<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934

                   For the fiscal year ended December 31, 1999
                                       or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                For the transition period _________ to _________

                         Commission file number 0-20272

                          RESOURCE CAPITAL GROUP, INC.
                          ----------------------------
                 (Name of Small Business Issuer in its Charter)

                         DELAWARE                               13-3617377
                         --------                               ----------
                    (State or Other Jurisdiction of          (I.R.S. Employer
                    Incorporation or Organization)          Identification No.)

                            419 Crossville Road
                            Suite 204
                            Roswell, Georgia                        30075
                            ----------------                        -----
                    (Address of Principal Executive Offices)   (Zip Code)

                                 (770) 649-7000
                                 --------------
                 Issuer's Telephone Number, Including Area Code

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

                                      None
                                      ----

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

                     Common Stock, par value $.01 per share
                     --------------------------------------
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

            State issuer's revenues for its most recent fiscal year.
                                   $2,068,605

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of December 31, 1999.

                                 Not applicable


                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of December 31, 1999.

              Common stock, par value $.01 per share   416,935 shares


<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I                                                                            PAGE

<S>                                                                               <C>
         Item  1.          Description of Business                                  1

         Item  2.          Description of Properties                                2

         Item  3.          Legal Proceedings                                        7

         Item  4.          Submission of Matters to a Vote of                       7
                           Security Holders

PART II

         Item  5.          Market for Common Equity and Related                     7
                           Stockholder Matters

         Item  6.          Management's Discussion and Analysis or                  8
                           Plan of Operation

         Item  7.          Financial Statements                                     9

         Item  8.          Changes in and Disagreements with                        9
                           Accountants on Accounting and
                           Financial Disclosure

PART III

         Item  9.          Directors, Executive Officers, Promoters                 9
                           and Control Persons; Compliance with
                           Section 16(a) of the Exchange Act

         Item 10.          Executive Compensation                                  11

         Item 11.          Security Ownership of Certain Beneficial                12
                           Owners and Management

         Item 12.          Certain Relationships and Related                       12
                           Transactions

PART IV

         Item 13.          Exhibits and Reports on Form 8-K                        13

                           Signatures                                              15
</TABLE>


<PAGE>   3



                                     Part I

ITEM 1. DESCRIPTION OF BUSINESS

General

                  Resource Capital Group, Inc. (the Company), was organized as a
Delaware Corporation in November, 1990 to become successor in interest to AGS
Properties (AGS) and assumed various general and limited partnership interest of
AGS. From 1991 through 1999, the Company gradually disposed of all of the
mortgage receivables and the partnership interests acquired from AGS. From 1995
to 1999, the Company made real estate investments resulting in the ownership and
operation of various office buildings. During 1999, the Company's remaining two
partnership investments (acquired from AGS in 1991), were liquidated (see note
3 to the Consolidated Financial Statements included under Item 7).

         The Company's investments as of December 31, 1999 include the
following:

         8050 ROSWELL ASSOCIATES LLC (8050 ROSWELL), a Georgia Limited Liability
         Company formed in 1995 and owns a 9,000 square foot office building in
         Fulton County, Georgia.

         419 CROSSVILLE ASSOCIATES LLC (CROSSVILLE), a Georgia Limited Liability
         Company formed in 1995 and owns a 19,000 square foot office building in
         Fulton County, Georgia.

         COLONIAL PARK COMMONS LLC (COLONIAL), a Georgia Limited Liability
         Company formed in 1996 and owns a 18,387 square foot office building in
         Fulton County, Georgia.

         HEIDE LOT LLC (HEIDE), a Georgia Limited Liability Company formed in
         1996 and owns a 10,400 square foot office building, which was
         constructed in 1999, in Fulton County, Georgia.

         8046 ROSWELL ROAD LLC (8046 ROSWELL), a Georgia Limited Liability
         Company formed in 1997 and owns an 8,000 square foot office building in
         Fulton County, Georgia.

         WOODSTOCK OFFICE I, LLC (WOODSTOCK), a Georgia Limited Liability
         Company formed in 1997 and owns a 11,250 square foot office building in
         Cherokee County, Georgia.

         HUNTER MANAGEMENT COMPANY (HUNTER), acquired in 1997 and owns the
         minority interest in various subsidiaries of the Company. Additionally,
         Hunter manages the properties owned by the Company's subsidiaries.

         920 HOLCOMB BRIDGE LLC (HOLCOMB BRIDGE), a Georgia Limited Liability
         Company formed in 1998 and owns a 14,400 square foot office building in
         Fulton County, Georgia.

         RCGI OAKMONT LLC (OAKMONT), a Georgia Limited Liability Company formed
         in 1998 and owns a 20,000 square foot office building in Jefferson
         County, Alabama.

         RCGI MONTCLAIR I, LLC (MONTCLAIR), a Georgia Limited Liability Company
         formed in 1998 and owns a 22,248 square foot office building in
         Jefferson County, Alabama.

         RCGI MILLWOOD, LLC (MILLWOOD), a Georgia Limited Liability Company
         formed in 1999 and owns an 8,886 square foot office building in Cobb
         County, Georgia.

         RCGI OLD CANTON, LLC (OLD CANTON), a Georgia Limited Liability Company
         formed in 1999 and owns an 11,804 square foot office building in Cobb
         County, Georgia.


                                       1
<PAGE>   4


         WILTON CENTER, LLC (WILTON), a Georgia Limited Liability Company formed
         in 1999 and owns approximately 2.9 acres of unimproved land in Fulton
         County, Georgia.

         The Company is actively seeking new real estate acquisitions and
investments. Although the Company is currently in negotiations it is not
committed to make any other real property acquisitions. However, the Company is
evaluating various potential property acquisitions and is engaging in
discussions with sellers regarding the purchase of properties for the Company.
Purchase agreements are subject to various terms and conditions, including
receipt of satisfactory closing documentation. There can be no assurance that
all of the terms and conditions of any agreement will be satisfied and therefore
it is possible that certain investments will not be acquired.

In addition, the Company also plans to construct four office buildings
containing approximately 45,000 square feet on a 2.9 acre parcel which it owns
in Fulton County, Georgia. The Company is not contractually obligated to
construct the buildings.

Other Business Factors

The business of the Company is not seasonal and the Company does no foreign or
export business.

Personnel

         As of December 31, 1999, the Company had nine employees. The Company
has contracted with ADP Total Source (ADP) to provide professional employer and
administrative services to the Company. ADP is the employer of record for tax
reporting purposes and provides various benefits to the employees including
life, medical, dental and vision insurance coverage, worker's compensation
insurance coverage and other services. One of the Company's staff is employed on
a part-time basis. The employees are not represented by a collective bargaining
unit.

Offices

         The Company's headquarters are located at 419 Crossville Road, Suite
204, Roswell, Georgia 30075 where the Company leases approximately 1,300 square
feet of space from Crossville.

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company's office is located at 419 Crossville Road, Suite 204,
Roswell, Georgia, 30075 where the Company leases approximately 1,300 square feet
of space from Crossville.

         In August, 1999, the Company completed construction of Colonial Park
II, a 10,400 square foot office building located in Roswell, Fulton County,
Georgia. Title to the property was acquired in 1996 by Heide Lot, LLC (Heide)
which is owned 99% by the Company and 1% by Hunter. Heide leases office space to
various tenants at rates ranging from $17 to $18 per square foot and terms
ranging from 3 to 5 years. At December 31, 1999 the property was 88% occupied
with 1999 rental revenue since the building was constructed of $55,933. The
gross potential rent for the building based on December 1999 rents is $181,500
annually. The 1999 real estate taxes on this property totaled $2,630.

         In November 1999, the Company purchased Millwood which is an 8,886
square foot office building located in Marietta, Cobb County, Georgia. Title to
Millwood is held by RCGI Millwood, LLC, which is 100% owned by the Company.
Millwood leases office space to various tenants at


                                       2
<PAGE>   5


rates ranging from $12 to $18 per square foot and terms ranging from 2 to 5
years. At December 31, 1999, the property was 100% occupied with 1999 rental
revenue since acquisition of $13,937. The gross potential rent for the building
based on December 1999 rents is $131,803 annually. The 1999 real estate taxes on
this property totaled $7,088.

