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 26, 1999

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

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

                          Commission File No. 33-86166

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


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


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


                                 (301) 493-4553
              (Registrant's telephone number, including area code)
          Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

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

                          Common Stock, $.01 par value


<PAGE>


             Indicate  by check mark  whether the  Registrant  (1) has filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
             Yes  X    No
                 ---      ---

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

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

             As of April 1, 2000, the aggregate market value of the Registrant's
Common Stock held by non-affiliates of the Registrant was $746,296.


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












                                       2
<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS


ITEM                                                                                           PAGE
                                     PART I

<S>     <C>                                                                                     <C>
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..........................................................................        6
6.       Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations....................................................................        7
7.       Financial Statements.............................................................       12
8.       Changes in and Disagreements with
         Accountants on Accounting and Financial
         Disclosure.......................................................................       12


                                    PART III

9.       Directors and Executive Officers
         of the Registrant................................................................       13
10.      Executive Compensation...........................................................       14
11.      Security Ownership of Certain Beneficial
         Owners and Management............................................................       15
12.      Certain Relationships and Related
         Transactions.....................................................................       16
13.      Exhibits and Reports on Form 8-K.................................................       18
         Signatures.......................................................................       20
</TABLE>









                                       3
<PAGE>


Item 1.  Business

General

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

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

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

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

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

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

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

As of December 26, 1999 Celebrated's  businesses consisted of one Starvin Marvin
American diner and the Chili's Grill & Bar Restaurants. The remaining businesses
had been either closed or sold during the year.  As previously  discussed it was
decided by the  Administrators  to dispose of the operating  businesses in March
2000.


                                       4
<PAGE>

The Celebrated Group Plc

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

Celebrated did not pay a dividend in 1999.


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.


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 26, 1999.







                                       5
<PAGE>



Item 4A.  Executive Officers of the Registrant

The executive officers of the Company are as follows:


      Name                      Age      Position

      Colin Halpern              63      President
      H. Michael Bush            45      Chief Financial Officer and Secretary


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 operating 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.

H. Michael Bush served as Chief  Financial  Officer and Secretary of the Company
since  November  1995.  Mr. Bush also served as Chief  Executive  Officer of the
Celebrated  Group Plc, from  February  1998 to October 1999.  Mr. Bush served as
President and Chief Financial Officer of International  Franchise Systems,  Inc.
from December 1995 through October 1998. Prior to joining the Company,  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 for Unisys.  Mr. Bush is a certified
public accountant.




                                       6
<PAGE>


                                     PART II

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

Market Information

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

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

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

  First Quarter        $0.3438       $0.1875               Unit Not Traded

                                                       1999*
                               Common                            Units
                         High           Low                 High      Low

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


                                                       1998*
                               Common                            Units
                         High           Low                 High      Low

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


                                                       1997*
                               Common                            Units
                         High           Low                 High      Low

  First Quarter         $9.375       $3.5625               $8.625     $3.00
  Second Quarter        4.3125         1.125                 3.00      2.25
  Third Quarter          4.125         1.125                 Unit Not Traded
  Fourth Quarter          6.00         1.875                 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, 2000,  there were 88 record holders of the Company's Common Stock
and 60 record  holders of the Class B Warrants.  The Company  believes there are
approximately 1500 beneficial owners of the Company's Common Stock.


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

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

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

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

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

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

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


                                       8
<PAGE>

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

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

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

Results of Operations

The Company realized a net loss of approximately  $3.5 million for the fifty-two
week period ended  December 26, 1999.  This was  attributable  to a $3.3 million
loss on the write off of its  investment of Celebrated  and  continuing  general
administrative  expenses  of the  company  of  approximately  $.2  million.  The
Company's  net loss for the  fifty-two  week period ended  December 27, 1998 was
approximately  $2.6 million.  This was  attributable to a $2.1 million loss from
the  Celebrated  Group and  continuing  general  administrative  expenses of the
company of $.5 million.

