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



                               FORM 10-KSB/A No.1

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

            For the fiscal year ended December 29, 1996

/ /         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. 0-26838

                             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

     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

     As of March 17, 1997, the aggregate market value of the Registrant's Common
Stock held by non-affiliates of the Registrant was $8,954,477.

     As of March 17, 1997, there were 10,262,347 shares outstanding of the
Registrant's Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

     The information required by Part III will be incorporated by reference to
certain portions of a definitive proxy statement which is expected to be filed
by the Registrant within 120 days after the close of its fiscal year.

<PAGE>
                                TABLE OF CONTENTS


ITEM                                                                       PAGE
                                     PART I

1.       Business.........................................................   4
2.       Properties.......................................................  11
3.       Legal Proceedings................................................  12
4.       Submission of Matters to a Vote of
         Security Holders.................................................  12
4A.      Executive Officers of the Registrant.............................  12


                                     PART II

5.       Market for the Registrant's Common
         Equity and Related Stockholder
         Matters..........................................................  14
6.       Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations....................................................  15
7.       Financial Statements.............................................  19
8.       Changes in and Disagreements with
         Accountants on Accounting and Financial
         Disclosure.......................................................  19


                                    PART III

9.       Directors and Executive Officers
         of the Registrant................................................  20
10.      Executive Compensation...........................................  20
11.      Security Ownership of Certain Beneficial
         Owners and Management............................................  20
12.      Certain Relationships and Related
         Transactions.....................................................  20
13.      Exhibits and Reports on Form 8-K.................................  20
         Signatures.......................................................  20



<PAGE>
                                     PART I

Item 1.  Business

General

     Red Hot Concepts was incorporated in the state of Delaware on June 14, 1994
and formed to develop the Chili's Restaurant Concept created by Brinker
International, Inc. ("Brinker"). Red Hot Concepts and its wholly-owned
subsidiaries (collectively, the "Company") have the exclusive development rights
for Chili's Restaurants in the United Kingdom ("U.K.") which expire November 1,
2006 and the exclusive rights for Chili's Restaurants in Australia/New Zealand
which expire November 8, 2005. The exclusive rights to these territories are
renewable subsequent to the initial term for 10 years. The Company is owned 34%
by Woodland Limited Partnership and 66% by the public.

     The Company had five Chili's restaurants open as of December 29, 1996;
three in Australia and two in the U.K. During the second quarter of 1997,
construction is scheduled to start for three Chili's Restaurants in Australia
and the Company expects to have a total of six to eight restaurants operating in
Australia by the end of 1997. The Company does not expect to construct any
restaurants in the U.K. in 1997.

     The Company opened its first U.K. Chili's Restaurant in London in October
1995, and opened two additional restaurants in March and May 1996. In December
1996, the Company elected to close one restaurant.

     In November 1995, the Company purchased a wholly-owned Australian
subsidiary of Brinker that had the operating rights to two Chili's Restaurants
in Australia. The first restaurant was opened in August 1994 and the second in
February 1995. Both restaurants are located in communities surrounding Sydney.
In September 1996, the Company opened its third restaurant in a suburb of
Melbourne. Before November 2005, as part of its development agreement, the
Company is also required to establish and operate a Chili's Restaurant in
Auckland, New Zealand.

Company's Mission

     The Company's vision is to be the customer's first choice in casual dining.
To accomplish this vision, the Company intends to build a superior management
team; demand knowledgeable outgoing employees with a genuine interest in their
guests; create and maintain a culture within the Company that is built on
integrity, communication, fun and pride; provide an appealing and casual
restaurant environment; appreciate and be sensitive to the different cultures
where the Company conducts business; enhance profitability to promote company
and shareholder growth; and to be a premier Brinker partner. The Company
believes that it will be successful in meeting its objectives based on its
management's business experience, the recognition and the reputation of Chili's
Restaurants in the United States and the foreign countries in which they operate
and the support, supervision and assistance that has been and is continuing to
be made available to the Company by Brinker.

The Chili's Concept and Industry Overview

     As of December 31, 1996, there were 519 Chili's restaurants system-wide,
comprised of 383 owned by Brinker and 136 franchised restaurants located in 46
states and in 12 foreign countries and territories. Chili's Restaurants are
full-service southwestern theme restaurants which cater to the casual diner.
Casual dining generally refers to a type of restaurant that falls in between
family style dining and fine dining establishments and typically features a full
range of moderately priced foods and full waiter and bar service.


<PAGE>

     Chili's restaurants feature efficient and friendly table service designed
to minimize customer waiting time and facilitate table turnover. Emphasis is
placed on serving substantial portions of freshly prepared quality food at
modest prices and providing excellent service. Chili's Restaurants are generally
open between 12 and 14 hours a day, seven days a week, for lunch, dinner and
late-night meals. Chili's personnel are dressed casually in jeans or slacks,
knit shirts and aprons to reinforce the casual, informal environment. The decor
of a Chili's restaurant consists of booth seating, tile-top tables, hanging
plants and wood and brick walls covered with interesting memorabilia. Chili's
Restaurants are designed to appeal primarily to the age group from 18 to 49
years.

     In the UK casual dining market, Chili's restaurants compete against
multi-unit restaurant operators of American theme restaurants and national and
regional chains. The latest statistics reported by the Mintel International
Group Ltd.'s ("Mintel") show that the restaurant eating market in the UK is
approximately (pound)9.14 billion ($14.6 billion). This market combines the food
sales of restaurants, pubs, hotels and catering, but excludes fast foods and
take away quick service establishments. The growth rate exhibited in the UK for
this segment in the last year was 7%.

     In Australia and New Zealand, multi-unit restaurants in the casual dining
market are a new development. The major competitors in the casual dining market
are suburban Chinese restaurants, Sizzler Steakhouse, and The Keg.

Relationship with Brinker

     Chili's Restaurant Development and Licensing Agreements: The Company's
relationship with Brinker is governed principally by two Chili's Development and
Licensing Agreements, one for the territory of the United Kingdom (the "UK
Development Agreement") and one for the territories of Australia and New Zealand
(the "Pacific Development Agreement"), collectively (the "Development
Agreements"). Pursuant to the agreements, the Company is granted the exclusive
right during a ten year period (the "Initial Term") to develop and operate
Chili's Restaurants within these defined territories. Major provisions of the
Development Agreements are detailed in the following paragraphs.

     Development Schedules: During the Initial Term of the Development
Agreements, the Company is required to open and operate at least 32 Chili's
Restaurants under the UK Development Agreement, and 40 in the combined countries
of Australia and New Zealand. The development schedule for the United Kingdom
over the remaining term of the agreement is scheduled below:

        By October 31 of Each                Cumulative Total Number of
        of the Following                     Restaurants Which the
        Years                                Company shall have Open

                1996                                  3
                1997                                 21
                1998(2)                               4
                1999                                  7
                2000                                 11
                2001                                 16
                2002                                 20
                2003                                 23
                2004                                 26
                2005                                 29
                2006                                 32
--------
1 Shaftesbury location closed during this period.
2 As of December 31, 1998.

