior Notes commencing November

                                      -5-

<PAGE>

2003  (total  US  $700,000)  in order to help fund  future  Company  growth.  In
addition,  during  2003,  GEIPPPII  agreed to modify the terms  under  which the
Junior  Notes  are  required  to  be  mandatorily  reclassified  as  debt.  (See
"Liquidity and Capital Resources").

         On March 9, 2004, the Company agreed to issue 816,250 warrants to
GEIPPPII 816,250 to purchase common shares at an exercise price of US $1.00,
with a five year term.

         OTHER FINANCING. In February of 1999, the Company completed an
additional private placement equity financing with a group of US investors. In
total the Company raised US $3,265,000 (CDN $4,897,500) from the sale and
issuance of additional Convertible Subordinated Notes (the "'99 Notes"). The '99
Notes had an initial term of five years which required payment in full of all of
the '99 Notes not previously paid or converted by December 31, 2003, together
with a 25% premium on the unpaid principal amount thereof.

         US$1,582,000 of the `99 Notes were previously converted into Common
Stock at $2 per Share (adjusted for the 1 for 2 stock consolidation). At
December 28, 2003, US$683,000 in face amount of the remaining '99 Notes remained
outstanding. In the last quarter of 2003, the terms of the '99 Notes were
renegotiated and the holders of the '99 Notes have agreed to accept quarterly
payments equivalent to 4.5% of the original principal, plus 25% premium, per
quarter. This arrangement continues until September 2005, when the balance of
the `99 Notes, including premium, are due. Interest accrues on the unpaid
principal, plus 25% premium, at a rate of 8% per annum. The holders of the '99
Notes received an aggregate of 81,900 Common Shares in consideration of such
extended terms of payment. The grant of the additional Common Shares will be
expensed in 2004.

RESTAURANTS IN OPERATION

         ELEPHANT & CASTLE. At the Elephant & Castle restaurants, the Company
seeks to distinguish itself from competitive restaurants by a distinctive
British style and Tudor decor, and by featuring a wide variety of menu items
including a large number of English-style dishes. The Company's restaurants
offer a broad menu at popular prices. The menu is regularly updated to keep up
with current trends in customers' tastes. Although all of the Company's
restaurants provide full liquor service, alcoholic beverages are primarily
served to complement meals.

         HOTEL RESTAURANTS. Starting in 1994, the Company shifted its previous
emphasis from mall locations to hotel locations. The Winnipeg Delta Elephant &
Castle restaurant was opened on May 18, 1994. The Philadelphia Crowne Plaza unit
was opened on February 28, 1995, Rosie's on Robson also opened in 1995, and the
San Diego Holiday Inn was opened on July 1, 1996. The Boston Club Quarters, and
Seattle West Coast Grand restaurants were added in 1997. The

                                      -6-

<PAGE>

Company opened its Chicago Club Quarters restaurant in April of 2001.

         During 2002 the Company signed its first joint venture agreement to
open an Elephant & Castle "managed" restaurant in a newly built hotel in San
Francisco, CA. Under this agreement, capital costs and profits are shared
between the Company and its joint venture partner. The San Francisco restaurant
opened on March 28, 2003. The Company believes that joint venture managed unit
opportunities offer significant potential for future growth.

         In the opinion of management, the key ingredients in the selection of
hotel based units are: (1) the control of occupancy costs; (2) the capacity to
work synergistically with a hotel management seeking to divorce itself from
direct involvement in food and beverage operations; and (3) the Company's
ability to control the menu, kitchen and restaurant amenities. The location of
the hotel in the vicinity of other drivers of restaurant business is a key
consideration for revenue generation.

         FRANCHISING. Management of the Company believes that the Company's
"brand" identification is a valuable asset. Seven franchised locations of the
Elephant & Castle brand are now open, including Springfield, NJ, which opened
during 2003. There are currently no new signed agreements for Elephant & Castle
franchises. One Alamo Steakhouse & Grill franchise still operates in Colorado
Springs, Colorado. The Company is in negotiations with this franchisee regarding
the continued use of the Alamo name, or the re-branding of this restaurant.

         The Company signed a sub-franchise agreement with Canadian Niagara
Hotels for the right to develop a Rainforest Cafe in Niagara, Ontario. This unit
opened in May, 2001. In 2002, the Company assigned this sub-franchise in
exchange for a finders fee of 1% of sales for the following 10 years.

         Future activities are intended to include a continuation of the
Company's franchising activities for the Elephant & Castle brand. No further
franchises of the Alamo Steakhouse & Grill or Rainforest Cafe brands are
anticipated.

         FUTURE COMPANY GROWTH. The Company's future growth is restricted by the
Company's limited availability of capital. Future developments will be out of
internally generated cash flow plus bank borrowings to the extent they are
available and permitted under existing agreements. Management believes it
continues to have a favorable relationship with GEIPPPII which could permit such
borrowings under appropriate circumstances. For future growth of the Company's
restaurants, management intends to concentrate exclusively on its Elephant &
Castle concept. Management is primarily focused on growth of revenues at
existing units and on joint ventures and management arrangements with hotel
operators and

                                      -7-

<PAGE>

prospective franchises. Any added units will be predominantly hotel-based or in
high traffic, urban centre locations. The Company is not actively negotiating
the development of any additional Company owned locations.


ADDITIONAL INFORMATION

a.       FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

         The Company considers that it has been substantially engaged in a
single line of business - the ownership and operation of casual dining
restaurants - and does not separately segment its financial results.

b.       NARRATIVE DESCRIPTION OF THE BUSINESS.

          i. PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS. See Description
of the Business - General.

         ii. DISTRIBUTION METHODS. The Company focuses on the casual dining
segment. The Company has not set out to establish its restaurants as
"destination locations". Instead, it relies primarily on its high-traffic,
convenient downtown and suburban mall, and most recently, high-occupancy hotel
locations, consumer satisfaction and reputation to attract new and repeat
customers.

         The Company conducts many local promotions and loyalty programs geared
to the neighborhoods and markets the restaurants serve, and supports these with
print and direct mail advertising. During fiscal 2003, the Company's
expenditures for advertising and promotional activities were approximately 2% of
its revenues.

         iii. STATUS OF NEW DEVELOPMENTS. The Company is constantly in the
process of examining, evaluating and undertaking various new restaurant
opportunities. The Company is at the advanced negotiation stage for a second
joint venture agreement to open an Elephant & Castle restaurant, and for an
eighth franchised Elephant & Castle restaurant. Both locations are planned to
open during 2004 or in early 2005. The Company is actively seeking further
joint venture and franchise opportunities for the Elephant & Castle brand.

         iv. RELATIONSHIP WITH HOTEL OPERATORS. The Company's relationship with
hotel operators is predicated on (i) shared investment in significant physical
improvements to the facility at the onset of the occupancy; (ii) costs of
occupancy measured by a percentage of the unit's revenues; (iii) adequate time
to recruit and train a restaurant staff of Company's selection; and (iv)
reliance upon restaurant operator's control of the physical environment and menu
selections. Management considers its relationship with its Hotel Operators
currently to be satisfactory.

                                      -8-

<PAGE>

         v. COMPETITORS AND COMPETITIVE BUSINESS CONDITIONS. The restaurant and
food service industry is highly competitive and fragmented. There are an
uncountable number of restaurants and other food and beverage service operations
that compete directly and indirectly with the Company. In addition, many
restaurant chains have significantly greater financial resources and higher
sales volumes than the Company. Restaurant revenues are affected by changing
consumer tastes and discretionary spending priorities, local economic
conditions, demographic trends, traffic patterns, the ability of business
customers to deduct restaurant expenses, the increasing trend towards
prohibition of smoking in restaurants and the type, number and location of
competing restaurants. In addition, factors such as inflation and increased
food, liquor, labour and other employee compensation costs can adversely affect
profitability. The Company believes that its ability to compete effectively and
successfully will depend on, among other things, management's ability to offer
quality food for moderate prices, management's ability to control labour costs,
and ultimately on the executive determinations as to extensions of the brand
(I.E., selection of sites for new locations and related strategies). The
Elephant & Castle brand has successfully existed in Canada (26 years) and the
United States (13 years) and, in the opinion of management, has more than
adequately proven that concept, is durable and is capable of being grown
significantly.

         vi. SUPPLIERS. Food products and related restaurant supplies are
purchased both through head office purchasing programs and also at the
restaurant level from specified food producers, independent wholesale food
distributors and manufacturers. This process enables the Company to ensure
timeliness and quality of procurement. Management believes all essential food
and beverage products are available from multiple sources in all of the
locations it serves, and that it is not dependent on any one of a limited number
of suppliers.

         vii. DEPENDENCE ON CONSUMER/BRAND LOYALTY. Elephant & Castle appeals to
a diverse customer base, including business and professional people who occupy
offices in the vicinity of the restaurants. The Company's hotel restaurants
benefit from serving tourists and others using the hotel properties. The
Company's locations and broad menu attract traffic from lunch through
mid-afternoon, dinner and into the evening hours. Most of the Company's
restaurants are open seven days and evenings, each week. All items on the menu
are available for take-out. Take-out revenues have traditionally accounted for
less than 2% of total restaurant sales, but a renewed effort to expand take-out
revenues is currently underway especially at the Company's downtown/urban
locations.

         viii. TRADEMARKS; LICENSES. The Company has registered "The Elephant &
Castle Pub & Restaurant" with the Canadian Trademarks

                                      -9-

<PAGE>

Office, and with the United States Patent and Trademark Office. The Company
acquired "The Elephant & Castle" trademark in the United States. The Company
agreed to pay US $50,000 (CDN $66,500), plus a one-time fee of US $5,000 (CDN
$6,650) per location for the first ten locations for the mark. The Company
regards its "Elephant & Castle" trademark as having substantial value and as
being an important factor in the marketing of its restaurants. The Company also
believes that its trademark rights in relation to "The Alamo Steakhouse & Grill"
have on-going value, and will therefore continue to protect these rights. The
Company is not aware of any infringing uses that could materially affect its
business or any prior claim to the trademarks in its business.

         ix. GOVERNMENTAL LICENSES AND APPROVALS. The Company is subject to
various rules, regulations and laws affecting its business. Each of the
Company's restaurants is subject to licensing and regulations by a number of
governmental authorities, including alcoholic beverage control and health,
safety and fire agencies in the state, province or municipality in which the
restaurant is located. Difficulties in obtaining or failure to obtain the
required licenses or approvals could prevent or delay the development of a new
restaurant in a new location. Management believes the Company is in compliance
in all material respects with all relevant regulations. The Company has never
experienced unusual difficulties or delays in obtaining the required licenses or
approvals required to open a new restaurant.

         Various Canadian federal and provincial labour laws govern the
Company's relationship with its employees, including such matters as minimum
wage requirements, overtime and other working conditions. Significant additional
government-imposed increases in minimum wage, paid leaves of absences and
mandated health benefits, or increased tax reporting and tax payment
requirements for employees who receive gratuities, may impose significant
burdens on the Company. The Company's restaurants in the United States are
subject to similar requirements.

         Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a state or provincial authority and, in certain
locations, county and municipal authorities, for a license and permit to sell
alcoholic beverages in the premises. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. The failure to
receive or retain, or a delay in obtaining, a liquor license in a particular
location could adversely affect the Company's ability to obtain such a license
elsewhere. The Company has not encountered any material problems related to
alcoholic beverage licensing to date.

         x. EFFECT OF EXISTING AND PROBABLE GOVERNMENTAL REGULATIONS.

(a)      Eight of the Company's corporately owned restaurants are
subject to local, state or provincial regulations which prevent or

                                      -10-

<PAGE>

restrict customers from smoking on the premises. This represents a growing trend
in North America, with four of the restaurants having been newly affected in
2003. At least two more restaurants will be affected in 2004. The introduction
of smoking bans or restrictions have an adverse impact upon restaurant revenues
and profits in areas where such restrictions are imposed. The Company's sales
and profits were adversely impacted by such restrictions in certain locales in
2003.

(b) The Company is subject to "dram-shop" statutes in California, Pennsylvania
and Washington and may become subject to similar proposed legislation in Canada.
"Dram-shop" statutes generally provide a person injured by an intoxicated person
the right to recover damages from an establishment which wrongfully served
alcoholic beverages to such a person. The Company has never been the subject of
a "dram-shop" claim. The Company carries liquor liability coverage which it
believes to be consistent with the coverage carried by other entities in the
restaurant industry. Even though the Company is covered by insurance, a judgment
against the Company under a "dram-shop" statute in excess of the Company's
liability coverage could have a material adverse effect on the Company.

         xi. RESEARCH AND DEVELOPMENT. The Company places significant emphasis
on the design and interior decor of its restaurants.

         The typical Elephant & Castle unit designs requires somewhat higher
capital costs and furniture and fixtures investment to open a new restaurant
than is usual in the industry. Landlord contributions defray a part or a
substantial part of interior design and decor at a new restaurant. The Company
may be required to expend greater resources to maintain the appearance of its
units and to remodel such units.

         The Company believes that its design and decor features enhance the
dining experience. Each restaurant typically features a prominent "British Bar",
and large dining areas. Additionally, several offer patio seating, which adds
substantially to seasonal capacity, revenues and profits. Table layouts are
flexible, permitting re-arrangement of seating to accommodate large groups and
effective utilization of maximum seating capacity.

         The Company believes that the location of a restaurant is critical to
its opportunities for success. Significant time and resources are spent in
determining whether a prospective site is acceptable. Traditional Elephant &
Castle restaurants were located at high-profile sites at malls/office complexes
within larger metropolitan areas. In selecting future sites, the Company intends
to analyze demographic information for each prospective site, hotel occupancy,
hotel uses, and factors such as visibility, traffic patterns, accessibility,
proximity of shopping areas, offices, parks, tourist attractions, and
competitive restaurants.

                                      -11-

<PAGE>

         xii. COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS. The
Company is not aware of, and does not anticipate any significant costs related
to compliance with environmental laws.

         xiii. NUMBER OF TOTAL EMPLOYEES AND FULL-TIME EMPLOYEES. As of December
28, 2003, the Company employed approximately 780 persons on a full-time and
part-time basis. 19 of such persons serve in administrative or executive
capacities, approximately 68 serve as restaurant management personnel and the
remainder are hourly workers in the Company's restaurant operations. The Company
believes that its working conditions and compensation packages are competitive
with those offered by its competitors. Management considers the Company's
relations with its employees to be good, and its rate of employee turnover to be
low in relation to industry standards. The Company has an agreement with the
union which represented the former workers at the predecessor restaurant located
at the Holiday Inn unit in Philadelphia which requires the Company to seek new
hires first from among the pool of available union hiring hall personnel. The
Company's service personnel at the San Diego Elephant & Castle unit and Rosie's
on Robson are separately unionized.