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










                                       9
<PAGE>





United Kingdom

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


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

The Company anticipates its cash requirements to be approximately  $200,000.  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.
















                                       10
<PAGE>



The Company

The Company's negative working capital as of December 26, 1999 was approximately
$155,000 as compared to  negative  working  capital of $146,000 on December  27,
1998.  Total  current  assets were  $2,093 on  December  26, 1999 and $68,693 on
December 27, 1998.  Current  liabilities  decreased by approximately  $58,000 in
1999 to $157,000 from $215,000 in 1998.

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

                                            December 28, 1998  December 29, 1997
                                                   to                 to
                                            December 26, 1999  December 27, 1998
                                              In Thousands       In Thousands
Net cash (used) in operating activities         $ (238)             $ (641)
Cash (used) in investing activities               (  0)               (  0)
Cash provided by financing activities              228                 544


During the fiscal year ended December 26, 1999,  the company used  approximately
$238,000 for operating  activities and for the year ended December 27, 1998, the
Company used approximately $641,000 for operating activities.

Cash provided by financing activities for the year was approximately $228,000 of
which all funds were advanced from related parties.

The Company has a month to month lease for its U.S. corporate office.

In Australia, Brinker has assumed obligation for the existing leases and Company
commitments on new restaurants sites. The Company's only obligation in Australia
is to pay the trade payables of approximately $30,000.

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.








                                       11
<PAGE>



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

Inflation

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


Item 7. Financial Statements

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


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

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

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

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

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









                                       12
<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 63, 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.

H. Michael Bush,  age 45, Mr. Bush resigned in October 1999.  Prior to that date
he served as Chief Financial  Officer and Secretary since joining the Company in
November 1995. Mr. Bush also served as Chief Financial  Officer and Secretary of
International  Franchise Systems, Inc., the UK licensee of Domino's Pizza. Since
May 1996,  Mr. Bush had served as Acting  President of  International  Franchise
Systems,  Inc. In  addition,  Mr. Bush is currently  serving as Chief  Executive
Officer of the  Celebrated  Group Plc,  the  company  that  merged  with Red Hot
Concepts,  Inc. in December 1997. Prior to joining the Company,  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,
Accounting Manager and Senior Tax Planning Advisor.  From 1976 through 1980, Mr.
Bush worked at Unisys. Mr. Bush is a certified public accountant.




                                       13
<PAGE>


Aaron L. Lebedow,  age 64, has served as a director of the Company since January
1998.  Mr.  Lebedow is founder and  President of Global  MarkeTactics,  a market
planning  consulting  firm, and a position he has held since 1994.  From 1966 to
1993, Mr.  Lebedow  served as Chairman and  co-founder of Technomic  Consultants
International,  a strategic marketing consulting firm with offices globally. Mr.
Lebedow  serves as a director for the Council of Jewish  Elderly,  a position he
has held since 1987.


Item 10.    Executive and Director Compensation

Summary Compensation Table

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

Colin Halpern             1999(3)       66,000            0          27,238              0                0                 0
President(3)              1998(3)       72,000            0          27,238              0                0                 0
                          1997          72,000       10,000          27,238              0            3,332                 0
H. Michael Bush           1999           9,800            0               0              0                0                 0
Chief Financial Officer,  1998          37,333            0               0              0                0                 0
Secretary                 1997          66,667       10,000               0              0                0                 0
</TABLE>
(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.


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 1999 and held at the end of fiscal year 1999.

