UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-KSB

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
/ X /        SECURITIES EXCHANGE ACT OF 1934

             For the fiscal year ended December 31, 2000

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
/   /        SECURITIES EXCHANGE ACT OF 1934

             For the transition period from         to
                                            -------    --------

                          Commission File No. 33-86166

                             RED HOT CONCEPTS, INC.
             (Exact name of Registrant as specified in its charter)


           DELAWARE                                      52-1887105
-------------------------------                 -----------------------------
(State or other jurisdiction of                 (I.R.S. employer identification
incorporation or organization)                  No.)


                            6701 Democracy Boulevard
                                    Suite 300
                               Bethesda, MD 20817
               (Address of principal executive offices) (Zip Code)


                                 (301) 493-4553
              (Registrant's telephone number, including area code)

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

                                      NONE

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

                          Common Stock, $.01 par value


<PAGE>


             Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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
                 ---      ---

             Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
             Yes  X    No
                 ---      ---

                  State issuer's revenues for its most recent fiscal year.
                                      $0.00

             As of April 1, 2000, the aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant was $171,036.


             As of April 1, 2000, there were 3,420,725 shares outstanding of the
Registrant's Common Stock.




















                                       2
<PAGE>


                                TABLE OF CONTENTS


ITEM                                                                    PAGE
                                     PART I

1.       Business.......................................................   4
2.       Properties.....................................................   5
3.       Legal Proceedings..............................................   5
4.       Submission of Matters to a Vote of
         Security Holders...............................................   5


                                     PART II

5.       Market for the Registrant's Common
         Equity and Related Stockholder
         Matters........................................................   7
6.       Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations..................................................   8
7.       Financial Statements...........................................  11
8.       Changes in and Disagreements with
         Accountants on Accounting and Financial
         Disclosure.....................................................  11


                                    PART III

9.       Directors and Executive Officers
         of the Registrant..............................................  12
10.      Executive Compensation.........................................  13
11.      Security Ownership of Certain Beneficial
         Owners and Management..........................................  14
12.      Certain Relationships and Related
         Transactions...................................................  15
13.      Exhibits and Reports on Form 8-K...............................  17
         Signatures.....................................................  19










                                       3
<PAGE>


Item 1.  Business

General

Red Hot Concepts, Inc. ("the Company") was incorporated in the state of Delaware
on June 14, 1994. The Company was formed to operate and develop the Chili's
Grill & Bar restaurant concept owned by Brinker International, Inc. ("Brinker")
outside the United States.

From incorporation until December 15, 1997, the Company, through its wholly
owned United Kingdom subsidiary, Restaurant House Limited ("Restaurant House"),
had the exclusive right to own and operate Chili's Grill & Bar restaurants
("Chili's Restaurants") in the United Kingdom.

From November 1995 until December 18, 1997, the Company, through its wholly
owned Australian subsidiary, Red Hot Pacific ("Red Hot Pacific") had the
exclusive rights to own and operate Chili's Restaurants in Australia and New
Zealand.

During 1997, the Company operated five Chili's Restaurants, three in Australia
and two in the United Kingdom. The Company opened its first Chili's Restaurant
in the United Kingdom, in London, in October 1995 and opened two additional
restaurants in March and May 1996. At the end of 1996, the Company closed one of
its restaurants. In November 1995, the Company acquired its first two Chili's
Restaurants in Australia through the purchase of a wholly-owned subsidiary of
Brinker that owned the operating rights to those restaurants, one which was
opened in August 1994 and the second in February 1995. The Company opened a
third restaurant in Australia in September 1996.

On December 15, 1997 the Company merged its wholly owned United Kingdom
subsidiary, Restaurant House, with and into The Celebrated Group Plc
("Celebrated") pursuant to the Agreement dated November 18, 1997 by and between
the Company and Celebrated ("the "Merger Agreement"). Pursuant to the Merger
Agreement, the Company sold all of the issued and outstanding stock of
Restaurant House to Celebrated in exchange for 28,000,000 shares of Celebrated.
Upon consummation of the Merger, the Company owns approximately 45.6% of
Celebrated. As part of the Merger, the Company received options to purchase an
additional 6,000,000 shares of Celebrated. Upon the exercise of these options
the Company would own approximately 50.51% of the outstanding shares of
Celebrated. Celebrated is publicly traded on the Alternative Index Market (AIM)
of the London Stock Exchange.

On December 18, 1997 the Company sold to Brinker the assets of its Australian
subsidiary, Chili's Texas Grill Plc., for $2.68 million. The Company used $1.25
million of the proceeds from the sale to repay a short-term loan to Brinker
dating from February 1997. An additional $700,000 was used primarily for the
payment of a related party debt. The Company purchased the Australian operations
from Brinker in November 1995.

As a result of the above transactions, the Company became a holding company, the
sole operation of which consisted of the owning of approximately 46% of the
outstanding equity of Celebrated which is recorded under the equity method. On
August 27, 1999 Celebrated obtained an Administration Order to effect a
financial restructuring and/or disposal of its various businesses. Ernst and
Young were appointed as Administrators. On or about March 27, 2000 the
Administrators decided to liquidate all the remaining assets of Celebrated.
After completion of liquidation of Celebrated, the company will have no
operations.

 During the year ended December 31, 2000 Celebrated was liquidated. Accordingly,
the company currently has no business operations.




                                       4
<PAGE>


The Celebrated Group Plc

Celebrated was incorporated in September 1988 in Berkshire, England, as Elegant
Leisure Ltd. The Company was initially formed to develop and operate mid-priced
hotels. Since that time, Celebrated has expanded its business operations to
include several restaurant chains operating throughout Great Britain. Celebrated
is a public company, 45.6 % of which is owned by the Company and 54.4% by other
public shareholders. Celebrated's shares trade on the Alternative Investment
Market of the London Stock Exchange.

The liquidation of Celebrated was completed during the year 2000.

Celebrated did not pay a dividend in 2000.


Item 2.   Properties

The Company subleases its US office from a related party on a month-to-month
lease. The total for this facility is $768.00 per month. The company did not pay
rent to related party in the year 2000.


Item 3.   Legal Proceedings

The Company is not a party to any litigation or governmental proceedings that
management believes would result in judgments or fines that would have a
material adverse effect on the Company.


Item 4.   Submissions of Matters to a Vote of Security Holders

A special meeting of stockholders was held November 3, 1997 to vote on a
proposal to reverse split outstanding shares three-to-one. Total number of votes
cast was 10,587,442, with 10,305,887 For, 256,020 Against, and 25,535
Abstaining.

No matters were submitted to a vote of the holders of the Company's Common Stock
during the fourth quarter of the Company's fiscal year ended December 31, 2000.













                                       5
<PAGE>



Item 4A.  Executive Officer of the Registrant

The executive officers of the Company are as follows:


             Name                Age      Position

             Colin Halpern        64      President and Chief Financial Officer


Colin Halpern has served as President and Director of the Company since June
1994. He served as a member of the Board of Directors of the Celebrated Group
Plc until August 1999. He also serves as President, Chief Executive Officer and
Chairman of the Board of Directors of NPS Technologies Group, Inc., all of which
are public companies. He has held these positions since July 1994 and August
1983, respectively. Mr. Halpern also serves as the Chairman of the Board of
International Franchise Systems Inc., a company which operated certain
restaurants in the United Kingdom. From 1985 to the present, Mr. Halpern has
also served as the Chairman of Universal Service Corp. Mr. Halpern was formerly
the President and Chief Executive Officer of DRC Industries, Inc., a company
that, from November 1975 through October 1985, had a Budget Rent-A-Car master
license agreement for the New York metropolitan area, including LaGuardia and
John F. Kennedy Airports.

In June 1991, the SEC sought and received, and NPS Technologies Group, Inc.
("NPS") consented to the entering of, an order against NPS and its officers and
employees that required NPS to file certain periodic reports with the SEC that
had not been timely filed and permanently restrained and enjoined NPS and such
officers and employees from failing to file in proper form with the SEC accurate
and complete reports required to be filed by NPS pursuant to the rules and
regulations of the SEC. Mr. Halpern is the President and Director of NPS, which
is currently inactive. Since June 1991, certain of NPS' reports have not been
timely filed by NPS and other reports have not been filed in proper form. The
SEC has taken no further action against NPS or any of its officers and
employees.


























                                       6
<PAGE>


                                     PART II

Item 5.   Market for the Registrant's Common Equity and Related Stockholder
          Matters

Market Information

         The Company's Common Stock is traded separately and as part of a unit
(a "Unit") which includes one share of Common Stock, one warrant to purchase one
share of stock through November 3, 2000 at $36.00* per share (a "Class B
Warrant"). The Company's Units and Common Stock are quoted on the NASDAQ
Small-Cap Market System under the symbols RHCSU and RHCS, respectively. The
Company's Class B Warrant is currently not traded.

         The high and low sale prices of the Common Stock and Units as reported
by NASDAQ were as follows:

                                                     2001*
                                                     -----
                                    Common                          Units
                              High           Low              High         Low

         First Quarter        $0.060        $0.040            Unit Not Traded



                                                     2000*
                                                     -----
                                    Common                          Units
                              High           Low              High         Low

         First Quarter         $0.3438      $0.1875           Unit Not Traded
         Second Quarter         0.3438       0.1875           Unit Not Traded
         Third Quarter          0.1875       0.1250           Unit Not Traded
         Fourth Quarter          0.070        0.040           Unit Not Traded


                                                     1999*
                                                     -----
                                    Common                          Units
                              High           Low              High         Low

         First Quarter        $1.1875       $0.4062           Unit Not Traded
         Second Quarter         0.625        0.5000           Unit Not Traded
         Third Quarter         0.5625        0.5200           Unit Not Traded
         Fourth Quarter        0.6875        0.1875           Unit Not Traded


                                                     1998*
                                                     -----
                                    Common                          Units
                              High           Low              High         Low

         First Quarter          $3.125      $2.25             Unit Not Traded
         Second Quarter           2.75       1.25             Unit Not Traded
         Third Quarter           2.625       1.45             Unit Not Traded
         Fourth Quarter           2.75       0.50             Unit Not Traded



*Prices listed reflect effect of November 1997 three-for-one reverse stock
split.



                                       7
<PAGE>



Dividends
The Company has not paid any cash dividends on its Common Stock and does not
intend to pay cash dividends on its Common Stock for the foreseeable future.


Number of Stockholders
As of April 1, 2001, there were 88 record holders of the Company's Common Stock
and 60 record holders of the Class B Warrants. The Company believes there are
approximately 1500 beneficial owners of the Company's Common Stock.


Item 6.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Introduction
Red Hot Concepts, Inc. ("the Company") was incorporated in the state of Delaware
on June 14, 1994. The Company was formed to operate and develop the Chili's
Grill & Bar restaurant concept owned by Brinker International, Inc. ("Brinker")
outside the United States.

