<PAGE>


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                   FORM 10-KSB

              [X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
                SECURITES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                    FOR THE TRANSITION PERIOD FROM ____TO____

                         COMMISSION FILE NUMBER 0-30301

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

                             SOULFOOD CONCEPTS, INC.
                 (Name of small business issuer in its charter)

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

                DELAWARE                           13-3585743
         (State of Incorporation)      (I.R.S. Employer Identification No.)

                           630 NINTH AVENUE, SUITE 310
                              NEW YORK, N.Y., 10036
           (Address of principal executive office, including zip Code)

                                 (212) 262-8333
                (Issuer's telephone number, including area code)

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

                                      NONE

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

                          COMMON STOCK, $.003 PAR VALUE

Check whether the issuer (1) Filed all reports required to be filed by section
13 or 15 (d) of the securities exchange act during the preceding 12 months (or
for such a shorter period that the registrant 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 no disclosure will be
contained, to the best of registrant's knowledge, is definitive proxy or
information statements incorporated by reference in Part III of this form 10-KSB
or any amendment to this form. [X]

     The aggregate market value on December 31, 2001 of voting stock held by
non-affiliates computed by reference to the last sale price on that date was
approximately $2,625,569

     The issuer's revenues for the year ended December 31, 2002 were  $6,047,643

As of December 31, 2002, 5,049,172 shares of common stock, par value $.003 per
share were issued and outstanding.

                       Documents incorporated by reference
                       -----------------------------------

                                      NONE

<PAGE>

                                     PART I

ITEM 1.   BUSINESS

GENERAL
-------

         Soulfood Concepts, Inc., a Delaware corporation (the "Company"), owns
and operates full service, upscale soul food restaurants under the name of The
Shark Bar(R) Restaurant . We also hold a 62% interest in one other full service,
soul food restaurant operating under the name of Mekka (R) restaurant . The
flagship Shark Bar restaurant and Mekka are located in Manhattan, New York; the
others are located in Chicago, Illinois, and Atlanta, Georgia.

         The original Shark Bar restaurant, which was opened in New York City in
1990, is a full service 95-seat restaurant. In March 1997, we opened a
three-floor 9,000 square foot Shark Bar(R) restaurant in Chicago. In September
1997, we opened a third Shark Bar(R) restaurant in Los Angeles in a 6,500 square
foot facility. In March 1998, we opened a fourth Shark Bar restaurant in a
10,000 square foot location in Atlanta.

         The corporate expansion during 1997 was financed by us through various
financing transactions as well as loans from one of our officers. See
"Business-Financing Transactions".

         The Los Angeles and Chicago units were closed in June and July 1999
respectively, primarily due to unsatisfactory management performance and
subsequent decline in sales. We have successfully sold the Los Angeles unit's
lease, inventory and fixed assets. As of the date of this report, we have
entered into a new lease agreement with the landlords of the Chicago location
and we will engage a turnaround plan to reopen the Chicago location by the first
quarter 2003.

CORPORATE STRATEGY
------------------

         We intend to build the first national "soul food" restaurant company
throughout major urban areas in the United States with the expansion of our two
concepts - The Shark Bar Restaurant and Mekka Restaurant. We are dedicated to
excellence in the quality of our food offerings and to the creation of value for
our customers.

         We believe that we differentiate our restaurants from other restaurants
by emphasizing the following strategic elements:

o    DISTINCTIVE CONCEPT AND BRAND. The restaurants provide guests with a
     distinctive dining experience, which helps promote frequent visiting
     patterns and strong customer loyalty.

o    ENSURE HIGH QUALITY GUEST EXPERIENCE. We strive to provide a consistent,
     high quality guest experience in order to generate frequent visiting
     patterns and customer loyalty. Through extensive training, experienced
     restaurant-level management and rigorous operational and quality controls,
     we seek to provide high quality menu items and to ensure prompt, friendly
     and efficient service to guests. We believe that the restaurants are
     attractive to a wide variety of dining occasions, including weekday and
     weekend lunches and dinners for a broad range of guests, offering upscale
     Soul Food and New Southern Cuisine which provides a unique and enduring
     attraction to a broad and diverse demographic and socio-economic mix of
     customers.

                                        1

<PAGE>

o    ACHIEVE ATTRACTIVE RESTAURANT-LEVEL ECONOMICS. Our primary objective is to
     be positioned as the first national company to target the soul food
     category, which offers a fine dining experience with casual dining prices.
     We intend to achieve attractive operating results due to the broad appeal
     of the concepts, careful site selection and cost-effective site
     development, consistent application of the management and training programs
     and favorable product costs. We utilize centralized information and
     accounting systems, which allow us to monitor and control labor, food and
     other direct operating expenses, and provide us with timely access to
     financial and operating data. We believe that the culture and emphasis on
     training leads to a lower employee turnover ratio, and therefore higher
     productivity, compared to many competitors.

o    ATTRACT AND RETAIN HIGH QUALITY RESTAURANT MANAGEMENT. We believe that we
     are able to attract and retain quality restaurant management because we
     offer a competitive compensation and benefits program. In addition to
     salary and bonus, we will adopt other incentive programs that allow general
     managers to become eligible for additional benefits including equity
     incentives through our employee incentive stock option plan ("ISO").

o    UTILIZE MANAGEMENT INFORMATION SYSTEMS EFFECTIVELY. We believe that current
     management information systems have the infrastructure capacity to support
     a growth plan and to achieve attractive restaurant level economics. All of
     the restaurants have personal computer and point-of-sale systems integrated
     with centralized management information and accounting systems. The
     corporate office is able to monitor and control labor, food and other
     direct operating expenses, and maintain efficient and quality restaurant
     service with hourly guest traffic and sales volume forecasts for each
     restaurant. The systems permit restaurant and company management to manage
     sales, cost of sales and product mix on a daily basis.

o    EXECUTE DISCIPLINED EXPANSION STRATEGY OF COMPANY-OWNED RESTAURANTS. We
     believe that the restaurant concepts have broad national appeal and that,
     as a result, there may be significant opportunities to expand operations
     and generate attractive unit level economics. We intend to re-open Chicago
     with a stringent and comprehensive management-training program in place and
     capitalize on a proven market that has already shown acceptance of the
     concept. We will continue opening company-owned restaurants in primary
     metropolitan markets, i.e. Baltimore/Washington D.C., Houston, and
     Nashville.

RESTAURANT CONCEPT AND MENUS
----------------------------

THE SHARK BAR

         The Shark Bar restaurants were developed to appeal to a 35-50 year old,
predominantly African-American customer base, however significant cross over
appeal exists for customers seeking a full service upscale casual dining
experience in the soul food genre. Our menu and service model is also highly
conducive to family style dining. Each has a separate bar area along with
dinning rooms with tablecloth settings. The Shark Bar restaurant serves dinner 7
days a week and lunch and brunch when appropriate. The distribution between food
and beverage sales is 65% food and 35% beverages. During 1999, the average guest
check at the Shark Bar was approximately $23 (including beverages).

         During 1998 and 1999, The New York Shark Bar restaurant received a
designation from Forbes Magazine as an "All-Star Eatery", while the Chicago
restaurant was awarded "Two Stars" from the Chicago Sun-Times.

                                        2
<PAGE>

         The menu at The Shark Bar Restaurants features both upscale soul food
and New Southern Cuisine at affordable prices. The menu is organized so that
diners may choose an entree with two accompanying side orders. The entrees
featured on the menu include Blackened Catfish, Honey Dipped Fried Chicken,
Shrimp Etoufe, and Grilled Salmon in a Herb Citrus Butter Sauce. The Shark Bar
has established a reputation of quality and consistency in its food,
particularly with its side orders, which includes black-eyed peas, collard
greens, macaroni and cheese, candied yams and mashed potatoes.

MEKKA

         We are also the General Partner, holding a 60% general partner interest
and a 2% limited partner interest, of a 55-seat soul food restaurant known as
Mekka. The menu at Mekka is also based on soul food and New Southern cooking,
but also offers a selection of Caribbean dishes. Mekka was designed with
slightly lower price points than The Shark Bar and is targeted towards a
predominantly African-American customer in the 20-40 age demographic, and also
has very significant cross over appeal. Mekka serves dinner seven days a week,
does not serve lunch during the week but does offer a brunch on Sunday. The
distribution between food and beverages sales is approximately 65% for food and
35% for beverages. In 1999, the average guest check in Mekka was approximately
$20 (including alcoholic beverages). Mekka also has an outdoor cafe space that
offers an additional 30 seats in the warmer months.


RESTAURANT EXPANSION
--------------------

         The first expansion outside of the New York market was The Shark Bar in
Chicago ("Shark Bar Chicago") which opened in March of 1997. On January 10,
1997, we completed the purchase of the lease, restaurant assets and licenses of
the Affair Restaurant Inc. in Chicago, Ill. from Affair, L.P. and all of the
issued and outstanding shares of capital stock of Affair Restaurant, Inc. for
the aggregate purchase of approximately $335,000 (the "Chicago Acquisition").
The Shark Bar Chicago is a 9,000 square foot unit, of which 7,000 square feet
can be used for sales space on three floors, with a 2,000 square foot outside
adjoining deck. The main dining floor contains 130 seats plus a small bar area,
while the second floor offers the larger bar space and seating for up to an
additional 75 persons, if so required. The second floor is also able to
accommodate larger private parties and catering events. We have currently
entered into a new lease agreement and intend to re-open the Chicago unit by the
first quarter of 2003.


