<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 26, 1999
                           COMMISSION FILE NO. 1-12134
                              CUSIP NO. 286199-20-3

                          ELEPHANT & CASTLE GROUP INC.
                         (NAME OF SMALL BUSINESS ISSUER)


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

856 Homer Street
VANCOUVER, B.C. CANADA                               V6B 2W5

(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.[ ]


<PAGE>

Issuer's revenues during the fiscal year ended December 26, 1999: CDN
$50,104,000 (converts at applicable exchange rates to U.S. $34,084,000).

Aggregate market value of voting stock held by non-affiliates of the Registrant
as at March 16, 2000: U.S.$5,289,209 (CDN $7,775,137).

Number of shares outstanding of Issuer's Common Stock as of December 26, 1999:
3,694,709. See footnote (a) below.

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

         None.

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

<TABLE>
<CAPTION>
                                   NASDAQ         Number of
      Title of Each Class          Symbol      Shares Outstanding
-------------------------------    ------      ------------------
<S>                                <C>         <C>
Common Stock, without par value     PUBFC         5,289,209(a)
</TABLE>

(a) Calculated as of March 16, 2000. In December 1999 the Company reached an
agreement with the holders of its 8% notes whereby US$1,582,500 of these
notes were to be converted into 1,582,500 shares. These shares were issued in
January 2000. This number is subject to adjustment for a "reverse split"
consolidation of the Company's share capital approved at the Extraordinary
General Meeting of shareholders held on March 23, 2000.

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


                                     -2-
<PAGE>

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.

ITEM 1   DESCRIPTION OF BUSINESS

a.       GENERAL

         As of the date of this report, the Company currently owns and
operates a chain of 24 full-service casual dining restaurants and pubs, 17 of
which are located in Canada and 7 of which are located in the United States.

         Eighteen of the Registrant's restaurants are operated under the name
"Elephant & Castle", an English pub concept, five of which are in the United
States. In addition to the owned and operated units, there are 3 Elephant &
Castle franchises, including the first United States franchise, which opened
in Grove City, Pennsylvania in January, 2000.

         The Company also owns and operates an "Alamo Grill" red meat
steakhouse at the Mall of America, Bloomington, Minnesota. The Company
intends to expand its chain of Alamo Grill steakhouse restaurants through
franchising. The first Alamo Grill franchise was opened in January 2000 in
Atlanta. Additional franchises are under negotiation.

         The Company is also a joint venture partner with, and exclusive
licensee of, Rainforest Cafe, Inc. (NASDAQ: RAIN) for the development of
Rainforest Cafe restaurants in Canada through a joint venture entity,
Canadian Rainforest Restaurants Inc. ("CRRI"). CRRI's first Canadian
Rainforest Cafe restaurant opened in June of 1998 in Vancouver, B.C. The
second opened in Scarborough (Toronto) Canada, in early 1999, and a third
opened at Yorkdale, also in Toronto, Canada, in the summer of 1999. CRRI has
signed a lease for the development of a Rainforest Cafe in The Forum,
Montreal and additionally has sub-franchised Rainforest Cafe to Canadian
Niagara Hotels for the development of one Rainforest Cafe in Niagara,
Ontario. These units, when opened, will comprise


                                     -3-
<PAGE>

the full extent of the Company's contractual commitment to open five
Rainforest Cafes in Canada by March 2001. The Company's continuing revenues
from its interest in the Canadian Rainforest Cafe restaurants constitute a
significant part of the Company's continuing revenues.

         There are thus three focal points for the current and future
operations of the Company, [i] owned and operated pub and casual dining
restaurants both in the United States and Canada; [ii] licensed owned and
operated, and sublicensed Canadian Rainforest restaurants; and [iii]
franchising activities, relating to both Elephant & Castle and Alamo.

         1999 RESULTS OF OPERATIONS

         During 1999, the Company opened two Canadian Rainforest restaurants,
both in Metro Toronto, made current plans for one additional Canadian
Rainforest restaurant to be opened in The Forum, Montreal later this year,
and sub-franchised the Rainforest Cafe to Canadian Niagara Hotels for the
development of one restaurant in Niagara, Ontario. The Company also opened a
second Elephant & Castle restaurant in Toronto, Ontario during December, 1999.

         In 1999, the Company's sales increased to CDN $50,104,000 from CDN
$42,630,000 for the comparable period in 1998.

  The sales increase was achieved primarily through the opening of the
Canadian Rainforest Cafe restaurants and the operation for the full year of
the "twin" restaurant, comprising an Alamo Grill restaurant and an Elephant &
Castle restaurant operating from a common kitchen, in Franklin Mills,
Pennsylvania. See Management's Discussion and Analysis, Item 7 hereinafter.

         During the fiscal year ended December 26, 1999, the Company incurred
a net loss of CDN $4,262,000 compared to a net loss of CDN $929,000 for the
corresponding period in 1998.

         1999 results of operations reflect the costs associated with the
resolution of certain disputes and corporate restructuring and a decline in
income from restaurant operations from CDN $3,770,000 to CDN $2,844,000.
General and administrative expenses decreased from 8.5% of sales in 1998 to
6.8% of sales in 1999, partly as a result of administrative cost reduction
steps taken during the year. Interest on long term debt increased to CDN
$2,056,000 in 1999 from CDN $1,084,000 in 1998 due to increased borrowings
and higher interest cost.


                                     -4-
<PAGE>

         The Company resolved its long-standing legal dispute with Shilo Inns
in October, 1999. The settlement that was reached will result in cash
payments of US $400,000 over 24 months, plus the issue of 150,000 common
shares. A provision of CDN $775,000 was made in 1999 to cover the cost of
this settlement.

         As part of a restructuring of corporate office operations,
employment contracts with two executive officers of the Company were not
renewed, and other corporate staff were terminated. CDN $867,000 was provided
for retiring allowances and other costs related to the restructuring.

         A portion of a tax dispute that arose in 1989 has been resolved in
the Company's favour. The Company has reserved CDN $125,000 for the estimated
cost of settling the remainder.

FINANCINGS

         1995 GEIPPP II FINANCING. In December of 1995, the Company completed
a major financing with a prominent U.S. private limited partnership money
manager, General Electric Investment Private Placement Partners II ("GEIPPP
II"). That financing ultimately added U.S. $1,000,000 (CDN $1,370,000) in
equity before issue costs and U.S. $9,000,000 (CDN $13,140,000) in
subordinated convertible notes to the Company's long term debt structure. In
October, 1999 the Company granted a security interest to GEIPPP II 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.

         DELPHI FINANCING. In February of 1999, the Company completed an
additional private placement equity financing with a group of U.S. investors.
The financing was arranged by Delphi Financial Corporation of Minneapolis
Minnesota. In total the Company raised U.S. $3,265,000 (CDN $4,897,500) from
the sale and issuance of additional Subordinated Convertible Notes (the "'99
Notes"). The '99 Notes have a five year term, bear interest at 8% per annum
payable quarterly in arrears commencing on June 30, 1999, in cash or Common
Shares, to the extent fully registered Common Shares of the Company are
available, at the option of the Company. All of the '99 Notes unpaid and not
converted by December 31, 2003 are immediately due and payable on such date,
together with a 25% premium on the unpaid principal amount thereof. The terms
of the '99 Notes were renegotiated in October, 1999 following which
$1,582,000 of these `99 Notes were converted into common stock at $1 per
share in exchange for the waiver of penalties associated


                                     -5-
<PAGE>

with the delay in registration of the underlying securities and adjustment to
the one year warrants to the terms noted below.

         The Company has a right for optional redemption of the remaining `99
Notes at 100% of par, plus accrued and unpaid interest, from time to time
during the period that the '99 Notes are outstanding if the market price for
the Company's Common Shares equals or exceeds 150% of the conversion price
for fifteen (15) consecutive trading days, under certain circumstances. Each
of the holders of the '99 Notes also received one year warrants, extended to
three years, to purchase an equal number of Common Shares. The Warrants are
exercisable at U.S. $2.00 per share until 31st January, 2001 and at U.S.
$3.00 thereafter. GEIPPP II participated in the Delphi Financing, and
purchased U.S. $2,000,000 additional of the 1999 Notes, U.S. $1,000,000 of
which was subsequently converted into 1,000,000 Common Shares.

         The additional financings described under the Delphi transactions
together have a significant dilutive effect on the existing warrant and
option instruments outstanding. U.S. $6,000,000 of the funds borrowed by the
Company from GEIPPP II are now convertible by it, at its option, at U.S.
$3.84 per share and U.S. $3,000,000 of such Notes are convertible at U.S.
$5.00 per share. If the '99 Notes expire without conversion and the Warrants
expire without exercise thereof, upward adjustments would apply with respect
to the GEIPPP II conversion and exercise prices. Similarly, if the GEIPPP II
instruments expire or terminate without conversion or exercise, corresponding
upward adjustments of exercise rights and number of shares purchasable would
impact on other existing instruments. At the present time, GEIPPP II has the
right through conversion privileges and warrant exercise rights to acquire
approximately 58.8% of the Company's Common Shares, assuming exercise of all
such rights and privileges.

RESTAURANTS IN OPERATION

         ELEPHANT & CASTLE. At the Elephant & Castle restaurants, the Company
seeks to distinguish itself from competitive restaurants by its 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. The average check per customer,
including beverage, was approximately CDN $14.00 during 1999, a number which
has more or less been stable since 1992. Although all of the Company's
restaurants provide full liquor service, alcoholic beverages are primarily
served to complement meals.


                                     -6-
<PAGE>

         MALL RESTAURANTS. The Company's mall restaurants average
approximately 5,000 square feet, with a typical seating capacity of 220. The
restaurants are open 7 days a week for lunch, dinner and late-night dining.
Average unit sales are approximately CDN $1,200,000 with a sales mix of
approximately 60% food and approximately 40% alcoholic beverages. Due to
their location at major downtown and suburban malls and office complexes, the
Elephant & Castle restaurants cater to both shoppers and office workers.

         HOTEL RESTAURANTS. The Company has agreements for the operation of
restaurants in 5 hotel locations in Canada and the United States, including 3
Holiday Inn locations. The Winnipeg Crowne Plaza Holiday Inn Elephant &
Castle restaurant was opened on May 18, 1994. The Philadelphia Holiday Inn
unit was opened on February 28, 1995, and the San Diego Holiday Inn was
opened on July 1, 1996. The Boston, Massachusetts and Seattle, Washington
sites added in 1997 are in hotel locations other than Holiday Inn. The
Company hopes to build additional hotel restaurant units at first-class
hotels over the next several years. In the opinion of management, the three
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.

         ALAMO GRILL. In October of 1996, the Company acquired all of the
capital stock of Alamo Grill, Inc. ("Alamo"), a one unit restaurant business
located at the Mall of America, Bloomington, Minnesota. The acquisition
provided the Company with a "red meat" concept restaurant. The single unit
Alamo has been operated successfully and profitably by the Company since its
acquisition. The new "Alamo Grill" restaurants (Registrant may use such name
or variants thereof) are casual steakhouse restaurants with a distinctive
southwestern design and theme. They are intended to be franchise restaurants
located primarily in U.S. hotels. The menu is positioned to deliver an
average spend of U.S. $14-16 Dollars for food at dinner. Each restaurant is
planned to be up to 6,500 square feet with up to a 240-seat capacity. See
also Franchising.

         THE CANADIAN RAINFOREST CAFE VENTURE. As of May 1, 1997, the Company
signed agreements with Rainforest Cafe, Inc. ("RCI") relating to the Canadian
Rainforest Joint Venture. The agreements provide for the establishment of a
jointly-owned Canadian corporation, Canadian Rainforest Restaurants, Inc.
("CRRI") in by


                                     -7-
<PAGE>

the power to nominate three of the five CRRI directors and by a management
agreement.

