SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

        [X]       Annual report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 for the fiscal year ended May 31, 2003

        [ ]       Transition report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934 For the transition period
                  from ________  to ________

                         Commission File Number 0-32133

                                  Donini, Inc.
                            Formerly PRS Sub VI, Inc.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

                   New Jersey                             22-3768426
        -------------------------------               -------------------
        (State or Other Jurisdiction of                (I.R.S. Employer
        Incorporation or Organization)                Identification No.)

        4555 boul, des Grandes Prairies, #30
        St. Leonard, Montreal, Quebec, Canada                H1R 1A5
        ----------------------------------------            ----------
        (Address of Principal Executive Offices)            (Zip Code)

                                 (514) 327-6006
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                                     Name of Each Exchange
        Title of Each Class                            on Which Registered
        -------------------                           --------------------

        NONE                                                          NONE

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock $.001 par value

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and if no disclosure will be
contained, to the best of the Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

<PAGE>

                                   $1,495,657
               ---------------------------------------------------
               (Issuer's revenues for its most recent fiscal year)

                                   $2,335,711
       ------------------------------------------------------------------
       (Aggregate market value of the voting stock held by non-affiliates
                                 of the Issuer)

                         6,920,688 [as of May 31, 2003]
 ------------------------------------------------------------------------------
 (Number of shares outstanding of each of the Issuer's classes of common stock)


Transitional Small Business Disclosure Format (check one)
Yes [ ]  No [X]


                       DOCUMENTS INCORPORATED BY REFERENCE
                                   into Part I

                   Current Reports on Forms 8-K of the Company
   Dated March 26, 2001, April 13, 2001, June 5, 2001 and October 22, 2001 and
             Forms 8K-A dated September 5, 2001 and October 3, 2001
  and Form 10-SB dated December 18, 2000 and Form 10-SBA dated February 8, 2001
 and Form 10-KSB dated October 30, 2001 and Form 10-KSBA dated November 1, 2001
    and Form 8-K dated October 25, 2002 and Form 8K-A dated February 4, 2003
 and Form 10-KSB dated February 21, 2003 and Form 10-QSB dated February 21, 2003
                      and Form 10-QSB dated April 14, 2003

                                       2
<PAGE>

                                  DONINI, INC.
                                   FORM 10-KSB
                         FOR THE YEAR ENDED MAY 31, 2003


PART I
ITEM 1.        DESCRIPTION OF BUSINESS .....................................  4

ITEM 2.        DESCRIPTION OF PROPERTY .....................................  6

ITEM 3.        LEGAL PROCEEDINGS ...........................................  6

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .........  7

PART II
ITEM 5.        MARKET FOR COMPANY'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS .........................................  7

ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS .........................  7

ITEM 7.        FINANCIAL STATEMENTS ........................................  8

ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE .........................  8

PART III
ITEM 9.        DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL
               PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANCE ACT ..  8

ITEM 10.       EXECUTIVE COMPENSATION ...................................... 10

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT .................................................. 11

ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .............. 13

ITEM 13.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
               FORM 8-K .................................................... 13

               SIGNATURES .................................................. 15

                                        3
<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS

Forward-Looking Statements and Associated Risks

         This Report, including all documents incorporated herein by reference,
includes certain "forward-looking statements" within the meaning of that term in
Section 13 or 15(d) of the Securities Act of 1934, and Section 21E of the
Exchange Act, including, among others, those statements preceded by, followed by
or including the words "believes," "expects," "anticipates" or similar
expressions.

         These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Our actual
results could differ materially from these forward-looking statements. In
addition to the other risks described in the "Factors That May Affect Future
Results" discussion under Item 6, Management's Discussion and Analysis of
Financial Condition and Results of Operations in Part II of this Report,
important factors to consider in evaluating such forward-looking statements
include:

         o        changes in our business strategy or an inability to execute
                  our strategy due to unanticipated changes in the market,

         o        our ability to raise sufficient capital to meet operating
                  requirements,

         o        various competitive factors that may prevent us from competing
                  successfully in the marketplace, and

         o        changes in external competitive market factors or in our
                  internal budgeting process which might impact trends in our
                  results of operations.

         In light of these risks and uncertainties, there can be no assurances
that the events contemplated by the forward-looking statements contained in this
Report will, in fact, occur.

The Company

         Donini, Inc. (hereinafter referred to as the "Company", "we" or "us")
was incorporated under the name PRS Sub VI, Inc. in the State of New Jersey in
1991 as a subsidiary of People Ridesharing Systems, Inc., a public corporation
which filed for the protection of the Bankruptcy Court in 1989, to provide a
candidate for merger with an operating company. The Company retained its status
as a public company with no assets and no liabilities.

         In January 2001 certain shareholders of Pizza Donini Inc. a company
organized under the laws of Canada, acquired eighty-two percent (82%) of the
outstanding shares of the Company and the Company agreed to assume all
liabilities of Pizza Donini. The Company owns 100% of the common stock Pizza
Donini Inc.

         On February 6, 2001, we amended our Certificate of Incorporation
changing our name from PRS Sub VI, Inc. to Donini, Inc. and increasing our
authorized shares of common stock from 10,000,000 to 100,000,000, par value
$.001.

Description of Business

         Pizza Donini Inc. was organized in 1987 and at present operates a
franchise management company in the Greater Montreal area. Pizza Donini Inc.
supports twenty-nine (29) pizza outlets. At May 31, 2003 twenty-six (26) were
franchised and three (3) locations were held with intention of selling them as
Pizza Donini franchises. All outlets are in Greater Montreal. In addition, Pizza
Donini Inc. entered into an agreement with Intrawest Corp, a developer and
operator of village centered destinations resorts, has signed a three year
contract for the supply of pizzas.

         As franchisor, Pizza Donini Inc. supplies the franchisees, through its
wholly owned subsidiary Pizado Foods (2001) Inc. ("Pizado") with the dough and
sauces used in the preparation of Pizza Donini recipes. Pizado also supplies

                                        4
<PAGE>

a separate product line of pizza dough and sauces to other restaurants in the
Province of Quebec. In connection with frozen pizza wholesale orders the Company
employs subcontractors to produce its products.

         In addition to supplying its franchisees with food supplies, Pizza
Donini Inc. also provides various forms of marketing and operating support. In
addition to traditional radio, print and direct mail advertising, it operates,
through another wholly owned subsidiary, Pizza Donini.Com Inc., a call center
that executes home delivery through one central telephone number. The call
center dispatches telephone orders to the closest franchisee for prompt
delivery. The Company has also embarked on an internet-based order taking and
processing program. DoniniCo Inc., a wholly owned subsidiary of Pizza Donini
Inc., repurchases existing Donini franchised restaurants and operates them,
pending their resale to new franchisees.

Employees

         We have a total of approximately 50 employees of whom 5 are executives,
10 are clerical and administrative, 10 are manufacturing and 25 are sales and
marketing. No officer of the Company receives a salary in excess of $50,000 per
year.

Patent Protection

         We have no patents relating to our products or processes but have U.S.
and Canadian trademarks relating to our name, logo and certain products, and
rely on our trade secrets, proprietary formulations and confidentiality
arrangements with respect to our food products.

Competition

         The food industry is highly competitive and is dominated by several
large public multinational food companies including several which dominate the
pizza market. In addition there are a great number of independently owned single
or small multi location chains, many of which compete with us in our present
market area. Although we have a satisfactory penetration in the Province of
Quebec, Canada, in entering new markets, which is important to our future
growth, we will face very strong competition. Our ability to succeed will depend
on our ability to maintain and improve our competitive position.

Potential Markets

         In addition to expanding our existing base of franchised outlets and
wholesale distribution and sales, we also plan to expand our efforts into
alternative business-to-business (B2B) distribution channels to sell to such
customers as department store cafeterias and other restaurants. In this regard,
Pizza Donini Inc. has developed a line of frozen, ready-to-use pizza products
with self-rising crust capable of being prepared, freezer to table, in six to
eight minutes and intends to expand its business by marketing its own brand of
Pizza Donini frozen pizza to retail grocery outlets including mass merchandise
stores and supermarkets.

         In addition to generating revenues from our franchisees in the form of
initial franchise fees and royalties, Pizza Donini Inc.'s revenues have also
been generated by our three operating subsidiaries, Pizado Foods (2001) Inc.
("Pizado"), Pizza Donini.Com Inc. and DoniniCo Inc. Pizado intends to expand its
existing distribution business to additional customers.

         We believe that our largest growth area will be the further development
of our B2B (business to business) distribution of a fully-topped, ready-to-use
self-rising crust, frozen pizza product to its existing and new foodservice
customers such as department store cafeterias, other restaurants, hospitality
and leisure venues, convenience stores, video stores, gas stations and contract
caterers.

Marketing Activities

         Although we had an independent market research firm conduct a market
survey, which ascertained that our products compared favorably to our present
competitors, there can be no assurance that the public's taste will remain
attracted to our products. In order to maintain our favorable consumer
acceptance we will have to maintain our high quality of products and competitive
prices. In addition, we believe that our investment in our centralized call
center and other marketing efforts of Pizza Donini.Com Inc. will result in
future expansion and increased profitability.

                                        5
<PAGE>

         We have utilized food brokers in the past and will continue to do in
the future, to assist in marketing our products to supermarkets and wholesale
customers. In this regard, we recently entered into a brokerage, marketing and
sales services contract with Zsquared, LLC, Chet Zalesky and Dennis Zweig to
establish and expand Pizza Donini products and services within the United States
of America. In addition, we entered into a marketing and sales services
agreement with JT Tucker, Inc. to establish and expand Pizza Donini products and
services within the States of California and Arizona. As of now, no sales were
realized from the brokers.

         The Company has redirected its energy and focus on its core business,
i.e. to improve the profitability of its franchise units. To do this, the senior
management team is analyzing and devoting hands on effort to review the status
of all existing franchisee sites. The Company has already re-acquired three
franchises and intends to purchase up to five more. It also has suspended its
service at the Molson Center, at Bombardier's site (Aramark) and at the Zellers
outlets. The Zellers sites will be restarted with a new product (7" pizza)
following a short final product review by Zellers after which it will
re-introduce this new product into the original twenty-seven Zellers outlets
and, if appropriate, into many additional units in the future. This new product
was developed after six months of experimentation by the Company including
market tests.

