<PAGE>


                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

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


                                 FORM 10-KSB/A-1


[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, 1999

                                       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 33-39231

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

                             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:

                                      NONE

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 __    NO  _X_

     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, 1999 of voting stock held by
non-affiliates computed by reference to the last sale price on that date was
approximately $1,499,316.

     The issuer's revenues for the year ended December 31, 1999 were $7,465,231.

As of December 31, 1999 3,998,177 shares of common stock, par value $.003 per
share were issued and outstanding.

                      Documents incorporated by reference
<PAGE>

                                     NONE

                                    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, Atlanta, Georgia and Los Angeles,
California.

     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".

DEVELOPMENTS

     On November 3, 1999, Mr. Brian Hinchcliffe, a majority stockholder and a
director, resigned as our Chief Executive Officer and President. Mr. Mark
Campbell was elected to serve as a director and to serve as our Chief Executive
Officer and President.

     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 intend to sell the Los Angeles unit and to
engage a turnaround plan to reopen the Chicago location in the spring of 2000.


     Use of EBITDA. This discussion includes, among other factors, an analysis
of operating income before depreciation and amortization ("EBITDA") in order to
eliminate the effect on the operating performance of the business of
significant amounts of amortization. Financial analysts generally consider
EBITDA to be an important measure of comparative operating performance for the
business, and when used in comparison to debt levels or the coverage of
interest expense, as a measure of liquidity. However, EBITDA should be
considered in addition to, not as a substitute for, operating income, net
income, cash flow and other measures of financial performance and liquidity
reported in accordance with generally accepted accounting principles.


     We intend to implement a reorganization plan with an aim to bolster our
balance sheet, reduce corporate level G&A expenses, improve overall unit EBITDA
margins, and build share-holder value. The changes encompass corporate as well
as store level revisions. In connection with our reorganization plan, several
completed and ongoing initiatives are as follows:


     1. Completed initiatives:


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     a)   The closure of the Chicago and Los Angeles units.

     b)   A change in senior executive management and the Board of Directors:
          Mr. Brian Hinchcliffe resigned and Mr. Mark Campbell was elected to
          the office to President and CEO; Ed Rodriguez became the CFO, Lisa
          Cash was promoted to Vice President of Operations, Rebecca Johnson
          was hired as Vice President of Marketing and Communications; Marlly
          Tobon was moved to the position of Accounts Payable Manager; Mark
          Campbell was elected to the Board of Directors.

     c)   Reduction in G&A expenses by 15% thus far.

     Ongoing Initiatives:

     a)   A plan to sell the Los Angeles (currently in negotiations with
          prospective buyer).

     b)   The Chicago unit has not yet re-opened. We must complete leasehold
          improvements and hire a staff. The approximate costs to reopen the
          restaurant are estimated to be $150,000. Reopening is anticipated in
          the third or forth quarter of 2000).

    c)   Pay down of $200,000 of debt is subject to the completion of an equity
         financing, which financing is not yet complete. [There can be no
         assurance that we will successfully complete such financing.]

    d)   Continuing reduction of G&A expenses.

    e)   The conversion of $500,000 of debt to Soulfood Concepts, Inc. common
         stock

    f)   The cancellation of $300,000 of related party debt.

    g)   The redemption of 900,000 issued and outstanding shares from a majority
         shareholder.

2.   We intend to reduce G&A expenses through the elimination of salary
     expense, and commensurate benefits, including, health insurance, realized
     in conjunction with the change in our management, and other operating
     expenses that have been eliminated or streamlined through better operating
     efficiency.


     We are developing a catering/event planning focus, which will plan,
organize and manage, off-site and in-house events and functions. In the spring
of 2000 two high profile political events are scheduled to be organized and
catered by us: a fundraiser in our New York Shark Bar Unit for Congressman
Gregory Meeks, and an "off-site" cocktail reception for 400 people, hosted by
the first lady Mrs. Hillary Rodham Clinton. We anticipate that catering and
event planning services will increase our revenues by at least 2-3% within the
first year of full operation.

     We experienced a significant promotional boost during the Super Bowl in
Atlanta, when our Atlanta unit was featured on local radio and television
stations as the "place to be seen" for festivities. Our Atlanta store had
revenues in excess of $120,000 during Super Bowl week, the most any single unit
has done in one week.

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:


                                       2

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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.

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 St.
     Louis.

                                       3

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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.

     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 intend to re-open
the Chicago unit by the second or third quarter 2000.


                                       4
<PAGE>

     In the summer of 1997, we acquired for $375,000, the lease and equipment
of the 6,500 square foot 826 N. La Cienega Boulevard premises, formerly the "La
Mer Restaurant" (the "Los Angeles Acquisition"). This acquisition was financed
through the proceeds of a convertible debenture and a small bridge loan from
Mr. Hinchcliffe for $105,000. The Shark Bar(R)Restaurant Los Angeles has a main
dining room with 110 seats, a lounge area which can accommodate 30 persons and
a 600 square foot garden and patio area. We closed this unit in June of 1999
and are currently in negotiations to sell the lease.

     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 2000 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 2001 we intend to
open two additional restaurants.


     The approximate costs for the Chicago unit's reopening are $150,000.
Additional expansion efforts will not begin until the third or fourth quarter
2001. Typically, the cost to open a unit is approximately $400,000 to $600,000.
The foregoing represents the Company's reasonable estimate of the funds
required for these openings. This estimate is based on certain assumptions,
including, that interior improvements and equipment installation can be
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;

                                       5
<PAGE>

     -    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:

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




     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. The
Notes are due $100,000 by December 31, 1999 and $250,000 by September 1, 2000.
The $100,000 has not been repaid.

     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 the period from January 1997 through December 1999, in order to
help finance our acquisitions, among other things, Mr. Brian Hinchcliffe, our
Chief Executive Officer at the time, loaned us funds, which aggregate
approximately $543,000 as of December 31, 1999. The loans bear interest at the
rate of 105 per annum.

     In addition, during the period through December 1999, in order to finance
our acquisitions, among other things, Mr. Hinchcliffe loaned us funds, which
aggregate approximately $335,000 as of December 31, 1999, which loans are
convertible into preferred stock and bear interest at the rate of 10% per annum.


     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

                                       6

<PAGE>

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. These Notes are apart of a proposed
exchange agreement for conversion to an equity interest in the company. The
Notes are due January 26, 2000. The Notes have not been repaid.

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.

RESTAURANT MANAGEMENT AND SYSTEMS

     Management. A typical unit staff consists of a general manager, an
assistant manager, one or two 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
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.

                                       7

<PAGE>

     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, 1999, we employed 160 persons. Of our employees, 96 are
full time and 64 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

     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

                                       8

<PAGE>

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 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.

                                       9
<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
New York, N.Y.