From incorporation until December 15, 1997, the Company, through its wholly
owned United Kingdom subsidiary, Restaurant House Limited ("Restaurant House"),
had the exclusive right to own and operate Chili's Grill & Bar restaurants
("Chili's Restaurants") in the United Kingdom.

From November 1995 until December 18, 1997, the Company, through its wholly
owned Australian subsidiary, Red Hot Pacific ("Red Hot Pacific") had the
exclusive rights to own and operate Chili's Restaurants in Australia and New
Zealand.

During 1997, the Company operated five Chili's Restaurants, three in Australia
and two in the United Kingdom. The Company opened its first Chili's Restaurant
in the United Kingdom, in London, in October 1995 and opened two additional
restaurants in March and May 1996. At the end of 1996, the Company closed one of
its restaurants. In November 1995, the Company acquired its first two Chili's
Restaurants in Australia through the purchase of a wholly-owned subsidiary of
Brinker that owned the operating rights to those restaurants, one which was
opened in August 1994 and the second in February 1995. The Company opened a
third restaurant in Australia in September 1996.

On December 15, 1997 the Company merged its wholly owned United Kingdom
subsidiary, Restaurant House, with and into The Celebrated Group Plc
("Celebrated") pursuant to the Agreement dated November 18, 1997 by and between
the Company and Celebrated ("the "Merger Agreement"). Pursuant to the Merger
Agreement, the Company sold all of the issued and outstanding stock of
Restaurant House to Celebrated in exchange for 28,000,000 shares of Celebrated.
Upon consummation of the Merger, the Company owns approximately 45.6% of
Celebrated. As part of the Merger, the Company received options to purchase an
additional 6,000,000 shares of Celebrated. Upon the exercise of these options
the Company would own approximately 50.51% of the outstanding shares of
Celebrated. Celebrated is publicly traded on the Alternative Index Market (AIM)
of the London Stock Exchange.

On December 18, 1997 the Company sold to Brinker the assets of its Australian
subsidiary, Chili's Texas Grill Plc., for $2.68 million. The Company used $1.25
million of the proceeds from the sale to repay a short-term loan to Brinker
dating from February 1997. An additional $700,000 was used primarily for the
payment of a related party debt. The Company purchased the Australian operations
from Brinker in November 1995.





                                       8
<PAGE>


As a result of the above transactions, the Company was a holding company, the
sole operation of which consisted of owning of approximately 46% of the
outstanding equity of Celebrated which is recorded under the equity method. The
Company is the single largest shareholder of Celebrated. Celebrated was
incorporated in September 1988 in Berkshire, England, as Elegant Leisure Ltd.
The Company was initially formed to develop and operate mid-priced hotels. Since
that time, Celebrated has expanded its business operations to include several
restaurant chains operating throughout Great Britain. Celebrated is a public
company, 45.6 % of which is owned by the Company and 54.4% by other public
shareholders. Celebrated's shares trade on the Alternative Investment Market of
the London Stock Exchange.

On August 27, 1999 Celebrated obtained an Administration Order to effect a
financial restructuring and/or disposal of its various businesses. Ernst and
Young were appointed as Administrators. On or about March 27, 2000 the
Administrators decided to liquidate all the remaining of assets of Celebrated.
During 2000 the liquidated of Celebrated was completed. With the liquidation of
Celebrated, the Company has no business operations. Management is actively
seeking a new active business venture. The venture will require funds which the
company will seek from outside sources. No commitment for these funds are
currently available.

The Company's common stock is owned 36% by Woodland Limited Partnership and 64%
by the public. Woodland Limited Partnership owns 100% of both Class A and Class
B Convertible Preferred Stock. Upon conversion of the Class A and B Convertible
Preferred Stock, Woodland would own 56.94% of the common shares.


Results of Operations

The Company realized a net loss of $24,139 for the fifty-two week period ended
December 31, 2000. This was attributable to continuing general and
administrative expenses of the company of approximately $24,000. The company's
net loss for the fifty-two week period ended December 26, 1999 was approximately
$3.5 million. This was attributable to a $3.3 million loss on the write off of
its investment in Celebrated and continuing general and administrative expenses
of $.2 million.

At the present time the company is actively seeking a new business venture.




United Kingdom

No annual revenue and expense information for the United Kingdom operations of
Celebrated is available as Celebrated is no longer required to file quarterly or
annual reports.


Liquidity and Capital Resources
As the Company no longer has operations on a going forward basis, the Company
will no longer have revenues, but will continue to have expenses and actively
seek a new business venture. The Company has reduced its administrative expenses
currently, and has an administrative headcount of one.

The Company anticipates its cash requirements to be approximately $40,000.
In the short-term, the Company will rely on short-term advances from a related
party to finance the requirements. The Company is investigating alternative
sources of capital to finance any new ventures whether it is bank financing or
another equity transaction.




                                       9
<PAGE>



The Company

The Company's negative working capital as of December 31, 2000 was approximately
$162,000 as compared to negative working capital of $155,000 on December 26,
1999. Total current assets were $453 on December 31, 2000. Current liabilities
increased by approximately $6,000 in 2000 to $163,000 from $157,000 in 1999.

The following chart represents the net funds raised and/or used in operating,
financing and investment activities for both periods.

                                         December 27, 1999   December 28, 1998
                                                  to                  to
                                         December 31, 2000   December 26, 1999
                                            In Thousands         In Thousands
Net cash (used) in operating activities       $ ( 17)             $ (  238)
Cash (used) in investing activities             (  0)               (    0)
Cash provided by financing activities             15                   228


During the fiscal year ended December 31, 2000, the company used approximately
$17,000 for operating activities and for the year ended December 26, 1999, the
Company used approximately $238,000 for operating activities.

Cash provided by financing activities for the year was approximately $15,000 of
which all funds were advanced from related parties.

The Company has a month to month lease for its U.S. corporate office, which it
is currently not paying.

In Australia, Brinker has assumed obligation for the existing leases and Company
commitments on new restaurants sites. The Company no longer has any obligations
in Australia.

On December 27, 1998 the company converted $1,500,000 of loans and accrued
interest from a related party, into 100,000 shares of Series A Convertible 8%
Preferred Stock. The Company's Board of Directors approved this agreement.






                                       10
<PAGE>



The Company has improved short term liquidity through a number of different
steps including the reduction of administrative expenses and headcount and the
rescheduling of payment terms on the advances from Woodland Limited Partnership.
The Company believes that additional capital or borrowing will be necessary to
finance working capital in the short term. The Company does not currently have
any commitments to secure financing and there is no assurance that the Company
will be able to secure financing in the future and that even if the Company is
able to obtain financing, such financing will be available on terms acceptable
to the Company. If the Company's plans change, or if the assumptions or
estimates prove to be inaccurate, or if the Company is unable to raise more
funds, the Company will no longer be able to continue business.

Inflation

To date, inflation has not had a material effect on the Company's operations.


Item 7.   Financial Statements

See the Financial Statements data listed in the accompanying Index to Financial
Statements on Page F-1 herein. Information required by other schedules called
for under Regulation S-X is either not applicable or is included in the
financial statements or notes thereto.


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

Moore Stephens, P.C. were previously the principal accountants for Red Hot
Concepts, Inc. On April 9, 1999, that firms appointment as principal accountants
was terminated. The decision to terminate was approved by the board of directors
on April 6, 1999. In connection with the audits of the fiscal years ended
December 28, 1997 and the subsequent interim period, there were no disagreements
with Moore Stephens, P.C. on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedures, which
disagreements if not resolved to their satisfaction would have caused them to
make reference in connection with their opinion to the subject of the
disagreement.

The audit reports of Moore Stephens, P.C. on the consolidated financial
statements of Red Hot Concepts, Inc. and subsidiaries as of and for the years
ended December 28, 1997 and December 29, 1996, did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles other than the uncertainty as
to the ability of the company to continue as a going concern.

On April 6, 1999, Red Hot appointed Wayne P. Hickey, P.C. to replace Moore
Stephens, P.C. as their independent auditors of Red Hot for the fiscal year
ended December 27, 1998.

The company has agreed to provide indemnification to Moore Stephens, P.C.
subject to certain conditions, for legal and other costs that might be incurred
in defending itself in the event of threatened or actual litigation in
connection with the resources of its auditors report on the financial statement
of the company.




                                       11
<PAGE>


                                    PART III



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

The Directors and Executive Officers, their ages, their principal occupations
during the past five years or more, and directorships of each in public
companies in addition to the Company are as follows:

Colin Halpern, age 64, has served as Chairman of the Board since June 1994, and
served as President of the Company from June 1994 until August 1996 and again
from May 1997 to present. He serves as Chairman of the Board of International
Franchise Systems, Inc., a position he has held since December 1993. Mr. Halpern
also serves as President, Chief Executive Officer and Chairman of the Board of
Directors of NPS Technologies Group, Inc., all of which are/were public
companies. He has held these positions since July 1994, January 1998 and August
1983, respectively. Mr. Halpern also served as a member of the Board of
Directors of the Celebrated Group Plc from December 1997 to August 1999. Mr.
Halpern also served as President, Secretary, Treasurer and Director of Crescent
Capital from December 1993 to October 1998. Mr. Halpern also served as Executive
Vice President of Lafayette Industries from January 1992 to December 1996. From
1985 to the present, Mr. Colin Halpern has also served as the Chairman of
Universal Services Group, Inc. Mr. Colin Halpern was formerly the Chairman and
Chief Executive Officer of DRC Industries, Inc., a company that, from November
1975 through October 1985, had a Budget Rent-A-Car master license agreement for
the New York metropolitan area, including LaGuardia and John F. Kennedy
Airports.

In June 1991, the SEC sought and received, and NPS Technologies Group, Inc.
("NPS") consented to the entering of, an order against NPS and its officers and
employees that required NPS to file certain periodic reports with the SEC that
had not been timely filed and permanently restrained and enjoined NPS and such
officers and employees from failing to file in proper form with the SEC accurate
and complete reports required to be filed by NPS pursuant to the rules and
regulations of the SEC. Mr. Colin Halpern is the President and Director of NPS,
which is currently inactive. Since June 1991, certain of NPS' reports have not
been timely filed by NPS and other reports have not been filed in proper form.
The SEC has taken no further action against NPS or any of its officers and
employees.











                                       12
<PAGE>





Item 10.    Executive and Director Compensation


Summary Compensation Table

      The following table sets forth the aggregate cash compensation paid by the
Company for the fifty-two weeks ended December 26, 1999 to those executive
officers whose salary and bonus exceeded $100,000 and the Chief Executive
Officer.
<TABLE>
<CAPTION>
                                                                                    Long-Term Compensation
                                Annual Compensation                     Awards
                          ----------------------------------   --------------------------
                                                                  Other        Restricted       Securities
Name and                                Salary                    Annual          Stock         Underlying       All Other
Principal                           Compensation      Bonus    Compensation     Award (s)         Options      Compensation
Position                   Year          ($)         ($)(1)      ($)(2)           ($)               (#)              ($)

<S>                        <C>          <C>         <C>          <C>          <C>                <C>             <C>
Colin Halpern              2000              0           0            0            0                  0               0
President(3)               1999(3)      66,000           0       27,238            0                  0               0
                           1998(3)      72,000           0       27,238            0                  0               0

H. Michael Bush            2000              0           0            0            0                  0               0
Chief Financial Officer    1999          9,800           0            0            0                  0               0
Secretary                  1998         37,333           0            0            0                  0               0

<FN>
(1) Represents amounts paid under the Company bonus plan.

