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 30, 2001

             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, 2001, the aggregate market value of the Registrant's Common
Stock held by non-affiliates of the Registrant was $102,617.


      As of April 1,  2001,  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 have owned approximately 50.51% of the outstanding shares of
Celebrated. Celebrated was 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 was 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 has 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 expanded its business operations to include
several restaurant chains operating throughout Great Britain. Celebrated was a
public company, 45.6 % of which was owned by the Company and 54.4% by other
public shareholders. Celebrated's shares traded on the Alternative Investment
Market of the London Stock Exchange.

The liquidation of Celebrated was completed during the year 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 2001.


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 30, 2001.

                                       5

<PAGE>

Item 4A.  Executive Officer of the Registrant
          -----------------------------------

The executive officers of the Company are as follows:


         Name                  Age      Position
         ----                  ---      --------

         Colin Halpern          65      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 Class B Warrants expired in 2000. The Company's Common Stock are
quoted on the NASDAQ Small-Cap Market System under the symbol RHCS. The
Company's Class B Warrant's have expired.

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

                                                    2002 *
                                                    ------
                                     Common                        Units
                                     ------                        -----
                              High            Low            High         Low
                              ----            ---            ----         ---

         First Quarter        $0.050        $0.010           Unit Not Traded


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

         First Quarter       $ 0.060        $0.040           Unit Not Traded
         Second Quarter        0.030         0.020           Unit Not Traded
         Third Quarter         0.040         0.010           Unit Not Traded
         Fourth Quarter        0.030         0.010           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

*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, 2002, there were 88 record holders of the Company's Common Stock
.. 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 owned 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 owned approximately 50.51% of the outstanding shares of
Celebrated. Celebrated was 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 was recorded under the equity method. The
Company was 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 was a public
company, 45.6 % of which was 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 liquidation 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 net income of $5,288 for the fifty-two week period ended
December 30, 2001. This was attributable to a refund from Brinker International,
Inc for excess charges paid/escrowed in 1997 upon the sale of Australia
operations back to Brinker. The company's net loss for the fifty-two week period
ended December 31, 2000 was $24,139. This was attributable to continuing general
and administrative expenses.

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. Celebrated was liquidated in 2000.


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 30, 2001 was approximately
$57,000 as  compared  to negative  working  capital of $162,000 on December  31,
2000. Total current assets were $4,790 on December 30, 2001. Current liabilities
decreased by approximately $100,000 in 2001 to $62,000 from $163,000 in 2000.

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

<TABLE>
<CAPTION>
                                            January 1, 2001          December 27, 19998
                                                   to                         to
                                            December 30, 2001        December 31, 2000
                                            -----------------        -----------------
                                              In Thousands              In Thousands
<S>                                             <C>                       <C>
Net cash (used) in operating activities         $ (  93)                  $ (  17)
Cash (used) in investing activities               (   0)                    (   0)
Cash provided by financing activities                98                        15
</TABLE>



During the fiscal year ended December 30, 2001, the company used approximately $
93,000 for operating activities and for the year ended December 26, 1999, the
Company used approximately $ 17,000 for operating activities.

Cash provided by financing activities for the year was approximately $ 98,000 of
which $ 29,000 was advanced from related parties, and $ 69,000 was received from
repayments of loans receivable.

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 the reduction of
administrative expenses and headcount. 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 firm's 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 65, 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 30, 2001 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              2001              0            0               0              0            0               0
President(3)               2000              0            0               0              0            0               0
                           1999(3)      66,000            0          27,238              0            0               0


H. Michael Bush            2000              0            0               0              0            0               0
Chief Financial Officer    2001              0            0               0              0            0               0
Secretary                  1999          9,800            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 2001 and held at the end of fiscal year 2001.

<TABLE>
<CAPTION>
                                    Option Grants in Last Fiscal Year

                                             Individual Grants
                                             -----------------
                      Options
                      Granted     % of Total Options Granted     Exercise or
Name                   (#)(1)     to Employees in Fiscal Year   Base Price(1)   Expiration Date
----                   ------     ---------------------------   -------------   ---------------
<S>                    <C>        <C>                           <C>             <C>
                                              None

<FN>
(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.
</FN>
</TABLE>


                                       13


<PAGE>

<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>

Names and Address of                Amount and Nature of          Percentage of
  Beneficial Owner                   Beneficial Ownership             Class
  ----------------                   --------------------             -----

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%

(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.


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 30, 2001, dividends in arrears on the Series A convertible preferred
stock are $360,000. Dividends in arrears on the Series B non-convertible
preferred stock amounted to $522,000 or $1.40 per share.

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

The Company had advanced funds to and paid various expenses on behalf of Mr.
Halpern. During the year ended December 30, 2001 these advances were repaid in
full. At December 31, 2000, the total amount due to the Company was $41,149.