         The Company will inaugurate a new sales effort with a test program in
six locations of one of Quebec's leading video store chains, Superclub
Videotron, marketing a new twelve inch frozen pizza to be sold in an attractive
branded chest freezer.


ITEM 2.  DESCRIPTION OF PROPERTY

         We do not own any real estate, but through our subsidiaries we lease
two locations. Pizado Foods (2001) Inc. leases 6,518 square feet on a five-year
lease expiring October 2003, which it uses as production facilities and
administrative offices. Pizza Donini.Com Inc. leases 1,560 square feet on a
three-year lease expiring May 2004, which it uses as its call center. All lease
rates are at market and none is leased from an affiliate.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is subject from time to time to litigation arising from the
normal course of business. In management's opinion, any such contingencies are
appropriately provided for or would not materially affect the Company's
financial position or results of operations.

         Pizza Donini was sued by a former franchisee of a former subsidiary who
is seeking to obtain from the Court to declare the transfer and sale to Pizza
Donini of trademarks by the former subsidiary null and void and to have Pizza
Donini declared jointly and severally liable for a claim of the former
franchisee against the former subsidiary.

         This action stems from a separate suit filed by the former franchisee
against the former subsidiary, in the amount of $465,455, which suit was
dismissed by the Superior Court of Quebec on May 19, 1998. The former franchisee
has appealed the original judgment of the lower Court and legal counsel for the
former subsidiary does not expect a hearing date before October 2003. In the
meantime, in the file against Pizza Donini, there is an agreement between the
attorneys of the parties to await the outcome of the decision of the Court of
Appeal in the original proceedings prior to pursuing this action. Counsel to
Pizza Donini and to its former subsidiary is confident that the appeal will be
dismissed in the original suit and therefore, the action against Pizza Donini
will also be dismissed.

         Pizza Donini has been sued by a former banker for repayment of a loan
originally due in March 2003. Pizza Donini is disputing certain fees charged by
the bank, has counter sued and ceased making monthly payments on the loan.

         No director, officer, or affiliate of the Company, or any associate of
any of them, is a party to, or has a material interest in, any proceeding
adverse to us.

                                        6
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted during the fourth quarter of the fiscal year
ended May 31, 2003 to a vote of the security holders.

PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         To date there has been only a limited public market for our common
stock. There can be no assurance that a more active and reliable public market
will develop or, if developed, that such market will be sustained. As a result,
investors may find it difficult to liquidate their investment in the Company
should they desire to do so. We intend to apply to have our common stock
approved for quotation on the Nasdaq common stock. There can be no assurance
that a more active and reliable public market will develop or, if developed,
that such market will be sustained. As a result, investors may find it difficult
to liquidate their investment in the Company should they desire to do so.

Shareholders

         As of May 31, 2003, the number of holders of record of the Company's
common stock, $.001 par value, was 560.

Dividends

         We have not in the past paid any dividends on our common stock and do
not expect to pay any dividends in the foreseeable future. The payment of any
dividend will be at the discretion of the Board of Directors and will depend on
our future operations, future capital needs and financial condition.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Pizza Donini support twenty-six (26) franchised pizza outlets. At May
31, 2003 Pizza Donini also owned three (3) additional locations that are being
held with the intention of selling them as Donini franchises. All locations are
in the Greater Montreal.

         Pizza Donini is further developing its B2B (business to business)
distribution network of fully-topped, ready-to-use self-rising crust frozen
pizza to food service customers and is in discussion with a number of potential
customers such as department store cafeterias, other restaurants, hospitality
and leisure venues, convenience stores, and contract caterers.

         In addition to generating revenues from its franchisees in the form of
initial franchise fees and royalties, Pizza Donini Inc. revenues have also been
generated by three other operation subsidiaries, Pizado Foods (2001) Inc.
(`'Pizado"), Pizza Donini.Com Inc. and DoniniCo Inc. Pizado sells raw food
products and other supplies to our franchisees and is offering selected products
to other distributors and manufacturers. Pizado also intends to expand its
distribution business. Pizza Donini.Com Inc. manages the call center that
executes home delivery orders made from a single telephone number to the closest
franchisee. DoniniCo Inc. repurchases existing Donini franchised restaurants and
operates them, pending their resale to new franchisees.

         In fiscal 2003, franchise operations accounted for approximately 40% of
our total revenues, while the sale of wholesale food products equaled
approximately 59% and the remaining revenues accounted for 1%. This compares to
41%, 58%, and 1% respectively for fiscal 2002. Even though actual sales of
wholesale food products has decreased, the gross profit margin has increased.
This was primarily due to the discontinuance of sales to a major client on a low
profit margin in 2003. This resulted in lower sales but a higher gross margin.

         During fiscal 2003, our consolidated revenues decreased $76,681 or
0.05% to $1,495,657 from 2002 revenues of $1,572,338. This decrease is primarily
a result of discontinuance of sales to a low profit margin client. Cost of goods
sold for the year ended May 31, 2003 was $632,563 or 71.2% as compared to
$713,896 or 75.6% for fiscal 2002. These fewer sales resulted in a higher gross
margin. The working capital deficit during this period

                                       7
<PAGE>

decreased from $1,234,186 at May 31, 2002 to $902,105 at May 31, 2003. Total
assets increased from $1,010,290 as at May 31, 2002 to $1,038,246 as at May 31,
2003. net losses decreased $1,160,124 from $1,523,273 during fiscal 2002 to
$363,149 at May 31, 2003. The decrease in net losses is primarily due to
reductions of $439,738 in advertising and promotion, $591,521 in professional
fees and $128,000 in operational expenses.

         During fiscal 2002, our consolidated revenues increased $21,951 or 1.2%
to $1,572,338 from 2001 revenues of $1,550,387. This increase was a result of
increased revenues to outside distributors. Cost of goods sold for the year
ended May 31, 2002 was $713,896 or 75.6% as compared to $515,322 or 62.9% for
fiscal 2001. Working capital deficit during this period increased from
$1,070,896 at May 31, 2001 to $1,234,186 at May 31, 2002. Total assets increased
from $1,001,343 as of May 31, 2001 to $1,010,290 as at May 31, 2002. Net losses
increased $473,820 from $1,029,453 during fiscal 2001 to $1,523,273 at May 31,
2002.

         The Company has reduced its historical losses during the past year and
anticipates achieving a break even in its next fiscal year. It is on track for
this goal with its repurchase and upgrading of under performing franchise
outlets and because of a steady improvement in its other franchise units.

         The Company maintains that its liquidity will improve marginally with
improved earnings, but will not be sufficient to allow it to expand its
operations to any significant degree. The Company has adopted a plan to raise
additional capital through an outside offering of debentures.


ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements required to be included in this Report
pursuant to Item 310(a) of Regulation S-B, are set forth below.

ITEM 8.  CHANGES IN FINANCIAL DISCLOSURE

         During the Registrant's most recent fiscal year and all interim periods
there were no adjustments that were required to be made nor was there any
adverse opinion, disclaimer of opinion, or any disagreements with the
registrant's former accountant on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.

         The financial statements accompanying this report have been audited by
SAMUEL KLEIN AND COMPANY. The audit report contains an explanatory paragraph
related to substantial doubt about the Company's ability to continue as a going
concern.


PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors, Executive Officers and Significant Employees

         The following sets forth, as of May 31, 2003, the names and ages of all
of our directors and executive officers; the date when each director was
appointed; and all positions and offices in the Company held by each. Each
director will hold office until the next annual meeting of shareholders and
until his or her successor has been elected and qualified:

                                        8

<PAGE>

                                        Offices                      Term of
      Name                Age            Held                        Office
-------------------      -----      -----------------               ----------
Peter Deros               54        President, Chief               February 2001
                                    Executive Officer,
                                    Chairman and Treasurer

                                    President and CEO              May 1987
                                    of Pizza Donini, Inc.

Chet Zalesky              46        Director                       April 2001

Theo Kalaitzis            56        Director                       April 2001

                                    President and COO              January 1994
                                    of Pizado Foods
                                    (2001) Inc.

Catherine Pantoulis       43        Secretary                      February 2001

Sarkis Tsaoussian         31        President and COO              May 1997
                                    of Pizza Donini.Com
                                    Inc.

Jean Vassiliadis          41        Vice-President of              May 2002
                                    Pizza Donini Inc.

                                    President and COO              March 2003
                                    Of DoniniCo Inc.

         In May 2003, Alfred C. D'Alessandro tendered his resignation as a
Director, for personal reasons.


Biographies of Directors and Officers of the Company

         Set forth below are the names of our directors and officers, all
positions and offices held, the period during which he or she has served as
such, and his/her business experience during at least the last five years:

Peter Deros - President, Chief Executive Officer, Chairman of the Board of
Directors and Treasurer. Mr. Deros has been in the quick-service restaurant
industry for 35 years, founded Pizza Donini Inc. in 1987 and has served as its
President and Chief Executive Officer since inception. Prior to founding Pizza
Donini Inc., Mr. Deros was President and Chief Operating Officer of a highly
successful public pizza chain. Under his leadership sales for this chain grew
from $5 million to more than $50 million. Prior to this position, Mr. Deros was
an executive with a multi-unit franchisee of A&W Food Services of Canada. Mr.
Deros has been a Director of the Company since February 23, 2001.

Chet Zalesky - Director. Mr. Chet Zalesky is the president of ConsumerMetrics
Inc. (CMI). CMI provides information-based solutions to marketing questions,
issues and problems. Mr. Zalesky has over 15 years of marketing experience
dealing with such related industry issues as customer value management, pricing,
new product development, market segmentation and customer, client and employee
satisfaction. His clients include members of the Fortune 500 companies and are
found in a variety of service industries including food services, financial
services, hotel and travel, telecommunications, internet, television and
utilities. Mr. Zalesky is also a partner in Zsquared, LLC, an investment company
in emerging industries such as internet and communications. He is responsible
for market planning, acquisition and retention strategies. Mr. Zalesky has been
a Director of the Company since April 3, 2001.