         In the first quarter of 1998, we acquired a lease, together with
furniture and fixtures thereon, of a 10,000 square foot, two level restaurant
located in mid-town Atlanta for a purchase price of $250,000. We opened these
premises into the fourth Shark Bar (R) Restaurant during the first quarter of
1998.

         We still believe that significant opportunities to expand company-owned
restaurants exists, and will implement an accelerated expansion strategy. We
intend to seek to develop new restaurants in geographic areas and primary
metropolitan markets that are readily receptive to our concept and which will
enable us to increase name recognition and realize improved efficiencies in
marketing, management, and purchases. In fiscal 2003 we plan to reopen Shark Bar
restaurant Chicago with an extensive "turnaround" plan that involves a focus on
operations and management training, and in fiscal 2004 we intend to open two
additional restaurants.

                                        3
<PAGE>

         Approximate costs for the Chicago unit's reopening are $250,000.
Additional expansion efforts will not begin until second or third quarter 2003.
Typically, the cost to open a unit is approximately $400,000 to $600,000. The
foregoing represents the Company's best estimate of the funds required for these
openings. This estimate is based on certain assumptions, including, primarily
that interior improvements and equipment installation can be commenced and, in
some cases, completed at projected costs. Future events, including the problems,
delays, expenses and complications frequently encountered by companies as well
as changes in economic, regulatory or competitive conditions or changes in the
Company's planned business and the success or lack thereof may make shifts in
the allocation of funds necessary or desirable. There can be no assurance that
the Company's estimates will prove to be accurate, that unforeseen expenses will
not occur, or that the Company will successfully realize its objectives.

         We intend to expand our business through the development and "branding"
of our full service restaurants, namely The Shark Bar Restaurant(R) and Mekka
Restaurant(R). We believe that our overall business objectives will be better
met through the expansion of full service units in the larger urban markets
within the United States. These large markets can accommodate 125 seat plus
establishments, which in turn will help build our cash flow and establish the
name brands of our restaurants in the important US markets.

         While pursuing our expansion program of developing a chain of
restaurants under the Shark Bar & Mekka brands, we intend to also seek to
develop strategic alliances through joint ventures, acquisitions or mergers,
augmenting our growth plan. The Company will act as principal fundraiser, and
operator for all future restaurants.

The success of the Company's planned expansion will depend upon a number of
factors, including:

         -    the cost and availability of suitable locations and the
              negotiation of acceptable leases;

         -    the ability to meet development and construction schedules;

         -    the securing or required government permits, licenses, and other
              regulatory approvals;

         -    the hiring and training of management and other personnel;

         -    the terms and availability of financing; and

         -    other general economic and business conditions.

         We will prepare for duplication of our restaurant concept and
operations by developing operating systems, training and operating manuals,
recipes and cooking procedures, menu format and new menu items, costing and
pricing standards, financing and accounting controls, quantity and quality
controls, and preventive maintenance programs.

         Our proposed expansion plans will require additional management,
operational and financial resources. Consultants will be hired if necessary.

         We have had continuing discussions with brokers, agents and landlords
regarding new sites for additional Shark Bars in major urban markets, however,
there can be no assurance that additional restaurants will be opened.

FINANCING TRANSACTIONS
----------------------

         During 1997, in order to finance our acquisitions and to facilitate our
expansion strategy, we entered into various financing transactions:

                                        4
<PAGE>

         During January 1997, we issued 100,000 unregistered shares of our
common stock for an aggregate purchase price of $20,000.

         During January, 1997, we issued 100,000 unregistered shares of our
common stock and a warrant to purchase up to 10,000 shares of common stock to an
institutional investor for an aggregate purchase price of $100,000.

         During February, 1997, we borrowed $100,000 pursuant to the terms of a
promissory note bearing interest at the rate of 10%, payable semi-annually until
February 4, 1999. During February of 1999, subject to repayment terms under the
note purchase agreement we repaid $100,000 of the 1997 Notes.

         During May, 1997, we entered into a note purchase agreement, pursuant
to which we issued 8% convertible secured notes (the "Notes") to institutional
investors, in the aggregate principal amount of $350,000 together with warrants
to purchase up to 35,000 shares of common stock. The Notes bear interest at 8%
and are due on May 21, 1999. The Notes provide that the holder is entitled at
any time to convert any or all of the original principal amount of the Note into
shares of common stock. The shares of common stock underlying the Notes and the
warrants bear certain demand and "piggyback" registration rights. On June 30,
2000, the notes were converted for 864,000 shares of common stock at a
conversion price of $0.50 per share

         On June 6, 1997, we issued 100,000 unregistered shares of our common
stock and a warrant to purchase up to 10,000 shares of common stock to an
institutional investor for an aggregate purchase price of $100,000.

         During 1997, in order to help finance our acquisitions, among other
things, Mr. Brian Hinchcliffe, our Chief Executive Officer at the time, loaned
us approximately $476,038. On June 30, 2000, $300,000 of these advances were
forgiven by the major stockholder and officer, and contributed to capital.

     During January 26, 1998, we entered into a note purchase agreement,
pursuant to which we issued 8% convertible secured notes ("1998 Notes") to
institutional investors, in the aggregate principal amount of $265,000, together
with warrants to purchase shares of common stock. The 1998 Notes provide that
the holder is entitled at any time to convert any or all of the original
principal amount of the Note into shares of common stock. The shares of common
stock underlying the 1998 Notes and the warrants bear certain demand and
"piggyback" registration rights. On June 30, 2000, $150,000 of the notes were
converted for 318,000 shares of common stock at a conversion price of $0.50 per
share for $50,000 of the notes and $0.33 per share for $100,000.


SITE SELECTION AND DESIGN
-------------------------

         We are seeking to locate our new restaurants in locations that offer
demographic and economic factors that can support a profitable operation. We
have established parameters with respect to "Sales vs. Investment ratios" and
"rent as a percentage of sales" that we will use in order to evaluate the
feasibility of additional sites. At this time, we intend to use the design,
methods and mode of operations developed at "The Shark Bar" and "Mekka"
restaurants in New York as models for additional sites in other locations.

                                        5
<PAGE>

RESTAURANT MANAGEMENT AND SYSTEMS
---------------------------------

         Management. A typical unit staff consists of a general manager, an
assistant manager, one or two restaurant managers, a Head Chef and approximately
22-25 hourly employees, many of whom are part time personnel. The general
manager is responsible for the day-to-day operations of the restaurant,
including service, staffing and front of the house ("FOH") as well as back of
the house ("BOH") quality control. The head chef is responsible for food quality
and kitchen management. We intend to hire experienced managers and staff and to
motivate and retain them by providing opportunities for increased
responsibilities and advancement, as well as performance-based cash incentives.
These performance incentives are tied to sales, profitability and qualitative
measures such as mystery shoppers, who anonymously evaluate individual
restaurants.

         Each restaurant manager is required to comply with an operations manual
that contains detailed standards and specifications for all elements of
operations. We employ a vice president of operations to monitor system-wide
compliance and field supervision including duties such as regular visits to
stores, detailed inspections of quality, service and sanitation.

         Training. We strive to maintain quality and consistency in each of our
units through the careful training and supervision of personnel and the
establishment of, and adherence to, high standards relating to personnel
performance, food and beverage preparation and maintenance of facilities. We
have implemented a training program that is designed to teach new managers the
technical and supervisory skills necessary to direct the operations of its
restaurants in a professional and profitable manner. Each manager must
successfully complete a four-week training course, which includes hands-on
experience in both the kitchen and dining areas. There are prepared operations
manuals relating to food and beverage handling, preparation and service. In
addition, we will maintain a continuing education program to provide unit
managers with ongoing training and support.

         Quality Control. We maintain an emphasis on excellent customer service
enhanced by our quality control programs. We welcome comments on the quality of
service and food at units by distributing customer survey. Senior operation
managers are directly responsible for ensuring that these comments are addressed
to achieve a high level of customer satisfaction. We also engage from time to
time a third-party service whereby an anonymous customer or mystery shopper
evaluates and reports to management key elements of the restaurants experience,
including product quality, cleanliness and customer service.

         We require all appropriate personnel to participate in an independent
nationally recognized training program to ensure the sanitary and responsible
service of food and alcohol. Financial and management control is maintained
through the use of a standardized POS system.

EMPLOYEES
---------

         As of December 31, 2002, we employed 120 persons. Of our employees, 65
are full time and 55 are employed on a part time basis. None of our employees
are covered by a collective bargaining agreement. We have not experienced any
work stoppages and consider our relationship with employees to be good.