<PAGE>

     Pursuant to the Pacific Development Agreement, the Company will be required
to open an additional 37 Chili's Restaurants by November 8, 2005 in accordance
with the following schedule:

        By November 8 of Each               Cumulative Total Number of
        of the Following                    Restaurants Which the
        Years                               Company shall have Open

                1996                                 2
                1997                                 4
                1998                                 7
                1999                                10
                2000                                13
                2001                                17
                2002                                22
                2003                                28
                2004                                34
                2005                                40

     Default Provision: If the Company falls behind the Development Schedule by
one restaurant in a given year under either agreement, it will not be in default
of its development obligations. However, if the Company falls behind the
development schedule for either territory by more than one restaurant, the
Company will be in default of that respective territorial development
obligation. If such default occurs, the Company's exclusive rights to establish
Chili's Restaurants in that territory will terminate and the Company will have
to cease developing Chili's Restaurants. However, under the Licensing Agreement,
the Company would continue to operate the Chili's Restaurants that had been
established and operating and the Company has the option to renew the license
for another 20 years. Any development fee obligations that are due under a
development agreement but unpaid at the time it is terminated would be owed to
Brinker.

     Renewal Provisions: If the Company is in compliance with the UK Development
Agreement at the expiration of its Initial Term and is operating at least 42
Chili's Restaurants, the Company may renew the UK Development Agreement for an
additional 10-year period. The number of Chili's Restaurants to be opened during
the renewal term will be subject to mutual agreement by the Company and Brinker;
however, both parties have agreed that in no event will the number of Chili's
Restaurants to be opened during the renewal term be less than four per year. If
the Company is in compliance with the Pacific Development Agreement at the
expiration of its Initial Term and is operating at least 40 Chili's Restaurants,
the Company may renew the Pacific Development Agreement for an additional
10-year period. The number of Chili's Restaurants to be opened during the
renewal term will be subject to mutual agreement by the Company and Brinker;
however, both parties have agreed that in no event will the number of Chili's
Restaurants to be opened during the renewal term be less than two per year. If
the Company and Brinker are unable to reach an agreement with respect to
determining an annual number of Chili's Restaurants to be opened under either
development agreement, the Chili's Development Agreement will not be renewed.

     If after expiration of the Initial Term (or any renewal term), the
Company's exclusive development rights are not renewed, then the Company would
continue to have the right to operate its then-existing Chili's Restaurants in
accordance with the License Agreement for each such restaurant. In such event,
the Company would no longer have the exclusive right to own and operate Chili's
Restaurants under the development agreement depending upon the territory (UK or
Pacific) and Brinker would have the right to proceed (or the right to grant a
third party the right to proceed) with further development of Chili's
Restaurants in these territories, subject to territorial rights granted under
then existing License Agreements. The territory agreements are independent and
the Company's decision to renew or not renew one agreement does not affect the
other agreement.
<PAGE>

     Development Fees: As consideration for the grant of the exclusive
development rights for the United Kingdom, the Company agreed to pay Brinker a
total of $320,000. Upon execution of the Chili's Development Agreement, the
Company paid $100,000 to Brinker. The Company is obligated to pay the additional
$225,000 to Brinker in April 1998. The Company paid a development fee of
approximately $348,000 for the Australian and New Zealand territories which was
included in the acquisition price.

     Licensing Agreement: The Development Agreements require the Company to
enter into license agreement with Brinker for each restaurant it opens ("License
Agreement"). The term of each License Agreement is 20 years and it is renewable
for another 20 years subject to certain conditions. Prior to beginning
construction of a restaurant, the Company must notify Brinker of its intention
to establish a restaurant by sending Brinker a license application. A License
Agreement for a restaurant is formed upon the earlier of Brinker signing the
license application or 30 days after Brinker receives the license application.

     Licensing Fees: The Company is required to pay Brinker a one-time opening
fee of $20,000 for each restaurant opened in the United Kingdom, Australia or
New Zealand. In addition, the Company must pay to Brinker a monthly royalty fee
equal to 2% of each restaurant's gross receipts determined in local currency
(exclusive of value added or other taxes payable by the Company). This royalty
fee is payable to Brinker irrespective of the profitability of the Company or
the restaurant. The Company's payments to Brinker are to be made in US dollars
at the telegraphic transfer exchange rate applicable on the date the payment is
made.

     Licenser's Obligations: Under the terms of a License Agreement, the Company
is entitled to receive from Brinker, on an ongoing basis, all information and
materials necessary to make the Company knowledgeable of the Chili's restaurant
system and the methods used to operate and manage those restaurants, including
without limitation, access to Brinker's "Chili's Concept Team", and other
Brinker employees that Brinker considers appropriate to provide assistance in
the following aspects of the Chili's system: design, purchasing, food and
beverage specifications, marketing, real estate site criteria, training,
financial analysis and computer information systems.

     Assignment Provision: The Development Agreements are not assignable by the
Company without Brinker's consent, which consent may be withheld in Brinker's
reasonable discretion or given conditionally. In addition, during the Initial
Term of the Development Agreements, unless terminated sooner, and for two years
thereafter, the Company may not have an interest in any casual dining restaurant
in the United Kingdom, Australia or New Zealand that has an image identical or
deceptively similar to a Chili's Restaurant.

     Right of Refusal: In addition to its rights to develop Chili's Restaurants
in the United Kingdom, Australia and New Zealand, the Company has been granted
rights of refusal with respect to developing and operating other Brinker full
service restaurant concepts such as Romano's Macaroni Grill, On the Border,
Cozymel's, and Maggiano's in these territories. Under the terms of the
Development Agreements, if at any time Brinker intends to license or develop
itself any of its own full service restaurant concepts in these territories,
Brinker must first notify the Company and at the Company's request, Brinker
would be obligated to negotiate in good faith with the Company the terms of the
license agreement for the other concept. After 60 days in the UK and 90 days in
Australia and New Zealand, if the Company and Brinker were unable to reach
mutual agreement as to the terms of the development agreement, Brinker would be
free to negotiate with third parties or develop themselves the other concept.
<PAGE>

     Termination: Under certain circumstances of default by the Company, Brinker
has the right to terminate the Development Agreements. Upon termination of the
UK or Pacific Development Agreement, the Company must pay all amounts due, but
unpaid, to Brinker under the agreement and stop the development of Chili's
Restaurants. The Company would, however, be able to continue operating any
Chili's Restaurants under License Agreements then in effect.

Proposed Restaurant Development

     The Company, pursuant to its current plan of operation in Australia, will
seek to open three to five Chili's Restaurants in 1997 and five to seven
restaurants in 1998. The Company intends to open three Chili's restaurant in the
UK in 1998. As of December 29, 1996, the Company has opened three Chili's
Restaurants in the Australia and had opened three Chili's Restaurants in the
U.K. (and subsequently closed one).

     The Company intends to concentrate its efforts in the United Kingdom on the
development of Chili's Restaurants in regional economic areas such as Bristol,
Leeds, Birmingham and Newcastle. In Australia, the Company has reviewed sites
for Chili's Restaurants around the Sydney and Melbourne metropolitan areas and
has selected and is negotiating contracts for two sites.

     Site Selection: The Company is responsible for the selection of sites for
its restaurants and must give Brinker the opportunity to comment on the
suitability of each site. Brinker will provide the Company with site selection
guidelines and criteria for proposed locations (based on those used in the
United States for free standing units) and prototype specifications and plans
for construction and fit-out of Chili's Restaurants.