Theo Kalaitzis - Director and President and COO of Pizado Foods (2001) Inc. Mr.
Kalaitzis is President and Chief Operating Officer of Pizado Foods (2001) Inc.
("Pizado"). He is responsible for the day-to-day supply of all franchise
operations and for the management of Pizado's production facility. Mr. Kalaitzis
joined Pizza Donini Inc. in 1987. Prior to this position, Mr. Kalaitzis held
management positions with a multi-unit franchisee of A&W Food Services of Canada
and operated his own restaurant. Mr. Kalaitzis has been a Director of the
Company since April 3, 2001.

                                        9
<PAGE>

Catherine Pantoulis - Secretary. Ms. Pantoulis graduated from Universite de
Montreal, Faculty of Law in 1983 and has been a member of the Quebec Bar
Association since 1984. At present she is associated with Kounadis Perreault,
which serves as counsel to Pizza Donini Inc. Ms. Pantoulis has been Secretary of
the Company since February 23, 2001.

Sarkis Tsaoussian - President and COO of Pizza Donini.Com Inc. Mr. Tsaoussian is
President and Chief Operating Officer of Pizza Donini.Com Inc., the Company's
call center. Mr. Tsaoussian joined Pizza Donini Inc. in 1992 as a field
supervisor and progressed through various more responsible positions, serving as
Secretary/Treasurer and Director of Pizza Donini.Com Inc. from January 1994
until May 1997 when he was appointed to his current position.

Jean Vassiliadis - Vice-President of Pizza Donini Inc. & President and COO of
DoniniCo Inc. Mr. Vassiliadis started his food service career with Pizza Donini
fifteen years ago in 1987, initially working as a cook and pizza deliveryman at
Pizza Donini's first outlet. He worked his way through staff and management
positions at the store level and later joined Pizza Donini Head Office as
Manager of Operations. Mr. Vassiliadis also owned several Pizza Donini
franchises until June of 2001, when he joined the Pizza Donini management team
as Director of its Food Service Division. Mr. Vassiliadis holds a college degree
in Commerce specializing in Marketing, and is pursuing part-time studies for a
BA at the Universite du Quebec a Montreal. He also has 10 years of military
experience with the Canadian Forces Army Reserve. On May 1st 2002, he was
appointed Vice-President of Business Development of the Company's food service
and grocery retail industry sectors and in March 2003, he also became the
President and COO of DoniniCo Inc. a wholly-owned subsidiary of Pizza Donini
Inc. that repurchases existing Donini franchised restaurants and operates them,
pending their resale to new franchisees.

Family Relationships

         No family relationships exist between any director or executive officer
of Company or any person contemplated to become such, except that Sarkis
Tsaoussian is a nephew of Peter Deros, President of the Company. Compliance With
Section 16(a) of the Exchange Act.

         None of the Company's securities have been registered pursuant to
Section 12 of the Exchange Act of 1934, as amended (the "Exchange Act").
Therefore, Section 16(a) of the Exchange Act is not applicable.


ITEM 10. EXECUTIVE COMPENSATION

         We intend to reimburse the Directors for reasonable expenses incurred
in connection with their directorship.

         No officer of the Company received a salary during fiscal years May 31,
2001, May 31, 2002 and May 31, 2003 in excess of $50,000.

         The following table sets forth information concerning the annual
compensation received or accrued for services provided in all capacities for the
fiscal years ended May 31, 2001, 2002 and 2003 by our chief executive and all
our executive officers and directors serving as such as at May 31, 2003 or at
any time during the year ended May 31, 2003. Common stock issued in lieu of cash
salary payments was valued at $0.06798 per share. We believe that, as of the
dates when such shares were issued, the actual market value of such shares was,
and as of the date hereof remains, highly contingent upon, and subject to,
extremely high risks.

                                       10
<PAGE>

SUMMARY COMPENSATION TABLE:
<TABLE>
<CAPTION>
=========================================================================================================

                                                            ANNUAL COMPENSATION
---------------------------------------------------------------------------------------------------------
Name and                                                              Car Allowance
Principal Position                     Year         Salary $          and Expenses $            Other $
=========================================================================================================
<S>                                    <C>      <C>                <C>                    <C>
Peter Deros,                           2003     $ 49,640           $  9,842               $       0
President and CEO                   ---------------------------------------------------------------------
                                       2002     $ 30,460           $  8,487               $ 113,300 (2)
                                    ---------------------------------------------------------------------
                                       2001     $ 24,845           $  7,582               $  17,000 (1)
---------------------------------------------------------------------------------------------------------
Theo Kalaitzis, President              2003     $ 26,032           $ 10,838               $       0
and COO of Pizado Foods (2001)      ---------------------------------------------------------------------
Inc.                                   2002     $ 15,839           $  9,222               $       0
                                    ---------------------------------------------------------------------
                                       2001     $ 15,041           $  8,814               $  17,000 (1)
---------------------------------------------------------------------------------------------------------
Sarkis Tsaoussian,                     2003     $ 32,508           $      0               $       0
President and COO of Pizza          ---------------------------------------------------------------------
Donini.Com Inc.                        2002     $ 27,579           $      0               $       0
                                    ---------------------------------------------------------------------
                                       2001     $ 26,373           $      0               $       0
---------------------------------------------------------------------------------------------------------
Jean Vassiliadis, President and        2003     $ 29,230           $  9,490               $       0
COO of DoniniCo Inc. & Vice-        ---------------------------------------------------------------------
President of Pizza Donini Inc.         2002     $ 0                $      0               $       0
                                    ---------------------------------------------------------------------
                                       2001     $ 0                $      0               $       0
---------------------------------------------------------------------------------------------------------
Chet Zalesky,                          2003     $ 0                $      0               $       0
Director                            ---------------------------------------------------------------------
                                       2002     $ 0                $      0               $       0
                                    ---------------------------------------------------------------------
                                       2001     $ 0                $      0               $  17,000 (1)
=========================================================================================================
</TABLE>
(1)      Represents a grant of 25,000 shares given as compensation for acting as
         a Director of the Company. We believe that it is impossible to
         determine the actual current or potential value of such shares in light
         of the fact that, as of the dates when such shares were issued to the
         executive officers, the actual potential market value of such shares
         were highly contingent upon, and subject to, extremely high risks
         including but not limited to the following factors: (i) the absence of
         a trading market for the Company's common stock (ii) the very early
         stage of development of our business; (iii) our lack of sufficient
         funds to implement our business plan and the absence of any commitments
         from potential investors to provide such funds; and (iv) the
         uncertainty respecting our ability to continue as a going concern.

(2)      Compensation on options converted to shares.

Employment Agreements

         There is in place an addendum to employment agreement with Theo
Kalaitzis its President and Chief Operating Officer providing future issuances
of options to purchase common stock of the Company provided Mr. Kalaitzis
remains in the employ of Pizado Foods (2001) Inc.

         Pizza Donini.Com Inc. has in place an addendum to employment agreement
with Sarkis Tsaoussian its President and Chief Operating Officer granting him
11,667 shares of our common stock and providing for the future issuances of
options to purchase common stock of the Company provided Mr. Tsaoussian remains
in the employ of Pizza Donini.Com Inc.

         Mr. Peter Deros does not currently have an employment agreement,
however Mr. Deros was granted a three-year option to purchase 750,000 shares of
our common stock at prices ranging from $2.25 to $6.00.

Stock Plan

         We have not adopted an employee stock plan, but intend to do so in the
near future.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information as of May 31, 2003, with
respect to security ownership of Management and persons known to the Company to
be the beneficial owners of more than 5% of the common stock, $.001 par value of
the Company. Except as noted, each person has sole voting power with respect to
the shares shown.

                                       11
<PAGE>

               Name and                            Amount and
               Address of                          Nature of
Title of       Beneficial                          Beneficial          Percent
Class          Owner                               Ownership           of Class
--------------------------------------------------------------------------------

Common         Peter Deros                        3,142,001(1)          47.55%
               8220 Birnam  Apt. 2
               Montreal, Quebec H3N 2T9
               Canada

Common         Terence Byrne                        896,311(2)          13.57%
               466 Cote St. Antoine
               Westmount, Quebec H3Y 2J9
               Canada

Common         Theo Kalaitzis                        31,500               .48%
               12 Garland
               Dollard Des Ormeaux
               Quebec H9G 2B6
               Canada

Common         Chet Zalesky                         100,000              1.50%
               2325 N. Peachtree Court
               Atlanta, Ga. 30338

Common         Sarkis Tsaoussian                     43,009               .65%
               561 Carleton
               Chomedey, Laval
               Quebec H7W 4R1
               Canada

Common         Catherine Pantoulis                   33,334               .51%
               8350 Place Fonteneau
               Montreal, Quebec H1M 2T6
               Canada

Common         Alfred C. D'Alessandro                23,764               .36%
               204 Atlantic Avenue
               Marblehead, MA  09145

Common         Jean Vassiliadis                      25,013               .38%
               467 Croissant des Orchidees
               Ste-Julie, Quebec  J3E 2C3
               Canada

               Total                              4,294,932             65.01%

(1)      1,000,000 shares are held by Spartan Trust, a discretionary family
         trust in which Mr. Peter Deros and members of his immediate family are
         the possible beneficiaries. The trustee of the Spartan Trust is
         Ansbacher (Bahamas) Limited. A further 1,000,000 shares are held by the
         Deros Family Trust, a discretionary family trust in which Mr. Peter
         Deros and members of his immediate family are the possible
         beneficiaries. The trustee for the Deros Family Trust is William L
         Mouris. Demaco M.C.S. Inc., whose majority shareholder is Peter Deros,
         holds 425,000 shares. The remaining shares are held directly by Mr.
         Deros.