TRADEMARK
---------

                                        6
<PAGE>

         We filed a Trademark application with the United States Patent and
Trademark Office for The Shark Bar(R) on September 25, 1996 and for Mekka(R) on
or about October 16, 1996. We have been granted trademarks for both The Shark
Bar(R) and Mekka(R).

         In addition, The United States Patent and Trademark office has issued a
Certificate of Registration on the Supplemental Register for SOUL TO GO(R). A
trademark registered on the Supplemental Register is not considered to be
inherently distinctive but is considered to be "capable" of becoming
distinctive. Once the trademark becomes distinctive (acquired secondary
meaning), it can be transferred to the Principal Register.

TRADE SECRETS
-------------

         We have developed and currently own trade secrets with respect to its
food products, its preparation and sources. There is no assurance that
confidentiality relating to the protection of our trade secrets can or will be
obtained or that such trade secrets will afford us meaningful competitive
advantages.

COMPETITION
-----------

         The restaurant business throughout the United States, and particularly
in Manhattan (New York), is intensely competitive and involves a high degree of
risk. We believe that a large number of new restaurants open each year in the
New York city metropolitan area and the other urban markets in which we own
restaurants, a significant number of which do not succeed. Even successful
restaurants can rapidly lose popularity due to changes in customer tastes,
economic conditions, population and traffic patterns. We compete with
locally-owned restaurants and bars as well as with national and regional
restaurant chains, which have substantially greater financial and marketing
resources and longer operating histories than us. There is active competition
for management personnel and attractive commercial real estate sites suitable
for restaurants.

         In the past we have not generally incurred significant expenses for
advertising and promotion, relying instead on word-of-mouth to bring our
restaurant establishments to the attention of new customers.

FORMATION AND HISTORY
---------------------

         The company was initially organized on August 23rd, 1984 in the State
of Delaware under the name Empire Ventures, Inc. On December 14, 1992, the
company entered into an ("agreement") and plan of re-organization with Soul To
Go, Inc. for 5,031,250 shares of the common stock of Empire Ventures, Inc. As a
result of the transactions consummated pursuant to the agreement, Soul to Go,
Inc. has become the wholly owned subsidiary of Empire Ventures, Inc. and the
stockholders of Soul To Go, Inc. became the owners of approximately 92% of the
issued and outstanding shares of common stock of Empire Ventures, Inc.

         Soul to Go, Inc. was a New York based holding company controlling a
group of operating subsidiaries consisting of the Shark Restaurant Corp., which
operated a 90-seat restaurant called the Shark Bar and Shark Catering Corp.,
which operated a quick service business called Soul To Go. On January 25th 1993,
Empire Ventures Inc. changed its name to STG International Inc. Subsequent to
the re-organization, STG International Inc. opened a second Soul to Go operation
in Jamaica, Queens, and



                                        7


<PAGE>



through its wholly owned subsidiary 7 West Rest. Corp. became the General
Partner of "Mekka". See "Business-General". Due to operating losses, both Soul
to Go stores were closed in 1995.

         During 1996, the company changed its name from STG International Inc.
to Soulfood Concepts, Inc., reorganized its Board of Directors, effected a
one-for-three reverse stock split and adopted an expansion campaign for 1997 and
1998.

GOVERNMENT REGULATIONS
----------------------

         We are subject to various federal, state and local laws affecting our
employees and guests, our owned and leased properties and the operation of our
restaurants. The restaurants are subject to licensing and/or regulations by
various fire, health, sanitation and safety agencies in the applicable state
and/or municipality. In particular, we have adopted extensive procedures
designed to meet the requirements of applicable food handling and sanitation
laws and regulations. To date, we have not experienced any material problems
resulting from its sanitation and food handling procedures.

         Our restaurants are subject to state and local licensing and
regulations with respect to the sale and service of alcoholic beverages.
Typically, alcoholic beverage licenses must be renewed annually and may be
revoked or suspended for cause. Alcoholic beverage control regulations relate to
numerous aspects of the daily operations of the purchasing, inventory control
and the handling, storage and dispensing of alcoholic beverages. We have not
encountered material problems relating to alcoholic beverage licenses to date,
but the failure of a restaurant to obtain or retain a liquor license would
adversely affect that restaurant's operations.

         In certain states, we are subject to "dram shop" statutes, which
generally give a person injured by an intoxicated person the right to recover
damages from the establishment that wrongfully served alcoholic beverages to the
intoxicated person. We carry liquor liability coverage as part of its existing
comprehensive general liability insurance.

         We are subject to federal and state fair labor standards, statutes and
regulations that govern such matters as minimum wages, overtime, tip credits,
child labor and other working conditions. A good number of our food service
personnel are paid at rates based on applicable federal and state minimum wages.

                                        8
<PAGE>


ITEM 2.    DESCRIPTION OF PROPERTY

         The following tables sets forth certain information with respect to our
facilities currently in operation (unless otherwise noted):

<TABLE>
<CAPTION>
Name and Location               Date Opened      Restaurant Size       Seating Capacity      Lease Expiration
-----------------               -----------      ---------------       ----------------      ----------------
<S>                             <C>              <C>                   <C>                   <C>
The Shark Bar................   11/90             2,500 sq. ft              90                  2009
New York, N.Y.
Mekka........................   12/94             1,500 sq. ft.             65                  2002(1)
New York, N.Y.
The Shark Bar................    3/97             9,000 sq. ft             200                  2009(2)
Chicago, Illinois
The Shark Bar................    3/98            10,000 sq. ft             255                  2007
Atlanta, Georgia
</TABLE>

(1) This lease provides one five year renewal option, and the option is
    presently being negotiated
(2) Currently not operating. This lease provides two five year renewal options.

     Our headquarters are located in an office building located in New York
City, where we lease approximately 2,500 sq. ft. The lease expires in August
2005. We believe that the space is adequate for our needs through the term of
the lease.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party to any pending material legal proceeding.

ITEM 4   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of our shareholders during the fourth
quarter ended December 31, 2002.


                                        9
<PAGE>

                                     PART II

ITEM  5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                  On June 12, 1997 our common stock commenced trading on the OTC
Bulletin Board under the symbol "SLFD". Set forth below are the range of
reported high and low bid and ask quotations for our common stock for each of
the quarters indicated as reported on the OTC Bulletin Board. All
over-the-counter market price quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.

         2002                        HIGH                       LOW
         ----                        ----                       ---
         1st Quarter                 $.20                       $.05
         2nd Quarter                 $.14                       $.13
         3rd Quarter                 $.35                       $.13
         4th Quarter                 $.52                       $.13

         2001                        HIGH                       LOW
         ----                        ----                       ---
         1st Quarter                 $.06                       $.06
         2nd Quarter                 $.05                       $.05
         3rd Quarter                 $.05                       $.05
         4th Quarter                 $.05                       $.05

         2000                        HIGH                       LOW
         ----                        ----                       ---
         1st Quarter                 $.35                       $.30
         2nd Quarter                 $.40                       $.35
         3rd Quarter                 $.75                       $.40
         4th Quarter                 $.25                       $.15

         1999                        HIGH                       LOW
         ----                        ----                       ---
         1st Quarter                 $1.06                      $.56
         2nd Quarter                 $.75                       $.37
         3rd Quarter                 $.62                       $.12
         4th Quarter                 $.75                       $.12

         Holders. As of December 31, 2002, to our knowledge, we had
approximately 69 shareholders of record of our Common Stock

         Dividends. We have not paid dividends on our common stock since its
inception and have no intention to pay any dividends to our shareholders in the
foreseeable future. We currently intend to reinvest earnings, if any, in the
development and expansion of its business. The declaration of dividends in the
future will be at the election of the Board of Directors, and will depend upon
our earnings, capital requirements and financial position, plans for expansion,
general economic conditions and other pertinent factors.

         During 2000 we issued approximately 269,000 shares of common stock
pursuant to and in accordance with our 1997 stock incentive plan. We also issued
shares of common stock upon the conversion of previously issued Notes. See
"Business-Financing Transactions." The transactions were private transactions
not involving a public offering and were exempt from the registration provisions
of the securities act pursuant to Sec 4 (2) thereof. At the time of issuance,
all of the foregoing securities



                                       10
<PAGE>




of our common stock were deemed to be restricted securities for purposes of the
securities act, and the certificates representing the securities bore or will
bear legends to that effect.

         Also see "Business - Financing Transactions".



                                       11
<PAGE>


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

GENERAL
         The following discussion and analysis of Soulfood Concepts, Inc. (the
"Company"), should be read in conjunction with the Company's Financial
Statements and Notes thereto included elsewhere in the Form 10-KSB.