         The Registrant simultaneously acquired from RCI an exclusive Area
Development Agreement for U.S. $500,000 (CDN $685,000), U.S. $250,000 (CDN
$343,000) paid in advance, and U.S. $50,000 (CDN $69,000) per annum thereafter
until the balance is paid. The Area Development Agreement has been assigned to
CRRI, the joint venture company. Each restaurant built within the exclusive
territory of Canada will also enter into a license arrangement with RCI. The
Rainforest Cafe restaurants, a trademark and trade name protected concept,
provide patrons with a rainforest environment, which is both attractive and
entertaining, and has been sought out by mall operators and others on favorable
terms as a destination location.

         In 1999 an additional company, Yorkdale Rainforest Restaurant Inc.
("YRRI"), was formed for the development of one of the Rainforest Cafe
restaurants. CRRI and RCI each have a 50% interest in the Common Stock of YRRI,
giving the Registrant an effective 25% interest. The Registrant effectively
controls YRRI, as to day to day operations, through its management service
contract.

         A section of the premises of each Canadian Rainforest Cafe restaurant
is set aside for the sale of rainforest related merchandise. The Company has
slightly modified the basic physical structure of each Rainforest restaurant. In
the United States, Rainforest Cafe, Inc. has quickly expanded from its first
unit at Mall of America, Bloomington, Minnesota to a worldwide chain. RCI has
Development Agreements for foreign expansion in numerous areas. The Registrant's
interest is solely in the Rainforest Cafe restaurants located in Canada.

         Thus far, the Company has invested CDN $5.45 million, net, through
December 26, 1999, in the joint venture entity towards the creation of the first
three Canadian Rainforest restaurants. The Company will receive a management fee
of 1.5% of sales from each licensed restaurant in addition to distributions it
receives as a shareholder of CRRI.

         Each Rainforest Cafe presents an equatorial rainforest motif, a diverse
interesting menu and high quality food which is intended to appeal to a broad
customer base. The five restaurants planned to date (one in greater Vancouver
opened June, 1998, two in Toronto Scarborough February, 1999 - Yorkdale July,
1999, one in Montreal scheduled to open in November, 2000, and one to be opened
in Niagara, Ontario under a sub-franchise agreement) will range from 13,000 to
20,000 square feet and seat from 340 to 400 people. Due to the size and scope of
these facilities, it is necessary that


                                    -8-
<PAGE>

they be positioned in very high traffic areas to attract the necessary
clientele. The anticipated sales mix from the Canadian Rainforest Cafe is 10%
retail items, and 90% food and beverage. RCI has the right to buy out the
Company's interest in Canadian Rainforest Restaurants, Inc. based on a
formula amounting to not less than five times EBITDA after seven years of
operations. The Company has an equivalent right to buy out RCI's interest in
the venture, which is only exercisable after the 15th anniversary of
operations.

         RCI has signed a definitive merger agreement with Landry's Seafood
Restaurants, Inc. This agreement is subject to regulatory and shareholder
consent. The Company currently has no relationship with Landry's.

         FRANKLIN MILLS "TWIN" RESTAURANT. In 1998 the Company opened a
dual-brand "twin" restaurant in Franklin Mills, outside of Philadelphia,
Pennsylvania. The E&C/Alamo is approximately 14,000 square feet and shares a
common kitchen. The efficiencies of the dual-brand concept intended to be
realized include facility and construction cost limitations, while presenting
two distinct brand images to the public. This unit has not operated at
satisfactory volume or profit levels due to lack of foot traffic passing. The
Company is considering alternative, better and higher uses for the Franklin
Mills premises, and may be required to consider closure or partial closure
pending more favorable results or such alternative better or higher use.
Closure of the Franklin Mills facility could have a material adverse effect
on the total assets, net assets and shareholders equity of the Company. The
Company's income from restaurant operations in 1999, before losses at
Franklin Mills, and a one-time provision of CDN $250,000 for the closing of a
small Canadian location, was $5,002,000. A successful assignment, transfer or
closure, without continuing rent obligation, of Franklin Mills would,
therefore, be expected to have a favorable impact on continuing net income of
the Company. In the absence of improved foot traffic in that section of the
mall, the Company is actively seeking to involve the Landlord at Franklin
Mills in its efforts to find a better or higher uses for the premises.

         FRANCHISING. Management of the company believes that the Company's
"brand" identification is a valuable asset. Three franchised locations of the
Elephant & Castle brand are now open, one at the new international terminal
at Vancouver International Airport, a second to a pair of former employees in
London, Ontario and a third, opened in January, 2000, in Grove City,
Pennsylvania.


                                    -9-
<PAGE>

         In 1999 the Company signed an exclusive franchise agreement with
Holiday Inn Hotels, whereby Holiday Inn Hotels and its franchises have the
exclusive right to franchise the Alamo Grill brand in hotel locations in the
United States. In consideration for this exclusivity, Holiday Inn Hotels has
undertaken to promote the brand to its franchisees as the exclusively
endorsed steakhouse restaurant. The first such franchise opened in a Holiday
Inn hotel in College Park, near Atlanta, Georgia. Additional franchises are
currently under negotiation.

         The Company signed a sub-franchise agreement with Canadian Niagara
Hotels for the right to develop a Rainforest Cafe in Niagara, Ontario. This
unit is expected to open in the spring of 2001.

         Future activities are intended to include an expansion of the
Company's franchising activities for both the Alamo Grill and the Elephant &
Castle brand. No further sub-franchises of the Rainforest Cafe brand are
currently anticipated.

         FUTURE COMPANY GROWTH. The Company's strategy for future growth of
its Elephant & Castle and Alamo Grill concepts involves both franchising and
development of company owned and operated locations. These will be
predominantly hotel-based or in high traffic, urban centre locations. The
Company's intention is to cluster restaurants in prime locations in chosen
geographic regions. Key points for consideration include the need for
consistency in use and revenues resulting therefrom. The Company's current
cash position and cash flow from operations should be adequate to permit the
development of one to two additional Company owned facilities per year,
without further capital transactions.

         ADDITIONAL INFORMATION

b.       FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

         During each of the last three years, 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.

c.       NARRATIVE DESCRIPTION OF THE BUSINESS.

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


                                    -10-
<PAGE>

                  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 1999, 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.

         RELATIONSHIP WITH HOTEL OPERATORS

         The Registrant's relationship with hotel operators, such as Holiday
Inn 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 Registrant's selection; and
(iv) reliance upon restaurant operator's control of the physical environment
and menu selections. The Registrant currently operates additional hotel
restaurants at the Club Quarters Hotel (Boston, Massachusetts) and Cavanaughs
Inn (Seattle, Washington) and Rosedale Hotel (Vancouver, Canada).

                  iv. 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 complete 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, labor 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 continue to offer quality food for moderate


                                  -11-
<PAGE>

prices, management's ability to control labor costs, and ultimately on the
executive determinations as to extensions of the brand (I.E., selection of
sites for new locations and related strategies).

                  v. SUPPLIERS. Food products and related restaurant supplies
are purchased both through home office purchasing programs and already at the
restaurant level from specified food producers, independent wholesale food
distributors and manufacturers. This process enables the Company to ensure
quality companies. 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.

                  vi. DEPENDENCE ON CUSTOMERS. Elephant & Castle appeals to a
diverse customer base, including business and professional people who occupy
offices in the vicinity of the restaurants, shoppers from the malls, downtown
tourists, and others. The Company's locations and broad menu attract traffic
from lunch through mid-afternoon, dinner and into the evening hours. Most all
of the Company's restaurants are open seven days and evenings, each week. All
items on the menu are available for take-out, although take-out customers
account for less than 2% of total restaurant sales.

                  vii. TRADEMARKS; LICENSES. The Company has registered "The
Elephant & Castle Pub & Restaurant" with the Canadian Trademarks 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
U.S. $50,000 (CDN $75,000), plus a one-time fee of U.S. $5,000 (CDN $7,500)
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 is not
aware of any infringing uses that could materially affect its business or any
prior claim to the trademarks in its business.

                  viii. 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


                                  -12-
<PAGE>

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 labor 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 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. Alcoholic
beverage control regulations relate to numerous aspects of the daily
operations of the Company's restaurants. The Company has not encountered any
material problems related to alcoholic beverage licensing to date. 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.

                  ix. Y2K COMPLIANCE. Business operations are affected by the
Year 2000 readiness of infrastructure suppliers in areas such as utilities,
communications, transportation and other services. In this environment, there
is potential for instances of failure that could cause disruptions in
business processes for the Company or adversely impact its customers.
Preparation by the Company for Year 2000 was effective, and no material
occurrences of Year 2000 failure were experienced. See also discussion of Y2K
under Management's Discussion and Analysis, Item 7 herein.

                  x. EFFECT OF EXISTING AND PROBABLE GOVERNMENTAL
REGULATIONS. 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 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


                                  -13-
<PAGE>

Company's liability coverage could have a material adverse effect on the
Company. The Company has never been the subject of a "dram-shop" claim.

                  xi. RESEARCH AND DEVELOPMENT. The Company places
significant emphasis on the design and interior decor of its restaurants. The
Company is employing the same basic architectural design, decors and
construction techniques for the Canadian Rainforest Cafe restaurants as
Rainforest Cafe has used for its restaurants in the U.S.

         The Company's Elephant & Castle unit designs requires somewhat
higher capital costs and furniture and fixtures investment to open a new
restaurant than is typical in the industry. Landlord contributions defray a
part or a substantial part of interior design and decor at a typical new
restaurant. The Company believes that its design and decor features enhance
the dining experience. Each restaurant typically features large, airy dining
areas. Two of the restaurants offer atrium seating, and 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 also believes that the location of a restaurant is
important to its success. In general, 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 Registrant 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.

                  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 26, 1999, the Company, including its Canadian Rainforest Cafe
joint venture, employed approximately 1,700 persons on a full-time and
part-time basis. 23 of such persons serve in administrative or executive
capacities, approximately 100 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


                                  -14-
<PAGE>

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, particularly among management employees, 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 Registrant 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 unionized. In 1999 the Company experienced its only
organized work stoppage, strike or labor dispute. This strike, by the staff
of Rosie's on Robson, lasted for a period of 2 weeks.

         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 about five years' experience with the Company. The Company also
employs regional managers and may be required to add additional supervisory
people as the chain expands. As the Company adds new restaurants, its future
success may depend in part on its ability to continue to attract and train
capable additional managers. The Company also anticipates that the opening of
additional restaurants including at hotel sites in the United States will
require a commensurate increase in employees. The Company does not expect a
proportionate increase in the number of corporate or administrative
personnel. 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. Management has made a conscious
commitment to provide customer service of the highest standards. In addition
to evaluations made by the customers, the Company uses a "designated
customer" quality control program to independently monitor service and
operations. "Designated customers" are independent people who test the
standards of food, beverage and service as customers of the restaurant
without the knowledge of management or staff. Done on a periodic basis, their
findings are reported to corporate management. Efficient, attentive and
friendly service is integral to the Company's overall


                                  -15-
<PAGE>

concept. Any new employee at all functional levels is closely supervised
after his or her on-the-job training. Management regularly solicits employee
suggestions concerning operations, and endeavors to be responsive to employee
concerns.

         The Company believes its commitment to employee morale is also
critical to its long-term success. The Company has compiled a favorable
record of employee retention. The average tenure of a restaurant general
manager in the Elephant & Castle chain is five years. The Company considers
the quality of its employee interaction with customers to be an important
element of its business strategy.