         The Company has sought to attract and retain high-quality,
knowledgeable restaurant management and staff. Each restaurant is managed by one
general manager, and from one to three assistant managers depending on volume.
Most restaurants, again depending on volume, also have one kitchen manager and
one to three assistant kitchen managers. On average, general managers have in
excess of 5 years' experience with the Company. The Company also employs two
regional managers. The Company's future success may depend in part on its
ability to continue to attract and train capable additional managers. Restaurant
managers, many of whom have moved up through the ranks, are required to complete
a training program during which they are instructed in areas including food
quality and preparations, customer service, alcohol service, liquor liability
avoidance and employee relations. The Company believes its training programs for
managers and other employees are comparable to the training provided for
managers and other employees at substantially larger restaurant chains.
Restaurant managers are also provided with operations manuals relating to food
and beverage standards and other expectations of restaurant operations. Any new
employee at all functional levels is closely supervised after his or her
on-the-job training.

         Management has made a conscious commitment to provide customer service
of the highest standards. Recent evaluations by customers and other independent
testing appears to confirm customer satisfaction with the quality of food and
service at the Company's restaurant units. Efficient, attentive and friendly
service is integral to the Company's overall concept. Management regularly
solicits employee suggestions concerning operations, and endeavors to be
responsive to legitimate employee concerns. The Company

                                      -12-

<PAGE>

considers the quality of its employee interaction with customers to be an
important element of its business strategy.


                                      -13-

<PAGE>

ITEM 2   PROPERTIES

         All of the restaurants are located on leased sites. The Company owns
the furnishings, fixtures and equipment in each of its restaurants. Existing
restaurant leases have expirations ranging from 2004 through 2017 (including
existing renewal options). The Company has no automatic right to renew the lease
of its Victoria location when it expires on May 31, 2004. The Company is in
negotiation with the landlord to try to extend the term. Other than in
Victoria, the Company does not anticipate any difficulties renewing its
existing leases as they expire, should it wish to do so.

         Mall leases typically provide for fixed rent plus payment of certain
escalations and operating expenses, against a percentage of restaurant sales.

         The Company's hotel restaurant leases are more typically focused on a
percentage of restaurant sales, against a minimum base rental. Thus, while the
Company's aggregate annual minimum rent continues to increase, such rent per
facility and per square foot controlled by the Company is declining.

         The Company's facilities at Hotels and other non-mall locations are as
follows:
<TABLE>
<CAPTION>

HOTEL LOCATIONS     OPENING DATE                   SQUARE FT.     INDOOR SEATING

<S>                 <C>                             <C>               <C>
Winnipeg            May. 1994                        4,300             180
Philadelphia        Feb. 1995                        7,900             310
Vancouver           Aug. 1995                        5,500             200
San Diego           Jul. 1996                        7,500             300
Seattle             Aug. 1997                        7,600             230
Boston              Nov. 1997                        9,500             200
Chicago             Apr. 2001                        6,000             190
San Francisco       Mar. 2003                        5,230             148
(Joint venture)

OTHER NON-MALL LOCATIONS
Toronto
 King Street        Oct. 1996                        9,200             330
Edmonton            Nov. 1997                        5,600             180
Toronto
 Yonge Street       Dec. 1999                        3,200             160
</TABLE>

                                      -14-

<PAGE>

The Company also currently operates 6 mall based restaurants, all of which are
in Canada. The following table provides opening date, square footage and indoor
seating capacity information with respect to each of the mall based restaurants
currently in operation:
<TABLE>
<CAPTION>

                                                                             INDOOR
CITY              MALL              OPENING DATE          SQUARE FEET        SEATING(a)
<S>               <C>               <C>                   <C>                <C>
Ottawa, Ont.      Rideau Center     Mar. 1983             7,119              280
West Edm., Alb.   West Edmonton B)  Jul. 1988             6,500              245
Edmonton, Alb.    Eaton Center      Sep. 1988             5,939              225
Victoria, B.C.    Eaton Center      Jun. 1989             5,640              225
Saskatoon, Sask.  Midtown Plaza     Oct. 1990             5,815              225
Calgary, Alb.     Eaton Center      Dec. 1990             5,851              225
</TABLE>

(a)  Outdoor/patio seating is available at a number of the locations, and not
     included herein.

(b)  Closed January, 2004.

         The following table sets forth, for all restaurants by location, the
earliest expiration date of the leases and the minimum annual rent:
<TABLE>
<CAPTION>
                                       EARLIEST
LOCATION                            EXPIRATION DATE          MINIMUM ANNUAL RENT

<S>                                 <C>                            <C>
Victoria Eaton Center               2004                           180,000
Winnipeg, Delta Hotel               2004                            60,000
Saskatoon Midtown Plaza             2005                           149,000
Vancouver, Rosedale Hotel           2005                            90,000
Philadelphia, Holiday Inn           2005                           130,000
Calgary Eaton Center                2005                           117,000
San Diego, Holiday Inn              2006                            95,000
Edmonton, Eaton Centre              2007                            63,000
Boston, Club Quarters               2007                            78,000
Ottawa Rideau Center                2008                           165,000
Toronto, Yonge Street               2008                           141,000
Chicago, Club Quarters              2010                           159,000
Toronto, King Street                2011                           110,000
Edmonton, Whyte Ave                 2012                           104,000
Seattle, WestCoast Grand            2012                           132,000
San Francisco                       2013                                 0

         TOTAL:                                             CDN $1,773,000
                                                            ==============
</TABLE>

In addition to the properties listed above, as of December 28, 2003 the Company
still operated the Elephant & Castle restaurant at the West Edmonton Mall,
Alberta. Rent payable up to the date of closing (January 16, 2004) was $9,000.
The Company operates the Club Quarters in San Francisco, California on a joint
venture basis and has no obligation for rent in respect thereof. The joint
venture has a 10 year term.

                                      -15-

<PAGE>

ITEM 3   LEGAL PROCEEDINGS

         From time to time lawsuits are filed against the Company in the
ordinary course of business. The Company is not currently a party to any
litigation which would, if adversely determined, have a material adverse effect
on the Company or its business and is not aware of any such threatened
litigation.

         In 1989 and 1990 a Canadian subsidiary of the Company received Notices
of Reassessment from Canada Revenue Agency ("CRA") and the Ontario Ministry
of Revenue ("Ontario Ministry") regarding a construction allowance received
in 1984 from the landlord for its former Sarnia, Ontario location. The
Reassessment was appealed in 1989. A portion of the dispute was resolved in
the Company's favour in 2001, resulting in a resolution accepted by the
Company. The Company has made instalment payments to the Ontario Ministry
totalling CDN $56,000 and has a remaining balance owing of CDN $48,000 which
was recognised as a tax charge in 2002, and against which full provision is
maintained as at December 28, 2003. During 2003, the Company made a payment
of CDN $95,000 to the CRA in "final settlement" of the total amount of
federal taxes claimed by CRA. Subsequently, the Company has received a
further demand from the CRA for $209,000. The Company believes that there is
no basis for this demand and disputes the CRA claim for additional taxes, but
maintains a provision for the entire disputed balance of $209,000 claimed by
the CRA.

         In December 2003, the Company received claims from three current, and
one former kitchen, employee of its San Diego restaurant in relation to
non-payment of wages for breaks which are deemed to be paid time. These four
claims totaled US $45,000 and were settled in early 2004 for US $24,000. One
additional claim of US $7,000 has since been received, and is being reviewed by
the Company. The Company believes that there may be other current and former
employees who could be able to make claims of a similar nature. The Company made
a provision of US $45,000 in the year ended December 28, 2003 against the four
original claims and any possible additional claims. The Company is in the
process of reviewing its procedures for recording employees' entitlement to be
paid for breaks in all of its restaurants.


                                      -16-


<PAGE>

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.


                                      -17-


<PAGE>


                                     PART II

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

(a) The Company's Common Stock was traded on NASDAQ - small cap market from June
29, 1993, until it lost that listing on March 22, 2000 as a result of having
failed to maintain a minimum bid price of $1.00. The shares continue to be
traded on the NASDAQ electronic bulletin board OTCBB (PUBSF).

     The range of high and low sales prices for the Common Stock from January 1,
2002, to the end of 2003 has been:
<TABLE>
<CAPTION>

                                   High               Low

<S>                               <C>                <C>
First Quarter of 2002:            $0.580             $0.300
Second Quarter of 2002:           $0.700             $0.280
Third Quarter of 2002:            $0.420             $0.210
Fourth Quarter of 2002:           $0.450             $0.150

First Quarter of 2003:            $0.400             $0.250
Second Quarter of 2003:           $0.380             $0.220
Third Quarter of 2003:            $0.390             $0.220
Fourth Quarter of 2003:           $0.390             $0.210
</TABLE>

(b) The approximate number of record holders of the Company's common stock as of
January 2004 is 500.


(c) The Company has never paid any dividends in respect of any of its capital
stock and the Company presently has no intention or ability to pay any dividends
in the foreseeable future.


                                      -18-

<PAGE>


(d) Securities authorized for issuance under equity compensation plans.

Equity based compensation plans in force as at December 28, 2003 :
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------
Plan category                  Number of securities         Weighted-average              Number of securities
                               to be issued upon            exercise price of             remaining available
                               exercise of                  outstanding options           for future issuance
                               outstanding options                                        under equity
                                                                                          compensation plans
                                                                                          (excluding securities
                                                                                          reflected in column
                                                                                          (a))
                                   (a)                          (b)                            (c)
--------------------------------------------------------------------------------------------------------------------

<S>                                <C>                      <C>                              <C>
Equity compensation                584,000                  US $ 5.70                           616,000
plans approved by                                           CDN $ 8.84
security holders
--------------------------------------------------------------------------------------------------------------------

Equity compensation                      0                                                            0
plans not approved by
security holders
--------------------------------------------------------------------------------------------------------------------

Total                              584,000                  US $ 5.70                           616,000
                                                            CDN $ 8.84
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      -19-

<PAGE>

ITEM 6   SELECTED FINANCIAL DATA
         (IN THOUSANDS OF CANADIAN DOLLARS EXCEPT PER SHARE INFORMATION WHICH
         IS SET FORTH IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>

                                                 2003                2002                2001               2000               1999

<S>                                           <C>                 <C>                 <C>                <C>                <C>
                             Sales           $37,453             $43,520             $46,833           $50,084            $50,104
                     Income (loss)
                   from Restaurant
                        Operations             3,838               4,147               4,711            (7,621)             2,844
                   Earnings (loss)
        before Interest  and Taxes             1,005              (1,478)              1,276           (11,100)            (1,175)
                 Net Income (loss)               319              (2,111)               (128)          (12,412)            (3,281)
                      Total Assets            13,940              16,806              20,453            19,765             30,028
                     Shareholders'
               Equity (Deficit)(a)             3,210               3,075               5,397            (2,963)             6,793
                         Long Term
                              Debt             6,041               8,071              $9,033           $16,182            $15,792
                           Average
                            Shares
                    Outstanding(b)         5,163,271           5,163,354           3,890,000         2,619,000          1,756,000
                   Earnings (loss)
                     Per  Share(b)              0.06               (0.41)             $(0.03)           $(4.74)            $(1.87)
</TABLE>

     Prior year comparatives have been adjusted to reflect the Company's
change of accounting policy by which all gains and losses arising from
the translation of foreign currency are now included in net income. This policy
was adopted for the year ending December 29, 2002 in line with the new
recommendations of the Canadian Institute of Chartered Accountants, and has been
applied retroactively to prior years:
                  2001 net income decreased by $425
                  2000 net loss increased by $596
                  1999 net loss reduced by $981
                  1998 net loss increased by $1,110

a)   The increase in Shareholder's Equity in 2001 was occasioned by a
     refinancing arrangement with GEIPPPII, pursuant to which a portion of the
     Company's debt with GEIPPPII was restructured to junior notes which are
     mandatorily convertible into common shares under certain circumstances. In
     the event of the failure of the Company to achieve such targets, the junior
     notes and interest thereon will become payable to GEIPPPII as debt.

b)   Adjusted for the Company's 1 for 2 stock consolidation on March 23, 2000.


                                      -20-

<PAGE>

ITEM 7   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

FIFTY TWO WEEKS ENDED DECEMBER 28, 2003 VS. FIFTY TWO WEEKS ENDED DECEMBER 29,
2002

         The Company owns, operates and franchises casual full dining brand name
restaurants in Canada and the United States. Its principal brand is "Elephant
and Castle". From 1996 until early 2003, the Company has also operated red meat
restaurants under the name "Alamo Steakhouse & Grill." In January, 2003, the
Company closed its only owned "Alamo Steakhouse & Grill" and subsequently two
out of three Alamo Steakhouse & Grill franchisees cancelled their franchise on
negotiated terms.

         During 2003, Canadian restaurants were adversely impacted by SARS, the
Canadian meat mad-cow scare, and the power outages experienced in Eastern Canada
during August. US restaurant operations were depressed during the first quarter
of 2003 by the uncertainties surrounding the war in Iraq, but showed good
recovery during the rest of the year as the US economy steadily improved.
Certain Canadian and US restaurant operations were also adversely impacted by an
increase in local, provincial and state regulations restricting or banning
customers from smoking in the restaurants.

SALES

         Sales decreased during the fifty two weeks ended December 28, 2003 to
CDN $37,453,000 from CDN $43,520,000 in 2002. The year on year reduction in
sales of CDN $6,067,000 comprises:
<TABLE>
<CAPTION>
                                                                          CDN $
                                                                       -----------
<S>                                                                    <C>
Consolidation of US sales at lower exchange rate                       (2,167,000)
Decline in sales from same Canadian stores (-2.6%)                       (504,000)
Increase in sales from same US stores (+1.1%)                             182,000
Impact of stores closed in 2002 and 2003                               (4,346,000)
Sales from new stores opened in 2003                                      630,000
Changes in other income                                                   138,000
                                                                       -----------
Total change in sales versus 2002                                      (6,067,000)
                                                                       -----------
                                                                       -----------
</TABLE>

         For the eleven Canadian Elephant & Castle Corporate locations open
throughout both periods, sales for the fifty two weeks ended December 28, 2003
totaled CDN $18,730,000 and were down -2.6% compared to the fifty two weeks
ended December 29, 2002. The two stores in Toronto showed a decline of -11%,
reflecting SARS and the power outage during August. Both Calgary (-9.3%) and
Winnipeg (-7.7%) were adversely impacted by smoking bans introduced during the
year. Following its renovation, Ottawa's sales grew by +6.2%,

                                      -21-

<PAGE>

despite the introduction of a smoking ban and the August power outage.