         In November 1999, the Company purchased Old Canton which is an 11,804
square foot office building located in Marietta, Cobb County, Georgia. Title to
Old Canton is held by RCGI Old Canton, LLC, which is 100% owned by the Company.
Old Canton leases office space to various tenants at rates ranging from $13 to
$16 per square foot and terms ranging from 1 to 5 years. At December 31, 1999,
the property was 100% occupied with 1999 rental revenue since acquisition of
$16,726. The gross potential rent for the building based on December 1999 rents
is $158,028 annually. The 1999 real estate taxes on this property totaled
$8,871.

         In December 1999, the Company purchased Wilton. Title to Wilton is held
by Wilton Center, LLC, which is 100% owned by the Company. Wilton owns
approximately 2.9 acres of developmental land located in Roswell, Fulton County,
Georgia. The 1999 real estate taxes on this land totaled $10,778.

         In February 1998 the Company purchased 920 Holcomb Bridge. Title to
Holcomb Bridge is held by 920 Holcomb Bridge, LLC, which is 100% owned by the
Company. Holcomb Bridge owns a 14,400 square foot office building located in
Roswell, Fulton County, Georgia. Holcomb Bridge leases office space to various
tenants at rates ranging from $16 to $18 per square foot and terms ranging from
1 to 5 years. At December 31, 1999 the property was 88% occupied with 1999
rental revenue of $226,839. The gross potential rent for the building based on
December 1999 rents is $246,906 annually. The 1999 real estate taxes on this
property totaled $19,769.

         In July 1998 the Company purchased Oakmont. Title to Oakmont is held by
RCGI Oakmont, LLC, which is 100% owned by the Company. RCGI Oakmont owns a
20,000 square foot office building located in Birmingham, Jefferson County,
Alabama. Oakmont leases office space to various tenants at rates ranging from
$11 to $14 per square foot and terms ranging from 1 to 5 years. At December 31,
1999 the property was 95% occupied with 1999 rental revenue of $211,233. The
gross potential rent for the building based on December 1999 rents is $218,532
annually. The 1999 real estate taxes on this property totaled $14,001.

         In July 1998 the Company purchased Montclair. Title to Montclair is
held by RCGI Montclair I, LLC, which is 100% owned by the Company. RCGI
Montclair owns a 22,248 square foot office building located in Birmingham,
Jefferson County, Alabama. Montclair leases office space to various tenants at
rates ranging from $10 to $16 per square foot and terms ranging from 1 to 3
years. At December 31, 1999 the property was 91% occupied with 1999 rental
revenue of $227,639. The gross potential rent for the building based on December
1999 rents is $255,426 annually. The 1999 real estate taxes on this property
totaled $21,579.

         In June 1997 the Company purchased Woodstock. Title to Woodstock is
held by Woodstock Office I, LLC, which is 100% owned by the Company. Woodstock
owns an 11,250 square foot office building located in Woodstock, Cherokee
County, Georgia. Woodstock leases office space to various tenants at rates
ranging from $12 to $15 per square foot and terms ranging from 1 to 3 years. At
December 31, 1999 the property was 100% occupied with 1999 rental revenue of
$149,515. The gross potential rent for the building based on December 1999 rents
is $154,513 annually. The 1999 real estate taxes on this property totaled
$10,686.


                                       3
<PAGE>   6

         In June 1997 the Company purchased 8046 Roswell. 8046 Roswell owns an
8,000 square foot office building located in Atlanta, Fulton County, Georgia.
Title to 8046 Roswell is held by 8046 Roswell Road, LLC, which is 100% owned by
the Company. 8046 Roswell leases office space to various tenants at rates
ranging from $15 to $17 per square foot and terms ranging from 1 to 5 years. At
December 31, 1999 the property was 100% occupied with 1999 rental revenue of
$124,457. The gross potential rent for the building based on December 1999 rents
is $125,465 annually. The 1999 real estate taxes on this property totaled
$10,149.

         In September 1997 the Company acquired all of the outstanding shares of
stock in Hunter in exchange for 10,000 shares of the Company's common stock.
Hunter owns the minority interest in 8050 Roswell, Crossville, Colonial and
Heide and manages various properties owned by the Company's subsidiaries.
Hunter's office is located at 419 Crossville Road, Suite 203, Roswell Georgia
30075 where it leases approximately 1,200 square feet of space from Crossville.

         In September 1996, the Company and Hunter purchased Colonial. Title to
Colonial is held by Colonial Park Commons, LLC, which is 99% owned by the
Company and 1% by Hunter. Colonial owns an 18,387 square foot office building
located in Roswell, Fulton County, Georgia. Colonial leases office space to
various tenants at rates ranging from $12 to $16 per square foot and terms
ranging from 1 to 3 years. At December 31, 1999 the property was 100% occupied
with 1999 rental revenue of $215,776. The gross potential rent for the building
based on December 1999 rents is $256,870 annually. The 1999 real estate taxes on
this property totaled $16,623.

         In 1995, the Company and Hunter purchased 8050 Roswell. Title to 8050
Roswell is held by 8050 Roswell Associates, LLC, which is 75% owned by the
Company and 25% by Hunter. 8050 Roswell owns a 9,000 square foot office building
located in Atlanta, Fulton County, Georgia. Roswell entered into a five-year
lease of the entire building to a single tenant for $88,500 annually with the
tenant being responsible for all electricity and fuel bills. The 1999 real
estate taxes on this property totaled $7,726.

         In 1995, the Company and Hunter purchased Crossville. Title to 419
Crossville is held by 419 Crossville Associates, LLC, which is 75% owned by the
Company and 25% by Hunter. Crossville owns a 19,000 square foot office building
located in Roswell, Fulton County, Georgia. Crossville leases office space to
various tenants at rates ranging from $13 to $16 per square foot and terms
ranging from 1 years to 3 years. At December 31, 1999 the property was 100%
occupied with 1999 rental revenue of $283,286. Of this amount, $36,220 was paid
to Crossville by the Company and Hunter and was eliminated from rental revenue
upon consolidation. The gross potential rent for the building, if based on
December 1999 rents is $291,685 annually. The 1999 real estate taxes on this
property totaled $16,986.

     The Company has obtained adequate insurance coverage for all properties
acquired.

Mortgages Payable

          The mortgages payable by the Company secured by the properties
mentioned above as of December 31, 1999 consists of the following:


                                       4
<PAGE>   7

<TABLE>
<S>                                                                     <C>
8050 Roswell - The mortgage payable bears interest
at 9.53% per annum and matures in July 2010
The terms of the mortgage require that monthly
payments of $3,766 be applied first to interest
and the balance to reduction of principal. Interest
on this loan adjusts every five years commencing
on July 1, 2000 and is computed at 325 basis
points over the average yield on U.S. Treasury
securities, as defined.                                                 $  300,866

Crossville - The mortgage payable bears interest at
7.75% per annum and matures in February 2008
The terms of the mortgage require that monthly
payments of $8,693 be applied first to interest
with the balance to reduction of principal.                              1,062,570

Colonial - The mortgage payable bears interest at
9.375% per annum and matures in October 2006
The terms of the mortgage require that monthly
payments of $7,276 be applied first to interest
with the balance to reduction of principal
Interest on this loan adjusts on October 1, 2001
and is computed at 300 basis points over the average
yield on U.S. Treasury securities, as defined.                             737,918

8046 Roswell - The mortgage payable bears interest
at 8.00% per annum and matures in June 1, 2009
The terms of the mortgage require that monthly
payments of $5,175 be applied first to interest with
the balance to reduction of principal. Interest
on this loan adjusts on June 1, 2002 and is computed
at 300 basis points over the average yield on U.S.
Treasury securities, as defined.                                           409,943

Woodstock - The mortgage payable bears interest
at 9.31% per annum and matures in December 2017
The terms of the mortgage require that monthly
payments of $5,243 be applied first to interest with
the balance to reduction of principal. Interest
on this loan adjusts every five years, commencing
on December 1, 2002 and is computed at 300 basis
points over the average yield on U.S. Treasury
securities, as defined.                                                    550,090

Holcomb Bridge - The mortgage payable bears interest
at 8.5% per annum and matures in March 2018
The terms of the mortgage require that monthly
payments of $8,418 be applied first to interest with
the balance to reduction of principal. Interest
on this loan adjusts every five years, commencing
on March 1, 2003 and is computed at 275 basis
points over the average yield on U.S.
Treasury securities, as defined. The mortgage may
be called by the lender in March 2003.                                     935,445
</TABLE>