                                  -16-
<PAGE>

ITEM 2   PROPERTIES

         The Company directly, and through its Canadian Rainforest Cafe
restaurant affiliate (shown by *), currently operates 14 mall based
restaurants, including the "twin" restaurants at Franklin Mills added in
1998. All of such facilities are leased properties. 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>
Regina,Sask.      Cornwall Centre    Aug. 1981         5,375      220
Ottawa, Ont.      Rideau Center      Mar. 1983         7,119      280
West Edm., Alb.   West Edmonton      Jul. 1988         6,500      245
Edmonton, Alb.    Eaton Center       Sep. 1988         5,939      225
Victoria, B.C.    Eaton Center       Jun. 1989         5,640      225
Bellingham, WA    Bellis Fair        May  1990         5,200      220
Saskatoon, Sask.  Midtown Plaza      Oct. 1990         5,815      225
Calgary, Alb.     Eaton Center       Dec. 1990         5,851      225
Surrey, B.C.      Guildford Town     May  1992         4,835      200
Bloomington, MN   Mall of America    Oct. 1996         6,750      280
*Vancouver, BC    Metrotown          Jun. 1998        18,000      340
Philadelphia, PA  Franklin Mills     Nov. 1998        11,400      396
*Toronto, Ont.    Scarborough        Feb. 1999        20,000      394
*Toronto, Ont.    Yorkdale           Jul. 1999        20,000      396
</TABLE>

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


         All of the restaurants are located on leased sites. The Company owns
the furnishings, fixtures and equipment in each of its mall based
restaurants. Existing restaurant leases have expirations ranging from 2000
through 2017 (including existing renewal options). The Company does not
anticipate any difficulties renewing its existing leases as they expire. Mall
leases typically provide for fixed rent plus payment of certain escalations
and operating expenses, against a percentage at 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 typically
declining.

         The Company's facilities at Hotels and other non-mall locations are
occupied on the following basis:


                                    -17-
<PAGE>

<TABLE>
<CAPTION>
HOTEL LOCATIONS     OPENING DATE     SQUARE FT.     INDOOR SEATING
---------------     ------------     ----------     --------------
<S>                 <C>              <C>            <C>
Winnipeg            May 1994           4,300              180
Philadelphia        February 1995      7,900              310
Rosie's/Vancouver   August, 1995       5,500              200
San Diego           July 1996          7,500              300
Seattle             August, 1997       7,600              230
Boston              November, 1997     9,500              200

OTHER NON-MALL LOCATIONS
------------------------
BCIT
 (Burnaby,B.C.)     September, 1995    4,500              300
Toronto
 King Street        October, 1996      9,200              330
Edmonton            November, 1997     5,600              180
Toronto
 Yonge Street       December, 1999     3,200              160
</TABLE>

         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>
Regina, Cornwall Centre             2000                      CDN      $19,000
BCIT, Burnaby, B.C.                 2000                               105,000
Edmonton Eaton Center               2001                               109,000
Minneapolis, Mall of America        2002                               344,000
West Edmonton Mall                  2003                               130,000
Ottawa Rideau Center                2003                               165,000
Victoria Eaton Center               2004                               169,000
Winnipeg, Holiday Inn               2004                                60,000
Saskatoon Midtown Plaza             2005                               158,000
Bellingham Bellis Fair              2005                               152,000
Rosie's, Rosedale                   2005                                60,000
Philadelphia, Holiday Inn           2005                               150,000
Calgary Eaton Center                2005                                94,000
San Diego, Holiday Inn              2006                                90,000
Surrey, Guildford                   2007                               156,000
Boston, Club Quarters               2007                                90,000
Philadelphia, Franklin Mills        2008                               413,000
</TABLE>


                                     -18-
<PAGE>

<TABLE>
<CAPTION>
                                  EARLIEST
LOCATION                       EXPIRATION DATE                MINIMUM ANNUAL RENT
--------                       ---------------                -------------------
<S>                            <C>                            <C>
Toronto (Yonge Street)              2008                             110,000
Toronto (King Street)               2011                              92,000
Edmonton, White Ave                 2012                              95,000
Seattle, Cavanaughs                 2012                              84,000
Vancouver, Metrotown                2013                             585,000
Toronto, Scarborough                2014                           1,073,000
Toronto, Yorkdale                   2014                           1,073,000

         TOTAL:                                               CDN $5,576,000
                                                              ==============
</TABLE>

         In earlier years, the Company was able to decrease the aggregate per
unit minimum annual rental obligations by selective locations and appropriate
lease provisions. The minimum annual rental obligations per unit are
currently increasing, however, with the Canadian Rainforest Cafe restaurants
substantially increased space and location needs, which are, in turn,
providing greater per unit revenues from operations to the Registrant.


                                     -19-
<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.

SHILO LITIGATION

         In late 1992, the Company obtained the right to operate all of the
food and beverage services at the Shilo Hotel & Resort complex in Yuma,
Arizona. In addition, on July 1, 1993, the Company added the food and
beverage operations at a second Shilo Hotel in Pomona, California. After a
breakdown in the business relationship between the parties, on August 22,
1995, Shilo asserted legal claims against the Company, and commenced
litigation. The Company settled this litigation in October 1999 for cash
payments of U.S.$400,000 over 24 months plus 150,000 shares of Common Stock
of the Company.

TAX REASSESSMENT

In 1989 and 1990, the Canadian subsidiary received Notices of Reassessment
from Revenue Canada and the Ministry of Revenue, Ontario, regarding a
construction allowance received in 1984 from the landlord for its former
Sarnia location. The reassessment has been under appeal since 1989. The
Company reached substantial agreement with Revenue Canada, subject to the
confirmation of certain facts, for the settlement of the reassessment for tax
and interest estimated to be CDN $125,000. Full provision for this sum has
been made.


                                     -20-

<PAGE>

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's 1999 Annual General Meeting was initially scheduled to be held on
August 23, 1999, and was subsequently adjourned upon the motion of a group of
insurgent shareholders ("Shareholder Group"). On October 19, 1999, the Company
and such Shareholder Group agreed to a Memorandum of Agreement providing,
INTER-ALIA, for the election of two additional independent directors; the
appointment of Richard Bryant as President of the Company; the scheduling of the
2000 Annual General Meeting to be held on or before June 29, 2000; allowance for
the shareholder group to require certain additional changes in the Board
composition under certain circumstances prior to the Year 2000 Annual General
Meeting. The Company currently believes that Management's relationship with the
Shareholder Group has been stabilized, and that the governance of the
corporation will proceed on a mutually acceptable basis. GEIPPII, the Company's
largest equity holder, is not a member of the Shareholder Group.

Following the Memorandum of Agreement, the 1999 Annual General Meeting proceeded
on October 22, 1999, and the management slate of director nominees was elected.
Two additional independent directors, one of whom was a former director of the
Company, were then elected to the Board by the directors, theretofore elected by
the shareholders.


                                       -21-
<PAGE>

                                     PART II

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

         The Company's Common Stock is, and has been since June 29, 1993, traded
on NASDAQ - small cap market and the Pacific Exchange (PUBS). The NASDAQ symbol
was changed from PUBSF to PUBFC in early 2000 and is expected to change to PUBCD
in the near future.

         The range of high and low sales prices for the Common Stock from
January 1, 1998, to the end of 1999 has been:

<TABLE>
<CAPTION>
                                   High            Low
                                  -------        -------
<S>                               <C>            <C>

First Quarter of 1998:            $7.625         $5.375
Second Quarter of 1998:           $6.375         $4.25
Third Quarter of 1998:            $6.50          $2.375
Fourth Quarter of 1998:           $4.125         $1.75

First Quarter of 1999:            $2.125         $1.594
Second Quarter of 1999:           $2.25          $1.50
Third Quarter of 1999:            $1.625         $0.688
Fourth Quarter of 1999:           $0.594         $1.156
</TABLE>

         The approximate number of record holders of the Company's common stock
as of January 2000 is 536.

         The company has been required by NASDAQ to take certain actions to
avoid the delisting of its Common Stock due to the fact that the price thereof
had fallen below the NASDAQ's $1.00 per share minimum price. A proposal to
consolidate the shares on a 1 for 2 basis was approved by shareholders at an
Extraordinary General Meeting held on March 23, 2000, and trading will commence
on this basis on 27th March, 2000.


                                      -22-
<PAGE>

ITEM 6   SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
                                      1999                1998              1997              1996               1995
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
<S>                        <C>              <C>                 <C>               <C>               <C>
Sales                              $50,104             $42,630           $34,231           $29,284            $25,764
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Income from Restaurant               2,844               3,770             1,883             1,587                791
Operations
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Earnings before Interest            (2,196)                156              (912)             (840)            (1,493)
and Taxes
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Net Income                          (4,262)               (930)           (1,416)           (1,174)            (1,578)
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Total Assets                        30,028              30,797            24,621            16,767             15,888
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Shareholder's Equity                 6,793               8,621            10,209             7,928              7,318
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Long Term Debt                     $15,792             $16,605           $10,279            $5,337             $5,384
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Average Shares                   3,513,000           3,197,000         2,947,000         2,683,000          2,503,000
Outstanding
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
Earnings Per Share                  $(1.21)             $(0.29)           $(0.48)           $(0.44)            $(0.63)
-------------------------- ---------------- ------------------- ----------------- ----------------- ------------------
</TABLE>


                                      -23-
<PAGE>

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

FIFTY TWO WEEKS ENDED DECEMBER 26, 1999 VS. FIFTY TWO WEEKS ENDED
DECEMBER 27, 1998

NET INCOME

For the fifty two weeks ended December 26, 1999, the Company's net loss was CDN
($4,262,000) compared to CDN ($929,000) for the corresponding period in 1998.
Loss per share for the current period was CDN ($1.21), compared to ($0.29) in
1998. The average number of shares outstanding increased from 3,197,000 in 1998
to 3,513,000 for the current year.

Included in the current year are certain costs associated with the resolution of
certain disputes and corporate restructuring.

The 1999 net loss excluding the operating loss at the Franklin Mills location
and the one-time items mentioned above was CDN ($87,000) or CDN ($0.02) per
share.

SALES

Sales increased 17.5% during the fifty two weeks ended December 26, 1999 to CDN
$50,104,000 from CDN $42,630,000 in 1998. As discussed above, the 1999 figure
includes sales for four new locations: Franklin Mills PA (opened November 13,
1998); Rainforest - Scarborough ON (opened February 4, 1999); Rainforest -
Yorkdale ON (opened June 30, 1999); and Toronto ON (opened November 10, 1999).
The Company disposed of its London ON location, by way of a franchise agreement
with two of its location managers, on September 28, 1998.

For the thirteen Canadian E&C locations open throughout both periods, sales for
the fifty two weeks December 26, 1999 totaled CDN $19,703,000 and were down 1.8%
compared to the fifty two weeks ended December 27, 1998. Newly enacted bans on
indoor smoking at several locations and the impact of the Eaton's department
store chain bankruptcy on several mall locations contributed to the decline.

For the six US locations open throughout both periods, sales for the 1999 period
were US $12,657,000 and were down 1.9% compared to the prior year. Food sales,
which make up approximately 70% of


                                     -24-
<PAGE>

total sales were up slightly, but beverage
sales were down, again partially attributable to restrictions on indoor smoking.
Sales at the Franklin Mills location continue to disappoint, despite numerous
targeted marketing programs implemented during 1999.

Sales at the Rainforest - Sales at theme restaurants such as Rainforest are not
considered to be "comparable" until after eighteen months of operation. None of
the locations have yet reached that point of comparability. As discussed under
"Site Developments" above, the Company has developed strategies and programs,
including the hiring of an experienced marketing and promotions manager, in
order to take advantage of the sales potential in the markets served by the
restaurants.