         Option Grants in Last Fiscal Year

                  Individual Grants

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





                                       14
<PAGE>




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

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


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

                                                          # of Securities     # of securities        Value of          Value of
                                                          ----------------    ----------------       ---------         --------
                                                             Underlying          underlying        unexercised        unexercised
                                                             -----------         ----------        ------------       -----------
                                                            Unexercised         unexercised        in-the-money      in-the-money
                                                            ------------        -----------        -------------     ------------
                              Shares          Value          Options at         options at          option at          option at
                              -------         ------         ----------         -----------         ----------         ---------
                            acquired on      Realized          FY-End             FY-End            FY-End (1)        FY-End (1)
                            ------------     --------          -------            -------           -----------       ----------
          Name              exercise (#)        ($)          Exercisable       Unexercisable        Exercisable      Unexercisable
          ----              ------------        ---          -----------       -------------        -----------      -------------
<S>                            <C>             <C>             <C>                <C>                <C>                <C>
Colin Halpern                    0               0               3,332              1,666              $ --               $ --
H. Michael Bush                  0               0             19,999              10,001              $ --               $ --
</TABLE>


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

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.  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, 2000 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.




                                       15
<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 (3 persons)                         64,998(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, 2000.


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.




                                       16
<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 26, 1999, dividends in arrears on the Series A convertible preferred
stock  are  $120,000.  Dividends  in  arrears  on the  Series B  non-convertible
preferred stock amounted to $290,000 or $0.32 per share.

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

The Company has  advanced  funds to and paid  various  expenses on behalf of Mr.
Halpern. At December 26, 1999 and December 27, 1998, the total amount due to the
Company was $41,149 and $31,149 respectively.

Mr. Halpern's son is an attorney with a law firm that provides legal services to
the Company. Legal expense incurred with this firm for the fifty-two weeks ended
December 26, 1999 was  approximately  $22,000.  At December 26, 1999 there was a
balance of $93,778 due and owing by the Company to this firm.

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









                                       17
<PAGE>

<TABLE>
<CAPTION>

Item 13.   Exhibits and Reports on Form 8-K
         (a)  Exhibits
<S>      <C>                  <C>
         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
---------------------


                                       18
<PAGE>

<FN>
         (*)   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
</FN>
</TABLE>

(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





                                       19
<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:  August  25, 2000
                                                  -------------------


          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              August 25, 2000
----------------           (Chief Executive Officer)
Colin Halpern



/s/Aaron L. Lebedow        Director                            August 25, 2000
-------------------
Aaron L. Lebedow





                                       20

<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                                          Page

<S>                                                                                                    <C>
Independent Auditor's Report............................................................................   F-1

Consolidated Balance Sheets as of December 26, 1999 and December 27, 1998...............................   F-2...F-3

Consolidated Statements of Operations for the fifty-two weeks ended
December 26, 1999 and December 27, 1998.................................................................   F-4

Consolidated Statements of Stockholders' Equity for the period December 27, 1998
to December 26, 1999....................................................................................   F-5

Consolidated Statements of Cash Flows for the fifty-two weeks ended
December 26, 1999 and December 27, 1998.................................................................   F-6...F-7

Notes to Consolidated Financial Statements..............................................................   F-8...F-22


</TABLE>



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




<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  26, 1999 and
December  27,  1998,  and the  related  consolidated  statement  of  operations,
stockholders'  equity,  and cash flows for the two fifty-two  week periods ended
December 26, 1999 and December 27, 1998. 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 26, 1999
and December 27, 1998,  and the  consolidated  results of their  operations  and
their cash flows for the two fifty-two  week periods ended December 26, 1999, in
conformity with generally accepted accounting principles.

                  The accompanying  consolidated  financial statements have been
prepared assuming that Red Hot Concepts, Inc. and its subsidiaries will continue
as a  going  concern.  As  discussed  in  Note 3 to the  consolidated  financial
statements,  Red Hot Concepts, Inc. and its subsidiaries have suffered recurring
losses  from  operations;  have  utilized  $237,926  and  $641,144  in cash  for
operations; have working capital deficits of $154,957 and $146,373, and that the
company major asset,  its in vestment in  Celebrated  Group has been written off
due to the  liquidation of  Celebrated,  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
August 22, 2000




                                      F-1
<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 26, 1999 AND DECEMBER 27, 1998
-------------------------------------------------------------------------------