Mr. Halpern's son was 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 30, 2001. At December 31, 2000 there was
a balance of $93,778 due and owing by the Company to this firm which was paid in
full during the the year ended December 30. 2001.

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:  June 6, 2002


          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              June 6, 2002
----------------------    (Chief Executive Officer)
Colin Halpern




                                       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 30, 2001 and
December 31, 2000...................................................  F-2...F-3

Consolidated Statements of Operations for the fifty-two weeks ended
December 30, 2001 and December 31, 2000.............................  F-4

Consolidated Statements of Stockholders' Equity for the
period January 1, 2001 to December 30, 2001.........................  F-5

Consolidated Statements of Cash Flows for the fifty-two weeks
ended December 30, 2001 and December 31, 2000.......................  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 30, 2001 and December 31,
2000,  and the  related  consolidated  statement  of  operations,  stockholders'
equity,  and cash flows for the two fifty-two  week periods  ended  December 30,
2001 and December 31, 2000.  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 30, 2001 and December
31, 2000, and the consolidated  results of their operations and their cash flows
for the two  fifty-two  week  periods  ended  December 30, 2001 and December 31,
2000, 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 $ 93,441 and  $17,040 in cash for  operations;  have
working  capital  deficits of $ 57,457 and $ 162,172 as of December 30, 2001 and
December  31,  2000,  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, 2002


                                      F-2

<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 30, 2001 AND DECEMBER 31, 2000
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                           December 30,       December 31,
Assets:                                       2001               2000
                                            --------           --------
<S>                                         <C>                <C>
Current Assets:
   Cash                                     $  4,790           $    453
   Restricted Cash                                 0                  0
   Due from Celebrated Group                       0                  0
   Prepaid Expenses                                0                  0
   Accrued Interest Receivable                     0                  0
                                            --------           --------

   Total Current Assets                     $  4,790           $    453
                                            --------           --------

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

   Property and Equipment - Net             $      0           $  1,649
                                            --------           --------

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

   Total Other Assets                       $      0             69,149
                                            --------           --------

   Total Assets                             $  4,790           $ 71,251
                                            ========           ========


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

</TABLE>
                                      F-3

<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 30, 2001 AND DECEMBER 31, 2000
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                                                          December 30            December 31,
                                                                             2001                   2000
                                                                             ----                   ----
<S>                                                                      <C>                    <C>
Liabilities and Stockholders' Equity:
Current Liabilities
   Accounts Payable and Accrued Expenses                                 $     62,247           $    162,625
                                                                         ------------           ------------

Long-Term Liabilities:
   Accrued Interest Payable - Related Party                                         0                      0
   Due to Related Party                                                  $    365,255           $    336,626
                                                                         ------------           ------------

   Total Long-Term Liabilities                                           $    365,255           $   336,6226
                                                                         ------------           ------------

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                                                    (11,727,140)           (11,732,428)

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

   Total Stockholders' Equity                                            $   (422,712)          $   (428,000)
                                                                         ------------           ------------

   Total Liabilities and Stockholders' Equity                            $      4,790           $     71,251
                                                                         ============           ============

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

</TABLE>

                                      F-4

<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                 Fifty-Two Weeks Ended
                                                                 ---------------------
                                                          December 30,          December 31,
                                                          ------------          ------------
                                                              2001                  2000
                                                              ----                  ----

<S>                                                       <C>                   <C>
Revenues                                                  $    14,122           $         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                             7,185                22,615

Depreciation and Amortization                                   1,649                 1,524
                                                          -----------           -----------

   Operating Income or (Loss)                                   5,288               (24,139)
                                                          -----------           -----------

Net (Loss) of Unconsolidated Investee                               0                     0
                                                          -----------           -----------

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

   Other Income [Expense] - Net                                     0                     0
                                                          -----------           -----------

   Income [Loss] Before Income Tax Expense                      5,288               (24,139)

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

   Net Income [Loss]                                            5,288               (24,139)

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

   Net Income [Loss] Available to Stockholders            $  (230,712)          $  (260,139)
                                                          ===========           ===========

Net Income [Loss] Per Common Share:
   Basic                                                  $      (.07)          $      (.08)
                                                          ===========           ===========

   Weighted Average Number of Shares Outstanding            3,420,725             3,420,725
                                                          ===========           ===========


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

</TABLE>

                                      F-5

<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
--------------------------------------------------------------------------------



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


<S>                                   <C>         <C>          <C>            <C>        <C>              <C>         <C>
Balance - December 26, 1999            3,420,782   $ 34,207     $ 8,443,416    725,000    $ 1,450,000      100,000     $  1,500,000
                                       =========   ========     ===========    =======    ===========      =======     ============