FOOD AND BEVERAGE COSTS

Overall, food and beverage costs, as a percentage of sales, increased marginally
to 28.8% for the fifty two weeks ended December 26, 1999, compared to 28.1% for
the fifty two weeks ended December 27, 1998. Excluding Franklin Mills, the food
and beverage percentage would have been 28.6%.

LABOUR AND BENEFITS COSTS

Labour and benefits decreased from 32.3% of sales in 1998 to 32.0% in the
current period. The disappointing sales at the Franklin Mills location led to
unacceptably high labour rates at that location and influenced the overall rate.

Excluding Franklin Mills, the labour and benefits rate would have been 30.8%, a
1.5% (of sales) improvement over the comparable period in 1998. The decrease is
being driven by continued emphasis on cost management techniques at all
locations.

OCCUPANCY AND OTHER OPERATING COSTS

Occupancy and other operating expenses increased as a percentage of sales from
24.8% in 1998 to 25.5% in the current period. Excluding Franklin Mills, the rate
would have been 24.0%, representing an improvement of 0.8% compared to 1998.

RESTAURANT CLOSING COSTS

Included in the results for 1999 is a provision of CDN $250,000 for the costs of
closure (scheduled for March 25, 2000) of an older Canadian mall-based
restaurant. There were no such costs in the comparable period of 1998.


                                    -25-
<PAGE>

DEPRECIATION AND AMORTIZATION EXPENSE

Depreciation and amortization costs increased to 7.6% of sales for the current
period from 5.9% last year. Amortization of pre-opening costs for new
restaurants, which is effected over the twelve months following opening, is the
major driver of the cost increase. The combination of low sales and high
development costs at Franklin Mills had a significant impact on the rate.
Without Franklin Mills, the depreciation and amortization rate was 5.6% of
sales.

INCOME FROM RESTAURANT OPERATIONS

As a result of the above factors, income from restaurant operations, as a
percentage of sales, decreased from 8.8% for the fifty two weeks ended December
27, 1998 to 5.7% for the current period. In dollars terms, the decrease was from
CDN $3,770,000 to CDN $2,844,000.

The impact of Franklin Mills was disproportionate. Excluding Franklin Mills, and
the one-time provision for potential closing costs of a Canadian location,
income from restaurant operations improved to 10.5% of sales in the current
period from 8.8% in the comparable period last year. In dollar terms, the
improvement was CDN $1,232,000, from CDN $3,770,000 to CDN $5,002,000.

GENERAL AND ADMINISTRATIVE COSTS

General and administrative costs decreased from 8.5% of sales in 1998 to 6.8% in
the current period. Economies of scale are now being achieved as new restaurants
are opened without commensurate increases in general and administrative costs.
In dollar terms, general and administrative costs were down slightly from last
year, despite higher legal costs incurred during 1999.

RETIRING ALLOWANCES AND OTHER COSTS

As part of a restructuring of corporate office in 1999, employment contracts
with two executive officers of the company were not renewed, and other corporate
staff were terminated. CDN $867,000 has been provided for retiring allowances
and other costs related to the restructuring.

LEGAL SETTLEMENT

The Company reached an agreement with Shilo Management Corporation to settle a
legal dispute that arose in 1995. The cost of the settlement was CDN $775,000
and has been included in the results


                                   -26-
<PAGE>

for the fifty two weeks ended December 26, 1999.

INTEREST ON LONG TERM DEBT

Interest on long term debt rose to CDN $2,056,000 for the fifty two weeks ended
December 26, 1999, compared to CDN $1,085,000 for the comparable period in 1998.
The increase is attributable to interest on funds raised in late 1998 and early
1999 to finance the construction of the new Canadian Rainforest Cafe operations
and the Franklin Mills location.

(LOSS) BEFORE TAXES

The Company incurred a loss before income taxes of CDN ($4,252,000) for 1999
compared to a loss of CDN ($929,000) for 1998. As discussed above, the Company
experienced a negative impact from its new Franklin Mills location, which more
than offset improved performance at the remainder of its locations. Significant
improvements in labour, occupancy and other costs were offset by poor
performance in these areas at Franklin Mills. The poor performance at Franklin
Mills, plus increased interest costs, some of which was related to Franklin
Mills, and CDN $1,912,000 in one-time costs related to retiring allowances,
settlement of an old legal dispute and the potential closure of one location
resulted in the increased loss for the year.

INCOME TAXES

The Company incurred a loss in the fifty two week period ended December 26, 1999
and therefore has no current tax liability. The Company also has loss
carry-forwards that will reduce its effective tax rate in future periods.
Included in 1999 is a provision of CDN $125,000 representing the Company's
current estimate of the cost of settling a dispute that dates back to 1984. This
dispute had been carried as a contingent liability, with an estimated possible
cost of CDN $785,000 as at December 27, 1998. A portion of the dispute has been
settled, and, subject to confirmation of certain facts by the taxing
authorities, the Company believes the balance of the dispute will be resolved
for the CDN $125,000 recorded in the current period. Should a change to this
estimate be necessary, it will be recorded at the time such determination is
made. A deferred income tax recovery of CDN $125,000 related to timing
differences in a joint venture has also been recorded in the current period.


FIFTY TWO WEEKS ENDED DECEMBER 27, 1998 VS. TWELVE MONTHS ENDED
DECEMBER 31, 1997


                                   -27-

<PAGE>

NET INCOME

         For the year ended December 27, 1998, the Company's net loss was CDN
($929,000) compared to a net loss of CDN ($1,416,000) for the corresponding
period in 1997. Income from restaurant operations increased to CDN $3,769,000 in
1998 from CDN $1,883,000 in 1997. Overall, loss per share in 1998 was CDN
($0.29) compared to CDN ($0.48) in 1997.

         The Company reports its results in accordance with Canadian Generally
Accepted Accounting Principles (CDN GAAP). See below, and Note XX to the audited
financial statements for discussion and reconciliation between CDN GAAP and
United States Generally Accepted Accounting Principles (US GAAP).

INCOME FROM RESTAURANT OPERATIONS

         Income from restaurant operations, at CDN $3,769,000 was up 100.2% over
1997 and, as a percentage of sales, increased to 8.8% in 1998 from 5.5% in 1997.
There are four principal reasons for this improvement. Firstly, the opening of
higher volume stores and closing of two lower volume locations enhanced overall
operating margins. Secondly, food and beverage cost percentages showed
improvement throughout the year. Thirdly, labor cost percentages were lower than
the previous year. Fourthly, the 1997 figure included CDN $200,000 in costs
relating to the closure of two restaurants during the year and CDN $130,000
related to a lease guarantee on a former location.

SALES

         Sales increased 24.5% during the 1998 year to CDN $42,630,000 from CDN
$34,231,000 in 1997. The Company's joint venture with Rainforest Cafe Inc.
opened its first location during 1998, in Vancouver (June 12th ). The Company
also entered a franchise agreement for its corporately owned location in London,
Ontario on September 28, 1998. The Company opened three locations in 1997, in
Seattle (August 28th), Boston (November 4th) and Edmonton (November 20th). It
also closed two low volume locations in 1997 (Vancouver in February and Thunder
Bay in August) as their leases expired. The result of opening higher volume
stores and closing lower volume locations has seen the average weekly sales
volume per unit in 1998 increase by 13.2% over the 1997 figure.

         For the twelve Canadian locations open throughout both years, 1998
sales totaled CDN $19,274,000 and were up 2.5% from 1997.


                                   -29-
<PAGE>

         For the four U.S. locations open throughout both years, sales decreased
2.5% from 1997. A 20.4% decrease at the Bellingham, WA location accounted for
the majority of the decrease. The mall in which this restaurant is located is
largely dependent on Canadian cross border shoppers and the relative decrease in
value of the Canadian dollar versus the US dollar has caused mall traffic to
decline. The year on year impact of this is expected to be much less severe in
1999.

         The Company's Rainforest Cafe joint venture opened its first location,
in Vancouver, BC, in June, 1998. Its second unit opened in Metro Toronto in
February, 1999. Sales continue to be in line with management's expectations.

COSTS AND EXPENSES

         FOOD AND BEVERAGE COSTS

         Overall, food and beverage costs, as a percentage of sales, decreased
to 28.1% for the twelve months ended December 27, 1998 compared to 29.1% for the
corresponding period in 1997. The Company implemented a number of purchasing
programs in 1998 that decreased the food and beverage percentage during the
year, and generated recovery of certain rebates and credits from prior years.

         LABOR AND BENEFITS COSTS

         Labor and benefits costs decreased from 33.0% of sales in 1997 to 32.3%
for the 1998 period. The Company is continuing to review labor schedules and
believes further labor efficiencies are deliverable.

         OCCUPANCY AND OTHER COSTS

         Occupancy and other operating costs decreased as a percentage of sales
from 25.7% in 1997 to 24.8% in 1998. This is primarily the result of the
Company's strategy of focusing new developments in high traffic urban locations
and moving away from its traditional suburban mall locations. This is resulting
in lower occupancy percentages at the newer locations and is driving the overall
rate down.

         DEPRECIATION AND AMORTIZATION

         Depreciation and amortization costs increased slightly to 5.9% of sales
for 1998 compared to 5.7% in 1997. Higher development costs and shorter
amortization periods at new locations, compared


                                   -30-
<PAGE>

to older suburban mall
locations, plus amortization of higher pre-opening costs, are the cause of the
increase in the percentage.

         RESTAURANT CLOSING COSTS

         During 1997 the Company closed two mall locations on the expiration of
their respective leases. The costs associated with these closings were
approximately CDN $200,000. The Company also incurred costs of CDN $130,000
related to a lease guarantee on a former property. The Company did not close any
locations during 1998, although it did enter into a franchise agreement for its
London, Ontario location. There was no net cost to the Company.

         GENERAL AND ADMINISTRATIVE COSTS

         General and administrative expenses increased from 7.2% of sales in
1997 to 8.5% in 1998. The 1998 figure contains full year costs for three new
executives hired in the second half of 1997, causing the overall rate to
increase. Hiring these executives was a necessary step in the development of the
infrastructure needed to allow the Company to expand and return to
profitability. Mr. Martin O'Dowd, former President of Rainforest Cafe Inc.,
joined the Company in August, 1997 as President of the U.S. operations with the
mandate to expand the Company's U.S. presence and to oversee the development of
Rainforest Cafes in Canada. In March, 1998 Mr. O'Dowd was appointed President
and Chief Executive Officer of the Company. Mr. Colin Stacey, former President
of Keg Restaurants, also joined the Company in August, 1997, as Chief Operating
Officer responsible for Canadian operations. In March, 1998 he was given
responsibility for all Canadian and US Elephant & Castle and Alamo locations.
Mr. Richard Bryant, formerly Chief Financial Officer of Keg Restaurants, joined
the Company in November, 1997 as Chief Financial Officer. While the costs of
these executives, plus other additions to corporate management caused general
and administrative costs to rise over the near term, the Company believes its
long term general and expense percentage will be brought down to under 7.0% as
new stores are added without incurring proportionate additional costs.

         RETIRING ALLOWANCES AND OTHER COSTS

         In December, 1997 one of the founders of the Company, Mr. Peter Barnett
retired from his position as Executive Vice President. Under the terms of his
employment contract Mr. Barnett was paid a retiring allowance on his retirement.
Other costs arose from settlement of two labor matters with former employees.
There were no such items in 1998.