                                           December 26,         December 27,
Assets:                                        1999                1998
                                           -----------          -----------
Current Assets:
   Cash                                    $     2,093          $    12,293
   Restricted Cash                                   0               30,000
   Due from Celebrated Group                         0               26,400
   Prepaid Expenses                                  0                    0
   Accrued Interest Receivable                       0                    0
                                           -----------          -----------

   Total Current Assets                    $     2,093          $    68,693
                                           -----------          -----------

Property and Equipment:
   Furniture and Fixtures                  $    10,861          $    10,861
   Less:  Accumulated Depreciation              (7,688)              (6,164)
                                           -----------          -----------

   Property and Equipment - Net            $     3,173          $     4,697
                                           -----------          -----------

Other Assets:
   Officer Loan Receivable                 $    41,149          $    31,149
   Investment in Celebrated Group                    0            3,257,096
   Loan Receivable - Other                      28,000                    0
                                           -----------          -----------

   Total Other Assets                      $    69,149            3,288,245
                                           -----------          -----------

   Total Assets                            $    74,415          $ 3,361,635
                                           ===========          ===========


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



                                      F-2
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 26, 1999 AND DECEMBER 27, 1998
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                     <C>                   <C>
                                                                         December 26,          December 27,
                                                                             1999                 1998
                                                                        ------------          ------------
Liabilities and Stockholders' Equity:
Current Liabilities
   Accounts Payable and Accrued Expenses                                $    157,050          $    215,066
                                                                        ------------          ------------

Long-Term Liabilities:
   Accrued Interest Payable - Related Party                                        0                     0
   Due to Related Party                                                 $    321,226          $     55,500
                                                                        ------------          ------------


   Total Long-Term Liabilities                                          $    321,226          $     55,500
                                                                        ------------          ------------

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                                                   (11,708,289)           (8,213,359)

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

   Total Stockholders' Equity                                           $   (403,861)         $  3,091,069
                                                                        ------------          ------------

   Total Liabilities and Stockholders' Equity                           $     74,415          $  3,361,635
                                                                        ============          ============
</TABLE>

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

                                      F-3
<PAGE>

RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                Fifty-Two Weeks Ended
                                                         December 26,         December 27,
                                                         -----------          -----------
                                                             1999                 1998
                                                         -----------          -----------

<S>                                                      <C>                  <C>
Revenues                                                 $         0          $         0
                                                         -----------          -----------

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

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

   Gross Margin                                                    0                    0

General and Administrative Expenses                          215,829              451,402

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

   Operating Loss                                           (217,353)            (452,926)
                                                         -----------          -----------

Net (Loss) of Unconsolidated Investee                     (3,283,496)          (2,118,694)
                                                         -----------          -----------

Other Income [Expense]:
   Interest Income                                                14                5,409
   Interest Expense - Related Party                                0              (75,886)
   Gain [Loss] on Disposal of Subsidiary                       5,905                    0
                                                         -----------          -----------

   Other Income [Expense] - Net                                5,919              (70,477)
                                                         -----------          -----------

   Income [Loss] Before Income Tax Expense                (3,494,930)          (2,642,097)

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

   Net Income [Loss]                                      (3,494,930)          (2,642,097)

Preferred Stock Dividends                                   (236,000)            (116,000)
                                                         -----------          -----------

   Net Income [Loss] Available to Stockholders           $(3,730,930)         $(2,758,097)
                                                         ===========          ===========

Net Income [Loss] Per Common Share:
   Basic                                                 $     (1.09)         $      (.81)
                                                         ===========          ===========

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

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

                                      F-4
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                           Series B
                                                                                       Non-Convertible
                                               Common Stock [11E]      Additional      Preferred Stock
                                             Number of                  Paid-in       Number of
                                              Shares         Amount     Capital        Shares     Amount
                                              ------         ------     -------        ------     ------
<S>                                         <C>             <C>       <C>             <C>        <C>