         For the five US Corporate locations open throughout both periods, sales
for the 2003 period were US $12,077,000 an increase of 1.1% compared to the
prior year. A strong performance from San Diego (+11.6%) was partly offset by a
decline of -5.7% in Boston, where a smoking ban was introduced during the year.

NET INCOME (LOSS)

         For the fifty two weeks ended December 28, 2003, the Company generated
a net profit of CDN $319,000 compared to a net loss of CDN $(2,111,000) for the
fifty two week period in 2002. Earnings per share for the current period were
CDN $0.06 compared to a loss per share of CDN $(0.41) in 2002. The average
number of shares outstanding decreased from 5,163,354 in 2002 to 5,163,271 for
the current year, following the repurchase of 25,000 shares.

         Included in the 2003 profit, is a gain on foreign exchange of CDN
$952,000 (2002 = CDN $278,000) which relates mainly to the revaluation of the
Company's US dollar denominated debt. The 2003 profit is after charging CDN
$132,000 for store closure costs (2002 = CDN $366,000). The 2002 loss included a
CDN $2,382,000 write-off of goodwill and other intangible assets, in line with
the recommendations of the Canadian Institute of Chartered Accountants.(2003 =
CDN $Nil).

INCOME FROM RESTAURANT OPERATIONS

         The Company generated income from restaurant operations of CDN
$3,838,000 compared to CDN $4,147,000 for 2002. The decline versus 2002 of CDN
$309,000 comprises:
<TABLE>
<CAPTION>
                                                                          CDN $
                                                                     -----------
<S>                                                                    <C>
Consolidation US income at lower exchange rate                         (408,000)
Decline in income from same Canadian stores                            (359,000)
Decline in income from same US stores                                  (177,000)
Impact of new and closed stores                                         353,000
Change in store closing costs                                           234,000
Franchise and other income                                               48,000
                                                                     -----------
Total change in sales versus 2002                                      (309,000)
                                                                     -----------
                                                                     -----------
</TABLE>

FOOD AND BEVERAGE COSTS

         Overall, food and beverage costs, as a percentage of sales, improved to
26.8% for the fifty two weeks ended December 28, 2003, compared to 27.4% for the
fifty two weeks ended December 29, 2002.

          This reflects improvements in procurement and waste

                                     -22-

<PAGE>

management for both Canada and the US, management of menu pricing, the
strengthened Canadian dollar which reduced the cost of produce originating from
the US but used in Canadian operations, and the benefit of closing two
underperforming stores in the US.

         In Canada, food and beverage costs improved to 29.0% versus 29.2% in
2002, and in the US to 25.3% versus 26.4% in 2002.

LABOUR AND BENEFITS COSTS

         Labour and benefits decreased from 31.4% of sales in 2002 to 31.0% in
the current period. This improvement partly reflects the lower participation in
the consolidated figures of US operations, where labour and benefits are a
higher percentage of sales, due to the change in exchange rates versus 2002.

         In Canada, labour and benefits costs increased to 29.9% of sales
compared to 29.5% in the prior year. Labour was well controlled against a
background of declining sales, but benefits costs represented a 17.3% uplift on
labour costs in 2003, versus 16.3% in 2002.

         In the US, labour and benefits costs decreased to 33.2% of sales
compared to 33.8% in the prior year. This reduction included the benefit of
closing two loss making stores in 2002 and early 2003. In same US stores, labour
and benefits costs as a percentage of sales increased by 0.4% versus 2002.
Labour was well controlled, but benefits costs represented a 32.4% uplift on
labour costs in 2003, versus 30.1% in 2002.

OCCUPANCY AND OTHER OPERATING COSTS

         Occupancy and other operating expenses as a percentage of sales were
25.9% in both the current and prior periods.

         In Canada, these costs increased to 26.4% from 25.2% in 2002 reflecting
upwards pressure on insurance costs against a declining sales base. In the US,
occupancy and other operating expenses fell to 26.0% versus 27.2% in 2002,
largely reflecting the closure of two loss making stores. In US same store
locations only, these costs rose by 2.0% as a percentage of sales, reflecting
increases in insurance costs, rents, repairs and maintenance, and additional
investment in local marketing activities to build sales.

RESTAURANT CLOSING COSTS

         Included in the 2003 results are costs of CDN $132,000 to reflect the
closure of two Canadian Elephant & Castle restaurants at BCIT, Burnaby,
Vancouver (CDN $89,000) and in the West Edmonton Mall, Alberta (CDN $210,000).
These costs were partly offset by the write-back of CDN $167,000 of provisions
made against 2002 closures which were in excess of actual costs incurred. The
Company received

                                      -23-

<PAGE>

CDN $126,000 in fees from the two former "Alamo Steakhouse & Grill" franchises
who terminated their franchise agreements in early 2003, and such fees were
accounted for as a credit against closing costs.

         Included in the 2002 results were estimated costs of CDN $366,000 to
reflect the closure of the Alamo Steakhouse & Grill restaurant in Bloomington,
MN, and the Elephant & Castle restaurant in Bellingham, WA, offset by the
release of a previous over-provision of closure costs for the Franklin Mills
operation.

DEPRECIATION AND AMORTIZATION EXPENSE

         Depreciation and amortization costs increased to 5.8% of sales for the
current period from 5.0% last year.

         Canadian depreciation costs fell to 3.9% versus 4.3% in 2002,
reflecting some assets becoming fully depreciated, and a lack of new capital
investment during the year.

         US depreciation and amortization costs rose to 8.0% of sales versus
5.7% in 2002. Of this 2.3% increase, 0.9% reflects US sales being translated at
a lower exchange rate in 2003. The new joint venture store in San Francisco had
costs, including pre-opening, of US $153,000 which represented 34.1% of sales
and inflated the US average. Costs in same US stores were broadly flat.

GENERAL AND ADMINISTRATIVE COSTSGENERAL AND ADMINISTRATIVE COSTS

         General and administrative costs increased from 8.1% of sales in 2002
to 10.1% in the current period. Declining total sales in CDN$, reflecting the
change in the US$ exchange rate, account for 0.5% of this increase. In dollar
terms, general and administration costs in 2003, were CDN $3,785,000, an
increase of CDN $264,000 versus 2002. This increase comprises:
<TABLE>
<CAPTION>
                                                                          CDN $
                                                                     -----------
<S>                                                                    <C>
Increase in costs of Vancouver office                                  (280,000)
Costs of vacated office premises in Vancouver                          (307,000)
Saving from closure of Alamo office, Minnesota                          263,000
Decrease in costs of San Antonio office, due to exchange                 60,000
                                                                     -----------

Total increase in G&A costs vs 2002                                    (264,000)
                                                                     -----------
                                                                     -----------
</TABLE>

Higher costs of the Vancouver office reflect increased Operations support, and
higher insurance costs.

The Company's Corporate Office function relocated to smaller offices in
Vancouver in 2000. The vacated offices were initially sub-let to the end of the
Company's lease, but the sub-tenant became insolvent during 2003. The Company
has attempted to find a new sub-tenant for the balance of its lease, which
expires at the end of October 2004, but has been unsuccessful in a difficult
Vancouver commercial

                                      -24-

<PAGE>

property market. The Company has made full provision for the remaining rent and
service charges of this property until the end of the lease.

The Company closed its office in Minnesota in early 2003, following the closure
of the Company's only owned "Alamo Steakhouse & Grill" restaurant.

The decrease in the costs of the San Antonio office largely reflect their
conversion into CDN $ at a lower exchange rate than in 2002. Actual costs were
US $2,000 lower than in 2002.

GAIN/(LOSS) ON FOREIGN EXCHANGE

The Company's results of operations were markedly impacted by changes in
currency translation. For the fifty-two weeks ended December 28, 2003, the
Company recorded a gain on foreign exchange of CDN $952,000 (2002 = CDN
$278,000). This largely reflects the revaluation of the Company's US $3,900,000
of senior debt from a rate of US$1 = CDN$1.57 in 2002 to a rate of US$1 =
CDN$1.31 in 2003.

INTEREST ON LONG TERM DEBT

         Interest on long term debt was CDN $763,000 for the fifty two weeks
ended December 28, 2003, compared to CDN $899,000 in 2002. The decrease is
attributable principally to the favorable movement in the value of the Canadian
Dollar versus the US dollar, and also to the repayment of debt principal.

INCOME/(LOSS) BEFORE TAXES

         The Company generated an income before income taxes of CDN $242,000 for
2003 compared to a loss of CDN $(2,377,000) for 2002. As discussed above,
foreign exchange gains in 2003 and write downs of goodwill and other intangible
assets in 2002 were major factors in this year on year movement.

INCOME TAXES

         The Company generated an income before taxes of CDN $242,000 in the
fifty two week period ended December 28, 2003. The Company has loss
carry-forwards relating to prior years, which are sufficient to cover any tax
charges on current year income. The net tax credit for the year ending December
28, 2003 of $77,000 reflects a decrease in the provision to cover taxes owed by
predecessor companies, partially offset by state taxes payable in the US.

NET INCOME (LOSS)

         For the fifty two weeks ended December 28 2003, the Company's

                                      -25-

<PAGE>

net income was CDN $319,000 compared to a net loss of CDN $(2,111,000) for the
fifty two week period in 2002. Earnings per share for the current period were
CDN $0.06, compared to a loss of CDN $(0.41) in 2002. The average number of
shares outstanding decreased from 5,163,354 in 2002 to 5,163,271 for the current
year.

FIFTY TWO WEEKS ENDED DECEMBER 29, 2002 VS. FIFTY TWO WEEKS ENDED DECEMBER 30,
2001

         The Company owns, operates and franchises casual full dining brand name
restaurants in Canada and the United States. Its principal brand is "Elephant
and Castle". Since 1996 the Company has also operated red meat restaurants under
the name "Alamo Steakhouse & Grill." 2002 was most noteworthy for the
announcement of plans to close the Company's only owned "Alamo Steakhouse &
Grill" and the subsequent decision by two out of three Alamo Steakhouse & Grill
franchisees to cancel their agreements.

         Restaurant operations continued to be adversely impacted by the
economic slowdown during the 1st and 2nd quarters of 2002, particularly at the
Company's hotel/downtown locations, which have a higher dependency on the
business traveller and tourism. The US stores experienced greater impact than
the Canadian stores.

SALES

         Sales decreased during the fifty two weeks ended December 29, 2002 to
CDN $43,520,000 from CDN $46,833,000 in 2001. Sales in 2001 included CDN
$3,571,000 from the discontinued Rainforest Cafe operation (Zero in 2002).
Excluding Rainforest Cafe, sales in 2002 were CDN $258,000 higher than in 2001.

         For the twelve Canadian E&C Corporate locations open throughout both
periods, sales for the fifty two weeks ended December 29, 2002 totaled CDN
$19,533,600 and were down 4% compared to the fifty two weeks ended December 30,
2001.

         For the five US Corporate locations open throughout both periods, sales
for the 2002 period were US $10,793,000 and were flat compared to 2001.

NET INCOME (LOSS)

         For the fifty two weeks ended December 29, 2002, the Company generated
a net loss of CDN $(2,111,000) compared to a net loss of CDN $(128,000) for the
fifty two week period in 2001. Earnings per share for 2002 were a loss of CDN
$(0.41) compared to a loss per share of CDN $(0.03) in 2001. The average number
of shares outstanding increased from 3,890,000 in 2001 to 5,163,354 for 2002 ,
reflecting the full year effect of 2,600,000 shares of common stock which were
issued in the second half of 2001.

                                      -26-

<PAGE>

         Included in the year 2002 loss are the write off of goodwill and other
intangible assets in line with current recommendations of the Canadian Institute
of Chartered Accountants (CDN $2,382,000). Also included are CDN $366,000 of
costs relating to the closure of the Alamo Steakhouse & Grill restaurant (CDN
$288,000)and the closure of the Elephant & Castle restaurant in Bellingham,
Washington (CDN $425,000) partially offset by the release of a previous
over-provision of costs for the closure of the Franklin Mills operation (CDN
$347,000).

INCOME FROM RESTAURANT OPERATIONSINCOME FROM RESTAURANT OPERATIONS

         The Company generated income from restaurant operations of CDN
$4,147,000 compared to CDN $4,711,000 for 2001.

FOOD AND BEVERAGE COSTS

         Overall, food and beverage costs, as a percentage of sales, improved to
27.4% for the fifty two weeks ended December 29, 2002, compared to 28.2% for the
fifty two weeks ended December 30, 2001.

LABOUR AND BENEFITS COSTS

         Labour and benefits decreased from 32.2% of sales in 2001 to 31.4% in
2002.

OCCUPANCY AND OTHER OPERATING COSTS

         Occupancy and other operating expenses increased as a percentage of
sales from 25.6% in 2001 to 25.9% in the 2002.

RESTAURANT CLOSING COSTS

         Included in the 2002 results are costs of CDN $366,000 to reflect the
closure of the Alamo Steakhouse & Grill restaurant in Minneapolis, and the
Elephant & Castle restaurant in Bellingham, WA, offset by the release of a
previous over-provision of closure costs for the Franklin Mills operation.

         There were no similar closure costs or provisions in 2001.

DEPRECIATION AND AMORTIZATION EXPENSE

         Depreciation and amortization costs increased to 5.0% of sales for 2002
from 3.9% in 2001.


GENERAL AND ADMINISTRATIVE COSTS

         General and administrative costs increased from 6.4% of sales in 2001
to 8.1% in 2002, primarily as a result of increased

                                      -27-

<PAGE>

insurance costs and the need to build head office infrastructure to support
growth planned for 2003. In dollar terms, general and administrative costs
increased from CDN $3,010,000 for 2001 to CDN $3,521,000 for 2002.

INTEREST ON LONG TERM DEBT

         Interest on long term debt was CDN $899,000 for the fifty two weeks
ended December 29, 2002, compared to CDN $1,404,000 in 2001. The decrease is
attributable to the repayment of debt principal and a favorable movement in the
value of the Canadian Dollar versus the US dollar.

INCOME/(LOSS) BEFORE TAXES

         The Company generated a loss before income taxes of CDN $(2,377,000)
for 2002 compared to a loss of CDN $(128,000) for 2001. As discussed above, the
Company experienced a negative impact from the write down of goodwill and other
intangible assets ($2,382,000) and the cost of closing two stores ($366,000).