(2)      735,619 are owned by Bartholomew International Investments, Ltd. and
         122,602 are owned by T.T. Byrne Capital Investments Inc. whose
         principal shareholder, director and officer is Mr. Terence Byrne. The
         remaining shares are held directly by Mr. Byrne.

                                       12
<PAGE>

Changes in Control

         We are not aware of any arrangements, which may at a subsequent date,
result in a change in control of the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The following is a description of transactions during the last two
fiscal years or any presently proposed transactions to which the Company was or
is to be a party, in which the amount involved in such transaction (or series of
transactions) was $60,000 or more and which any of the following persons had or
is to have a direct or indirect material interest: (i) any director or executive
officer of the Company; (ii) any person who owns or has the right to acquire 5%
or more of the issued and outstanding common stock of the Company; and (iii) any
member of the immediate family of any such persons.

         On April 2, 2001 we entered into a brokerage, marketing and sales
services contract with Zsquared, LLC, Chet Zalesky and Dennis Zweig to establish
and expand Pizza Donini products and services within the United States of
America. The compensation is substantially in the form of common stock and stock
options most of which are contingent on performance. Chet Zalesky is a Director
of the Company.

         On May 30, 2001 we granted a three-year option to purchase an aggregate
of 750,000 shares of our Common Stock at prices ranging from $2.25 to $6.00 per
share to Peter Deros, the Company's President, Chief Executive Officer,
Treasurer and Chairman of our Board of Directors.

         On May 30, 2001 we entered into an agreement with TT Byrne Capital
Investments Inc. ("TT Byrne") to assist us with private equity and/or debt
financing. The compensation to TT Byrne is in the form of a percentage of money
raised. In addition, TT Byrne was granted a three-year option to purchase an
aggregate of 500,000 shares of our Common Stock at prices ranging from $2.25 to
$6.00 per share. Terence Byrne, a former director of the Company, is the
principal of TT Byrne. This agreement was cancelled and no compensation was paid
to TT Byrne Capital.

         The company has made loans and advances totalling $111,787 to its
President, who is also its Chief Operating Officer and Principal Shareholder. In
addition, he has made personal guarantees on certain obligations of the Company
and pledged 300 000 of his company stock as collateral for the bank demand note
of 217,522 as of May 31, 2003.


ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

Exhibits

         The exhibits filed as a part of this Report or incorporated herein by
reference are as follows:


                                                           Exhibits Incorporated
                                                           Herein By Reference,
                                                           Exhibit No. As Filed
                                                           With Document
                                                           Indicated
                                                           ---------------------

         (a) Letter of Resignation - Alfred C. D'Alessandro

                                       13
<PAGE>

Financial Statements

         The financial statements filed as a part of this report are as follows:

         Consolidated Balance Sheet - 2003 and 2002

         Consolidated Statements of Operations for the years ended May 31, 2003
         and 2002

         Consolidated Statements of Stockholders' Deficit and Comprehensive
         Income at May 31, 2003 and 2002

         Consolidated Statements of Cash Flows for the years ended May 31, 2003
         and 2002


Reports on 8-K

         No reports on forms 8-K were filed in the last quarter of fiscal 2003.

                                       14
<PAGE>

                                   SIGNATURES

         In accordance with Section 15(d) of the Exchange Act of 1934, the
Company has caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.


                                       DONINI, INC.



                                       By /s/ PETER DEROS
                                          --------------------------------------
Date: September 18, 2003                  Peter Deros, Director, Chairman,
                                          President, Chief Executive Officer and
                                          Treasurer


         In accordance with Section 15(d) of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Company in the capacities and on the dates indicated.


        SIGNATURES                        TITLE                     Date


Principal Executive Officer:



/s/ PETER DEROS                   Chief Executive Officer     September 18, 2003
-------------------------
Peter Deros


Principal Financial and
Accounting Officer:



/s/ PETER DEROS                   Treasurer                   September 18, 2003
-------------------------
Peter Deros


A Majority of the Board
of Directors:



/s/ PETER DEROS                   Chairman                    September 18, 2003
-------------------------
Peter Deros


/s/ THEO KALAITZIS                Director                    September 18, 2003
-------------------------
Theo Kalaitzis

                                       15
<PAGE>

                  SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
                 REPORTS FILED PURSUANT TO SECTION 15(D) OF THE
                      EXCHANGE ACT BY NON-REPORTING ISSUERS


         No annual report or proxy materials have been sent to security-holders
during the fiscal year ended May 31, 2003 or the subsequent interim period. As
at the date hereof, the Company plans to furnish proxy materials relating to its
annual meeting, which is presently intended to be held during the current fiscal
year. All such materials will be furnished to the Commission at the same time as
they are sent to securities holders.

                                       16
<PAGE>



                                  DONINI, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                        YEAR ENDED MAY 31, 2003 AND 2002



<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Donini, Inc.
4555 Des Grandes Prairies #30
St-Leonard, Quebec, HR 1 A5
Canada


We have audited the accompanying consolidated balance sheets of Donini, Inc. and
its Subsidiaries as of May 31, 2003 and 2002 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Donini, Inc. and its
Subsidiaries as of May 31, 2003 and 2002 and the results of its operations and
its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered significant losses from
operations during the years ended May 31, 2003 and 2002 and has a net capital
deficiency, which raises substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




                                         SAMUEL KLEIN AND COMPANY



Newark, New Jersey
September 12, 2003

<PAGE>

                                  DONINI, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                        Years ended May 31, 2003 and 2002


Financial Statements

      Consolidated Balance Sheets ........................................  F-1

      Consolidated Statements of Operations ..............................  F-2

      Consolidated Statements of Cash Flows ..............................  F-3

      Consolidated Statements of Stockholders' Equity ....................  F-5

      Notes to Consolidated Financial Statements .........................  F-6

<PAGE>

                                  DONINI, INC.

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              May 31,
                                                                    --------------------------
ASSETS                                                                 2003            2002
------                                                              -----------    -----------
<S>                                                                 <C>            <C>
Current Assets:
   Accounts receivables, net                                        $    54,593    $    45,064
  Inventories                                                            22,907         22,061
  Taxes receivables                                                       6,681         34,795
  Due from shareholder                                                  111,787        160,840
  Current portion of franchise sales receivables                         47,193         79,247
  Prepaid expenses                                                       18,731         19,980
  Assets held for resale                                                173,343         35,998
                                                                    -----------    -----------
             Total Current Assets                                       435,235        397,985

Property and Equipment (Net)                                            452,551        400,023

Franchise sales receivables                                             139,328        200,528

Trademarks                                                               11,132         11,754
                                                                    -----------    -----------

             Total Assets                                           $ 1,038,246    $ 1,010,290
                                                                    ===========    ===========


LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
---------------------------------------------

Current Liabilities:
  Current portion of long-term debt                                 $   367,594    $   479,081
  Loans payable                                                         129,183         23,038
  Accounts payables and accrued liabilities                             756,532      1,130,052
  Deposits payable                                                       84,031             --
                                                                    -----------    -----------
             Total Current Liabilities                                1,337,340      1,632,171

Long-Term Liabilities:
  Long - term debt                                                      569,188        339,571
                                                                    -----------    -----------
             Total Liabilities                                        1,906,528      1,971,742
                                                                    -----------    -----------

Stockholders' Equity (Deficit):
  Common stock ($.001 par value 100,000,000 shares
    authorized, 6,920,688 and 6,607,456 issued and
    outstanding May 31, 2003 and 2002 respectively                        6,920          6,607
  Additional paid-in capital                                          4,384,061      3,821,142
  Foreign currency translation adjustment                               (39,747)        67,166
  Accumulated deficit                                                (5,219,516)    (4,856,367)
                                                                    -----------    -----------
             Total Stockholders' Equity (Deficit)                      (868,282)      (961,452)
                                                                    -----------    -----------

             Total Liabilities and Stockholders' Equity (Deficit)   $ 1,038,246    $ 1,010,290
                                                                    ===========    ===========
</TABLE>
--------------------

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

                                      F-1
<PAGE>

                                  DONINI, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                       For the Years Ended
                                                             May 31,
                                                   ----------------------------
                                                      2003             2002
                                                   -----------      -----------

Revenues:
  Sales                                            $   887,731      $   944,032
  Royalties and other related revenues                 370,520          375,045
  Order processing fees                                185,735          230,941
  Initial franchise fees                                51,671           22,320
                                                   -----------      -----------
      Total Revenues                                 1,495,657        1,572,338
                                                   -----------      -----------

Cost of Goods Sold                                     632,563          713,896
Cost of supplies to franchises                              --            4,523
                                                   -----------      -----------
                                                       632,563          718,419
                                                   -----------      -----------

Gross Profit                                           863,094          853,919
                                                   -----------      -----------

Costs and expenses :
  General and administrative expenses                  576,098        1,264,154
  Advertising and promotion                            236,071          675,809
  Salaries                                             178,785          151,746
  Interest expense                                     148,784          156,760
  Depreciation and amortization                         77,806           62,911
  Product development                                   29,287           86,936
                                                   -----------      -----------
        Total Costs and Expenses                     1,246,831        2,398,316
                                                   -----------      -----------

Income (Loss) from Operations                         (383,737)      (1,544,397)

Other Income (Expenses)                                 20,588           21,124
                                                   -----------      -----------

Net Income (Loss) before Income Taxes                 (363,149)      (1,523,273)

Provision for Income Taxes                                  --               --
                                                   -----------      -----------

Net (Loss)                                         $  (363,149)     $(1,523,273)
                                                   ===========      ===========

Earnings (Loss) Per Share
   Basic and diluted (loss) per share              $     (0.05)     $     (0.23)
                                                   ===========      ===========

   Basic and diluted weighted average
     common shares outstanding                       6,920,688        6,102,519
                                                   ===========      ===========
--------------------