Balance - December 28, 1997                 3,420,782       $34,207   $8,443,416       725,000  $1,450,000

Notes Payable Converted to Convertible             --            --           --            --          --
  Preferred Stock  [9D]
Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 27, 1998                   --            --           --            --          --
Comprehensive Income                               --            --           --            --          --
                                            ---------       -------   ----------       -------   ----------


Balance - December 27, 1998                 3,420,782       $34,207   $8,443,416       725,000  $1,450,000


Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 26, 1999                   --            --           --            --          --
Comprehensive Income                               --            --           --            --          --
                                            ---------       -------   ----------       -------   ----------

Balance - December 26, 1999                 3,420,725       $34,207   $8,443,416       725,000  $1,450,000
                                            =========       =======   ==========       =======   ==========





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

Balance - December 28, 1997                        --            --                $(5,571,262)  $(123,195)      $4,233,166

Notes Payable Converted to Convertible        100,000     1,500,000           --            --          --        1,500,000
  Preferred Stock  [9D]
Comprehensive income;
  Net [Loss] for the fifty-two week
  period ended December 27, 1998                   --            --   (2,642,097)   (2,642,097)         --       (2,642,097)
Comprehensive Income                               --            --   (2,642,097)           --          --               --
                                              -------    ----------  ===========   -----------   ---------       ----------
Balance - December 27, 1998                   100,000    $1,500,000                $(8,213,359)  $(123,195)      $3,091,069
                                              =======    ==========                ===========   =========       ==========


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

</TABLE>



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


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

                                      F-5
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                                              Fifty-Two Weeks Ended
                                                                                         December 26,       December 27,
                                                                                         ------------       ------------
                                                                                             1 9 9 9           1 9 9 8
                                                                                             -------           -------

Operating Activities:
<S>                                                                                   <C>                 <C>
   Net Income [Loss]                                                                  $    (3,494,930)    $    (2,642,097)
                                                                                      ----------------    ----------------
   Adjustments to Reconcile Net Income [Loss] to Net
     Cash [Used for] Provided by
     Operating Activities:
     Depreciation and Amortization                                                              1,524               1,524
     Net Loss of Unconsolidated Investee                                                    3,257,096           2,118,694
     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                                                                     56,400             165,586
       Inventories                                                                                  0                   0
       Prepaid Expenses and Other Current Assets                                                    0              37,213

     Increase [Decrease] in:
       Accounts Payable                                                                       (58,016)           (322,064)
       Accrued Expenses                                                                             0                   0
       Other Payables and Accrued Interest                                                          0                   0
                                                                                      ---------------     ---------------

     Total Adjustments                                                                $     3,257,004     $     2,000,953
                                                                                       --------------      --------------

   Net Cash - Operating Activities                                                    $      (237,926)    $    (641,144)
                                                                                       ---------------     --------------


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

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

Financing Activities:
   Advances from Related Parties                                                              265,726             544,182
   Payments to Related Parties                                                                (38,000)                  0
                                                                                      ----------------    ---------------

   Net Cash - Financing Activities                                                    $       227,726     $       544,182
                                                                                       --------------      --------------

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

   Net [Decrease] in Cash - Forward                                                   $       (10,200)    $       (96,962)

</TABLE>




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



                                      F-6
<PAGE>



RED HOT CONCEPTS, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                              Fifty-Two Weeks Ended
                                                                                         December 26,       December 27,
                                                                                         ------------       ------------
                                                                                            1 9 9 9            1 9 9 8
                                                                                            -------            -------


<S>                                                                                   <C>                 <C>
   Net [Decrease] in Cash - Forwarded                                                 $       (10,200)    $       (96,962)

Cash - Beginning of Periods                                                                    12,293             109,255
                                                                                      ---------------     ---------------

   Cash - End of Periods                                                              $         2,093     $        12,293
                                                                                      ===============     ===============

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     $     1,500,000

   Cancellation of Warrants                                                           $             0     $             0
</TABLE>


