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

                                 Form 10-KSB A-1

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

                   For the fiscal year ended December 31, 2000

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

              For the transition period from _________ to _________
                        Commission file number  001-13559
                                                ---------

                      Restaurant Teams International, Inc.
                 (Name of small business issuer in its charter)

             Texas                                        75-2337102
(State of other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

     P.O. Box 5310, Longview, Texas                          75608
(Address of principal executive offices)                   (Zip Code)

                    Issuer's telephone number: (903) 295-6800

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

     Title of each class               Name of each exchange on which registered

                              None

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

                  Common Stock, par value $.01
                        (Title of class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

The Issuer's  revenues for the most recent  fiscal year:  $1,023,894,  excluding
sales from discontinued restaurant operations.

Part III, Items 9 through 12, of Form 10KSB will be incorporated by reference to
the Issuer's  definitive  proxy statement for its annual meeting of shareholders
to be held in October of 2001.

The  aggregate  market  value of  common  stock  held by  non-affiliates  of the
registrant  based on the sale trade price of the common stock as reported on the
OTC-BB on September 5, 2001 was $271,147.00.  For purposes of this  computation,
all officers,  directors,  and 10% beneficial owners of registrant are deemed to
be affiliates.  Such  determination  should not be deemed an admission that such
officers,  directors or 10%  beneficial  owners are, in fact,  affiliates of the
registrant.  Number of shares  outstanding  of each of the  Issuer's  classes of
common stock, as of September 5, 2001:  49,264,663  shares of common stock,  par
value $.01.

Transitional Small Business Disclosure Format:  Yes [  ]  No [X]

<PAGE>

                                     PART I

Item 1.  DESCRIPTION OF BUSINESS

History

         Restaurant  Teams  International,  Inc.  (the  "Company")  is  a  Texas
corporation.  The Company originally was incorporated as a Delaware  corporation
on May 9, 1990, under the name "Bosko's,  Inc. On November 9, 1992, the Bosko's,
Inc.  name was  changed to Fresh'n  Lite,  Inc.  and on  September  15, 1998 the
Company  changed its name to Restaurant  Teams  International,  Inc. in order to
more  properly  reflect  management's  desire  to  position  the  Company  as  a
restaurant holding company.

         In October 1995, the Delaware  Corporation merged into its wholly owned
subsidiary,  FNL,  Inc.,  a Texas  corporation.  FNL,  Inc.  was  the  surviving
corporation in the merger. FNL, Inc. then changed its name to Fresh'n Lite, Inc.
The purpose of the merger was to convert the Delaware  Corporation  into a Texas
corporation.

         The Company was formed in connection  with the creation of a restaurant
in  Marshall,  Texas,  which was named  Bosko's 3 N 1 D-Lite.  In the past,  the
Company  has  operated  restaurants  in the  Texas  cities of  Marshall,  Tyler,
Longview,  Nacogdoches,  Dallas,  Richardson,  Valley  Ranch,  The  Colony,  and
Texarkana.  Each of these restaurants has been closed or sold with the exception
of The Colony restaurant,  which the Company still operates under the trade name
of Street Talk Cafe.

         On  February  9, 2000 the  Company  acquired  substantially  all of the
assets of Hartan,  Inc. and it's subsidiaries out of chapter 11 bankruptcy for a
purchase price of $535,890.  The assets  consisted of 8 Tanner's  restaurants in
the  Atlanta,  GA market.  During 2000 the Company sold four of the units for an
aggregate  sales price of $307,444 and the  remaining  four stores where sold in
2001 for an  aggregate  sales price of  $325,000.  The  Company no longer  holds
rights to the Tanner's franchises or company owned stores.

         On March 16, 2000 the Company acquired Regulatory Solutions, Inc. (RSI)
in an equity transaction, which was subsequently rescinded resulting in a charge
to earnings of $1,269,043 in 2000.  RSI is a workplace  safety and  governmental
regulation   compliance   specialty  firm  with  expertise  in  the  restaurant,
manufacturing,  oil & gas, and  construction  industries.  The principals of RSI
subsequently  filed a lawsuit  against the Company  seeking a rescission  of the
aforementioned  transaction.  The Company and the principals of RSI have reached
an agreement with respect to the aforementioned lawsuit.

Company Business - Restaurant Segment

         The Company currently  operates one full-service  restaurant located in
the Texas City of The Colony under the trade name Street Talk Cafe.

         The Company's  restaurant  offers a variety of food items,  including a
wide selection of sandwiches, salads, pizzas, steaks, seafood, Tex-Mex and other
food items and desserts.

         The  majority of the  Company's  food items are prepared to order using
fresh meats,  cheeses, and vegetables.  While the restaurant offers full-service
casual  dining,  the menus are  designed to permit quick food  preparation.  The
restaurant offers take-out service.

         The key strategic elements of the Street Talk Cafe concept are:

o    Providing  guests  a broad  menu  with 50% of the  "tie  breakers"  of each
     segment in good tasting versions to enhance frequency;

<PAGE>

o    Pricing  menu  offerings  at  levels  comparable  to  other  casual  dining
     restaurants while providing more wholesome and consistent selections;

o    Selecting,  training and motivating cast members to enhance customer dining
     experiences by delivering a level of service that is a product unto itself;

o    Reinforcing  perceived  value through  unique  concept  elements to provide
     guests with a superior "total dining"  experience in a fun and entertaining
     atmosphere.

   Menu
   ----

         The menu features a wide variety of entrees  including  chicken,  ribs,
sandwiches,  salads, pizzas, steaks,  seafood,  Tex-Mex and special dinner items
and desserts that have nonfat or low-fat content.

         The  Company  targets  urban   white-collar   markets  and  focuses  on
increasing  customer value by providing more wholesome and consistent  offerings
than other  casual  dining  restaurants  at  comparable  prices in a relaxed and
entertaining atmosphere.

         The Company's  strategy is to continually  deliver broad menu appeal by
offering patrons  selections from all dining segments in good tasting  versions.
In  addition,  the  Company's  efforts to assure  the broad  appeal of its menu,
combined with its emphasis on affordability and food quality,  promotes frequent
return visits by restaurant guests.

         To  accomplish  these  objectives,  the  Company  identifies  the "tie"
breaking and "forerunner" products in each restaurant segment.  Management feels
these "best sellers" are the single most important reason guests select a casual
dining  restaurant.  The Company  offers about 50% of its  selections in low-fat
versions.

         Dinner  entrees  presently  range in price  from  $6.95 to  $10.95.  An
assortment of sandwiches, baked potatoes, salads, burgers, soups and pizza round
out the menu. The concept uses the same menu for lunch and supper.

   Competition
   -----------

         The Company's  restaurants  operate in the casual dining segment of the
foodservice industry.  This segment is estimated to be $36 billion per year with
another  $10  billion   estimated  in  the  Bar  and  Grill   segment.   Brinker
International  operates more brands in the casual dining  segment than any other
company with a total of seven different concepts.

         Casual operators agree that continued  expansion of core concepts and a
more aggressive  pursuit of acquisitions are the two prevailing trends that will
characterize the casual-theme segment in the near term.

         Despite the  category's  maturation,  wide spread labor  shortages  and
competitive  saturation  in dozens of  suburban  markets,  leading  casual-theme
operators are confident there is plenty of room for domestic expansion.

         Fragmentation  is happening in the casual  segment.  Casual Diners have
historically  tried to be all things to all people by carrying Tex-Mex,  steaks,
ribs, and a bar. Today,  if people want steak,  they will go to operators in the
steak house niche like Outback or Lone Star. If they want Mexican,  they will go
to El Chico or Rio Bravo.


<PAGE>

PENDING ACQUISITION

         Pending Acquisition

         At this time the Company does not have any pending  acquisitions  under
contract.  Management is exploring a number of potential acquisition  candidates
and will continue to work towards growing the Company through acquisition.

         Terminated Acquisition

         Over the course of the year 2000, the Company  terminated  it's efforts
to acquire the Fatburger chain of restaurants.  This  termination  resulted in a
charge to  earnings of  $4,156,632,  which were costs that had  previously  been
capitalized as acquisition costs.


                                    Employees
                                    ---------

         Registrant  employed  44  persons as of August 30,  2001,  including  2
executive and office personnel and 42 restaurant operational managers and staff.



ITEM 2: DESCRIPTION OF PROPERTY

Restaurant Locations

         The following  table provides  information  with respect to each of the
Company's  restaurant  properties.   The  Dallas,  Texarkana,  The  Colony,  and
Richardson buildings are owned, with a lease on the land.


         Location                          Square Feet     Lease Expiration Date
         --------                          -----------     ---------------------

         Dallas, Texas..............      4,500 sq. ft.    February 21, 2015

         The Colony, Texas..........      4,700 sq. ft.    October 15, 2017

         Richardson, Texas .........      4,700 sq. ft.    December 15, 2017

         Texarkana, Texas...........      3,600 sq. ft.    November 30, 2006

         The Company no longer operates  restaurants in the Dallas,  Richardson,
and Texarkana  locations.  The Dallas and  Richardson  facilities  are leased to
other operators.


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

         None

<PAGE>

                                     PART II

Item 5:  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The  Company's  Common Stock began  trading on the OTC  Bulletin  Board
under the  symbol  FLTT on May 9,  1997.  Such  symbol  was  changed  to RTIN in
September  1998.  The  Company's  stock was  subsequently  delisted from the OTC
Bulleting  Board  for lack of  reporting  in May of  2001.  The  Company  is now
bringing all of it's filings  current in an effort to regain it's  listing.  The
following  table  sets  forth for the  quarters  indicated  the high and low bid
prices of the  Company's  Common  Stock as  reported by the  National  Quotation
Bureau,  Inc. The prices reflect  inter-dealer  prices,  without retail mark-up,
mark-down or commissions and may not represent actual transactions.

                                  1999                      High         Low
                  --------------------------------------   -------     -------

                  First Quarter..........................  $ 3.19      $ 1.50

                  Second Quarter.........................    2.59        1.13

                  Third Quarter..........................    1.68         .74

                  Fourth Quarter.........................    1.00         .26


                                  2000                      High         Low
                  --------------------------------------   -------     -------


                  First Quarter .........................  $ 1.16      $  .34


                  Second Quarter ........................     .84         .34

                  Third Quarter..........................     .46         .095

                  Fourth Quarter.........................     .28         .03


         As of  December  31,  2000,  the  Company  estimates  that  there  were
approximately  1000  beneficial  owners  of  the  Company's  Common  Stock,  and
approximately 250 holders of record.