                                       5
<PAGE>   8

<TABLE>
<S>                                                                     <C>
Montclair - The mortgage payable bears interest
at 7.14% per annum and matures in January 2019
Commencing in February 1999, the terms of the
mortgage require that monthly payments of $7,367
be applied first to interest with the balance
to reduction of principal. Interest on this
loan adjusts every five years, commencing
on January 1, 2004 and is computed at 275 basis
points over the average yield on U.S.
Treasury securities, as defined. The mortgage
may be called by the lender in January 2004.                               919,727

Oakmont - The mortgage payable bears interest
at 7.14% per annum and matures in January 2019
Commencing in February 1999, the terms of the
mortgage require that monthly payments of $6,348
be applied first to interest with the balance
to reduction of principal. Interest on this
loan adjusts every five years, commencing
on January 1, 2004 and is computed at 275 basis
points over the average yield on U.S.
Treasury securities, as defined. The mortgage
may be called by the lender in January 2004.                               792,531

Heide - Under the terms of the mortgage, the
Company may borrow up to the principal sum of
$900,000. The mortgage matures in March 2004
and requires interest only monthly payments through
March 2000 at the lender's base rate plus 1%,
which is currently at 9.5%. Commencing in
April 2000 until maturity, monthly principal and
interest payments based on a 20 year
amortization will be required and interest will
be fixed at the five-year Treasury constant
maturity plus 275 basis with a floor of 8%
As of January 13, 2000, the full amount has been
drawn under this facility.                                                 557,940

Millwood - The mortgage payable bears interest
at 7.54% per annum and matures in September 2008
The terms of the mortgage require that monthly
payments of $4,071 be applied first to interest
with the balance to reduction of principal
In addition, the mortgage payable requires
monthly escrow deposits, which currently amount to
$1,860, to be made to the mortgagee for the payment
of real estate taxes, insurance, lease reserves
and replacement reserves.                                                  574,060

Old Canton - The mortgage payable bears interest
at 7.54% per annum and matures in September 2008
The terms of the mortgage require that monthly
payments of $5,545 be applied first to interest
with the balance to reduction of principal
In addition, the mortgage payable requires
monthly escrow deposits, which currently amount to
$3,421, to be made to the mortgagee for the payment
of real estate taxes, insurance, lease reserves
and replacement reserves.                                                  781,908
                                                                        ----------

                                                                        $7,622,998
                                                                        ----------
</TABLE>


                                       6
<PAGE>   9


A schedule of future amortization payments  including the full $900,000 mortgage
payable as of January 13, 2000 in Heide, at December 31, 1999 follows:

<TABLE>
                           <S>            <C>
                           2000           $  189,789
                           2001              210,922
                           2002              229,129
                           2003              248,928
                           2004            1,080,703
                           Thereafter      6,005,587
                                          ----------
                                          $7,965,058
                                          ==========
</TABLE>

A majority of the mortgage notes payable have been guaranteed by the Company.
The above table excludes the callable provisions in Holcomb Bridge (2003),
Montclair (2004) and Oakmont (2004).

ITEM 3. LEGAL PROCEEDINGS

         The Company is not aware of any material pending or threatened legal
proceedings against the Company or its officers and directors.


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

         There were no matters submitted to a vote of security holders during
1999.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         On September 1, 1991 the Common Stock originally issued to the public,
was valued at $10 per share (denominated value). Although the Company
anticipates that it will request listing as soon as permissible and practicable,
the Company shares are not currently traded on the NASDAQ Over-the-Counter
Market.

         As of December 31, 1999, there were 677 record holders of the Company's
Common Stock and 416,935 shares outstanding. At December 31, 1999, there was no
established broker-dealer price quotation for the Company's Common Stock. There
are currently no market makers for the Company's Common Stock.


                                       7


<PAGE>   10

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Liquidity and Capital Resources

         The Company's liquidity is based primarily on its cash reserves, real
estate operating and investment income, its ability to obtain mortgage financing
and its ability to sell and refinance its real estate investments. These funds
are used to pay the Company's normal operating expenses and fund new
acquisitions.

         As of December 31, 1999, the Company had cash reserves of $593,863. The
Company's cash reserves and current level of income are sufficient to meet the
Company's current level of operating expenses on an ongoing basis.

         In April 1999, MLP sold the Aspen Walk Apartments for $2,675,000. As a
result, the Company received $172,522 in interest income, $76,904 in partner
distribution, as well as $1,339,554 in principal reductions on amounts due from
MLP.

         In November 1999, the Company formed Millwood and Old Canton with
capital contributions of $229,848 and $320,732, respectively. Millwood and Old
Canton acquired 8,886 and 11,804, respectively, square foot office buildings
located in Cobb County, Georgia for $786,021 and $1,062,538, respectively. In
connection with the purchase, Millwood and Old Canton assumed a mortgage payable
in the amount of $574,521 and $782,538, respectively.

         In December 1999, the Company formed Wilton with a $1,178,826 capital
contribution. Wilton acquired approximately 2.9 acres of unimproved land in
Fulton County, Georgia for $1,125,000. It is the intention of management to use
this property to construct four office buildings containing approximately 45,000
square feet. As of December 31, 1999, the Company has incurred $37,493 of costs
associated with this construction and is included in construction-in-progress in
the accompanying financial statements.

         In August 1999, Heide completed the construction of a 10,400 square
foot office building. The total cost of the construction was $930,622 of which
$837,578 was incurred in 1999 and $93,044 was incurred in 1998. In order to fund
the construction of the office building, Heide obtained a mortgage payable
whereby Heide may borrow up to $900,000. As of December 31, 1999, Heide had
drawn $557,940 under this facility.

         Based on 2000 and future budgets and recent property valuations it
appears the Company's real estate investments should produce future operating
cash flows and future resale values for the Company.

         In 1999, the Company utilized $89,392 in cash for operations and
$78,347 in cash from financing activities including mortgage proceeds of
$557,940 and the payment of a $417,301 dividend to the stockholders. During
1999, the Company utilized $1,450,968 in cash for investing activities which
included $1,658,158 used for investment in subsidiaries and $1,341,553 used for
property additions. These amounts were partially offset by $1,530,960 in
proceeds received from partnership investments. As a result, the Company
utilized cash of $1,618,707 for the year.


                                       8
<PAGE>   11

Results of Operations

         For the year ended December 31, 1999, the Company realized net income
of $21,068 compared to net income of $368,235 in 1998. Total revenue in 1999 was
$2,068,605 versus $2,287,418 in 1998. This decrease in revenue was primarily due
to the relatively low rate of return the Company had on its money market
investments versus the interest received on the notes receivable from affiliated
entity.

         Total expenses for the year ended December 31, 1999 were $1,979,796
compared to $1,629,092 in 1998. The increase in expenses was the result, in part
of the July 1998 acquisitions of Oakmont and Montclair, the 1999 acquisitions of
Millwood and Old Canton and the resulting increase in rental operating expenses,
interest and depreciation expense associated with these properties.

         General and administrative expenses of $745,802 increased $4,556 over
the 1998 level. This increase is considered immaterial.

         Depreciation and amortization of $265,035 increased $61,615 from 1998
primarily due to the 1998 and 1999 acquisitions mentioned above.

         Interest expense increased $147,122 in 1999 due to the mortgages
obtained on the 1998 and 1999 acquisitions mentioned above.

Inflation

         Inflation in the future may increase rental revenues as well as
operating expenses, all in accordance with general market trends.

ITEM 7. FINANCIAL STATEMENTS

         See Index to Consolidated Financial Statements on Page F-1 of Item 7 of
Form 10-KSB for financial statements.

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

         There have been no changes in or reported disagreements with the
accountants on any matter of accounting principles, practices or financial
statement disclosure.


                                    Part III

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

         The principal officers and directors of the Company are:

<TABLE>
<CAPTION>

         Name                         Age          Office
                                      ---          ------
         <S>                          <C>    <C>
         Albert G. Schmerge, III      55     Chairman of the Board,
                                             Chief Executive Officer,
                                             President and Director
         Norman F. Swanton            61     Secretary and Director
         Martin D. Newman             61     Director
         Rodney Knowles, III          54     Director
</TABLE>


                                       9
<PAGE>   12


         All Directors are elected to three year terms.

Albert G. Schmerge III

         Prior to the formation of the Company, Mr. Schmerge was the sole
general partner and Chief Executive Officer of AGS Properties. Mr. Schmerge
began specializing in real estate investments and acquisitions in 1970. He
combined several family owned and related businesses and co-founded AGS
Properties in 1974 which operated in the acquisition, management and operation
of many large real estate properties, primarily apartments, located throughout
the United States. In addition, his experience includes syndication, mortgage
financing and refinancing, construction, operations/management and purchase and
sales of income and investment properties.