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







                                      F-7
<PAGE>



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

[1] Organization and Nature of Business

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

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

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


[2] Summary of Significant Accounting Policies

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

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

Property and Equipment - Property and equipment are stated at cost. Depreciation
on  equipment  is computed  primarily  using the  straight-line  method over the
estimated useful lives of the assets,  which range from 3 to 7 years.  Leasehold
improvements  were  amortized  over  the  lesser  of  the  useful  life  of  the
improvements  or the lease term,  which averaged 20 years.  The Company began to
record  depreciation of its assets in October 1995,  when operations  commenced.
Depreciation  expense for the fifty-two week periods ended December 26, 1999 and
December 27, 1998 was $1,524 and $1,524, respectively.




                                      F-8
<PAGE>

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



[2] Summary of Significant Accounting Policies [Continued]

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

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

Earnings [Loss] Per Share - The Financial  Accounting Standards Board has issued
Statement of Financial  Accounting  Standards  ["SFAS"] No. 128,  "Earnings  per
Share";  which is effective for financial  statements  issued for periods ending
after December 15, 1997.  Accordingly,  earnings per share data in the financial
statements for the year ended December 26, 1999 and December 27, 1998, have been
calculated in accordance with SFAS No. 128.

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

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

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

Foreign  Currency  Translation  - For the periods  ended  December  26, 1999 and
December 27, 1998, the investment in Celebrated  Group has been  translated into
US dollars,  from British Pound Sterling using year end exchange rates in effect
at that date.





                                      F-9
<PAGE>


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


[2] Summary of Significant Accounting Policies [Continued]

Impairment  - Certain  long-term  assets of the  Company  are  reviewed at least
annually as to whether their  carrying  value has become  impaired,  pursuant to
guidance  established  in  Statement of  Financial  Standards  ["SFAS"] No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of."  Management  considers  assets to be impaired if the  carrying
value  exceeds  the  future   projected  cash  flows  from  related   operations
[undiscounted and without interest  charges].  If impairment is deemed to exist,
the assets will be written down to fair value or projected discounted cash flows
from related  operations.  As of December 26, 1999,  management has written down
these assets to their fair value.

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

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

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


[3] Going Concern

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

Since the Company's operations commenced in October 1995, revenues have not been
sufficient  to cover the  Company's  fixed  administrative  costs  resulting  in
operating  losses of $217,353 and $523,403 for the fifty-two  week periods ended
December 26, 1999 and December  27, 1998,  respectively.  In addition the losses
incurred on the write down of the company's  investment in the Celebrated  Group
plc to no value and Celebrated pending  liquidation,  significantly  impairs its
ability to continue in business.  The company had a working  capital  deficit of
$154,957 and an  accumulated  deficit of  $11,708,289  at December 26, 1999. The
company has been funded  through  December 26, 1999  through  loans from related
parties and affiliated entities.

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

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

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


                                      F-10
<PAGE>

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



[4] Significant Risks and Uncertainties

[A] Concentrations of Credit Risk - Cash - At December 27, 1998, the Company had
approximately  $30,000 on deposit in Australia.  Australia does not have federal
insurance on balances maintained in banks. There is no collateral in relation to
deposits.  At December 27,  1998,  one letter of credit in the amount of $30,000
had been issued on the Company's behalf and is secured by a cash account,  which
is  reflected  as  restricted  on the balance  sheet.  At December  26, 1999 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 - The Company is subject to numerous factors
relating  to  conducting  business  in a  foreign  country  [including,  without
limitation,  economic,  political and currency  risks] any of which could have a
significant  impact on the Company's  operations.  Upon the final liquidation of
Celebrated this risk will be eliminated.

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

[5] Leases
Red Hot subleases its U.S. office from a related party for approximately  $800 a
month. The lease is month to month. Restaurant House subleased office facilities
for  approximately  $400 a month  from a wholly  owned  subsidiary  of a related
company. This obligation was transferred to Celebrated as of December 15, 1997.