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

                                      F-2
<PAGE>

                                  DONINI, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                           For the Years Ended
                                                                 May 31,
                                                       --------------------------
                                                          2003            2002
                                                       -----------    -----------
<S>                                                    <C>            <C>
Cash Flows from Operating Activities:
   Net (loss)                                          $  (363,149)   $(1,523,273)
   Adjustments to reconcile net (loss)
     to net cash (used in) operating activities:
        Depreciation and amortization                       77,806         62,911
        Compensation expense                                    --        432,521
        Foreign translation adjustments                   (106,913)       (53,323)
        Change in taxes receivables                         28,114          5,113
   Change in operating assets and liabilities:
      Accounts receivable                                   (9,529)         6,876
      Inventories                                             (846)         2,235
      Prepaid expenses and other current assets              1,249        (11,805)
      Accounts payable and accrued liabilities            (103,769)       365,375
                                                       -----------    -----------
          Net cash (used in) provided by
            operating activities                          (477,037)      (713,371)
                                                       -----------    -----------

Cash Flows from Investing Activities:
    Increase in franchise sales receivables                (77,271)       (98,177)
    Proceeds from franchise sales receivables              170,525        116,369
    Advances to shareholder                                 49,053             --
    Repayments of shareholder's loan                            --       (160,840)
    Decrease (Increase) in assets held for resale         (137,345)       133,067
    Acquisition of property and equipment                 (129,712)       (64,696)
                                                       -----------    -----------
          Net cash used in investing
            activities                                    (124,750)       (74,277)
                                                       -----------    -----------

Cash Flows from Financing Activities:
   Proceeds from employee loan                                  --         19,630
   Proceeds from loans payable                             180,395        102,801
   Principal payments on loans payable                     (74,250)            --
   Proceeds from long term-debt                            590,804        630,348
   Due to shareholder                                           --        (22,445)
   Principal payments on long term-debt                   (179,193)       (67,316)
   Proceeds from deposits                                  116,913             --
   Repayment of deposits                                   (32,882)       124,630
                                                       -----------    -----------
          Net cash provided by financing
            activities                                     601,787        787,648
                                                       -----------    -----------

Net (Decrease) Increase in Cash and Cash Equivalents            --             --

Cash and cash equivalents, beginning of year                    --             --
                                                       -----------    -----------

Cash and cash equivalents, end of year                 $        --    $        --
                                                       ===========    ===========
</TABLE>
                                      F-3
<PAGE>

                                  DONINI, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Continued)



                                                          For the Years Ended
                                                                May 31,
                                                      --------------------------
                                                         2003            2002
                                                      -----------    -----------

Supplemental Disclosure of Cash Flow Information:
   Interest paid during the year                      $        --    $        --
                                                      ===========    ===========
   Income taxes paid during the year                  $        --    $        --
                                                      ===========    ===========

Supplemental Disclosure of Noncash Investing and
  Financing Activities:
    Common stock issued in settlement of debt         $   293,480    $   682,810
                                                      ===========    ===========
    Common stock issued for services rendered         $   269,752    $   432,521
                                                      ===========    ===========


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

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

                                      F-4
<PAGE>

                                  DONINI, INC.


            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(DEFICIT)
                    FOR THE YEARS ENDED MAY 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                     Common Stock
                                   $0.001 Par Value
                               --------------------------                                                  Total
                                                Common        Additional                   Foreign      Stockholders'
                                 Number         Stock          Paid-In                     Currency        Equity
                                of Shares       Amount         Capital       Deficit      Translation     (Deficit)
                               -----------    -----------    -----------   -----------    -----------    -----------
<S>                              <C>          <C>            <C>           <C>            <C>            <C>
Balances, June 1, 2001           5,052,979    $     5,053    $ 2,582,735   $(3,333,094)   $   120,489    $  (624,817)

   Common stock issued
     for services                  345,000            345        199,186                                     199,531

   Exercise of common
     stock options                 183,333            183        124,447            --             --        124,630

   Common stock issued in
     connection with
     services rendered             343,333            343        232,647                                     232,990

   Common stock issued in
     exchange of debt              682,810            683        682,127                                     682,810

   Foreign currency
     translation                                                                              (53,323)       (53,323)

    Net loss for the year
      ended May 31, 2002                --             --             --    (1,523,273)            --     (1,523,273)
                               -----------    -----------    -----------   -----------    -----------    -----------

Balances May 31, 2002            6,607,456          6,607      3,821,142    (4,856,367)        67,166       (961,452)

   Common stock issued in
     exchange for debt             293,480            293        293,187                                     293,480

   Cancellation of commn
     stock issued upon
     termination of services
     agreement                    (250,000)          (250)           250                                          --

   Common stock issued in
     connection with
     services rendered             269,752            270        269,482                                     269,752

   Foreign currency
     translation                                                                             (106,913)      (106,913)

    Net loss for the year
      ended May 31, 2003                                                      (363,149)                     (363,149)
                               -----------    -----------    -----------   -----------    -----------    -----------

Balances May 31, 2003            6,920,688    $     6,920    $ 4,384,061   $(5,219,516)   $   (39,747)   $  (868,282)
                               ===========    ===========    ===========   ===========    ===========    ===========
</TABLE>
--------------------

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

                                      F-5
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company
-----------

Donini, Inc. (formerly PRS Sub VI, Inc.) (the "Company") is incorporated in the
State of New Jersey and through its wholly-owned subsidiary Pizza Donini Inc.
(the "Subsidiary") and its subsidiaries, Pizado Foods (2001) Inc., Pizza
Donini.Com Inc. and DoniniCo Inc., is the franchisor, manufacturer and
distributor of frozen ready-made pizza, frozen and refrigerated sauces and pizza
dough to franchise, retail and wholesale customers, the operator of a call
center for home delivery of pizza and other food products and operating
restaurants.

The Company's franchise outlets in Quebec, Canada operate under the trade name
"Pizza Donini", which name is also primarily used for the distribution of the
Company's frozen pizza to the food service industry.

Recapitalization
----------------

On January 18, 2001, certain shareholders of Pizza Donini Inc. purchased 82% of
the issued and outstanding common stock of PRS Sub VI, a New Jersey Corporation
and changed its name to Donini, Inc. The Company at that time was an inactive
publicly held company with no appreciable assets or equity. On January 29, 2001,
the Company purchased all the issued and outstanding common shares of Pizza
Donini Inc. for a nominal cash payment, the assumption of long-term debt owed to
certain shareholders and related parties of the subsidiary of $683,000, the
assumption of the obligations under a convertible subordinated debenture of
$500,000 and the assumption of the obligations under a consulting agreement with
a third party ("Consultant") to provide financial resources and consulting
services.

The Company assumed the long-term debt and obligations under a convertible
subordinated debenture in exchange for debentures of the Company that are
convertible at the option of the holders, into common stock of the Company. On
March 30, 2001, the $500,000 debenture was converted into 735,618 common shares
of the Company. On April 2, 2001, the debentures of $683,000 were converted into
344,759 common shares of the Company.

Pizza Donini is considered the purchaser and continuing entity and these
transactions have been accounted for as a recapitalization. The accounting
values of Pizza Donini's shareholders' equity have been ascribed to the Company.

The functional currency of Pizza Donini Inc. is the Canadian dollar and its
reporting currency is the United States dollar. The Company's assets and
liabilities have been translated into United States dollars using the exchange
rate prevailing at the balance sheet date. Revenues and expenses and cash flows
have been translated using the average rate for the year.

                                      F-6
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (CONTINUED)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Liquidity
---------

The accompanying financial statements have been prepared on the basis that the
Company will continue as a going concern and that assets and liabilities have
been recorded on the basis that the entity will be able to realize its assets
and discharge its liabilities in the normal course of business. However, the
accompanying financial statements report that the Company has incurred
significant operating losses during the years ended May 31, 2003 and 2002 and
has a deficit in shareholders' equity and a working capital deficit at May 31,
2003. In addition, the Company will require additional financing to meet its
future obligations.

These matters raise substantial doubt as to the Company's ability to continue as
a going concern. The Company's ability to continue as a going concern will
depend on its attaining profitable operations and the ability to obtain
additional financing. Should the going concern assumption not be appropriate,
significant adjustments may be necessary to the recorded amounts of assets and
liabilities.

In order to meet these goals to secure additional capital funding, the Company
has engaged the services of an investment banker in an effort to raise an
additional $2,000,000 of equity and/or debt financing through the issuance of
common stock, convertible debentures or a combination thereof. In addition, the
Company has secured further commitments from its existing and new customers for
additional installations at their food services facilities to provide ready made
frozen pizza and is seeking to finance this future growth through equipment
leasing arrangements and other means. Finally, the Company has adopted various
streamlining and cost control measures to ensure that optimal profit margins are
realized and that existing resources are maximized.

It is also the Company's intention to continue to convert additional trade
payables into capital stock during the next fiscal year.

Summary of Significant Accounting Policies
------------------------------------------

Principles of Consolidation and Basis of Presentation
-----------------------------------------------------

       The accompanying financial statements consolidate the accounts of the
       parent company and its wholly-owned subsidiaries. All significant
       intercompany accounts and transactions have been eliminated in
       consolidation.

Use of Management's Estimates
-----------------------------

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

                                      F-7
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Cash and Cash Equivalents
-------------------------

       The Company considers cash equivalents to be all highly liquid
       investments with original maturities of three months or less.
       Substantially all cash and cash equivalents are held in one major
       financial institution.

Fair Value of Financial Instruments
-----------------------------------

       Carrying amounts of certain of the Company's financial instruments,
       including cash and cash equivalents, trade receivables, accounts payable
       and other accrued liabilities approximate fair value because of their
       short maturities.

Revenue Recognition
-------------------

       Franchise agreements provide the terms of the arrangement between Pizza
       Donini and the franchisee. The franchise agreements may or may not
       require the franchisee to pay an initial, nonrefundable fee. Royalties
       and advertising revenues are based on a percentage of the sales of the
       franchisees according to the terms of the franchise agreement. Order
       processing fees for the operation of the call center are based on a
       percentage of the franchisees' sales generated by the call center. These
       revenues are recorded as earned, with an appropriate provision for
       estimated uncollectible amounts.