     The Company intends to lease the majority of its restaurant sites. The
Company believes that the restaurant site selection process is critical to its
success and intends to devote a significant effort to the investigation of
locations. The site selection process involves an evaluation of a variety of
factors, including demographics (such as population density and household income
levels); specific site characteristics (such as visibility, accessibility and
traffic volume); proximity to activity centers (such as office or retail
shopping districts and apartment, hotel and office complexes); competition in
the area; construction or renovation costs, and lease terms and conditions.

     All sites must generally be approved by the local planning board, which
approval generally takes approximately three to six months. Brinker is working
with the Company to ensure that the plans submitted are consistent with the
Chili's image. The Company believes it will be successful in obtaining municipal
approval for the other UK sites it selects. In Australia, Chili's Restaurants
are "build to suit" sites where the property landlord assumes building
construction responsibilities. The Company works with the property landlord to
obtain local planning approval. Brinker works with the Company to ensure the
construction plans are consistent with the Chili's image.

Restaurant Design

     Chili's: Chili's Restaurants in the United States are traditionally
free-standing units averaging approximately 5,800-7,000 square feet in size,
with a seating capacity of approximately 210-250 people. The bar area consists
of 8-12 tables with a seating capacity of approximately 50-60 people. The decor
of a Chili's restaurant consists of booth seating, tile-top tables, hanging
plants and wood and brick walls covered with interesting memorabilia. The
Company intends to modify the traditional design to accommodate the needs of its
market. These modifications may include a larger bar area and more table seating
(and less booth seating) so that the restaurant can accommodate larger parties.

     The Company currently estimates that once a site has been made available,
approximately four months is required to open a Chili's Restaurant. The Company
currently estimates the cost of opening a Chili's Restaurant in the United
Kingdom to be approximately (pound)750,000 ($1,160,000) including leasehold
improvements, furniture, fixtures, equipment, opening inventories and hiring and
training staff, but excluding lease payments and the license fee. Such estimates
vary depending on the size of the proposed restaurant and the extent of required
leasehold improvements. In Australia, the Company currently estimates that once


<PAGE>

a site has been made available, approximately four months is required to open a
Chili's Restaurant. The Company currently estimates the cost of opening a
Chili's Restaurant in Australia to be approximately A$1,800,000 ($1,386,000)
including leasehold improvements, furniture, fixtures, equipment, opening
inventories and hiring and training staff, but excluding lease payments and the
license fee. In Australia, restaurants are constructed as "build to suit" by the
property owner and the owner pays the costs for site preparation and
construction. The Company's costs are the interior decor, furniture, fixtures
and equipment.

Menu

     Chili's restaurants feature a casual atmosphere and a limited menu of
broadly appealing food items, including a variety of hamburgers, fajitas,
chicken, imported beef and seafood entrees, sandwiches, barbecued ribs, salads,
appetizers and desserts, all of which are prepared fresh daily according to
recipes specified by Brinker. Emphasis is placed on serving substantial portions
of quality food at modest prices. In the UK, entree selections generally range
in price from (pound)4.75 to (pound)10.95 ($7.50 - $22.25) British Pounds. The
average per person check, before tip, but including alcoholic beverages and
taxes, is approximately (pound)10.95 ($17.50). In Australia, entree selections
generally range in price from 4.75 to 15.95 Australian Dollars ($3.75 - $12.50).
The average per person check, before tip, but including alcoholic beverages and
taxes, is approximately A$15.00 ($11.75).

     Brinker updates its menus twice a year, at which time new items are
introduced and items which no longer sell well are removed. Brinker also
continually test markets new menu additions prior to their introduction. The
Company offers the standard Chili's menu items in each of its restaurants. The
Company may deviate, however, from the standard menu items in the event that the
supply of a particular item is unavailable in the United Kingdom or Pacific or
if the Company believes that a particular item is particularly appropriate or
inappropriate based on customer preferences in the United Kingdom, Australia or
New Zealand. In the event the Company determines to remove an item from the menu
or change a menu item, the Company must first obtain the approval of Brinker.

Restaurant Operations

     Restaurant Personnel: In the restaurants in the UK and Australia, the
Company employs one general manager, three restaurant managers, and
approximately 60 to 80 hourly employees, most of whom work part-time. The
general manager is responsible for the day-to-day operation of the restaurant
and for the maintenance of operating standards. The Company seeks to hire
experienced restaurant managers and staff and motivate and retain them by
providing opportunities for advancement and performance-based financial
incentives.

     Training: The Company requires all of the general managers and restaurant
managers for its restaurants to participate in a system-wide comprehensive 12 to
16-week training program for the restaurant concept by which they are employed.
The program teaches management trainees detailed food preparation standards and
procedures. In addition, each employee will be required to be trained in the
operation of that restaurant's system. The Company has established its own
training program both in the U.K. and Australia to reduce the costs of United
States based Brinker training teams. The Company also participates in regional
and national training and development programs sponsored by Brinker.

     Hours of Operation: The Company keeps its restaurants open between 12 and
14 hours a day, seven days a week, for lunch, dinner, late-night meals, and [in
some areas breakfast], depending on local approval and regulations.

<PAGE>

Purchasing; Food Distribution Operations

     Brinker and the Company set quality standards for all products used in the
Company's restaurants. Brinker provides the Company with an operations manual
which includes full ingredient specifications for each menu item, including
photographs of each item. The Company has developed local sources of supply in
order to minimize the importation of food supply from the United States. In the
Pacific and the U.K. the Company will negotiate purchase contracts for virtually
all of the ingredients and supplies used in a Chili's Restaurant and the
individual restaurants will order directly from approved suppliers.

Advertising and Promotion

     The License Agreement which the Company must execute for each restaurant
requires the Company to spend in the UK and the Pacific a minimum of one-half of
one percent of the average of its gross receipts (exclusive of taxes) for the
previous twelve consecutive months on advertising and promotion. The Company is
responsible for using this money for advertising and promotional plans,
materials and activities under the UK and Pacific Development Agreement. All
advertising, promotional plans, materials and activities must be consistent with
the Chili's image.

     The Company has engaged a public relations firm in the UK to help publicize
the activities of the Company and its restaurants and has consulted with an
advertising agency to help develop the Company's printed promotional material.

     The Company's principal method of promotion has been printed advertising in
newspapers, magazines, leaflets, local radio and limited television in
Australia. The Company believes that as the number of restaurants in the United
Kingdom and Australia increases, the Company will be able to begin using more
radio advertising in the UK and use radio and television more extensively in
Australia. The Company also offers an extensive number of promotional items,
such as hats, t-shirts, sweat clothing, overnight bags, pens and pencils at its
Chili's Restaurant locations.

Trademarks

     The Company is authorized to use the names Chili's Texas Grill & Bar in the
United Kingdom and Chili's Texas Grill in Australia and such other trademarks
specified by Brinker from time to time (collectively, the "Trademarks"). Brinker
has represented to the Company that it owns the Trademarks in the United
Kingdom, Australia and New Zealand.

Foreign Currency and Exchange

     Revenues from operations in the United Kingdom and Australia are maintained
in local currency-denominated accounts, although they may be freely converted
into foreign currencies, at then-current official exchange rates, for purposes
of paying for foreign goods and for repatriation of profits. The Company
anticipates that it will leave a substantial portion of the profits of its
operations, if any, in the United Kingdom and Australia for use in the Company's
business in such markets. There are presently no limitations on the Company's
ability to repatriate profits. The exact amount of profits, if any, that the
Company repatriates at a given time depends on, among other factors, the
Company's financial condition, results of operations and capital requirements.
The Company will be subject to risks from exchange rate fluctuations. The
Company seeks to limit its exposure to the risk of currency fluctuations by
engaging in hedging or other transactions, if necessary.