                                    -31-
<PAGE>

         INTEREST ON LONG TERM DEBT

         Interest on long term debt increased to CDN $1,084,858 in 1998 from CDN
$503,715 in 1997. There are three main reasons for the increase. Firstly, during
1998 the Company completed two US $2,000,000 (for a total of CDN $5,740,000)
financings. The first was a convertible debenture financing with General
Electric Private Placement Partners, II (GEIPPP II) as part of a 1995 agreement.
The second, also with GEIPPP II, was part of a convertible debenture financing
that saw an additional US $1,105,000 (CDN $1,657,500) raised from other
investors in February, 1999. Secondly, during 1997 the Company also completed
two US $2,000,000 (CDN $3,000,000 each, for a total of CDN $6,000,000)
convertible subordinated debenture financings with GEIPPP II under the 1995
agreement. The 1998 year includes a full year's interest on the 1997 financings.
Thirdly, the decline in the relative value of the Canadian dollar versus the US
dollar during 1998 resulted in a translation adjustment of CDN $1,170,000, CDN
$130,000 of which is included in interest expense for the 1998 year. The balance
of the translation adjustment will be charged to interest expense over the life
of the related debt. As a result of these factors, , interest on long term debt
in 1998 was substantially higher than 1997, and will be higher again in 1999.

(LOSS) BEFORE TAXES

         The Company incurred a loss before income taxes of CDN ($929,000) in
1998 compared to a loss of CDN ($1,416,000) in 1997. The 1997 figure includes a
total of CDN $677,000 in restaurant closing costs, retiring allowances and other
costs. There were no such costs in 1998. The 1997 loss before these items was
CDN ($739,000). During 1998, income from restaurant operations increased by CDN
$1,886,000. This was offset by an increase of CDN $1,165,000 in general and
administrative expenses and CDN $581,000 in interest costs.

         Management believes the additions it made to executive management
during 1997, plus the additional financings it has been successful in
completing, have positioned the Company to successfully roll-out its expansion
plans, including the development of Rainforest Cafe in Canada. Management is
targeting a return to profitability in 1999.

INCOME TAXES

         The Company incurred losses in each of 1998 and 1997 and therefore has
no tax liability. The Company also has loss carry-forwards which will reduce its
effective tax rate in future years.


                                    -32-
<PAGE>

FINANCIAL CONDITION AND OTHER ITEMS

LIQUIDITY AND CAPITAL RESOURCES

The Company currently has cash balances slightly in excess of CDN $1.0 million.
Aside from day to day operating requirements, its most immediate cash
requirements are to pay the cash components of its legal settlements and
retiring allowance obligations. Funds on hand, plus cash flow from operations
will be sufficient to satisfy these current requirements. The Company's growth
strategy, as discussed on page two of this report, is to focus on strengthening
the profitability of existing operations and leveraging the brands' strength
through franchising and through corporate store growth to the extent deliverable
from internally generated cash flow. The Company does not anticipate the need
for additional external funding to meet its current plans and commitments.

YEAR 2000

The Company spent considerable time and effort in completing Year 2000 readiness
assessments and preparing for the roll-over of the calendar. The Company
experienced no problems before, during or after the roll-over.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CDN AND U.S. GAAP)

The Company prepares its financial statements in accordance with CDN GAAP. (The
reader is referred to Note 18 of the Consolidated Financial Statements for the
year ended December 26, 1999 for additional explanation.) The Financial
statements, if prepared in accordance with U.S. GAAP would have differed as
follows:

         Net loss for the year ended December 26, 1999 would be decreased by CDN
         $1,189,000 comprised of recognition on non-capital loss carry-forwards,
         offset by dividends on paid-in capital that would be treated as
         interest expense under U.S. GAAP; by amortization expense resulting
         from exclusion of the first option period in calculating the
         amortization of certain leasehold improvements; and by pre-opening
         costs that would be expensed under U.S. GAAP.

         Net loss for the year ended December 27, 1998 would be decreased by CDN
         $280,000 comprised of recognition of non-capital loss carry forwards,
         offset by dividends on paid-in capital that would be treated as
         interest under U.S. GAAP, and by amortization expense resulting from
         exclusion of the


                                    -33-
<PAGE>

         first option period in calculating the amortization of
         certain leasehold improvements. The impact of this adjustment would be
         to decrease the net loss per share from CDN ($0.29) under CDN GAAP to
         CDN ($0.20) under U.S. GAAP.

Shareholders' Equity at December 26, 1999 under U.S. GAAP would be CDN
$7,325,000 compared to CDN $6,793,000 under CDN GAAP, due to the cumulative
effect of reconciliation adjustments.

Shareholders' Equity at December 27, 1998 under U.S. GAAP would have been CDN
$6,760,000 compared to CDN $ 8,261,000 under CDN GAAP


                                    -34-
<PAGE>

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Intentionally omitted.


                                    -35-
<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.


                                    -36-

<PAGE>

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

         None.  Not applicable.


                                    -37-
<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 proxy
ITEM 13  statement or definitive information statement is filed not later
         than 120 days after the end of the fiscal year 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.


                                      -38-
<PAGE>

                                     PART IV

ITEM 14. 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.


                                      -39-


<PAGE>

ELEPHANT & CASTLE GROUP INC.

CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 26, 1999
(CANADIAN DOLLARS)

<TABLE>
<CAPTION>
         INDEX                                                             PAGE
         -----                                                             ----
<S>                                                                        <C>
         MANAGEMENT REPORT                                                   1

         AUDITORS' REPORT TO THE SHAREHOLDERS                                2

         CONSOLIDATED FINANCIAL STATEMENTS

         Consolidated Balance Sheets                                         3

         Consolidated Statements of Operations                               4

         Consolidated Statements of Shareholders' Equity                     5

         Consolidated Statements of Cash Flows                               6

         Notes to Consolidated Financial Statements                        7-21
</TABLE>


<PAGE>

MANAGEMENT REPORT

Management is responsible for preparing the Company's financial statements and
the other information that appears in this annual report. Management believes
that the financial statements fairly reflect the form and substance of
transactions and reasonably present the Company's financial condition and
results of operations in conformity with generally accepted accounting
principles. Management has included in the Company's 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.

Panell Kerr Forster audits the Company's financial statements in accordance with
generally accepted auditing standards 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 and 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.



"Richard Bryant"

Chief Financial Officer


                                       F-1
<PAGE>

                                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 26, 1999 and December 27, 1998 and the consolidated statements of
operations, shareholders' equity and cash flows for the years ended December 26,
1999, December 27, 1998 and December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in Canada which do not differ in any material respects from auditing standards
generally accepted in the United States. Those standards require that we plan
and perform an audit to obtain reasonable assurance 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, these consolidated financial statements present fairly, in all
material respects, the financial position of Elephant & Castle Group Inc. as at
December 26, 1999 and December 27, 1998 and the results of its operations and
its cash flows for the years ended December 26, 1999, December 27, 1998 and
December 31, 1997 in accordance with generally accepted accounting principles in
Canada 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 and are discussed in Note 16 to the
consolidated financial statements.

"Pannell Kerr Forster"

Chartered Accountants

Vancouver, Canada
March 14, 2000, except for note 7(f)
  which is as of March 23, 2000


                                       F-2
<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED BALANCE SHEETS
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
============================================================================================
                                                                DECEMBER 26,     DECEMBER 27,
                                                                    1999             1998
--------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>
ASSETS (note 6)

CURRENT
  Cash and term deposits                                           $  1,014         $  2,468
  Accounts receivable (note 13(c))                                      863              557
  Inventory                                                           1,062              808
  Deposits and prepaid expenses                                         419              517
  Pre-opening costs                                                     167              891
--------------------------------------------------------------------------------------------
                                                                      3,525            5,241
FIXED (note 3)                                                       22,649           21,291
GOODWILL                                                              1,949            2,053
OTHER (note 4)                                                        1,905            2,212
--------------------------------------------------------------------------------------------

                                                                   $ 30,028         $ 30,797
============================================================================================
LIABILITIES

CURRENT
  Accounts payable and accrued liabilities (note 5)                $  7,443         $  5,931
  Current portion of long-term debt (note 6)                             62              105
--------------------------------------------------------------------------------------------
                                                                      7,505            6,036
LONG-TERM DEBT (note 6)                                              15,730           16,500
--------------------------------------------------------------------------------------------
                                                                     23,235           22,536
--------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY

CAPITAL STOCK (note 7)
  Authorized
               20,000,000 Common shares without par value
  Issued
                 3,694,709 (1998 - 3,321,334) Common shares          13,955           12,982
OTHER PAID-IN CAPITAL (note 7(a))                                         0              844
SUBSCRIPTIONS RECEIVED                                                2,374                0
CURRENCY TRANSLATION ADJUSTMENT                                        (618)          (1,051)
DEFICIT                                                              (8,918)          (4,514)
--------------------------------------------------------------------------------------------
                                                                      6,793            8,261
--------------------------------------------------------------------------------------------

                                                                   $ 30,028         $ 30,797
============================================================================================
</TABLE>

Contingencies and Commitments (notes 9 and 10)

Approved on behalf of the Board:

"R. Bryant"                                   "C. Stacey"
 ..............................  Director   ...........................  Director
R. Bryant                                      C. Stacey

See notes to consolidated financial statements.


                                       F-3
<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT LOSS PER SHARE)

<TABLE>
<CAPTION>
========================================================================================================
                                                           1999               1998               1997
--------------------------------------------------------------------------------------------------------
<S>                                                  <C>                 <C>                 <C>
SALES                                                $    50,104         $    42,630         $    34,231
--------------------------------------------------------------------------------------------------------

RESTAURANT EXPENSES

  Food and beverage                                       14,418              11,990               9,946
  Operating
      Labour                                              16,026              13,764              11,305
      Occupancy and other                                 12,760              10,581               8,802
  Restaurant closing costs (note 11)                         250                   0                 330
  Depreciation and amortization                            3,806               2,525               1,965
--------------------------------------------------------------------------------------------------------

                                                          47,260              38,860              32,348
--------------------------------------------------------------------------------------------------------

INCOME FROM RESTAURANT OPERATIONS                          2,844               3,770               1,883
--------------------------------------------------------------------------------------------------------

GENERAL AND ADMINISTRATIVE EXPENSES                        3,398               3,614               2,448
RETIRING ALLOWANCES AND OTHER COSTS (note 11)                867                   0                 347
LEGAL SETTLEMENT (note 9(a))                                 775                   0                   0
INTEREST ON LONG-TERM DEBT                                 2,056               1,085                 504
--------------------------------------------------------------------------------------------------------

                                                           7,096               4,699               3,299
--------------------------------------------------------------------------------------------------------

LOSS BEFORE INCOME TAXES                                  (4,252)               (929)             (1,416)
INCOME TAXES (note 9(b))                                     125                   0                   0
DEFERRED INCOME TAXES                                       (115)                  0                   0
--------------------------------------------------------------------------------------------------------

NET LOSS FOR YEAR                                    $    (4,262)        $      (929)        $    (1,416)
========================================================================================================

NET LOSS PER COMMON SHARE                            $     (1.21)        $     (0.29)        $     (0.48)
========================================================================================================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING          3,513,000           3,197,000           2,947,000
========================================================================================================
</TABLE>


See notes to consolidated financial statements.