         As of December 31, 2002, we operated three full service restaurants in
locations in New York City, and Atlanta. The Company is engaged in developing
full service "Soul Food" restaurants in the major urban markets of the United
States. We have traditionally funded our growth through sales of equity,
convertible notes and debt financing

         Our Los Angeles and Chicago units were closed in June and July 1999
respectively, primarily due to unsatisfactory management performance and
subsequent decline in sales As of December 2001 we have successfully sold the
lease, fixed assets and inventory of our Los Angeles unit. We will engage a
turnaround plan to reopen the Chicago location, which showed high receptivity to
the concept and produced overwhelming initial trial. Chicago will be reopened in
1st quarter 2003. The flagship Shark Bar(R) and Mekka(R) Restaurants are located
in Manhattan, New York. The third operating unit, a Shark Bar Restaurant, is
located in Atlanta, Georgia.

RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 2002 AND 2001


         Revenues. Revenue was generated from the sale of food and beverages for
the year ended December 31, 2002 and 2001, from restaurant units. Revenues
decreased $474,706 from $6,047,643 for the year ended December 31, 2001 to
$5,572,937 for the year ended December 31, 2002.
         Cost of Revenues. We incurred cost of revenues from continuing
operations of $1,530,709 for the year ended December 31, 2002 and $1,592,948 for
the year ended December 31, 2001. As a percentage of net revenues, cost of
revenues from continuing operations was 27.4% for the year ended December 31,
2002 and 26.3% for year ended December 31, 2001.
         Gross Profit. We had gross profit from continuing operations of
$4,454,696 for the year ended December 31, 2002 and $5,230,581 for the year
ended December 31, 2001. As a percentage of revenues, gross profit from
continuing operations was 73.6% for the year ended December 31, 2002 and 70% for
the year ended December 31, 2001.
         Restaurant Labor and Related Costs. Labor expenses and the related
taxes, are restaurant level labor costs and they decreased $104,566 or 5.8%% to
$1,682,797 for the year ended December 31, 2002 from $1,787,363 for the period
ended December 31, 2001. As a percentage of revenue labor costs increased
slightly to 30.1% for the period ended December 31, 2002 compared to 29.5% for
year ended December 2001.

         Other Operating Expenses. Other operating expenses consists of,
occupancy costs, i.e. rent, insurance, licenses and utilities. Other operating
costs increased $55,308 or 3.2% to $1,728,152 for the year ended December 31,
2002 compared to $1,672,844 for the year ended December 31, 2001 This overall
decrease was principally attributable to the closing of the Chicago and Los
Angeles units and the corresponding reduction in operations and expenses. As a
percentage of revenues restaurant operating expenses increased to 31% for the
year ended December 31, 2002, from 27.6% for the year ended December 31, 2001.


                                       12
<PAGE>
         General and Administrative Expense. General and administrative expenses
consist of restaurant corporate support costs, travel, manager training and
field supervision. We incurred general and administrative expenses from
continuing operations of $792,068 for the year ended December 31, 2002 compared
to $882,409 for the year ended December 31, 2001.. As a percentage of revenues,
general and administrative expense for the year ended December 31, 2002 were
slightly decreased to 14.2% compared to 14.5 for the year ended December 31,
2001. This increase was due primarily to the field support efforts given to the
Atlanta unit and the travel and relocation costs associated with this task.

         Depreciation and Amortization Expense. Depreciation and amortization
expense decreased to $142,101 for the year ended December 31, 2002 from $157,365
for the year ended December 31, 2001. As a percentage of revenues depreciation
and amortization were 2.5% for the year ended December 31, 2002 and 2.6% for
year ended December 31, 2001.

         Interest Income, Other (Expense) Income and Income Taxes. We had
interest expense of $172,533 for the year ended December 31, 2002 compared to
interest expense of $142,548 for year ended December 31, 2001. Interest expense
for year ended December 31, 2002 and 2001 related primarily to long-term notes.
On December we sold the lease, inventory and assets of the Los Angeles and took
a loss on disposition of assets of $286,326. On June 30, 2000 we converted Notes
in the aggregate amount of $350,000 for 864,000 shares of common stock at a
conversion price of $0.50 per share and $150,000 for 318,000 shares of common
stock at a conversion price of $0.50 per share for $50,000 of the notes and
$0.33 per share for $100,000 of the notes. We incurred a debt conversion expense
of $601,512 in year ended December 31, 2000 as a result of these conversions.
(See "Notes to Consolidated Financial Statements - Note 10 -Convertible Notes
Payable").

FINANCIAL CONDITION AND LIQUIDITY

         Cash and Cash Equivalents as of December 31, 2002 increased by $74,144
to $83,360 from $9,216 as of December 31, 2001. Overall, Total Current Assets
increased by $14,430 as of December 31, 2002 to $175,948 from $161,518 as of
December 31, 2001. The increase in cash and all other assets was primarily due
the increase in cash flow from operations.

         Our current liabilities decreased $409,291 as of December 31, 2002 to
$1,523,705 from $1,932,996 as of December 31, 2001. This decrease was due
primarily to the reduction of current portion of long-term debt as a result an
exchange agreement for conversion these Notes to an equity interest in the
company.

         Accounts payable expenses are primarily due to the closing of the
Chicago and the Los Angeles units. Arrangements have been made with vendors to
settle outstanding amounts or, in the case of Chicago to wait until the
reopening of the store, to work out terms and payment. In all cases, there has
been no action taken against the company and there have been no adverse effects
on operations.

         Accrued expenses include payroll, sales, other taxes with penalties and
interest, professional fees and other operating expenses. A settlement for all
tax liabilities is being negotiated with each taxing authority relative to the
claim. All outstanding payable are being negotiated and/or paid down from
operating funds.

         For the year ended December 31, 2002, net cash provided by operating
activities increased to $168,303 from $164,832 for the year ended December 31,
2001. This increase was primarily due to a decrease in net loss of $834,585 for
the year ended December 2002 compared to a loss of $888,549 for



                                       13
<PAGE>


the same period in 2001. There was a significant decrease in cash used in
investing activities as of December 2002, $10,525 from $56,065 for period ended
December 31, 2001 because there were no material property and equipment
purchases during the year ended December 2002 as compared with the previous
year.

         The effect of inflation has not been a factor upon either the
operations or the financial condition of the company. Our business is not
seasonal in nature.

FORWARD-LOOKING INFORMATION

         Statements contained in this Form 10-KSB that are not historical facts,
including, but not limited to, statements found in this Item 6, Management's
Discussion and Analysis of financial Condition and Results of Operations, are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that involve a number of risks
and uncertainties. The actual result of the future events described in this Form
10-KSB could differ materially from those stated in such forward-looking
statements. Among the factors that could cause actual results to differ
materially are: our ability to operate existing restaurants profitably, changes
in economic conditions are concentrated, increasingly intense competition in the
restaurant industry, increases in food, labor, and employee benefits and similar
costs, as well as the risks and uncertainties discussed in this form 10-KSB


 ITEM 7  FINANCIAL STATEMENTS.

         The information required under this item is set forth on pages F-1
through F-12 of this Annual Report on Form 10-KSB.

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

None.



                                       14
<PAGE>


                                    PART III

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)    EXHIBITS.

                None




























                                   Signatures



                                       15
<PAGE>

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

                                     Soulfood Concepts Inc.

Date: April 15, 2003                  By:       /s/ Mark Campbell
                                            ------------------------
                                            Mark Campbell, Chief
                                            Executive Officer and President


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




Signature and Title                                      Date





   /s/ Mark Campbell                                     April 15, 2003
-----------------------------
Mark Campbell, Chief
Executive Officer, President,
Director and Accounting Officer



   /s/  Brian A. Hinchcliffe                             April 15, 2003
------------------------------
Brian A. Hinchcliffe, Director



    /s/ Michael D. Vann                                  April 15, 2003
------------------------------
Michael D. Vann, Director




                                                         April, 2002
------------------------------
Keith Clinkscales, Director



                                       16
<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001




<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001





                                      INDEX



                                                                            PAGE

Independent auditors' report                                              1


Consolidated balance sheets                                             2 - 3


Consolidated statements of operations                                   4 - 5


Consolidated statement of stockholders' equity (deficit)                  6


Consolidated statements of cash flows                                   7 - 8


Notes to consolidated financial statements                             9 - 24






<PAGE>


                          INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
SOULFOOD CONCEPTS, INC.