         Mr. Schmerge earned a Bachelor of Science degree from Villanova
University, and a Masters of Business Administration from Iona Graduate School
of Business. After several years in the electronics and satellite industry he
entered the financial planning and real estate investment business with his
father in 1968.

         Mr. Schmerge has been the President and CEO of the Company since 1991.
Just prior to the formation of the Company, he was a general partner of AGS
Properties, a well known and highly respected real estate owner/operator and had
acted as the general partner as it grew in the 1970's and 1980's to participate
and control more than 70 real estate partnerships and entities over the years.
In his capacity as General Partner he was responsible for the acquisition,
formation, financial structuring, financing and sale of several hundred million
dollars worth of real estate, primarily suburban apartment developments and
suburban office properties.

Norman F. Swanton

         Mr. Swanton currently serves as Chairman of the Board and Chief
Executive Officer of Warren Resources, Inc. which engages in the acquisition and
development of existing oil properties. From 1989 to 1992, Mr. Swanton also
served as President and Investment Manager of Harbor View Horizons Corp., which
engaged in equity options trading. From October 1986 to June 1989, Mr. Swanton
was also an independent financial advisor managing investment funds for his own
account and outside investors.

         Mr. Swanton received a B.A. Degree from Long Island University in 1962
and attended Bernard Baruch Graduate School of Business PH.D. Program in
Accountancy and Finance.

Martin D. Newman

         Mr. Newman currently is a partner in the law firm of Fromme, Schwartz,
Newman & Cornicello LLP. His law expertise includes many aspects of real estate,
corporate representation of public and private companies, particularly those
engaged in the ownership, operation and management of real estate and securities
representation of public, private and not-for profit entities generally as
issuer's counsel, in connection with private placements and public offerings,
including such matters arising under the Securities Exchange Act of 1934,
periodic reporting requirements under said Act and other compliance matters.
Previously, Mr. Newman was with the law firms of Ballon, Stoll, Bader and
Nadler, PC and Wien Malkin & Bettex. He was also with the law firm of Chadbourne
& Parke from 1968 to 1977 and a staff attorney with the U.S. Securities and
Exchange Commission from 1963 to 1967. Mr. Newman is currently the principal of
four companies which own and operate over three hundred fifty apartments and
fifty retail stores in New York City.


                                       10
<PAGE>   13

         Mr. Newman received a B.A. Degree from the University of Michigan in
1960 and a JD from Harvard Law School in 1963.

Rodney Knowles, III

         Mr. Knowles currently is the Chairman and CEO of Alpha-Omega Advisors,
Inc., a private investment advisory company based in Atlanta, Georgia
specializing in publicly traded bank stocks. Mr. Knowles served as Managing
Director of the Atlanta Committee for the Olympic Games in 1996 and was
Chairman, President and CEO of Chattahoochee Bank in Georgia until its
acquisition by BankSouth in 1994. Mr. Knowles brings to the Company over 25
years of experience in the financial services industry.

ITEM 10. EXECUTIVE COMPENSATION

         The Company amended the employment agreement effective July 1, 1999 and
extended the term to June 30, 2003 with Albert G. Schmerge III, the Chairman of
the Board, Chief Executive Officer, President and Director of the Company. The
amended agreement calls for an annual base salary of $275,000 plus an annual
bonus equal to 10% of the Company's net income in excess of a 10% return on
shareholder equity. Salaries earned by Mr. Schmerge during 1999 amounted to
$262,500.

Outside Director Compensation

         The non-salaried outside directors of the Company, Mr. Norman F.
Swanton, Mr. Martin D. Newman and Mr. Rodney Knowles III receive a stipend of
$750 for each Board of Directors meeting attended. It is anticipated that the
Board will hold four regular meetings each year. The Board appointed an audit
committee and a compensation committee, which is comprised of the Outside
Directors.

         In 1997 the Company issued 4,115 common stock purchase warrants to Mr.
Norman F. Swanton and 4,115 common stock purchase warrants to Mr. Martin D.
Newman which was each equal to a 1% capitalization of the Company. In 1999 the
Company issued 4,132 common stock purchase warrants to Mr. Rodney Knowles III
which was equal to a 1% capitalization of the Company. Each warrant allows the
purchase of one share of the Company's common stock at a price of $1 per share.
The warrants were all exercised in 1999.

Officer Compensation

         The Company amended the employment agreement effective July 1, 1999 and
extended the term to June 30, 2003 with Albert G. Schmerge III. The amended
agreement calls for an annual base salary of $275,000 plus an annual bonus equal
to 10% of the Company's net income in excess of a 10% return on shareholder
equity.

         The employment agreement also provided for Mr. Schmerge to continue to
participate in employee benefit plans consisting of life and medical insurance
plans and to be provided long term disability coverage.


                                       11
<PAGE>   14

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

         (a) As of December 31, 1999, two persons owned of record or were known
by the Company to own beneficially more than five percent (5%) of the Common
Stock then outstanding.

         (b) The following table sets forth certain information with respect to
the beneficial ownership (determined in accordance with Securities and Exchange
Commission Rule 13d-3 under the Securities Exchange Act of 1934) of the
Company's Common Stock by each person known to the Company to beneficially own
more than 5% of the Company's outstanding Common Stock, by each director of the
Company and by all officers and directors as a group.

<TABLE>
<CAPTION>

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

         <S>                            <C>                         <C>
         Albert G. Schmerge III (1)            48,000               11.5126%
         Norman F. Swanton (2)                  5,615                1.3467%
         Cullen Associates (3)                 31,808                7.6290%
         Schmerge Capital One LLP (4)           3,533                0.8474%
         Martin D. Newman (5)                   5,128                1.2299%
         Rodney Knowles III (6)                 4,132                0.9910%

         Officers and Directors
         as a Group (four people)              62,875               15.0802%
</TABLE>

(FOOTNOTES)

(1) Mr. Schmerge is an Officer and Director of the Company.

(2) Mr. Swanton is an Officer and Director of the Company.

(3) A partnership owned by a trust for the benefit of Albert G. Schmerge
    III and his brothers and sisters.

(4) A Partnership owned by the family of Albert G. Schmerge, III, the
    Chairman & President of the Company.

(5) Mr. Newman is a Director of the Company.

(6) Mr. Knowles is a Director of the Company.

         (c) There are no other arrangements which may at a subsequent date
         result in a compensatory change in control of the Company.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Reference is made to the Notes to Consolidated Financial Statements
contained in this report for various transactions between the Company and its
affiliates.

         (a) No management person is indebted to the Company.

         (b) There have been no significant transactions with promoters.


                                       12
<PAGE>   15

                                     Part IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) The following documents are filed as part of this report:

         (1)(2) The consolidated financial statements indicated in Item 7,
         "Financial Statements".

         An annual report will be sent to the Shareholders subsequent to this
filing and the Company will furnish copies of such report to the Commission at
that time.

         (3) Exhibits

         The following is a complete list of Exhibits filed as part of the Form
10-KSB Annual Report. Exhibit numbers correspond to the numbers in the Exhibit
Table of Item 601(a) of Regulation S-B, which are incorporated herein:

         (2)(a)   Second Amended Joint Disclosure Statement with respect to
                  Plans of Reorganization of AGS Northbrook Associates, AGS
                  Properties and Related Debtors. *

            (b)   First Amended Plan of Reorganization of Birchwood Associates
                  dated February 27, 1991. *

            (c)   First Amended Plan of Reorganization of AGS Aspen Walk
                  Associates dated February 27, 1991. *

            (d)   First Amended Plan of Reorganization of AGS Rolling Hills
                  Associates dated February 27, 1991 *

            (e)   First Amended Plan of Reorganization of AGS Jackson Associates
                  dated February 27, 1991. *

            (f)   First Amended Plan of Reorganization of AGS Southern Lights
                  Associates dated February 27, 1991. *

            (g)   First Amended Plan of Reorganization of AGS Fountain Lake
                  Associates dated February 27, 1991. *

            (h)   Confirmation Order dated June 12, 1991 by Chief United States
                  Bankruptcy Judge Burton Lifland. *

            (i)   Second Amended Plan of Reorganization of AGS Fountains
                  Associates dated January, 1992 *

            (j)   Confirmation Order dated March 10, 1992 by Chief United States
                  Bankruptcy Judge Burton Lifland. *

         (3)      Articles of Incorporation and By-laws. *

         *The exhibit was previously included with the Form 10 filed in June,
         1992.