The Shark Bar...........        3/97         9,000 sq. ft             200                 2003(1)
Chicago, Illinois

The Shark Bar...........        9/97         6,500 sq. ft             130                 2010(2)
Los Angeles, California

The Shark Bar...........        3/98         10,000 sq. ft            255                 2007
Atlanta, Georgia
</TABLE>

(1) Currently not operating.  This lease provides two five year renewal options.
(2) Currently not operating.  This restaurant is on the market to be sold

     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
2001. 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. However, on
January 20, 2000 Kevin Starkes commenced an action against the Company in the
United States District Court for the Southern District of New York, Kevin
Starkes v. Soulfood Concepts, Inc., 00 Civ. 0427. In the action, Mr. Starkes
alleges, among other things that the company discriminated against him on the
basis of his race (African-American) in violation of 42 U.S.C. ss.1981, the New
York State Human Rights Law and the New York City Human Rights Law by
terminating his employment in January 1998 and by failing and refusing to
deliver certificates to him for 50,000 shares of stock which he claims were
promised to him. The Company served and filed an answer in this matter on March
1, 2000. The Company intends to vigorously defend against this action. In 1997
a court granted summary judgment against the Company regarding liability in an
action brought against the Company in the approximate amount of $48,000 with
respect to a stolen automobile that the plaintiff has alleged, among other
things, is due to the negligence of the Company. The Company appealed the
judgment and lost the appeal.

ITEM 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

None during the fourth quarter of the year ended December 31, 1999.


                                      10
<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.

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


         1998                   High                Low
         4th Quarter             $1.18             $1.00
         3rd Quarter             $1.62             $1.31
         2nd Quarter             $2.75             $2.37
         1st Quarter             $3.25             $1.87

     Holders. As of December 31, 1999, to our knowledge, we had approximately
57 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.



                                      11

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 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, 1999, 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


     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 intend to sell the Los Angeles unit and engage
a turnaround plan to reopen the Chicago location, which showed high receptivity
to the concept, during the third or fourth quarter of 2000 under the name The
Shark Bar(R) Restaurant, Chicago. 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

Year Ended December 31, 1999

     During the year ended December 31, 1999 the Company recorded net sales of
$7,465,231 which included net sales of $1,452,027 from the fourth quarter. The
Company incurred a net loss of $888,549 for the year ending December 31, 1999
or $.22 per share. During the year ended December 31, 1998, the Company
recorded net sales of $9,689,207, which included net sales of $2,392,307 from
the fourth quarter. The Company incurred a net loss of $80,572 for the year
ending December 31, 1998 or $.02 per share. During the year ended December 31,
1997, the Company recorded net sales of $6,137,315 and had a net loss of
$512,321 or $.15 per share.

     During the year ended December 31, 1998, the Company recorded net sales of
$9,689,207 and had a net loss of $80,572 or $.02 per share. Sales revenue for
the year ending December 31, 1999 decreased 22% from 1998 and fourth quarter
revenue decreased by 39% from fourth quarter sales in 1998 of $2,392,307. Sales
revenue for the year ending December 31, 1998 increased 57% from 1997 and
fourth quarter revenue increased by 14% from fourth quarter sales in 1997 of
$2,047,129.

     Revenue was generated from the sale of food (67% of total revenue) and
beverages (33% of revenue) for the year ended December 31, 1999

     During the year ended December 31, 1999, the Company recorded a Cost of
Sales, primarily food and beverage, of $2,234,650 or 29.9% of sales, increasing
from 29.4% Cost of Sales figure for 1998. During the year ended December 31,
1998, the Company recorded a Cost of Sales, of $2,850,042 or 29.4% of sales,
increasing from 28.2% Cost of Sales figure for 1997.

     Our Gross Profit decreased from $6,839,165 for the year ending December
31, 1998 to $5,230,581 for the year ending December 1999. This decrease is
directly related to the closing of two of its units in June and July of 1999.
The Company's restaurant operating expenses for the year ending December 31,
1999 were $ 4,656,363 compared to $5,565,041 for 1998, which represents 62% and
57% respectively. This decrease is directly related to the closing of two of
its units during 1999,

                                      12
<PAGE>

and the related costs carried as a result of these closings. Income from
operating restaurants for 1999 was $574,218 or 7.6% of sales as compared to
$$1,274,124 for the same period in 1998. The Company's Gross Profit increased
from $4,384,743 for the year ending December 31, 1997 to $6,839,165 for the year
ending December 1998. This increase is directly related to the opening of a new
restaurant during 1998. The Company's restaurant operating expenses for the year
ending December 31, 1998 were $ 5,565,041 compared to $3,413,055 for 1997, which
represents 57% and 55% respectively. This increase is directly related to the
opening of a new restaurant during 1998. Income from operating restaurants for
1998 was $1,274,124 or 13% of sales. For the fourth quarter of 1998, the Company
had an operating loss of $15,468. For 1997 and the fourth quarter of 1997, the
comparable amounts were $971,688 or 15.8% of sales and $219,725 or 11% of sales
respectively..

     The Company's G&A increased from $605,013 6.2 % of sales in 1998 to
$926,879 or 12.4% or of sales in 1999. In 1999 the Company incurred additional
legal and other expenses in it's restructuring strategy, the hiring, training
and retraining of its management personnel, and the closing of its two units.
The Company's G&A decreased from $749,669, or 12 % of sales in 1997 to $594,682
or 6.1% of sales in 1998. In 1997 the company incurred additional legal and
other expenses in it's national expansion program and in the listing of the
stock on a public exchange.

     The Company writes off the pre-opening expense portion of the capital
required to open a restaurant during the calendar year that the restaurant was
opened.. Thus in 1998 total pre-opening expenses of $212,261 were expensed in
addition to $320,685 of depreciation and amortization expense for a total of
$532,946 versus the 1997 total of $560,957 for pre-opening expenses, and
depreciation and amortization.

Profile of Unit Sales

     During 1998, the Company opened one additional restaurant, investing
$581,610 in The Shark Bar Atlanta. The Company seeks to build restaurants
where, after a unit is established, it's annual sales will be greater than two-
three times unit investment.

     A review of the 1999 sales and a comparison to the previous year is shown
below

<TABLE>
<CAPTION>
                                            1997              1998              1999           Year  Opened
                                            ----              ----              ----          --------------
<S>                                      <C>              <C>                <C>                      <C>
The Shark Bar Restaurant NY              $2,723,191       $2,681,064         $2,586,266          Nov. 1990
Mekka Restaurant                         $1,131,064       $1,181,570         $1,241,174          Nov. 1994
The Shark Bar Restaurant Chicago         $1,677,683       $2,110,756         $  754,985         April 1997
The Shark Bar Restaurant LA              $  605,377       $1,723,305         $  666,516         Sept. 1997
The Shark Bar Restaurant Atlanta                 --       $1,992,512         $2,216,290         March 1998
</TABLE>

Financial Condition and Liquidity

     The following is a discussion of the Company's recent and future sources
of and demands on liquidity as well as an analysis of liquidity levels. For the
year ending December 31, 1999 the Company incurred a net loss of $888,549. At
this time, during 2000 we plan to re-open the Chicago unit, fully implement our
turnaround strategy, tighten controls and improve service. We will embark on a
prudent national expansion through amongst other alternatives, partnership
programs that do not require the Company to fund the expansion, beginning first
quarter 2001.