Item 6:  MANAGEMENT'S DISCUSSION AND ANALYSIS ON PLAN OF OPERATION

Forward-Looking Statements

         This Annual Report on Form 10-KSB includes  forward-looking  statements
within the meaning of Section 27A of The Securities Act of 1933, as amended (the
Securities  Act),  and Section 21E of the  Securities  Exchange Act of 1934,  as
amended  (the   Exchange   Act),   which  can  be   identified  by  the  use  of
forward-looking  terminology such as may, believe,  expect, intend,  anticipate,
estimate or  continue or the  negative  thereof or other  variations  thereon or
comparable terminology.  All statements other than statements of historical fact
included in this Form  10-KSB,  are  forward-looking  statements.  Although  the
Company  believes  that  the  expectations  reflected  in  such  forward-looking
statements  are  reasonable,  it can give no  assurance  that  such  statements,
including  certain risks and  uncertainties  that could cause actual  results to
differ materially from the Company's  expectations  (Cautionary  Statements) are
disclosed in this Form 10-KSB. Important factors that could cause actual results
to  differ  materially  from  those  in the  forward-looking  statements  herein
include,  but are not  limited  to,  the  newness of the  Company,  the need for
additional  capital and additional  financing,  the Company's limited restaurant
base, lack of geographic diversification, the risks associated with expansion, a
lack  of   marketing   experience   and   activities,   risks  of   franchising,
seasonability,  the  choice  of site  locations,  development  and  construction
delays, need for additional personnel, increases in operating and food costs and
availability  of  supplies,   significant   industry   competition,   government
regulation,  insurance  claims and the ability of the Company to meet its stated
business  goals.  All  subsequent  written and oral  forward-looking  statements
attributable  to the  Company  or persons  acting on its  behalf  are  expressly
qualified in their entirety by the Cautionary Statements.

<PAGE>

         The following  discussion  of the results of  operations  and financial
condition  should  be  considered  in  connection  with  the  Audited  Financial
Statements and related Notes thereto included herein. Overview

The Company was  organized in June 1990 as Bosko's,  Inc.  under the laws of the
State of  Delaware.  In November  1992 the  Company  changed its name to Fresh'n
Lite,  Inc.,  and in November 1995 the Company  merged into a Texas  corporation
also  bearing the name  Fresh'n  Lite,  Inc. On  September  15, 1998 the Company
changed its name to  Restaurant  Teams  International,  Inc. to more  accurately
reflect the  direction  management  is taking with  respect to  positioning  the
Company as a  multi-concept  holding  company.  The Company  currently  owns and
operates one Street Talk Cafe restaurant in The Colony, Texas.

                              Results of Operations
                              ---------------------

Comparison of Year Ended December 31, 1999 and December 31, 2000.

         Revenues.  Restaurant  sales from continuing  locations for fiscal year
ended December 31, 1999 were $1,137,713.

         Restaurant  sales  from  continuing  locations  for  fiscal  year ended
December 31, 2000 were  $739,676,  a 35% decrease from 1999. The 35% decrease in
revenues from 1999 is attributed to the decline in sales at the Company's Colony
location due to the opening of several new  restaurants in the area. At one time
the Colony restaurant was the only full service restaurant operation in the area
but it is now  competing  with three other major  brands that have opened in the
last two years.  Management  expects this decline in revenue to be temporary and
is working to restore the sales to their previous  levels.  (SEE Note 2, Page 15
to the audited financial statements)

         Revenues  and costs of sales from  discontinued  locations in 1999 were
applicable to the Addison and Richardson locations,  which the Company ceased to
operate in 1999. Revenues and costs of sales from discontinued locations in 2000
represent sales and expenses of the eight Tanners  locations,  which the Company
acquired  in  February of 2000.  In  November  of 2000,  the Company  decided to
dispose  of the  Tanners  locations  due to the fact that the  operations  where
starting to show signs of  weakening  sales and the  geographic  dislocation  of
these operations from the Company's  headquarters.  Four Tanners  locations were
sold in 2000 for a net gain of $100,268 and the remaining four Tanners locations
were sold in February of 2001.

         Costs and  Expenses.  Operating  costs and expenses for the fiscal year
ended  December  31, 2000  increased  by  $3,637,128  or 116% to  $6,770,457  as
compared to $3,133,329  for the  corresponding  period ended  December 31, 1999.
General  and  Administrative  Costs  in 2000  decreased  by 11% to  $909,365  as
compared to $1,019,247 in 1999.  This decrease was primarily due to the previous
years  development of  infrastructure  in  anticipation of the future growth and
acquisitions.  Interest expense in 2000 increased by $208,769 to $1,015,481 from
$806,712 in 1999.

         Net  Income.  The  Company  had a net loss for the  fiscal  year  ended
December 31, 2000 of $9,598,566  compared to net loss of  $2,245,204  for fiscal
year  ended  December  31,  1999,  representing  a loss of ($.68) and ($.30) per
share,  respectively.  The net loss in 1999 was  primarily due to the closing of
the  Company's  Street  Talk  Cafe  operations  and the  loss on sale of  assets
associated with the sale of the Company's  Addison  restaurant.  The net loss in
2000 is attributed greatly to the charge off of the expenses associated with the
Fatburger  acquisition and the write off of the Regulatory Solutions acquisition
costs and bad debt.

<PAGE>

Liquidity and Capital Resources
-------------------------------

         Historically,  the Company has required  capital to fund the operations
and capital expenditure requirements of its Company-owned restaurants.

         The Company is  currently  operating  out of cash flow from  operations
however, management has determined that an immediate infusion of capital will be
required for the Company to maintain it's  operations and to be in a position to
make the acquisitions which have been targeted.

         The Company's principal capital requirements are the funding of
acquisitions.

         The Company  completed  two private  placements  of A Debentures  and B
Debentures  on May 29,  1998 and  June 29,  1998,  respectively,  providing  net
proceeds  to the  Company  of  $2,670,000  and  resulting  in  ensuing  debt  of
$3,000,000.  The proceeds were used to fund the Company's  expansion strategy of
opening  additional  Street Talk Cafe restaurants in the Dallas market area. The
Company implemented these expansion plans with the opening of restaurants in The
Colony,  Addison,  and Richardson,  Texas.  The Company then moved away from its
strategy to expand in the Dallas DMA market  utilizing the Street Talk brand and
sold the  Addison  restaurant  and leased  the  Richardson  restaurant  to other
operators.  It was the  determination  of  management  at that  time to grow the
company by way of  acquisition  of existing  well-established  brands  rather to
expand through the development and incubation of new concepts. The Company began
looking at potential  acquisition  candidates and  ultimately  settled in on the
Fatburger  acquisition  mentioned  elsewhere  in this  document.  The  Fatburger
acquisition was subsequently  terminated resulting in a charge to the Company in
2000 of  $4,156,632.  After the  placement of the Series A and B Debentures  the
debenture holders converted $1,000,080 of the principal amount of the debentures
to common  stock in the  Company.  In  February  of 2001,  the  Company  and the
debenture  holders agreed to convert the  debentures  and accrued  interest into
500,000  shares of  common  stock of the  company  and  1,999,920  shares of the
Company's  Convertible  Exchangeable  Series A Preferred Stock (Series A Stock).
The Series A Stock has a par value of $.10 per share,  bears interest at 10% per
annum on the face value of  $1,999,920,  provides  for a  preferred  liquidation
preference of $1.00 per share plus any unpaid accumulated dividends in the event
of  dissolution,  liquidation  or  winding up of the  Company  and has no voting
rights. The holders of the Series A Stock may at their option convert the Series
A Stock to common stock of the Company at any time as follows: (a) at one dollar
($1) per share for each share of common stock during the first twelve months or,
(b) after the first twelve (12) months,  based on 80% of the market value of the
common stock at the time of conversion.  The Company has the right to redeem the
Series A Stock  upon cash  payment of the  greater  of the  market  price of the
Company's  common  stock  prior to  redemption  or 110% of the face  value  plus
accrued but unpaid dividends.

<PAGE>

Item 7.  Financial Statements




                      RESTAURANT TEAMS INTERNATIONAL, INC.


                          INDEX TO FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

Report of Independent Certified Public Accountants                        F - 1

Independent Auditor's Report - 1999                                       F - 2

Financial Statements

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

   Consolidated Statements of Operations for the years ended
     December 31, 2000 and 1999                                           F - 5

   Consolidated Statements of Stockholders' Equity (Deficit) for
     the years ended December 31, 2000 and 1999                           F - 6

   Consolidated Statements of Cash Flows for the years ended
     December 31,  2000 and 1999                                          F - 8

   Notes to Consolidated Financial Statements                             F - 11




<PAGE>

                        Killman, Murrell & Company, P.C.
                          Certified Public Accountants

505 N. Big Spring, Suite 603    1931 E. 37th, Suite 7  4049 St. Christopher Lane
   Midland, Texas 79701         Odessa, Texas 79762       Dallas Texas 75287
      (915) 686-9381          (915) 363-0067/550-4910       (972) 862-3975
    Fax (915) 684-6722           Fax (915) 363-0376        Fax (915) 363-0376


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


The Board of Directors and Stockholders
Restaurant Teams International, Inc.
Longview, Texas

We have audited the accompanying  consolidated balance sheet of Restaurant Teams
International,  Inc. (a Texas  Corporation)  and  Subsidiary  as of December 31,
2000, and the related consolidated statement of operations, stockholders' equity
(deficit) and cash flows for the year then ended. 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 audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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 financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Restaurant Teams
International, Inc. as of December 31, 2000, and the results of their operations
and their cash flows for the year then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 13 to
the  consolidated  financial  statements,  the Company's  significant  operating
losses raise substantial doubt about its ability to continue as a going concern.
The financial  statements do not include any adjustments  that might result from
the outcome of this uncertainty.