The Company had 5 operating  leases for  restaurant  sites  ranging from 2 to 25
years. Two of these leases,  one with a 5 year term and one with a 11 year term,
had renewal options,  exercisable at the Company's  option,  for successive five
year terms through 2012.  All operating  leases have been  transferred to either
Celebrated or Brinker in December 1997.

Rent expense for the fifty-two week periods ended December 26, 1999 and December
27, 1998 was $9,096 and $9,096, respectively.


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




                                      F-11

<PAGE>



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


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


[7] Related Party Transactions
Woodland Limited Partnership ["Woodland"] is a partnership controlled by members
of Mr. Colin Halpern's family.  Mr. Halpern is the President and Chairman of the
Board of the  Company.  As of  December  27,  1998,  there is no balance  due to
Woodland. As of December 28, 1997 the balance due to Woodland for funds advanced
to the  Company was  $1,011,317,  which  includes  accrued  interest  payable of
$230,065.  This  obligation  was  originally due in May 1998 and was extended by
Woodland to January  1999.  This loan was exchanged  for  convertible  preferred
stock discussed below on December 27, 1998.  During 1997 funds received from the
sale of the Australian subsidiary of $2,060,000 were received by the Company and
were transferred to Woodland.  Woodland returned $1,347,100 to the Company to be
utilized  for the payment of the  outstanding  note to  Brinker.  The balance of
$712,900  was  treated by the  Company  as a  reduction  to the  amount  owed to
Woodland. In addition,  approximately  $1,000,000 was advanced to the Company by
Woodland for working capital purposes.

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

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

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

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


                                      F-12
<PAGE>


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


[7] Related Party Transactions [Continued]

At December 26, 1999 dividends in arrears on the Series A convertible  preferred
stock amounted to $120,000. Dividends in arrears on the Series B non-convertible
preferred stock amounted to $290,000 or $0.32 per share.

At  December  26,  1999,  Woodland  owns  approximately  36%  of  the  Company's
outstanding  common  stock.  Woodland also owns 100 % of the Class A Convertible
Preferred  Stock, as well as, 100% of Class B  Non-Convertible  Preferred Stock.
Upon  Conversion of the Series A and B  Convertible  Preferred  Shares  Woodland
would own approximately 57% of the Company's outstanding common stock.

Mr.  Halpern  also is the  Chairman  of the  Board  of  International  Franchise
Systems,  Inc. ["IFS"].  No management fees have been charged to the company for
the years ended December 26, 1999 and December 27, 1998.

The Company has  advanced  funds to and paid  various  expenses on behalf of Mr.
Halpern.  At December 26, 1999 and December 27, 1998 the total amount due to the
Company from Mr. Halpern is $41,149 and $31,149, respectively.

Mr. Halpern's son is an attorney with a law firm that provides legal services to
the Company. Legal expense incurred with this firm for the fifty-two weeks ended
December 26, 1999 was $22,000.  At December 26, 1999 there was a $93,778 balance
due and owing by the Company to this firm.

The Chief Financial  Officer of the Company was also the Chief Financial Officer
of IFS. On February 11, 1998 the Chief  Financial  Officer of the company became
the Chief Financial Officer and Chief Executive Officer of the Celebrated Group,
Plc. No amount was  allocated to IFS or Celebrated of his salaries of $9,800 for
1999 and $37,333 for 1998.


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

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

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







                                      F-13
<PAGE>


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



[8] Provision for Income Taxes [Continued]
Red Hot files a consolidated United States federal income tax return with one of
its related companies,  Red Hot Pacific. There is no income tax provision as Red
Hot  and  its  subsidiary,  Red Hot  Pacific,  incurred  a net  loss  for  1999.
Therefore,  no loss carryforward was used during 1999. In 1997, Red Hot incurred
capital  gains tax of  approximately  $1,364,000  on the sale and  merger of its
subsidiaries.  This amount was offset against its  utilization of operating loss
carryforwards.  At  December  26,  1999,  Red  Hot  had  a  deferred  tax  asset
attributable  to  its  United  States  net  operating  loss   carryforwards   of
approximately  $1,345,000,   which  was  offset  by  a  valuation  allowance  of
approximately  $1,345,000.  The  change in the  valuation  allowance  during the
fiscal year ended December 26, 1999 was approximately $66,000.