     Cash and Cash Equivalents as of December 31, 1999 decreased by $23,105 to
$9,216 from $32,321 as of December 31, 1998. Overall, Total Current Assets
decreased by $71,955 as of

                                      13

<PAGE>

December 31, 1999 to $161,518 from $233,473 as of December 31, 1998. The
decrease in cash and all other assets was caused by the closing of two units
during 1999. Cash and Cash Equivalents as of December 31, 1998 decreased by
$17,148 to $32,321 from $49,469 as of December 31, 1997. Overall, Total Current
Assets decreased by $86,922 as of December 31, 1998 to $233,473 from $320,395
as of December 31, 1997. The decrease in cash and increase in all other assets
was caused by the expansion of one new restaurant during 1998

     The Company's current liabilities increased $972,731 as of December 31,
1999 to $1,932,996 from $960,265 as of December 31, 1998. This increase was due
primarily to the increase of accrued expenses and the maturity of certain long
term Notes. To finance the expansion and cash flow needs due to the corporate
growth, current liabilities increased by $187,999 as of December 31, 1998 to
$960,265 from $772,266 as of December 31, 1997.


     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, 1999, net cash provided by operating
activities decreased to $164,832 from $283,921 for the year ended December 31,
1998. This decrease was primarily due to an increase in net loss of $888,549
for the year ended December 1999 compared to a loss of $80,572 for the same
period in 1998. There was a significant decrease in cash used in investing
activities as of December 1999, $56,065 from $737,573 for period ended December
31, 1998 because there were no new restaurant openings in 1999 and the company
did not incur the costs associated with such openings. Financing activities
changed from 1998 to 1999 as net cash used in 1999 was $131,872 primarily due
to the repayment of $100,000 of long-term debt. In 1998, net cash was provided
from borrowings of $265,000 for use in restaurant expansion and equipment
purchases.


     The effect of inflation has not been a factor upon either the operations
or the financial condition of the company. The Company's 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: the Company's 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

                                      14
<PAGE>

ITEM 7 FINANCIAL STATEMENTS.

     The information required under this item is set forth on pages F1 through
F25 of this Annual Report on Form 10-KSB.

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

                                     None.




                                      15
<PAGE>



                                    PART III

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

     The name, age, principal occupation, other business affiliations and other
information (relating to the past five or more years) concerning each director,
and, where applicable, the year each was first elected a director of the
company, are set forth below:


     MARK CAMPBELL, 39, was appointed President, CEO and Director on November
3, 1999. As the current CEO and President of SoulFood Concepts, Inc., Mark
Campbell oversees operations of the Shark Bar and Mekka restaurants, a national
chain in five locations across the United States. From November 1996 through
February 1999, Mr. Campbell served as managing general partner of the Soul
Cafe, a 125 seat upscale casual dining restaurant in midtown Manhattan with
partners actor Malik Yoba, and restaurateur Michael Vann. During June 1998
through February 1999, Mr. Campbell also served as the Vice President of
Operations of the Soul Cafe. From 1989 through 1998, Mr. Campbell had an
eight-year career as a Wall Street investment banker. His forte while working on
Wall Street was private and public venture capital projects in the equities
markets, primarily with start-up and small to mid-sized companies in the high
technology and entertainment industries. In 1995, Campbell utilized his valuable
banking experience from Wall Street, and successfully formed Kova Capital, LLC.,
a venture capital concern that provided strategic advisory services to
entrepreneurs, and financed properties in the entertainment industry.


     BRIAN HINCHCLIFFE, Director, 43, was our financial founder in 1990 and
assumed management responsibility in 1995. Mr. Hinchcliffe was a Vice President
at Goldman Sachs for ten years before launching an entrepreneurial career. Mr.
Hinchcliffe also serves as a member of the Board of Directors of Jordex
Resources, Inc.

     MICHAEL VANN, 42 , Director , was our co-founder in 1990 and has served as
a director since 1992. He also has served as our Vice President from 1992
through November 1996. Mr. Vann graduated from Western Michigan University in
April 1979, earning a Bachelor's degree in marketing and retailing.

     KEITH T. CLINKSCALES, 35, has served as one of our directors since January
1997. Mr. Clinkscales was the former President and CEO of VIBE Ventures, the
urban music magazine and television show, since its inception in September
1993. Mr. Clinkscales is a magna cum laude graduate of Florida A&M University.
He was the first student speaker for the prestigious School of Business and
Industry Forum series, and the President of Kappa Alpha Psi fraternity.


Compliance with Section 16(a) of the Exchange Act

Not Applicable.

ITEM 10:  EXECUTIVE COMPENSATION

                                      16
<PAGE>

     (a) Cash Compensation.

     The following table sets forth all compensation in excess of $100,000
awarded to, earned by or paid to our Chief Executive Officer and the four other
most highly compensated executive officers (the "named executive officers") for
the years ended December 31, 1999, 1998, and 1997.

                           SUMMARY COMPENSATION TABLE

                                                    Fiscal
Name and Principal position                          Year     Annual   Salary
---------------------------                          ----     ---------------
Mark Campbell                                        1999         -
President and Chief Executive Officer

Brian Hinchcliffe                                    1999        $152,000
President and Chief Executive Officer                1998        $135,000
                                                     1997        $130,000

Directors' Fee and Other Remuneration

     Directors received no compensation for services as a member of the Board
of Directors or of any committee of the Board of Directors in respect of 1999.
However, at this time, we have established a stock option plan which will allow
both directors, employees and consultants to participate.

Stock Options.

     No options were granted by us during 1999.

1997 Stock Incentive Plan

     Administration and Eligibility. We have adopted the 1997 Stock Incentive
Plan (the "1997 Plan") for officers, directors, employees, and consultants of
the company or any of our 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
stock to employees, officers, directors and consultants of the company and our
subsidiaries and non-discretionary automatic awards of stock options to our
non-employee directors. The 1997 Plan provides for its administration by either
a committee of two or more outside directors or the Board of Directors (the
"Administrator"). In general, the Administrator, in its sole discretion,
determines which eligible employees, officers, directors and consultants of the
Company and our subsidiaries may participate in the 1997 Plan and the type,
extent and terms of the equity-based awards to be granted to them. In the event
of a change in control, as defined in the 1997 Plan, all options will become
immediately vested and exercisable and the restrictions with regard to
restricted stock will lapse unless the Administrator provides otherwise.

     Options. Options granted to employees may either be ISOs or non-ISOs. Each
option has a maximum term of ten years from the date of the grant, subject to
early termination. The Administrator 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. At the discretion of the Administrator, the exercise
price of the options may be paid in cash, by tendering of shares of common
stock having a fair market value equal to the exercise price of such option.


                                      17

<PAGE>

     Restricted Stock. The Administrator may make grants of restricted stock
for cash or other consideration, as the Administrator determines. The number of
shares of common stock granted to each grantee will be determined by the
Administrator. Grants of restricted stock will be made subject to such
restrictions and conditions as the Administrator 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 Administrator so determines. During the
Restriction Period, if any, a grantee may be given the right, at the discretion
of the Administrator, to vote the shares subject to the grant and the right to
receive any regular cash dividends paid thereon. If a grantee's employment or
service with us terminates, or in the event of the occurrence of certain other
events determined by the Administrator, the grant will terminate with respect
to all shares as to which the restrictions have not lapsed and those shares
must be returned to us.