KILLMAN, MURRELL & COMPANY, P.C.
Dallas, Texas
August 24, 2001




                                      F - 1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Stockholders
Restaurant Teams International, Inc.
Longview, Texas

We  have  audited  the   accompanying   balance   sheet  of   Restaurant   Teams
International,  Inc. as of December  31,  1999,  and the related  statements  of
operations,  stockholders'  equity and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Restaurant Teams International,
Inc. as of December 31,  1999,  and the results of its  operations  and its cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.


HEIN + ASSOCIATES LLP

Dallas, Texas
April 7, 2000




                                      F - 2
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999


                                     ASSETS

                                                                   2000           1999
                                                               -----------    -----------
<S>                                                            <C>            <C>
CURRENT ASSETS
   Cash                                                        $    49,452    $     2,521
   Inventories                                                      30,981         13,690
   Marketable Securities                                            24,140           --
   Trade Accounts Receivable                                         1,970           --
   Prepaid Expenses                                                   --           18,657
   Federal Income Tax Receivable                                      --           38,030
                                                               -----------    -----------

              TOTAL CURRENT ASSETS                                 106,543         72,898
                                                               -----------    -----------

PROPERTY AND EQUIPMENT, at cost
   Buildings                                                     2,425,651      3,129,304
   Furniture, Fixtures and Restaurant Equipment                  1,091,092        943,959
   Vehicles                                                         29,950         29,950
                                                               -----------    -----------
                                                                 3,546,693      4,103,213
   Accumulated Depreciation                                       (662,149)      (495,099)
                                                               -----------    -----------

         NET PROPERTY AND EQUIPMENT                              2,884,544      3,608,114
                                                               -----------    -----------

OTHER ASSETS
   Assets Held For Sale, net of $68,786 and $105,700 reserve
     for impairment                                                257,000      1,844,586
   Acquisition Costs of Fatburger                                     --        3,861,632
   Debenture Issuance Costs, net                                      --           62,150
                                                               -----------    -----------

         TOTAL OTHER ASSETS                                        257,000      5,768,368
                                                               -----------    -----------







              TOTAL ASSETS                                     $ 3,248,087    $ 9,449,380
                                                               ===========    ===========

</TABLE>




                   The accompanying notes are an integral part
                   of these consolidated financial statements

                                      F - 3
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                           CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999

                                                                         2000            1999
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
CURRENT LIABILITIES
   Current Installments on Long-Term Debt - Note 4                  $  1,764,819    $    719,380
   Accounts Payable                                                      446,869         226,324
   Accrued Expenses and Other Liabilities - Note 3                       967,976         280,997
   Income Taxes Payable                                                   10,000          10,000
   Amounts Due Related Parties - Note 6                                   47,500            --
                                                                    ------------    ------------

         TOTAL CURRENT LIABILITIES                                     3,237,164       1,236,701
                                                                    ------------    ------------

LONG-TERM DEBT, Net of Current Installments - Note 4                        --         1,328,276

DEFERRED LIABILITIES                                                      32,638          24,819

CONVERTIBLE DEBENTURES - Note 5                                        1,996,301       2,227,846
                                                                    ------------    ------------

         TOTAL LIABILITIES                                             5,266,103       4,817,642
                                                                    ------------    ------------

COMMITMENTS AND CONTINGENCIES - Notes 10 and 13                             --              --

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred Stock, $.10 par value, 10,000,000 shares authorized;
     no shares issued                                                       --              --
   Common Stock, $.01 par value, 50,000,000 shares authorized;
     36,581,346 and 14,941,506 shares issued and outstanding
     (including 5,000,000 shares held in escrow)                         365,814         149,416
   Additional Paid-In Capital                                         12,265,653       8,921,335
   Retained Deficit                                                  (13,876,027)     (3,311,120)
                                                                    ------------    ------------

                                                                      (1,244,560)      5,759,631

     Less 400,440 and 280,440 Treasury Stock Shares, at Cost            (773,456)       (761,150)
     Less Notes Receivable from Related Parties - Note 6                    --          (366,743)
                                                                    ------------    ------------

         TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                         (2,018,016)      4,631,738
                                                                    ------------    ------------

         TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY (DEFICIT)                                      $  3,248,087    $  9,449,380
                                                                    ============    ============

</TABLE>



                   The accompanying notes are an integral part
                   of these consolidated financial statements

                                      F - 4
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                      2000            1999
                                                                 ------------    ------------
<S>                                                              <C>             <C>
REVENUES
   Restaurant Sales - Continuing Location                        $    739,676    $  1,137,713
   Restaurant Sales - Discontinued Locations                        4,332,403       1,185,824
   Rental Income                                                      284,218         115,000
                                                                 ------------    ------------
              TOTAL REVENUES                                        5,356,297       2,438,537

OPERATING COSTS AND EXPENSES
   Cost of Sales - Continuing Location                              1,060,436         780,382
   Cost of Sales - Discontinued Locations                           4,108,283         894,623
   General and Administrative Expenses                                909,365       1,019,247
   Depreciation and Amortization                                      390,942         298,139
   Impairment of Assets                                               301,431         140,938
                                                                 ------------    ------------
              TOTAL OPERATING COSTS AND EXPENSES                    6,770,457       3,133,329
                                                                 ------------    ------------

              LOSS FROM OPERATIONS                                 (1,414,160)       (694,792)
                                                                 ------------    ------------

NON-OPERATING INCOME (EXPENSE):
   Interest Expense                                                (1,015,481)       (806,712)
   (Loss) on Foreclosure of Restaurant Building - Note 4             (557,363)           --
   (Loss) on Abandonment of Fatburger Acquisition - Note 2         (4,156,632)           --
   (Loss) on Foreclosure of Corporate Office Building - Note 6     (1,286,155)           --
   (Loss) on Recision of RSI Acquisition - Note 2                  (1,269,043)           --
   Gain (Loss) on Sales of Assets                                     100,268        (502,202)
   Acquisition Costs                                                     --          (288,288)
                                                                 ------------    ------------
              TOTAL NON-OPERATING INCOME (EXPENSE)                 (8,184,406)     (1,597,202)
                                                                 ------------    ------------

              (LOSS) BEFORE INCOME TAXES                           (9,598,566)     (2,291,994)

INCOME TAX BENEFIT - Note 7                                              --            46,790
                                                                 ------------    ------------

              NET LOSS                                           $ (9,598,566)   $ (2,245,204)
                                                                 ============    ============

NET LOSS PER COMMON SHARE, basic and dilutive                    $       (.68)   $       (.30)
                                                                 ============    ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING,
   Basic and Dilutive                                              14,065,153       7,470,418
                                                                 ============    ============

</TABLE>





              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F - 5
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                                                             Notes
                                                                                                           Receivable
                                           Common Stock          Additional                                   from         Total
                                    -------------------------     Paid-In      Retained      Treasury       Related    Stockholders'
                                       Shares        Amount       Capital      (Deficit)       Stock        Parties        Equity
                                    -----------   -----------   -----------   -----------   -----------   -----------   -----------
<S>                                 <C>           <C>           <C>           <C>           <C>           <C>           <C>
Balance, January 1, 1999              6,833,328   $    68,334   $ 5,718,252   $(1,065,916)  $  (761,150)  $      --     $ 3,959,520

 Sale of Common Stock, including
   $80,000 for services                 435,678         4,357       256,078          --            --            --         260,435


 Issuance of Common Stock
   to consultants                       933,000         9,330     2,120,395          --            --            --       2,129,725


 Common Stock placed into
   escrow for possible future
   conversion by debenture holders    5,000,000        50,000       (50,000)         --            --            --            --


 Value assigned agreement to issue
   stock for settlement of debenture
   litigation                              --            --         116,250          --            --            --         116,250


 Common Stock issued to officers
   in connection with
   extinguishments of convertible
   debt                               1,739,500        17,395       760,360          --            --            --         777,755


 Notes receivable from related
   parties                                 --            --            --            --            --        (366,743)     (366,743)


 Net loss                                  --            --            --      (2,245,204)         --            --      (2,245,204)
                                    -----------   -----------   -----------   -----------   -----------   -----------   -----------


Balance, December 31, 1999           14,941,506       149,416     8,921,335    (3,311,120)     (761,150)     (366,743)    4,631,738
                                                                                                                          8,921,335

 Issuance of Common Stock in
   connection with RSI acquisition
   Note - 2                           1,000,000        10,000       940,000          --            --            --         950,000


 Common Stock issued in
   connection with debenture
   conversions                        9,858,932        98,589       920,110          --            --            --       1,018,699


 Common Stock issued in
   extinguishment of debt            10,680,908       106,809       293,191          --            --            --         400,000


 Common Stock issued in
   extinguishments of amounts
   owed to law firm                     100,000         1,000        74,000          --            --            --          75,000

</TABLE>




                                   (Continued)
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F - 6
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                   (CONTINUED)

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                                                                      Notes
                                                                                                                   Receivable
                                          Common Stock              Additional                                        from
                                     ---------------------------      Paid-In       Retained       Treasury          Related
                                        Shares         Amount         Capital       (Deficit)        Stock           Parties
                                     ------------   ------------   ------------   ------------    ------------    ------------
<S>                                  <C>            <C>            <C>            <C>             <C>             <C>
 Value Assigned to beneficial
   conversion rights in connection
   with the sale of debentures in
   2000                                      --     $       --     $    174,000   $       --      $       --      $       --


 Cash capital contribution                   --             --          280,000           --              --              --



 Fair Market Value of 730,512
   shares of Ness Energy
   International, Inc. common
   stock contributed to the
   Company by a major
   shareholder                               --             --          637,711           --              --           366,743



 Fair Market Value of common
   stock of Company contributed
   by major shareholder                      --             --           25,306           --           (12,306)           --



 Distribution of Ness common
   stock to shareholders                     --             --             --         (966,341)           --              --


 Net Loss                                    --             --             --       (9,598,566)           --              --
                                     ------------   ------------   ------------   ------------    ------------    ------------


Balance, December 31, 2000             36,581,349   $    365,814   $ 12,265,653   $(13,876,027)   $   (773,456)   $       --
                                     ============   ============   ============   ============    ============    ============

                                        Total
                                     Stockholders'
                                        Equity
                                     ------------

 Value Assigned to beneficial
   conversion rights in connection
   with the sale of debentures in
   2000                              $    174,000