INCOME TAXES

         The Company generated a loss before taxes of CDN $(2,377,000) in the
fifty two week period ended December 29, 2002. The Company has loss
carry-forwards relating to prior years. The net tax credit for the year ending
December 29, 2002 of $266,000 reflects revaluation of the tax asset relating to
these losses, offset by an increase in the provision to cover taxes owed by
predecessor companies.

NET INCOME (LOSS)

         For the fifty two weeks ended December 29 2002, the Company's net loss
was CDN $(2,111,000) compared to a net loss of CDN $(128,000) for the fifty two
week period in 2001. Earnings per share for 2002 was a loss of CDN $(0.41),
compared to a loss of CDN $(0.03) in 2001. The average number of shares
outstanding increased from 3,890,000 in 2001 to 5,163,354 for 2002.

                                      -28-

<PAGE>

FINANCIAL CONDITION AND OTHER ITEMS
-----------------------------------

LIQUIDITY AND CAPITAL RESOURCES

         As at December 28, 2003, the Company had cash balances of CDN $536,000.
Such amounts are sufficient to continue operations as they presently exist. The
Company's lack of adequate cash restricts capital transactions, and precludes
management from spending as it might prefer to refurbish existing locations or
to add additional restaurant locations. The Company's growth strategy is to
focus on strengthening the profitability of existing operations and leveraging
the brands' strength through franchising and through joint venture store growth.

         In order to continue existing operations, and to fund modest growth, it
has been necessary for the Company to renegotiate the repayment terms of both
its Senior Notes and its '99 Notes. The Company's principal lender, GEIPPPII has
agreed to defer four quarterly repayments of the Senior Notes, totaling US
$700,000, commencing November 2003.

         The '99 Notes were originally repayable on December 31, 2003, totaling
US $853,000 including a 25% premium on maturity. The holders of the Company's
'99 Notes have agreed to accept quarterly payments equivalent to 4.5% of the
original principal, plus 25% premium, per quarter. This arrangement continues
until September 2005, when the balance of the '99 Notes are due.

         Under current debt agreements, the Company would have to repay the
outstanding balances on both the Senior Notes and '99 Notes in September 2005.
These amounts would be US $3,100,000 and US $546,000 respectively.

         Also, at September 2005, the Company's Junior Notes will convert to
debt and be immediately repayable, unless the Company meets the levels of EBITDA
required to convert these notes into equity. September 2005 repayment of the
Junior Notes would represent US $5,000,000 plus accrued interest.

         The Company's projections show that there is no likelihood of the
Company either achieving the EBITDA targets required to convert the Junior Notes
into equity, or of building sufficient cash reserves to meet all of its debt
repayment obligations in September 2005.

         The Company has been asked by its board to prepare five year financial
projections, including growth plans, which will form the basis for discussions
regarding the possible rescheduling and/or restructuring of the Company's debt.


                                      -29-

<PAGE>

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CDN AND US GAAP)

         The Company prepares its financial statements in accordance with CDN
GAAP. (The reader is referred to Note 15 of the Consolidated Financial
Statements for the year ended December 28, 2003 for additional explanation.) The
Financial statements, if prepared in accordance with US GAAP would have differed
as follows:

         Net income for the year ended December 28, 2003 would have decreased by
         CDN $ 555,000 comprised primarily of dividends on convertible
         subordinated debentures that would have been treated as interest
         expense under US GAAP and pre-opening costs which would have been
         expensed in 2003 under US GAAP. Net loss for the year ended December
         29, 2002 would be increased by CDN $ 473,000 comprised primarily of
         dividends on convertible subordinated debentures that would have been
         treated as interest expense under US GAAP, offset by pre-opening costs
         that would have been expensed in 2001 under US GAAP. The impact of
         these adjustments would be to decrease the net income per share in 2003
         from CDN $0.06 under CDN GAAP to a loss of CDN $(0.05) under US GAAP.
         For 2002, the loss per share would increase from CDN ($0.41) per share
         to a loss of CDN ($0.50) per share.

         Shareholders' Equity at December 28, 2003 would be decreased from a
surplus of CDN $3,210,000 under CDN GAAP to a deficit of CDN $(5,829,000) under
US GAAP due primarily to the exclusion of CDN $ 8,260,000 of convertible
subordinated debentures which would have been shown as long term debt under US
GAAP. Shareholders' Equity (Deficit) at December 29, 2002 under US GAAP would
have been decreased to a deficit of CDN ($4,832,000) compared to a surplus of
CDN $3,075,000 under CDN GAAP.

                                      -30-

<PAGE>

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


         Intentionally omitted.


                                      -31-

<PAGE>


ITEM 8   FINANCIAL STATEMENTS

         The Company's consolidated financial statements and the report of the
independent accountants thereon appear beginning at page F-2. See index to
consolidated Financial Statements on page F-1.


                                      -32-

<PAGE>


ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.  Not applicable.

ITEM 9A.  CONTROLS AND PROCEDURES.

        Management has disclosed, based on the Company's most recent evaluation
of internal control over financial reporting, to the Company's auditors and the
audit committee of Company's board of directors (or persons performing the
equivalent functions):

         (a)      All significant deficiencies and material weaknesses in the
                  design or operation of internal controls over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         (b)      Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls over financial reporting.


         The assessment report due in respect of this item is not required of
non-accelerated filers prior to fiscal years ending on or after April 15, 2005.


                                      -33-

<PAGE>

                                    PART III


ITEM 10       The information required by PART III will be incorporated by
ITEM 11       reference from Registrant's definitive proxy statement or
ITEM 12       definitive information statement, provided such definitive
ITEM 13       proxy statement or definitive information statement is filed
ITEM 14       not later than 120 days after the end of the fiscal year
ITEM 15       covered by the Form 10-K, or by an amendment to the Form 10-K,
              not later than the end of such 120 day period.


                                      -34-

<PAGE>


                                     PART IV

ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
         FORM 8-K

         (a)  See Index to Exhibits, attached.
         (b) During the last quarter of the period covered by this report, the
         Registrant filed no reports on Form 8-K.


                                      -35-

<PAGE>


         ELEPHANT & CASTLE GROUP INC.

         CONSOLIDATED FINANCIAL STATEMENTS
         DECEMBER 28, 2003 AND DECEMBER 29, 2002
         (CANADIAN DOLLARS)



<TABLE>
<CAPTION>



         INDEX                                                                                           PAGE
         -----                                                                                           ----

         <S>                                                                                             <C>
         MANAGEMENT REPORT                                                                               F-1

         INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS                                                F-2

         CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Balance Sheets                                                                     F-3

         Consolidated Statements of Operations                                                           F-4

         Consolidated Statements of Shareholders' Equity                                                 F-5

         Consolidated Statements of Cash Flows                                                           F-6

         Notes to Consolidated Financial Statements                                                   F-7-25

</TABLE>


<PAGE>






MANAGEMENT REPORT

Management is responsible for preparing the Company's consolidated financial
statements and the other information that appears in this annual report.
Management believes that the consolidated financial statements fairly reflect
the form and substance of transactions and reasonably present the Company's
consolidated financial condition and results of operations in conformity with
Canadian generally accepted accounting principles. Management has included in
the Company's consolidated financial statements amounts that are based on
estimates and judgments, which it believes are reasonable under the
circumstances.

The Company maintains a system of internal accounting policies, procedures and
controls intended to provide reasonable assurance, at appropriate cost, that
transactions are executed in accordance with Company authorization and are
properly recorded and reported in the financial statements and that assets are
adequately safeguarded.

Pannell Kerr Forster audits the Company's consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America and provides an objective, independent review of the Company's internal
controls and the fairness of its reported financial condition and results of
operations.

Elephant & Castle Group Inc.'s Board of Directors has an Audit Committee
composed of non-management Directors. The Committee meets with financial
management and the independent auditors to review internal accounting controls
and accounting, auditing and financial reporting matters.


/s/ R. Bryant

Richard Bryant
President and Chief Executive Officer


                                      F-1

<PAGE>

                                                    INDEPENDENT AUDITORS' REPORT



TO THE SHAREHOLDERS OF ELEPHANT & CASTLE GROUP INC.

We have audited the consolidated balance sheets of Elephant & Castle Group Inc.
as at December 28, 2003 and December 29, 2002 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended December 28, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in Canada and in the United States of America. 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.

In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Elephant & Castle
Group Inc. as at December 28, 2003 and December 29, 2002 and the results of its
operations and its cash flows for each of the three years in the period ended
December 28, 2003 in accordance with Canadian generally accepted accounting
principles, applied on a consistent basis. Accounting principles generally
accepted in Canada differ in certain significant respects from accounting
principles generally accepted in the United States of America and are discussed
in Note 15 to the consolidated financial statements.


"Pannell Kerr Forster"


Chartered Accountants

Vancouver, Canada
February 27, 2004


                                      F-2

<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED BALANCE SHEETS
AT DECEMBER 28, 2003 AND DECEMBER 29, 2002
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
                                                                         2003                 2002
---------------------------------------------------------------------------------------------------
<S>                                                                  <C>                   <C>
ASSETS (note 6)
CURRENT
  Cash                                                                  $536                 $670
  Accounts receivable                                                    455                  319
  Inventory                                                              399                  475
  Deposits and prepaid expenses                                          290                  529
  Pre-opening costs                                                       64                    0
---------------------------------------------------------------------------------------------------
                                                                       1,744                1,993
FIXED (note 3)                                                         8,724               10,596
FUTURE INCOME TAX BENEFITS (note 12)                                   3,074                3,513
OTHER (note 4)                                                           398                  704
---------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                         $13,940              $16,806
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------

LIABILITIES
CURRENT
  Accounts payable and accrued liabilities (note 5)                   $4,681               $5,437
  Current portion of long-term debt (note 6)                             477                1,058
---------------------------------------------------------------------------------------------------
                                                                       5,158                6,495
LONG-TERM DEBT (note 6)                                                5,564                7,013
---------------------------------------------------------------------------------------------------
OTHER LIABILITIES (note 7(a)(v))                                           8                  223
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES                                                     10,730               13,731
---------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY
CAPITAL STOCK (note 7)
  Authorized
      20,000,000      Common shares without par value
  Issued
      5,146,604 (2002 - 5,144,604) Common shares                      17,741               17,811
OTHER PAID-IN CAPITAL (note 7(a))                                      8,034                7,547
DEFICIT                                                              (22,565)             (22,283)
---------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                             3,210                3,075
---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $13,940              $16,806
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
</TABLE>

Contingencies and Commitments (notes 9 and 10)
Approved on behalf of the Board:


/s/ R. Bryant                             /s/ T. Chambers
................................. Director ............................  Director
R. Bryant                                 T. Chambers

                See notes to consolidated financial statements.

                                      F-3

<PAGE>


ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001 (CANADIAN
DOLLARS) (IN THOUSANDS OF DOLLARS, EXCEPT NET INCOME (LOSS) PER SHARE)
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
                                                                                    2003               2002               2001
-------------------------------------------------------------------------------------------------------------------------------

<S>                                                                              <C>                <C>                <C>
SALES                                                                           $37,453            $43,520            $46,833
-------------------------------------------------------------------------------------------------------------------------------

RESTAURANT EXPENSES
  Food and beverage                                                              10,050             11,919             13,204
  Operating
      Labour                                                                     11,594             13,649             15,125
      Occupancy and other                                                         9,683             11,272             11,980
  Restaurant closing costs (notes 11 (a) and (b))                                   132                366                  0
  Depreciation and amortization                                                   2,156              2,167              1,813
-------------------------------------------------------------------------------------------------------------------------------
                                                                                 33,615             39,373             42,122
-------------------------------------------------------------------------------------------------------------------------------
INCOME FROM RESTAURANT OPERATIONS                                                 3,838              4,147              4,711
-------------------------------------------------------------------------------------------------------------------------------

GENERAL AND ADMINISTRATIVE EXPENSES                                               3,785              3,521              3,010
(GAIN) LOSS ON FOREIGN EXCHANGE (note 2 (i))                                       (952)              (278)               425
INTEREST ON LONG-TERM DEBT                                                          763                899              1,404
IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE
 ASSETS (note 11 (c ))                                                                0              2,382                  0
-------------------------------------------------------------------------------------------------------------------------------
                                                                                  3,596              6,524              4,839
-------------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) BEFORE INCOME TAXES                                                   242             (2,377)              (128)
INCOME TAXES (CHARGE) RECOVERY (note 9)                                              77               (525)               100
UTILIZATION OF LOSSES CARRIED FORWARD                                                 0                  0               (100)
FUTURE INCOME TAX BENEFIT (note 12)                                                   0                791                  0
-------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) FOR YEAR                                                         $319            $(2,111)             $(128)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS) PER COMMON SHARE (note 2(j))
  Basic                                                                           $0.06             $(0.41)            $(0.03)
  Diluted (note 2(j))                                                             $0.06
-------------------------------------------------------------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
  Basic                                                                        5,163,271         5,163,354          3,890,000
  Diluted (note 2(j))                                                          5,163,271
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                See notes to consolidated financial statements.

                                      F-4

<PAGE>


ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
                                                                          2003              2002                2001
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>
NUMBER OF COMMON SHARES ISSUED
  Beginning balance                                                 5,144,604         5,169,604           2,594,604

  Issue of shares
    On renegotiation of debenture interest                                  0                 0           2,600,000
    For services                                                       27,000                 0                   0
    Repurchase and cancellation of shares                             (25,000)          (25,000)            (25,000)
---------------------------------------------------------------------------------------------------------------------
ENDING BALANCE                                                      5,146,604         5,144,604           5,169,604
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
COMMON SHARES ISSUED
  Beginning balance                                                   $17,811           $17,898             $15,966
  Issue of shares
    On renegotiation of debenture interest                                  0                 0               2,017
    For services                                                           16                 0                   0
    Repurchase and cancellation of shares                                 (86)              (87)                (85)
---------------------------------------------------------------------------------------------------------------------
  Ending balance                                                       17,741            17,811              17,898
---------------------------------------------------------------------------------------------------------------------
OTHER PAID-IN CAPITAL
  Beginning balance                                                     7,547             7,153                 356
  Equity portion of convertible notes                                       0                 0               7,255
  Deferred interest on convertible notes                                  487               466                   0
  On renegotiation of debenture interest                                    0                 0                (386)
  On cancellation of shares                                                 0               (72)                (72)
---------------------------------------------------------------------------------------------------------------------
  Ending balance                                                        8,034             7,547               7,153
---------------------------------------------------------------------------------------------------------------------
CURRENCY TRANSLATION ADJUSTMENT
  Beginning balance                                                         0                 0                (596)
  Deferred gain (loss) incurred during year                                 0                 0                (425)
---------------------------------------------------------------------------------------------------------------------
  Ending balance as previously stated                                       0                 0              (1,021)
  Adjustment to reflect change of accounting policy
  for foreign exchange gains (losses) (note 2 (i))                          0                 0               1,021
---------------------------------------------------------------------------------------------------------------------
  Ending balance as restated                                                0                 0                   0
---------------------------------------------------------------------------------------------------------------------
DEFICIT
  Beginning balance                                                   (22,283)          (19,654)            (19,285)
  Dividends on other paid-in capital                                     (488)             (518)               (241)
  On cancellation of shares                                              (113)                0                   0
  Net income (loss)                                                       319            (2,111)               (128)
---------------------------------------------------------------------------------------------------------------------
  Ending balance as restated                                          (22,565)          (22,283)            (19,654)
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
  Ending balance as previously stated                                        0                 0            (18,633)

  Adjustment to reflect change of accounting policy
   for foreign exchange gains (losses) (note 2 (i))                          0                 0             (1,021)
---------------------------------------------------------------------------------------------------------------------
  Ending balance as restated                                                 0                 0            (19,654)
---------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY                                              $3,210            $3,075             $5,397
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
                See notes to consolidated financial statements.