(2) For 1999, 1998 and 1997, Colin Halpern's compensation includes $15,840 car
allowance and $7,443 for insurance. Where no amount is given, the dollar value
of perquisites paid to the named executive officer does not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus reported for the named
executive officer.

(3) Colin Halpern has served as President since May 1997.
</FN>
</TABLE>


The following tables set forth, as to the executive officers, certain
information relating to options for the purchase of Common Stock granted and
exercised during fiscal year 2000 and held at the end of fiscal year 2000.

                        Option Grants in Last Fiscal Year

                                Individual Grants

 Name    Options    % of Total Options Granted     Exercise or   Expiration Date
          Granted   to Employees in Fiscal Year   Base Price(1)
          (#)(1)
                            None






                                       13
<PAGE>



(1) Reflects three-for-one reverse split, which occurred on November 28, 1997.

(2) Represents options granted under the Company's 1996 Non-Employee Director
Plan. Mr. Colin Halpern was not an executive officer of the Company at the time
of grant. Such options are exercisable after the first anniversary of the grant
until ten years from the date of grant.


<TABLE>
<CAPTION>
                                                Aggregated Option Exercises in Last
                                                Fiscal Year and FY-End Option Values

                                                          # of Securities     # of securities        Value of          Value of
                                                          ----------------    ----------------       ---------         --------
                                                             Underlying          underlying        unexercised        unexercised
                                                             -----------         ----------        ------------       -----------
                                                            Unexercised         unexercised        in-the-money      in-the-money
                                                            ------------        -----------        -------------     ------------
                              Shares          Value          Options at         options at          option at          option at
                              -------         ------         ----------         -----------         ----------         ---------
                            acquired on      Realized          FY-End             FY-End            FY-End (1)        FY-End (1)
                            ------------     --------          -------            -------           -----------       ----------
          Name              exercise (#)        ($)          Exercisable       Unexercisable        Exercisable      Unexercisable
          ----              ------------        ---          -----------       -------------        -----------      -------------
<S>                              <C>             <C>             <C>                <C>                <C>                <C>
Colin Halpern                    0               0               3,332              1,666              $ --               $ --

<FN>
 (1) Represents the difference between the option exercise price and the closing
market price for the Company's Common Stock.
</FN>
</TABLE>


Director Compensation

Directors who are officers or employees of the Company receive no additional
compensation for service as members of the Board of Directors or committees
thereof. Directors who are not officers or employees of the Company receive such
compensation for their services as the Board of Directors may from time to time
determine. Non-employee directors should receive an annual fee of $5,000 and a
fee of $1,000 for each board, committee, and shareholder meeting attended.
During fiscal year 1998, non-employee directors participated in the 1996
Non-Employee Directors Stock Option Plan (See Note 16A of Notes to Financial
Statements), which plan was adopted by the shareholders at the 1997 annual
meeting of shareholders. During fiscal year 1998, Mr. Melvin Lazar was granted
options to acquire 6,664 shares of common stock (reflecting the November 28,
1997 three-for-one reverse stock split) at an exercise price of $8.25, $3.9375,
$1.50 and $4.03 (1,666 shares at each price) under the plan. These options have
expired. In addition, Mr. Franklin Abelman was granted options to acquire 3,332
shares of common stock at an exercise price of $8.25 and $3.9375 (1,666 shares
at each price) under the plan. These options have also expired.


Item 11.    Security Ownership of Certain Beneficial Owners and Management

The table below sets forth certain information as of April 1, 2001 regarding the
beneficial ownership, as defined in regulations of the Securities and Exchange
Commission, of Common Stock of (i) each person who is known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of the Company's
Common Stock, (ii) each director of the Company, and (iii) all directors and
executive officers as a group. On April 1, 2000, there were 3,420,725 shares of
the Company's Common Stock and options outstanding. Unless otherwise specified,
the named beneficial owner has sole voting and investment power. The information
in the table below was furnished by the persons listed. "Beneficial Ownership"
as used herein has been determined in accordance with the rules and regulations
of the Securities and Exchange Commission and is not to be construed as a
representation that any of such shares are in fact beneficially owned by any
person.



                                       14
<PAGE>


<TABLE>
<CAPTION>
Names and Address of                  Amount and Nature of                          Percentage of
  Beneficial Owner                     Beneficial Ownership                             Class
<S>                                        <C>                                         <C>
Woodland Limited Partnership(1)             1,245,833                                   36%
1301 K Street, NW, Suite 1100
Washington, DC  20005

Colin Halpern                                  23,332(2)                                   *

Aaron L. Lebedow                               20,000                                      *

All directors and officers
as a group (2 persons)                         43,332(2)                                   *

*   Less than 1%
<FN>
(1) From December 1993, Woodland Limited Partnership, a limited partnership of
which Woodland Group is the General Partner, owns approximately 36% of Red Hot
Concepts issued and outstanding shares of Common Stock. Woodland Group is owned
one-third by Mr. Jay Halpern, one-third by Ms. Nancy Gillon and one-third by
Mrs. Gail Halpern. Gail Halpern is the wife of Colin Halpern. Jay Halpern and
Nancy Gillon are the children of Gail and Colin Halpern. By reason of their
indirect ownership of approximately 100% of the outstanding stock of Woodland,
Mr. Jay Halpern, Ms. Gillon and Mrs. Halpern may be deemed to have a beneficial
interest in the shares owned by Woodland Limited Partnership. Messrs. Halpern,
Ms. Gillon and Mrs. Halpern disclaim beneficial ownership of such securities.

(2) Represents options to purchase shares of Common Stock exercisable within 60
days of April 1, 2001.
</FN>
</TABLE>


Item 12.   Certain Relationships and Related Transactions

Woodland Limited Partnership ["Woodland"] is a partnership controlled by members
of Mr. Colin Halpern's family. Mr. Halpern is the President and Chairman of the
Board of the company. As of December 28, 1997, the balance due to Woodland for
funds advanced to the company was $1,011,317, which included accrued interest
payable of $230,065. This note was due in June 1998. In May 1998 the due date
was extended to January 1999. During 1998, additional funds were advanced to the
company from Woodland of $488,683 including accrued interest for the current
period. The total of these amounts for 1997 and 1998, totaling $1,500,000 were
converted to 100,000 shares of Series A Convertible 8% Preferred Stock at
December 27, 1998.

In June 1996, as partial consideration for the conversion of short-term advances
to a note payable loan, the Company issued a common stock purchase warrant
entitling Woodland to purchase 166,667 shares of the Company's common stock at
$7.50 per share for a period of 24 months commencing on the date of the loan.
The warrants will be redeemable at $.01 per share if the closing bid price of
the Company's common stock exceeds $30 for 10 consecutive trading days ending
within five days of the notice of redemption. In December 1996, Woodland agreed
to extend the note due until June 1998 and the shares of the Company's common
stock at $5.25 per share for a term expiring December 31, 1999. As of December
29, 1996, the note was recorded net of the fair value of these stock warrants at
$694,556 [See Note 6]. Interest expense amortized on purchase warrants for the
52 week period ended December 28, 1997 is $130,000. The warrants were cancelled
with conversion of the notes to equity.



                                       15
<PAGE>


In March 1997, the Company agreed with Woodland Limited Partnership to convert
$750,000 of long-term debt to 100,000 $1.00 par value Series A convertible
preferred shares. On September 25, 1997, Woodland agreed to exchange its $1.00
par value Series A non-convertible preferred shares to 375,000 $2.00 par value
Series B non-convertible preferred shares.

On September 25, 1997, Woodland agreed to convert an additional $700,000 of
notes payable into 350,000 $2.00 par value Series B non-convertible preferred
shares. The agreed dividend is 8% and is cumulative. The preferred shares hold
the same voting rights as the common shares. The warrants issued in connection
with notes payable were valued at $145,522 and was accounted for as a discount
to the notes payable to Woodland. At December 28, 1997, the Company amortized
$116,000 as interest expense.

On December 27, 1998, Woodland agreed to convert $1,500,000 working capital
loans and accrued interest, to 100,000 shares of $1.00 Par Value Series A
Convertible 8% Preferred Stock. The agreed dividend is 8% and is cumulative.

At December 31, 2000, dividends in arrears on the Series A convertible preferred
stock are $240,000. Dividends in arrears on the Series B non-convertible
preferred stock amounted to $406,000 or $0.40 per share.

Mr. Halpern also is the Chairman of the Board of International Franchise
Systems, Inc. ["IFS"].

The Company has advanced funds to and paid various expenses on behalf of Mr.
Halpern. At December 31, 2000 and December 26, 1999, the total amount due to the
Company was $41,149 and $41,149 respectively.

Mr. Halpern's son is an attorney with a law firm that had provided legal
services to the Company. There were no legal expenses incurred with this firm
for the fifty-two weeks ended December 31, 2000. At December 31, 2000 there was
a balance of $93,778 due and owing by the Company to this firm.

The Chief Financial Officer of the Company was also the Chief Financial Officer
of IFS until October 1998. Mr. H. Michael Bush the then Chief Financial Officer
of the company was also Chief Financial Officer and the Chief Executive Officer
of the Celebrated Group, Plc.








                                       16

<PAGE>


Item 13.   Exhibits and Reports on Form 8-K

(a) Exhibits

   1(A)(2)       Underwriting Agreement

    (B)(1)       Form of Selected Dealers Agreement

    (C)(2)       Warrant Agreement

   3(A)(2)       Certificate of Incorporation

    (C)(2)       Bylaws of Registrant

   4(A)(3)       Form of Common Stock Certificate

    (B)(3)       Class B Common Stock Purchase Warrant Specimens

  10(A)(2)       Development Agreement dated July 15, 1994 between
                 Brinker International, Inc. and Restaurant House Limited

  10(A)(i)(4)    License Agreement dated January 27, 1995 between
                 Brinker International, Inc. and Restaurant House Limited

  10(A)(ii)(4)   Letter Agreement dated January 9, 1995 by
                 Brinker International, Inc.