                                       13
<PAGE>   16

             (a)  Certificate of Correction to Certificate of Amendment to
                  Certificate of Incorporation of Resource Capital Group, Inc. *

         (4)      Form of certificate representing Common Stock of the Issuer. *

         (10)(a)  Amended and Restated Agreement of Limited Partnership of AGS
                  Partners MLP, L.P. dated September 1, 1991. *

             (b)  Stock Option Agreement dated as of July 1, 1991 between
                  Resource Capital Group, Inc. and Mr. Norman F. Swanton, a
                  Director of the Company. *

             (c)  Consulting Agreement dated July 1, 1991, between Resource
                  Capital Group, Inc. and Norman F. Swanton, a Director of the
                  Company. *

             (d)  Employment Agreement, dated as of July 1, 1991 between the
                  Issuer and Albert G. Schmerge, III, the Issuer's Chairman,
                  President, Chief Executive Officer and Director. *

             (e)  Minutes of Board of Directors meeting January 15, 1993. *

             (e)  Letter Agreement dated August 16, 1993 between Resource
                  Capital Group, Inc. and Household Commercial Realty, Inc.
                  including Assignment of Deed of Trust. *

             (f)  Settlement Agreement dated November 23, 1993 between Resource
                  Capital Group, Inc. and Eastrich Multiple Investor Fund, L.P.*


             (g)  Operating agreement dated April 25, 1995 for 8050 Roswell
                  Associates, LLC a Georgia Limited Liability Company *

             (h)  Operating agreement dated November 8, 1995 for 419 Crossville
                  Associates, LLC a Georgia Limited Liability Company. *

         (27)(a)  Financial Data Schedule (for SEC use only)

         (99)(a)  Report on Form 8-K filed February 7, 1995 regarding the sale
                  of Birches and Foxfire Apartments by AGS Partners MLP, L.P. *

             (b)  Report on Form 8-K originally filed on November 21, 1995 and
                  amended on January 23,1996 regarding the purchase of a 75%
                  interest in 419 Crossville Associates, LLC in November, 1995 *

             (c)  Report on Form 8-K filed May 27, 1997 regarding the sale of
                  Carriage House and Compass Pointe Apartments. *




         (b)      REPORTS ON FORM 8-K

                  None.

         *The exhibit was previously included with the Form 10 filed in June,
         1992 or the Form 10-KSB filed in 1993 through 1997.


                                       14
<PAGE>   17


                                   SIGNATURES


In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized

                                              RESOURCE CAPITAL GROUP, INC.
                                              ----------------------------

                                              By:/s/ Albert G. Schmerge III
                                                 --------------------------

                                              Albert G. Schmerge III,
                                              Chairman of the Board, Chief
                                              Executive Officer, President
                                              and Director




                                              Date: March 30, 2000

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.

<TABLE>
<CAPTION>

Signature                                            Title                                      Date
                                                     -----                                      ----
<S>                                         <C>                                            <C>
/s/Albert G. Schmerge III                   Chairman of the Board,                         March 30, 2000
-------------------------
Albert G. Schmerge III                      Chief Executive Officer,
                                            President and Director

/s/Norman F. Swanton                        Secretary-Treasurer                            March 30, 2000
-------------------------
Norman F. Swanton                           and Director

/s/Martin D. Newman                         Director                                       March 30, 2000
-------------------------
Martin D. Newman


/s/Rodney Knowles III                       Director                                       March 30, 2000
-------------------------
Rodney Knowles III
</TABLE>


                                       15
<PAGE>   18


                          RESOURCE CAPITAL GROUP, INC.

                        Consolidated Financial Statements
                                 for year ended
                                December 31, 1999



<PAGE>   19


Item 7. Consolidated Financial Statements



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




<TABLE>
<CAPTION>


                                                                                                          Page

<S>                                                                                                       <C>
Independent Auditor's Report                                                                              F-2

Consolidated Balance Sheet                                                                                F-3

Consolidated Statement of Operations                                                                      F-4

Consolidated Statement of Stockholders' Equity                                                            F-5

Consolidated Statement of Cash Flows                                                                      F-6

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


                                      F-1
<PAGE>   20


                          Independent Auditor's Report




To the Board of Directors
Resource Capital Group, Inc.

We have audited the accompanying consolidated balance sheet of Resource Capital
Group, Inc. and Subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1999. 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 Resource Capital
Group, Inc. and Subsidiaries at December 31, 1999, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.




                                                PANNELL KERR FORSTER PC






New York, NY
February 11, 2000


                                      F-2
<PAGE>   21


                          RESOURCE CAPITAL GROUP, INC.

                           Consolidated Balance Sheet
                                December 31, 1999

                                     Assets


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

Cash (note 2)                                                                                            $   593,863

Real and personal property, at cost (notes 1, 2, 4 and 5)
     Land                                                                         $  3,721,554
     Buildings and improvements                                                      8,404,536
     Furniture and equipment                                                           472,255
     Construction in progress                                                           37,493
                                                                                  ------------
                                                                                    12,635,838
     Less accumulated depreciation                                                    (583,918)           12,051,920
                                                                                  ------------

Deferred mortgage costs - net of accumulated amortization of
$32,581 (note 2)                                                                                            223,339

Deferred tax asset (note 7)                                                                                   19,720

Other assets                                                                                                 150,831
                                                                                                         -----------
                                                                                                         $13,039,673
                                                                                                         -----------

                      Liabilities and Stockholders' Equity

Liabilities
     Accounts payable                                                                                    $    86,440
     Accrued expenses
         Interest                                                                       52,716
         Payroll                                                                       122,418
         Professional fees                                                              26,000
         Income taxes                                                                  145,919
         Other                                                                          18,070               365,123
                                                                                  ------------
     Security deposits and other                                                                             135,493
     Mortgages payable (note 5)                                                                            7,622,998
                                                                                                         -----------
                  Total liabilities                                                                        8,210,054

Commitments and contingencies (notes 5 and 8)

Stockholders' equity (note 6)
     Common stock - $.01 par value per share, authorized
     1,000,000 shares, issued 520,970 shares                                            5,210
     Additional paid-in capital                                                      4,636,260
     Retained earnings                                                                 380,626
     Treasury stock, at cost                                                          (192,477)            4,829,619
                                                                                  ------------           -----------
                                                                                                         $13,039,673
                                                                                                         -----------
</TABLE>


See notes to consolidated financial statements


                                       F-3

<PAGE>   22
                          RESOURCE CAPITAL GROUP, INC.

                      Consolidated Statement of Operations





<TABLE>
<CAPTION>


                                                                              Year Ended
                                                                              December 31
                                                                    -------------------------------
                                                                        1999                1998
                                                                    -----------         -----------

<S>                                                                 <C>                 <C>
Income
     Rental operations (notes 1, 4 and 8)                           $ 1,577,621         $ 1,147,183
     Income from partnership investments - net (note 3)                 257,189             543,310
     Management fees - affiliated entity (note 8)                         7,206              84,188
     Interest - affiliated entity (note 3)                              120,360             379,987
     Gain on sale of real property (note 4)                                  --              60,872
     Interest and other income                                          106,229              71,878
                                                                    -----------         -----------
                  Total income                                        2,068,605           2,287,418
                                                                    -----------         -----------

Expenses
     Rental operations (notes 1 and 4)                                  464,044             326,633
     General and administrative                                         745,802             741,246
     Interest (note 5)                                                  504,915             357,793
     Depreciation and amortization (note 2)                             265,035             203,420
                                                                    -----------         -----------
                  Total expenses                                      1,979,796           1,629,092
                                                                    -----------         -----------

                  Income before provision for income taxes               88,809             658,326

Provision for income taxes (note 7)                                      67,741             290,091
                                                                    -----------         -----------
                  Net income                                        $    21,068         $   368,235
                                                                    -----------         -----------

Earnings per share (note 2)
     Basic earnings per share                                       $       .05         $       .89
                                                                    -----------         -----------
     Dilutive earnings per share                                    $       .05         $       .88
                                                                    -----------         -----------
</TABLE>





See notes to consolidated financial statements


                                       F-4


<PAGE>   23
                          RESOURCE CAPITAL GROUP, INC.