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      100,000     $  1,500,000
                                       =========   ========     ===========    =======    ===========      =======     ============

Comprehensive income;
  Net Income for the fifty-two week
  period ended December 30, 2001            --         --              --         --             --           --               --
Comprehensive Income                        --         --              --         --             --           --               --
                                       ---------   --------     -----------    -------    -----------      -------     ------------

Balance - December 30, 2001            3,420,725   $ 34,207     $ 8,443,416    725,000    $ 1,450,000      100,000     $  1,500,000
                                       =========   ========     ===========    =======    ===========      =======     ============
</TABLE>


<TABLE>
<CAPTION>
                                                                             Accumulated
                                          Compre-                              Other               Total
                                           hensive         Accumulated      Comprehensive       Stockholders'
                                          Income            [Deficit]          Income             Equity
                                          ------            ---------          ------             ------

<S>                                      <C>            <C>               <C>               <C>
Balance - December 26, 1999                              $(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                              $(11,732,428)     $   (123,195)     $   (428,000)
                                                         ============      ============      ============

Comprehensive income;
  Net Income for the fifty-two week
  period ended December 30, 2001              5,288             5,288              --               5,288
Comprehensive Income                          5,288              --                --                --
                                          ---------      ------------      ------------      ------------

Balance - December 30, 2001                             $(11,727,140)     $   (123,195)      $   (422,712)
                                                         ============      ============      ============

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.
</TABLE>

                                      F-6

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                 Fifty-Two Weeks Ended
                                                                                 ---------------------
                                                                             December 30,        December 31,
                                                                             ------------        ------------
                                                                                 2001                2000
                                                                                 ----                ----
<S>                                                                           <C>                 <C>
Operating Activities:
   Net Income [Loss]                                                          $   5,288           $ (24,139)
                                                                              ---------           ---------
   Adjustments to Reconcile Net Income [Loss] to Net
     Cash [Used for] Provided by Operating Activities:
     Depreciation and Amortization                                                1,649               1,524
     Net Loss of Unconsolidated Investee                                              0                   0
     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                   0
       Inventories                                                                    0                   0
       Prepaid Expenses and Other Current Assets                                      0                   0

     Increase [Decrease] in:
       Accounts Payable                                                        (100,378)               5575
       Accrued Expenses                                                               0                   0
       Other Payables and Accrued Interest                                            0                   0
                                                                              ---------           ---------

     Total Adjustments                                                        $ (98,729           $   7,099
                                                                              ---------           ---------

   Net Cash - Operating Activities                                            $ (93,441)          $ (17,040)
                                                                              ---------           ---------


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

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

Financing Activities:
   Advances from Related Parties                                                 28,629              15,400
   Repayment of Loan Receivable Officer                                          41,149                   0
   Repayment of Loan Receivable Other                                            28,000                   0
   Payments to Related Parties                                                        0                   0
                                                                              ---------           ---------

   Net Cash - Financing Activities                                            $  97,778           $  15,400
                                                                              ---------           ---------

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

   Net Increase [Decrease] in Cash - Forward                                  $   4,337           $  (1,640)


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

</TABLE>

                                      F-7

<PAGE>


RED HOT CONCEPTS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                    Fifty-Two Weeks Ended
                                                                                    ---------------------
                                                                                December 30,      December 31,
                                                                                ------------      ------------
                                                                                    2001             2000
                                                                                    ----             ----


<S>                                                                               <C>              <C>
   Net Increase [Decrease] in Cash - Forwarded                                    $ 4,337          $(1,640)

Cash - Beginning of Periods                                                           453            2,093
                                                                                  -------          -------

   Cash - End of Periods                                                          $ 4,790          $   453
                                                                                  =======          =======


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


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

</TABLE>


                                      F-8

<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  consisted of its ownership of
Celebrated, recorded using the equity method. Celebrated was initially formed to
develop  and  operate  mid-priced  hotels.   Celebrated  expanded  its  business
operations to include several  restaurants  chains  operating  throughout  Great
Britain.  Celebrated  was a public  company,  45.6% of  which  was  owned by the
Company and 54.5% by other public  shareholders.  Celebrated's  shares traded on
the Alternative Investment Market of the London Stock Exchange. Celebrated owned
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.  The company  currently has no business
operations.


[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 had an option to
acquire more than 50% of the outstanding shares of Celebrated.

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, 2001 and
December 31, 2000 was $1,649 and $1,524, respectively.

                                      F-9

<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 30, 2001 and December 31,2000,  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 are not currently dilutive, but may be in the future.

Foreign  Currency  Translation  - For the periods  ended  December  30, 2001 and
December 31, 2000, no foreign currency  translation has been required due to the
write off of the company's investment in the Celebrated Group.