                                       F-4
<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
============================================================================================================================
                                                                                1999            1998             1997
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>              <C>
NUMBER OF COMMON SHARES ISSUED
  Beginning balance                                                          3,321,334        3,002,183        2,822,225
  Issue of shares
    For interest (note 6)                                                       32,500           15,000           70,555
    For settlement of legal matter (note 9(a))                                 150,000                0                0
    For services                                                                     0            1,000            2,000
    For exercise of options                                                          0                0           17,833
    On exercise of warrants                                                          0                0           75,000
    On conversion of other paid-in capital (note 7(a))                         190,875          303,151           14,570
----------------------------------------------------------------------------------------------------------------------------

                                                                             3,694,709        3,321,334        3,002,183
============================================================================================================================

COMMON SHARES ISSUED
  Beginning balance                                                        $    12,982      $    11,228      $     9,876
  Issue of shares
    For interest (note 6)                                                           98               29              472
    For settlement of legal matter (note 9(a))                                     303                0                0
    For services                                                                     0                3               21
    For exercise of options                                                          0                0              129
    On exercise of warrants                                                          0                0              599
    On conversion of other paid-in capital (note 7(a))                             572            1,722              131
----------------------------------------------------------------------------------------------------------------------------
  Ending balance                                                                13,955           12,982           11,228
----------------------------------------------------------------------------------------------------------------------------
OTHER PAID-IN CAPITAL
  Beginning balance                                                                844            2,421                0
  Issue of other paid-in capital (note 7(a))                                         0                0            2,548
  Paid-in capital converted into shares                                           (844)          (1,577)            (127)
----------------------------------------------------------------------------------------------------------------------------
  Ending balance                                                                     0              844            2,421
----------------------------------------------------------------------------------------------------------------------------
SHARE SUBSCRIPTIONS
  Beginning balance                                                                  0                0                0
  Amount reserved to issue shares                                                2,374                0                0
----------------------------------------------------------------------------------------------------------------------------
  Ending balance                                                                 2,374                0                0
----------------------------------------------------------------------------------------------------------------------------
CURRENCY TRANSLATION ADJUSTMENT
  Beginning balance                                                             (1,051)               0                0
  Deferred gain (loss) incurred during year                                        433           (1,051)               0
----------------------------------------------------------------------------------------------------------------------------
  Ending balance                                                                  (618)          (1,051)               0
----------------------------------------------------------------------------------------------------------------------------
DEFICIT
  Beginning balance                                                             (4,514)          (3,440)          (1,948)
  Dividends paid on other paid-in capital                                         (142)            (145)             (76)
  Net loss                                                                      (4,262)            (929)          (1,416)
----------------------------------------------------------------------------------------------------------------------------
  Ending balance                                                                (8,918)          (4,514)          (3,440)
----------------------------------------------------------------------------------------------------------------------------

TOTAL SHAREHOLDERS' EQUITY                                                 $     6,793      $     8,261      $    10,209
============================================================================================================================
</TABLE>



See notes to consolidated financial statements.


                                       F-5
<PAGE>

ELEPHANT & CASTLE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
=========================================================================================
                                                        1999          1998          1997
-----------------------------------------------------------------------------------------
<S>                                                  <C>           <C>           <C>
CASH PROVIDED BY OPERATING ACTIVITIES
  Net loss                                           $ (4,262)     $   (929)     $ (1,416)
  Operating items not using cash                        5,023         2,502         2,317
-----------------------------------------------------------------------------------------
                                                          761         1,573           901
-----------------------------------------------------------------------------------------

CHANGES IN NON-CASH WORKING CAPITAL
  Accounts receivable                                    (306)          115          (195)
  Inventory                                              (254)         (125)          (33)
  Deposits and prepaid expenses                            98           140           (33)
  Accounts payable and accrued liabilities              1,512         1,645           864
-----------------------------------------------------------------------------------------
                                                        1,050         1,775           603
-----------------------------------------------------------------------------------------
                                                        1,811         3,348         1,504
-----------------------------------------------------------------------------------------

INVESTING ACTIVITIES
  Acquisition of fixed assets                          (3,857)       (8,682)       (5,306)
  Acquisition of other assets                            (546)       (1,326)         (870)
  Acquisition of trademark                                  0           (17)          (14)
-----------------------------------------------------------------------------------------
                                                       (4,403)      (10,025)       (6,190)
-----------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Deferred finance charges                               (364)         (108)         (216)
  Obligation under capital leases                           0             0           (21)
  Proceeds from long-term debt                          1,847         5,740         5,480
  Repayment of long-term debt                            (345)         (584)         (538)
  Issuance of shares for cash                               0             0           728
  Issuance of convertible debentures (note 7(a))            0             0         2,549
-----------------------------------------------------------------------------------------
                                                        1,138         5,048         7,982
-----------------------------------------------------------------------------------------

INFLOW (OUTFLOW) OF CASH                               (1,454)       (1,629)        3,296
CASH AND TERM DEPOSITS, BEGINNING OF YEAR               2,468         4,097           801
-----------------------------------------------------------------------------------------

CASH AND TERM DEPOSITS, END OF YEAR                  $  1,014      $  2,468      $  4,097
=========================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the year for
    Interest                                         $    820      $    723      $    388
    Income taxes                                            0             0             0
=========================================================================================
</TABLE>



See notes to consolidated financial statements.


                                       F-6
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSAND OF DOLLARS)

================================================================================

1.       BASIS OF PRESENTATION

         These financial statements include the accounts of Elephant & Castle
         Group Inc. ("the Company"), its wholly-owned subsidiaries and its
         proportionate share of jointly owned assets, liabilities and restaurant
         operations:

         (a)      The Elephant and Castle Canada Inc. ("the Canadian
                  subsidiary") which owns and operates English style restaurants
                  across Canada under the name "The Elephant & Castle Restaurant
                  and Pub" and a New York style deli under the name "Rosie's";

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

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

         (d)      Elephant & Castle International, Inc. incorporated in Texas,
                  September 4, 1997 to franchise the Elephant & Castle
                  British-style pub and restaurant and Alamo Grill steakhouse
                  concept;

         (e)      Canadian Rainforest Restaurants, Inc. ("CRRI") was
                  incorporated during 1997 and is equally owned with Rainforest
                  Cafe Canada Holding Inc. ("RCCH") for the purpose of
                  undertaking the development of rainforest theme restaurants
                  within Canada. Under the terms of the agreement RCCH will have
                  the option to purchase the Company's interest in CRRI after
                  six years operations based on a predetermined formula of cash
                  flow and investment.

                  Yorkdale Rainforest Restaurant Inc. was incorporated June 29,
                  1999 and is equally owned by CRRI and RCCH. The restaurant
                  commenced operations in July 1999.

         All significant inter-company balances and transactions are eliminated.

         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. The
         significant differences and the approximate related effect on the
         consolidated financial statements are set forth in Note 16.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      Franchise fees

                  The Company recognizes initial fees from the sale of
                  franchises as a recovery of general and administrative
                  expenses. Continuing franchise fees 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.


                                       F-7
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         (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

                  Improvements to leased premises and property under capital
                  leases are being amortized on the straight-line method over
                  the term of the lease plus the first renewal option. For
                  locations opened subsequent to January 1, 1993, such
                  improvements are being amortized on a straight-line basis over
                  the term of the lease.

                  China, glassware and cutlery are not depreciated and
                  replacements are charged directly to operations.

         (d)      Goodwill

                  Goodwill is recorded at cost and amortization is calculated on
                  a straight-line basis over periods from 10 to 40 years.

         (e)      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)      Other assets

                  The following other assets are recorded at cost which is
                  amortized annually as follows:

                      Deferred finance costs          -  Term of the related
                                                         financial instruments
                      Restaurant development rights   -    5 Years
                      Deferred franchise costs        -    5 Years
                      Trademark                       -  10 Years

         (g)      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.


                                       F-8
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                  Gains and losses arising from this translation of foreign
                  currency are included in net income except for unrealized
                  gains and losses on long-term monetary assets and liabilities,
                  which are deferred and amortized over the lives of those
                  items. The unrealized gains and losses will be recognized as
                  amounts are received or paid and are included as a separate
                  component of shareholders' equity.

         (h)      Net loss per share

                  Net loss per share computations are based on the weighted
                  average number of common shares outstanding during the year.
                  There is no dilutive effect on net loss per share in 1999,
                  1998 or 1997 after the assumed exercise of stock options,
                  warrants or convertible debentures.

         (i)      Use of estimates

                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the reported
                  amount 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.

3.       FIXED ASSETS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                      1999
--------------------------------------------------------------------------------
                                                   ACCUMULATED
                                       COST        DEPRECIATION          NET
--------------------------------------------------------------------------------
<S>                                   <C>          <C>                  <C>
Leasehold improvements                $23,253          $ 6,463          $16,790
Furniture and fixtures                  9,906            5,067            4,839
China, glassware and cutlery              539                0              539
Computer equipment                        735              254              481
--------------------------------------------------------------------------------

                                      $34,433          $11,784          $22,649
================================================================================
</TABLE>

<TABLE>
<CAPTION>
================================================================================
                                                       1998
--------------------------------------------------------------------------------
                                                    ACCUMULATED
                                                    DEPRECIATION
                                                        AND
                                        COST        AMORTIZATION          NET
--------------------------------------------------------------------------------

<S>                                   <C>           <C>                 <C>
Leasehold improvements                $20,429          $ 4,759          $15,670
Furniture and fixtures                  9,041           43,362            4,679
China, glassware and cutlery              508                0              508
Computer equipment                        598              164              434
-------------------------------------------------------------------------------

                                      $30,576          $48,285          $21,291
===============================================================================
</TABLE>


                                       F-9
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

4.       OTHER ASSETS

<TABLE>
<CAPTION>
===========================================================================================
                                                                      1999            1998
-------------------------------------------------------------------------------------------

<S>                                                                  <C>             <C>
Deferred finance costs                                               $  701          $  481
Rainforest Restaurant developments rights                               440             408
Deferred franchise costs                                                228             273
Trademark                                                               123             123
Other                                                                   298             202
Deferred income tax recoverable                                         115               0
Note receivable June 1, 2000 (note 13(c))                                 0             350
Prepaid interest (additional consideration for below market

  interest rate)                                                          0             375
-------------------------------------------------------------------------------------------

                                                                     $1,905          $2,212
===========================================================================================
</TABLE>

5.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

<TABLE>
<CAPTION>
=========================================================================
                                                    1999            1998
-------------------------------------------------------------------------
<S>                                                <C>             <C>
Trade payables                                     $2,168          $1,687
Occupancy and other operating expenses              1,335             760
Accrued salaries, wages and related taxes             893             819
Other payables                                        777             494
Retiring allowances                                   639               0
Debt redemption and other interest costs              495               0
Closing costs and legal settlement                    400             307
Sales taxes                                           311             311
Prepaid supplier rebates                              250               0
Construction costs                                    175           1,553
-------------------------------------------------------------------------

                                                   $7,443          $5,931
=========================================================================
</TABLE>


                                       F-10
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

6.       LONG-TERM DEBT

<TABLE>
<CAPTION>
=========================================================================================================================
                                                                                            1999                 1998
-------------------------------------------------------------------------------------------------------------------------

<S>                                                                                         <C>              <C>
General Electric Investment Private Placement Partners II ("GEIPPPII)",
a limited partnership, $9,000 U.S. ($13,140 CDN.) convertible
subordinated debentures, interest only at 5% per annum to November
1997, 6% per annum to November 1998,  7% per annum to November
1999 and 8% per annum thereafter, repayable in equal semi-annual
instalments of one eighth of the principal amount outstanding
commencing November 2001.  In consideration for the below market
interest rates, the agreement provides for the issuance to the lender of
70,555 common shares in each of 1996 and 1997 and 15,000
common shares in each of 1998 and 1999.  The lender may exercise
its conversion privilege at any time on the basis of one share for each
$3.84 U.S. of principal.  A Security Agreement granting security over
substantially all of the company's assets was entered into with the
lender in 1999                                                                              $13,140          $13,500

Convertible subordinated notes issued February 1999 $3,265 U.S.
($4,897 CDN.), due December 31, 2003, interest at 8% per annum
payable quarterly in cash or common shares commencing June 30,
1999.  Notes unpaid and not converted by December 31, 2003 are
immediately due and payable with a 25% premium on the unpaid
principal.  The terms were renegotiated in October 1999 and $1,583
U.S. of the notes were converted into 1,582,500 common shares at $1
U.S. per share in exchange for waiver of penalties and extension of one
year warrants to three year warrants (see note 7(e) below).  The
Company may, if the market price of its common shares equals or
exceeds 150% of the conversion price for fifteen consecutive trading
days, redeem the remaining notes at 100% of par plus accrued and
unpaid interest.  GEIPPPII participated in the above financing by
purchasing $2,000 U.S. of which $1,000 U.S. was subsequently
converted into 1,000,000 common shares, included in the above                                 2,457                0