United States Income Taxes

     Pursuant to United States tax laws, if the Company's subsidiaries organized
under the laws of the United Kingdom and Australia are not engaged in business
in the United States, such subsidiaries will not be subject to United States
taxation. Any earnings of the United Kingdom and Australia subsidiaries, when
paid to the Company (or, in certain cases, deemed paid, even though not
distributed, under certain technical provisions of the Internal Revenue Code),
would be included by the Company for United States Federal income tax purposes.

<PAGE>

However, the Company would receive a credit against Federal income tax liability
that otherwise would result from any deemed or actual distributions from its
United Kingdom and Australia subsidiaries, for any United Kingdom and Australian
corporate taxes paid by such subsidiaries on these distributions, as well as for
any dividend and royalty withholding taxes imposed directly on the Company.
Because the United Kingdom and Australian corporation tax rate is equal to or
higher than the United States corporate tax rate, the Company does not
anticipate being subject to significant United States Federal income tax on
either distributed or undistributed earnings of its United Kingdom and
Australian subsidiaries.

Government Regulation

     The Company is subject to various British, Australian, New Zealand and
local laws affecting its business. Each of the Company's restaurants will be
subject to licensing and regulation by a number of governmental authorities,
which include health, safety, sanitation, building and fire agencies in the
municipality in which the restaurant is located. Difficulties in obtaining or
failure to obtain required licenses or approvals could delay or prevent the
opening of a new restaurant in a particular area. The food distribution facility
is licensed and subject to regulation by national and local health and fire
codes, and the operation of its trucks is subject to certain regulations. The
Company is also subject to environmental regulations, but the Company does not
believe that these regulations will have a material effect on the Company's
operations.

     The Company's restaurant operations in the United Kingdom will be subject
to British, local and European Community laws governing such matters as wages,
working conditions, citizenship requirements and overtime. Significant numbers
of the Company's hourly personnel will be paid at rates related to the minimum
wage and, accordingly, further increases in the minimum wage could increase the
Company's labor costs. New European Community regulations could materially
increase the Company's cost of operations.

Item 2.   Properties

     The Company's principal place of business in the United Kingdom is located
at Unit 6, Maryland Road, Tongwell, Milton Keynes. The leased space is
approximately 800 square feet and houses the administrative offices. The rent
for this facility is (pound)500 ($783) per month. The Company maintains its
principal place of business in Australia at Unit 26, 3-9 Terminus Street, Castle
VIII-NSW 2154, Western Australia. The leased space houses the company's
administrative offices. The rent for this facility is A$20,000 ($15,625). The
lease is a 24 month lease and expires on August 31, 1998, but can be renewed at
the Company's option for two twelve month periods.

     Red Hot Concepts maintains space for its U.S. office at corporate
headquarters located in Bethesda, Maryland. The lease was for a term of one year
and expires on June 30, 1997. The total rent payable during the term of the
lease is approximately $19,200.

     The Company intends to lease the facilities for each of its Chili's
Restaurants. The Company has entered into long term leases with respect to its
Wentworthville and Ringwood Chili's Restaurants. The Company has entered into a
short-term lease with an option to purchase the property for its Cambelltown
Chili's Restaurant. The lease also provides the Company with the option to renew
the lease for two five-year and one ten-year renewal periods.

     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 twelve leases for properties in Australia developed as
Chili's Restaurants (the "Guaranty Agreement"). The Company can request that
Brinker guaranty up to five leases at any time through September 30, 2001,
subject to the limits on Brinker's total liability described below. The Company

<PAGE>

has used one guaranty for the Ringwood restaurant. The Company can also request
up to an additional seven guarantees but only if (I) the demographic profile for
the proposed Chili's location is substantially similar to the average
demographic profile for a similar Chili's in the United States, (ii) the Company
under the lease to be guaranteed is not then in default under another lease, and
(iii) the average gross sales of all of the similar Chili's Restaurants in
Australia is equal to or greater than 90% of the average gross sales of all
similar Chili's in the United States.

     Brinker's maximum liability under any one lease may not exceed $225,000 and
the term of any guaranty shall be the lesser of (I) the first three years o the
lease and (ii) the remaining term of the Guaranty Agreement. Brinker's maximum
liability under the Guaranty Agreement in any year shall be as follows:

                  Year                         Maximum Guaranty
                  1997                           $1,200,000
                  1998                            2,250,000
                  1999                            2,100,000
                  2000                            1,200,000
                  2001                               50,000

     Brinker was issued fifty-three shares (5%) of stock of the Company's Red
Hot Concepts Pacific subsidiary in connection with the Guaranty Agreement. In
the event Brinker is obligated to make any payments under any guaranty and the
Company does not reimburse Brinker within 20 days of making such payment, the
Company is required to issue stock to Brinker in an amount representing 15.1% of
the then outstanding shares of the Company's Red Hot Concepts Pacific subsidiary
stock. On September 30, 2001 (expiration date of the agreement), the Company is
required to repurchase from Brinker the stock the Company issued under the
Guaranty Agreement. The shares are to be repurchased at a price determined by a
formula based on the Company's operating profit and general and administrative
expenses. The purchase price of any 15.1% block of stock issued shall not exceed
$1,200,000 not be less than $600,000. The Company may satisfy its obligation to
repurchase the stock with cash or a two year promissory note.

     The Guaranty Agreement imposes certain financial and operating limitations
on the Company including limitations on debt, payments to Red Hot Concepts,
officers salaries and transfers of assets.

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 Officers

     No matters were submitted to a vote of the holders of the Company's Common
Stock during the fourth quarter of the Company's fiscal year ended December 31,
1995.

<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 as part of a unit (a "Unit") which
includes one share of Common Stock, one warrant to purchase one share of stock
through December 31, 1997 at $6.00 per share (a "Class A Warrant") and one
warrant to purchase one share of stock through November 3, 2000 at $12.00 per
share (a "Class B Warrant"). The Company's Units and Common Stock are quoted on
the NASDAQ Small-Cap Market System under the symbols RHCSU and RHCS,
respectively. The Company's Class A and Class B Warrants currently are not
traded.

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

                                                      1996
                                          Units                   Common
                                  High          Low          High         Low

      First Quarter              $ 4.00       $ 1.25         $ --         $ --
      Second Quarter               2.75         1.625          --           --
      Third Quarter                4.00         1.50        3.375        1.875
      Fourth Quarter               4.00         2.00        3.875        2.25

                                                      1995
                                          Units                   Common
                                  High          Low          High         Low

      Third Quarter               $8.00        $6.00         Common not traded
      (beginning August 8, 1995)                             during this period
      Fourth Quarter               8.00         1.50

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.
The Company intends to retain future earnings to finance future developments.

Number of Stockholders

     As of March 25, 1997, there were 76 record holders of the Company's Common
Stock, 50 record holders of the Class A Warrants and 49 record holders of the
Class B Warrants. The Company believes there are approximately 2800 beneficial
owners of the Company's Common Stock.

<PAGE>


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

Introduction

The Company was incorporated on June 14, 1994 and was in the development stage
until October 1995. The Company was formed to develop the Chili's Concept
created by Brinker International and has acquired an exclusive right to develop
the Chili's Concept in the United Kingdom, Australia and New Zealand pursuant to
development and license agreements with Brinker.