     Amendment. The Board has the right to amend, suspend or terminate the 1997
Plan at any time, provided, however, that unless approved by our stockholders
in general, no amendment or change in the 1997 Plan will be effective: (i)
materially increasing the total number of shares of common stock which may be
issued under the 1997 Plan; (ii) changing the minimum option exercise price;
(iii) extending the term of the 1997 Plan or the period during which any option
may be granted or exercised; or (iv) altering in any way the class of persons
eligible to participate in the 1997 Plan.

ITEM 11:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT


     The following table sets forth certain information, as of December 31,
1999, regarding the beneficial ownership of our common stock, which is our only
class of outstanding voting securities, by each shareholder who owns more than
5% of outstanding shares, by each director and nominee for election as
director, by each of our named executive officers and by all of our directors
and executive officers as a group. The information set forth in the table and
accompanying footnotes has been furnished by the named beneficial owners .
Since the table reflects beneficial ownership determined pursuant to the
applicable rules of the Securities and Exchange Commission, the information is
not necessarily indicative of beneficial ownership for any other purpose.


     Name and Address        Amount and Nature of
   of Beneficial Owner      Beneficial Ownership(1)(2)        Percent of Class
   -------------------      --------------------------        ----------------

 Brian A. Hinchcliffe           1,922,523                         48%
 Michael D. Vann                  168,209                        4.2%
 Mark Campbell                          -                          -
 Keith Clinkscales                100,000                        2.5%
 Aton Ventures                    250,000(3)                     5.9%


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

All Executive Officers and
Directors as a group
(4 persons)                     2,190,732                        55%

(1)  Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission and includes voting and investment
     power with respect to the shares shown as beneficially owned. Shares of
     common stock subject to options currently exercisable or
                                      18

<PAGE>

     exercisable within 60 days are deemed outstanding for computing the
     percentage ownership of the person holding such options, but such shares
     are not deemed outstanding for computing the percentage ownership of any
     other person.

(2)  The amount of ownership takes into account the reverse stock split of our
     outstanding common stock as of November 6, 1996.


(3)  Includes 250,000 shares of common stock issuable upon conversion of a
     convertible Note. See "Business Financing Transactions.".

ITEM 12:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant to an arrangement between the company and Hinchcliffe, during the
period of 1993 through end of 1996, we borrowed in excess of $285,266 from
Hinchcliffe at an interest rate of 10% per annum. On December 30, 1996 it was
determined by our Board of Directors to be in our best interest that we accept
Hinchcliffe's offer to (i) convert $125,000 of said loans into 125,000 shares
of Series A Convertible Preferred Stock, which stock contains the designations,
rights and preferences which were filed in the Certificate of Designations with
the Secretary of State of the State of Delaware and (ii) to convert an
additional $80,000 of loans into 400,000 shares of common stock. See "Financial
Statements and Notes Thereto."


     In addition, during the period from January 1997 through December 1999, in
order to finance our acquisitions, among other things, Mr. Hinchcliffe loaned
us funds, which aggregate approximately $543,000 as of December 31, 1999. The
loans bear interest at the rate of 10% per annum.

     In addition, during the period through December 1999, in order to finance
our acquisitions, among other things, Mr. Hinchcliffe loaned us funds, which
aggregate approximately $335,000 as of December 31, 1999, which loans are
convertible into preferred stock and bear interest at the rate of 10% per annum.



                                      19
<PAGE>



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS.

THE FOLLOWING DOCUMENTS HERETOFORE FILED BY US OR BEING FILED HEREWITH WITH THE
SECURITIES AND EXCHANGE COMMISSION ("SEC") ARE HEREBY INCORPORATED BY
REFERENCE:

Exhibit No.                         Document

2.1  (2)           Agreement and plan of Reorganization

3.1  (1)           Certificate of Incorporation

3.2  (1)           By- Laws of the Company

3.3  (4)           Amended Certificate of Incorporation

3.4  (4)           Amended and Restated By-Laws of the company

3.5  (4)           Amended Certificate of Incorporation

3.6  (4)           Certificate of Designation relating to the Series A
                   Convertible Preferred Stock

10.1 (1)           Escrow Agreement between the Company and New Jersey National
                   Bank

10.2 (2)           Warrant Agreement between the Company and Interest Transfer
                   Co., Inc.

10.3 (3)           Lease Agreement relating to the New York Shark Bar Restaurant

10.4 (3)           Sublease Agreement for Mekka

10.5 (5)           Warrant Agreement by and among Soulfood Concepts, Inc. and
                   Commonwealth Associates

10.6 (5)           Note Purchase Agreement, dated May 21, 1997, by and among
                   Soulfood Concepts, Inc., Aton Ventures Fund, Ltd. and Aton
                   Balanced Fund Ltd.

10.7 (5)           Agreement, dated May 20, 1999 by and among Soulfood Concepts,
                   Inc., Aton Ventures Fund, Ltd. and Aton Balanced Fund Ltd.

10.8 (5)           $250,000.00 10% Convertible Secured Note, dated May 20, 1999,
                   by and among Soulfood Concepts, Inc. and Roycan & Co.

10.9 (5)           $100,000.00 10% Convertible Secured Note, dated May 20, 1999,
                   by and among Soulfood Concepts, Inc. and Roycan & Co.

10.10 (5)          Form of Warrant Agreement, dated May 20, 1999, issued by
                   Soulfood Concepts, Inc.

                                      20
<PAGE>


10.11 (5)          Stock Purchase Agreement, dated June 6, 1997, by and among
                   Soulfood Concepts, Inc. and Clarion Finanz AG

10.12 (5)          Warrant Agreement, dated June 6, 1997, by among Soulfood
                   Concepts, Inc. and Clarion Finanz AG

10.13 (5)          Note Purchase Agreement, dated January 26, 1998, by and among
                   Soulfood Concepts, Inc. and the purchaser parties thereto

10.14 (5)          Form of 8% Convertible Secured Note, dated January 26, 1998

10.15 (5)          Form of Warrant Agreement, dated January 26, 1998, issued by
                   Soulfood Concepts, Inc.

21 (5)             Subsidiaries of the Registrant

27 (5)             Financial Data Schedule



--------------------------
(1)  Incorporated by reference from registrants registration statements on Form
     S-18, File No. 22-382321- N.Y

(2)  Incorporated by reference to the Company's Annual Report on Form 10-KSB
     for the year ended December 31, 1992.

(3)  Incorporated by reference to the Company's Quarterly Report on Form for
     the quarter ended September 30, 1994.

(4)  Incorporated by reference to the Company's Annual Report on Form 10-KSB
     for the year ended December 31, 1996.

(5)  Filed herewith.

     (b)  REPORTS ON FORM 8-K. The Company did not file any Current Reports on
          Form 8-k during the fourth quarter ended December 31, 1999.