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


[9] Stock Transactions

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

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

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



                                      F-14
<PAGE>



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



[9] Stock Transactions (Continued)

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

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

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

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

At December 26, 1999 dividends in arrears on the Series A convertible  preferred
stock amounted to $120,000. The dividends on Series B non-convertible  preferred
stock amounted to $290,000 or $.32 per share.

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












                                      F-15

<PAGE>

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



[10] Stock Options and Warrants

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

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

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

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

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

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



                                      F-16
<PAGE>


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



[10] Stock Options and Warrants [Continued]

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

Information pertaining to stock options as of December 26, 1999 and December 27,
1998 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 28, 1997                   57,671           3.53
   --------------------------------------              ===========      =========

Options Granted - Directors Plan                            11,662           2.07              --             9.5  years
Options Granted - Stock Plan                                     0              0              --                --
Options Granted - Non-Qualified                                  0              0              --                --
Options Exercised                                                0              0              --                --
Options Canceled                                            (4,333)             0              --                --
                                                       ------------

   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
   --------------------------------------              ===========      =========
</TABLE>

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




                                      F-17
<PAGE>



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



[10] Stock Options and Warrants [Continued]

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

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

                                                  Years ended
                                                 December 31,
                                       1 9 9 9                  1 9 9 8
                                       -------                  -------
Net Income [Loss]:
   As Reported                     $   (3,494,930)          $    (2,642,097)
                                   ===============          ================

   Pro Forma                       $   (3,572,452)          $    (2,700,751)
                                   ===============          ================

Net Income [Loss] Per Share:
   As Reported                     $         (1.09)         $            (.81)
                                   ================         ==================

   Pro Forma                       $         (1.11)         $            (.81)
                                   ================         ==================


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 26, 1999 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 26, 1999
or December 27, 1998.



                                      F-18
<PAGE>


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


[11] Operations by Geographic Area

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

For the fifty-two weeks ended December 26, 1999:
<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]                $      (211,434) $   (3,283,496) $             0  $            0   $    (3,494,930)
Assets                           $        74,415  $            0  $             0  $            0   $        74,415
Liabilities                      $       478,276  $            0  $             0  $            0   $       478,276
Company's Investment in
   Foreign Subsidiaries          $             0  $            0  $             0  $            0   $             0



For the fifty-two weeks ended December 27, 1998:

                                      United           United
                                      States           Kingdom        Australia     Eliminations      Consolidated

Revenues                         $             0  $            0  $             0  $            0   $             0
Gross Margin [Loss]              $             0  $            0  $             0  $            0   $             0
Net Income [Loss]                $      (523,403) $   (2,118,694) $             0  $            0   $    (2,642,097)
Assets                           $     3,361,635  $            0  $             0  $            0   $     3,361,635
Liabilities                      $       270,566  $            0  $             0  $            0   $       270,566
Company's Investment in
   Foreign Subsidiaries          $     3,257,096  $            0  $             0  $            0   $     3,257,096
</TABLE>



[12] Commitments

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

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

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

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

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



                                      F-19
<PAGE>

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

[12] Commitments [Continued]

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

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


[13] New Authoritative Accounting Pronouncements

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

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


[14] Sale of Rights in Chili's Restaurants

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

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

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

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



                                      F-20
<PAGE>



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



[15] Merger with Celebrated

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

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

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

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


[16] Subsequent Events


[A]  Additional  Related  Party  Advances - In the first  quarter  of 2000,  the
Company received additional cash advances from a related party of $4,000.




                              . . . . . . . . . . .








                                      F-21