As of December 29, 1996, the Company had five operating restaurants. The Company
opened its first Chili's Restaurant at Canary Wharf in the United Kingdom on
October 9, 1995 and opened additional restaurants on March 20, 1996 and May 1,
1996 in Cambridge and central London, respectively. In November 1995, the
Company purchased the Australian subsidiary of Brinker International which had
two Chili's Restaurants operating in communities surrounding Sydney. The Company
opened its third restaurant in Australia near Melbourne in September 1996. In
late December 1996, the Company closed the central London restaurant.

The auditors have issued a going concern report to the Company, due to the
Company suffering recurring losses from operations, not satisfying certain loan
covenants, and having a deficit working capital at December 29, 1996.

United Kingdom

The Company has taken several significant steps to improve the overall
profitability of the United Kingdom subsidiary. In June, the Company began
restructuring the headquarters staffing to significantly reduce the headcount
from thirteen to two and reduce overhead expenses. For administrative services,
the Company relies on a related company in the U.K.

The Company changed the name of the restaurants to Chili's "Texas" Grill & Bar
from Chili's Grill & Bar. This change was in response to consumer focus groups
which found the brand name to imply hot Mexican cuisine rather than American
Grill. The Company reinforced the Texas Grill positioning with intensive
marketing efforts and a new menu.

In August, the Company hired a senior operations director from Brinker to manage
the existing restaurants. This resulted in an overall improvement in the
execution of service, food preparation, presentation, and the feel of the
"Chili's" experience. Sales at the Canary Wharf and Cambridge restaurants
improved by approximately 40% from August until the end of the year which the
Company believes is attributed to these improvements.

In December, the Company decided to close the central London restaurant. The
restaurant did not achieve results consistent with management expectations and
was unlikely to in the future without a significant investment. The Company has
written off the investment of $2.1 million and believes that there are no
further obligations under the lease of the property.

The Company believes these changes and the continuing improvement in the
restaurant operations will significantly improve the operating results for 1997.

Australia

The Company has spent significant time focusing its efforts on various
activities including selecting sites, hiring and training management personnel,
establishing administrative and financial policies and procedures, and
undertaking other activities necessary to operate new restaurants. The Company
implemented a "market partner" program to rapidly expand the brand by giving
management an equity position in their restaurants. The Company has also
concluded an agreement in principle with a property investment group to finance
the construction of Chili's restaurants.
<PAGE>

In September, the Company entered into an agreement with Brinker pursuant to
which Brinker agreed to guarantee, under certain circumstances, a minimum of
five and up to twelve leases for properties. This enables the Company to
unrestrict cash balances that were designated for rent deposits. As
consideration under the agreement, Brinker received 5% ownership of Red Hot
Concepts Pacific, the parent company to the Australia subsidiary.

Corporate Activities

In August 1996, Colin Halpern stepped down as President of Red Hot Concepts and
Norman Abdallah, the former Vice President of Franchise Operations for Brinker
International was hired as President. The Company believes Mr. Abdallah's
comprehension of the Chili's concept and his industry contacts have been a
tremendous asset to the Company. Mr. Halpern remains as Chairman of the Board to
focus on the long term strategic development of the Company.

Results of Operations

The Company realized a net loss of $6.3 million for the fifty-two week period
ended December 29, 1996 partly attributable to the $2.2 million loss associated
with the closing of the restaurant in the U.K. This compared with a net loss of
$1.3 million for the same period last year.

The following table sets forth expenses as a percentage of total revenue for the
period ended December 29, 1996 and for the period ended December 31, 1995.

<TABLE>
<CAPTION>
                                                    1996                               1995
                                                                   Consolidated   Consolidated
                                    UK      Australia   Parent         Total          Total
<S>                                <C>        <C>       <C>            <C>            <C> 
Revenues                           100%       100%                      100%           100%

Costs and Expenses
     Food & Beverage               (35%)      (30%)                     (32%)          (37%)
     Restaurant Labor              (27%)      (26%)                     (26%)          (33%)
     Restaurant Expense            (20%)      (11%)                     (15%)          (12%)
     Royalties                      (2%)       (2%)                      (2%)           (2%)
     Fixed Restaurant Expense      (35%)      (19%)                     (27%)          (18%)
                                  ----        ---       ----           ----           ----  
Total Costs and Expenses          (119%)      (88%)                    (102%)         (102%)

Gross Margin (Loss)                (19%)      (12%)                      (2%)           (2%)

General & Administrative           (27%)       (8%)      (13%)          (29%)         (110%)
Depreciation/Amortization          (16%)       (3%)                      (9%)          (11%)
Closing Costs of Restaurant        (53%)       --         --            (23%)           --
                                  ----        ---       ----           ----           ----  
Operating Loss                    (115%)        1%       (13%)          (63%)         (123%)
Other Income (Expense)              (4%)       --         (2%)           (4%)            3%
                                  ----        ---       ----           ----           ----  

Net Income/(Loss)                 (119%)        1%       (15%)          (67%)         (120%)
</TABLE>

Comparison of the Fifty-Two Week Period Ended December 29, 1996 and December 31,
1995.

                                   Australia      United Kingdom        Total
    Revenues                      $5,327,463       $4,111,276        $9,438,739
    Operating Income/(Loss)           46,320       (4,740,546)       (4,694,226)


<PAGE>

United Kingdom

Revenues
Revenues for the three restaurants as of December 29, 1996 totaled $4.1 million
as compared to $0.4 million in 1995. The significant increase in revenue was
principally related to three restaurants operating in 1996 versus one restaurant
operating in 1995. Restaurant operating weeks in 1995 totaled 12 as compared to
128 weeks in 1996. At the end of the third quarter, the Company implemented a
market plan to increase revenues at its restaurants by changing the brand
identity to Chili's "Texas" Grill & Bar. The name change, in complement with a
new menu rollout, resulted in an increase in average weekly sales for August to
December of approximately 40%.

Cost and Expenses

Restaurant cost of food, labor, variable and fixed expenses totaled $4.9 million
for the period ended December 29, 1996. This is an increase of $4.4 million for
the year ended December 31, 1995. The increase was principally related to the
number of store operating weeks in 1996 versus 1995. Food costs as a percentage
of revenue fell from 50% in 1995 to 35% in 1996 as the Company improved
purchasing power through economics of scale and sourcing more products locally.
Labor costs as a percentage of revenue fell from 45% to 27% in 1995 as the
Company reduced restaurant staff after store grand openings, and implemented
programs to improve staff training and work productivity. During the last
quarter of 1996, food costs and labor costs as a percentage of revenue were 31%
and 19% respectively. Restaurant expense and fixed costs as a percentage of
revenue increased in 1996 to 55% from 32% in 1995. This increase in the
percentage was principally related to high fixed expenses associated with the
central London restaurant in comparison to the revenues generated.

General and Administrative Expense

The total cost of general and administrative expenses for the fifty-two weeks
ended December 29, 1996 were $1.1 million or 27% of revenues. General and
administrative costs in 1995 were $300,000 or 75% of revenues. The
administrative costs to run the three restaurants were reduced significantly in
an effort to achieve overall profitability in the United Kingdom. In 1995,
significant costs were incurred to develop the brand, hire and train personnel,
and build the administrative infrastructure.