                 Consolidated Statement of Stockholders' Equity
                   For Years Ended December 31, 1999 and 1998


<TABLE>
<CAPTION>
                                                                                    Unrealized
                                                         Additional                   Gain                          Total
                                               Common      Paid-in      Retained    (Loss) on      Treasury     Stockholders'
                                               Stock       Capital      Earnings    Investment       Stock         Equity
                                               ------    ----------    ---------    -----------    ---------    -------------

<S>                                            <C>       <C>           <C>          <C>            <C>           <C>
Balance, December 31, 1997                     $5,086    $4,607,494    $ 408,624     $   4,437     $(131,712)    $4,893,929

Net income for year ended December 31, 1998        --            --      368,235            --            --        368,235

Treasury stock acquired (note 6)                   --            --           --            --       (58,935)       (58,935)

Change in unrealized gain on investment            --            --           --        (2,428)           --         (2,428)
                                               ------    ----------    ---------     ---------     ---------     ----------

Balance, December 31, 1998                      5,086     4,607,494      776,859         2,009      (190,647)     5,200,801

Net income for year ended December 31, 1999        --            --       21,068            --            --         21,068

Issuance of warrants (note 6)                      --        16,528           --            --            --         16,528

Exercise of warrants (note 6)                     124        12,238           --            --            --         12,362

Treasury stock acquired (note 6)                   --            --           --            --        (1,830)        (1,830)

Dividends paid (note 6)                            --            --     (417,301)           --            --       (417,301)

Change in unrealized gain on investment            --            --           --        (2,009)           --         (2,009)
                                               ------    ----------    ---------     ---------     ---------     ----------

Balance, December 31, 1999                     $5,210    $4,636,260    $ 380,626     $      --     $(192,477)    $4,829,619
                                               ------    ----------    ---------     ---------     ---------     ----------
</TABLE>

See notes to consolidated financial statements


                                      F-5
<PAGE>   24


                          RESOURCE CAPITAL GROUP, INC.

                      Consolidated Statement of Cash Flows


<TABLE>
<CAPTION>
                                                                                      Year Ended
                                                                                     December 31
                                                                           ---------------------------------
                                                                               1999                 1998
                                                                           ------------         ------------

<S>                                                                        <C>                  <C>
Cash flows from operating activities
     Net income                                                            $     21,068         $    368,235
     Adjustments to reconcile net income to net cash provided
      (used) by operating activities
         Depreciation and amortization                                          265,035              203,420
         Income from partnership investments - net                             (178,427)            (372,883)
         Provision for deferred income taxes                                   (285,544)              94,587
         Gain on sale of real property                                               --              (60,872)
         Gain on sale of marketable equity securities                              (157)                  --
         Issuance of stock warrants                                             16,528                   --
         Changes in certain other accounts, net of acquisitions
              Other assets                                                      (22,031)               1,744
              Accounts payable                                                   24,942               27,972
              Accrued expenses                                                   19,911              182,122
              Security deposits and other                                        49,283               47,763
                                                                           ------------         ------------
                  Net cash provided (used) by operating activities              (89,392)             492,088
                                                                           ------------         ------------
Cash flows from investing activities
     Net repayments from investees                                            1,343,723            1,861,394
     Proceeds from sale of real property                                             --               62,584
     Additions to real and personal property                                 (1,341,553)            (210,257)
     Construction in progress costs                                                  --              (60,350)
     Investments in subsidiaries                                             (1,658,158)          (2,300,684)
     Proceeds from sale of marketable equity securities                          17,783                   --
     Proceeds from disposition of partnership investments                       187,237                   --
                                                                           ------------         ------------
                  Net cash (used) by investing activities                    (1,450,968)            (647,313)
                                                                           ------------         ------------
Cash flows from financing activities
     Repayment of mortgages payable                                                  --             (836,480)
     Proceeds from mortgages payable                                            557,940            2,850,000
     Note amortization payments                                                      --              (85,258)
     Mortgage amortization payments                                            (151,858)             (96,017)
     Purchase of treasury stock                                                  (1,830)             (58,935)
     Deferred mortgage costs                                                    (77,660)             (79,240)
     Dividends paid                                                            (417,301)                  --
     Exercise of warrants                                                        12,362                   --
                                                                           ------------         ------------
                  Net cash provided (used) by financing activities              (78,347)           1,694,070
                                                                           ------------         ------------
                  Net increase (decrease) in cash                            (1,618,707)           1,538,845
Cash at beginning of year                                                     2,212,570              673,725
                                                                           ------------         ------------
Cash at end of year                                                        $    593,863         $  2,212,570
                                                                           ------------         ------------

Supplemental disclosures of cash flow information
     Cash paid during the year for interest (net of $7,686 interest
      capitalized in 1999)                                                 $    481,977         $    351,732
                                                                           ------------         ------------
     Cash paid during the year for income taxes                            $    365,067         $     43,361
                                                                           ------------         ------------
Details of investments in subsidiaries
     Prior year deposit applied to current year purchase                   $         --         $    200,000
     Real and personal property                                              (3,015,217)          (3,470,684)
     Mortgages payable                                                        1,357,059              970,000
                                                                           ------------         ------------
                                                                             (1,658,158)          (2,300,684)
                                                                           ------------         ------------
Consideration given for purchases of subsidiaries
     Cash                                                                  $  1,658,158         $  2,300,684
                                                                           ------------         ------------
</TABLE>

See notes to consolidated financial statements


                                      F-6
<PAGE>   25


                          RESOURCE CAPITAL GROUP, INC.

                   Notes to Consolidated Financial Statements
                               December 31, 1999


Note 1 - Organization and description of business

Resource Capital Group, Inc. (the Company) was organized as a Delaware
Corporation in November 1990 to become successor in interest to AGS Properties
(AGS) and assumed various general and limited partnership interest of AGS. From
1991 through 1999, the Company gradually disposed of all of the mortgage
receivables and the partnership interests acquired from AGS. From 1995 to 1999
the Company made real estate investments resulting in the ownership and
operation of various office buildings. During 1999, the Company's two remaining
partnership investments (acquired from AGS in 1991), were liquidated (see note
3).

As of December 31, 1999, the Company's investments include:

         8050 ROSWELL ASSOCIATES LLC (8050 ROSWELL), formed in 1995 and owns an
         office building in Fulton County, Georgia.

         419 CROSSVILLE ASSOCIATES LLC (CROSSVILLE), formed in 1995 and owns an
         office building in Fulton County, Georgia.

         COLONIAL PARK COMMONS LLC (COLONIAL), formed in 1996 and owns an
         office building in Fulton County, Georgia.

         HEIDE LOT LLC (HEIDE), formed in 1996 and owns an office building,
         which was constructed in 1999 in Fulton County, Georgia (see note 4).

         8046 ROSWELL ROAD LLC (8046 ROSWELL), formed in 1997 and owns an
         office building in Fulton County, Georgia.

         WOODSTOCK OFFICE I, LLC (WOODSTOCK), formed in 1997 and owns an office
         building in Cherokee County, Georgia.

         HUNTER MANAGEMENT COMPANY (HUNTER), formed in 1997 and owns the
         minority interest in various investees of the Company. Additionally,
         Hunter manages the properties owned by the Company's subsidiaries.

         RCGI OAKMONT LLC (OAKMONT), formed in 1998 and owns an office building
         in Jefferson County, Alabama.

         RCGI MONTCLAIR I, LLC (MONTCLAIR), formed in 1998 and owns an office
         building in Jefferson County, Alabama.

         920 HOLCOMB BRIDGE LLC (HOLCOMB BRIDGE), formed in 1998 and owns an
         office building in Fulton County, Georgia.

         RCGI MILLWOOD, LLC (MILLWOOD), formed in 1999 and owns an office
         building in Cobb County, Georgia.

         RCGI OLD CANTON, LLC (OLD CANTON), formed in 1999 and owns an office
         building in Cobb County, Georgia

         WILTON CENTER, LLC (WILTON), formed in 1999 and owns unimproved land
         in Fulton County, Georgia.


                                      F-7
<PAGE>   26


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Note 2 - Significant accounting policies

Basis of accounting

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, 8050 Roswell, Crossville, Colonial, Heide, 8046
Roswell, Woodstock, Hunter, Oakmont, Montclair, Holcomb Bridge, Millwood, Old
Canton and Wilton. All intercompany transactions and balances have been
eliminated in consolidation.

The Company's general and limited partnership interests in both MLP and Meadow
were accounted for under the equity method. (See note 3.)