                                      21
<PAGE>



                                  Signatures


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

                            Soulfood Concepts Inc.


Date:  August 14, 2000      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                                             August 14, 2000
--------------------------------
Mark Campbell, Chief
Executive Officer, President,
Director and Accounting Officer

/s/ Brian A. Hinchcliffe                                      August 14, 2000
--------------------------------
Brian A. Hinchcliffe, Director

/s/ Michael D. Vann                                           August 14, 2000
--------------------------------
Michael D. Vann, Director

                                                              August __, 2000
--------------------------------
Keith Clinkscales, Director


                                      22

<PAGE>














                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

                                      INDEX

                                                                        PAGE
                                                                        ----

Independent auditors' report                                              F1


Consolidated balance sheets                                             F2 - F3


Consolidated statements of operations                                   F4 - F5


Consolidated statement of stockholders' equity (deficit)                  F6


Consolidated statements of cash flows                                   F7 - F8


Notes to consolidated financial statements                              F9 - F25


<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, 1999 and 1998 and the related
consolidated statements of operations, stockholders' equity, 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 generally accepted auditing
standards. 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, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

As discussed in Note 1(s) to the consolidated financial statements, SOULFOOD
CONCEPTS, INC. AND SUBSIDIARIES changed its method of accounting for
organization costs effective January 1, 1998.

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 & CORSO, P.C.
                                        Certified Public Accountants
New York, New York
March 28, 2000


                                     - F1 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       December 31,
                                                                ---------------------------
                                                                    1999            1998
                                                                -----------     -----------
      ASSETS
<S>                                                             <C>             <C>
CURRENT ASSETS
   Cash and cash equivalents                                    $     9,216     $    32,321
   Accounts receivable                                               56,894          49,804
   Inventory                                                         69,120         120,775
   Prepaid expenses and other current assets                         26,288          30,573
                                                                -----------     -----------

      TOTAL CURRENT ASSETS                                          161,518         233,473


PROPERTY AND EQUIPMENT, net of accumulated
 depreciation of $1,406,060 and $1,070,857 respectively           1,448,036       1,727,176


SECURITY DEPOSITS                                                    90,874          90,874
                                                                -----------     -----------
      TOTAL ASSETS                                              $ 1,700,428     $ 2,051,523
                                                                ===========     ===========
</TABLE>


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

                                      - F2 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                December 31,
                                                      ---------------------------------
                                                         1999                   1998
                                                      -----------           -----------
         LIABILITIES AND STOCKHOLDERS' DEFICIT
<S>                                                   <C>                   <C>
CURRENT LIABILITIES
   Bank overdraft                                     $    60,849           $   137,825
   Accounts payable                                       404,339               194,087
   Accrued Expenses                                       821,113               397,595
   Obligation under capital lease                          31,695                28,932
   Current portion of long-term debt                      615,000               201,826
                                                      -----------           -----------

      TOTAL CURRENT LIABILITIES                         1,932,996               960,265

DUE TO RELATED PARTY                                      878,383               747,116

OBLIGATIONS UNDER CAPITAL LEASE - LONG-TERM                32,376                54,492

LONG-TERM DEBT                                                  -               515,000
                                                      -----------           -----------

      TOTAL LIABILITIES                                 2,843,755             2,276,873
                                                      -----------           -----------

COMMITMENTS AND CONTINGENCIES                                   -                     -

MINORITY INTEREST                                          81,392                45,835
                                                      -----------           -----------

STOCKHOLDERS' DEFICIT
   Common stock, par value $.003; authorized
    14,500,000 shares; issued and outstanding
    3,998,177 shares                                       11,995                11,995

   Additional paid-in capital                             980,949               980,949

   Accumulated deficit                                 (2,217,663)           (1,264,129)
                                                      -----------           -----------

      TOTAL STOCKHOLDERS' DEFICIT                      (1,224,719)             (271,185)
                                                      -----------           -----------
      TOTAL LIABILITIES AND STOCKHOLDERS'
       DEFICIT                                        $ 1,700,428           $ 2,051,523
                                                      ===========           ===========
</TABLE>


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

                                      - F3 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                             For The Year Ended
                                                                  December 31,
                                                       ---------------------------------
                                                           1999                  1998
                                                       -----------           -----------
<S>                                                    <C>                   <C>
SALES                                                  $ 7,465,231           $ 9,689,207

RESTAURANT OPERATING COSTS                               8,153,096             9,553,042
                                                       -----------           -----------

(LOSS) INCOME FROM OPERATIONS                             (687,865)              136,165
                                                       -----------           -----------

OTHER EXPENSES
   Interest expense                                        165,127               161,371
                                                       -----------           -----------

LOSS BEFORE INCOME TAXES, CUMULATIVE
  EFFECT OF ACCOUNTING CHANGES AND
  MINORITY INTEREST                                       (852,992)              (25,206)

PROVISION FOR INCOME TAXES                                       -                     -
                                                       -----------           -----------

LOSS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES AND MINORITY INTEREST                  (852,992)              (25,206)

MINORITY INTEREST IN THE INCOME OF CONSOLIDATED
   SUBSIDIARY                                              (35,557)              (27,168)
                                                       -----------           -----------

NET LOSS BEFORE ACCOUNTING CHANGE                         (888,549)              (52,374)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
 Net of income taxes of $0                                       -               (28,198)
                                                       -----------           -----------

NET LOSS                                               $  (888,549)          $   (80,572)
                                                       ===========           ===========
</TABLE>


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

                                      - F4 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 For The Year Ended
                                                                    December 31,
                                                                 -------------------
                                                                  1999         1998
                                                                 ------       ------
<S>                                                              <C>          <C>
LOSS PER COMMON SHARE
    BASIC AND DILUTED:
       Loss before cumulative effect of accounting change        $(0.22)      $(0.01)
       Cumulative effect of accounting change                         -        (0.01)
                                                                 ------       ------

       Net loss                                                  $(0.22)      $(0.02)
                                                                 ======       ======
</TABLE>

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

                                      - F5 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT


<TABLE>
<CAPTION>
                                    Preferred Stock             Common Stock        Additional                        Total
                                  --------------------      --------------------      Paid-in       Accumulated     Stockholders'
                                  Shares        Amount      Shares        Amount     Capital         Deficit          Deficit
                                  ------        ------      ------        ------     -------         -------          -------
<S>                               <C>         <C>          <C>           <C>         <C>           <C>              <C>
Balance - December 31, 1997       125,000     $     375    3,373,177     $ 10,120    $  982,449    $(1,167,163)     $  (174,219)

Conversion of preferred stock    (125,000)         (375)     625,000        1,875        (1,500)             -                -

Partner Distributions                                 -            -            -             -        (16,394)         (16,394)

Net loss                                -             -            -            -             -        (80,572)         (80,572)
                                  -------     ---------    ---------     --------    ----------    -----------      -----------

Balance - December 31, 1998             -             -    3,998,177       11,995       980,949     (1,264,129)        (271,185)

Partner Distributions                                 -            -            -             -        (64,985)         (64,985)

Net loss                                -             -            -            -             -       (888,549)        (888,549)
                                  -------     ---------    ---------     --------    ----------    -----------      -----------