Closing Costs for Restaurant

The Company closed one restaurant in Central London in December. The costs
incurred to close the restaurant in addition to the write off of leasehold
improvements, inventories, pre-opening costs and equipment total $2,198,451 or
53% of the total U.K. sales revenues.

Australia

The original owners of the Chili's development agreement opened the first Sydney
restaurant in August 1994 and the second restaurant in February 1995. The
restaurants and the Development Agreement were sold back to Brinker in July
1995. The Company purchased the development rights and the restaurants from
Brinker in November 1995.

Revenues

Total revenues for the fifty-two weeks ended December 29, 1996 were $5.3
million. Revenues on a pro forma combined basis for the 52 weeks ended October
31, 1995 for the two restaurants were approximately $3.4 million. The increase
in revenues was attributed to more restaurant trading weeks (139 in 1996 versus
90 in 1995) and an increase in same store sales of 8% over the previous year.
Sales trends improved in 1996 through a combination of new customer trial,
repeat business, and effective sales building marketing programs.
<PAGE>

Cost and Expense

For the fifty-two weeks ended December 29, 1996, the total cost of food, labor,
variable and fixed restaurant expenses were $4.7 million. The cost of food sales
as a percentage of revenue was 30% during the year as compared to 33% in 1995 on
a pro forma basis. The cost of sales percentage improved during 1996 as the
Company moved to more cost effective food sources and improved efficiencies in
the restaurants. Labor costs as a percentage of revenue were 26% during 1996.
Labor costs as a percentage of revenue were reduced during 1996 as a result of
less labor after the store openings, efficiency improvements and the reduction
of management in the restaurants. Other restaurant variable and fixed costs were
32% of revenue. Other variable and fixed costs were higher in 1996 as a result
of opening a third restaurant which increased the fixed costs.

General and Administrative Expenses

The total cost of general and administrative expenses for the fifty-two weeks
ended December 29, 1996 were approximately $400,000 or 8% of revenue. The
administrative costs to run the three restaurants were reduced significantly in
an effort to achieve overall profitability in Australia. In 1995, the previous
owners incurred significant costs to develop the brand in Australia and
integrate the business into the structure of the parent company.

Liquidity and Capital Resources

The Company

The Company's working capital as of December 29, 1996 was approximately $3.1
million as compared to working capital of $300,000 on December 31, 1995. Total
current assets were $1.5 million on December 29, 1996 and $2.6 million on
December 31, 1995. Current liabilities increased by $2.3 million in 1996 to $4.6
million from $2.3 million in 1995. The primary decrease in current assets was
attributed to the use of initial public offering funds to acquire fixed assets.
The increase in current liabilities is related to trade payables associated with
restaurant operations and interest on related party debt.

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

                                       January 1, 1996         January 2, 1995
                                             to                       to
                                      December 29, 1996       December 31, 1995
                                        In Thousands             In Thousands
Net cash (used) in operating activities   $(1,573)                  $  (618)
Cash (used) in investing                   (4,804)                   (2,500)
Cash provided by financing                  5,289                     4,733

During the fiscal year ended December 29, 1996, the Company used approximately
$1,573,000 for operating activities. The Company had a net loss of approximately
$6.3 million which was reduced by non-cash adjustments of $3,140,600. Accounts
receivable decreased by approximately $166,000 which was offset by an increase
of inventories of $80,000 and an increase of prepaid expenses of $464,000. The
accounts payables, accrued liabilities, and other payables increased by
approximately $1,960,000.

Cash used in investing activities of approximately $4,800,000 is primarily
attributed to $4,057,000 spent on leasehold improvements, furniture and fixtures
for the new restaurants in the United Kingdom and Australia, and $664,000 spent
on pre-opening costs associated with new restaurants. New officer loans totaled
$118,000 and loans were repaid of $35,000.
<PAGE>

Cash provided by financing activities for the year was aprroximately $5,289,000
which include the net proceeds from the sale of common shares of approximately
$3,397,000 less additional offering costs of $55,000, the proceeds from a loan
from Westminster Bank for $1.0 million and advances from a related party of
$2,861,000 with repayments of approximately $1,609,000. The repayment terms on
the intercompany advances have been extended to June 1998.

The Company has a lease for its U.S. corporate office which terminates in June
1997. The United Kingdom headquarters at Milton Keynes, England is subject to a
month-to-month lease. The Australian headquarters are in Sydney, Western
Australia. The leased property is subject to a two year lease which expires in
August 1998. Estimated annual lease payments for each of the next five years are
approximately $947,000, $936,000, $924,000 and $924,000 per year, respectively.
This cost relates primarily to the restaurant sites.

To finance the construction and opening of the second and third restaurants in
the U.K., the Company obtained debt financing and financing from a related
party. The Company has signed a Fixed Rate Loan Agreement for 650,000 British
Pounds (approximately $1 million) with the National Westminster Bank PLC. The
terms of the loan are for seven years at an interest rate of the U.K. base rate
plus three percent. The Company currently is not in compliance with certain loan
covenant provisions. The Company has implemented sales building and cost
reduction programs which should enable it to satisfy the operating profitability
guidelines. In our discussion with the bank, the bank feels that the loan is
fully secured and at this time has not expressed intentions to demand repayment
of the loan. The Company secured a short term loan of $1.6 million from Brinker
in February 1997. The interest rate is 8% and the monies are to be repaid either
in August 1997 or March 1998 depending on certain conditions. These monies will
be used for short term working capital purposes.

In Australia, the landlord has committed to finance the three restaurants that
will start construction in the second quarter. The Company has also agreed on
heads of terms with an investment management company to finance land purchases
and restaurant construction. This agreement will be used in lieu of landlord
financing in each case when possible. The Company is responsible for financing
the interior decor, furniture, equipment and pre-opening costs. The Company will
use cash flow from local operations and bank financing to pay for its
responsibilities. The Company does not have a bank commitment at this time for
future equipment leases. The Company used one guaranty provided by Brinker to
secure the Ringwood lease.

The Company has reached an agreement in principle with Woodland Limited
Partnership to convert $750,000 of long term debt to convertible preferred
shares. This agreement will be presented to the Company's Board of Directors for
approval.

The Company has improved short term liquidity through a number of different
steps including the reduction of administrative expenses and headcount; sales
building in the restaurants; the rescheduling of payment terms on the advances
from Woodland Limited Partnership; and securing a working capital loan from
Brinker. The Company is also analyzing the cost to construct restaurants and
incur pre-opening expenses to identify ways to elimintate cost. The Company
believes that anticipated revenues and additional capital or borrowing will be
necessary to achieve the Company's development schedule and satisfy future
construction obligations and amounts due to Brinker. 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, of it the Company is unable to
raise more funds, the Company will reduce its operations to a level consistent
with its available funding.

<PAGE>


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

Not Applicable.