       Initial fees are recognized as revenue when Pizza Donini has
       substantially performed all initial services required by the franchise
       agreement, which is generally upon opening. Direct costs incurred to
       secure and perform the required services under the franchise agreement
       are charged to expense as incurred.

       Refranchising gains include gains on sales of company-operated
       restaurants to new and existing franchisees and the related initial
       franchise fees, if any. Gains on subsequent restaurant franchising are
       recognized when the sale transaction closes, the franchisee has a minimum
       amount of the purchase price in at-risk equity and the Company is
       satisfied that the franchisee can meet its financial obligations.
       Otherwise, refranchising gains are deferred until those criteria have
       been met.

       Revenue from sales of frozen pizza, dough and sauces are recorded upon
       shipment.

                                      F-8

<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Foreign Currency Translation
----------------------------

       Pizza Donini Inc., Pizza Donini.Com Inc., Pizado Foods (2001) Inc. and
       DoniniCo, Inc. the Company's wholly-owned Canadian subsidiaries, use the
       Canadian dollar as their functional currency and translate their assets
       and liabilities into U.S. dollars at the exchange rates prevailing at the
       balance sheet date and revenues, expenses and cash flows translated at
       the average rate for the year. The resulting currency translation
       adjustments are accumulated and reported in other comprehensive income.

       Other monetary assets and liabilities denominated in foreign currencies
       are translated at the exchange rates prevailing at the balance sheet
       date. Revenues and expenses denominated in foreign currencies are
       translated at the rates of exchange prevailing at the transaction dates.
       All exchange gains and losses are included in the statement of
       operations.

Assets Held for Resale
----------------------

       Assets held for resale consist of franchise equipment reacquired by the
       Company and are recorded at the lower of cost and net realizable value.

Inventory
---------

       Inventory is stated at the lower of cost, determined by the moving
       average cost method, or market. The Company provides inventory allowances
       based on slow-moving and obsolete inventories.

Property and Equipment
----------------------

       Property and equipment are recorded at cost. Depreciation is computed by
       the straight-line method over the estimated useful lives of the assets,
       which vary from three to thirty-nine years. Leasehold improvements are
       being amortized over the related lease term or estimated useful lives,
       whichever is shorter.

Intangible Assets
-----------------

       Intangible assets, which consists of trademarks are amortized to
       operations under the straight-line method over their estimated useful
       lives or statutory lives, whichever is shorter.

       As of June 1, 2002, the Company has adopted Statement of Financial
       Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
       (SFAS 142), which addresses the financial accounting and reporting
       standards for goodwill and other intangible assets subsequent to their
       acquisition. This accounting standard requires that goodwill no longer be
       amortized, and instead, be tested for impairment on a periodic basis.

                                      F-9
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Impairment of Long-Lived Assets
-------------------------------

       Long-lived assets and certain identifiable intangible assets to be held
       and used are reviewed for impairment whenever events or changes in
       circumstances indicate that the carrying amount of such assets may not be
       recoverable. Determination of recoverability is based on an estimate of
       undiscounted future cash flows resulting from the use of the asset and
       its eventual disposition. Measurement of an impairment loss for
       long-lived assets and certain identifiable intangible assets that
       management expects to hold and use is based on the fair value of the
       asset. Long-lived assets and certain identifiable intangible assets to be
       disposed of are reported at the lower of carrying amount or fair value
       less costs to sell.

Research and Development
------------------------

       Costs associated with development of new product are charged to
       operations as incurred.

Advertising Costs
-----------------

       Advertising expenditures relating to the advertising and marketing of the
       Company's products and services are expensed in the period the
       advertising costs are incurred.

Income Taxes
------------

       Tax provisions and credits are recorded at enacted tax rates for taxable
       items included in the consolidated statements of operations regardless of
       the period for which such items are reported for tax purposes. Deferred
       tax assets and liabilities are determined based on the differences
       between the financial statement and tax bases of assets and liabilities
       using enacted tax rates in effect for the year in which the differences
       are expected to reverse. Deferred tax assets are reduced by a valuation
       allowance when the determination can be made that it is more likely than
       not that some portion or all of the related tax assets will not be
       realized.

Comprehensive Income
--------------------

       The Company reports components of comprehensive income under the
       requirements of Statement of Financial Accounting Standards No. 130,
       "Reporting Comprehensive Income" (SFAS 130). This statement establishes
       rules for the reporting of comprehensive income and its components which
       require that certain items such as foreign currency translation
       adjustments, unrealized gains and losses on certain investments in debt
       and equity securities, minimum pension liability adjustments and unearned
       compensation expense related to stock issuances to employees be presented
       as separate components of stockholders' equity.

                                      F-10
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Reverse Stock Splits
--------------------

       On February 6, 2001, the Company amended its Certificate of Incorporation
       increasing its authorized shares of common stock from 10,000,000 to
       100,000,000. On March 5, 2002 the Board of Directors approved a reverse
       stock split of 1 for 3 shares of all issued shares effective March 7,
       2002. All share and per-share amounts in the accompanying consolidated
       financial statements have been restated to give effect to the 1 for 3
       reverse stock split. The Company's restated issued and outstanding common
       stock was 6,607,456 as of May 31, 2002.

Earnings (Loss) per Share
-------------------------

       The Company computes earnings or loss per share in accordance with
       Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
       (SFAS 128). Basic earnings per share is computed by dividing income
       available to common stockholders by the weighted average number of common
       shares outstanding. Diluted earnings per share reflects the potential
       dilution that could occur if securities or other agreements to issue
       common stock were exercised or converted into common stock. Diluted
       earnings per share is computed based upon the weighted average number of
       common shares and dilutive common equivalent shares outstanding, which
       include convertible debentures, stock options and warrants. All earnings
       per share amounts have been retroactively restated to reflect the 1 for 3
       reverse stock split which occurred on March 7, 2002.

Accounting for Stock-Based Compensation
---------------------------------------

       Stock compensation plans for employees are accounted for using the
       intrinsic value method of Accounting Principles Board Opinion No. 25 (APB
       25). Under APB 25, compensation expense is determined on the measurement
       date, that is, the first date on which both the number of shares the
       employee is entitled to receive and the exercise price, if any, are
       known. Compensation expense, if any, is the excess of the market price of
       the stock over the exercise price on the measurement date. The amount of
       compensation expense, if any, is charged to operations over the vesting
       period. The Company utilizes the Black-Scholes model to value stock
       options for pro forma presentation of income and per share data as if the
       fair value-based accounting method in Statement of Financial Accounting
       Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123),
       had been used to account for stock-based compensation.

       In accounting for options granted to persons other than employees (as
       defined under SFAS 123), the provisions under SFAS 123 were applied. As
       required by SFAS 123, the fair value of these options was estimated at
       the grant date using the Black-Scholes option pricing model.

                                      F-11
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Recent Accounting Pronouncements
--------------------------------

       In June 2001, the Financial Accounting Standards Board (FASB) issued
       Statement of Financial Accounting Standards No. 143, "Accounting for
       Asset Retirement Obligations" (SFAS 143). SFAS 143 addresses financial
       reporting for obligations associated with the retirement of tangible
       long-lived assets and the associated retirement costs. The adoption of
       SFAS 143 is effective for fiscal years beginning after June 15, 2002. The
       Company does not expect the adoption of SFAS 143 to have a significant
       impact on the Company's future financial position or results of
       operations.

       In August 2001, the FASB issued SFAS No. 144, "Accounting for the
       Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS
       121, "Accounting for the Impairment of Long-Lived Assets and for
       Long-Lived Assets to be Disposed of". The primary objectives of SFAS 144
       are to develop one accounting model based on the framework established in
       SFAS 144 for long-lived assets to be disposed of by sale, and to address
       significant implementation issues. The Company will adopt SFAS 144 for
       its fiscal year beginning June 1, 2002. The Company does not expect the
       adoption of SFAS 144 to have a significant impact on its future financial
       position or results of operations.

       In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
       Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and
       Technical Corrections." SFAS 145 updates, clarifies and simplifies
       certain accounting pronouncements. The adoption of SFAS 145 is effective
       in large part for transactions occurring after May 15, 2002. SFAS 145 had
       no impact on the Company's financial position or results of operations in
       the year ended May 31, 2002 and the Company does not expect the adoption
       of SFAS 145 to have an impact on its future financial position or results
       of operations.

       In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
       Associated with Exit or Disposal Activities". SFAS 146 addresses
       financial accounting and reporting for costs associated with exit or
       disposal activities and nullifies Emerging Issues Task Force Issue No.
       94-3. The adoption of SFAS 146 is effective for exit or disposal
       activities initiated after December 31, 2002. The Company does not expect
       the adoption of SFAS 146 to have a significant impact on its future
       financial position or results of operations.

       In December 2002, the FASB issued Statement of Financial Accounting
       Standards (SFAS") No. 148, "Accounting for Stock-Based Compensation -
       Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS
       No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
       to provide alternative methods of transition for a voluntary change to
       the fair value based method of accounting for stock-based employee
       compensation. In addition, SFAS No. 148 amends the disclosure
       requirements of SFAS No. 123 to require prominent disclosures in both
       annual and interim financial statements about the method of accounting
       for stock-based employee compensation and the effect of the method used
       on reported results. SFAS No. 148 is effective for the Company as of
       January 1, 2003. The Company has not elected a voluntary change in
       accounting to the fair value based method, and, accordingly, the adoption
       of SFAS No. 148 did not have a significant impact on the Company's
       results of operations or financial position.

                                      F-12
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Summary of Significant Accounting Policies (Continued)
------------------------------------------

Reclassifications
-----------------

       Certain reclassifications have been made to the prior year balances to
       conform to the current year's presentation.