                                      F-5

<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
                                                                          2003               2002               2001
---------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>            <C>                  <C>
OPERATING ACTIVITIES
  Net income (loss)                                                      $319           $(2,111)             $(128)
  Operating items not using cash                                        1,660             3,888              3,887
---------------------------------------------------------------------------------------------------------------------

OPERATING CASH FLOW                                                     1,979             1,777              3,759
---------------------------------------------------------------------------------------------------------------------

CHANGES IN NON-CASH WORKING CAPITAL
  Accounts receivable                                                    (136)              133                218
  Inventory                                                                76                73                (42)
  Deposits and prepaid expenses                                           239                51               (212)
  Accounts payable and accrued liabilities                               (756)             (135)              (974)
---------------------------------------------------------------------------------------------------------------------

                                                                         (577)              122             (1,010)
---------------------------------------------------------------------------------------------------------------------

CASH PROVIDED BY OPERATING ACTIVITIES                                   1,402             1,899              2,749
---------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
  Acquisition of fixed assets                                            (388)           (1,215)            (2,817)
  Acquisition of other assets and pre-opening costs                      (254)                0               (140)
  Acquisition of trademark                                                  0                 0                (23)
---------------------------------------------------------------------------------------------------------------------

CASH USED IN INVESTING ACTIVITIES                                        (642)            (1,215)           (2,980)
---------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Deferred finance charges                                                  0                 (5)              (97)
  Repurchase of shares                                                   (210)              (234)             (157)
  Proceeds from long-term debt                                              0                  0                73
  Repayment of long-term debt                                            (684)              (825)             (262)
---------------------------------------------------------------------------------------------------------------------

CASH USED IN FINANCING ACTIVITIES                                        (894)            (1,064)             (443)
---------------------------------------------------------------------------------------------------------------------

OUTFLOW OF CASH                                                          (134)              (381)             (674)
CASH, BEGINNING OF YEAR                                                   670              1,051             1,725
---------------------------------------------------------------------------------------------------------------------

CASH, END OF YEAR                                                        $536               $670            $1,051
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the year for
    Interest                                                             $338               $516              $302
    Income taxes                                                         $310                $41                $0
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
                See notes to consolidated financial statements.

                                      F-6

<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSAND OF DOLLARS)
--------------------------------------------------------------------------------

1.       BASIS OF PRESENTATION AND ECONOMIC DEPENDENCE

         These financial statements include the accounts of Elephant & Castle
         Group Inc. ("the Company") and its wholly-owned subsidiaries described
         below. All significant inter-company balances and transactions are
         eliminated.

         (a)      The Elephant and Castle Canada Inc. ("the Canadian
                  subsidiary") owns and operates English style restaurants
                  across Canada under the name "The Elephant & Castle Restaurant
                  and Pub";

         (b)      Elephant & Castle Inc. ("the US subsidiary" incorporated in
                  Texas) and its subsidiaries own and operate English style
                  restaurants in Washington, Pennsylvania, Massachusetts,
                  California and Illinois.

                  One such subsidiary, E&C Chicago Corporation, owns E&C San
                  Francisco LLC, a single purpose entity which is the ownership
                  vehicle for the Company's one-third stake in BC Restaurants
                  LLC, a joint venture company which manages the Elephant &
                  Castle restaurant in San Francisco. (note 2(m));

         (c)      Alamo Grill, Inc. ("Alamo" incorporated in Indiana) owns and
                  operates a red meat steak house at the Mall of America,
                  Bloomington, Minnesota. (Note 11(b)(iii));

         (d)      Elephant & Castle International, Inc. incorporated in Texas,
                  franchises the Elephant & Castle British-style pub and
                  restaurant and Alamo Steakhouse & Grill concept.

         Prior to the year ending December 29, 2002, these financial statements
         also included the Company's proportionate shares of revenues and
         expenses from its interest in a joint venture established to develop
         and operate Rainforest theme restaurants in Canada.

         The Company has debt obligations to General Electric Investment Private
         Placement Partners II ("GEIPPPII") to be repaid in cash totalling
         $3,900 US by September 1, 2005 as described in note 6 and, if unable to
         generate sufficient earnings before interest, taxes, depreciation and
         amortization, as outlined in note 7, will become obliged to repay
         GEIPPPII a further $5,000 US plus accrued interest, on September 1,
         2005. The Company is further indebted in the amount of $693 US for
         subordinated notes, also due by September 1, 2005.

         In addition to being lenders to the Company as described above,
         GEIPPPII also owns approximately 62% of the issued and outstanding
         common shares of the Company.

         Accordingly, the Company is economically dependent on GEIPPPII for
         continued financial support.

         These consolidated financial statements have been prepared assuming the
         Company will continue as a going concern, realizing its assets and
         discharging its liabilities in the normal course of business.

         These consolidated financial statements are prepared in accordance with
         Canadian generally accepted accounting principles and all figures are
         in Canadian dollars unless otherwise stated. Canadian generally
         accepted accounting principles differ in certain respects from
         accounting principles generally accepted in the United States of
         America. The significant differences and the approximate related effect
         on the consolidated financial statements are set forth in Note 15.

         Certain comparative figures have been restated to conform to current
         presentation.

                                      F-7

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS) (IN THOUSAND OF DOLLARS)
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      Franchise fees

                  The Company recognizes initial fees from the sale of
                  franchises as revenue once the Company has fully complied with
                  its obligations to the new franchisee regarding the opening of
                  the restaurant. Continuing franchise royalties are included in
                  sales as they are earned.

         (b)      Inventory

                  Inventory consists of food, beverages and retail merchandise
                  and is recorded at the lower of cost or market. Cost is
                  determined using the first-in, first-out method.


         (c)      Fixed assets

                  Fixed assets are recorded at cost and are depreciated annually
                  as follows:

                       Furniture and fixtures        -  10% Straight-line method
                       Computer equipment            -  20% Straight-line method

         (d)      Goodwill

                  Goodwill is recorded at cost, less any reduction for
                  impairment. Goodwill is tested for impairment on an annual
                  basis or when events occur that may indicate impairment.

                  This policy was adopted during the year ending December 29,
                  2002 in line with the recommendations of the Canadian
                  Institute of Chartered Accountants ("CICA"). Previously,
                  Goodwill was recorded at cost and amortized on a straight-line
                  basis over periods from 10 to 40 years.

         (e)      Intangible assets

                  Intangible assets are amortized over their useful lives,
                  unless the life is determined to be indefinite, in which case
                  no amortization is taken. Intangible assets are tested for
                  impairment on an annual basis or when events occur that may
                  indicate impairment.

                  Liquor licences are recorded at cost of original acquisition.
                  They are short lived assets, and additional costs are incurred
                  on an on-going basis to maintain and renew them. These
                  additional costs are charged directly to operations, so no
                  amortization is charged against the original cost.

         (f)      Pre-opening costs

                  Pre-opening costs represent amounts for staff training costs,
                  payroll for trainees, rents paid prior to opening, travel and
                  accommodation of trainers and supplies consumed prior to
                  opening which were all incurred to open new locations. These
                  costs are amortized on a straight-line basis over 12 months.

                                      F-8

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSAND OF DOLLARS)
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         (g)      Other assets

                  The following other assets are recorded at cost and amortized
                  annually as follows:
<TABLE>

                      <S>                                 <C>
                       Deferred finance costs             -  Term of the related financial instruments
                       Deferred franchise costs           -  5 years
</TABLE>

         (h)      Income taxes

                  Income taxes are calculated using the liability method of tax
                  accounting. Temporary differences arising from the difference
                  between the tax basis of an asset or liability and its
                  carrying amount on the balance sheet are used to calculate
                  future income tax assets or liabilities. Future income tax
                  assets or liabilities are calculated using tax rates
                  anticipated to apply in the periods that the temporary
                  differences are expected to reverse. A valuation allowance is
                  provided to reduce the asset to the net amount management
                  estimates to be reasonable to carry as a future income tax
                  asset (note 12).

         (i)      Foreign currency translation

                  Amounts recorded in foreign currency are translated into
                  Canadian dollars as follows:

                  (i)      Monetary assets and liabilities at the rate of
                           exchange in effect at the balance sheet date;

                  (ii)     Non-monetary assets and liabilities at the exchange
                           rates prevailing at the time of the acquisition of
                           the assets or assumption of the liabilities; and,

                  (iii)    Revenues and expenses (excluding depreciation and
                           amortization which are translated at the same rate as
                           the related asset), at the average rate of exchange
                           for the year.

                  Gains and losses arising from this translation of foreign
                  currency are included in net income . This policy was adopted
                  for the year ending December 29, 2002 in line with the
                  recommendations of the CICA. Previously, unrealised gains and
                  losses on long-term monetary assets and liabilities were
                  deferred and amortized over the lives of those assets. The new
                  policy was applied retroactively, and prior year comparatives
                  were retroactively restated to reflect this change of policy.
                  This resulted in a decrease in net income of $425 for 2001.

         (j)      Net income (loss) per share

                  Net income (loss) per share computations are based on the
                  weighted average number of common shares outstanding during
                  the year. Options to purchase 584,000 common shares were
                  outstanding as of December 28, 2003 but were not included in
                  the computation of diluted earnings per share because the
                  options exercise prices were greater than the average market
                  price of the common shares throughout the year and, therefore,
                  the effect would be anti-dilutive. The conversion of restated
                  and amended junior secured notes (note 7(a)) and the payment
                  of interest thereon through common share issuances were not
                  included in the computation of diluted earnings per share
                  because, as per CICA Handbook section 3500.46(c), "the
                  presumption that such notes will be settled with common shares
                  is overcome by past experience." For 2002 and 2001, the
                  conversion of the junior secured notes and the payment of
                  interest thereon through common share issuances and the
                  assumed exercise of stock options had an anti-dilutive effect
                  and therefore, diluted earnings per share was not calculated
                  for either of these years.

                                      F-9

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSAND OF DOLLARS)
--------------------------------------------------------------------------------

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         (k)      Use of estimates

                  The preparation of financial statements in conformity with
                  Canadian generally accepted accounting principles requires
                  management to make estimates and assumptions that affect the
                  reported amounts of assets and liabilities and disclosures of
                  contingent assets and liabilities at the date of the financial
                  statements, and the reported amounts of revenues and expenses
                  during the reporting period. Actual results could differ from
                  those estimates and would impact future results of operations
                  and cash flows.

         (l)      Stock based compensation

                  During the year ended December 29, 2002, the Company adopted
                  the new recommendations of the CICA on Stock-Based
                  Compensation. These recommendations allow the Company to apply
                  the intrinsic value method in accounting for its employee
                  stock option plans. Compensation expense is recorded when
                  options are granted at discounts to market. Options granted to
                  non-employees are accounted for using the fair value method.


         (m)      Joint venture

                  In 2002 the Company signed a joint venture agreement to open
                  an Elephant & Castle restaurant in the new Club Quarters hotel
                  in San Francisco. This restaurant opened for business on March
                  28, 2003.

                  Neither the Company, nor its joint venture partner has
                  unilateral control over major strategic, investing and
                  financing decisions. Accordingly, the Company accounts for
                  this operation as a joint venture and uses the proportionate
                  method of consolidation.

                  Revenues, costs, assets and liabilities proportionate to the
                  Company's one-third ownership stake are included in the 2003
                  financial statements. Additional costs have been recorded to
                  reduce the Company's profit share to 15% in 2003, consistent
                  with the sliding scale of profit participation detailed in the
                  joint venture agreement. (note 15(b)).