<PAGE>


                                    PART III


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

     Officers and Directors are elected on an annual basis. The present term of
each Director will expire at the next Annual Meeting of Shareholders or at such
time as a successor is duly elected. Officers serve at the discretion of the
Board of Directors. The Officers and Directors of the Company and their
respective positions are as follows:

     Officers are elected on an annual basis. Officers serve at the discretion
of the Board of Directors. The executive officers of the Company and their
respective positions are as follows:

     Name                         Age           Position

Norman J. Abdallah                 34        President, Director
H. Michael Bush                    42        Chief Financial Officer
Colin Halpern                      60        Chairman of the Board of Directors
Melvin F. Lazar                    57        Director
Robert P. Flack                    59        Director
Franklen Myles Abelman             55        Director
----------

     Norman J. Abdallah joined Red Hot Concepts as President in August 1996.
Prior to this position, Mr. Abdallah was employed with Brinker International,
the casual dining giant for nine years. Mr. Abdallah served in various
management positions at Brinker including Vice President of Franchise Operations
and Development from August 1993 to August 1996, Franchise Operations Director
from July 1992 to July 1993 and Area Director, Chili's Concept prior to July
1992.

     H. Michael Bush, has served as Chief Financial Officer of the Company since
November 1995. He currently also serves as Acting President, Chief Financial
Officer and Secretary of International Franchise Systems, Inc. Mr. Bush has been
employed with Red Hot Concepts, Inc. as its Chief Financial Officer since
November 1995. Prior to joining Red Hot, Mr. Bush worked at Mobil Oil
Corporation. He served at Mobil in various financial capacities from 1980
through November 1995, including Manager of Financial Analysis, Controls and
Joint Venture Reporting and Senior Tax Planning Advisor. From 1976 through 1980,
Mr. Bush worked at Unisys. Mr. Bush is a certified public accountant.


     Colin Halpern has served as Chairman of the Board of the Company since June
1994 and served as President of the Company from June 1994 to August 1996. He
also currently serves as President, Secretary, Treasurer and Director of
Crescent Capital, Inc., Chairman of the Board of International Franchise
Systems, Inc., Director of Lafayette Industries, Inc., and 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, December 1993, January 1992 and August 1983, respectively. Mr.
Halpern also served as Executive Vice President of Lafayette Industries from
January 1992 through December 1996. Colin Halpern also served as President of
International Franchise Systems, Inc. from December 1993 through May 1996. From
1985 to the present, Mr. Halpern has served as the Chairman of Universal Service
Corp. Mr. Halpern was formerly the Chairman and Chief Executive Officer of DRC
Industries, Inc., a company which, 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.
<PAGE>

     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.

     Melvin F. Lazar has been an outside Director of the Company since June
1994. Mr. Lazar is the founding partner of Lazar, Levine & Company, a New York
City CPA firm which is in its twenty-sixth year of operation. Mr. Lazar received
a Bachelor of Business Administration degree from The City College of New York
in 1960. He is a member of the American Institute of Certified Public
Accountants, the New York State Society of Certified Public Accountants and is
currently serving on the NYSSCPA Committee on Cooperation with Stock Exchanges
and Investment Bankers as well as the Committee on Cooperation with Financial
Media. Mr. Lazar has been licensed in the State of New York as a Certified
Public Accountant since 1964. Mr. Lazar specializes in both litigation support
services and assisting companies with merger and acquisition activities. He has
assisted companies with funding requirements including venture, equity and debt
financing and has serviced public and privately owned companies for over thirty
years. Mr. Lazar is also a director of International Franchise Systems, Inc.

     Robert Pace Flack has served as a director of the Company since December,
1995. Since December, 1995, he has served as Chief Executive Officer, President
and Director of Kona Restaurant Group, Inc. He is also currently serving as a
management consultant for business development and for the food service industry
as a director of Business Development Services, a private company. From June
1989 to December 1994, Mr. Flack has held several positions and most recently
served as the President and Chief Executive Officer of Sonic Industries, a
NASDAQ listed, fast food service, drive-in restaurant chain with over 1,300
outlets, 90% of which are franchised. He has served in senior management
positions with several restaurant companies including El Chico Corporation
(NASDAQ), Pizza Inn, Inc. (AMEX) and Village Kitchen Foods, Inc. Mr. Flack is a
member of the National Restaurant Association and the International Franchise
Association. Mr. Flack is also a director of International Franchise Systems,
Inc. and of Lincoln National Bank, Oklahoma.

     Franklen Myles Abelman has served as a director of the Company since
December, 1995. Mr. Abelman is currently serving as Regional General Counsel for
British American Tobacco. From 1992 through 1995, Mr. Abelman served as an
independent consultant in franchising, distribution and business development to
entities involved in international development, particularly with respect to
operations in the Far East, Europe and the Middle East. His clients include
public and privately owned companies and franchise operations such as Roasters
Corporation (for which he served as Vice President - International Development
through 1995), Foodmaker, Carvel, Dairy Queen, Pepsico, Inc., Medvest and Brown
and Williamson. From 1983 to 1992, Mr. Abelman was employed by Pepsico, Inc. and
served as Vice President and General Counsel of Kentucky Fried Chicken
International where he was responsible for managing the legal department and
franchising operations of the Company's international division in 65 countries.
Mr. Abelman is a director of Perfect Delivery, Inc. and of Foodco International,
Ltd., both private companies. Mr. Abelman is also a director of International
Franchise Systems, Inc.
<PAGE>

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 receive an annual fee of $5,000
and a fee of $1,000 for each board, committee, and shareholder meeting attended.
Non-employee directors participate in the Company's 1996 Non-Employee Directors
Stock Option Plan. Pursuant to the Company's plan, on the first business day of
each January, April, July and October, each non-employee director is
automatically granted an option to purchase 5,000 shares of Common Stock. The
options are exercisable after the first anniversary of the grant for a period of
ten years. During fiscal year 1996, Messrs. Abelman, Flack and Lazar each were
granted an option to acquire 5,000 shares of Common Stock at an exercisable
price of $2.52 and 5,000 shares at an exercisable price of $2.875. Mr. Halpern
was granted an option to acquire 5,000 shares of Common Stock at an exercisable
price of $2.875.

Meetings and Committees of the Board of Directors

     The Board of Directors ("Board") held five meetings in 1996. The
Compensation and Stock Option Committee ("the Compensation Committee") which
currently consists of Messrs. Lazar, Flack and Abelman evaluates the performance
of and makes compensation recommendations for senior management, including the
President and directs the administration of and make determinations under the
Company's Stock Option and Incentive Plan. Messrs. Lazar, Flack and Abelman are
the members of the Compensation Committee. The Compensation Committee met once
in 1996. The Company does not have a standing audit or nominating committee.

     Each director attended at least 75% of the aggregate of (i) the total
number of meetings of the Board of Directors held during fiscal year 1996 and
(ii) the total number of meetings held by all committees of the Board of
Directors during fiscal year 1996 on which such person served.


Item 10.    Executive Compensation

Summary Compensation Table

     The following table sets forth the aggregate cash compensation paid by the
Company on an annualized basis for the fifty-two weeks ended December 29, 1996,
to those executive officers whose salary and bonus exceeded $100,000 and the
Chief Executive Officer.
<TABLE>
<CAPTION>
                                                                                       Long-Term Compensation
                                     Annual Compensation                                        Awards

   Name and                                                   Other Annual     Restricted     Securities    All Other
   Principal                                       Bonus      Compensation(2)    Stock        Underlying  Compensation
   Position               Year      Salary($)       ($)            ($)         Award(s)($)    Options(#)       ($)

<S>                       <C>        <C>         <C>             <C>              <C>         <C>           <C>
Colin Halpern             1996       72,000           0           15,840           0             5,000         0
Chairman (1)              1995       72,000           0           60,156           0                 0         0

Norman Abdallah           1996       88,333      20,000(3)           ---                       400,000         0
President

H. Michael Bush           1996       50,000      10,000(3)           ---           0            90,000         0
Chief Financial Officer,
Secretary
<FN>

(1)  Colin Halpern served as President from January 1996 to August 1996.
(2)  For 1996, Mr. Halpern's other annual compensation includes $15,840 for car
     allowance and for 1995, Mr. Halpern's other annual compensation includes
     $15,840 for car allowance and $32,760 for housing allowance. 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
     annual salary and bonus reported.
(3)  Represents amounts paid under the Company's bonus plan.
</FN>
</TABLE>

<PAGE>
Stock Option Grants


     The following tables set forth, as to the named executive officers, certain
information relating to options for the purchase of Common Stock granted and
exercised during fiscal year 1996 and held at the end of fiscal year 1996.