 Cash capital contribution                280,000



 Fair Market Value of 730,512
   shares of Ness Energy
   International, Inc. common
   stock contributed to the
   Company by a major
   shareholder                          1,004,454



 Fair Market Value of common
   stock of Company contributed
   by major shareholder                    13,000



 Distribution of Ness common
   stock to shareholders                 (966,341)


 Net Loss                              (9,598,566)
                                     ------------


Balance, December 31, 2000           $ (2,018,016)
                                     ============

</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F - 7
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

                                                                       2000           1999
                                                                   -----------    -----------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                           $(9,598,566)   $(2,245,204)
Adjustments to Reconcile Net Loss Before Discontinued Operations
  to Net Cash Used By Operating Activities
    Depreciation and Amortization                                      390,942        298,139
    Amortization of Discount and Issuance Costs on
      Convertible Debentures                                           159,304        257,796
    (Gain) Loss on Sales of Assets                                    (100,268)       502,202
    Benefit for Deferred Income Taxes                                     --          (46,790)
    Stock for Services                                                    --           80,000
    Interest Added to Note Balance                                     122,900           --
    Lawsuit Settlement Paid by Shareholder                              13,000           --
    Write-Down and Impairment of Assets                                301,431        140,938
    Beneficial Conversion Feature in Issuance of Common Stock          174,000        255,906
    Value Assigned to Settlement of Debenture Litigation                  --          116,250
     Loss on Foreclosure of Restaurant Building                        557,363           --
     Loss on Abandonment of Fatburger Acquisition                    4,156,632           --
     Loss on Foreclosure of Corporate Office Building                1,286,155           --
     Loss on Recision of RSI Acquisition                             1,269,043           --
Changes in Operating Assets and Liabilities
    Decrease (Increase) in Inventories                                 (23,040)        29,345
    Increase in Accounts Receivable                                     (1,970)          --
    Decrease in Market Value of Marketable Securities                   13,973           --
    Decrease (Increase) in Prepaid Expenses                             18,657        (11,242)
    Decrease in Other Assets                                              --           18,288
    Decrease in Federal Income Tax Receivable                           38,030           --
    Increase (Decrease) in Accounts Payable                            333,437        (13,511)
    Increase in Accrued Expenses and Other Liabilities                 686,979        113,976
    Increase (Decrease) in Deferred Liabilities                          7,819        (38,322)
                                                                   -----------    -----------

           NET CASH USED IN OPERATING ACTIVITIES                      (194,179)      (542,229)
                                                                   -----------    -----------

</TABLE>



                                   (Continued)
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F - 8
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                                             2000           1999
                                                                         -----------    -----------
<S>                                                                      <C>            <C>
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of Property and Equipment                                  $   (28,165)   $  (268,934)
     Purchase of Tanners Restaurants                                        (535,890)          --
     Proceeds from Sales of Property and Equipment                           307,445        156,229
     Decrease (Increase) in Notes Receivable from Related Parties, net          --          220,500
     Payments in Connection with RSI Acquisition                            (319,043)          --
     Payments in Connection with Acquisition of Fatburger                   (295,000)    (1,731,907)
                                                                         -----------    -----------

              NET CASH USED IN INVESTING ACTIVITIES                         (870,653)    (1,624,112)
                                                                         -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds From Issuance of Long-Term Debt                                110,588        508,784
     Principal Payments On Long-Term Debt                                    (16,325)      (648,451)
     Proceeds from Issuance of Notes Due Related Parties                     113,500        521,850
     Cash Contributed to Capital by Shareholder                              280,000           --
     Payments on Notes Due to Related Parties                                (66,000)          --
     Proceeds from Issuance of Convertible Debentures                        690,000           --
     Proceeds from Sales of Common Stock                                        --          180,434
                                                                         -----------    -----------

              NET CASH PROVIDED BY FINANCING ACTIVITIES                    1,111,763        562,617
                                                                         -----------    -----------

NET INCREASE (DECREASE) IN CASH                                               46,931     (1,603,724)

CASH AT BEGINNING OF YEAR                                                      2,521      1,606,245
                                                                         -----------    -----------

CASH AT END OF YEAR                                                      $    49,452    $     2,521
                                                                         ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION
   Interest Paid                                                         $    42,424    $   194,140
                                                                         ===========    ===========
   Income Taxes Paid                                                     $      --      $      --
                                                                         ===========    ===========

</TABLE>





                                   (Continued)
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                      F - 9
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                                                            2000           1999
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
NON-CASH INVESTING AND FINANCING TRANSACTIONS
   Property and Equipment Acquired in Connection with Default of
     Related Party Note Receivable                                      $      --      $   306,498
   Debentures Converted to Common Stock                                  (1,018,699)          --
   Common Stock Issued to Consultants in Connection with Fatburger
     Acquisition                                                               --        2,129,725
   Long-Term Debt Issued for Property and Equipment                            --           21,500
   Non Cash Additions to Property and Equipment                                --         (327,998)
   Non Cash Acquisition Cost Capitalized                                       --       (2,129,725)
   Common Stock Issued for Debentures                                        98,589           --
   Additional Paid-In Capital from Debenture Conversions                    920,110           --
   Marketable Securities Received                                         1,004,454           --
   Receivable from Related Party Paid by Receipt of Marketable
     Securities                                                            (366,743)          --
   Marketable Securities Distributed as a Dividend                         (966,341)          --
   Charge to Retained Deficit for Non-Cash Distribution                     966,341           --
   Accounts Payable Settled for Common Stock                                 75,000           --
   Common Stock Issued for Legal Service                                     (1,000)          --
   Additional Paid-In Capital Created for Legal Service                     (74,000)          --
   Settlement of Long-Term Debt for Issuance of Common Stock                400,000           --
   Common Stock Issued for Settlement of Long-Term Debt                    (106,809)          --
   Additional Paid-In Capital Created in Settlement of Long-Term Debt      (293,191)          --
   Additional Paid-In Capital from Ness Energy International, Inc.
     Common Stock                                                          (637,711)          --
                                                                        -----------    -----------

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





              The accompanying notes are an integral part of these
                        consolidated financial statements

                                     F - 10
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999


NOTE 1:  ORGANIZATION AND DESCRIPTION OF BUSINESS

   Restaurant Teams International,  Inc. ("the Company"), has owned and operated
   full  service   restaurants   principally   located  in  the  Dallas,   Texas
   metropolitan  area.  Currently,  the Company  owns one  restaurant,  which it
   operates  under  the name  "Street  Talk  Cafe,"  and owns  three  restaurant
   facilities, which it leases to other operators. The Company desires to become
   a multi-concept restaurant holding company.

   The accompanying financial statements include the accounts of the Company and
   its wholly owned subsidiary RTOSF, Inc. All significant intercompany balances
   and transactions have been eliminated in the consolidation.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Financial Instruments
   ---------------------

   The Company's financial instruments at December 31, 2000 and 1999, other than
   cash and accounts payable, include long-term debt and convertible debentures.
   Management believes the fair values of the a long-term debt approximate their
   carrying  values  based on the present  value of  expected  future cash flows
   discounted  at interest  rates  commensurate  to rates  currently  offered in
   connection with instruments of similar terms and maturities. Due to the terms
   of the  convertible  debentures  discussed  in Note 5, the fair  value of the
   convertible debentures has not been determined.

   Statements of Cash Flows
   ------------------------

   For  purposes of the  statements  of cash flows,  the Company  considers  all
   highly liquid  investments with a maturity of three months or less to be cash
   equivalents.

   Inventories
   -----------

   Inventories   consist  of  food  and  beverage  items  and  paper   supplies.
   Inventories are stated at the lower of cost (first-in,  first-out  method) or
   market.

   Property and Equipment
   ----------------------

   Property and equipment are  depreciated  using  accelerated or  straight-line
   methods.  Buildings are depreciated over 20 years, the estimated useful lives
   of the assets.  Furniture and equipment  are  depreciated  over the estimated
   useful  lives of the assets,  which  range from five to ten years.  Leasehold
   improvements  are  amortized  over the lesser of the lease term or  estimated
   useful life of the improvements, which range from ten to fifteen years.

   Certain   construction   overhead  costs  are  capitalized  and  included  in
   buildings.  Major improvements,  which significantly extend the useful lives,
   are  capitalized  and  depreciated  over  the  remaining  useful  life of the
   underlying asset.  Maintenance and repair costs are expensed as incurred. The
   cost  of  properties  sold,  or  otherwise   disposed  of,  and  the  related
   accumulated  depreciation or amortization are removed from the accounts,  and
   any gains or losses are reflected in current operations.


                                     F - 11
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   Accounting for Long-Lived Assets
   --------------------------------

   The Company evaluates long-lived assets and certain identifiable  intangibles
   to be held  and used in the  business  for  impairment  whenever  events  and
   changes in circumstances indicate that the carrying amount of an asset may be
   impaired.  In these  circumstances,  the estimated future  undiscounted  cash
   flows  associated with the asset are compared with the asset's carrying value
   to  determine  if a write-down  to market  value or  discounted  cash flow is
   required.

   Assets Held for Sale
   --------------------

   The Company has  classified  certain  assets as "Assets Held for Sale," which
   are recorded at the lower of cost or estimated  market  value.  Buildings and
   land totaling  $257,000 and  $1,844,586,  net of an  impairment  allowance of
   $68,786 and  $105,700,  are being held for sale as of  December  31, 2000 and
   1999, respectively. Management is not presently able to determine an expected
   disposal date, but is actively  pursuing sale of the assets.  Depreciation on
   reclassified  assets was ceased at the point that  management  committed to a
   plan to dispose of the assets.

   Debenture Issuance Costs
   ------------------------

   Debenture  issuance  costs,  which are being  amortized  using a method  that
   approximates  the effective  interest method over the life of the Convertible
   Debentures,  adjusted for conversions, are included in the balance sheet. The
   Company incurred  approximately  $330,000 in debenture issuance costs related
   to the Convertible Debentures in 1998 (see Note 5). Accumulated  amortization
   of debenture  issuance costs was approximately  $268,000 at December 31, 1999
   and debenture costs were fully amortized at December 31, 2000.

   Revenue Recognition
   -------------------

   Sales  and  related  costs are  recognized  by the  Company  upon the sale of
   products at restaurant locations.