    (B)(2)       Employment Agreement between Registrant and
                 Colin Halpern

    (C)(2)       Unit Purchase Option

    (D)(2)       Escrow Agreement among the Company, the Underwriter,
                 Jersey Transfer and Trust Co., and United Jersey Bank

    (E)(4)(**)   Form of Incentive Stock Option Plan

  21(2)          Subsidiaries of the Registrant

  10(F)(5)       Development Agreement between Brinker International, Inc.
                 and Red Hot Concepts-Pacific, Inc. dated November 8, 1995

  10(G)(5)       Share Sale Agreement between Red Hot Concepts-Pacific, Inc.
                 and Brinker Australia, Inc. dated November 8, 1995

  11(**)         1996 Non-Employee Directors Stock Option Plan

  10(H)(6)       Merger Agreement between Celebrated Group Plc and Red Hot
                 Concepts, Inc. dated December 16, 1997

  10(I)(6)       Sale Agreement between Brinker International, Inc. and Red Hot
                 Concepts, Inc. dated December 19, 1997
---------------------





                                       17
<PAGE>


         (*)   Filed herewith.
         (**)  Denotes Compensatory Plans

1    Incorporated by reference, filed as an exhibit to Registrant's
     Post-Effective Amendment No. 1 to SB-2 filed with the Securities and
     Exchange Commission on November 8, 1994.

2    Incorporated by reference, filed as an exhibit to Registrant's Registration
     Statement on Form SB-2, filed with the Securities and Exchange Commission
     on November 8, 1994.

3    Incorporated by reference, filed as an exhibit to Registrant's
     Pre-Effective Amendment No. 1 to SB-2, filed with the Securities and
     Exchange Commission on November 8, 1994.

4    Incorporated by reference previously filed as an exhibit to Registrant's
     Pre-Effective Amendment No. 2 to SB-2 filed with the Securities and
     Exchange Commission on November 8, 1994.

5    Incorporated by reference filed as Exhibit to Registrant's 8-K, filed with
     the Securities and Exchange Commission on November 28, 1995.

6    Incorporated by reference filed as Exhibit to Registrant's 8-K, filed with
     the Securities and Exchange Commission on December 19, 1997

(b)      Reports on Form 8-K

         March 26, 1997      Extension of Class A Common Stock Purchase Warrant

         May 13, 1997        Naming New President

         August 27, 1997     Letter of Intent to Merge with Celebrated Group Plc

         October 28, 1997    Continued Listing on Nasdaq SmallCap Market

         November 28, 1997   Reverse Split of Common Stock

         December 19, 1997   Merger with Celebrated Group Plc and
                             Sale of Australian Subsidiary to Brinker
                             International, Inc.

         December 30, 1997   Amendment to December 19, 1997 8-K









                                       18
<PAGE>


                                   SIGNATURES


          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                              RED HOT CONCEPTS, INC.



                                              By:/s/ Colin Halpern
                                                 ------------------------
                                                   Colin Halpern, President

                                              Date:  May  4, 2001
                                                   --------------


          In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.


/s/Colin Halpern          President and Director              May 4, 2001
----------------
Colin Halpern             (Chief Executive Officer)





















                                       19
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES


INDEX TO FINANCIAL STATEMENTS



                                                                            Page

Independent Auditor's Report.........................................        F-1

Consolidated Balance Sheets as of December 31, 2000
and December 26, 1999................................................  F-2...F-3

Consolidated Statements of Operations for the fifty-two weeks ended
December 31, 2000 and December 26, 1999..............................        F-4

Consolidated Statements of Stockholders' Equity for the period
December 31, 2000 to December 26, 1999...............................        F-5

Consolidated Statements of Cash Flows for the fifty-two weeks ended
December 31, 2000 and December 26, 1999..............................  F-6...F-7

Notes to Consolidated Financial Statements...........................  F-8..F-21





                         . . . . . . . . . . . . . . . .




<PAGE>


                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors of
   Red Hot Concepts, Inc.


                  We have audited the accompanying  consolidated  balance sheets
of Red Hot  Concepts,  Inc.  and its  subsidiaries  as of December  31, 2000 and
December  26,  1999,  and the  related  consolidated  statement  of  operations,
stockholders'  equity,  and cash flows for the two fifty-two  week periods ended
December 31, 2000 and December 26, 1999. These consolidated financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

                  We conducted our audits in accordance with generally  accepted
auditing  standards.  Those standards require that we plan and perform the audit
to  obtain  reasonable  assurance  about  whether  the  consolidated   financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall  consolidated  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 consolidated  financial
position of Red Hot Concepts,  Inc. and its subsidiaries as of December 31, 2000
and December 26, 1999,  and the  consolidated  results of their  operations  and
their cash flows for the two fifty-two  week periods ended December 31, 2000 and
December 26, 1999, in conformity with generally accepted accounting principles.

                  The accompanying  consolidated  financial statements have been
prepared assuming that Red Hot Concepts, Inc. and its subsidiaries will continue
as a  going  concern.  As  discussed  in  Note 3 to the  consolidated  financial
statements,  Red Hot Concepts, Inc. and its subsidiaries have suffered recurring
losses  from  operations;  have  utilized  $17,040  and  $237,926  in  cash  for
operations;  have  working  capital  deficits of $160,532  and  $154,957,  as of
December 31, 2000 and December 26, 1999,  respectively;  and that the  company's
major asset,  its investment in Celebrated Group has been written off due to its
liquidation,  raise  substantial  doubt  about Red Hot  Concepts,  Inc.  and its
subsidiaries'  ability to continue  as a going  concern.  Management's  plans in
regard to these  matters are  described  in Note 3. The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.






                                            WAYNE P. HICKEY, P. C.
                                            Certified Public Accountant.

Bohemia, New York
May 4, 2001










                                      F-1

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND DECEMBER 26, 1999



                                           December 31,       December 26,
Assets:                                       2000               1999
                                            --------           --------
Current Assets:
   Cash                                     $    453           $  2,093
Restricted
Cash                                               0                  0
   Due from Celebrated Group                       0                  0
   Prepaid Expenses                                0                  0
   Accrued Interest Receivable                     0                  0
                                            --------           --------

   Total Current Assets                     $    453           $  2,093
                                            --------           --------


Property and Equipment:
   Furniture and Fixtures                   $ 10,861           $ 10,861
   Less:  Accumulated Depreciation            (9,212)            (7,688)
                                            --------           --------

   Property and Equipment - Net             $  1,649           $  3,173
                                            --------           --------

Other Assets:
   Officer Loan Receivable                  $ 41,149           $ 41,149
   Investment in Celebrated Group                  0                  0
   Loan Receivable - Other                    28,000             28,000
                                            --------           --------

   Total Other Assets                       $ 69,149           $ 69,149
                                            --------           --------

   Total Assets                             $ 71,251           $ 74,415
                                            ========           ========


The Accompanying Notes are an Integral Part of these Consolidated
Financial Statements.





                                      F-2
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2000 AND DECEMBER 26, 1999



<TABLE>
<CAPTION>
                                                                          December 31,          December 26,
                                                                              2000                   1999
                                                                         ------------           ------------
<S>                                                                      <C>                    <C>
Liabilities and Stockholders' Equity:
Current Liabilities
   Accounts Payable and Accrued Expenses                                 $    162,625           $    157,050
                                                                         ------------           ------------

Long-Term Liabilities:
   Accrued Interest Payable - Related Party                                         0                      0
   Due to Related Party                                                  $    336,626           $    321,226
                                                                         ------------           ------------


   Total Long-Term Liabilities                                           $    336,626           $    321,226
                                                                         ------------           ------------

Commitments and Contingencies [16]                                                  0                      0
                                                                         ------------           ------------

Stockholders' Equity:
   Series A Convertible 8% Preferred Stock, $1.00 Par Value
     100,000 Shares Authorized, Issued and Outstanding                   $  1,500,000           $  1,500,000

   Series B Non-Convertible 8% Preferred Stock, $2.00 Par Value
     725,000 Shares Authorized, Issued and Outstanding                      1,450,000              1,450,000

   Common Stock, 12,000,000 Shares Authorized,
     3,420,782 Shares Issued and Outstanding                                   34,207                 34,207

   Additional Paid-in Capital                                               8,443,416              8,443,416

   Accumulated Deficit                                                    (11,732,428)           (11,708,289)

   Accumulated Other Comprehensive Income                                    (123,195)              (123,195)
                                                                         ------------           ------------

   Total Stockholders' Equity                                            $   (428,000)          $   (403,861)
                                                                         ------------           ------------

   Total Liabilities and Stockholders' Equity                            $     71,251           $     74,415
                                                                         ============           ============

</TABLE>



The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.

                                      F-3
<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 Fifty-Two Weeks Ended
                                                          December 31,          December 26,
                                                          -----------           -----------
                                                               2000                  1999
                                                          -----------           -----------
<S>                                                       <C>                   <C>
Revenues                                                  $         0           $         0
                                                          -----------           -----------

Cost of Revenues:
   Cost of Revenues                                                 0                     0
   Restaurant Expense                                               0                     0
                                                          -----------           -----------

   Total Cost of Revenues                                           0                     0
                                                          -----------           -----------

   Gross Margin                                                     0                     0

General and Administrative Expenses                            22,615               215,829

Depreciation and Amortization                                   1,524                 1,524
                                                          -----------           -----------

   Operating Loss                                             (24,139)             (217,353)
                                                          -----------           -----------

Net (Loss) of Unconsolidated Investee                               0            (3,283,496)
                                                          -----------           -----------

Other Income [Expense]:
   Interest Income                                                  0                    14
   Interest Expense - Related Party                                 0                     0
   Gain [Loss] on Disposal of Subsidiary                            0                 5,905
                                                          -----------           -----------

   Other Income [Expense] - Net                                     0                 5,919
                                                          -----------           -----------

   Income [Loss] Before Income Tax Expense                    (24,139)           (3,494,930)

Federal and State Income Tax Expense                                0                     0
                                                          -----------           -----------

   Net Income [Loss]                                          (24,139)           (3,494,930)

Preferred Stock Dividends                                    (236,000)             (236,000)
                                                          -----------           -----------

   Net Income [Loss] Available to Stockholders            $  (260,139)          $(3,730,930)
                                                          ===========           ===========

Net Income [Loss] Per Common Share:
   Basic                                                  $      (.08)          $     (1.09)
                                                          ===========           ===========

   Weighted Average Number of Shares Outstanding            3,420,725             3,420,725
                                                          ===========           ===========
</TABLE>

The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.