<TABLE>
<CAPTION>
                                                    Option Grants in Last Fiscal Year
                                                             Individual Grants
  Name                          Options      % of Total Options Granted     Exercise or     Expiration Date
                                Granted      to Employees in Fiscal Year    Base Price
                                   #
<S>                           <C>                     <C>                   <C>             <C> 
Colin Halpern                    5,000(1)                (1)                   $2.875         10/01/06
Norman Abdallah                400,000(2)                73%                    1.875         08/20/06
H. Michael Bush                 15,000(2)                 3%                    1.750         03/07/06
                                75,000(2)                14%                    1.875         08/20/06
<FN>
(1)  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.
(2)  1/3 of such options are exercisable on the first anniversary date of the
     grant, 1/3 are exercisable on the second anniversary date of the grant and
     the remaining 1/3 are exercisable on the third anniversary date of the
     grant. No option is exercisable after the expiration of ten years from the
     date of grant.
</FN>
</TABLE>

                       Aggregated Option Exercises in Last
                      Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
    Name          Shares          Value       # of Securities     # of Securities       Value of           Value of
                Acquired on      Realized        Underlying          Underlying        Unexercised       Unexercised
                 Exercise           ($)         Unexercised         Unexercised       In-the-Money       In-the-Money
                    (#)                          Options at         Options at          Option at         Option at
                                                   FY-End             FY-End           FY-End (1)         FY-End (1)
                                                 Exercisable       Unexercisable       Exercisable       Unexercisable
<S>                <C>             <C>              <C>              <C>                  <C>             <C>    
Colin Halpern        0               0                0                 5,000               0                     *
Norman               0               0                0               400,000               0              $350,000
Abdallah
H. Michael           0               0                0                15,000               0                15,000
Bush                                                                   75,000               0                65,625

<FN>
*    At fiscal year-end, the Company stock was trading at a price less than the
     option price of the grant.
(1)  Represents the difference between the option exercise price and the closing
     market price for the Company's Common Stock on December 29, 1996 ($2.75).
</FN>
</TABLE>



<PAGE>

Item 11.    Security Ownership of Certain Beneficial Owners and Management

     The table below sets forth certain information as of March 17, 1997
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 and nominee for director of the
Company, and (iii) all directors and executive officers as a group. On March 17,
1997, there were 10,262,347 shares of the Company's Common Stock 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.

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

Woodland Limited Partnership(1)             3,737,500                36%
1301 K Street, N.W.
Washington, DC  20005

Colin Halpern                                      -0-              -0-

Norman Abdallah                                    -0-              -0-

Melvin F. Lazar                                 5,000(2)             *

Robert P. Flack                                 5,000(2)             *

Franklen M. Abelman                             5,000(2)             *

All directors and executive
officers as a group (6 persons)                20,000                *
---------------------
* Less than 1%

(1)  Woodland Group is the General Partner of Woodland Limited Partnership.
     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 100% of Woodland
     Limited Partnership, Mr. 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 March 17, 1997.
<PAGE>

Item 12.   Certain Relationships and Related Transactions

Transactions with Affiliates

     The Company has entered into several transactions with affiliates. The
Company believes that the terms of the transactions with affiliates are on terms
at least as favorable as could have been obtained from unaffiliated third
parties. The Company will require that in the future, transactions with
affiliates will continue to be made on terms the Company believes are at least
as favorable as those obtainable from unaffiliated third parties.

Amounts due to International Franchise Systems, Inc.

     The Company has entered into an agreement with International Franchise
Systems, Inc., ("IFS"), a company indirectly controlled by Woodland Limited
Partnership, the holder of 36% of the Company's Shares, which allows the Company
to sublease its principal place of business which is located at Unit 6, Maryland
Road, Tongwell, Milton Keynes in the U.K. The leased space is approximately 800
square feet and houses the administrative offices. The monthly rent payable by
the Company is $ 933.

     The Company also subleases from IFS space for its U.S. office on a month to
month basis. The rent payable during the term of the lease is approximately
$1,508 per month.

     At December 31, 1995, IFS had advanced funds to the Company in the amount
of $183,635. During 1996, the entire amount was repaid. IFS charges a management
fee to the Company for administrative services. For the years ended December 29,
1996 and December 31, 1995, the management fee was $25,000 and $36,000,
respectively. At December 29, 1996, the Company's U.K. subsidiary is owed
$29,785 from the U.K. subsidiary of IFS.

Amounts due to Woodland Limited Partnership

From time to time, Woodland Limited Partnership has advanced funds to the
Company. As of December 29,1996, the total amount due to Woodland was $1,940,342
consisting of short-term advances of $940,342 and a short-term note-payable of
$1,000,000. On December 31, 1995, the Company owed Woodland Limited partnership
$89,709. All amounts were advanced on a short-term basis and are non-interest
bearing.

Advances to Norman Abdallah

     During fiscal year 1996, the Company has loaned Norman Abdallah $100,000
repayable monthly over a 24 month period at an interest rate of 6% per annum.
The Company also issued short-term advances of $3,014.


     The information required by this Item 10 will be in the Company's
definitive proxy materials to be filed with the Securities and Exchange
Commission and is incorporated in this Annual Report on Form 10-KSB by this
reference.


Item 13.   Exhibits and Reports on Form 8-K

    (a)  Exhibits

         3(A)(2)    Certificate of Incorporation

          (C)(2)    Bylaws of Registrant

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

          (B)(3)    Class A and 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. (E)(4)(**) Form of Incentive Stock
                    Option Plan


<PAGE>

        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

---------------------
         (*)   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.


   (b)    Reports on Form 8-K

          During the last quarter the following Form 8-K's were filed by the
     Company:

          (i)  On November 7, 1996, the Company filed a report on Form 8-K
               reporting events under Item 9.

          (ii) On December 27, 1996, the Company filed a report on Form 8-K
               reporting events under Item 9.



<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/Norman Abdallah
                                       Norman Abdallah, President

                                       Date:  April 28, 1997


     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/Norman Abdallah         President and Director              April 28, 1997
Norman Abdallah            (Chief Executive Officer)

/s/H. Michael Bush         Chief Financial Officer             April 28, 1997
H. Michael Bush            and Secretary (Principal
                           Financial and Accounting
                           Officer)

/s/Colin Halpern           Chairman of the Board               April 28, 1997
Colin Halpern

/s/Melvin F. Lazar         Director                            April 28, 1997
Melvin F. Lazar

/s/Robert Pace Flack       Director                            April 28, 1997
Robert Pace Flack

/s/Franklen Myles Abelman  Director  April 28, 1997
Franklen Myles Abelman