   Advertising Costs
   -----------------

   All advertising and promotional costs are expensed when incurred. The Company
   incurred  approximately  $6,000 and  $11,000  in  marketing  and  advertising
   expenses in 2000 and 1999, respectively.

   Comprehensive Income
   --------------------

   In June 1997,  SFAS No. 130,  "Reporting  Comprehensive  Income," was issued.
   This  statement  establishes  standards  for the  reporting  and  display  of
   comprehensive  income and its components in the financial  statements.  As of
   December  31, 2000 and 1999,  the Company had no items that  represent  other
   comprehensive  income  and,  therefore,   has  not  included  a  schedule  of
   comprehensive income in the financial statements.


                                   (Continued)
                                     F - 12
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   Income Taxes
   ------------

   The Company accounts for income taxes using the liability method.  Under this
   method,   deferred  tax  assets  and  liabilities  are  determined  based  on
   differences between the financial reporting basis and tax basis of assets and
   liabilities, and are measured using the enacted tax rates and laws which will
   be in effect when the differences are expected to reverse.

   Per Share Data
   --------------

   Basic earnings  (loss) per share (EPS) is computed by dividing income or loss
   available to common  stockholders  by the weighted  average  number of common
   shares outstanding.  Diluted EPS includes  potentially dilutive common shares
   outstanding  during  the  period.   Potentially  dilutive  common  shares  in
   connection  with stock options,  warrants and shares issuable upon conversion
   of the Convertible Debentures totaling approximately  6,862,500 and 8,056,000
   shares  for 2000  and  1999,  respectively,  were  not  included  as they are
   anti-dilutive.

   Stock-Based Compensation
   ------------------------

   The  Company  measures  stock-based  employee  compensation  costs  using the
   intrinsic value method prescribed by Accounting  Principles Board Opinion No.
   25, "Accounting for Stock-Based  Compensation," and related  interpretations.
   Accordingly,  compensation  cost for  stock  options  and  other  stock-based
   employee awards is measured as the excess, if any, of the quoted market price
   of the  Company's  common  stock  at the date of grant  over the  amount  the
   employee must pay to acquire the stock.  No stock options were granted during
   the two years ended December 31, 2000.

   Liquidity
   ---------

   The Company has experienced significant net losses in 2000 and 1999 and has a
   working  capital  deficit of  $3,180,621  at December 31, 2000. A significant
   portion of the net losses resulted from non-cash charges.

   Use of Estimates
   ----------------

   In preparing  financial  statements in  conformity  with  generally  accepted
   accounting   principles,   management  is  required  to  make  estimates  and
   assumptions  that affect the amounts  reported in these financial  statements
   and  accompanying  notes.  Certain  significant   estimates  related  to  the
   estimated  values  of  assets  held for sale are  included  in the  financial
   statements.  Actual  results  could  differ  from  these  estimates  and such
   differences could be material.



                                   (Continued)
                                     F - 13
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   Concentration of Credit Risk
   ----------------------------

   The Company places its cash in what it believes to be credit-worthy financial
   institutions.  Cash  balances may exceed FDIC insured  levels at times during
   the year.  As of December  31,  2000,  no balance  exceeded  the FDIC insured
   limits.

   Reclassifications
   -----------------

   Certain  reclassifications  have been made to previously  reported amounts so
   that prior periods will be consistent with the current period.

   Acquisitions
   ------------

   During 1998, the Company entered into an Asset Purchase  Agreement to acquire
   the  properties  and assets  comprising  the Old San  Francisco  Steak  House
   ("OSF")  restaurant chain. In February 1999, the OSF acquisition  attempt was
   abandoned and associated  acquisition costs totaling  approximately  $188,000
   have been charged to operations.

   In 1999,  as amended in March 2000,  the Company  entered  into a  definitive
   agreement  to  acquire  all the  outstanding  common  stock of the  Fatburger
   Corporation ("Fatburger"),  a restaurant chain currently operating in the Los
   Angeles,  California  market. In June of 2000, the Fatburger  acquisition was
   abandoned and all cost of the abandoned acquisition ($4,156,632) were charged
   to operations.

   In February  2000,  the  Company  acquired  the assets of  Tanner's  Original
   Rotisserie Grill ("Tanner's"),  an eight-unit restaurant operation located in
   Atlanta, Georgia for a total purchase price of $535,890. Four of the Tanner's
   locations  were sold in 2000,  and the other four were sold in February 2001.
   Operations of the Tanner's locations are shown in the accompanying  statement
   of operations as sales and cost of sales from discontinued locations.

   In March of 2000,  pursuant  to the terms of an  acquisition  agreement,  the
   Company  acquired all the  outstanding  common stock of Regulatory  Solution,
   Inc. ("RSI"), a professional services company which specialized in "Worksafe"
   training  and  certification  programs  relating  to local and  federal  laws
   governing both employer and employee workplace responsibilities, for $100,000
   in cash and the issuance of 1,000,000  shares of the Company's  common stock,
   which was valued at  $950,000.  Between  March of 2000 and June 6, 2001,  the
   Company had additional expenses of $169,043 applicable to RSI. Effective June
   1, 2001, the Company and the former shareholders of RSI agreed to rescind the
   acquisition  under the following  terms:  (a) The 1,000,000  shares of common
   stock will be  exchanged  for 500,000  shares of the  Company's  common stock
   which  will be  restricted  from  trading  for a period of one year,  (b) the
   50,000 shares of Ness Stock received by the former RSI  shareholders  will be
   returned to the Company (See Note 6), (c) the  assumption of certain debts of
   RSI by the Company and (d) the assumption of certain lease obligations of RSI
   which were guaranteed by the Company. Effective with the recision the Company
   has taken a charge to operations of $1,269,043.


                                     F - 14
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 3:  ACCRUED EXPENSES AND OTHER LIABILITIES

   Accrued expenses and other liabilities at December 31, 2000 and 1999, consist
   of the following:

                                                      2000             1999
                                                  -----------      -----------
   Accrued Interest Payable (a)                   $   602,887      $   220,781
   Accrued Expenses                                   154,525                -
   Property Taxes Payable                              21,897           38,962
   Accrued Payroll and Related Taxes                  174,384           12,800
   Sales Taxes Payable                                 14,283            8,454
                                                  -----------      -----------

                                                  $   967,976      $   280,997
                                                  ===========      ===========

   (a)Approximately  $408,000 and  $215,000 of the accrued  interest at December
      31,  2000  and  1999,  respectively,  may be paid in  common  stock at the
      Company's option.

NOTE 4:  LONG-TERM DEBT

   Long-Term Debt at December 31, 2000 and 1999, consists of the following:
                                                                                         2000               1999
                                                                                     -----------        -----------
<S>                                                                                  <C>                <C>
Note payable to an investment company, interest at 9%, remaining
     unpaid principal and accrued interest past due as of June 27,
     2000, secured by pledge of 403,500 shares of treasury stock
     and 120,000 shares of the Company's common stock which is
     owned by a major shareholder.                                                   $   122,900        $         -

Two notes payable to bank, interest at 9.5%, monthly principal and
    interest payments totaling $14,620, remaining unpaid principal
    and interest due April 9, 2001, collateralized by certain real
    property. Loans are in default for failure to make scheduled
    payments.                                                                          1,366,421          1,366,421

Note payable to a bank, interest 9.5%, monthly principal and
    interest payments of $2,935, remaining unpaid principal
    and interest due October 30, 2001, collateralized by certain
    real property shown as assets held for sale.                                         258,107            251,770


</TABLE>




                                   (Continued)
                                     F - 15
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 4:  LONG-TERM DEBT (CONTINUED)

                                                                                   2000           1999
                                                                               -----------    -----------
<S>                                                                            <C>            <C>

Note payable to financial institution, interest at 21%, collateralized
    by certain shares of Company common stock                                  $      --      $   400,000

Note payable to insurance company, interest at 10.43%, monthly
payments of $1,605, due April 28, 2000, unsecured                                     --            8,745


Note payable, interest at 11.65%, monthly principal and interest payments of
    $425, remaining unpaid principal and accrued
    interest due April 9, 2001, collateralized by an automobile                     17,391         20,720
                                                                               -----------    -----------

          Total Long-Term Debt                                                   1,764,819      2,047,656

          Less Current Installments                                             (1,764,819)      (719,380)
                                                                               -----------    -----------

          Long-Term Debt, excluding current installments                       $      --      $ 1,328,276
                                                                               ===========    ===========

</TABLE>

   On May 1, 2000,  the Company  borrowed  $100,000 under the terms of a 120 day
   note which bore interest at ten percent (10%) per annum. The note was secured
   by a  restaurant  building  located in the  Dallas  area with a book value of
   $657,363.  When  the  Company  was  unable  to repay  the  note,  the  lender
   foreclosed on the building.  The Company has recognized a loss of $557,363 on
   the foreclosure.

NOTE 5:  CONVERTIBLE DEBENTURES

   On May 29, 1998,  the Company  entered into an agreement to issue two trances
   of convertible  debentures ("1998 Debentures") to accredited investors with a
   total face amount of $3,000,000.  The 1998 Debentures bear interest at 6% and
   are convertible into shares of common stock of the Company based on a formula
   stated in the 1998 Debenture agreement.

   The 1998  Debenture  holders  converted  $675,000 and  $1,018,699 of the face
   amount  of the 1998  Debentures  into  408,388  and  9,858,932  shares of the
   company's common stock in 1998 and 2000, respectively.

   The remaining  outstanding 1998 Debentures  ($1,306,301)  were converted into
   1,309,920  shares of the Company's  newly created Series A Preferred stock in
   2001. (See Note 11).



                                   (Continued)
                                     F - 16
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 5:  CONVERTIBLE DEBENTURES (CONTINUED)

   On  February  29  2000,  the  Company  entered  into an  agreement  to  issue
   convertible  debentures  ("2000  Debentures") to accredited  investors with a
   total face amount of $690,000.  These 2000 Debentures bear interest at 8% and
   are  convertible  into shares of common stock of the Company.  Because of the
   discount  in the  conversion  feature of the 2000  Debentures,  a  Beneficial
   Conversion  Feature was  calculated by the Company in the amount of $174,000,
   which has been charged to interest expense in 2000.