2. ACCOUNTS RECEIVABLE

Accounts receivable are reflected on the balance sheet net of allowance for
doubtful accounts. A summary of activity in the allowance for doubtful accounts
is summarized as follows:


        Balance June 1, 2001                            $  33,330

        Bad debt expense                                   13,487
        Amounts written off                               (46,817)
                                                        ---------

        Balance May 31, 2002                                   --

        Bad debts expense                                   1,702
        Amounts written off                                (1,702)
                                                        ---------

        Balance May 31, 2003                            $      --
                                                        =========


3. ASSETS HELD FOR RESALE

Assets held for resale represents equipments and other assets reacquired from
franchise purchasers. During the year ended May 31, 2003 the Company resold the
assets that were held at May 31, 2002 and repossessed equipments from additional
restaurants and are in the process of reselling them.

                                      F-13
<PAGE>

                                  DONNINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



4. FRANCHISE SALES RECEIVABLES

Franchise sales receivables represent amounts owing from franchise purchasers
resulting from the sales of franchises including the related equipment included
in each restaurant. Terms generally range up to eight years with interest rates
from 5% to 10%.

<TABLE>
<CAPTION>
                                                                       May 31,
                                                                 -------------------
                                                                   2003       2002
                                                                 --------   --------
<S>                                                              <C>        <C>
Balance of sales at 8%, receivable in monthly installments of
$412 including interest, commencing June 1998, due May
2001 and secured by the tangible and intangible property sold,
except real estate                                               $     --   $  1,093

Balance of sales at 9%, receivable in weekly installments of
$384 including interest, commencing September 1998, due
August 2003 and secured by the tangible and intangible
property sold, except real estate                                   4,557     21,750

Balance of sales at 9%, receivable in weekly installments of
$418 including interest, commencing June 2000, originally due
May, 2004 and secured by the tangible and intangible property
sold, except real estate                                               --     35,033

Balance of sales at 9%, receivable in weekly installments of
$335 including interest, commencing August 2000, due July
2004 and secured by the tangible and intangible property
sold, except real estate                                           19,972     31,256

Balance of sales at 8%, receivable in weekly installments of
$153 including interest, commencing November 1999, originally
due October 2004 and secured by the tangible and intangible
property sold, except real estate                                      --     15,741
                                                                 --------   --------

Balance (Carried Forward)                                          24,529    104,873
</TABLE>
                                      F-14
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



4. FRANCHISE SALES RECEIVABLES (Continued)

<TABLE>
<CAPTION>
                                                                       May 31,
                                                                 -------------------
                                                                   2003       2002
                                                                 --------   --------
<S>                                                              <C>        <C>
Balance (Brought Forward)                                        $ 24,529   $104,873

Balance of sale at 10%, receivable in monthly installments of
$357 including interest commencing February 2001, due
February 2006 and secured by the tangible and intangible
property sold, except real estate                                      --     51,794

Balance of sale at 5%, receivable in weekly installments of
$139 including interest, commencing March 2002, due February
2010 and secured by the tangible and intangible property sold,
except real estate                                                 41,168     41,370

Balance of sale at 6%, receivable in weekly installments of
$84 including interest, commencing May 1, 2002 to April 2003,
increasing to $146 from April 2004 to April 2005, increasing
to $183 from April 2005 to April 2006, increasing to $211
from April 2006 to April 2010, and secured by the tangible and
intangible property sold, except real estate                       53,633     49,013

Balance of sale at 6%, receivable in weekly installments of
$183 including interest, commencing September 2002, due August
2006 and secured by the tangible and intangible property sold,
except real estate                                                 30,821     32,725

Balance of salt at 7%, receivable in weekly installments of
$183, including interest commencing November 2002, due October
2007 and secured by the tangible and intangible property sold,
except real estate                                                 36,370         --
                                                                 --------   --------

                                                                  186,521    279,775

Less:  Current portion                                             47,193     79,247
                                                                 --------   --------

                                                                 $139,328   $200,528
                                                                 ========   ========
</TABLE>

                                      F-15
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



5. PROPERTY AND EQUIPMENT

Property and equipment, at cost, and their respective useful lives consist of
the following at May 31:

                                                                      Estimated
                                                                       Useful
                                              2003          2002       Lives
                                            --------      --------    --------

Furniture and equipment                     $590,915      $505,064       5-7
Digital telephone system                      45,502        45,502        5
Computer equipment                            99,617        95,995        3
Computer software                             36,827        36,827        3
Leasehold improvements                        45,144         5,771       3-5
Website                                       10,356         9,490        3
                                            --------      --------
                                             828,361       698,649
Less: Accumulated depreciation               375,810       298,626
                                            --------      --------

Net Book Value                              $452,551      $400,023
                                            ========      ========


6. LOANS PAYABLE

The loans payable are noninterest bearing and have no specific terms of
repayment.


7. BANK INDEBTEDNESS

A subsidiary of the Company has a line of credit of which $22,005 and $21,689
were utilized at May 31, 2003 and 2002, respectively. Borrowings under the
facility are at Canadian bank prime rate plus 3% and are secured by accounts
receivable and inventory of the subsidiary, amounting to $38,951 and $48,042 at
May 31, 2003 and 2002, respectively. The credit facility is subject to
restrictions on the payment of dividends by the subsidiary and has an annual fee
of $549.

The effective interest rate on borrowings under the facility was 9.09% and
11.49% for the years ended May 31, 2003 and 2002, respectively.

                                      F-16
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities were as follows at May 31:

                                                                May 31,
                                                      --------------------------
                                                         2003            2002
                                                      ----------      ----------

Cash Overdraft                                        $   48,159      $   45,244
Accounts payable - trade                                 366,771         754,440
Accrued liabilities                                       13,079          75,262
Accrued payroll and related deductions                   216,586         172,348
Other trade payable                                       38,893          32,823
Sales tax payable                                         73,044          49,935
                                                      ----------      ----------

                                                      $  756,532      $1,130,052
                                                      ==========      ==========



9. LONG-TERM DEBT

                                                                May 31,
                                                      --------------------------
                                                         2003            2002
                                                      ----------      ----------
Small business bank loan at prime plus 3%,
repayable in monthly principal installments of
$1,363 due July 2005 and secured by equipment         $   39,580      $   51,814

Bank loan unsecured, bearing interest at a bank's
prime rate plus 2%, repayable in monthly principal
installments installments of $818 originally due
March 2003                                                74,470          66,704
                                                      ----------      ----------

Balance (Carried Forward)                             $  114,050      $  118,518
                                                      ----------      ----------

                                      F-17
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



9. LONG-TERM DEBT (Continued)

                                                                   May 31,
                                                            --------------------
                                                              2003        2002
                                                            --------    --------

Balance (Brought Forward)                                   $114,050    $118,518

Convertible subordinated debentures, bearing
interest at 11% payable at maturity, payable
during 2004. The convertible subordinated
debentures were all converted to common stock
on July 15, 2002
                                                                  --     270,000

Loan payable unsecured, bearing interest at 12%,
repayable in monthly installments of $689 including
interest, originally due July 2001                            10,008      10,147

Bank demand note bearing interest at the bank's
prime rate 2%, repayable in monthly principal
installments of $7,854, due March 2005, secured by
securities of the Company's president and his
limited personal guarantee                                   217,731     268,345

Loan payable, unsecured, bearing interest at 7%
repayable in monthly installments of $1,668
including interest, due April 2004                            20,490      38,375

Loan payable, secured by moveable property and
personal guarantee of a director, bearing interest
at 18% originally repayable in weekly installments
of $3,333 including interest, due January 2003                57,749     113,267

Loan payable, unsecured, non interest bearing with
no specified terms of repayment                               51,880          --

Loan payable, unsecured, non interest bearing
repayable in bi-monthly installments of $401, due
September. 2005                                               12,860          --

                                                            --------    --------
Balance (Carried Forward)                                   $484,768    $818,652
                                                            --------    --------

                                      F-18
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



9. LONG-TERM DEBT (Continued)

                                                                   May 31,
                                                             -------------------
                                                               2003       2002
                                                             --------   --------

Balance (Brought Forward)                                    $484,768   $818,652

Loan payable, unsecured, non interest bearing
repayable in bi-monthly installments of $622,
due December 2005                                              23,643         --

Loan payable, unsecured, non interest bearing,
repayable in weekly installments of $164, due
November 2004                                                   3,930         --

Loan payable, unsecured, non interest bearing,
repayable in monthly installements of $730, due
October 2005                                                   11,945         --

Loan payable unsecured, non interest bearing,
repayable in monthly installments of $1,538, due
May 2005                                                       36,908         --

Loan payable, unsecured, bearing interest of 7.25%
per annum, repayable in weekly installments of $219
from July 2003 till December 2003 increasing to $365
from January 2004 to June 2004 increasing to $585 from
July 2004 to December 2004, increasing to $731 from
January 2005 to June 2005 increasing to $877 from
July 2005 to October 2006                                      94,641         --
                                                             --------   --------

Balance (Carried Forward)                                    $655,835   $818,652
                                                             --------   --------

                                      F-19
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



9. LONG-TERM DEBT (Continued)

                                                                   May 31,
                                                             -------------------
                                                               2003       2002
                                                             --------   --------

Balance (Brought Forward)                                    $655,835   $818,652

Loan payable, unsecured, bearing interest of 7.25%
per annum, repayable in weekly installments of $146
from October 2003 till March 2004 increasing to $292
from April 2004 to September 2004 increasing to $438
from October 2004 to March2005, increasing to $585
from April 2005 to September 2005 decreasing to $365
from October 2005 to November 2005                             36,645         --

Loan payable, secured by a guarantee by a director,
bearing interest of 4% per annum, repayable in weekly
installments of $723, due February 2007                       133,893         --

Loan payable, secured by a guarantee by a director
bearing interest of 4% per annum, repayable in weekly
installments of $738, due April 2006                          110,409         --
                                                             --------   --------
                                                              936,782    818,652

Less:  Current portion                                        367,594    479,081
                                                             --------   --------

                                                             $569,188   $339,571
                                                             ========   ========


Principal repayments of long-term debt due in the next five years as at May 31,
2003 are as follows:


                2004                      $  367,594
                2005                         213,864
                2006                         173,967
                2007                          87,114
                2008                          94,243
                                          ----------

                                          $  936,782
                                          ==========

                                      F-20
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



10. INCOME TAXES

As at May 31, 2003, the Company and its subsidiaries had $1,745,245 of losses
for Canadian federal income tax purposes and $1,527,245 for Quebec taxes
available for carry forward to reduce future years taxable income expiring as
follows:


                             Canadian
  Expiring                   Federal                Quebec
  --------                 ------------          ------------

    2004                   $     28,000          $
    2005                        132,000
    2006                        228,000               196,000
    2007                        113,000                72,000
    2008                        291,000               303,000
    2009                        593,000               594,000
    2010                        360,245               362,245
                           ------------          ------------
                           $  1,745,245          $  1,527,245
                           ============          ============



Details of deferred income tax (assets) and liabilities are as follows:


                                                       2003             2002
                                                    -----------     -----------

Net operating losses                                $  (655,000)    $  (519,664)
Capital assets - differences between net
  book value and undepreciated capital
  cost                                                   26,285          21,398
                                                    -----------     -----------

Net deferred tax asset                                 (628,715)       (498,266)

Less valuation allowance                                628,715         498,266
                                                    -----------     -----------

                                                    $        --     $        --
                                                    ===========     ===========


The valuation allowance increased by approximately $130,449 in 2003 ($139,726 in
2002) due mainly to the current year's operating loss.