                                      F-4
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                           Series B
                                                                                        Non-Convertible
                                     Common Stock [11E]               Additional        Preferred Stock
                                          Number of                    Paid-in            Number of
                                           Shares         Amount       Capital         Shares    Amount


<S>                                     <C>           <C>            <C>               <C>         <C>
Balance - December 27, 1998              3,420,782     $   34,207     $8,443,416        725,000     $1,450,000
                                        ==========     ==========     ==========     ==========     ==========
Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 26, 1999              --             --             --             --             --
Comprehensive Income                          --             --             --             --             --
                                        ----------     ----------     ----------     ----------     ----------
Balance - December 26, 1999              3,420,725     $   34,207     $8,443,416        725,000     $1,450,000
                                        ==========     ==========     ==========     ==========     ==========
Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 31, 2000              --             --             --             --             --
Comprehensive Income                          --             --             --             --             --
                                        ----------     ----------     ----------     ----------     ----------

Balance - December 31, 2000              3,420,725     $   34,207     $8,443,416        725,000     $1,450,000
                                        ==========     ==========     ==========     ==========     ==========








                                                Series A                                             Accumulated
                                               Convertible            Compre-                           Other           Total
                                             Preferred Stock          hensive       Accumulated    Comprehensive     Stockholders'
                                                Number of              Income        [Deficit]          Income         Equity
                                          Shares        Amount

Balance - December 27, 1998                100,000   $  1,500,000                   $ (8,213,359)   $   (123,195)   $  3,091,069
                                      ============   ============                   ============    ============    ============

Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 26, 1999              --             --       (3,494,930)     (3,494,930)           --        (3,494,930)
Comprehensive Income                          --             --       (3,494,930)           --              --              --
                                      ------------   ------------   ------------    ------------    ------------    ------------
Balance - December 26, 1999                100,000   $  1,500,000                   $(11,708,289)   $   (123,195)   $   (403,861)
                                      ============   ============                   ============    ============    ============

Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 31, 2000              --             --          (24,139)        (24,139)           --           (24,139)
Comprehensive Income                          --             --          (24,139)           --              --              --
                                                                                                    ------------    ------------
Balance - December 31, 2000                725,000   $  1,450,000                   $(11,732,428)   $   (123,195)   $   (428,000)
                                      ============   ============                   ============    ============    ============


</TABLE>


Foreign Currency Translation:
Prior to December 28, 1997,  the  functional  currency for the Company's  United
Kingdom subsidiary and Australian  subsidiary was the British pound sterling and
Australian dollar, respectively. The translation from British pound sterling and
Australian  dollars into U.S.  dollars was performed for balance sheet  accounts
using current exchange rates in effect at the balance sheet date and for revenue
and expense  accounts using a weighted  average exchange rate during the period.
The  gains  or  losses   resulting  from  such   translation   are  included  in
stockholders'  equity.  For the period  December 27, 1998 the  translation  from
British pound  sterling into U.S.  dollars for the  investment in the Celebrated
group was done using current exchange rates in effect at year end.


The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.




                                      F-5
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                    Fifty-Two Weeks Ended
                                                                              December 31,          December 26,
                                                                              -----------           -----------
                                                                                  2000                  1999
                                                                              -----------           -----------

Operating Activities:
<S>                                                                           <C>                   <C>
   Net Income [Loss]                                                          $   (24,139)          $(3,494,930)
                                                                              -----------           -----------
   Adjustments to Reconcile Net Income [Loss] to Net
     Cash [Used for] Provided by
     Operating Activities:
     Depreciation and Amortization                                                  1,524                 1,524
     Net Loss of Unconsolidated Investee                                                0             3,257,096
     Gain on Sale of Assets of CTG and Rights in Chili's Restaurants                    0                     0
     Gain on Merger of UK Subsidiary into Celebrated                                    0                     0

   Changes in Assets and Liabilities:
     [Increase] Decrease in:
       Accounts Receivable                                                              0                56,400
       Inventories                                                                      0                     0
       Prepaid Expenses and Other Current Assets                                        0                     0

     Increase [Decrease] in:
       Accounts Payable                                                             5,575               (58,016)
       Accrued Expenses                                                                 0                     0
       Other Payables and Accrued Interest                                              0                     0
                                                                              -----------           -----------

     Total Adjustments                                                        $     7,099           $ 3,257,004
                                                                              -----------           -----------

   Net Cash - Operating Activities                                            $   (17,040)          $  (237,926)
                                                                              -----------           -----------

Investing Activities:
   Purchase of Furniture and Fixtures                                                   0                     0
                                                                              -----------           -----------

   Net Cash - Investing Activities                                            $         0           $         0
                                                                              -----------           -----------

Financing Activities:
   Advances from Related Parties                                                   15,400               265,726
   Payments to Related Parties                                                          0               (38,000)
                                                                              -----------           -----------

   Net Cash - Financing Activities                                            $    15,400           $   227,726
                                                                              -----------           -----------

Effect of Exchange Rate Changes on Cash                                       $         0           $         0
                                                                              -----------           -----------

   Net [Decrease] in Cash - Forward                                           $    15,400           $   (10,200)

</TABLE>




The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.

                                      F-6
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                              Fifty-Two Weeks Ended
                                                                                         December 31,       December 26,
                                                                                         ------------       ------------
                                                                                             2000               1999
                                                                                             ----               ----


<S>                                                                                   <C>                 <C>
   Net [Decrease] in Cash - Forwarded                                                 $        (1,640)    $       (10,200)

Cash - Beginning of Periods                                                                     2,093              12,293
                                                                                      ---------------     ---------------

   Cash - End of Periods                                                              $           453     $         2,093
                                                                                      ===============     ===============

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the periods for:
     Interest                                                                         $             0     $             0
     Income Taxes                                                                     $             0     $             0

Supplemental Disclosures of Non-Cash Investing and Financing Activities:
   Conversion of Related Party Debt to Preferred Stock                                $             0     $             0

   Cancellation of Warrants                                                           $             0     $             0
</TABLE>


The Accompanying Notes are an Integral Part of these Consolidated Financial
Statements.



                                      F-7
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



[1] Organization and Nature of Business

Corporate  Structure - Red Hot Concepts,  Inc. ["Red Hot"] was  incorporated  in
Delaware on June 14,  1994.  Its  principal  offices  are  located in  Bethesda,
Maryland. Until December 15, 1997, Red Hot owned 100% of the stock of Restaurant
House Limited ["Restaurant  House"], a United Kingdom corporation  headquartered
in Milton Keynes, England. On December 15, 1997, Red Hot exchanged its shares in
Restaurant House for shares in Celebrated Group Plc  ["Celebrated"],  a publicly
traded company in the United Kingdom ["UK"] [See Note 19].

Red Hot Concepts - Pacific,  Inc.,  ["Red Hot Pacific"] a Delaware  corporation,
was formed in September  1995 and is owned 95% by Red Hot. In November 1995, Red
Hot Pacific  acquired all of the stock of Chili's Texas Grill Pty Ltd.  ["CTG"],
an Australian  company. On December 19, 1997, Red Hot Pacific sold the assets of
CTG and the Chili's  Concept  Australia  and New Zealand  development  rights to
Brinker International, Inc. ["Brinker"] [See Note 18].

Description  and Nature of Business - The Company had the exclusive right to own
and operate Chili's Grill and Bar restaurants ["Chili's  Restaurants"]  pursuant
to development and license agreements,  in the UK, Australia and New Zealand. On
December 15 and December 19, 1997, Red Hot sold the exclusive  rights for the UK
and Australia/New Zealand restaurants, respectively. As a result, the Company is
a holding  company,  the sole  operation of which  consists of its  ownership of
Celebrated recorded using the equity method.  Celebrated was initially formed to
develop and operate  mid-priced  hotels.  Celebrated  has  expanded its business
operations to include several  restaurants  chains  operating  throughout  Great
Britain.  Celebrated is a public company, 45.6% of which is owned by the Company
and  54.5%  by  other  public  shareholders.  Celebrated's  shares  trade on the
Alternative Investment Market of the London Stock Exchange.  Celebrated owns the
exclusive  rights for Chili's  Restaurants in the UK, along with other concepts.
On  August  27,  1999  the  Celebrated  Group  plc  ("Celebrated")  obtained  an
administration order to effect a financial  restructuring and/or disposal of its
various  businesses.  Ernest  & Young  was  appointed  as the  Administrator  of
Celebrated and its subsidiaries. On March 20, 2000 the Joint Administrators,  in
compliance with insolvency Rules gave  notification  that they intended to apply
to the courts to become Joint  Liquidators of Celebrated,  and thereby liquidate
Celebrated Group and its subsidiaries.


[2] Summary of Significant Accounting Policies

Principles of Consolidation - The consolidated  financial statements include the
accounts of Red Hot and its wholly-owned and  majority-owned  subsidiaries until
the date of divestiture.  All significant intercompany accounts and transactions
have been eliminated.

On December 26, 1999, Red Hot Concepts, Inc. disposed of its interest in Red Hot
Pacific, Inc. its only remaining subsidiary. The Company has used the equity
method to account for the holdings in Celebrated. The Company has an option to
acquire more than 50% of the outstanding shares of Celebrated. If exercised, the
Company will report on a consolidated basis.

Property and Equipment - Property and equipment are stated at cost. Depreciation
on  equipment  is computed  primarily  using the  straight-line  method over the
estimated useful lives of the assets,  which range from 3 to 7 years.  Leasehold
improvements  were  amortized  over  the  lesser  of  the  useful  life  of  the
improvements  or the lease term,  which averaged 20 years.  The Company began to
record  depreciation of its assets in October 1995,  when operations  commenced.
Depreciation  expense for the fifty-two week periods ended December 31, 2000 and
December 26, 1999 was $1,524 and $1,524, respectively.






                                      F-8

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2



[2] Summary of Significant Accounting Policies [Continued]

Deferred  Lease  Guaranty - The Company had entered  into an  agreement  to have
guaranteed,  under  certain  circumstances,  a minimum  of 5 and up to 12 of its
operating  leases for properties.  These  guarantees were to be amortized over 5
years  under  the  straight-line  method  [See Note  16C].  This  agreement  was
terminated  upon the sale of CTG and the Chili's Concept  Australia/New  Zealand
development rights.

Revenue Recognition - The Company recognizes revenue at the point of sale to the
customer.

Earnings [Loss] Per Share - The Financial  Accounting Standards Board has issued
Statement of Financial  Accounting  Standards  ["SFAS"] No. 128,  "Earnings  per
Share";  which is effective for financial  statements  issued for periods ending
after December 15, 1997.  Accordingly,  earnings per share data in the financial
statements for the year ended December 31, 2000 and December 26,1999,  have been
calculated in accordance with SFAS No. 128.

SFAS No. 128 supersedes  Accounting  Principles  Board Opinion No. 15, "Earnings
per  Share,"  and  replaces  its  primary  earnings  per share  with a new basic
earnings per share  representing the amount of earnings for the period available
to each share of common stock outstanding during the reporting period.  SFAS No.
128 also requires a dual presentation of basic and diluted earnings per share on
the face of the statement of operations for all companies  with complex  capital
structures.  Diluted  earnings per share reflects the amount of earnings for the
period available to each share of common stock outstanding  during the reporting
period,  while giving effect to all dilutive  potential  common shares that were
outstanding during the period,  such as common shares that could result from the
potential exercise or conversion of securities into common stock.