   The 2000 Debentures were converted into 690,000 shares of the Company's newly
   created Series A Preferred stock in 2001. (See Note 11).

   In connection  with the issuance of the Convertible  Debentures,  the Company
   issued to the investor and the placement  agent warrants to purchase up to an
   aggregate of 150,000 and 50,000 shares, respectively,  of the Company's stock
   with an exercise price equal to 110% of the average closing bid price for the
   five trading  days  immediately  preceding  the  agreement  date of $4.40 per
   share.  These warrants are  exercisable  at any time through May 2003.  These
   warrants  were  valued on the date of  issuance  at $2.00 per  warrant  which
   resulted in a decrease in the carrying  value of the  Convertible  Debentures
   and a  corresponding  increase  in  stockholder's  equity  of  $40,000.  This
   discount  is  being  accreted  into  interest  expense  over  the life of the
   debentures, as adjusted for conversions to common stock.

NOTE 6:  RELATED PARTY TRANSACTIONS

   At December 31, 2000, the Company had two notes payable to related parties as
   follows:

      A $25,000 note payable to a stockholder.  The note is unsecured and is due
         on demand.

      A $22,500 note  payable to an employee.  The note was due August 11, 2000,
         bears  interest of 6% and is secured by certain  restaurant  equipment.
         The note was repaid on March 20, 2001.

   As of December 31, 1999,  the Company had notes  receivable  due from related
   parties as follows:

      A $327,743 note from an entity owned by two stockholders.  The note is due
         December 31, 2000, and bears interest at 6%.

      A $39,000  note from a  stockholder.  The note is due  December  31, 2000,
         bears interest at 6% and is uncollateralized.




                                   (Continued)
                                     F - 17
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 6:  RELATED PARTY TRANSACTIONS (CONTINUED)

   Both of the notes receivable,  which were recorded in stockholders' equity at
   December 31, 1999,  were retired when the Company  accepted on June 30, 2000,
   730,512 shares of Ness Energy International, Inc.'s ("Ness" a publicly traded
   company)  common stock valued at $1,004,454.  The  difference  ($637,711) has
   been  credited to additional  paid-in  capital.  Simultaneously,  the Company
   distributed  as a dividend to the common  shareholders  702,923 shares of the
   Ness stock valued at $966,341.

   In 1999,  the Company  borrowed  $521,850 and issued  convertible  promissory
   notes to two officers. The notes allowed conversion into the Company's common
   stock at a 33%  discount  to the market  rate.  The value of this  beneficial
   conversion feature at the time of issuance was approximately $256,000,  which
   has been  recorded  as  interest  expense.  The  notes  were  converted  into
   1,739,500 shares of common stock in December 1999.

   In 1997,  the Company  acquired two pieces of property  from a related  party
   (Four Seasons Marine & Cycle, Inc.). In 1998, the Company sold the two pieces
   of  property  to a  sister  corporation.  In  1999,  the  sister  corporation
   defaulted on the note. The Company took back the property and has included it
   with assets held for sale at December 31, 1999, in the amount of  $1,286,155.
   In 2000,  the two  pieces of  property  became the  subject  of a  bankruptcy
   proceeding,  and a  bankruptcy  court deemed the sale of the property by Four
   Seasons to the Company in 1997 as a  prohibited  conveyance.  The  bankruptcy
   estate had the sales contract rejected by the court and reclaimed the estates
   right to the property.  As a result the Company realized a loss of $1,286,155
   on the foreclosure of the property.

   The Company has entered into two employment agreements, one with Stan Swanson
   and one with Curtis Swanson. The employment agreements provide for total base
   salaries of $250,000 in 2000, $275,000 in 2001, $325,000 in 2002, $375,000 in
   2003 and $225,000 in 2004.  Salaries  paid under the terms of the  employment
   agreements  were $109,137 during the year ended December 31, 2000. The unpaid
   amount ($140,803) is included in accrued expenses at December 31, 2000.





                                     F - 18
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 7:  INCOME TAXES

   Deferred  income taxes  reflect the net tax effects of temporary  differences
   between  the  carrying  amounts  of  assets  and  liabilities  for  financial
   reporting  purposes  and the  amounts  used  for  income  tax  purposes.  The
   significant  components of the Company's  deferred tax assets at December 31,
   2000 and 1999, are set forth below. The Company had no material  deferred tax
   liabilities at December 31, 2000 and 1999. The Company's  valuation allowance
   increased by $3,291,000  and  $1,197,000 in the years ended December 31, 2000
   and 1999, respectively.

Deferred Tax Assets:                              2000           1999
                                              -----------    -----------
   Cash to Accrual Adjustment                 $    34,000    $    68,000
   Debenture Beneficial Conversion Feature        144,000         85,000
   Reserve for Litigation Settlement               40,000         40,000
   Deferred Rent                                   11,000          8,000
   Property and Equipment Depreciation             24,000         15,000
   Allowance on Assets Held for Sale               20,000         36,000
   Net Operating Loss                           4,270,000      1,000,000
                                              -----------    -----------
Total Deferred Tax Assets                       4,543,000      1,252,000
Valuation Allowance for Deferred Tax Assets    (4,543,000)    (1,252,000)
                                              -----------    -----------
              NET DEFERRED TAX ASSETS         $      --      $      --
                                              ===========    ===========

   The Company has a net operating loss of approximately $12,000,000 at December
   31, 2000,  which may be applied to reduce future  taxable  income through the
   year 2019.

   The income tax benefit consists of the following:

                                                  2000           1999
                                              -----------    -----------
Federal Income Tax:
     Current Benefit                          $      --     $       --
     Deferred Benefit                                --           46,790
                                              -----------   ------------
                                              $      --     $     46,790
                                              ===========   ============

   The reconciliation between the expected tax at the federal U.S. corporate tax
   rate and the Company's consolidated actual tax is as follows:

                                                              Year Ended December 31,
                                                                2000            1999
                                                            -----------     -----------
<S>                                                         <C>             <C>
     Loss Before Income Tax                                 $(9,598,566)    $(2,291,994)
     U.S. Corporate Tax Rate                                         34%             34%
                                                            -----------     -----------
     Expected Benefit                                         3,263,512         779,278

     Effect of Valuation Allowance on Deferred Tax Assets     3,263,512         732,488
                                                            -----------     -----------
                 Actual (Benefit)                           $      --       $    46,790
                                                            ===========     ===========

</TABLE>

                                     F - 19
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 8:  LEASES

   The Company  leases the land where  restaurant  buildings  are located  under
   non-cancelable  lease  agreements  having terms that expire at various  dates
   through  fiscal  2017.  The  Company  has  options to renew the  leases  upon
   expiration for periods  ranging from five to ten years.  Total rental expense
   for operating leases amounted to approximately  $642,000 and $224,000 in 2000
   and 1999,  respectively.  The Company also pays real estate taxes, insurance,
   and maintenance expenses related to these leases.

   The Company  currently leases three restaurant  facilities to other operators
   under  non-cancelable  lease agreements,  having terms that expire at various
   dates through 2015.  Assets  subject to these leases  totaling  approximately
   $1,934,000 and related  accumulated  depreciation of $285,000 are included in
   property  and  equipment  at  December  31,  2000.  Total  rental  income was
   approximately $284,00 and $115,000 in 2000 and 1999, respectively.

   Future  minimum  lease  commitments  and rentals at  December  31, 2000 under
   operating  leases having an initial or remaining  noncancellable  term of one
   year or more are:

                                                                 Lease
                                          Lease                  Rental
                                       Commitments               Income
                                      ------------           -------------
      Years Ended December 31,
               2001                   $    643,433           $     192,000
               2002                        468,126                 196,000
               2003                        402,314                 196,000
               2004                        374,009                 114,000
               2005                        385,552                  53,000
             Thereafter                  2,985,834                 505,000
                                      ------------           -------------

       Total Minimum Rentals          $  5,259,268           $   1,256,000
                                      ============           =============


NOTE 9:  STOCKHOLDERS' EQUITY (DEFICIT)

   Common Stock

   As a  part  of  the  agreement  to  convert  the  $1,996,301  in  convertible
   debentures  to Series A Preferred  Stock the Company is obligated to effect a
   reverse  split of no less than 10 to 1. As of August  24,  2001 such  reverse
   split has not been consummated.




                                   (Continued)
                                     F - 20
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 9:  STOCKHOLDERS' EQUITY (CONTINUED)

   Preferred Stock
   ---------------

   The  Company  has  10,000,000  shares  of  preferred  stock  authorized.  The
   preferred stock may be issued with rights or preferences as determined by the
   board of directors.  There was no preferred stock  outstanding as of December
   31, 2000.

   Stock Options
   -------------

   The  Company  has  authorized  the  granting  of options  covering a total of
   1,200,000  shares of the Company's  common stock to key employees,  officers,
   directors and certain  consultants of the Company.  All options  granted have
   five-year terms and become fully exercisable when granted.

   A summary  of the  Company's  outstanding  stock  option  transactions  is as
   follows:


                                                           Year Ended December 31,
                                               ---------------------------------------------
                                                        2000                    1999
                                               ---------------------   ---------------------
                                                            Weighted                Weighted
                                                            Average                 Average
                                                            Exercise                Exercise
                                                   Shares     Price      Shares       Price
                                               ----------   --------   ----------   --------
<S>                                            <C>          <C>        <C>          <C>
     Outstanding at Beginning of Year             897,072   $   2.57      897,072   $   2.57
       Granted                                          -          -            -          -
       Exercised                                        -          -            -          -
       Forfeited                                 (103,572)      (.17)           -          -
                                               ----------              ----------

     Outstanding at End of Year                   793,500   $   2.72      897,072   $   2.57
                                               ==========   ========   ==========   ========

   Options Exercisable at End of Year             793,500   $   2.72      897,072   $   2.57
                                               ==========   ========   ==========   ========

   Weighted Average Fair Value of Options
     Granted During the Year                   N/A                     N/A

</TABLE>

   The weighted average remaining  contractual life of those options is 1.52 and
   2.03 years in 2000 and 1999, respectively. The exercise prices of outstanding
   options  range  from  $.10 to $4.43 as of  December  31,  2000 and  1999.  In
   connection  with the Company's  stock option plan,  406,500  shares of common
   stock have been reserved for future issuance.