We have audited the accompanying consolidated balance sheets of SOULFOOD
CONCEPTS, INC. AND SUBSIDIARIES as of December 31, 2001 and 2000, and the
related consolidated statements of operations, stockholders' 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 audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SOULFOOD CONCEPTS,
INC. AND SUBSIDIARIES as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring net losses, negative
working capital, stockholders' capital deficiency and its limited capital
resources raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


                                    MERDINGER, FRUCHTER, ROSEN & COMPANY , P.C.
                                             Certified Public Accountants
New York, New York
April 14, 2003


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                               December 31,
                                                                   -----------------------------------
                                                                         2002                  2001
                                                                   -------------         -------------
<S>                                                                <C>                    <C>
      ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                       $       4,236          $     83,360
   Accounts receivable                                                     5,763                 2,060
   Inventory                                                              53,387                67,942
   Prepaid expenses and other current assets                              23,586                22,586
                                                                   -------------         -------------

      TOTAL CURRENT ASSETS                                                86,972               175,948


PROPERTY AND EQUIPMENT, net of accumulated
 depreciation of $1,705,526 and $1,563,425 respectively                  723,104             1,301,196


SECURITY DEPOSITS                                                        103,549               103,374
                                                                    ------------          ------------

      TOTAL ASSETS                                                  $    913,625            $1,580,518
                                                                    ============          ============
</TABLE>






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

                                      - 2 -



<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                               December 31,
                                                                   -----------------------------------
                                                                         2002                  2001
                                                                   -------------         -------------
<S>                                                                <C>                    <C>
         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
   Accounts payable                                                 $    726,765         $     545,118
   Accrued expenses                                                      753,096               831,892
   Obligation under capital lease                                         17,881                31,695
   Current portion of long-term debt                                     115,000               115,000
   Due to related party                                                   74,004                     -
                                                                    ------------         -------------

      TOTAL CURRENT LIABILITIES                                        1,686,750             1,523,705

DUE TO RELATED PARTY                                                     522,612               580,680

OBLIGATIONS UNDER CAPITAL LEASE - LONG-TERM                                    -                   761
                                                                    ------------         -------------

      TOTAL LIABILITIES                                                2,209,362             2,105,146
                                                                    ------------         -------------

COMMITMENTS AND CONTINGENCIES                                                  -                     -

MINORITY INTEREST                                                        176,657               126,630
                                                                    ------------         -------------

STOCKHOLDERS' (DEFICIT)
   Common stock, par value $.003; authorized
    14,500,000 shares; issued and outstanding
    5,353,333 and 5,268,177 shares, respectively                          16,060                15,805

   Additional paid-in capital                                          2,435,747             2,435,152

   Accumulated deficit                                                (3,921,001)           (3,099,015)

   Less cost of treasury stock - 10,000 common
    shares                                                                (3,200)               (3,200)
                                                                   -------------          ------------

      TOTAL STOCKHOLDERS' (DEFICIT)                                   (1,472,394)             (651,258)
                                                                   -------------          ------------

      TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY (DEFICIT)                                              $    913,625           $ 1,580,518
                                                                   =============          ============
</TABLE>

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

                                      - 3 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                       For The Year Ended
                                                                            December 31,
                                                              ----------------------------------
<S>                                                            <C>                  <C>
                                                                   2002                  2001
                                                              --------------        ------------
SALES                                                          $ 5,572,937          $  6,047,643
                                                              --------------        ------------
COSTS AND EXPENSES
   Cost of sales                                                 1,530,709             1,592,948
   Restaurant labor and related costs                            1,682,797             1,787,363
   Depreciation and amortization of restaurant
    property and equipment                                         142,101               157,365
   Other operating expenses                                      1,728,152             1,672,844
                                                               -----------          ------------
      Total restaurant operating expenses                        5,083,759             5,210,520
                                                               -----------          ------------

GENERAL AND ADMINISTRATIVE EXPENSES                                792,068               882,409
                                                               -----------          ------------

LOSS FROM OPERATIONS                                            (  302,890)              (45,286)
                                                               ------------         ------------

OTHER EXPENSES
   Interest expense                                                172,533               142,548
   Debt conversion expense                                               -               601,513
   Loss on disposition of FIXED assets                             286,326                     -
                                                               -----------          ------------
      Total other expense                                          458,859               744,061
                                                               -----------          ------------

LOSS BEFORE INCOME TAXES,
 AND MINORITY INTEREST                                          (  761,749)             (789,347)

PROVISION FOR INCOME TAXES                                          10,210                     -
                                                               -----------          ------------

LOSS BEFORE MINORITY INTEREST                                   (  771,959)             (789,347)

MINORITY INTEREST IN THE INCOME OF CONSOLIDATED
   SUBSIDIARY                                                   (   50,027)            (  45,238)
                                                               ------------         ------------

NET LOSS                                                        $ (821,986)          $  (834,585)
                                                                ===========          ============
</TABLE>








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

                                      - 4 -



<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS




                                                  For The Year Ended
                                                      December 31,
                                           ---------------------------------

                                               2002                  2001
                                           -------------         -----------
LOSS PER COMMON SHARE
    BASIC AND DILUTED:
       Loss per common share                $(      .16)         $(     .18)
                                           =============         ===========








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

                                      - 5 -


<PAGE>


<TABLE>
<CAPTION>
                                                                              ADDITIONAL
                                                  COMMON STOCK                 PAID IN         ACCUMULATED
                                              SHARES             AMOUNT        CAPITAL           DEFICIT
                                            ----------         ----------    -----------      --------------
<S>               <C>                       <C>                  <C>             <C>            <C>
Balance - January 1, 2001                   3,998,177            11,995          980,949        (2,217,663)

Issuance of Common Stock                    1,270,000             3,810        1,454,203                --

Purchase of Treasury Stock                         --                --               --                --

Partner Distributions                              --                --               --           (46,767)

Net loss                                           --                --               --          (834,585)
                                            ----------         ----------    -----------      --------------
Balance - December 31, 2001                 5,268,177            15,805        2,435,152        (3,099,015)

Issuance of Common Stock                       85,167               255              595                --

Net loss                                           --                --               --          (821,986)
                                            ----------         ----------    -----------      --------------
Balance - December 31, 2002                 5,353,333           $16,060       $2,435,747       $(3,921,001)
                                            ==========         ==========    ===========      ==============




<CAPTION>
                                                                                   TOTAL
                                                  TREASURY STOCK               STOCKHOLDERS'
                                               SHARES             AMOUNT         DEFICIT
                                              ---------          ---------    -------------
<S>               <C>                         <C>               <C>            <C>
Balance - January 1, 2001                          --                  --      (1,224,719)

Issuance of Common Stock                           --                  --       1,458,013

Purchase of Treasury Stock                     10,000              (3,200)         (3,200)

Partner Distributions                              --                  --         (46,767)

Net loss                                           --                  --        (834,585)
                                              ---------          ---------    -------------
Balance - December 31, 2001                    10,000              (3,200)       (651,258)

Issuance of Common Stock                           --                  --             850

Net loss                                           --                  --        (821,986)
                                              ---------          ---------    -------------
Balance - December 31, 2002                    10,000             $(3,200)    $(1,472,394)
                                              =========          =========    =============
</TABLE>




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

                                      - 6 -



<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                          For The Year Ended
                                                                            December 31,
                                                                    ---------------------------------
                                                                         2002               2001
                                                                    ---------------     ------------
<S>                                                                       <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                          $   (821,986)      $  (834,585)
   Adjustments to reconcile net loss to
    Net cash provided (used) by operating activities:
      Depreciation and amortization                                       142,101           157,365
      Loss on disposition of fixed assets                                 286,326
      Loss attributed to minority interest                                 50,027            45,238
      Debt conversion                                                           -           601,513
      (Increase) Decrease in:
      Accounts receivable                                                (  3,704)           54,834
      Inventory                                                            14,555             1,178
      Prepaid expenses and other current assets                          (  1,000)            3,702
      Other assets                                                       (    175)        (  12,500)
      (Decrease) Increase in:
      Accounts payable and accrued expenses                               119,381           151,558
                                                                    -------------        ----------

NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES                         (517,330)          168,303
                                                                     -------------       ----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                   (  16,865)        (  10,525)
   Proceeds from disposition of assets                                    150,000                 -
                                                                     ------------
                       -
      ------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                          133,135         (  10,525)
                                                                     ------------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Bank overdraft                                                               -         (  60,849)
   Repayment of debt                                                            -                 -
   Repayment of capital leases                                          (  14,575)        (  31,615)
   (Decrease) increase in due to related party                             15,940          (297,703)
   Partner distributions                                                        -         (  46,767)
   Increase in common stock                                                   255               264
   Increase in additional paid-in capital                                     595           356,236
   Purchase of treasury stock                                                   -         (   3,200)
                                                                    -------------        ----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                            2,215          ( 83,634)
                                                                    -------------        ----------

NET (DECREASE) INCREASE IN
 CASH AND CASH EQUIVALENTS                                              (  79,124)           74,144

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                              83,360             9,216
                                                                    -------------        ----------

CASH AND CASH EQUIVALENTS - END OF YEAR                             $       4,236        $   83,360
                                                                    =============        ==========
</TABLE>

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

                                      - 7 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS




<TABLE>
<CAPTION>
                                                                   For The Year Ended
                                                                      December 31,
                                                              ---------------------------
                                                                  2002             2001
                                                              -----------       ----------
<S>                                                           <C>               <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for:
      Interest expense                                        $    69,175       $   70,271
                                                              ===========       ==========
      Income taxes                                            $    10,970       $   12,738
                                                              ===========       ==========
</TABLE>



NON-CASH INVESTING AND FINANCING ACTIVITIES:


DECEMBER 31, 2001
-----------------
ON DECEMBER 31, 2001, THE COMPANY TOOK A WRITE OFF OF $16,530 OF ACCRUED
EXPENSES INVOLVING THE CLOSING OF THE LOS ANGELES OPERATIONS


December 31, 2000
-----------------
On June 30, 2000, several notes payable to outside parties (see Notes 10 and 11)
were converted to 1,182,000 shares of stock.