GEIPPPII a limited partnership $2,000 U.S. ($3,000 CDN.).  Bridge loan
due in June 2000                                                                                  0            3,000

Capital lease obligations repayable over terms ranging from 36 to 60
months, interest rates average 13%                                                              171                0

Camdev Properties Inc. - repayable in monthly instalments of $3
including interest at 13%, due August 1, 2000, secured by a charge on
certain leasehold improvements                                                                   24               33

Toronto-Dominion Bank term loans                                                                  0               72
-------------------------------------------------------------------------------------------------------------------------

                                                                                             15,792           16,605
Less:  Current portion                                                                           62              105
-------------------------------------------------------------------------------------------------------------------------

                                                                                            $15,730          $16,500
=========================================================================================================================
</TABLE>


                                       F-11
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)

================================================================================

6.       LONG-TERM DEBT (Continued)

         Long-term debt principal repayments due in each of the next five years
         and thereafter are approximately as follows:

<TABLE>
<S>                                                                     <C>
================================================================================
2000                                                                    $    62
2001                                                                      1,685
2002                                                                      5,789
2003                                                                      3,313
2004                                                                      3,299
Thereafter                                                                1,644
--------------------------------------------------------------------------------

                                                                        $15,792
================================================================================
</TABLE>

7.       CAPITAL STOCK

         (a)      In July 1997, the Company issued $2,000 U.S. ($2,740 CDN.) of
                  6% convertible subordinated debentures recorded as "other
                  paid-in capital". As at December 27, 1998 $616 U.S. ($844
                  CDN.) remained outstanding. During 1999, 190,875 shares were
                  issued to convert $386 U.S. ($597 CDN.) and the remainder were
                  redeemed for cash.

                  In December 1999 the Company reached an agreement with the
                  holders of its 8% notes whereby $1,583 U.S. ($2,374 CDN.) is
                  to be converted into 1,582,500 shares. These shares were
                  issued in January 2000. The conversion rate on the remaining
                  $1,683 remains unchanged at $2 U.S. per share.

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

                  (i)      The 1993 Founders' option plan set aside 100,000
                           common shares. Options on the entire 100,000 shares
                           have been granted at $6.60 U.S. ($9.04 CDN.). These
                           options become exercisable on the 5th through 9th
                           anniversary date of granting. 43,750 of these options
                           were cancelled through December 26, 1999.

                  (ii)     The 1993 employee option plan set aside 100,000
                           common shares. Options have been granted for
                           approximately 90,000 shares. All options expire on
                           the 5th anniversary date of the grant. 17,833 of the
                           options have been exercised through December 26, 1999
                           and 38,833 of the options were cancelled through
                           December 26, 1999.

                  (iii)    The 1997 employee option plan set aside 400,000
                           common shares. Options have been granted for 278,000
                           shares. All options expire on the 5th anniversary
                           date of the grant. None have been exercised through
                           December 26, 1999 and 50,000 of the options were
                           cancelled through December 26, 1999.


                                       F-12
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE PRICES)

================================================================================

7.       CAPITAL STOCK (Continued)

                  (iv)     The 1993 directors' option plan set aside 20,000
                           common shares. All have been granted and none have
                           been exercised through December 26, 1999.

                  There are 1,262,584 (including the 925,000 options in (c)
                  below) options outstanding at December 26, 1999 exercisable at
                  various prices detailed in note 16(e).

         (c)      During 1998, options for 945,000 common shares were granted to
                  five key executives, four of whom commenced employment with
                  the Company in 1997. None have been exercised and 20,000 of
                  these options were cancelled through December 26, 1999.

         (d)      During 1994, 63,500 shares were issued to a director at $4.75
                  U.S. per share. At December 26, 1999, $300 U.S. ($411 CDN.) of
                  these proceeds were unpaid. The amount unpaid was charged to
                  shareholders' equity in the 1994 fiscal year.

         (e)      At December 26, 1999, warrants to purchase common shares were
                  outstanding as follows:

<TABLE>
<CAPTION>
================================================================================
                                                     EXERCISE
EXPIRY DATE                                            PRICE            NUMBER
--------------------------------------------------------------------------------
<S>                                             <C>                      <C>

2000                                            $ 4.75 - $ 5.25 U.S.     144,500
2001                                                     $ 8.16 U.S.       6,125
2002                                                     $ 4.91 U.S.     977,597
2002                                                     $ 3.84 U.S.     703,125
2003                                            $ 2.00 - $ 3.00 U.S.   1,632,500
--------------------------------------------------------------------------------

                                                                       3,463,847
================================================================================
</TABLE>

                  These warrants are subject to an anti-dilution provision,
                  which provides for an adjustment to the exercise price to take
                  into consideration the issue of other shares, or securities
                  convertible into shares, at prices below the existing exercise
                  price. In addition the number of shares issued on exercise may
                  increase such that the total dollar amount paid on exercise of
                  these warrants will be the same at all times regardless of the
                  exercise price.

         (f)      Shareholders approved a special resolution on March 23, 2000
                  to consolidate the Company's authorized and issued capital
                  stock on a one for two basis. All numbers of shares, options
                  and warrants reported in these financial statements are on a
                  pre-consolidated basis.


                                       F-13
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

8.       FINANCIAL INSTRUMENTS

         (a)      Fair value

                  The carrying value of cash and term deposits, 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 1999
                  approximate their fair value because the interest payments
                  over the term of the debentures approximated market rates when
                  the agreements were finalized.

                  The carrying value of 6% convertible subordinated debentures
                  recorded as "other paid-in capital" has been adjusted to
                  reflect market rates at the date the transaction was
                  completed.

         (b)      Credit risk

                  The Company's financial assets that are exposed to credit risk
                  consist primarily of cash and term deposits and accounts
                  receivable. Cash and term deposits are 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 is not exposed to significant interest rate risk
                  due to the short-term maturity of its monetary current assets
                  and current liabilities and the relatively small amount of
                  long-term debt subject to interest rate changes.

         (d)      Translation risk

                  The Company translates the results of U.S. operations into
                  Canadian currency using rates approximating the average
                  exchange rate for the year. The exchange rate may vary from
                  time to time. This risk is minimized to the extent U.S.
                  capital expansions are financed through borrowing in U.S.
                  dollars and all non-Canadian source revenues and expenses are
                  in U.S. dollars.


                                       F-14
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

9.       CONTINGENCIES

         (a)      The Company was a party to two ten year lease agreements with
                  Shilo Hotels ("Shilo") relating to facilities located at Yuma,
                  Arizona and Pomona, California respectively. The Company
                  asserted certain claims against Shilo by reason of the lease
                  agreements. Shilo, in turn, asserted claims against the
                  Company and commenced litigation in the Superior Court, State
                  of Arizona, County of Yuma. The Company resolved its
                  long-standing legal dispute with Shilo Inns in October, 1999.
                  Shilo had been seeking general and special damages amounting
                  to approximately $3,840,000, plus costs. The settlement that
                  was reached will result in cash payments over 24 months, plus
                  the issue of 150,000 common shares. A provision of $775,000
                  was made in 1999 to cover the cost of this settlement.

         (b)      In 1989 and 1990, the Canadian subsidiary received Notices of
                  Reassessment from Revenue Canada 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. The amount of
                  tax reassessed was $209. Including interest accrued
                  retroactively since 1984, the total amount disputed at
                  December 26, 1999 approximates $785.

                  A portion of the dispute has been settled in the Company's
                  favour and a tax provision of $125 has been made for the
                  estimated remainder of the dispute.

10.      COMMITMENTS

         (a)      The subsidiaries are committed to leases on their restaurant
                  locations extending into the 2014 fiscal year. Minimum annual
                  rentals for the restaurants excluding realty taxes, common
                  area maintenance and other charges are as follows:

<TABLE>
<CAPTION>
================================================================================
<S>                                                                    <C>
2000                                                                   $ 4,414
2001                                                                     4,357
2002                                                                     4,110
2003                                                                     3,863
2004                                                                     3,604
2005 to 2014 inclusive                                                  19,854
--------------------------------------------------------------------------------

                                                                       $40,202
================================================================================
</TABLE>

                  Each of the aforementioned 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 6% to 11%.


                                       F-15
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

10.      COMMITMENTS (Continued)

         (b)      The Company has committed, through its joint venture agreement
                  with Rainforest Cafe Canada Holding Inc., to open a minimum of
                  five Canadian Rainforest restaurants by March, 2001. In 1998
                  the first restaurant opened in Vancouver, B.C. at a total cost
                  of approximately $6 million, the second and third restaurants
                  located in Scarborough and Yorkdale, Ontario opened in 1999.
                  The total cost incurred to December 26, 1999 approximates $9
                  million. A lease has been signed for one additional location
                  and a sub-franchise agreement has been signed for the fifth
                  location.

11.      RESTAURANT CLOSING COSTS, RETIRING ALLOWANCES AND OTHER COSTS


<TABLE>
<CAPTION>
================================================================================
                                                          1999     1998     1997
--------------------------------------------------------------------------------
<S>                                                       <C>      <C>      <C>

RESTAURANT CLOSING COSTS
  Disposal of assets and demolition costs relating to
  restaurant lease not renewed                            $250     $  0     $330
================================================================================

RETIRING ALLOWANCES AND OTHER COSTS
  Senior executive retirement allowances                  $820     $  0     $261
  Other former employee costs                               47        0       86
--------------------------------------------------------------------------------

                                                          $867     $  0     $347
================================================================================

LEGAL SETTLEMENT
  Legal settlement costs (note 9(a))                      $775     $  0     $  0
================================================================================
</TABLE>

12.      INCOME TAX

         The Company has the following available tax losses, the benefits of
         which have not been recorded in these financial statements:

         (i)      Non-capital losses of approximately $5,960 which can be
                  applied against future income for Canadian tax purposes up to
                  and including 2005.

         (ii)     Net capital losses of approximately $400 which can be applied
                  against future capital gains income for Canadian tax purposes
                  indefinitely.

         (iii)    Operating losses of approximately $823 U.S. ($1,240 CDN.)
                  which may be carried forward to apply against future years'
                  income for United States income tax purposes expiring up to
                  2013.


                                       F-16
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

13.      RELATED PARTY TRANSACTIONS

         (a)      Included in general and administrative are wages and
                  management fees paid to directors, former directors, officers,
                  former officers and personal service corporations used by
                  these individuals for a total of $717 (1998 - $800) (1997 -
                  $590).

         (b)      A shareholder and a former director of the Company provides
                  legal and consulting services to the Company. Fees for these
                  services totalled $122 (1998 - $103) (1997 - $80).

         (c)      The Company holds a non-interest bearing promissory note for
                  $350 (included in accounts receivable at December 26, 1999)
                  from a director and officer of the Company. 100,000 shares in
                  the capital stock of the Company are pledged as security for
                  payment of the note.

         (d)      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 $824 in
                  1999, $762 in 1998 and $834 in 1997 consisting of cash of $725
                  in 1999, $732 in 1998 and $362 in 1997; the balance was paid
                  by share issuances.