                                      F-10

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

3.       FIXED ASSETS
<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
                                                                                        2003
                                                                                       Accumulated
                                                                                     Depreciation &
                                                                            Cost      Amortization              Net
         -----------------------------------------------------------------------------------------------------------
         <S>                                                             <C>                <C>              <C>
         Leasehold improvements                                          $13,892            $8,132           $5,760
         Furniture and fixtures                                            6,836             4,655            2,181
         China, glassware and cutlery                                        458                 0              458
         Computer equipment                                                  900               575              325
         -----------------------------------------------------------------------------------------------------------
                                                                         $22,086           $13,362           $8,724
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                        2002
                                                                                       Accumulated
                                                                                     Depreciation &
                                                                            Cost      Amortization              Net
         -----------------------------------------------------------------------------------------------------------
         <S>                                                             <C>                <C>              <C>
         Leasehold improvements                                          $14,689            $7,419           $7,270
         Furniture and fixtures                                            7,711             5,177            2,534
         China, glassware and cutlery                                        482                 0              482
         Computer equipment                                                  935               625              310
         -----------------------------------------------------------------------------------------------------------
                                                                         $23,817           $13,221          $10,596
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
</TABLE>

4.       OTHER ASSETS
<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
                                                                                                2003           2002
         -----------------------------------------------------------------------------------------------------------
        <S>                                                                                     <C>            <C>
         Deferred finance costs                                                                 $296           $580
         Trademark                                                                                24             24
         Deferred franchise costs                                                                  7              8
         Other                                                                                    71             92
         -----------------------------------------------------------------------------------------------------------

                                                                                               $ 398          $ 704
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
</TABLE>

5.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>

         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
                                                                                               2003            2002
         -----------------------------------------------------------------------------------------------------------
        <S>                                                                                  <C>            <C>
         Trade payables                                                                      $1,600          $1,813
         Occupancy and other operating expenses                                                 520             205
         Accrued salaries, wages and related taxes                                              808             817
         Closing costs and legal settlement                                                      29             538
         Debt redemption and other interest costs                                             1,010             696
         Sales taxes                                                                            226             273
         Other payables                                                                         181             410
         Prepaid supplier rebates                                                                50             100
         Provision for income taxes (note 9)                                                    257             585
         -----------------------------------------------------------------------------------------------------------

                                                                                             $4,681          $5,437
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-11


<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

6.       LONG-TERM DEBT
<TABLE>
<CAPTION>

         ----------------------------------------------------------------------------------------------------------
         ----------------------------------------------------------------------------------------------------------
                                                                                          2003                2002
         ----------------------------------------------------------------------------------------------------------
         <S>                                                                            <C>                 <C>
         General Electric Investment Private Placement Partners II
         ("GEIPPPII"), a limited partnership, senior secured 6% convertible
         notes, convertible into common shares at GEIPPPII's option maturing
         September 1, 2005 and originally payable in three quarterly payments
         beginning February 28, 2002, each in the amount of $125 US, four
         quarterly payments beginning November 30, 2002, each in the amount
         of $150 US, four quarterly payments beginning November 30, 2003,
         each in the amount of $175 US, four quarterly payments beginning               $5,099              $6,827
         November 30, 2004, each in the amount of $200 US, and one final
         instalment due on September 1, 2005 of $2,400 US. Terms have been
         modified to defer the four quarterly payments each of $175 US,
         originally beginning November 30, 2003, until September 1, 2005.
         Revised final instalment due on September 1, 2005 is therefore
         $3,100 US. Interest payment at 6% is payable in cash quarterly. A
         security agreement granting security over a majority of the
         Company's assets has been entered into with the lender (note 7(a))

         Convertible subordinated notes issued in 2000, originally due
         December 31, 2003, but now repayable in quarterly instalments of $38
         US beginning November 30, 2003 with one final instalment due on
         September 1, 2005 of $546 US. Interest at 8% per annum payable                    852               1,071
         quarterly in cash or common shares. Notes unpaid and not
         converted by December 31, 2003 are uplifted by a 25% premium on the
         principal. (notes 7(a) and 16).

         Capital lease obligations repayable over terms ranging from 36                     90                 173
         to 60 months, interest rates average 13%
         ----------------------------------------------------------------------------------------------------------


                                                                                         6,041               8,071
         Less:  Current portion                                                            477               1,058
         ----------------------------------------------------------------------------------------------------------
                                                                                        $5,564              $7,013
         ----------------------------------------------------------------------------------------------------------
         ----------------------------------------------------------------------------------------------------------
</TABLE>
         Long-term debt principal repayments due in each of the next five fiscal
         years are as follows:

<TABLE>
         --------------------------------------------------
         <S>                            <C>
         2004                           $   477
         2005                             5,554
         2006                                 9
         2007                                 1
         2008                                 0
         --------------------------------------------------

                                         $6,041
         --------------------------------------------------
         --------------------------------------------------
</TABLE>

                                      F-12


<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

7.       CAPITAL STOCK

         (a)      In December 2000 the Company reached an agreement with the
                  holders of its 8% notes whereby $1,583 US ($2,374 CDN.) was
                  converted into 791,250 shares. During 2001, $1,000 US was
                  renegotiated and included in the $10,000 US of convertible
                  subordinated notes (see below). The conversion rate on the
                  remaining $683 remains unchanged at $4 US per share.

                  In June 2001, the Company and General Electric Investment
                  Private Placement Partners II ("GEIPPPII") agreed to
                  renegotiate the terms on $10,000 US of convertible
                  subordinated notes and debentures held by GEIPPPII. As part of
                  the renegotiation, the Company issued 2,600,000 shares in
                  payment of accrued interest, reduction of future interest rate
                  and issued the following notes:

                  o        $5,000 US of the restated and amended senior secured
                           convertible 6% notes (the "senior notes") (note 6);
                           and

                  o        $5,000 US of the restated and amended junior secured
                           convertible 6% notes (the "junior notes"), in
                           exchange for the securities to be surrendered by
                           GEIPPII.

                  Both the senior notes and the junior notes shall be
                  convertible into shares of the Company's common shares at the
                  holder's option. However the junior notes are mandatorily
                  convertible into common shares, subject to certain targeted
                  performance requirements to be measured by the Company's
                  earnings before interest, taxes, depreciation and amortization
                  ("EBITDA"). These targets were originally as follows:

                  (i)      On or after September 1, 2002, $1,250 US of the
                           junior notes would convert into common shares at a
                           conversion price of one dollar ($1.00 US) per share
                           (1,250,000 shares);

                  (ii)     On or after September 1, 2003, $1,250 US of the
                           junior notes would convert into common shares at a
                           conversion price of one dollar and twenty-five cents
                           ($1.25 US) per share (1,000,000 shares);

                  (iii)    On or after September 1, 2004, $1,250 US of the
                           junior notes would convert into common shares at a
                           conversion price of one dollar and fifty cents ($1.50
                           US) per share (833,333 shares); and

                  (iv)     On or after September 1, 2005, $1,250 US of the
                           junior notes would convert into common shares at a
                           conversion price of one dollar and seventy-five cents
                           ($1.75 US) per share (714,286 shares);

                                      F-13

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

7.       CAPITAL STOCK (Continued)

                  (v)      Conversion was originally subject only to the
                           Company's meeting certain minimum tests of EBITDA
                           during each twelve month period ended June 30
                           preceding each such conversion date. The EBITDA
                           targets for mandatory conversion were originally
                           fixed as follows:
<TABLE>
<CAPTION>
                           --------------------------------------------------------------------------------
                           --------------------------------------------------------------------------------
                           12 Month Period                 Conversion Date                          EBITDA
                           --------------------------------------------------------------------------------
                           <S>                             <C>                                    <C>
                           June 30, 2002                   September 1, 2002                      US$3,000
                           June 30, 2003                   September 1, 2003                         3,750
                           June 30, 2004                   September 1, 2004                         4,500
                           June 30, 2005                   September 1, 2005                         5,000
                           --------------------------------------------------------------------------------
                           --------------------------------------------------------------------------------
</TABLE>

                           For the twelve month period ended June 30, 2002, the
                           Company did not achieve the EBITDA target required to
                           convert the first tranche of junior notes into
                           shares. It did, however, achieve 67% of the target,
                           and therefore would still have been able to convert
                           both the first and second tranche of junior notes
                           into equity, if the Company had met 100% of its
                           EBITDA target for the twelve months ending June 30,
                           2003. Achievement of 80% of EBITDA target for the
                           twelve months ending June 30, 2003 would have allowed
                           the Company to convert two thirds of the second
                           tranche of junior notes into equity, but the Company
                           would have lost the ability to convert any of the
                           first tranche.

                           For the twelve month period ended June 29, 2003, the
                           Company achieved less than 67% of the original EBITDA
                           target. Under the terms of the original agreement,
                           this would have required the Company to reclassify
                           the first two tranches as a debt instrument.

                           The Company has, however, reached an agreement with
                           GEIPPPII to modify the terms of the junior notes,
                           such that the test for mandatory conversion of all
                           four tranches is dependent on achievement of EBITDA
                           targets for the twelve months ending June 30, 2005.
                           Accordingly, no reclassification of the junior notes
                           is required at this time. The agreed amended EBITDA
                           targets for the four tranches are now respectively as
                           follows:
<TABLE>
<CAPTION>
                           --------------------------------------------------------------------------------
                           --------------------------------------------------------------------------------
                           12 Month Period                 Conversion Date                          EBITDA
                           --------------------------------------------------------------------------------
                           <S>                             <C>                                    <C>
                           June 30, 2005                   September 1, 2005                      US$3,000
                           June 30, 2005                   September 1, 2005                         3,750
                           June 30, 2005                   September 1, 2005                         4,500
                           June 30, 2005                   September 1, 2005                         5,000
                           --------------------------------------------------------------------------------
                           --------------------------------------------------------------------------------
</TABLE>

                           Interest payments on the junior notes in the amount
                           of 6% shall be payable in arrears. The Company shall
                           have the option to pay up to one-half of the interest
                           in common shares upon each conversion date. The
                           interest paid with shares will be calculated using a
                           conversion price, based upon a market value, not
                           exceeding US$1.00 per share.

                           The junior notes are considered a compound instrument
                           and have been included in these financial statements
                           as part of other paid-in capital. Interest payable
                           with cash has been discounted and included in these
                           financial statements as other liabilities of $8 (2002
                           - $223) and accounts payable and accrued liabilities
                           of $594 as of December 28, 2003 (2002 - $352).


                                      F-14

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
 (CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

7.       CAPITAL STOCK (Continued)


                  (vi)     On initial recognition, the Company presented the
                           above mentioned junior notes as an equity instrument
                           as management believed the Company would meet the
                           EBITDA requirements. In accordance with Canadian
                           generally accepted accounting principles, once
                           initial recognition is made, such determination
                           should not be changed until the triggering event has
                           occurred. Therefore, if the Company does not reach
                           the required EBITDA, the notes will be reclassified
                           as a debt instrument at such time when the conversion
                           feature is no longer available to the Company. For
                           accounting purposes, this would represent a change in
                           estimate and as such, interest from the reclassified
                           notes will be recorded as interest on a prospective
                           basis.

         (b)      Stock option plans have been adopted as follows:

                  (i)      The 1993 Founders' option plan set aside 50,000
                           common shares. Options on the entire 50,000
                           shares have been granted at $13.20 US
                           ($21.05 CDN.). These options become exercisable
                           on the 5th through 9th anniversary date of granting.
                           All of these options had expired by December
                           29, 2002.

                  (ii)     The 1993 employee option plan set aside 50,000 common
                           shares. Options have been granted for approximately
                           45,000 shares. All options expire on the 5th
                           anniversary date of the grant. 8,916 of the options
                           were exercised and the remaining 36,084 of the
                           options were cancelled by December 29, 2002.

                  (iii)    The 1997 employee option plan set aside 200,000
                           common shares. Options have been granted for 139,000
                           shares. All options expire on the 5th anniversary
                           date of the grant. None have been exercised through
                           December 29, 2002 and 65,000 of the options were
                           cancelled through December 28, 2003.

                  (iv)     The 1993 directors' option plan set aside 10,000
                           common shares. All have been granted, and all have
                           been cancelled. None have been exercised through
                           December 28, 2003.

                  (v)      The 2001 stock options and bonus plan set aside
                           950,000 common shares of which 400,000 were granted
                           in January 2003. None have been exercised, but 52,500
                           have been cancelled due to option holders leaving the
                           Company's employment.


                  During the year ended December 28, 2003, 400,000 stock options
                  were granted to employees of the Company. The Company applies
                  the Intrinsic Method in accounting for its stock options
                  granted to employees and accordingly, compensation expense of
                  $Nil (2002 $Nil; 2001 $Nil) was recognised during the year.


                                      F-15

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS  ENDED  DECEMBER  28,  2003,  DECEMBER  29,  2002  AND
DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------


7.       CAPITAL STOCK (Continued)

                  Had compensation expense been determined as provided using the
                  Fair Value Method, the pro-forma effect on the Company's net
                  income and per share amounts for the years ended December 28,
                  2003 and December 29, 2002 would have been as follows:
<TABLE>
<CAPTION>

         -----------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------
                                                                                2003               2002
         -----------------------------------------------------------------------------------------------
         <S>                                                                    <C>            <C>
         Net income (loss) as reported                                         $319            $(2,111)
         Plus (minus) intrinsic value expensed                                    0                  0
         Plus (minus) fair value of stock options                               (79)                 0
         -----------------------------------------------------------------------------------------------

         Net income (loss), pro-forma                                           240             (2,111)
         -----------------------------------------------------------------------------------------------

         Net income (loss) per share as reported                              $0.06             $(0.41)
         Plus (minus) intrinsic value per share expensed                       0.00               0.00
         Plus (minus) fair value per share of stock options                   (0.01)              0.00
         -----------------------------------------------------------------------------------------------

         Net income (loss) per share, pro-forma                                0.05              (0.41)
         -----------------------------------------------------------------------------------------------

         Diluted net income per share as reported                             $0.06
         Plus (minus) diluted intrinsic value per share expensed               0.00
         Plus(minus) diluted fair value per share of stock options            (0.01)

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

         Diluted net income per share, pro-forma                               0.05
         -----------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------
</TABLE>

                  The Fair Value Method applies the Black-Scholes option-pricing
                  model, using the following weighted average assumptions:
<TABLE>
<CAPTION>
                                                                                        2003              2002
         --------------------------------------------------------------------------------------------------------
                  <S>                                                                   <C>               <C>
                  Expected life (years)                                                 5                 N/A
                  Interest rate                                                         2.50%
                  Volatility                                                            83.81%
                  Dividend yield                                                        0.00%
         --------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-16


<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

7.       CAPITAL STOCK (Continued)

                  Stock option activity is summarized as follows:
<TABLE>
<CAPTION>

                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
                                                                       Number              Exercise Price
                                                                     of Shares          (US$)          (Cdn.$)
                  -------------------------------------------------------------------------------------------------
                  <S>                                                       <C>           <C>              <C>
                  Balance outstanding,
                    December 31, 2000                                      297,125       $ 12.58 *       $ 21.20
                  2001 - Cancelled/lapsed                                  (20,000)        11.26           17.96
                  -------------------------------------------------------------------------------------------------

                  Balance outstanding,
                    December 30, 2001                                      277,125       $ 12.68 *       $ 20.22
                  2002 - Cancelled/lapsed                                  (40,625)        12.83           20.46
                  -------------------------------------------------------------------------------------------------

                  Balance outstanding,
                    December 29, 2002                                      236,500        $12.60 *        $19.78
                  2003 - Issued                                            400,000          1.00            1.40
                  2003- Cancelled/lapsed                                   (52,500)         1.00            1.40

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

                  Balance outstanding,
                    December 28, 2003                                      584,000         $5.70 *         $8.84
                  -------------------------------------------------------------------------------------------------
                  -------------------------------------------------------------------------------------------------
</TABLE>
                 *        Weighted average exercise price.

         (c)      During 1999, options for 472,500 common shares were granted to
                  five key executives, four of whom commenced employment with
                  the Company in 1997. None have been exercised and 310,000 of
                  these options were cancelled through December 28, 2003.