Use of estimates

The consolidated financial statements of the Company are prepared in conformity
with generally accepted accounting principles, which require 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. The most significant area which requires the use
of management's estimates relate to the determination of the carrying value of
the Company's equity investments in partnerships. Actual results could differ
from those estimates.

Long-lived assets

Management evaluates the Company's long-lived assets, which consist primarily
of its investments in real and personal property, for impairment based on the
recoverability of their carrying amounts. When it is probable that undiscounted
cash flows will not be sufficient to recover the carrying amount of a specific
property, the assets will be written down to its fair value. No such
write-downs were required in 1999 and 1998.

Disclosure about fair value of financial instruments

The carrying amount of the Company's cash, receivables, mortgages and notes
payable is a reasonable approximation of fair value.

Depreciation and amortization

Depreciation of real and personal property is being provided on straight-line
and accelerated methods over estimated service lives ranging from 5 to 39
years. Depreciation expense for the years ended December 31, 1999 and 1998
amounted to $256,649 and $169,975, respectively.

Deferred mortgage costs are being amortized on a straight-line basis over the
term of the respective mortgages. As a result of the refinancing of
Crossville's mortgage during 1998, deferred mortgage costs in the amount of
$22,554 have been fully amortized and reflected in the 1998 consolidated
statement of operations.

Income taxes

Deferred tax assets and liabilities are recognized for both the expected future
tax impact of differences between the financial statement and tax basis of
assets and liabilities, and for the expected future tax benefit to be derived
from tax loss and tax credit carryforwards. Deferred tax assets are reflected
at their likely realizable amount.


                                      F-8
<PAGE>   27


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Cash

Cash includes cash on hand and in banks and money market funds which are
available for current operations. Substantially, all of the Company's cash is
maintained in a money market account on deposit with one bank. The Company has
not experienced any losses on its cash deposits.

Earnings per share

The Company follows the provisions of the Financial Accounting Standards Board
Statement No. 128 (SFAS 128), Earnings per Share. The following table sets
forth the computation of basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                      December 31
                                                              --------------------------
                                                                 1999            1998
                                                              ---------        ---------

<S>                                                           <C>              <C>
Numerator used for both basic and diluted
 earnings per share                                           $  21,068        $ 368,235
                                                              ---------        ---------
Denominator for basic earnings per share
     Weighted average shares outstanding                        415,284          413,780
                                                              ---------        ---------
Denominator for dilutive earnings per share
     Denominator for basic earnings per share                   415,284          413,780
     Effect of dilutive securities - warrants                         -            6,584
                                                              ---------        ---------
                                                                415,284          420,364
                                                              ---------        ---------
Basic earnings per share                                            .05              .89
                                                              ---------        ---------
Dilutive earnings per share                                   $     .05         $    .88
                                                              ---------        ---------
</TABLE>

Investment in marketable equity securities

The Company's investment in marketable equity securities was classified as
available for sale and accordingly was stated at fair value with the related
unrealized gains and losses included as a separate component of stockholders'
equity. During 1999 the Company sold its investment for $17,783. All realized
and unrealized gains/losses were not material.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive
Income". SFAS 130 requires a company to report comprehensive income and its
components in a full set of financial statements. Comprehensive income is the
change in equity during a period from transactions and other events and
circumstances from nonowner sources, such as unrealized gains (losses) on
available-for-sale securities. Changes in unrealized gains (losses) during 1999
and 1998 amounted to ($2,428) and ($2,009), respectively. Accordingly,
comprehensive income for the years ended December 31, 1999 and 1998 amounted to
$19,059 and $365,807, respectively.


                                      F-9
<PAGE>   28


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Investments in partnerships

The Company used the equity method of accounting for its partnership interests
(see note 3), whereby the original costs were adjusted by the Company's share
of the undistributed earnings or losses.

The equity in earnings (loss) of the Partnerships was adjusted annually to
eliminate transactions with the Company.

Note 3 - Partnership investments

As discussed in note 1, upon formation, the Company acquired the following
partnership investments from AGS:

-    AGS PARTNERS MLP, LP (MLP) - The Company had a 1% general and a 27.55%
     limited partnership interest in MLP which owned and operated various
     residential real estate.

-    AGS MEADOW OAKS ASSOCIATES (MEADOW) - The Company had a 2.55% general and
     a 43.10% limited partnership interest in Meadow which owned residential
     real estate property.

During 1999, both MLP and Meadow disposed of their remaining properties and
liquidated the partnerships. In connection with the liquidation of MLP, the
Company received a cash distribution of $76,904 and reimbursement of certain
advances, notes, accrued interest receivable in the amount of $1,499,967. Upon
the liquidation of Meadow, the Company received a cash distribution of
$110,333. The following is a summary of the Company's partnership investment
activity included in the accompanying statement of operations for the years
ended December 31, 1999 and 1998:

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

<S>                                                                        <C>                  <C>
Equity in earnings (loss)
     MLP                                                                   $    446,563         $    379,325
     Meadow                                                                   1,511,199               (6,442)
                                                                           ------------         ------------
         Subtotal                                                             1,957,762              372,883
Elimination of interest on notes payable
 and management and other fees                                                   78,762              170,427
                                                                           ------------         ------------
         Total equity in earnings                                             2,036,524              543,310
                                                                           ------------         ------------

(Loss) on disposition of partnership investments
     MLP                                                                       (454,047)                  --
     Meadow                                                                  (1,325,288)                  --
                                                                           ------------         ------------
                                                                             (1,779,335)                  --
                                                                           ------------         ------------

         Net partnership investment activity                               $    257,189         $    543,310
                                                                           ------------         ------------
</TABLE>


                                     F-10
<PAGE>   29


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Note 4 -  Property acquisitions and dispositions

1999 Acquisitions

In November 1999, the Company formed Millwood and Old Canton with capital
contributions of $229,848 and $320,732, respectively. Millwood and Old Canton
acquired 8,886 and 11,804, respectively, square foot office buildings located
in Cobb County, Georgia for $786,021 and $1,062,538, respectively. In
connection with the purchase, Millwood and Old Canton assumed a mortgage
payable in the amount of $574,521 and $782,538, respectively.

In December 1999, the Company formed Wilton with a $1,178,826 capital
contribution. Wilton simultaneously acquired approximately 2.9 acres of
unimproved land in Fulton County, Georgia for $1,125,000. It is the intention
of management to use this property to construct an office complex. As of
December 31, 1999, the Company has incurred $37,493 of costs associated with
the cost of constructing an office complex which is included in
construction-in-progress in the accompanying financial statements.

In August 1999, Heide completed the construction of an office building. The
total cost of the construction was $930,622 of which $837,578 was incurred in
1999 and $93,044 was incurred in 1998. In order to fund the construction of the
office building, Heide obtained a mortgage payable whereby Heide may borrow up
to $900,000 (see note 5). During the period the office building was under
construction, $7,686 of interest was capitalized and is included in the cost of
the office building.

1998 Acquisitions

In February 1998, Holcomb Bridge was formed and capitalized with a $273,692
contribution. Holcomb Bridge simultaneously acquired a 14,400 square foot
office building located in Fulton County, Georgia for $1,250,000. The purchase
was financed in part, with a $970,000 mortgage payable on the property.

In July 1998, the Company formed Oakmont and Montclair with capital
contributions of $1,014,880 and $1,182,271, respectively. Oakmont and Montclair
simultaneously acquired 20,000 and 22,248, respectively, square foot office
buildings located in Jefferson County, Alabama, for $1,009,000 and $1,175,000,
respectively. Subsequent to the purchase of the office buildings, Oakmont and
Montclair obtained mortgages payable on each of the properties amounting to
$810,000 and $940,000, respectively.

1998 Dispositions

During 1998, the Company sold a small portion of the Woodstock land to the
State of Georgia for $62,584. As a result, the Company realized a gain on sale
in the amount of $60,872.

The following summarized unaudited pro forma results of operations for the year
ended December 31, 1999 assume each of the three 1999 acquisitions occurred on
January 1, 1999.