On December 31, 2000, warrants were exercised in exchange for a payable of
188,000 shares of common stock.


















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

                                      - 8 -




<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

         a)   Nature of Operations

              The accompanying consolidated financial statements include the
              accounts of Soulfood Concepts, Inc. ("the Company"), organized
              under the laws of the state of Delaware on December 14, 1992 and
              its subsidiaries. The Company operates restaurants in New York,
              NY, Los Angeles, CA, Chicago, IL and Atlanta, GA, specializing in
              Southern cuisine NOTE 14):

              1)   Shark Restaurant Corp. ("SRC"), incorporated under the laws
                   of New York on June 7, 1990 (owned 100% by the Company);

              2)   Shark Restaurant California, Inc. ("LA"), incorporated under
                   the laws of California on June 23, 1997 (owned 100% by the
                   Company); ceased operations in June 1999, and sold its lease
                   and related property and equipment on December 10, 2001.

              3)   Affair Restaurant, Inc. ("Chicago"), d/b/a Shark Bar
                   Restaurant Chicago, purchased on January 10, 1997 (owned 100%
                   by the Company); temporarily ceased operations in July 1999.
                   (SEE NOTE 14).

              4)   Shark Bar, Inc. ("Atlanta"), incorporated under the laws of
                   Georgia on January 29, 1998 (owned 100% by the Company);

              5)   7 West Restaurant Corp. ("7 West"), incorporated under the
                   laws of New York on February 1, 1994 (owned 100% by the
                   Company);

              6)   Avenue A Restaurants Associates, L.P. ("Avenue A"), organized
                   as a limited partnership under the laws of New York on
                   September 22, 1994 (owned 62% by 7 West);

              7)   Shark Catering Corp. ("Catering"), incorporated under the
                   laws of New York on May 14, 1992 (owned 100% by the Company)
                   - currently inactive; and

              8)   TWS Restaurant Corp. ("TWS"), incorporated under the laws of
                   New York on May 1, 1995 (owned 100% by the Company) -
                   currently inactive.

         All significant intercompany accounts and transactions have been
eliminated in consolidation.






                                      - 9 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)

         b)   Basis of presentation

              The accompanying consolidated financial statements have been
              prepared assuming the Company will continue as a going concern. As
              of December 31, 2002, the Company has a working capital deficit of
              $1,599,778 and an accumulated deficit of $3,921,001. Additionally,
              the Company has defaulted on certain notes; however, the note
              holders have agreed to not seek relief as the Company attempts to
              restructure the debt. These matters raise substantial doubt about
              the Company's ability to continue as a going concern.

              The Company's near and long-term operating strategies focus on an
              administrative restructuring, aggressive closing of
              under-performing locations, debt-restructuring and seeking
              additional equity financing. Several completed and ongoing
              initiatives are as follows:

              o    The Company closed its Los Angeles operation in June 1999. LA
                   experienced an operating loss in 1999 approximating $111,000
                   before any corporate overhead burden. A sale of the lease and
                   fixed assets for this location, was completed December 14,
                   2001.

              o    The Company temporarily closed its Chicago operation in July
                   1999. Chicago experienced an operating loss in 1999
                   approximating $222,000 before any corporate overhead burden.
                   The Company is in the process of reopening in Chicago by the
                   first quarter 2003.

              o    The Company is pursuing an equity financing via a private
                   placement; if successful, the proceeds of the financing will
                   be used, in part, to pay down certain current obligations.

              o    The Company has and is pursuing aggressive cost cutting of
                   general and administrative expenses with a goal of an overall
                   30% reduction.

              Management believes that the aforementioned plan to revise the
              Company's operations along with the additional funds raised
              through the equity financing raised by the private placement will
              be sufficient to support its operations during the twelve month
              period following December 31, 2002, and will provide the
              opportunity to continue as a going concern.




                                     - 10 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)

         c)   Use of estimates

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

         d)   Reclassifications

              Certain prior year amounts have been reclassified to conform with
              current year presentation.

         e)   Cash and cash equivalents

              The Company considers all highly liquid investments purchased with
              original maturities of three months or less to be cash
              equivalents.

         f)   Accounts receivable

              Accounts receivable consist of charges due from credit card
              companies and others. As of December 31, 2001 and 2000, no
              allowance for doubtful accounts is necessary.

         g)   Inventory

              Inventory is valued at the lower of cost or market under the first
              in first out method of costing.

         h)   Property and equipment

              Property and equipment is valued at cost and is depreciated over
              the asset's estimated useful lives, utilizing the straight-line
              method. Leasehold improvements are amortizable over the life of
              the lease or estimated useful lives, whichever is shorter.

         i)   Concentration of credit risk

              The Company places its cash in what it believes to be
              credit-worthy financial institutions. However, cash balances
              exceed FDIC insured levels at various times during the year.

         j)   Advertising costs

              Advertising costs are expensed as incurred and included in
              restaurant operating expenses. For the years ended December 31,
              2002 and 2001, advertising expense amounted to $1,523 and $13,253,
              respectively.



                                     - 11 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)

         k)   Income taxes

              Income taxes are provided for based on the liability method of
              accounting pursuant to Statement of Financial Accounting Standards
              (SFAS) No. 109, "Accounting for Income Taxes". The liability
              method requires the recognition of deferred tax assets and
              liabilities for the expected future tax consequences of temporary
              differences between the reported amount of assets and liabilities
              and their tax basis.

         l)   Fair value of financial instruments

              The Company's financial instruments consist of cash, accounts
              receivable, accounts payable and accrued expenses, and long-term
              debt. The carrying amounts of cash, accounts receivable and
              accounts payable and accrued expenses approximate fair value due
              to the highly liquid nature of these short-term instruments. The
              fair value of long-term borrowings was determined based upon
              interest rates currently available to the Company for borrowings
              with similar terms. The fair value of long-term borrowings
              approximates the carrying amounts as of December 31, 2001 and
              2000.

         m)   Long-lived assets

              Long-lived assets and certain identifiable intangibles to be held
              and used are reviewed for impairment whenever events or changes in
              circumstances indicate that the related carrying amount may not be
              recoverable. When required, impairment losses on assets to be held
              and used are recognized based on the fair value of the assets and
              long-lived assets to be disposed of are reported at the owner's
              carrying amount or fair value less cost to sell.

         n)   Stock-based compensation

              The Company has adopted the intrinsic value method of accounting
              for stock-based compensation in accordance with Accounting
              Principles Board Opinion ("APB") No. 25, "Accounting for Stock
              Issued to Employees" and related interpretations.

         o)   Loss per share

              The computation of basic earnings per share ("EPS") is computed by
              dividing income available to common stockholders by the weighted
              average number of outstanding common shares during the period.
              Diluted EPS gives effect to all dilutive potential common shares
              outstanding during the period. The computation of diluted EPS does
              not assume conversion, exercise or contingent exercise of
              securities that would have an anti-dilutive effect.





                                     - 12 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)

         o)   Loss per share (continued)

              The shares used in the computation were as follows:

                                                          December 31,
                                                 --------------------------
                                                    2002            2001
                                                 ----------      ----------
                  Basic and Diluted               5,353,333       4,557,944
                                                 ==========      ==========

         p)   Comprehensive income

              SFAS No. 130, "Reporting Comprehensive Income", establishes
              standards for the reporting and display of comprehensive income
              and its components in the financial statements. As of December 31,
              2001 and 2000, the Company has no items that represent
              comprehensive income, and therefore has not included a schedule of
              comprehensive income in the financial statements.

         q)   Recent accounting pronouncements

              Additionally, during 1998, SFAS No. 131, "Disclosure About
              Segments of an Enterprise and Related Information" was issued,
              which changes the way public companies report information about
              segments. SFAS No. 131, which is based on the selected segment
              information, requires quarterly and entity-wide disclosures about
              products and services, major customers, and the material countries
              in which the entity holds assets and reports revenues. This
              statement is effective for the Company's 2001 and 2000 fiscal
              years.

              SFAS No. 132, "Employers' Disclosures about Pension and Other Post
              Employment Benefits," was issued in February 1998 and specifies
              amended disclosure requirements regarding such obligations. SFAS
              No. 132 does not effect the Company as of December 31, 2002.

              In June 1998, the FASB issued SFAS No. 133, "Accounting for
              Derivative Instruments and for Hedging Activities". This new
              pronouncement requires that certain derivative instruments be
              recognized in balance sheets at fair value and for changes in fair
              value to be recognized in operations. Additional guidance is also
              provided to determine when hedge accounting treatment is
              appropriate whereby hedging gains and losses are offset by losses
              and gains related directly to the hedged item. While the standard,
              as amended, must be adopted in the fiscal year beginning after
              June 15, 2000, its impact on the Company's consolidated financial
              statements is not expected to be material as the Company has not
              historically used derivative and hedge instruments.