The  computation  of diluted  earnings  per share  does not  assume  conversion,
exercise,  or contingent  issuance of securities that would have an antidilutive
effect on earnings  per share [i.e.,  increasing  earnings per share or reducing
loss per share].  The dilutive  effect of  outstanding  options and warrants and
their   equivalents  are  reflected  in  dilutive  earnings  per  share  by  the
application  of the treasury  stock method which  recognizes the use of proceeds
that could be  obtained  upon  exercise of options  and  warrants  in  computing
diluted  earnings  per share.  It  assumes  that any  proceeds  would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive  effect only when the average  market price of the
common  stock  during the period  exceeds the  exercise  price of the options or
warrants.

Potential common shares of 2,699,847 are not currently  dilutive,  but may be in
the future.

Foreign  Currency  Translation  - For the periods  ended  December  31, 2000 and
December 26, 1999, the investment in Celebrated  Group has been  translated into
US dollars,  from British Pound Sterling using year end exchange rates in effect
at that date.










                                      F-9

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3


[2] Summary of Significant Accounting Policies [Continued]

Impairment  - Certain  long-term  assets of the  Company  are  reviewed at least
annually as to whether their  carrying  value has become  impaired,  pursuant to
guidance  established  in  Statement of  Financial  Standards  ["SFAS"] No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of."  Management  considers  assets to be impaired if the  carrying
value  exceeds  the  future   projected  cash  flows  from  related   operations
[undiscounted and without interest  charges].  If impairment is deemed to exist,
the assets will be written down to fair value or projected discounted cash flows
from related  operations.  As of December 31, 2000,  management has written down
these assets to their fair value.

Stock Options Issued to Employees - The Company adopted SFAS No. 123 "Accounting
for Stock-Based  Compensation"  on January 1, 1996 for financial note disclosure
purposes and will  continue to apply the  intrinsic  value method of  Accounting
Principles  Board  ["APB"]  Opinion  No.  25  "Accounting  for  Stock  Issued to
Employees" for financial reporting purposes.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Reclassification  - Certain items in the prior year's financial  statements have
been reclassified to conform to the December 27, 1998 presentation.


[3] Going Concern

The  accompanying  financial  statements  have been  prepared on a going concern
basis which  contemplates  the  realization  of assets and the  satisfaction  of
liabilities and commitments in the normal course of business.

Since the Company's operations commenced in October 1995, revenues have not been
sufficient  to cover the  Company's  fixed  administrative  costs  resulting  in
operating  losses of $24,139 and $217,353 for the  fifty-two  week periods ended
December 31, 2000 and December  26, 1999,  respectively.  In addition the losses
incurred on the write down of the company's  investment in the Celebrated  Group
plc to no value and Celebrated's liquidation,  significantly impairs its ability
to continue in business.  The company had a working  capital deficit of $162,172
and an accumulated  deficit of $11,732,428 at December 31, 2000. The company has
been funded  through  December 31, 2000 through  loans from related  parties and
affiliated entities.

The Company does not  currently  have any  commitments  to secure  financing and
there is no assurance  that the Company will be able to secure  financing in the
future and that even if the Company is able to obtain financing,  such financing
will be available on terms acceptable to the Company.

The Company has also taken steps to further  reduce its  administrative  expense
for  its  monthly  corporate  operating  activities.  To  meet  these  corporate
expenses,  the Company  intends to continue with related party  advances or seek
additional equity financing.

There can be no assurances that management's plans to reduce operating expenses,
start a new business venture and obtain additional  financing to fund operations
will be  successful.  The financial  statements  do not include any  adjustments
relating to the  recoverability  and  classification  of recorded assets, or the
amounts and  classification  of liabilities that might be necessary in the event
the Company cannot continue in existence.


                                      F-10
<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4



[4] Significant Risks and Uncertainties

[A]  Concentrations  of Credit Risk - Cash - At December 31, 2000 the company no
longer had funds on deposit in Australia.  The restricted  cash has been used to
satisfy outstanding obligations

[B] Operations in Foreign  Countries - With the completion of the liquidation of
Celebrated  Group,  Plc.  the  Company no longer has any  operations  in foreign
countries.

[C] Economic  Dependency - Due to the nature of the licenses granted pursuant to
the  development  agreements  with  Brinker  [See Note 16],  the  success of the
Company was in part  dependent  upon the overall  success of Brinker and Chili's
Restaurants,  including Brinker's financial condition,  management and marketing
success.  As of December 27, 1998,  the Company has no  outstanding  obligations
with Brinker,  however,  the Brinker  obligation  was  transferred to Celebrated
which  could  have a  material  adverse  effect  on the  Celebrated's  financial
condition.

[5] Leases
Red Hot subleases its U.S. office from a related party for approximately  $800 a
month. No rent expense has been charged to operations in 2000.

Rent expense for the fifty-two week periods ended December 31, 2000 and December
26, 1999 was $0 and $9,096, respectively.


[6] Fair Value of Financial Instruments
Generally  accepted  accounting  principles require disclosing the fair value of
financial  instruments to the extent practicable for financial instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.























                                      F-11
<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5


[6] Fair Value of Financial Instruments [Continued]
In assessing the fair value of financial instruments, the Company uses a variety
of methods and  assumptions,  which are based on estimates of market  conditions
and risks existing at the time. For certain instruments, including cash and cash
equivalents,  accounts  receivable and accounts payable, it was assumed that the
carrying amount approximated fair value because of the short maturities of these
instruments.  The fair value of long-term debt due to a related party of $55,500
is based on current  rates at which the Company  could borrow funds with similar
remaining maturities.


[7] Related Party Transactions

Woodland Limited Partnership ["Woodland"] is a partnership controlled by members
of Mr. Colin Halpern's family.  Mr. Halpern is the President and Chairman of the
Board of the  Company.  As of December  28, 1997 the balance due to Woodland for
funds advanced to the Company was $1,011,317,  which included  accrued  interest
payable of $230,065.  This  obligation  was  originally  due in May 1998 and was
extended by Woodland to January 1999.  This loan was  exchanged for  convertible
preferred stock discussed below on December 27, 1998. During 1997 funds received
from the sale of the  Australian  subsidiary of $2,060,000  were received by the
Company and were transferred to Woodland.  Woodland  returned  $1,347,100 to the
Company to be utilized for the payment of the outstanding  note to Brinker.  The
balance of $712,900 was treated by the Company as a reduction to the amount owed
to Woodland. In addition,  approximately  $1,000,000 was advanced to the Company
by Woodland for working capital purposes.

In June 1996, as partial consideration for the conversion of short-term advances
to a note  payable  loan,  the Company  issued a common stock  purchase  warrant
entitling  Woodland to purchase  166,667 shares of the Company's common stock at
$7.50 per share  for a period of 24 months  commencing  on the date of the loan.
The warrants  will be  redeemable  at $.01 per share if the closing bid price of
the Company's  common stock exceeds $30 for 10  consecutive  trading days ending
within five days of the notice of redemption.  In December 1996, Woodland agreed
to extend the note due until June 1998 and,  the Company  issued a common  stock
purchase warrant entitling  Woodland to purchase an additional 166,667 shares of
the Company's stock at $5.25 per share for a term expiring December 31, 1999. As
of December 29, 1996, the note was recorded net of the fair value of these stock
warrants  at  $694,556  [See Note 6].  Interest  expense  amortized  on purchase
warrants  for the 52 week  period  ended  December  28,  1997 is  $130,000.  The
warrants were cancelled when conversion of the notes to equity.

In March 1997, the Company agreed with Woodland  Limited  Partnership to convert
$750,000  of  long-term  debt to  100,000  shares of $1.00  par  value  Series A
convertible preferred shares. On September 25, 1997, Woodland agreed to exchange
its $1.00 par value Series A convertible  preferred  shares to 375,000 $2.00 par
value Series B non-convertible preferred shares.

On September  25, 1997,  Woodland  agreed to convert an  additional  $700,000 of
notes  payable into 350,000 $2.00 par value Series B  non-convertible  preferred
shares.  The agreed dividend is 8% and is cumulative.  The preferred shares hold
the same voting rights as the common shares.  Warrants issued in connection with
notes payable were valued at $145,522 and was accounted for as a discount to the
notes payable to Woodland.  At December 28, 1997, the Company amortized $116,000
as interest  expense.  At December  27, 1998,  no  additional  amortization  was
charged to  operations,  as the  warrants  were  cancelled  upon  conversion  to
preferred shares.

On December 27, 1998 Woodland agreed to convert  $1,500,000 of loans and accrued
interest into 100,000  shares of Series A Convertible  8% Preferred  Stock.  The
Company's Board of Directors approved this agreement.



                                      F-12

<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6


[7] Related Party Transactions [Continued]

At December 31, 2000 dividends in arrears on the Series A convertible  preferred
stock amounted to $140,000. Dividends in arrears on the Series B non-convertible
preferred stock amounted to $406,000 or $0.40 per share.

At  December  31,  2000,  Woodland  owns  approximately  36%  of  the  Company's
outstanding  common  stock.  Woodland also owns 100 % of the Class A Convertible
Preferred  Stock, as well as, 100% of Class B  Non-Convertible  Preferred Stock.
Upon  Conversion of the Series A and B  Convertible  Preferred  Shares  Woodland
would own approximately 57% of the Company's outstanding common stock.

Mr. Halpern also is the Chairman of the Board of International Franchise
Systems, Inc. ["IFS"]. No management fees have been charged to the company for
the years ended December 31, 2000 and December 26, 1999.

The Company has  advanced  funds to and paid  various  expenses on behalf of Mr.
Halpern.  At December 31, 2000 and December 26, 1999 the total amount due to the
Company from Mr. Halpern is $41,149 and $41,149, respectively.

Mr. Halpern's son is an attorney with a law firm that provides legal services to
the  Company.  There  were no legal  expenses  incurred  with  this firm for the
fifty-two  weeks ended  December  31,  2000.  At  December  31, 2000 there was a
$93,778 balance due and owing by the Company to this firm.

The Chief Financial  Officer of the Company was also the Chief Financial Officer
of IFS. On February 11, 1998 the Chief  Financial  Officer of the company became
the Chief Financial Officer and Chief Executive Officer of the Celebrated Group,
Plc. No amount was allocated to IFS or Celebrated of his salaries of $0 for 2000
and $9,800 for 1999.


[8] Provision for Income Taxes
Pursuant to United  States tax laws,  if the  Company's  subsidiaries  organized
under the laws of the UK or Australia  are not engaged in business in the United
States,  profits  of such  subsidiaries  will not be  subject  to United  States
taxation,  until distributed as dividends.  However, the Company would receive a
credit against federal income tax liability that would otherwise result from any
distributions  from its  subsidiaries  for any UK or Australian  corporate taxes
paid by its UK or Australian subsidiaries on these distributions, as well as for
any UK or Australian  dividend and royalty withholding taxes imposed directly on
the Company.