Balance - December 31, 1999             -     $       -    3,998,177     $ 11,995    $  980,949    $(2,217,663)     $(1,224,719)
                                  =======     =========    =========     ========    ==========    ===========      ===========
</TABLE>


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

                                      - F6 -
<PAGE>

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


<TABLE>
<CAPTION>
                                                           For The Year Ended
                                                               December 31,
                                                     --------------------------------
                                                        1999                  1998
                                                     ----------            ----------
<S>                                                  <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                          $ (888,549)           $  (80,572)
   Adjustments to reconcile net loss to
    Net cash provided (used) by operating activitie
      Depreciation and amortization                     288,039               320,685
      Cumulative effect of accounting change                  -                28,198
      Loss attributed to minority interest               35,557                27,168
      Loss on abandonment of equipment                   47,165                     -
      (Increase) Decrease in:
      Accounts receivable                                (7,090)               19,583
      Inventory                                          51,655               (53,626)
      Prepaid expenses and other current assets           4,285               103,817
      Other assets                                            -               (15,692)
      (Decrease) Increase in:
      Accounts payable & accrued expenses               633,770               (65,640)
                                                     ----------            ----------

NET CASH PROVIDED BY OPERATING ACTIVITIES               164,832               283,921
                                                     ----------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                  (117,929)             (737,578)
   Disposition of fixed assets                           61,864                     -
                                                     ----------            ----------
NET CASH USED BY INVESTING ACTIVITIES                   (56,065)             (737,573)
                                                     ----------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Bank overdraft                                       (76,976)               49,185
   Additional borrowing                                       -               265,000
   Repayment of debt                                   (101,826)              (10,039)
   Additional capital leases                                  -                42,151
   Repayment of capital leases                          (19,353)              (25,148)
   Increase in due to related party                     131,267               131,749
   Partner distributions                                (64,985)              (16,394)
                                                     ----------            ----------

NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES       (131,872)              436,504
                                                     ----------            ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS               (23,105)              (17,148)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR            32,321                49,469
                                                     ----------            ----------

CASH AND CASH EQUIVALENTS - END OF YEAR              $    9,216            $   32,321
                                                     ==========            ==========
</TABLE>


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

                                      - F7 -
<PAGE>

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

<TABLE>
<CAPTION>
                                                         For The Year Ended
                                                             December 31,
                                                        ----------------------
                                                          1999          1998
                                                        -------       -------
<S>                                                     <C>           <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for:
      Interest expense                                  $69,060       $98,621
                                                        =======       =======
      Income taxes                                      $ 6,130       $ 5,240
                                                        =======       =======
</TABLE>

NON-CASH INVESTING AND FINANCING ACTIVITIES:

December 31, 1998

On September 30, 1998, a preferred stockholder of the Company converted 125,000
shares of preferred stock into 625,000 shares of common stock.

As of December 31, 1998, the Company incurred a $28,198 expense relating to a
cumulative effect of an accounting change as to the treatment of organization
costs. See Note 1(s).


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

                                      - F8 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


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. (See Note 15):

         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.

         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.

         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.

                                      - F9 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

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, 1999, the Company has a working capital deficit of $1,771,478 and
         an accumulated deficit of $2,217,663. 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. Negotiations are in process
              to sell the lease and fixed assets for this location.

         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. It is anticipated
              that Chicago will re-open in the second or third quarter of 2000
              with more qualified restaurant personnel.

         o    The Company, in late 1999, effectuated a change in senior
              management personnel and its Board of Directors.

         o    The Company is presently in negotiations with its majority
              shareholder whereby certain debt will be converted to equity, as
              well as certain debt being forgiven. Additionally, the Company is
              negotiating debt restructuring with two other investors.

         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, 1999, and will provide the opportunity to continue as a
         going concern.


                                     - F10 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

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, 1999 and 1998, 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
         assets 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, 1999 and 1998,
         advertising expense amounted to $36,737 and $62,001, respectively.


                                     - F11 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)

    k)   Pre-Opening expenses
         Pre-opening expenses consist of various expenses relating to the
         opening of Chicago, LA and Atlanta prior to their opening to the
         general public and have been expensed.

    l)   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.

    m)   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, 1999 and 1998.

    n)   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 carrying
         amount or fair value less cost to sell.

    o)   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.

                                     - F12 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (continued)

    p)   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.

         The shares used in the computation were as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                                     --------------------------
                                                       1999             1998
                                                     ---------        ---------
<S>                                                  <C>              <C>
         Basic and Diluted                           3,998,177        3,350,711
                                                     =========        =========
</TABLE>

    q)   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, 1999 and
         1998, the Company has no items that represent comprehensive income, and
         therefore has not included a schedule of comprehensive income in the
         financial statements.

    r)   Impact of year 2000 issue
         During the year ended December 31, 1999, the Company conducted an
         assessment of issues related to the Year 2000 and determined that it
         was necessary to modify or replace portions of its software in order to
         ensure that its computer systems will properly utilize dates beyond
         December 31, 1999. All computer systems are operating efficiently and
         accurately, but the company cannot guarantee there will be no adverse
         effects in the future. At this time, the Company cannot determine the
         impact the Year 2000 will have on its key customers or suppliers. If
         the Company's customers or suppliers don't convert their systems to
         become Year 2000 compliant, the Company may be adversely impacted. The
         Company is addressing these risks in order to reduce the impact on the
         Company.

    s)   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
         1999 and 1998 fiscal years.

                                     - F13 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         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, 1999.

         In March 1998, Statement of Position No. 98-1 was issued, which
         specifies the appropriate accounting for costs incurred to develop or
         obtain computer software for internal use. The new pronouncement
         provides guidance on which costs should be capitalized, and over what
         period such costs should be amortized and what disclosures should be
         made regarding such costs. This pronouncement is effective for fiscal
         years beginning after December 15, 1998, but earlier application is
         acceptable. Previously capitalized costs will not be adjusted. The
         Company believes that it is already in substantial compliance with the
         accounting requirements as set forth in this new pronouncement, and
         therefore believes that adoption will not have a material effect on
         financial condition or operating results.

         In April 1998, Statement of Position No. 98-5 was issued which requires
         that companies write-off previously defined capitalized start-up costs
         including organization costs and expense future start-up costs as
         incurred. The Company had capitalized certain organization costs in
         prior periods. Effective January 1, 1998, the Company recorded a
         non-cash charge of $28,198 to reflect the cumulative effect of the
         accounting change.

         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.

NOTE 2 - INVENTORY

         Inventory consisted of the following:

<TABLE>
<CAPTION>
                                                 December 31,
                                            --------------------
                                              1999        1998
                                            --------    --------
<S>                                         <C>         <C>
         Food                               $ 18,059    $ 31,862
         Beverage                             51,061      88,913
                                            --------    --------
                                            $ 69,120    $120,775
                                            ========    ========
</TABLE>

                                     - F14 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                          -----------------------------
                                                                             1999               1998
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
         Furniture, Fixtures and Equipment                                $ 2,108,876       $ 2,052,813
         Leasehold Improvement                                                745,220           745,220
                                                                          -----------       -----------
                                                                            2,854,096         2,798,033
         Less: Accumulated Depreciation                                    (1,406,060)       (1,070,857)
                                                                          -----------       -----------
         Property and equipment, net                                      $ 1,448,036       $ 1,727,176
                                                                          ===========       ===========
</TABLE>

         Depreciation expense for the years ending December 31, 1999 and 1998
         was $288,039 and $320,685, respectively.