                                     - 13 -


<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE 2 - INVENTORY

         Inventory consisted of the following:

                                           December 31,
                                   --------------------------
                                         2002           2001
                                   -------------    -----------
         Food                      $      15,831    $    15,535
         Beverage                         37,556         52,407
                                   -------------    -----------
                                    $     53,837    $    67,942
                                   =============    ===========

NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:

                                                          December 31,
                                                 -------------------------
                                                     2002          2001
                                                 ------------  -----------
         Furniture, Fixtures and Equipment        $ 1,871,683  $ 2,119,401
         Leasehold Improvement                        556,947      745,220
                                                 ------------  -----------
                                                    2,428,630    2,864,621
         Less: Accumulated Depreciation             1,705,526    1,563,425
                                                 ------------  -----------
         Property and equipment, net              $   723,104  $ 1,301,196
                                                 ============  ===========

         Depreciation expense for the years ending December 31, 2002 and 2001
         was $142,101 and $157,365, respectively.

         Cost of assets acquired pursuant to capital leases included above are
as follows:

                                                            December 31,
                                                   ----------------------------
                                                       2002            2001
                                                   -------------   ------------
         Furniture, Fixtures and Equipment         $    42,151     $     42,151
                                                   =============   ============

NOTE 4 - ACCRUED EXPENSES

         The Company had the following accrued expenses:

                                                  December 31,
                                       -----------------------------
                                          2002               2001
                                       -----------      ------------
         Payroll and Sales Taxes       $   430,447       $   452,621
         Professional Fees                       -            20,000
         Other Operating Expenses          105,293           228,345
         Interest                          147,356            95,926
         Penalties                          70,000            35,000
                                       -----------      ------------
                                       $   753,096       $   831,892
                                       ===========      ============


                                     - 14 -



<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001




NOTE 5 - RELATED PARTY TRANSACTION

         Due to related parties consists of the following:
<TABLE>
<CAPTION>
                                                                                December 31,
                                                                        -------------------------
                                                                             2002           2001
                                                                        ------------     ---------
<S>                                                                      <C>             <C>
         Advances for the president of the Company
         payable on demand, with no interest                             $    15,940             -

         Advances from a major stockholder and officer of the Company, to be
         repaid in ten equal installments over a five-year period beginning with
         the fist payment on August 31, 2002. Interest has been accrued on these
         advances
         At 8% per annum                                                     580,680       580,680
                                                                         -----------     ---------
                                                                             596,620       580,680
         Less:  Current potion                                                74,008             -
                                                                        ------------     ---------
         Long-term portion                                                $  522,612     $ 580,680
                                                                        ============     =========

NOTE 6 - LONG-TERM DEBT

         Long-term debt consists of the following:
                                                                                December 31,
                                                                       ---------------------------
                                                                             2002         2001
                                                                       ------------     ----------

         The Company received $350,000 from the sale of convertible secured
         notes to two entities on May 21, 1997 with interest payable at 8% per
         annum. The notes were converted
         on June 30, 2000 (see Notes 10 and 11).                          $       -      $       -
</TABLE>













                                     - 15 -


<PAGE>



                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 6 - LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                    --------------------------
                                                                                        2002             2001
                                                                                    -------------   -----------
<S>                                                                                <C>               <C>
         The Company received $265,000 from the sale of three
         convertible secured notes to two entities and an individual
         in January 1998 with interest payable at 8% per annum. The
         notes were due January 26, 2000. $150,000 of these notes were
         converted into common stock on June 30, 2000. Interest is due
         semi-annually and any unpaid amounts have been accrued
         (see Notes 10 and 11).                                                          115,000         115,000
                                                                                    ------------    ------------

                  Total                                                                  115,000         115,000

                  Less:  Current Portion                                              (  115,000)     (  115,000)
                                                                                    -------------   ------------

                  Long-Term Debt                                                     $        -      $         -
                                                                                    =============   ============

NOTE 7 - INCOME TAXES

         The components of the provision (benefit) for income taxes is as
follows:

                                                                                       December 31,
                                                                                -----------------------
                                                                                   2002          2001
                                                                                ----------    ---------
                  Current tax expense
                    U.S. federal                                                $      -       $      -
                    State and local                                                    -              -
                                                                                ----------    ---------
                  Total current                                                        -              -

                  Tax benefit of net operating loss carryforwards                      -              -
                                                                                ----------    ---------
                  Provision for income taxes                                           -              -
                                                                                ----------    ---------

                  Deferred tax expense
                    U.S. federal                                                       -              -
                    State and local                                                    -              -
                                                                                ----------     --------
                  Total deferred                                                       -              -
                                                                                ----------     --------

                  Total provision from continuing operations                    $      -       $      -
                                                                                ==========     ========
</TABLE>


                                     - 16 -


<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE 7 - INCOME TAXES (Continued)

         The reconciliation of the effective income tax rate to the Federal
         statutory rate is as follows:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                       -----------------------
                                                                           2002         2001
                                                                       -----------   ---------
<S>                                                                      <C>         <C>
         Federal income tax rate                                         (34.0)%     (  34.0)%
         Deferred tax charge (credit)                                         -              -
         Effect on valuation allowance                                    34.0%         34.0%
         State income tax, net of federal benefit                             -              -
                                                                        ----------   ---------
         Effective income tax rate                                         0.0%          0.0%
                                                                        ==========   =========
</TABLE>

         AT DECEMBER 31, 2002 AND 2001 the Company had net carryforward losses
         of approximately $3,900,000 AND $3,190,000 RESPECTIVELY.. Because of
         the current uncertainty of realizing the benefit of the tax
         carryforward, a valuation allowance equal to the tax benefit for
         deferred taxes has been established. The full realization of the tax
         benefit associated with the carryforward depends predominantly upon the
         Company's ability to generate taxable income during the carryforward
         period.

         Deferred tax assets and liabilities reflect the net tax effect of
         temporary differences between the carrying amount of assets and
         liabilities for financial reporting purposes and amounts used for
         income tax purposes. Significant components of the Company's deferred
         tax assets and liabilities at December 31, 2002 are as follows:

         Deferred tax assets
         Loss carryforwards                             $   425,000
         Less:  Valuation allowance                      (  425,000)
                                                        ------------
         Net deferred tax assets                        $         -
                                                        ============

         Net operating loss carryforwards expire starting in 2008 through 2015.
         Per year availability is subject to change of ownership limitations
         under Internal Revenue Code Section 382.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

a)                The Company's future minimum annual aggregate rental payments
                  required under operating and capital leases that have initial
                  or remaining non-cancelable lease terms in excess of one year
                  are as follows:


                                     - 17 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)

<TABLE>
<CAPTION>
                                                                                   Operating          Capital
                                                                                    Leases             Leases
                                                                                  -----------       ------------
<S>               <C>                                                          <C>                  <C>
                  2002                                                         $      468,903       $     18,493
                  2003                                                                413,055                  -
                  2004                                                                413,055                  -
                  2005                                                                413,055
                  2006 and thereafter                                               1,527,516                  -
                                                                                  -----------       ------------
                  Total minimum lease payments                                    $ 3,235,584             18,493
                                                                                  ===========
                  Less: Amounts representing interest                                                (       612)
                                                                                                    ------------
                  Present value of future minimum lease payments                                          17,881
                  Less:  Current maturities                                                          (    17,881)
                                                                                                   --------------
                  Total                                                                            $           -
                                                                                                   ==============
</TABLE>

                  Rent expense under operating leases for the years ended
                  December 31, 2002 and 2002 was $542,080 and $597,814,
                  respectively.

         b)       The Company is a party to claims and lawsuits arising in the
                  normal course of operations. Management has resolved all of
                  these claims and lawsuits and none had any material effect on
                  the financial position of the Company.

NOTE 9 - MINORITY INTEREST

                  The Company, through its subsidiary 7 West, is the general
                  partner in Avenue A. 7 West owns a 60% general partnership
                  interest and a 2% limited partnership interest. Accordingly,
                  the minority interest represents a 38% limited partnership
                  interest. As of December 31, 2002 and 2001, the minority
                  interest equals $176,657 and $126,630, respectively.

NOTE 10 -         CONVERTIBLE NOTES PAYABLE

                  On May 21, 1997, Chicago sold an aggregate of $350,000 of 10%
                  Convertible Secured Notes (the "10% Notes"). The 10% Notes
                  bear interest at the rate of 10% per annum on the principal
                  sum outstanding. Interest was payable semi-annually on June 30
                  and December 31. The holders of the 10% Notes are entitled, at
                  their option at any time, to convert any or all of the
                  original principal amount of the 10% Notes into Common Stock
                  of the Company at a conversion price equal to the lessor of i)
                  $3.00 or ii) 70% of the offering price per share of the
                  Company's Common Stock as established in a public offering of
                  the Company's Common Stock. On June 30, 2000, the notes were
                  converted for 864,000 shares of common stock at a conversion
                  price of $0.50 per share. The Company has recorded a financing
                  cost attributable to the beneficial conversion feature in the
                  amount of $446,288.