         (d)      At December 28, 2003, warrants to purchase common shares were
                  outstanding as follows:
<TABLE>
<CAPTION>
                  ----------------------------------------------------------------------------------------------
                  ----------------------------------------------------------------------------------------------
                                                                            Exercise                  Number
                  Expiry Date                                                 Price                 of Shares
                  ----------------------------------------------------------------------------------------------

                  <S>                                                       <C>                     <C>
                  2006                                                      US $1.00                1,869,744
                  ----------------------------------------------------------------------------------------------
                  ----------------------------------------------------------------------------------------------
</TABLE>

                  The shareholders approved at the Annual General Meeting on
                  June 29, 2001 the issue of five year warrants with a US $1.00
                  price on a one for one basis for the then outstanding shares,
                  with the exception of the 2,600,000 shares issued to GEIPPII
                  in respect of debenture interest. Shares currently trade with
                  the warrants attached.


                                      F-17


<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003,  DECEMBER 29, 2002
AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

8.       FINANCIAL INSTRUMENTS

         (a)      Fair value

                  The carrying value of cash, accounts receivable, accounts
                  payable and accrued liabilities approximate their fair value
                  because of the short maturity of these financial instruments.

                  The carrying values of convertible subordinated debentures
                  held by General Electric Investment Private Placement Partners
                  II and convertible subordinated notes issued in February 2000
                  approximate their fair value because fair values for similar
                  debt instruments have remained relatively consistent with the
                  carrying values of these instruments over the past year.

         (b)      Credit risk

                  The Company's financial assets that are exposed to credit risk
                  consist primarily of cash and accounts receivable. Cash is
                  placed with major financial institutions rated in the two
                  highest grades by nationally recognized rating agencies.
                  Credit risk from customer exposure is nominal due to the
                  nature of the business.

         (c)      Interest rate risk

                  The Company's current monetary assets and liabilities are not
                  exposed to significant interest rate risk due to their
                  relatively short term nature and the stability of short term
                  interest rates. The Company is exposed to interest rate price
                  risk to the extent that its long-term debts are at fixed rates
                  of interest.

         (d)      Translation risk

                  The Company translates the results of US operations into
                  Canadian currency using rates approximating the average
                  exchange rate for the year. The exchange rate may vary from
                  time to time. 48% of the Company's sales are in US dollars and
                  all US operating costs are also incurred in US dollars. The US
                  operation generates revenues in excess of associated costs, so
                  some translation risk remains on the surplus.

                  99% of the Company's long-term debt is in US dollars, as are
                  the interest and principal payments associated with it. The
                  Company does not have forward currency contracts to cover
                  these scheduled US dollar payments, and the exchange rate may
                  vary from time to time, but the operating profits of the US
                  operations provide some reduction to the resulting translation
                  risk.

9.       CONTINGENCIES

         (a)      In 1989 and 1990, the Canadian subsidiary received Notices of
                  Reassessment from Canada Revenue Agency ("CRA") and the
                  Ontario Ministry of Revenue regarding a construction allowance
                  received in 1984 from the landlord for its former Sarnia,
                  Ontario location. The reassessment has been under appeal since
                  1989. A portion of the dispute was settled in the Company's
                  favour and a tax provision of $125 was made in 2001 for the
                  estimated remainder of the dispute. Based on communications
                  with the CRA and the Ontario Ministry of Revenue, the Company
                  increased its provision to $585 as at December 29, 2002.


                                      F-18

<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003,  DECEMBER 29, 2002
AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

9.       CONTINGENCIES (Continued)

                  During 2003, the Company made a payment of $95 to the CRA in
                  final settlement of the total amount due for federal tax.
                  Subsequently, the Company has received a further demand from
                  the CRA for $209. The Company does not believe that the CRA
                  has any valid basis for this demand, and has written to the
                  CRA disputing this additional amount. During 2003 the Company
                  has also made instalment payments of $56 to the Ontario
                  Ministry of Finance, leaving a balance owing of $48. As at
                  December 28, 2003 the Company has reduced its provision to
                  $257, representing the $48 owed to the Ontario Ministry of
                  Finance and the disputed balance of $209 claimed by the CRA.

         (b)      In December 2003, the Company received claims from three
                  current and one former kitchen employee of its San Diego
                  restaurant in relation to non-payment of wages for breaks
                  which are deemed to be paid. These four claims totaled $63 (US
                  $45) and were settled in early 2004 for $34 (US $24). One
                  additional claim of $10 (US $7) has since been received, and
                  is being reviewed by the Company. The Company believes that
                  there may be other current and former employees who could be
                  able to make claims of a similar nature. The Company made a
                  provision of $63 (US $45) in the year ended December 28, 2003
                  against the four original claims and any subsequent claims.
                  The Company is in the process of reviewing its procedures for
                  recording paid breaks in all of its restaurants.

10.      COMMITMENTS

         The subsidiaries are committed to leases on their restaurant locations
         extending into the 2013 fiscal year. Minimum annual rentals for the
         restaurants excluding realty taxes, common area maintenance and other
         charges are as follows:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
         <S>                                                             <C>
         2004                                                            $1,611
         2005                                                             1,247
         2006                                                               995
         2007                                                               997
         2008 to 2013 inclusive                                           2,331
         -----------------------------------------------------------------------
                                                                         $7,161
         -----------------------------------------------------------------------
         -----------------------------------------------------------------------
</TABLE>

         Each of the aforementioned restaurant leases provide for the payment of
         additional rent based on percentages of gross annual revenue in excess
         of minimum rents, or other graduated formulae derived from gross
         revenue as defined in the particular lease agreements. The percentages
         range from 3% to 12%.

         The Company has guaranteed payments for the regular purchase of liquor
         by way of letters of credit for $66 with its main Canadian banker.

11.      RESTAURANT CLOSING COSTS, IMPAIRMENT
         OF GOODWILL AND OTHER INTANGIBLE ASSETS

         (a) RESTAURANT CLOSING COSTS FOR 2003 WERE COMPRISED OF THE FOLLOWING:

                  (i)      Closure of Elephant & Castle restaurant at BCIT,
                           Burnaby, Vancouver, BC

                  The Company closed its BCIT location on June 15, 2003, on
                  expiry of the lease. Capital asset write-downs and other
                  closure costs totalled $89.



                                      F-19


<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

11.      RESTAURANT CLOSING COSTS,  IMPAIRMENT
         OF GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

                  (ii)     Closure of Elephant & Castle restaurant at West
                           Edmonton Mall, AB

                  On January 16, 2004 the Company closed its restaurant located
                  in the West Edmonton Mall, AB, on expiry of the lease. Capital
                  asset write-downs and estimated other closure costs totalled
                  $210.

                  (iii)    Write-back of surplus provisions in relation to
                           stores closed in 2002

                  In the year ended December 29, 2002 the Company made provision
                  for the closure of its Elephant & Castle restaurant at Bellis
                  Fair, Bellingham, WA and of its only Alamo Steakhouse and
                  Grill restaurant at Mall of America, Bloomington, MN.
                  Provision was also made for the costs of closing the Company's
                  Alamo office in Minnesota.

                  Actual costs were $167 less than expected, mainly reflecting
                  the payment of $126 in termination fees by two Alamo
                  Steakhouse and Grill franchisees who opted to terminate their
                  franchise agreements in 2003.

         (b) RESTAURANT CLOSING COSTS FOR 2002 WERE COMPRISED OF THE FOLLOWING:

                  (i)      Write-back of surplus provision in relation to
                           Franklin Mills Restaurant

                  The Company closed its unsuccessful Franklin Mills location in
                  January 2001, having made full provision for the costs of
                  closure in 2000. Actual costs incurred were $347 less than
                  anticipated, and this surplus has been released to earnings in
                  2002.

                  (ii)     Closure of Elephant & Castle restaurant at Bellis
                           Fair, Bellingham, WA

                  On October 14, 2002 the Company closed its unsuccessful
                  Elephant & Castle restaurant located in Bellingham, WA. The
                  lease of this location was due to expire in 2005. The Company
                  reached an agreement with the landlord to terminate the lease
                  early in exchange for the surrender of substantially all of
                  the assets at that location, and the payment of an agreed
                  level of compensation for loss of rent. Provision for the
                  disposal of assets, payment for loss of rent and other closing
                  costs was made, resulting in a charge to earnings of $425 in
                  2002.

                  (iii)    Closure of Alamo Steakhouse & Grill restaurant at
                           Mall of America, Bloomington, MN

                  The Company's lease for its only owned Alamo Steakhouse &
                  Grill restaurant at Mall of America, Bloomington, MN expired
                  in January 2003. Since this location was loss making, the
                  Company did not seek to renew the lease, and the restaurant
                  was closed on January 5, 2003. Full provision for the disposal
                  of assets, payment of one month's rent, the closure of the
                  Alamo office and other closing costs was made, resulting in a
                  charge to earnings of $288 in 2002.

         (c) IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS IN 2002 COMPRISE

                  (i)      Write off of goodwill relating to the Alamo
                           Steakhouse & Grill

                  At the end of 2001, the Company was carrying a book value
                  $1,729 relating to the acquisition of the Alamo Steakhouse &
                  Grill in 1996. Prior to 2002, this cost was being amortized in
                  line with the Company's policy at the time. From 2002, the
                  Company has adopted the new recommendations of the CICA, which
                  require that goodwill be tested for impairment annually or
                  when events occur which may indicate impairment. In 2002, the
                  Company decided to close its only owned Alamo Steakhouse &
                  Grill restaurant and to not develop the Alamo Steakhouse and
                  Grill brand in the future. The goodwill relating to the Alamo
                  Steakhouse and Grill has been fully written off, resulting in
                  a charge to earnings of $1,729 in 2002.


                                      F-20

<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

11.      RESTAURANT CLOSING COSTS, IMPAIRMENT
         OF GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)


                  (ii)     Write off of other intangible assets

                  In 2002, the Company reviewed the carrying value of its
                  intangible assets in line with the current recommendations of
                  the CICA. This review resulted in a write-down of other
                  intangible assets, resulting in a charge to earnings of $653
                  in 2002 :

                           Franchise development costs        $272
                           Trademarks                         $107
                           Other                              $274

12.      INCOME TAXES

                  The components of the future income tax benefits at December
                  28, 2003 and December 29, 2002, are as follows:
<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
                                                                                       2003                  2002
         -----------------------------------------------------------------------------------------------------------
         <S>                                                                         <C>                     <C>
         Future income tax benefits
           Tax benefit of non-capital loss carry forwards                             $6,254                $7,064
           Tax benefit of capital loss carry forwards                                  1,403                 1,426
           Fixed asset values for tax purposes in excess of book values                  756                   465
         -----------------------------------------------------------------------------------------------------------
                                                                                       8,413                 8,955
         Valuation allowance                                                          (5,339)               (5,442)
         -----------------------------------------------------------------------------------------------------------
         Net future income tax benefits                                               $3,074                $3,513
         -----------------------------------------------------------------------------------------------------------
         -----------------------------------------------------------------------------------------------------------
</TABLE>


         The Company has the following available tax losses, the partial
         benefits of which have been recorded in these financial statements:

         (i)      Non-capital losses of approximately $5,200 which can be
                  applied against future income for Canadian tax purposes up to
                  and including 2008.

         (ii)     Operating losses of approximately US $9,200 (CDN $12,000)
                  which may be carried forward to apply against future years'
                  income for United States income tax purposes expiring up to
                  2021.

         (iii)    Net capital losses of approximately $9,678 which can be
                  applied against future capital gains income for Canadian tax
                  purposes indefinitely.


                                      F-21


<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
 (CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)




13.      RELATED PARTY TRANSACTIONS

         (a)      Included in general and administrative expenses are consulting
                  fees paid to two directors and shareholders of $60 (2002 -
                  $62) (2001 - $49).

         (b)      GEIPPPII (note 6) is related to the Company by way of its
                  share ownership in the Company and the election of two
                  directors to the Board. Interest payments totalled $704 in
                  2003, $738 in 2002, and $852 in 2001 consisting of cash of
                  $266 in 2003, $432 in 2002 and $215 in 2001; the balance was
                  deferred or paid by share issuances. (note 7).

14.      GEOGRAPHIC SEGMENTED DATA
<TABLE>
<CAPTION>
         ---------------------------------------------------------------------------------------------------------
         ---------------------------------------------------------------------------------------------------------
                                                                         2003               2002             2001
         ---------------------------------------------------------------------------------------------------------
         <S>                                                          <C>                <C>              <C>
         Sales to unaffiliated customers
           Canada                                                     $19,381            $20,219          $25,083
           United States                                               18,072             23,301           21,750
         ---------------------------------------------------------------------------------------------------------
                                                                      $37,453            $43,520          $46,833
         ---------------------------------------------------------------------------------------------------------
         ---------------------------------------------------------------------------------------------------------

        Capital assets, other assets and goodwill
           Canada                                                      $3,662             $4,949           $5,659
           United States                                                5,460              6,351            9,385
         ---------------------------------------------------------------------------------------------------------

                                                                       $9,122            $11,300          $15,044
         ---------------------------------------------------------------------------------------------------------
         ---------------------------------------------------------------------------------------------------------
</TABLE>

15.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND US GAAP)

         (a)      US accounting pronouncements

                  (i)      In July 2001, FASB issued Financial Accounting
                           Standard No. 142, Goodwill and Other Intangible
                           Assets. This statement includes requirements to test
                           Goodwill and indefinite lived intangible assets for
                           impairment rather than amortization. This statement
                           is effective for years beginning December 15, 2001.
                           For the year ended December 29, 2002, the Company has
                           adopted the current recommendations of the Canadian
                           Institute of Chartered Accountants, which are now
                           consistent with the above treatment.

                  (ii)     In October 2001, the FASB issued Statement of
                           Financial Accounting Standards ("SFAS") No. 144,
                           "Accounting for the Impairment or Disposal of
                           Long-Lived Assets". SFAS No. 144 addresses
                           significant issues relating to the implementation of
                           SFAS No. 121, "Accounting for the Impairment of
                           Long-Lived Assets and Long-Lived Assets to be
                           Disposed Of", and develops a single accounting model,
                           based on the framework established in SFAS No. 121
                           for long-lived assets to be disposed of by sales,
                           whether such assets are or are not deemed to be a
                           business. SFAS No. 144 also modifies the accounting
                           and disclosure rules for discontinued operations. The
                           standard was adopted on January 1, 2002, and does not
                           have a material effect on the financial statements.


                                      F-22

<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)
--------------------------------------------------------------------------------

15.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND US GAAP) (Continued)


                  (iii)    In November 2001, the FASB issued EITF Issue No.
                           01-14, "Income Statement Characterization of
                           Reimbursements Received for `Out of Pocket' Expenses
                           Incurred". This guidance requires companies to
                           recognize the recovery of reimbursable expenses such
                           as travel costs on service contracts as revenue.
                           These costs are not to be netted as a reduction of
                           cost. This guidance was implemented on January 1,
                           2002, and does not have a material effect on the
                           financial statements.