The Company had approximately  $5,921,000 of net operating losses,  which can be
used to offset future UK taxable income, arising in the same trade. Under UK tax
provisions,  there is no time limit for the utilization of net operating losses.
These net operating losses were transferred to Celebrated.

Australia tax provisions  are recorded under the liability  method of Australian
tax effect  accounting,  whereby  income tax  expense is based on the  operating
profit  before  income  tax  adjusted  for  any  permanent  differences  between
financial  reporting and taxable  income.  At December 28, 1997,  the Australian
subsidiary had recorded a deferred tax asset based on timing differences between
financial  reporting and taxable  income of  approximately  $534,000,  which was
offset by a valuation allowance of approximately $534,000.







                                      F-13

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7



[8] Provision for Income Taxes [Continued]
Red Hot filed a consolidated United States federal income tax return with one of
its related  companies,  Red Hot Pacific  through  December  26,  1999.  Red Hot
Pacific was disposed of on December 26, 1999.  There is no income tax  provision
as Red Hot,  incurred a net loss for 2000.  Therefore,  no loss carryforward was
used  during  2000.  At  December  31,  2000,  Red Hot had a deferred  tax asset
attributable  to  its  United  States  net  operating  loss   carryforwards   of
approximately  $1,350,000,   which  was  offset  by  a  valuation  allowance  of
approximately  $1,350,000.  The  change in the  valuation  allowance  during the
fiscal year ended December 31, 2000 was approximately $4,000.

The  following  summarizes  the  operating  tax  loss  carryforwards  by year of
expiration.
                                                    Expiration Date of
    Amount in Consolidation                       Tax Loss Carryforward
    -----------------------                       ---------------------
       $      49,379                              December 31, 2009
       $     437,510                              December 31, 2010
       $   1,408,452                              December 31, 2011
       $   1,384,173                              December 31, 2012
       $     510,926                              December 31, 2013
       $     211,434                              December 31, 2014
       $      24,139                              December 31, 2015


[9] Stock Transactions

[A] Related Party Contribution - In May 1995, in connection with the filing of a
post-effective  amendment to its  Registration  Statement  changing the offering
price for the shares in its initial public  offering from $15 to $18,  Woodland,
the  holder  of all the  shares  of common  stock of the  Company,  at the time,
contributed back to the Company 316,667 shares of common stock.

[B] Initial Public Offering of Units - In August 1995, the Company completed its
initial  public  offering [the "IPO"].  In connection  with the IPO, the Company
sold 1,012,347 Units,  each Unit consisting of one share of common stock and two
common stock purchase warrants,  at $6 per Unit. Each Unit holder is entitled to
exercise the two stock purchase  warrants to purchase shares of common stock for
an eighteen month and a five year period commencing  November 1995 at $18.00 and
$36.00 per share,  respectively.  As of December  29, 1996,  1,012,347  warrants
exercisable  at $18.00 and $36.00 per share  through  December 1997 and November
2000,  respectively were outstanding.  Additionally,  the underwriter of the IPO
received  options to purchase  66,667 shares of common stock at $24.75 per share
exercisable  for a four year period  commencing  February 1996. The net proceeds
received  by  the  Company  from  the  IPO  were   $4,697,325   after  deducting
underwriting  discounts and expense  reimbursements to the underwriter  totaling
$758,158 and offering  costs of $618,599.  Additional  offering costs of $55,000
relating to this IPO were paid in 1996.

[C]  Regulation S Offering - In June,  August,  November and December  1996, the
Company  had  Regulation  S share  offerings  and  incurred  offering  costs  of
$103,252. In these offerings,  the Company sold 1,000,000 shares of common stock
at $1.20 per share,  500,000 shares of common stock at $3.00 per share,  333,333
shares of common stock at $1.50 per share and 200,000  shares of common stock at
$1.50 per share,  respectively.  In 1996, the Company issued 1,500,000 shares of
common stock for net proceeds of $2,596,748.


                                      F-14
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8



[9] Stock Transactions (Continued)

In December of 1996,  the Company  received  $800,000  for stock to be issued in
1997 for 1996 stock  subscriptions.  On January 23,  1997,  the  Company  issued
333,333 shares of the 533,333 unissued shares of stock sold under a Reg. S share
offering.  As of December  27,  1998,  the Company has not issued the  remaining
200,000  shares of stock to two  entities  because the Company is  currently  in
dispute  with the  subscribers  regarding  the price to be paid.  For  financial
reporting  purposes,  the Company has calculated the earnings per share with the
assumption that the 200,000 disputed shares had been issued.

[D]  Conversion  of Related Party Debt to Preferred  Stock - In March 1997,  the
Company  agreed  with  Woodland  Limited  Partnership  to  convert  $750,000  of
long-term  debt to  100,000  shares  of $1.00  par  value  Series A  convertible
preferred shares.  On September 25, 1997,  Woodland agreed to exchange its $1.00
par value  convertible  preferred  shares to  375,000  $2.00 par value  Series B
non-convertible preferred shares.

On September  25, 1997,  Woodland  agreed to convert an  additional  $700,000 of
notes  payable into 350,000 $2.00 par value Series B  non-convertible  preferred
shares.  The agreed dividend is 8% and is cumulative.  The preferred shares hold
the same voting rights as the common shares.  Warrants issued in connection with
notes payable were valued at $145,522 and was accounted for as a discount to the
notes payable to Woodland.  At December 28, 1997, the Company amortized $116,000
as interest expense.  For the year ended December 27, 1998, no amounts have been
amortized, as the warrants were canceled after conversion to preferred stock.

On December 27, 1998 Woodland agreed to convert  $1,500,000 of loans and accrued
interest into 100,000  shares of Series A Convertible  8% Preferred  Stock.  The
Company's Board of Directors approved this agreement.

At December 31, 2000 dividends in arrears on the Series A convertible  preferred
stock amounted to $240,000. The dividends on Series B non-convertible  preferred
stock amounted to $406,000 or $.40 per share.

[E] Reverse Stock Split - On November 26, 1997, the Company's Board of Directors
approved a 3 for 1 reverse stock split.  The par value of the shares remained at
$.01 per share. The financial  statements have been  retroactively  adjusted for
this split.











                                      F-15
<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9



[10] Stock Options and Warrants

[A] Stock  Options - The 1996  Non-Employee  Directors  Stock  Options  Plan was
amended January 1, 1997. The 1995 Stock Plan was terminated  effective  December
31,  1996 and  replaced  by the 1996  Stock  Incentive  Plan  which was  adopted
effective August 1, 1996.

Pursuant to the Stock Plan,  officers  and key  employees  of the  Company,  are
eligible  to receive  awards of stock  options  [with or without  limited  stock
appreciation  rights].  Options  granted  under the Stock Plan may be "incentive
stock options" ["ISO"], or non-qualified  stock options ["NQSO"].  Limited Stock
Appreciation Rights ["LSARs"] may be granted simultaneously with the grant of an
option or [in the case of NQSOs] at any time during its term.

The Company has reserved  266,666  shares [in  reflection  of the  three-for-one
reverse  stock  split] of its common stock for issuance of awards under the 1996
Stock Plan and 100,000  shares of common stock under the Director  Plan [subject
to  anti-dilution  and  similar  adjustments].  Under  the  Director  Plan,  any
non-employee  member of the Board of Directors is  automatically  granted a NQSO
for 1,666 shares [in reflection of the three-for-one reverse stock split] on the
first  business  day of January,  April,  July and  October of each year.  These
options vest after one year. Under the Consultants  Plan, either stock or NQSO's
can be granted to eligible consultants and advisors.

The 1996 Stock Plan,  Director  Plan [as amended] and the  Consultants  Plan are
administered  by a committee  [the  "Committee"],  established  by the Company's
Board of  Directors.  Subject to the  provisions  of the 1996 Stock Plan and the
Consultants  Plan, the Committee  determines the type of award, when and to whom
awards will be  granted,  and the number of shares  covered by each  award,  the
terms,  provisions and kind of  consideration  payable [if any], with respect to
awards under these two Plans. In addition,  the Committee has sole discretionary
authority  to  interpret  all  three  Plans and to adopt  rules and  regulations
related thereto.

An option may be granted under the 1996 Stock Plan and the  Consultants  Plan on
such terms and  conditions as the  Committee  may approve,  and generally may be
exercised  for a period  of up to 10 years  from the date of  grant.  Generally,
options will be granted under the Stock Plan with an exercise price equal to the
"Fair Market Value" [as defined in the Plan] on the date of grant.  The exercise
price for options  granted under the  Consultants  Plan may not be less than 60%
"Fair Market  Value" [as defined in the Plan] on the date of grant.  In the case
of ISOs  granted  under the Stock  Plan,  certain  limitations  will  apply with
respect to the aggregate value of option shares which can become exercisable for
the first time during any one calendar year, and certain additional  limitations
will apply to "Ten Percent  Stockholders"  [as defined in the Stock  Plan].  The
Committee may provide for the payment  resulting from the exercise of the option
in cash,  by delivery of other  common  stock  having fair market value equal to
such option price or by a combination thereof.

An option  granted  under the 1996 Stock Plan or the  Consultants  Plan shall be
exercisable at such time or times as the  Committee,  in its  discretion,  shall
determine, except that no stock option shall be exercisable after the expiration
of ten years [five years in the case of an incentive  stock option  granted to a
"Ten  Percent  Employee",  as  defined  in the Stock  Plan] from the date of the
grant.  The Stock Plan contains  special rules governing the time of exercise in
the case of  death,  disability  or other  termination  of  employment  and also
provides for acceleration of the  exercisability  of options upon certain events
involving a change in control of the Company. Options granted under the Director
Plan are  exercisable  one year  after  the  grant is made for a period  of nine
years.  The Director Plan also contains  special  exercise rules in the event of
death or other termination.



                                      F-16
<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #10



[10] Stock Options and Warrants [Continued]

The Company's  Board of Directors may at any time and from time to time suspend,
amend,  modify or terminate the Plans.  However,  to the extent  required by the
Securities Exchange Act of 1934 or other applicable law, no such amendment shall
be  effective  unless  approved  by the  holders of a majority of the issued and
outstanding  securities of the Company  entitled to vote.  In addition,  no such
change may  adversely  affect any option  previously  granted,  except  with the
written  consent  of the  optionee  to be made to extent  inconsistent  with the
Securities laws or other applicable law.