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

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                          -----------------------------
                                                                             1999               1998
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
         Furniture, Fixtures and Equipment                                $    42,151       $    42,151
                                                                          ===========       ===========
</TABLE>


NOTE 4 - ACCRUED EXPENSES

         The Company had the following accrued expenses:

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                          -----------------------------
                                                                             1999               1998
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
         Payroll and Sales Taxes                                          $   323,839       $    80,265
         Professional Fees                                                    200,076           116,911
         Other Operating Expenses                                             197,353           188,512
         Interest                                                              68,980            11,907
         Penalties                                                             30,865                 -
                                                                          -----------       -----------
                                                                          $   821,113       $   397,595
                                                                          ===========       ===========
</TABLE>

                                     - F15 -

<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 5 - RELATED PARTY TRANSACTION



<TABLE>
<CAPTION>
                  Due to related parties consists of the following:
                  (See Note 16)                                                             December 31,
                                                                                    ----------------------------
                                                                                      1999               1998
                                                                                    ----------        ----------
<S>                                                                                 <C>               <C>
                  Advances from a major shareholder and officer
                  of the Company, payable on demand.  It is
                  intended that these advances will be repaid in
                  more than one year.  Interest has been accrued
                  on these advances at 10% per annum.                               $  543,383        $  405,463

                  Advances from a major shareholder and officer
                   of the Company. These advances are convertible
                   into preferred stock.  Interest has been accrued
                  on these advances at 10% per annum.                                  335,000           335,000

                  Partner loans to Avenue A Restaurant
                   Associates, L.P.  Interest is being accrued
                   at 10% per annum to the limited partners.                                 -             6,653
                                                                                    ----------        ----------
                                                                                    $  878,383        $  747,116
                                                                                    ==========        ==========
</TABLE>



NOTE 6 - LONG-TERM DEBT


<TABLE>
<CAPTION>
                  Long-term debt consists of the following:
                                                                                             December 31,
                                                                                    ----------------------------
                                                                                       1999              1998
                                                                                    ----------        ----------
<S>                                                                                 <C>               <C>
                  Working capital loan from Citibank, bearing interest at 11.5%
                   per annum on the outstanding balance, payable in monthly
                   installments of $913 principal only with interest accrued,
                   maturing in
                   January 1999.                                                    $        -        $    1,826

                  The Company received $100,000, pursuant to a note, from an
                   outside investor on February 4, 1997, with interest payable
                   at 10% per annum. The note was due, and paid, February 4,
                   1999. Interest was due semi-annually and any unpaid amounts
                   were
                   accrued.                                                                  -           100,000

                  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 are due $100,000 by
                   December 31, 1999 and $250,000 by September 1, 2000. The
                   $100,000 note was not repaid. Interest is due semi-annually
                   and any unpaid amounts have been accrued
                   (See Notes 11, 12 and 16).                                          350,000           350,000
</TABLE>

                                     - F16 -

<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 6 - LONG-TERM DEBT (Continued)



<TABLE>
<CAPTION>
                  Long-term debt consists of the following:
                                                                                           December 31,
                                                                                    ---------------------------
                                                                                      1999              1998
                                                                                    --------          ---------
<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 are due January 26, 2000. The notes were not repaid.
                   Interest is due semi-annually and any unpaid amounts have
                   been accrued (see Notes 11, 12 and 16).                            265,000           265,000
                                                                                    ---------         ---------


                  Total                                                               615,000           716,826

                  Less:  Current Portion                                             (615,000)         (201,826)
                                                                                    ---------         ---------

                  Long-Term Debt                                                    $      -          $ 515,000
                                                                                    =========         =========
</TABLE>



NOTE 7 - INCOME TAXES


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

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                    ----------------------------
                                                                                      1999               1998
                                                                                    ---------          ---------
<S>                                                                                 <C>                <C>
                  Current tax expense
                    U.S. federal                                                    $       -          $       -
                    State and local                                                         -                  -
                                                                                    ---------          ---------
                  Total current                                                             -                  -

                  Tax benefit of net operating loss carry-forwards                          -                  -
                                                                                    ---------          ---------
                  Provision for income taxes                                                -                  -
                                                                                    ---------          ---------

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

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

                                     - F17 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 7 - INCOME TAXES (Continued)


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

         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%
                                                            =====        ====

         At December 31, 1999, the Company had net carryforward losses of
         approximately $1,167,000. 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,
         1999 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 2014. 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:

<TABLE>
<CAPTION>
                                                                          Operating           Capital
                                                                           Leases              Leases
                                                                          ----------         ----------
<S>                                                                       <C>                <C>
         2000                                                             $  348,262         $   40,020
         2001                                                                351,566             23,016
         2002                                                                357,903              7,029
         2003                                                                302,055                  -
         2004 and thereafter                                               2,896,604                  -
                                                                         -----------         ----------
         Total minimum lease payments                                     $4,256,390             70,065
                                                                         ===========
         Less: Amounts representing interest                                                     (5,994)
                                                                                             ----------
         Present value of future minimum lease payments                                          64,071
         Less:  Current maturities                                                              (31,695)
                                                                                             ----------
         Total                                                                               $   32,376
                                                                                             ==========
</TABLE>

         Rent expense under operating leases for the years ended December 31,
         1999 and 1998 was $538,049 and $511,848, respectively.

                                     - F18 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued)


    b)   The Company is a party to claims and lawsuits arising in the normal
         course of operations. Management is of the opinion that these claims
         and lawsuits will not have a material effect on the financial position
         of the Company. The Company believes these claims and lawsuits should
         not exceed $50,000, and accordingly, has established a reserve included
         in accounts payable and accrued expenses.


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, 1999
         and 1998, the minority interest equals $81,392 and $45,835,
         respectively.


NOTE 10 - STOCKHOLDERS' EQUITY

         Preferred stock
         On December 30, 1996, the Board of Directors of the Company approved
         the issuance of 125,000 shares of series A cumulative convertible
         preferred stock, $.003 par value, non-voting preferred stock in
         exchange for a reduction in the amount owed to a major stockholder of
         $125,000. Beginning January 1, 1997, the holder of the preferred stock
         may convert each share of Preferred Stock into five shares of common
         stock. On September 30, 1998, that stockholder converted all of his
         preferred stock into 625,000 shares of common stock.

NOTE 11 - 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
         and mature on May 21, 1999 (maturity of $250,000 of the 10% note was
         extended to September 1, 2000). Interest is 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 (see Note 16).

         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 and mature
         on January 26, 2000. Interest is 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 amount 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. The 8% Note was not repaid (see Note
         16).