<TABLE>
<CAPTION>

<S>                                              <C>
Total income                                     $     2,027,625

Net income                                                66,617

Basic earnings per share                                     .16

Dilutive earnings per share                                  .16
</TABLE>


                                     F-11
<PAGE>   30


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Note 5 - Mortgages payable

The mortgages payable as of December 31, 1999 consist of the following:

<TABLE>

<S>                                                                                                <C>
8050 Roswell - The mortgage payable bears interest at 9.53% per annum and
matures in July 2010. The terms of the mortgage require that monthly payments
of $3,766 be applied first to interest and the balance to reduction of principal
Interest on this loan adjusts every five years, commencing on July 1, 2000 and is
computed as 325 basis points over the average yield on U.S. Treasury securities,
as defined.                                                                                        $  300,866

Crossville - The mortgage payable bears interest at 7.75% per annum and matures
in February 2008. The terms of the mortgage require that monthly payments of
$8,693 be applied first to interest with the balance to reduction of principal.                     1,062,570

Colonial - The mortgage payable bears interest at 9.375% per annum and matures
in October 2006. The terms of the mortgage require that monthly payments of
$7,276 be applied first to interest with the balance to reduction of principal.
Interest on this loan adjusts on October 1, 2001 and is computed as 300 basis
points over the average yield on U.S. Treasury securities, as defined.                                737,918

8046 Roswell - The mortgage payable bears interest at 8.00% per annum and
matures on June 1, 2009. The terms of the mortgage require that monthly
payments of $5,175 be applied first to interest and the balance to reduction of
principal. Interest on this loan adjusts on June 1, 2002 and is computed as 300
basis points over the average yield on U.S. Treasury securities, as defined.                          409,943

Woodstock - The mortgage payable bears interest at 9.31% per annum and matures
in December 2017. The terms of the mortgage require that monthly payments of
$5,243 be applied first to interest with the balance to reduction of principal
Interest on this loan adjusts every five years, commencing on December 1, 2002
and is computed as 300 basis points over the average yield on U.S. Treasury
securities, as defined.                                                                               550,000

Holcomb  Bridge - The mortgage payable bears interest at 8.5% per annum and matures
in March 2018.  The terms of the mortgage require that monthly payments
of $8,418 be applied first to interest and the balance to reduction of  principal
Interest on this loan adjusts every five years commencing on March 1, 2003 and is
computed as 275 basis points over the average  yield on U.S. Treasury securities,
as defined. The mortgage may be called by the lender in March 2003.                                   935,445

Montclair - The mortgage payable bears interest at 7.14% per annum and matures
in January 2019. Commencing in February 1999, the terms of the mortgage
required that monthly payments of $7,367 be applied first to interest and the
balance to reduction of principal. Interest on this loan adjusts every five years
commencing on January 1, 2004 and is computed as 275 basis points over the
average yield on U.S. Treasury securities, as defined. The mortgage may be called
by the lender in January 2004.                                                                        919,727
</TABLE>


                                     F-12
<PAGE>   31


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


<TABLE>

<S>                                                                                                <C>
Oakmont - The mortgage payable bears interest at 7.14% per annum and matures
in January 2019. Commencing  in February 1999, the terms of the mortgage
required  that monthly payments  of $6,348 be applied first to interest and the
balance to reduction of principal. Interest on this loan adjusts every five years
commencing on January 1, 2004 and is computed as 275 basis points over the
average yield on U.S. Treasury securities, as defined. The mortgage may be called
by the lender in January 2004.                                                                      $  792,531

Heide - Under the terms of the mortgage, the Company may borrow up to the
principal sum of $900,000. The mortgage  matures in March 2004 and requires
interest only monthly payments through March 2000 at the lender's base rate plus
1%, which is currently at 9.5%. Commencing in April 2000 until maturity, monthly
principal and interest payments based on 20-year amortization will be required and
interest will be fixed at the five-year Treasury constant maturity plus 275 basis
points with a floor of 8%. As of January 13, 2000 the full amount has been drawn
under this facility.                                                                                   557,940

Millwood - The mortgage payable bears interest at 7.54% per annum and matures
in September 2008. The terms of the mortgage require that monthly payments of
$4,071 be applied first to interest with the balance to reduction of principal. In
addition, the mortgage payable requires monthly escrow deposits, which currently
amount to $1,860, to be made to the mortgagee for the payment of real estate
taxes, insurance, lease reserves and replacement reserves.                                             574,060

Old Canton - The mortgage  payable bears interest  at 7.54% per annum and  matures
in September 2008. The terms of the mortgage require that monthly payments of
$5,545 be applied first to interest with the balance to reduction of principal. In
addition, the mortgage payable requires monthly escrow deposits, which currently
amount to $3,421, to be made to the mortgagee for the payment of real estate
taxes, insurance, lease reserves and replacement reserves.                                             781,908
                                                                                                   ----------

                                                                                                   $7,622,998
                                                                                                   ----------
</TABLE>

A schedule of future amortization payments, including the full $900,000
mortgage payable as of January 13, 2000 in Heide, at December 31, 1999 follows:

<TABLE>

<S>                          <C>
2000                         $      189,789
2001                                210,922
2002                                229,129
2003                                248,928
2004                              1,080,703
Thereafter                        6,005,587
                             --------------
                             $    7,965,058
                             --------------
</TABLE>

A majority of the mortgage notes payable have been guaranteed by the Company.
The above table excludes the callable provisions in Holcomb Bridge (2003),
Montclair (2004) and Oakmont (2004).


                                     F-13
<PAGE>   32


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Note 6 - Stockholders' equity

Common stock and warrants

During 1997, the Company issued 8,230 common stock purchase warrants (warrants)
valued at $24,690 to two members of the Board of Directors. In January 1999,
the Company issued an additional 4,132 warrants valued at $16,528 to one of its
members of the Board of Directors. Each warrant allowed the purchase of one
share of the Company's common stock at a price of $1 per share. During February
and March 1999, all warrants were exercised. At December 31, 1999, the Company
has issued 520,970 shares of its common stock.

Treasury stock

During 1999 and 1998, the Company acquired as treasury stock 366 and 11,787
shares for $1,830 and $58,935, respectively. At December 31, 1999, the Company
has 104,035 shares of treasury stock.

Dividends

In March 1999, The Company paid a cash dividend of $1 per share.

Note 7 - Income taxes

The provision (benefit) for income taxes for the years ended December 31, 1999
and 1998 is as follows:

<TABLE>
<CAPTION>
                                 1999              1998
                             -----------        ----------
<S>                          <C>                <C>
Current
     Federal                 $   292,652        $  158,093
     State                        60,633            37,411
                             -----------        ----------
                                 353,285           195,504
                             -----------        ----------
Deferred                        (285,544)           94,587
                             -----------        ----------
                             $    67,741        $  290,091
                             -----------        ----------
</TABLE>

The difference between the total tax provision and that obtained by applying
the statutory rate is as follows:

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

<S>                                                         <C>              <C>
Tax provision at statutory rate                             $       30,195   $      223,831
State taxes and other                                               37,546           66,260
                                                            ---------------  ---------------
                  Provision for income taxes                $       67,741   $      290,091
                                                            ---------------  ---------------
</TABLE>

A summary of the net deferred income tax asset by source at December 31, 1999
is as follows:

<TABLE>
<CAPTION>

<S>                                                         <C>
Deferred tax asset
     Incentive stock compensation                           $        19,720
                                                            ----------------
</TABLE>

The Company has fully utilized all available net operating loss carryforwards.


                                     F-14
<PAGE>   33


                          RESOURCE CAPITAL GROUP, INC.

             Notes to Consolidated Financial Statements (continued)
                               December 31, 1999


Note 8 - Commitments

a.  Employment agreement

The Company has an employment agreement with its President which expires on
June 30, 2003. The agreement calls for an annual base salary of $275,000 plus
an annual bonus based on the Company's net income, as defined.

b.  Management agreements

The real estate operations of the Company's equity investees were managed by
Hunter (see note 3) under an agreement which provides for fees equal to 5% of
revenue as defined. Management fee income for the year ended December 31, 1999
represents fees earned by Hunter from managing MLP. Management fee income for
the year ended December 31, 1998 represents fees earned by Hunter from managing
MLP and Meadow. The management fee income is net of the Company's respective
equity interest in those Partnerships.

c.  Operating leases

8050 Roswell, Crossville, Colonial, Heide, 8046 Roswell, Woodstock, Oakmont,
Montclair, Holcomb Bridge, Millwood and Old Canton, each lease their office
space under operating lease agreements expiring in various years through 2005.
Future minimum annual rents to be received under operating leases currently in
effect are as follows:

<TABLE>

<S>                        <C>
2000                       $  1,652,798
2001                          1,306,590
2002                            819,514
2003                            370,399
2004                            185,058
Thereafter                        6,813
                           ------------
                           $  4,341,172
                           ------------
</TABLE>


                                     F-15