                                      F-21
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



11. RELATED PARTY TRANSACTIONS

The Company has made loans and advances to its President, who is also its chief
operating officer and a principal shareholder. At May 31, 2003 there was an
outstanding balance of $111,787, net of repayments made during the year. In
addition, he has made personal guarantees on certain obligations of the Company
and pledged 300,000 shares of his Company stock as collateral for the bank
demand note of $217,731 as of May 31, 2003.


12. COMMITMENTS AND CONTINGENCIES

The Company's subsidiaries have entered into operating leases for their premises
and equipment with minimum annual rental payments for the years following May
31, 2003 as follows:

                 2004                      $ 96,558
                 2005                      $ 88,758


Litigation
----------

       The Company is subject from time to time to litigation arising from the
       normal course of business. In management's opinion, any such
       contingencies are appropriately provided for or would not materially
       affect the Company's financial position or results of operations.

       Pizza Donini was sued by a former franchisee of a former subsidiary who
       is seeking to obtain an order from the Court declaring that the transfer
       and sale to Pizza Donini of trademarks by the former subsidiary is null
       and void and to have Pizza Donini declared jointly and severally liable
       for a claim of the former franchisee against the former subsidiary.

       This action stems from a separate suit filed by the former franchisee
       against the former subsidiary, in the amount of $416,917 which suit was
       dismissed by the Superior Court of Quebec on May 19, 1998. The former
       franchisee has appealed the original judgment of the lower court and
       legal counsel for the former subsidiary does not expect a hearing date
       before July 2005. In the meantime, in the suit against Pizza Donini,
       there is an agreement between the attorneys of the parties to await the
       outcome of the decision of the Court of Appeal in the original
       proceedings prior to pursuing this action. Counsel to Pizza Donini and to
       its former subsidiary is confident that the appeal will be dismissed in
       the original suit and, therefore, the action against Pizza Donini will
       also be dismissed.

       Pizza Donini has been sued by a former lender bank for repayment of a
       loan originally due in March 2003. Pizza Donini is disputing certain fees
       charged by the bank, has counter sued and has ceased making monthly
       payments on the loan.

       The amount of the loan, including accrued interest, is $74,740 at May 31,
       2003 ($66,704 at May 31, 2002) and is included in long-term debt.

                                      F-22
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



13. STOCKHOLDERS' EQUITY (DEFICIT)

     Common Stock
     ------------

       On February 6, 2001, the Company amended its Certificate of Incorporation
       increasing its authorized shares of common stock from 10,000,000 to
       100,000,000. On March 5, 2002 the Board of Directors approved a reverse
       stock split of 1 for 3 shares of all issued and outstanding shares
       effective March 7, 2002. All share and per-share amounts in the
       accompanying consolidated financial statements have been restated to give
       effect to the 1 for 3 reverse stock split. The Company's restated issued
       and outstanding common stock was 6,920,688 and 6,607,456 as of May 31,
       2003 and 2002, respectively.

       Due to arrangements made with third parties to provide services to the
       Company that were entered into in May 2001, 345,000 shares of common
       stock were issued in August 2001. Also, certain options issued to certain
       key executives to acquire a maximum of 183,333 shares of common stock of
       the Company at $.001 were exercised in August 2001. The estimated fair
       value of the shares issued and the resultant conversion of discounted
       options amounted to $323,611 that has been recorded as compensation
       expense.

       In August 2002, on of these agreements signed May 2001 between a third
       party and the Company for services to be rendered by the third party was
       cancelled by mutual consent of the two parties. Therefore, the 250,000
       common shares (after the reverse split) that were issued under this
       agreement and the options that were granted to purchase an additional
       250,00 of common stock under the same agreement were also cancelled by
       mutual consent.

       Due to an arrangement with a third party to provide services to the
       Company 18,333 shares of common stock were issued in January 2002. Also
       in January 2002, 325,000 shares were issued to a company controlled by an
       executive for services rendered. These shares are included in the table
       above. The estimated fair value of shares issued amounted to $232,935 of
       which $222,935 has been recorded as compensation expense and $10,000 as
       prepaid consulting expenses.

       In May 2002, 682,810 common shares were issued to third parties for
       services rendered or debt advanced to the company. The estimated fair
       value of the shares issued was $682,810 of which $682,127 was recognized
       as paid up capital. The offsetting debt was to various accounts payable
       and loan payable accounts after the reverse split.

       In July 2002, $270,000 of the convertible subordinated debentures (plus
       interest of $23,480) were converted into 293,480 shares of the Company's
       common stock along with 29,348 three year warrants to purchase common
       stock at $1.66 per share.

       During November 2002 the Company issued 269,752 shares of its common
       stock in settlement of accounts payables amounting to $269,752.

                                      F-23
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



13. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

     Common stock options and warrants
     ---------------------------------

       In May 2001, the Company entered into agreements which included issuing
       options to purchase common shares to key executives and several third
       parties which were exercisable at various dates after the Company's
       common stock began public trading.

       At May 31, 2003 a summary of these outstanding options is as follows:

          Number
        of Options        Exercise Date               Exercise Price
        ----------        -------------               --------------

          133,333         July 5, 2003          75% of average trading price
           88,333         July 5, 2003         110% of average trading price
          193,333         July 5, 2004          75% of average trading price
          125,000         July 5, 2004         110% of average trading price
        ---------

          539,999
        =========


       The average five day trading price immediately following 91 days of
       trading of stock was $1.33. The effective trading date was April 4, 2002.

       In addition to the options granted above, an additional 2,016,667 options
       were granted to two employees and certain third parties exercisable at
       any time during the three-year period from the exercise date. During
       2002, 183,333 options were exercised, all the remaining options expired
       or were cancelled.

       On May 8, 2001, the Company granted warrants to a third party to purchase
       333,333 common shares of the Company at prices ranging from $3.00 to
       $9.00 per share, exercisable at any time during a three-year period from
       the date of issuance.

       Pro-forma information under FASB Statement No. 123 using the fair value
       method regarding earnings and earnings per share has been determined to
       be the same as under APB Opinion No. 25.

                                      F-24
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)


13. STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

    Common stock options and warrants (Continued)
    ---------------------------------------------

       A summary of changes to outstanding options is as follows:

                Options outstanding at May 31, 2001              2,556,666
                Options granted                                    325,000
                Options exercised                                 (183,333)
                Options cancelled or expired                    (1,000,000)
                                                             -------------

                Options outstanding May 31, 2002                 1,698,333
                Options granted                                     29,348
                Options exercised                                       --
                Options cancelled or expired                      (833,334)
                                                             -------------

                Options outstanding May 31, 2003                   894,347
                                                             =============


14. FINANCIAL INSTRUMENTS

     Fair value disclosures
     ----------------------

       Fair value estimates are made as of a specific point in time, using
       available information about the financial instrument. These estimates are
       subjective in nature and often cannot be determined with precision.

       The Company has determined that the carrying value of its short-term
       financial assets and liabilities approximates their fair values as at May
       31, 2003 and 2002 because of the short-term maturity of those
       instruments.

       The carrying amounts of franchise sales receivables are reasonable
       estimates of their fair value.

       The carrying value of the small business bank loan and the unsecured bank
       loan approximates their fair value at May 31, 2003 and 2002 as the debt
       bears interest at floating rates. The carrying value of the unsecured
       loan, although at fixed interest rates, approximates their fair value as
       the interest rates are comparable to the Company's incremental borrowing
       rate.

     Credit risk
     -----------

       The Company's revenues are derived from its franchise operations and
       sales of frozen ready-to-use pizza. The Company regularly monitors its
       credit risk exposure to these customers and takes steps to mitigate the
       risk of loss. The Company does not have any concentration of credit risk
       with any of their customers.

                                      F-25
<PAGE>

                                  DONINI, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              MAY 31, 2003 AND 2002
                                   (Continued)



14. FINANCIAL INSTRUMENTS (Continued)

     Interest rate risk
     ------------------

       The Company's franchise sales receivables are at fixed interest rates for
       fixed terms, minimizing exposure to interest rate fluctuations.

       Approximately one-half of the Company's long-term debt is at fixed
       interest rates. The balance is at floating rates which, together with the
       Company's short-term bank indebtedness, would expose it to interest rate
       risk through fluctuations in the prime interest rate.

                                      F-26
<PAGE>

                                   EXHIBIT "A"




Mr. Peter Deros
DONINI, INC.
4555 Boul. Des Grandes Prairies, Suite 30
St-Leonard, Quebec
H1R 1A5



May 28, 2003

Dear Sirs:

For personal reasons, I hereby tender my resignation as a Director of DONINI,
INC., effective immediately. Kindly acknowledge that it has been recorded by the
Company under separate cover.

Yours truly,



/s/ ALFRED C. D'ALESSANDRO
-------------------------------
Alfred C. D'Alessandro