                                   (Continued)
                                     F - 21
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 9:  STOCKHOLDERS' EQUITY (CONTINUED)

   Warrants
   --------

   The  Company has  1,069,000  outstanding  warrants  to acquire  shares of the
   Company's  common  stock  ranging  in price  from $1.00 to $5.00 per share as
   follows:

   As  discussed  in Note 5, the Company  has issued  warrants to purchase up to
   200,000 shares of the Company's common stock at $4.40 per share in connection
   with the  issuance of  convertible  debentures  in 1998.  These  warrants are
   exercisable at any time through May 17, 2002.

   Effective  January 1,  1999,  the  Company  issued to  existing  stockholders
   warrants to  purchase up to  approximately  669,000  shares of the  Company's
   common stock with an exercise  price of $5.00 per share.  These  warrants are
   exercisable at any time through December 2003.

   In  connection  with the attempt to acquire  Fatburger,  the  Company  issued
   warrants  to  acquire  150,000  shares of the  Company's  common  stock at an
   exercise price of $2.50 per share. These warrants are exercisable at any time
   through May 14, 2004.

   In  connection  with the  settlement  of legal fees  through the  issuance of
   common  stock the Company  issued  warrants to acquire  50,000  shares of the
   Company's  common  stock  at an  exercise  price of $1.00  per  share.  These
   warrants are exercisable at any time through March 5, 2005.

NOTE 10:  COMMITMENTS AND CONTINGENCIES

   Settlement with Debentures Holders
   ----------------------------------

   In 1998, the Company filed a lawsuit against three investment funds and their
   principals  ("the  Debenture  Holders"),  alleging  fraud and  violations  of
   federal  and  state  securities  laws in  connection  with  their $3  million
   investment in the  Company's  convertible  debentures.  (See Note 5.) Certain
   defendants to the Company's  lawsuit had  counterclaimed  seeking  damages in
   excess of $3 million.

   On December 28, 1999, the Company and Debenture  Holders reached an agreement
   to settle their litigation. As part of the settlement,  the Company agreed to
   issue the Debenture  Holders an additional  5% of the  outstanding  principal
   value of the  debentures,  payable in  Company  common  stock  (approximately
   258,000 shares at December 31, 1999). The approximate value of the shares was
   recorded as an expense of $116,250 in 1999.





                                   (Continued)
                                     F - 22
<PAGE>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 10:  COMMITMENTS AND CONTINGENCIES (CONTINUED)

   Loan Default Litigation
   -----------------------

   As of December  31,  1999,  the Company was in default of a  promissory  note
   agreement  that matured  August 26, 1999. In February 2000, the holder of the
   promissory  note  filed a lawsuit  seeking  damages of unpaid  principal  and
   accrued interest  totaling  approximately  $444,000,  plus attorney's fees. A
   court  awarded the holder of the note a judgment  in the amount of  $522,900.
   The judgment was acquired by W/F  Investment  Corp.  ("W/F").  As part of the
   settlement W/F converted  $400,000 of the judgment into 10,680,908  shares of
   the  Company's  common  stock.  The  remaining  $122,900 is carried as a note
   payable.

NOTE 11:  SUBSEQUENT EVENTS

   In February of 2001, the Company and the debentures holders agreed to convert
   the  debentures  and accrued  interest into 500,000 shares of common stock of
   the company and 1,999,920  shares of the Company's  Convertible  Exchangeable
   Series A Preferred Stock (Series A Stock). The Series A Stock has a par value
   of $.10 per  share,  bears  interest  at 10% per  annum on the face  value of
   $1,999,920,  provides  for a preferred  liquidation  preference  of $1.00 per
   share  plus any unpaid  accumulated  dividends  in the event of  dissolution,
   liquidation  or  winding  up of the  Company  and has no voting  rights.  The
   holders of the Series A Stock may at their option  convert the Series A Stock
   to common stock of the Company at any time as follows: (a) at one dollar ($1)
   per share for each share of common stock  during the first twelve  months or,
   (b) after the first twelve (12)  months,  based on 80% of the market value of
   the common  stock at the time of  conversion.  The  Company  has the right to
   redeem  the Series A Stock  upon cash  payment  of the  greater of the market
   price of the  Company's  common stock prior to redemption or 110% of the face
   value plus accrued but unpaid dividends.

   In March 2001, the Board of Directors of the Company approved the issuance of
   1,000,000  shares of Series B  Convertible  Preferred  stock  ("Series B") in
   exchange for 1,000,000  shares of common stock owned by Curtis A. Swanson and
   Stanley L.  Swanson.  The Series B stock has no par  value,  has full  voting
   power with respect to all actions  taken by  shareholders,  carries a 50 to 1
   voting  right as compared  to common  shares with  anti-dilution  rights,  is
   convertible  into 1 share of Common  Stock and is non  transferable  prior to
   conversion into Common Stock.

   On May 9, 2001, the Company acquired all franchise rights to McConnell's Fine
   Ice Cream for a promise to pay $50,000 in the form of a note  payable and the
   issuance of 500,000 shares of the Company's  common stock from W/F Investment
   Corp (a major shareholder of the Company).  McConnell's is a well-established
   Santa Barbara, California based brand of Ice Cream.

   On November 14, 2000,  the Board of  Directories  authorized  the issuance of
   200,000 shares of the Company's  common stock in settlement of  approximately
   $38,000 owed to a law firm.  The 200,000 shares of stock was not issued until
   2001.


                                   (Continued)
                                     F - 23
<PAGE>
<TABLE>
<CAPTION>

                      RESTAURANT TEAMS INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

                           DECEMBER 31, 2000 AND 1999


NOTE 11:  SUBSEQUENT EVENTS (CONTINUED)

   On August 17, 2001, the Company issued  10,000,000 shares of its common stock
   to It-Is, Inc., in connection with legal action, which may be brought against
   the Company's debenture holders.

NOTE 12: QUARTERLY FINANCIAL DATA (UNAUDITED)

   Quarterly  financial  data for the  year  ending  December  31,  2000,  is as
   follows:

                                               Income (Loss) Before            Net Income               Earnings
                                                 Income Taxes, And            (Loss) From           (Loss) Per Share
                                 Revenues     Discontinued Operations    Continuing Operations    Continuing Operations
                               -----------    -----------------------    ---------------------    ---------------------
<S>                            <C>            <C>                        <C>                      <C>
     2000
     ----

     December                  $(3,222,240)       $(3,475,403)                $(3,475,403)              $ (.21)
     September                   1,143,831         (4,787,588)                 (4,787,588)                (.37)
     June                        1,589,043         (1,664,548)                 (1,664,548)                (.16)
     March                       1,513,260             96,849                      96,849                  .01

</TABLE>

NOTE 13:  GOING CONCERN

   The Company's  financial  statements have been presented on the basis that it
   is a going  concern,  which  contemplates  the  realization of assets and the
   satisfaction of liabilities in the normal course of business.

   As shown in the accompanying financial statements the Company has experienced
   significant  operating  losses.  The  continuance  of such losses  creates an
   uncertainly  as to the  Company's  ability to  continue  as a going  concern.
   Management  of the Company has taken steps to reduce  operating  expenses and
   increase  revenue.  The ability of the Company to continue as a going concern
   is dependent upon the success of these actions and the ability of the Company
   to find additional  capital until such time as operations turn positive.  The
   financial   statements  do  not  include  any  adjustments  relating  to  the
   recoverability  of recorded asset amounts or the amounts of liabilities  that
   might be  necessary  should  the  Company  be unable to  continue  as a going
   concern.





                                     F - 24
<PAGE>

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

The Company did not have any  disagreements  with its accountants on any matters
of accounting or financial disclosure. The Company did change auditors from Hein
+ Associates,  LLP to Killman,  Murrell,  and Company, PC as is reflected in the
Company's Form 8-K filed with the Securities and Exchange Commission on July 30,
2001.

Part III.

Item 9.  Directors, Executive Officers, Promoters and Control Persons


The Directors and Officers of the Company are set forth below.

Name                       Age             Position              In Office Since
--------------------------------------------------------------------------------
Stanley L. Swanson          57        Chief Executive Officer          1990
                                       Chairman of the Board
                                           Of Directors

Curtis A. Swanson           33        Director, Treasurer              1990
                                          President, &
                                      Chief Financial Officer

Carole A. Swanson           59             Secretary                   1990


All directors hold office until the next annual meeting of the  shareholders  of
the Company, and until their successors are elected and qualified. Officers hold
office until the first  meeting of the Board of Directors  following  the annual
meeting of shareholders, subject to earlier removal by the Board of Directors.

Family relationships among Officers and Directors:

Stanley L. Swanson and Carole A. Swanson are husband and wife. Curtis A. Swanson
is the son of Stanley L. and Carole A. Swanson.


BUSINESS EXPERIENCE OF DIRECTORS AND OFFICERS

Stanley L.  Swanson,  a founder of the  Company,  has  served as  President  and
Chairman  of the  Board  since  its  inception  in May,  1990.  In  addition  to
developing the Company's  overall  business  strategy and expansion  plans,  Mr.
Swanson is responsible for selection and negotiations for all future  locations.
Prior to establishing the first restaurant in Marshall,  Texas in June, 1989, Mr
Swanson  was the  President  and CEO of  Canaan  Enterprises,  Inc.,  a  Montana
corporation  involved in the  development of real estate  franchises  within the
state. Under Mr. Swanson's leadership, the company grew from 1 franchise in 1986
to 10 franchises by 1988. It was at this time that Mr. Swanson sold his holdings
in Canaan  Enterprises,  Inc.,  in order to begin  and fund the  first  stage of
growth in what is now Restaurant Teams International, Inc. From 1981 to 1986 Mr.
Swanson  was a real estate  broker in the state of  Montana,  where he owned and
operated two real estate sales and development  companies.  From 1972 until 1981
Mr.  Swanson  was  an  entrepreneur  in  the  restaurant  industry,  owning  and
successfully operating two restaurant  establishments.  From 1962 until 1972 Mr.
Swanson played professional baseball, where he was primarily associated with the
Cincinnati Reds and Montreal Expos organizations.