14.      GEOGRAPHIC SEGMENTED DATA

<TABLE>
<CAPTION>
================================================================================================================
                                                                          1999         1998          1997
----------------------------------------------------------------------------------------------------------------

<S>                                                                    <C>           <C>           <C>
Sales to unaffiliated customers
  Canada                                                               $ 28,703      $ 23,647      $ 21,227
  United States                                                          21,401        18,983        13,004
----------------------------------------------------------------------------------------------------------------

                                                                       $ 50,104      $ 42,630      $ 34,231
================================================================================================================

Income from restaurant operations
  Canada                                                               $  2,225      $  2,224      $  1,107
  United States                                                             619         1,546           776
----------------------------------------------------------------------------------------------------------------
                                                                          2,844         3,770         1,883
Other charges                                                             7,096         4,699         3,299
----------------------------------------------------------------------------------------------------------------

Loss before income taxes                                               $ (4,252)     $   (929)     $ (1,416)
================================================================================================================

Identifiable assets
  Canada                                                               $ 16,501      $ 14,072      $ 11,345
  United States                                                          11,598        14,101        11,155
----------------------------------------------------------------------------------------------------------------

                                                                       $ 28,099      $ 28,173      $ 22,500
================================================================================================================
</TABLE>

15.      UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

  The Year 2000 Issue arises because many computerized systems use two digits
  rather than four to identify a year. Date sensitive systems may recognize the
  year 2000 as 1900 or some other date, resulting in errors when information
  using year 2000 dates is processed. In addition, similar problems may arise in
  some systems which use certain dates in 1999 to represent something other than
  a date. Although the change in date has occurred, it is not possible to
  conclude that all aspects of the Year 2000 Issue that may affect the Company,
  including those related to customers, suppliers, or other third parties, have
  been fully resolved.


                                       F-17
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

16.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND U.S. GAAP)

         (a)      Recent accounting pronouncements

                  (i)      Earnings per share

                           In February 1997, the Financial Accounting Standards
                           Board ("FASB") issued Statement of Financial
                           Accounting Standards ("SFAS") No. 128, "Earnings per
                           Share". The statement is effective for financial
                           statements for periods ending after December 15,
                           1997, and changes the method in which earnings per
                           share will be determined. The Company's adoption of
                           FASB 128 for U.S. GAAP purposes results in no
                           difference in net income (loss) disclosure.

                  (ii)     Income tax

                           Under Canadian GAAP, the future tax benefits related
                           to the non-capital loss carry forwards have not been
                           recorded in the accounts. Under U.S. GAAP, companies
                           must follow the requirements of Statement of
                           Financial Accounting Standards No. 109 (SFAS 109)
                           which requires the use of the asset/liability method
                           for measurement of tax liabilities, wherein deferred
                           tax assets are recognized as well as deferred tax
                           liabilities.

                           The Company has significant non-capital loss
                           carryforwards (note 12). SFAS 109 would require the
                           recognition of a long-term tax asset for the future
                           benefit expected from the application of these
                           carryforwards to future profitable years. If it is
                           expected that the entire amount of non-capital loss
                           carryforwards will not be utilized, then a valuation
                           allowance is applied to the asset to reasonably state
                           the asset at its expected value. Under SFAS 109,
                           disclosure of the amount of the valuation allowance
                           is required. As of December 26, 1999 the valuation
                           allowance is equal to 100% of the deferred tax net
                           except for the amount recognized in income in note
                           16(b) for $1,559. Changes in the value of the
                           deferred tax asset are recognized each year as income
                           tax expense.

                  (iii)    SFAS 130, "Reporting Comprehensive Income" and SFAS
                           131, "Disclosures About Segments of an Enterprise and
                           Related Information" were also issued in 1997. These
                           standards, which became effective in 1998, expand or
                           modify disclosures and, accordingly, will have no
                           effect on the Corporation's consolidated financial
                           position, results of operations or cash flows. Under
                           U.S. GAAP, the Company would have reported
                           comprehensive loss of $2,640.

                  (iv)     In April 1998, the American Institute of Certified
                           Public Accountants (AICPA) issued Statement of
                           Position No. 98-5 (SOP 98-5), "Reporting on the Costs
                           of Start-Up Activities". SOP 98-5 generally requires
                           costs of start-up activities to be expensed instead
                           of being capitalized and amortized and is required to
                           be adopted no later than January 1, 1999. Under U.S.
                           GAAP in fiscal 1999 the Company would be required to
                           write-off pre-opening costs which amounted to $167 at
                           December 26, 1999.


                                       F-18
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

16.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND U.S. GAAP) (Continued)

         (b)      Reconciliation of earnings reported in accordance with
                  Canadian GAAP and U.S. GAAP:

<TABLE>
<CAPTION>
======================================================================================================
                                                               1999              1998             1997
------------------------------------------------------------------------------------------------------

<S>                                                       <C>                <C>            <C>
Net loss - Canadian GAAP                                     $(4,262)           $(929)         $(1,416)
Adjustments increasing net loss
Amortization of improvement costs *                              (61)             (61)            (110)
Dividend on paid-in capital that would be treated as
interest under U.S. GAAP (note 7(a))                            (142)            (145)             (76)
Pre-opening costs expensed for U.S. GAAP                        (167)               0                0
Recognition of non-capital loss carry forwards **              1,559              486                0
------------------------------------------------------------------------------------------------------

Net loss U.S. GAAP                                            (3,073)            (649)          (1,602)
Comprehensive income adjustments                                 433           (1,051)               0
------------------------------------------------------------------------------------------------------

Comprehensive loss U.S. GAAP                                 $(2,640)         $(1,700)         $(1,602)
======================================================================================================

Net loss per common share
  Canadian GAAP                                               $(1.21)          $(0.29)          $(0.48)
======================================================================================================
  U.S. GAAP                                                   $(0.87)          $(0.20)          $(0.54)
======================================================================================================
Weighted average number of
  shares outstanding                                       3,513,000        3,197,000        2,947,000
======================================================================================================
</TABLE>

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

         **       Carry forward loss that would be recorded as a deferred tax
                  asset under U.S. GAAP.


                                       F-19
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

16.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND U.S. GAAP) (Continued)

         (c)      Reconciliation of shareholders' equity reported in accordance
                  with Canadian GAAP and U.S. GAAP:

<TABLE>
<CAPTION>
===================================================================================================
                                                        1999          1998          1997
---------------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>           <C>
Shareholders' equity, end of year under
Canadian GAAP                                         $  6,793      $  8,261      $ 10,209

Beneficial conversion feature of
convertible subordinated debentures
(notes 7 and 16(d)(i))                                   2,436         2,436         2,436

Cumulative increase in net loss reported
under Canadian GAAP to net loss under
U.S. GAAP                                               (1,904)       (3,093)       (3,373)

Other paid-in capital under Canadian
GAAP (note 7(a)) treated as debt
obligation for U.S. GAAP                                     0          (844)       (2,421)
---------------------------------------------------------------------------------------------------

Shareholders' equity, end of year under               $  7,325      $  6,760      $  6,851
U.S. GAAP
===================================================================================================
</TABLE>

                  (i)      The beneficial conversion feature of convertible
                           subordinated debentures is accounted for as an
                           interest expense at the date of issue of the
                           security. This policy conforms to the accounting for
                           these transactions announced by the SEC staff in
                           March, 1997.

                           The reconciliation of shareholders' equity reported
                           in accordance with Canadian GAAP and U.S. GAAP has
                           been adjusted by $2,436 Cdn. to reflect this charge
                           to income and increase in capital in 1995.


                                       F-20
<PAGE>

ELEPHANT & CASTLE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 26, 1999, DECEMBER 27, 1998 AND DECEMBER 31, 1997
(CANADIAN DOLLARS)
(IN THOUSANDS OF DOLLARS)

================================================================================

16.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
         ACCOUNTING PRINCIPLES (CANADIAN GAAP AND U.S. GAAP) (Continued)

         (d)      Stock options

                  The Company has granted founders, directors and certain
                  employees stock options. Stock option activity is summarized
                  as follows:

<TABLE>
<CAPTION>
====================================================================================
                                              NUMBER               EXERCISE PRICE
                                             OF SHARES         (U.S.$)       (CDN.$)
------------------------------------------------------------------------------------
<S>                                           <C>            <C>          <C>
Balance outstanding, December 31, 1996        195,800        $   6.19 *   $     8.47
1997 - Granted                                224,000            6.00           8.22
1997 - Exercised                              (17,833)           5.28 *         7.23
------------------------------------------------------------------------------------

Balance outstanding, December 31, 1997        401,967            6.11 *         8.37
1998 - Granted                              1,050,000            6.52           9.79
1998 - Cancelled                             (139,383)           6.04           9.07
------------------------------------------------------------------------------------

Balance outstanding, December 27, 1998      1,312,584            6.45 *         9.67
1999 - Cancelled                              (50,000)           5.68           8.23
------------------------------------------------------------------------------------

Balance, outstanding December 26, 1999      1,262,584        $   6.48 *   $     9.40
====================================================================================
</TABLE>

                  *        Weighted average exercise price.

                  In 1995 the FASB issued SFAS No. 123 "Accounting for
                  Stock-Based Compensation", which contains a fair value-based
                  method for valuing stock-based compensation that entities may
                  use. This measures compensation cost at the grant date based
                  on the fair value of the award. Compensation is then
                  recognized over the service period, which is usually the
                  vesting period. For U.S. GAAP purposes management accounts for
                  options under APB Opinion No. 25. As option exercise prices
                  approximated market price on the dates of grants no
                  compensation expense has been recognized. If the alternative
                  accounting-related provisions of SFAS No. 123 had been adopted
                  as of the beginning of 1995, the effect on 1997, 1998 and 1999
                  U.S. GAAP net loss per share would have been immaterial.


                                       F-21
<PAGE>

                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


(Registrant)  Elephant & Castle Group Inc.


By   s\ Richard Bryant
     ----------------------------------------------------------------------
     RICHARD BRYANT, PRESIDENT, CHIEF EXECUTIVE OFFICER/DIRECTOR

Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ Daniel Debou
     ----------------------------------------------------------------------
     DANIEL DEBOU, CHIEF ACCOUNTING OFFICER


Date March 23, 2000
     ----------------------------------------------------------------------

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

By   s\ Jeffrey Barnett
     ----------------------------------------------------------------------
     JEFFREY BARNETT, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ Martin O'Dowd
     ----------------------------------------------------------------------
     MARTIN O'DOWD, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ George Pitman
     ----------------------------------------------------------------------
     GEORGE W. PITMAN, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ William McEwen
     ----------------------------------------------------------------------
     WILLIAM MCEWEN, DIRECTOR


                                    -40-
<PAGE>

Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ David Wiederecht
     ----------------------------------------------------------------------
     DAVID WIEDERECHT, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ Anthony Mariani
     ----------------------------------------------------------------------
     ANTHONY MARIANI, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


By   s\ David Matheson
     ----------------------------------------------------------------------
     DAVID MATHESON, DIRECTOR


Date March 23, 2000
     ----------------------------------------------------------------------


                                     -41-
<PAGE>

                                INDEX TO EXHIBITS
EXHIBITS
--------
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                        (X)
         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                (X)

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 Subordinated Convertible Note
         issued in Delphi Financing                                     *****

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

4.5      Form of amended Noteholder Warrant issued                      (X)
         on renegotiation of Delphi Financing

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


                                     -42-
<PAGE>

         Edmonton Eaton Centre food court relocation

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

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.)                                            (X)

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

10.16    Abstract of Canadian Niagara Hotels sub-franchise              (X)


                                     -43-
<PAGE>

10.17    Abstract of Holiday Inns Hotels Exclusivity Agreement
         re: franchise facilities                                       (X)

10.18    Form of Franchise Agreement for Alamo Grill                    (X)

10.19    Form of Franchise Agreement for Elephant & Castle              (X)

21       List of Subsidiaries                                           ****

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

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                     *
         U.S. service mark application "E&C"

99.3     Filing receipt dated February 5, 1993, for                     *
         U.S. service mark "Elephant Mug"

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


                                -44-