                                      F-10

<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 30, 2001,  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.  The operating profit of $5,288 for the fifty two weeks ended
December 30, 2001 is a direct result of a $14,122  refund  received from Brinker
International, Inc for estimated costs originally paid and charged to operations
in  1997 by Red Hot  Concepts-Pacific,  Inc to  discontinue  its  operations  in
Australia.  The company  incurred an operating loss of $24,139 for the fifty-two
week period  ended  December 31,  2000.  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 $  57,457  and  an
accumulated  deficit of  $11,727,140  at December 30, 2001. The company has been
funded  through  December  30,  2001  through  loans from  related  parties  and
affiliated entities, as well as repayments of loans due from officers.

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-11

<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 30, 2001 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 30, 2001,  the Company has no  outstanding  obligations
with Brinker.

[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 2001.

No rent expense has been charged to operations  for the  fifty-two  week periods
ended December 30, 2001 and December 31, 2000.


[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-12

<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 $336,626
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-13

<PAGE>

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


[7] Related Party Transactions [Continued]

At December 30, 2001 dividends in arrears on the Series A convertible  preferred
stock amounted to $360,000. Dividends in arrears on the Series B non-convertible
preferred stock amounted to $522,000 or $1.40 per share.

At  December  30,  2001,  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 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 30, 2001 and December 31, 2000.

The Company had  advanced  funds to and paid  various  expenses on behalf of Mr.
Halpern.  During 2001 Mr. Halpern repaid these advances in full. At December 30,
2001 no amount is due to the  company by him.  At  December  31,  2000 the total
amount due to the Company from Mr. Halpern was $41,149.

Mr.  Halpern's son was 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,  2001.  At  December  31, 2000 there was a
$93,778  balance due and owing by the Company to this firm. This amount has been
paid in 2001.

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. He left the employ of Celebrated in 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-14

<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 is able to use  carryforward  losses to offset  its  income for 2001.
Therefore,  $5,288 of loss  carryforward  was used during 2001.  At December 30,
2001,  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,  2001 was  approximately
$1,000.

The  following  summarizes  the  operating  tax  loss  carryforwards  by year of
expiration.
                                                 Expiration Date of
    Amount in Consolidation                    Tax Loss Carryforward
    -----------------------                    ---------------------
       $      44,091                             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-15

<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, 2001 dividends in arrears on the Series A convertible  preferred
stock amounted to $360,000. The dividends on Series B non-convertible  preferred
stock amounted to $522,000 or $1.40 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-16

<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-17

<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 30, 2001 and December 31,
2000 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
   --------------------------------------                 ========      =======

Options Granted - Directors Plan                                 0            0              --            6.5 years
Options Granted - Stock Plan                                     0            0              --                --
Options Granted - Non-Qualified                                  0            0              --                --
Options Exercised                                                0            0              --                --
Options Canceled                                                 0            0              --                --
                                                          --------

   Options Outstanding -December 30, 2001                   65,000         4.53
   --------------------------------------                 ========      =======
</TABLE>

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

                                      F-18

<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,
                                                ------------
Net Income [Loss]:                        2001                2000
                                          ----                ----

   As Reported                        $    5,288          $  (24,139)
                                      ==========          ==========

   Pro Forma                          $    5,288          $  (24,139)
                                      ==========          ==========

Net Income [Loss] Per Share:
   As Reported                        $     (.07)         $     (.08)
                                      ==========          ==========

   Pro Forma                          $     (.07)         $     (.08)
                                      ==========          ==========


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 30, 2001 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-19

<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 30, 2001:

<TABLE>
<CAPTION>
                                   United           United
                                   States           Kingdom      Australia    Eliminations     Consolidated
                                   ------           -------      ---------    ------------     ------------

<S>                              <C>              <C>             <C>           <C>            <C>
Revenues                         $   14,122       $       0       $     0       $     0        $    14,122
Gross Margin [Loss]              $        0       $       0       $     0       $     0        $         0
Net Income [Loss]                $    5,288       $       0       $     0       $     0        $     5,288
Assets                           $    4,790       $       0       $     0       $     0        $     4,790
Liabilities                      $  427,502       $       0       $     0       $     0        $   427,502
Company's Investment in
   Foreign Subsidiaries          $        0       $       0       $     0       $     0        $         0
</TABLE>


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                      $   (24,139)
Assets                               71,251                                                         71,251
Liabilities                      $  499,251       $       0       $     0       $     0        $   499,251
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 was  restricted on the balance  sheet.  The letter of credit has
been closed and there is no further obligation.

                                      F-20

<PAGE>


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


[12] Commitments [Continued]


[D]  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-21

<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-22