                  (iv)     In January 2003, the FASB issued Interpretation No.
                           46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES, an
                           interpretation of Accounting Research Bulletin No.
                           51, CONSOLIDATED FINANCIAL STATEMENTS. Interpretation
                           46 establishes accounting guidance for consolidation
                           of variable interest entities that function to
                           support the activities of the primary beneficiary.
                           Interpretation 46 applies to any business enterprise
                           both public and private that has a controlling
                           interest, contractual relationship or other business
                           relationship with a variable interest entity. The
                           Company has no investment in or contractual
                           relationship or other business relationship with a
                           variable interest entity and therefore the adoption
                           did not have any impact on the Company's consolidated
                           financial position, results of operations or cash
                           flows.

                  (v)      On April 30, 2003, the FASB issued Statement No. 149,
                           AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS
                           AND HEDGING ACTIVITIES. Statement 149 is intended to
                           result in more consistent reporting of contracts as
                           either freestanding derivative instruments subject to
                           Statement 133 in its entirety, or as hybrid
                           instruments with debt host contracts and embedded
                           derivative features. In addition, Statement 149
                           clarifies the definition of a derivative by providing
                           guidance on the meaning of initial net investments
                           related to derivatives. Statement 149 is effective
                           for contracts entered into or modified after June 30,
                           2003. The Company believes the adoption of Statement
                           149 will not have any effect on its consolidated
                           financial position, results of operations or cash
                           flows.

                  (vi)     In May 2003, the FASB issued SFAS No. 150 "Accounting
                           for Certain Financial Instruments with
                           Characteristics of both Liabilities and Equity". SFAS
                           No. 150 establishes standards for how an issuer
                           classifies and measures certain financial instruments
                           with characteristics of both liabilities and equity.
                           It requires that an issuer classify a financial
                           instrument that is within its scope as a liability
                           (or asset in some circumstances). These requirements
                           of SFAS No. 150 apply to issuers' classification and
                           measurement of freestanding financial instruments,
                           including those that comprise more than one option or
                           forward contract. SFAS No. 150 does not apply to
                           features that are embedded in a financial instrument
                           that is not a derivative in its entirety. SFAS No.
                           150 is effective for financial instruments entered
                           into or modified after May 31, 2003, and otherwise is
                           effective at the beginning of the first interim
                           period beginning after June 15, 2003, except for
                           mandatory redeemable financial instruments of
                           non-public entities. It is to be implemented by
                           reporting the cumulative effect of a change in an
                           accounting principal for financial instruments
                           created before the issuance date of SFAS No. 150 and
                           still existing at the beginning of the interim period
                           of adoption. The Company believes the adoption of
                           Statement 150 will not have any effect on its
                           consolidated financial position, results of
                           operations or cash flows.


                                      F-23


<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)
--------------------------------------------------------------------------------

15.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND US GAAP) (Continued)

         (b)      Reconciliation of total assets, liabilities and shareholders'
                  equity (deficit)

<TABLE>
<CAPTION>
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
                                                                                        2003                 2002
                  --------------------------------------------------------------------------------------------------
                  <S>                                                                 <C>                   <C>
                  Total assets for Canadian GAAP                                      $13,940               $16,806
                  Adjustments to US GAAP                                                 (779)                  226
                  --------------------------------------------------------------------------------------------------

                  Total assets for US GAAP                                             13,161                17,032
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
                  Total liabilities per Canadian GAAP                                 $10,730               $13,731
                  Adjustments to US GAAP                                                8,260                 8,133
                  --------------------------------------------------------------------------------------------------
                  Total liabilities for US GAAP                                        18,990                21,864
                  --------------------------------------------------------------------------------------------------
                  Total equity (deficit) for Canadian GAAP                             $3,210                $3,075
                  Adjustment to US GAAP                                                (9,039)               (7,907)
                  --------------------------------------------------------------------------------------------------

                  Total equity (deficit) for US GAAP                                   (5,829)               (4,832)
                  -------------------------------------------------------------------------------------------------

                  Total equity (deficit) and liabilities for US GAAP                  $13,161               $17,032
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
</TABLE>

                  For Canadian GAAP purposes convertible debt (junior notes) and
                  related costs are recorded in the books as equity if the debt
                  is convertible into common shares of the Company at the option
                  of the issuer. For US GAAP purposes these amounts have been
                  reclassified as a liability.

                  For Canadian GAAP purposes, the Company uses the proportionate
                  method of consolidation to record its one third ownership
                  stake in the joint venture Elephant & Castle restaurant in San
                  Francisco, CA. For US GAAP purposes these amounts would have
                  been recorded as single line entries representing income from
                  joint venture and investment in joint venture.


                                      F-24


<PAGE>


ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 2003, DECEMBER 29, 2002 AND DECEMBER 30, 2001
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)



15.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND US GAAP) (Continued)

         (c)      Reconciliation of earnings (loss) reported in accordance with
                  Canadian GAAP and US GAAP:
<TABLE>
<CAPTION>

                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
                                                                              2003            2002             2001
                  --------------------------------------------------------------------------------------------------
                  <S>                                                   <C>             <C>               <C>
                  Net income (loss) - Canadian GAAP                           $319         $(2,111)           $(128)
                  Adjustments decreasing (increasing) net loss
                  Amortization of improvement costs *                           (3)            (10)             (61)
                  Dividend  on  paid-in  capital  that  would  be
                  treated as interest under US GAAP (note 7(a))               (488)           (518)            (241)
                  Pre-opening costs, expensed under US GAAP                    (64)             55              (55)
                  --------------------------------------------------------------------------------------------------
                  Net loss US GAAP                                            (236)         (2,584)            (485)
                  --------------------------------------------------------------------------------------------------
                  Net income (loss) per common share
                    Canadian GAAP - Basic                                   $ 0.06         $ (0.41)         $ (0.03)
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
                    US GAAP - Basic                                        $ (0.05)        $ (0.50)         $ (0.12)
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
                  Weighted average number of shares
                   outstanding                                           5,163,271       5,163,354        3,890,000
                  --------------------------------------------------------------------------------------------------
                  --------------------------------------------------------------------------------------------------
</TABLE>

                  *    Under US GAAP, amortization of leasehold improvement
                       costs would be restricted to the term of the lease.

16.      SUBSEQUENT EVENTS

         On January 26, 2004, the Company issued 81,900 shares of common stock
         to the holders of its subordinated notes in consideration of these note
         holders having agreed to a deferral of consideration which would
         otherwise have been payable on December 31, 2003 (note 6).

         On March 9, 2004, the Company agreed to issue 816,250 warrants to
         GEIPPPII to purchase common shares at an exercise price of US $1.00,
         with a five year term.


                                      F-25

<PAGE>


                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

(Registrant)  Elephant & Castle Group Inc.

By       S/RICHARD BRYANT
         --------------------------------------------
         RICHARD BRYANT, CHAIRMAN, CEO & DIRECTOR

Date     MARCH 9, 2004


By       S/ROGER SEXTON
         --------------------------------------------
         ROGER SEXTON, VP FINANCE/CFO

Date     MARCH 9, 2004


By       S/JEFFREY BARNETT
         --------------------------------------------
         JEFFREY BARNETT, DIRECTOR

Date     MARCH _9, 2004

By       S/GEORGE PITMAN
         --------------------------------------------
         GEORGE W. PITMAN, DIRECTOR

Date     MARCH 9, 2004

By       S/DAVID WIEDERECHT
         --------------------------------------------
         DAVID WIEDERECHT, DIRECTOR

Date     MARCH 9, 2004



<PAGE>



By       S/COLIN STACEY
         --------------------------------------------
         COLIN STACEY, DIRECTOR

Date     MARCH 9, 2004


By       S/RICHARD KELLEHER
         --------------------------------------------
         RICHARD KELLEHER, DIRECTOR

Date     MARCH 9, 2004


By       S/THOMAS CHAMBERS
         --------------------------------------------
         THOMAS CHAMBERS, DIRECTOR

Date     MARCH 9, 2004




<PAGE>

                                INDEX TO EXHIBITS
                                -----------------



EXHIBITS
--------

<TABLE>
<CAPTION>
<S>      <C>                                                  <C>


3.1      Certificate of Incorporation and
         Certificate of Name Change of
         Registrant                                                          *

3.2      Articles of Association of Registrant                               *

3.3      Certificate of Amalgamation, dated
         May 1, 1990, The Elephant and Castle
         Canada Inc.                                                         *

3.4      Resolution to increase the authorized
         share capital of Registrant                                    ******

3.5      Amendment to Articles of Association of
         Registrant, dated March 23, 2000                              *******

3.6      Memorandum of Agreement dated October 19,
         1999 between the Company and a shareholder
         group relative to governance of the Corporation               *******

4.1      Form of certificate evidencing shares
         of Common Stock                                                     *

4.2      Form of Underwriter's Warrant Agreement
         between Registrant and the Underwriter                              *

4.3      Form of Convertible Subordinated Note
         issued in Delphi Financing                                      *****

4.4      Form of Noteholders Warrant issued in
         Delphi Financing                                                *****

4.5      Form of amended Noteholder Warrant issued
         on renegotiation of Delphi Financing                          *******

4.6      Form of certificate evidencing shares of
         Common Stock, amended March 27, 2000                          *******

10.1     Bank Loan Agreement, dated September 13,
         1990, with Toronto Dominion Bank                                    *

10.2     Letter Agreement dated June 26, 1991,
         regarding expansion of facilities at
         Edmonton Eaton Centre food court relocation                         *

10.3     Retailer Application dated May 23, 1992,
         and Specimen Agreement for Alberta Lotteries
         and Alberta Gaming Control                                          *
</TABLE>




<PAGE>


EXHIBITS
--------

<TABLE>
<CAPTION>
<S>      <C>                                                  <C>


10.4     License Agreement dated July 9, 1992, with
         Servomation Inc. relating to B.C. Place
         Stadium                                                             *

10.5     Restaurant lease dated November 10, 1992,
         with Shilo Management Corporation, relating
         to the Shilo Inn, Yuma, Arizona                                     *

10.6     Letter Agreement, with Shilo Management
         Corporation relating to Shilo Hotel, Pomona,
         California                                                          *

10.7     Restaurant Lease Agreement with Holiday Inns
         of Canada, Ltd., relating to Holiday Inn Crowne
         Plaza at Winnipeg, Manitoba                                        **

10.8     Restaurant Lease Agreement relating to Holiday
         Inn, Philadelphia, Pennsylvania                                   ***

10.9     Abstract of Restaurant Lease relating to Holiday
         Inn, San Diego Lease                                             ****

10.10    Revised Lease Abstract of Restaurant Lease relating to
         Canadian Rainforest Restaurants, Inc. (Yorkdale)                *****

10.11    Revised Lease Abstract of Restaurant Lease relating to
         Canadian Rainforest Restaurants, Inc. (Montreal)                *****

10.12    Revised Lease Abstract of Canadian Rainforest
         Restaurants, Inc. (Burnaby, B.C.)                               *****

10.13    Lease Abstract of Elephant & Castle Group, Inc. (Edmonton)      *****

10.14    Lease Abstract of Canadian Rainforest Restaurants, Inc.,
         (Scarborough, Ont.)                                           *******

10.15    Lease Abstract of Elephant & Castle Group, Inc.
         (Franklin Mills, Pennsylvania)                                *******

10.16    Abstract of Canadian Niagara Hotels sub-franchise             *******

10.17    Abstract of Holiday Inns Hotels Exclusivity  Agreement
         re: franchise facilities                                      *******

10.18    Form of Franchise Agreement for Alamo Grill                   *******

10.19    Form of Franchise Agreement for Elephant & Castle             *******

10.20    Lease Abstract of Elephant & Castle Group, Inc.
         (Chicago, Illinois)                                          ********

</TABLE>


<PAGE>

EXHIBITS
--------

<TABLE>
<CAPTION>
<S>      <C>                                                  <C>


10.21    Operating Agreement of BC Restaurants, LLC                  *********

10.22    Member Control Agreement of BC Restaurants, LLC             *********

10.23    Management Agreement with E & C San Francisco, LLC          *********

10.24    License Agreement with Elephant & Castle
         International, Inc.                                         *********

10.25    Agreement with Elephant & Castle International, Inc.        *********

10.26    Lease Abstract of Elephant & Castle Group, Inc.
         (San Francisco, California)                                 *********

21       List of Subsidiaries                                             ****

24.1     Irrevocable Consents and Power of Attorney on Form F-X              *

31.1     Section 302 Certification of Chief Executive Officer
         - September 28, 2003                                       **********

31.2     Section 302 Certification of Chief Financial Officer
         - September 28, 2003                                       **********

31.3     Section 302 Certification of Chief Executive Officer        X
         - December 28, 2003

31.4     Section 302 Certification of Chief Financial Officer        X
         - December 28, 2003

32.1     Section 906 Certification of Chief Executive Officer       **********
         - September 28, 2003

32.2     Section 906 Certification of Chief Financial Officer       **********
         - September 28, 2003

32.3     Section 906 Certification of Chief Executive Officer       X
         - December 28, 2003

32.4     Section 906 Certification of Chief Financial Officer       X
         - December 28, 2003


         CERTIFICATION EXHIBITS

99.1     Canadian Declaration as of May 11, 1990,
         claiming the trade name "The Elephant and
         Castle"                                                    *

99.2     Filing receipt dated February 5, 1993, for
         US service mark application "E&C"                          *

99.3     Filing receipt dated February 5, 1993, for
         US service mark "Elephant Mug"                             *

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


<PAGE>

<TABLE>
<CAPTION>
<S>               <C>

X                 Filed herewith.

*                 Incorporated by reference from the Exhibits filed with the
                  Company's Registration Statement on Form SB-2 (Registration
                  No.  33-60612) Modification of the numbering of the exhibits
                  is in accordance with Item 601 of Registration S-B

**                Filed with Registrant's 10-K SB for the Fiscal Year ended
                  December 31, 1993

***               Filed with Registrant's 10-K SB for the Fiscal Year Ended
                  December 31, 1994

****              Filed with Registrant's 10-KSB A-1 for Fiscal Year Ended
                  December 31, 1996

*****             Filed with Registrant's 10-K for Fiscal Year Ended
                  December 27, 1998

******            Filed with Registrant's 8-K dated December 8, 1999

*******           Filed with Registrant's 10-K dated December 27, 1999

********          Filed with Registrant's 10-K dated December 31, 2000

*********         Filed with Registrant's 10-K dated December 29, 2002

**********        Filed with Registrant's 10-Q dated September 28, 2003
</TABLE>