                                     - F19 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 11 - CONVERTIBLE NOTES PAYABLE (Continued)


         Following a public offering of the Company's Common Stock, if, at the
         end of any rolling thirty (30) consecutive trading day period (the
         "Measuring Period") the Common Stock has traded for each trading day
         during the Measuring Period at 140% of the Public Offering price per
         share or higher, the Company may, in its sole discretion, give notice
         to a Note Holder of a mandatory conversion. The Holder shall, upon
         receipt of such notice, surrender its Note to the Company and receive
         in exchange those that number of shares of Common Stock as determined
         by dividing the principal amount converted by the Conversion Price then
         in effect at the time of conversion. No fractional shares or scrip
         representing fractions of shares will be issued on such a conversion,
         but the number of shares issuable shall be rounded to the nearest whole
         share, with the fraction paid in cash at the discretion of the Company.

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


NOTE 12 - 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 is 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 is exercisable on or before June 6, 2000 an exercise price of
         $1.00 per share (subject to customary anti-dilution adjustments).

         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
         are exercisable on or before May 21, 2000 at an exercise price of $1.00
         per share (subject to customary anti-dilution adjustments).

         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
         are 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. Fair value attributable to the warrants
         using the Black Scholes option pricing model was deemed material.

                                     - F20 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 12 - WARRANTS (Continued)


         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. Fair value
         attributable to the warrants using the Black Scholes option pricing
         model was deemed material.

         These warrants are summarized as follows:


<TABLE>
<CAPTION>
           Number                  Exercise Price          Expiration Date
           ------                  --------------          ---------------
<S>                                   <C>                 <C>
           10,000                     $ 1.00              February 4, 2000
           10,000                       1.00              June 6, 2000
           35,000                       1.00              May 21, 2000
           26,500                       2.20              January 26, 2000
          208,241                       0.01              July 31, 2003
</TABLE>



NOTE 13 - SEGMENT INFORMATION


         During 1999 and 1998, 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)

                                     - F21 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 13 - SEGMENT INFORMATION (Continued)


         Soulfood Concepts, Inc. and Subsidiaries:


<TABLE>
<CAPTION>
                                                                            Year Ended
                                                                            December 31,
                                                                  -------------------------------
                                                                     1999               1998
                                                                  -----------         -----------
<S>                                                               <C>                 <C>
         Sales:
                SRC                                               $ 2,586,266         $ 2,681,064
                LA                                                    666,516           1,723,305
                Chicago                                               754,985           2,110,756
                Atlanta                                             2,216,290           1,992,512
                7 West                                                      -                   -
                Avenue A                                            1,241,174           1,181,570
                                                                  -----------         -----------
         Total sales                                              $ 7,465,231         $ 9,689,207
                                                                  ===========         ===========

         Cost of sales:
                SRC                                               $   683,623         $   714,708
                LA                                                    215,631             557,569
                Chicago                                               281,813             659,816
                Atlanta                                               709,322             584,838
                7 West                                                      -                   -
                Avenue A                                              344,261             333,111
                                                                  -----------         -----------
         Total cost of sales                                      $ 2,234,650         $ 2,850,042
                                                                  ===========         ===========

         Restaurant operating expenses:
                SRC                                               $ 1,288,075         $ 1,260,038
                LA                                                    562,053           1,076,597
                Chicago                                               696,029           1,316,579
                Atlanta                                             1,354,048           1,140,267
                7 West                                                      -              69,864
                Avenue A                                              756,158             719,262
                Corporate                                                   -             (17,566)
                                                                  -----------         -----------
         Total restaurant operating expenses                      $ 4,656,363         $ 5,565,041
                                                                  ===========         ===========
</TABLE>


                                     - F22 -
<PAGE>
                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 13 - SEGMENT INFORMATION (continued)



<TABLE>
<CAPTION>
                                                                               Year Ended
                                                                              December 31,
                                                                    -------------------------------
                                                                       1999                1998
                                                                    -----------         -----------
<S>                                                                 <C>                 <C>
           Other corporate expenses:
                  SRC                                               $         -         $         -
                  LA                                                          -                   -
                  Chicago                                                     -                   -
                  Atlanta                                                     -                   -
                  7 West                                                      -                   -
                  Avenue A                                                    -                   -
                  Corporate                                             974,044             605,013
                                                                    -----------         -----------
           Total other corporate expenses                           $   974,044         $   605,013
                                                                    ===========         ===========

           Pre-opening expense
             Atlanta                                                $         -         $   212,261
                                                                    ===========         ===========

           Depreciation and amortization expense:
                  SRC                                               $    19,210         $    52,752
                  LA                                                     31,073              53,449
                  Chicago                                                75,415             101,769
                  Atlanta                                               126,892              76,294
                  7 West                                                      -                   -
                  Avenue A                                               21,245              27,091
                  Corporate                                              14,204               9,330
                                                                    -----------         -----------
           Total depreciation and amortization
             expense                                                $   288,039         $   320,685
                                                                    ===========         ===========

           Income (loss) from operations:
                  SRC                                               $   595,359         $   653,566
                  LA                                                   (142,241)             35,690
                  Chicago                                              (298,271)             32,592
                  Atlanta                                                26,028             (21,148)
                  7 West                                                 24,823             (69,864)
                  Avenue A                                               94,685             102,106
                  Corporate                                            (988,248)           (596,777)
                                                                    -----------         -----------
           (Loss) income from operations:                           $  (687,865)        $   136,165
                                                                    ===========         ===========

           Identifiable assets:
                  SRC                                               $    35,237         $   162,083
                  LA                                                    513,966             553,143
                  Chicago                                               385,603             510,174
                  Atlanta                                               480,796             575,322
                  7 West                                                     60                  60
                  Avenue A                                              136,620             136,814
                  Corporate                                             148,146             113,927
                                                                    -----------         -----------
           Total assets                                             $ 1,700,428         $ 2,051,523
                                                                    ===========         ===========
</TABLE>


                                     - F23 -

<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 14 - 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.

    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 15 - EARNINGS PER SHARE


         Securities that could potentially dilute basic earnings per share in
         the future that were not included in the computation of diluted
         earnings per share because their effect would have been antidilutive
         are as follows:

                                             December 31,
                                      --------------------------
                                         1999             1998
                                      ---------        ---------
         Warrants                     $ 289,741        $ 289,741
                                      =========        =========


NOTE 16 -  SUBSEQUENT EVENTS


         The Company is in the process of negotiating the sale of the L.A.
         store's lease, inventory and fixed assets. As of the date of this
         report, there has been no commitment received by the Company for a
         purchase.

         The Company intends to reopen Chicago in the second or third quarter of
         2000, once a restructuring of the Company's debt is finalized and new
         personnel have been properly trained.

                                     - F24 -
<PAGE>

                             SOULFOOD CONCEPTS, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 16 - SUBSEQUENT EVENTS (Continued)


         The Company is presently negotiating a restructuring of its short-term
         debt with two principle investors and the major stockholder. All
         parties connected to this debt (short-term and related party) have
         agreed not to move against the Company for non-payment of these loans
         in the year 2000.




                                     - F25 -