                                     - 18 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 10 -         CONVERTIBLE NOTES PAYABLE (Continued)

                  On January 26, 1998, Atlanta sold an aggregate of $265,000 of
                  8% Convertible Secured Notes (the "8% Notes"). The 8% Notes
                  bear interest at the rate of 8% per annum on the principal sum
                  outstanding. Interest was payable semi-annually on June 30 and
                  December 31. The holders of the 8% Notes are entitled, at
                  their option at any time, to convert any or all of the
                  original principal amounts of the 8% Notes into Common Stock
                  of the Company at a conversion price equal to the lessor of i)
                  $2.20 or ii) 70% of the offering price per share of the
                  Company's Common Stock as established in a public offering of
                  the Company's Common Stock. On June 30, 2000, $150,000 of the
                  notes were converted for 318,000 shares of common stock at a
                  conversion price of $0.50 per share for $50,000 of the notes
                  and $0.33 per share for $100,000.

                  The Company has recorded a financing cost attributable to the
                  beneficial conversion feature in the amount of $155,225.

                  The Notes were secured by all assets held by Chicago and
                  Atlanta, with the exception of the point of sale computer
                  systems.

NOTE 11 -         WARRANTS

                  The Company has issued outstanding warrants to purchase up to
                  289,741 shares of common stock.

                  On February 4, 1997, the Company sold 100,000 shares of Common
                  Stock, along with a warrant to purchase up to 10,000 shares of
                  Common Stock. The warrant was exercisable on or before
                  February 4, 2000 at an exercise price of $1.00 per share
                  (subject to customary anti-dilution adjustments). The warrant
                  was not exercised.

                  On June 6, 1997, the Company sold 100,000 shares of Common
                  Stock, along with a warrant to purchase up to 10,000 shares of
                  Common Stock. The warrant was exercisable on or before June 6,
                  2000 at an exercise price of $1.00 per share (subject to
                  customary anti-dilution adjustments). The warrant was not
                  exercised.

                  On May 21, 1997, in connection with the sale of $350,000 of
                  10% Convertible Secured Notes described in Note 6, the Company
                  issued warrants to purchase up to 35,000 shares of Common
                  Stock. The warrants were exercisable on or before May 21, 2000
                  at an exercise price of $1.00 per share (subject to customary
                  anti-dilution adjustments). The warrants were not exercised.




                                     - 19 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 11 -         WARRANTS (Continued)

                  On January 28, 1998, in connection with the sale of $265,000
                  of 8% Convertible Secured Notes described in Note 6, the
                  Company issued warrants to purchase up to 26,500 shares of
                  Common Stock. The warrants were exercisable on or before
                  January 26, 2000 at an exercise price of $2.20 per share
                  (subject to customary anti-dilution adjustments). The warrant
                  was not exercised.

                  Pursuant to the terms of an Engagement Letter dated February
                  5, 1997, between the Company and Commonwealth Associates
                  ("CA"), whereby CA was engaged to render corporate finance and
                  other financial service matters, the Company granted to CA
                  warrants to purchase 208,241 shares of Common Stock at an
                  exercise price of $.01 per share. On December 31, 2000, CA
                  exercised the warrants to purchase 188,000 shares of Common
                  Stock at $0.10 per share as a settlement for their services.

NOTE 12 -         SEGMENT INFORMATION

                  During 2002 and 2001, the Company had six reportable
                  restaurant segments and one management company;

                  a)  SRC
                  b)  LA (ceased operations - July 1999)
                  c)  Chicago (ceased operations - July 1999)
                  d)  Atlanta
                  e)  Avenue A
                  f)  7 West (management company)

                 Soulfood Concepts, Inc. and Subsidiaries:

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                    December 31,
                                                              ---------------------------------
                                                                   2002               2001
                                                              -------------       -------------
                             <S>                              <C>                <C>
                             Sales:
                                    SRC $ 2,504,873            $  2,647,873
                                    LA                                    -                   -
                                    Chicago                               -                   -
                                    Atlanta                       1,768,091           2,080,132
                                    7 West                                -                   -
                                    Avenue A                      1,299,973           1,319,638
                                                               ------------       -------------
                             Total sales                        $ 5,572,937        $  6,047,643
                                                                ===========       =============
</TABLE>




                                     - 20 -


<PAGE>


                            SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE 12 -         SEGMENT INFORMATION (Continued)

<TABLE>
<CAPTION>
                                                                                     Year Ended
                                                                                 December 31,
                                                                         ----------------------------------
                                                                              2002               2001
                                                                         ----------------   --------------
<S>                                                                        <C>               <C>
                  Cost of sales:
                         SRC                                               $    651,248      $     691,875
                         LA                                                    (17,320)            (13,365)
                         Chicago                                                     -             (26,062)
                         Atlanta                                               577,657             591,496
                         7 West                                                      -                   -
                         Avenue A                                              319,124             349,004
                                                                         -------------      --------------
                  Total cost of sales                                      $ 1,530,709       $   1,592,948
                                                                         =============      ==============

                  Restaurant operating expenses:
                         SRC                                               $ 1,297,494       $   1,292,943
                         LA                                                     90,113             108,588
                         Chicago                                                63,733             152,428
                         Atlanta                                             1,170,511           1,113,907
                         7 West                                                      -                   -
                         Avenue A                                              789,098             792,341
                         Corporate                                                   -                   -
                                                                         -------------      --------------
                  Total restaurant operating expenses                      $ 3,410,949       $   3,460,207
                                                                         =============      ==============

                  Other corporate expenses:
                         SRC                                             $           -       $           -
                         LA                                                          -                   -
                         Chicago                                                     -                   -
                         Atlanta                                                     -                   -
                         7 West                                                      -                   -
                         Avenue A                                                    -                   -
                         Corporate                                             792,068             882,409
                                                                         -------------      --------------
                  Total other corporate expenses                         $     792,068       $     882,409
                                                                         =============      ==============

                  Depreciation and amortization expense:
                         SRC                                             $       20,467      $      21,867
                         LA                                                          -                   -
                         Chicago                                                     -                   -
                         Atlanta                                                88,396             107,598
                         7 West                                                      -                   -
                         Avenue A                                               28,431              26,379
                         Corporate                                               4,807               1,521
                                                                         -------------      --------------
                  Total depreciation and amortization
                    expense                                              $     142,101       $     157,365
                                                                         =============      ==============
</TABLE>

                          - 21 -


<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



NOTE 12 -         SEGMENT INFORMATION (Continued)

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                    December 31,
                                                        -----------------------------------
                                                              2002               2001
                                                        ---------------     ---------------
<S>                                                       <C>               <C>
                  Income (loss) from operations:
                         SRC                              $    535,664      $      641,188
                         LA                                  (  72,793)          (  95,223)
                         Chicago                             (  63,733)           (126,366)
                         Atlanta                             (  68,473)            267,131
                         7 West                                      -                   -
                         Avenue A                              163,320             151,914
                         Corporate                            (796,875)           (883,930)
                                                          -------------     --------------
                  (Loss) income from operations:          $   (302,890)     $    (  45,286)
                                                          =============     ==============

                  Identifiable assets:
                         SRC                              $    13,2058      $      115,694
                         LA                                          -             482,128
                         Chicago                               359,669             363,336
                         Atlanta                               298,855             415,863
                         7 West                                     60               2,228
                         Avenue A                               73,265             148,033
                         Corporate                              48,571              53,236
                                                         -------------      --------------
                  Total assets                             $   913,625       $   1,580,518
                                                         =============      ==============
</TABLE>

NOTE 13 -   STOCK PLANS

         a)   Incentive Plan

              In 1997, the Company adopted the 1997 Stock Incentive Plan (the
              "1997 Plan") for officers, directors, employees, and consultants
              of the Company or any of its subsidiaries. The 1997 Plan, as
              originally adopted, authorizes the issuance of up to 500,000
              shares of common stock upon the exercise of stock options or in
              connection with the issuance of restricted stock. The 1997 Plan
              authorizes the granting of stock options and restricted options
              and restricted stock to employees, officers, directors and
              consultants of the Company and its subsidiaries and
              non-discretionary automatic awards of stock options to its
              non-employee directors. Each option has a maximum term of ten
              years from the date of the grant, subject to early termination.
              The Company may determine the exercise price, provided that such
              price may not be less than the fair market value of the common
              stock on the date of grant. No options have been granted to date.





                                     - 22 -

<PAGE>


                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001



  NOTE 13 -   STOCK PLANS (Continued)

         b)   Restricted Stock

              The Company may make grants of restricted stock for cash or other
              consideration. The number of shares of common stock granted to
              each grantee will be determined by the Company. Grants of
              restricted stock will be made subject to such restrictions and
              conditions as the Company may determine in its sole discretion,
              including periods of restriction on transferability (the
              "Restriction Period") during which time the grant may be required
              to be deposited with an escrow agent, if the Company so
              determines. No grants of restricted stock have been issued to
              date.

   NOTE 14 -  SUBSEQUENT EVENTS

              The Company is in the process of restructuring a new lease for its
              Chicago based operation along with new renovations with
              anticipated reopening by the first quarter 2003.