Information pertaining to stock options as of December 31, 2000 and December 26,
1999 for the Company and for the years then ended is as follows:

<TABLE>
<CAPTION>
                                                                                                       Weighted
                                                                                                        Average
                                                                       Weighted        Exercisable     Remaining
                                                         Common         Average           Stock       Contractual
                                                         Shares     Exercise Price       Options         Life

<S>                                                     <C>              <C>               <C>           <C>
   Options Outstanding -December 27, 1998                  65,000           4.53
   --------------------------------------              ===========    =========

Options Granted - Directors Plan                                0              0              --             8.5 years
Options Granted - Stock Plan                                    0              0              --                --
Options Granted - Non-Qualified                                 0              0              --                --
Options Exercised                                               0              0              --                --
Options Canceled                                                0              0              --                --
                                                       -----------

   Options Outstanding -December 26, 1999                  65,000           4.53
   --------------------------------------              ===========    =========

Options Granted - Directors Plan                                0              0              --             7.5 years
Options Granted - Stock Plan                                    0              0              --                --
Options Granted - Non-Qualified                                 0              0              --                --
Options Exercised                                               0              0              --                --
Options Canceled                                                0              0              --                --
                                                       -----------

   Options Outstanding -December 31, 2000                  65,000           4.53
   --------------------------------------              ===========    =========
</TABLE>



   * As adjusted to reflect three-for-one reverse stock split.






                                      F-17
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #11



[10] Stock Options and Warrants [Continued]

No  compensation  cost was  recognized  in income  under any of the stock option
plans.

Had  compensation  cost been  determined on the basis of fair value  pursuant to
SFAS No. 123, net income and earnings per share would have been as follows:

                                                  Years ended
                                                 December 31,
                                        2000                    1 9 9 9
                                        ----                    -------
Net Income [Loss]:
   As Reported                     $      (24,139)          $    (3,494,930)
                                   ===============          ================

   Pro Forma                       $      (24,139)          $    (3,572,452)
                                   ===============          ================

Net Income [Loss] Per Share:
   As Reported                     $           (.08)        $          (1.09)
                                   =================        =================

   Pro Forma                       $           (.08)        $          (1.11)
                                   =================        =================


At the grant dates,  the weighted  average fair value of the above options under
the Director  Plan,  Stock Plan and  Non-Qualified  Stock Plan for the fifty-two
week period ended December 31, 2000 were $.35, $.91 and $.93, respectively.

The fair  value  used in the pro  forma  data was  estimated  by using an option
pricing model which took into account as of the grant date,  the exercise  price
and the expected life of the option,  the current price of the underlying  stock
and its expected  volatility,  expected dividends on the stock and the risk-free
interest rate for the expected term of the option. The following is the weighted
average of the data used for the following items.

          Risk-Free         Expected              Expected          Expected
        Interest Rate         Life               Volatility         Dividends

            5.86%            5 Years               81.99%              --


[B]  Common  Stock  Purchase  Warrants - As of  December  27,  1998,  there were
1,012,347 Class B warrants outstanding, which were issued in August 1995 as part
of a public offering. Holders of 1,012,347 Class A warrants, also issued as part
of the public  offering,  were entitled to purchase one share of common stock at
$18.00 per share until December 31, 1997. The Class A warrants  expired  without
exercise.  Holders of each Class B warrant are entitled to purchase one share of
common  stock at  $36.00  per share  until  November  30,  2000 [See Note 9]. No
warrants were exercised during the fifty-two week period ended December 31, 2000
or December 26, 1999.



                                      F-18
<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #12


[11] Operations by Geographic Area

The summary of financial  information for the Company's operations by geographic
area is as follows:

For the fifty-two weeks ended December 31, 2000:
<TABLE>
<CAPTION>
                                      United           United
                                      States           Kingdom        Australia     Eliminations      Consolidated

<S>                              <C>              <C>             <C>              <C>              <C>
Revenues                         $             0  $            0  $             0  $            0   $             0
Gross Margin [Loss]              $             0  $            0  $             0  $            0   $             0
Net Income [Loss]                $       (24,139) $            0  $             0  $            0   $       (24,139)
Assets                           $        71,251  $            0  $             0  $            0   $        71,251
Liabilities                      $       499,251  $            0  $             0  $            0   $       499,251
Company's Investment in
   Foreign Subsidiaries          $             0  $            0  $             0  $            0   $             0



For the fifty-two weeks ended December 26, 1999:

                                      United           United
                                      States           Kingdom        Australia     Eliminations      Consolidated

Revenues                         $             0  $            0  $             0  $            0   $             0
Gross Margin [Loss]              $             0  $            0  $             0  $            0   $             0
Net Income [Loss]                $      (211,434) $   (3,283,496) $             0  $            0   $    (3,494,930)
Assets                           $        74,415  $            0  $             0  $            0   $        74,415
Liabilities                      $       478,276  $            0  $             0  $            0   $       478,276
Company's Investment in
   Foreign Subsidiaries          $             0  $            0  $             0  $            0   $             0

</TABLE>


[12] Commitments

[A]  Guaranty  Agreement  - In  September  1996,  the  Company  entered  into an
agreement  with Brinker  pursuant to which  Brinker  agreed to  guaranty,  under
certain  circumstances,  a minimum of five and up to 12 leases for properties in
the Territory developed as Chili's Restaurants.

Brinker was issued 53 shares of stock of the Company's subsidiary  [representing
5% of the  outstanding  shares] in connection with the Guaranty  Agreement.  The
Guaranty  Agreement  was valued at $497,181,  which was the net present value of
the obligation under the Guaranty Agreement. The unamortized balance at December
19, 1997 was $447,463 [See Note 5].

The  Guaranty  Agreement  was  terminated  with the Company upon the sale of the
Australia/New Zealand development rights to Brinker on December 19, 1997.

[B]  Employment  Agreements - The company has no employment  agreement  with its
employees at this time.

[C] Letter of Credit - At December  28, 1997, a letter a credit in the amount of
$110,000  had been  issued on the  Company's  behalf,  and is  secured by a cash
account,  which is  restricted on the balance  sheet.  At December 27, 1998 this
amount has been  reduced to $30,000.  At December  26, 1999 this amount had been
reduced to 0.



                                      F-19
<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #13



[12] Commitments [Continued]

[D] Rental Guaranty - The National  Australia Bank had a bank guarantee covering
the lease on one restaurant in the amount of approximately $105,000. This was in
turn covered by a stand-by  letter of credit from Brinker.  If the bank calls in
payment for this guaranty,  the bank would call upon the  Australian  subsidiary
first,  and then the  Brinker  letter of credit.  Red Hot was  released  of this
obligation in December 1997.

[E]  Consulting  Agreement - The Company has no  consulting  agreement  with any
parties at this time.


[13] New Authoritative Accounting Pronouncements

The  Financial  Accounting  Standards  Board  ["FASB"]  has issued SFAS No. 130,
"Reporting  Comprehensive  Income."  SFAS No. 130 was effective for fiscal years
beginning after December 15, 1997.  Reclassification of financial statements for
earlier periods provided for comparative purposes was required.  The company has
adopted  SFAS  No.  130  in the  preparation  of  December  27,  1998  financial
statement.

The FASB has issued SFAS No. 131,  "Disclosures  About Segments of an Enterprise
and  Related  Information."  SFAS No. 131  changes how  operating  segments  are
reported in annual  financial  statements and requires the reporting of selected
information  about  operating  segments in interim  financial  reports issued to
shareholders. SFAS No. 131 is effective for periods beginning after December 15,
1997, and comparative  information for earlier years is to be restated. SFAS No.
131 need not be applied to interim  financial  statements in the initial year of
its  application.  SFAS No. 131 is not expected to have a material impact on the
Company. The company has adopted SFAS No. 131 in the preparation of December 27,
1998 financial statement.


[14] Sale of Rights in Chili's Restaurants

From November 1995 until December 18, 1997, the Company had the exclusive  right
to own and operate Chili's  Restaurants in Australia and New Zealand pursuant to
a Development  and Franchise  Agreement with Brinker.  On December 18, 1997, the
Company  sold the assets of CTG and the  Chili's  Concept in  Australia  and New
Zealand to Brinker International, Inc. ["Brinker"] for $2,680,000. The Company's
counsel  advised  the  Company  that this  transaction  did not  require Red Hot
Concepts' shareholder approval. The Company used $1,347,100 of proceeds to repay
the Brinker loan and used approximately $700,000 to pay a related party debt.

The obligation  under this agreement was  transferred to Brinker on December 19,
1997,  therefore,  the  Company  no longer has the  exclusive  rights to operate
Chili's restaurants in the UK or Australia.

The  Company's  net value of these assets on December  18, 1997 was  $1,189,984.
Therefore, a gain of $1,490,016 was recognized on this transaction.

The parent  company  has agreed not to  withdraw  support by way of loans to the
detriment of the Australian's economic entity's solvency or other creditors.



                                      F-20
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #14



[15] Merger with Celebrated

The Company had the exclusive  right to own and operate  Chili's  Restaurants in
the UK pursuant to an amended  development  and license  agreement with Brinker.
During 1997, the Company operated two Chili's restaurants in the UK. On December
15, 1997, the Company  completed the merger of its  wholly-owned  United Kingdom
subsidiary,  Restaurant  House Limited with and into the  Celebrated  Group Plc.
pursuant to an agreement  dated November 18, 1997.  Company  counsel advised the
Company  that the  transaction  did not  require  Red Hot  Concepts  shareholder
approval.  Pursuant to the merger agreement,  the Company sold all of the issued
and  outstanding  stock  of  Restaurant  House to  Celebrated  in  exchange  for
28,000,000 shares of Celebrated.  Upon  consummation of the merger,  the Company
owns approximately 45.6% of Celebrated and is accounted for on the equity method
as the Company does not have  financial or  operational  control of  Celebrated.
This  investment  was valued at $5,375,790 at December 28, 1997. At December 27,
1998 the investment was valued at $3,257,096. As part of the merger, the Company
received  options to purchase an additional  6,000,000 shares of Celebrated upon
exercise of which the Company would own approximately  50.51% of the outstanding
shares of  Celebrated.  At  December  28,  1997,  the  Company  did not have the
financial  resources  to  exercise  the  options  for the  6,000,000  shares  of
Celebrated for a total cost of approximately $1,200,000 nor did the Company have
viable  plans to obtain the  financial  resources  necessary  to exercise  these
options.  In 1998,  the  Celebrated  Group share price did not exceed the option
price and the company did not exercise its option.

The Company's  exclusive  development  rights for Chili's  restaurants in the UK
transferred  to Celebrated in the merger.  As of December 28, 1997,  the Company
has no  obligation  under the  Agreement.  Celebrated  Group still has exclusive
development rights for Chili's restaurant in the UK at December 27, 1998.

The  Company's  basis in  Restaurant  House  Limited at  December  15,  1997 was
$1,996,270, therefore, a gain of $3,379,250 was realized on this transaction.

On August 27,  1999  Celebrated  obtained  an  Administration  Order to effect a
financial  restructuring  and/or disposal of its various  businesses.  Ernst and
Young  were  appointed  as  Administrators.  On or  about  March  27,  2000  the
administrators decided to liquidate all the remaining assets of Celebrated.  The
liquidation of Celebrated  was completed in 2000.  The company  currently has no
operations.


[16] Subsequent Events


[A]  Additional  Related Party  Advances - The company has not received any cash
advances in 2001, from related parties.





                              . . . . . . . . . . .






                                      F-21