<PAGE>

Curtis A. Swanson has been Executive Vice President and Treasurer of the Company
since its inception in May, 1990. Mr. Swanson handles all financial  matters and
day to day  operations  for the  Company.  Prior  to his  involvement  with  the
Company,  Mr Swanson  was an officer in Canaan  Enterprises,  Inc.  from 1986 to
1988. His duties with Canaan Enterprises,  Inc. included the sales,  set-up, and
oversight  of  franchises  within  the state of  Montana.  From 1987 to 1989 Mr.
Swanson owned and operated two real estate franchises, a video rental store, and
a pizza establishment.

Carole A. Swanson,  wife of Stanley L. Swanson and co-founder of the Company has
served as  Secretary  of the Company  since its  inception  in May,  1990.  Mrs.
Swanson was  involved  with her husband in the selling of real estate in Montana
from  1981  to  1988.  She  also  worked  in the  management  of all  restaurant
operations her husband was involved in from 1972 to 1981. From 1954 to 1966 Mrs.
Swanson worked in various capacities for the Blue Circle  restaurants,  a family
owned drive-in restaurant chain established by her father in Knoxville,  TN. The
chain  eventually  grew to 30 locations  throughout  the south.  Her  restaurant
experience  includes the establishment  and supervision of an  employee-training
program,  day-to-day  operations  and  management,  as well as overall  business
management and record keeping for the organization.

Item 10.   Executive Compensation

Year    Name of Individual    Capacities in which                     Aggregate
                              Remuneration was received             Remuneration
--------------------------------------------------------------------------------

2000    Stanley L. Swanson    Chief Executive Officer                 $150,000
2000    Curtis A. Swanson     Chief Financial Officer                 $100,000
1999    Stanley L. Swanson    President & Chief Executive Officer     $ 57,000
1999    Curtis A. Swanson     Chief Financial Officer                 $ 53,000
1998    Stanley L. Swanson    Chief Executive Officer                 $ 55,000
1998    Curtis A. Swanson     Chief Financial Officer                 $ 52,000

The Company has entered into two  employment  agreements,  one with Stan Swanson
and one with Curtis Swanson.  The employment  agreements  provide for total base
salaries of $250,000 in 2000,  $275,000 in 2001,  $325,000 in 2002,  $375,000 in
2003 and  $225,000  in 2004.  Salaries  paid  under the terms of the  employment
agreements  were $109,137  during the year ended  December 31, 2000.  The unpaid
amount  ($140,803)  is  included  in accrued  expenses  at  December  31,  2000.
Subsequent  to  year-end  in March of 2001  Messrs  Curtis and  Stanley  Swanson
exchanged their accrued salary along with 500,000 shares of common stock each to
the Company in exchange  for  500,000  shares each of Series B Preferred  Stock.
(See Note 11 to the Audit "Subsequent Events")

No options were granted to any employees or otherwise in the years 1999 or 2000.

<PAGE>
<TABLE>
<CAPTION>

A summary of the Company's outstanding stock option transactions is as follows:

                                                        Year Ended December 31,
                                            -------------------------------------------
                                                    2000                   1999
                                            --------------------    -------------------
                                                        Weighted               Weighted
                                                        Average                Average
                                                        Exercise               Exercise
                                             Shares      Price       Shares     Price
                                            --------    --------    --------   --------
<S>                                         <C>         <C>         <C>        <C>
     Outstanding at Beginning of Year        897,072    $   2.57     897,072   $   2.57
       Granted                                  --          --          --         --
       Exercised                                --          --          --         --
       Forfeited                            (103,572)       (.17)       --         --
                                            --------                --------

     Outstanding at End of Year              793,500    $   2.72     897,072   $   2.57
                                            ========    ========    ========   ========

   Options Exercisable at End of Year        793,500    $   2.72     897,072   $   2.57
                                            ========    ========    ========   ========

   Weighted Average Fair Value of Options
     Granted During the Year                N/A                     N/A

</TABLE>

The weighted  average  remaining  contractual  life of those options is 1.52 and
2.03 years in 2000 and 1999,  respectively.  The exercise  prices of outstanding
options range from $.10 to $4.43 as of December 31, 2000 and 1999. In connection
with the Company's  stock option plan,  406,500 shares of common stock have been
reserved for future issuance.

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

   The  following  table sets forth the number of shares of Common  Stock of the
Company owned by (i) each of the three highest paid persons who are officers and
or directors,  (ii) all directors and officers as a group, and (iii) each person
of record who beneficially  owns 10% or more of the outstanding  Common Stock of
the Company as of December 31, 2000.

--------------------------------------------------------------------------------
Title of         Name & address            Amount owned            Percent
class              of owner                                       of class
--------------------------------------------------------------------------------
Common
Stock         Stan & Carole Swanson           1,070,831                3%
              3216 Page Rd.
              Longview, TX  75601

Common
Stock         Curtis Swanson                    823,476                2%
              3218 Page Rd.
              Longview, TX  75601

Common
Stock         W/F Investment Corp            10,680,908               29%
              1900 Avenue of the Stars
              Suite 2410
              Los Angeles, CA  90067

Item 12.    Certain Relationships and Related Transactions.

   At December 31, 2000, the Company had two notes payable to related parties as
   follows:

   A $25,000 note payable to a stockholder.  The note is unsecured and is due on
   demand.

   A $22,500  note  payable to an  employee.  The note was due August 11,  2000,
   bears interest of 6% and is secured by certain restaurant equipment. The note
   was repaid on March 20, 2001.

<PAGE>

   As of December 31, 1999,  the Company had notes  receivable  due from related
   parties as follows:

   A $327,743  note from an entity  owned by two  stockholders.  The note is due
   December 31, 2000, and bears interest at 6%.

   A $39,000 note from a stockholder.  The note is due December 31, 2000,  bears
   interest at 6% and is uncollateralized.

   Both of the notes receivable,  which were recorded in stockholders' equity at
   December 31, 1999,  were retired when the Company  accepted on June 30, 2000,
   730,512 shares of Ness Energy International, Inc.'s ("Ness" a publicly traded
   company)  common stock valued at $1,004,454.  The  difference  ($637,711) has
   been  credited to additional  paid-in  capital.  Simultaneously,  the Company
   distributed  as a dividend to the common  shareholders  702,923 shares of the
   Ness stock valued at $966,341.

   In 1999,  the Company  borrowed  $521,850 and issued  convertible  promissory
   notes to two officers. The notes allowed conversion into the Company's common
   stock at a 33%  discount  to the market  rate.  The value of this  beneficial
   conversion feature at the time of issuance was approximately $256,000,  which
   has been  recorded  as  interest  expense.  The  notes  were  converted  into
   1,739,500 shares of common stock in December 1999.

   In 1997,  the Company  acquired two pieces of property  from a related  party
   (Four Seasons Marine & Cycle, Inc.). In 1998, the Company sold the two pieces
   of  property  to a  sister  corporation.  In  1999,  the  sister  corporation
   defaulted on the note. The Company took back the property and has included it
   with assets held for sale at December 31, 1999, in the amount of  $1,286,155.
   In 2000,  the two  pieces of  property  became the  subject  of a  bankruptcy
   proceeding,  and a  bankruptcy  court deemed the sale of the property by Four
   Seasons to the Company in 1997 as a  prohibited  conveyance.  The  bankruptcy
   estate had the sales contract rejected by the court and reclaimed the estates
   right to the property.  As a result the Company realized a loss of $1,286,155
   on the foreclosure of the property.

   The Company has entered into two employment agreements, one with Stan Swanson
   and one with Curtis Swanson. The employment agreements provide for total base
   salaries of $250,000 in 2000, $275,000 in 2001, $325,000 in 2002, $375,000 in
   2003 and $225,000 in 2004.  Salaries  paid under the terms of the  employment
   agreements  were $109,137 during the year ended December 31, 2000. The unpaid
   amount ($140,803) is included in accrued expenses at December 31, 2000.

Part III. EXHIBITS

Item 13.  Exhibits and Reports on Form 8-K. Part III.  EXHIBITS

   (a) Hereafter  set forth as exhibits to the Form 10-KSB of  Restaurant  Teams
International, Inc and incorporated by reference are the following exhibits:

No. as per Part III
Form 1A                   Description of Exhibits
------------------------- -----------------------

     2.1*                 Articles of Incorporation

     2.21***              Amendment to Articles of Incorporation

     2.22***              Articles of  Amendment

     2.3*                 By-Laws

     3.1                  Warrant Agreement filed as an exhibit to the Company's
                          Form 10-KSB dated February 28, 1997

     6.1**                Primary  Distribution  Agreement  dated as of February
                          17, 1995, by  and between Consolidated Companies, Inc.
                          on the one hand and Fresh'n Lite Inc. on the other

     6.3CE**              Restaurant Lease dated as of September 15, 1997 by and
                          between USRP (Midon), LLC on the  one hand and Fresh'n
                          Lite, Inc. on the other

     6.4CE**              Ground  Lease  dated as  of  February  21, 1995 by and
                          between Peter D. Fonberg  Investments on the  one hand
                          and Fresh'n Lite, Inc. on the other

<PAGE>

     6.5CE**              Ground Lease dated as of July 15, 1996 by and  between
                          MacArthur Partners, Ltd. on the  one  hand and Fresh'n
                          Lite, Inc. on the other

     6.6CE**              Ground Lease Agreement dated as of April 11,  1997  by
                          and between Robert M. Farrell Development, Ltd. on the
                          one hand and Fresh'n Lite, Inc. on the other

     6.8CE**              1997 Incentive Stock Option Plan

     6.9**                Franchise Agreement dated as of October 1, 1995 by and
                          between Fresh'n Lite, Inc. on the  one  hand  and F'NL
                          Investments, LLC on the other

     6.10CE**             Lease with Option to Purchase dated as  of October 15,
                          1993  by and between  Connor  Patman and Steve and Ann
                          M.  Raffaelli  on the one hand and Fresh'n Lite,  Inc.
                          on the other

     6.11CE*              Sub-Lease  dated as of November 2, 1998 by and between
                          Restaurant Teams  International, Inc. and the one hand
                          and Zeke's Grill, Inc. on the other

*    Previously filed as an exhibit to the Company's  Registration  Statement on
     Form 10-SB (File No.  001-13559)  filed with the  Securities  and  Exchange
     Commission on November 10, 1997.

**   Filed as a paper exhibit to the Company's Form 10-SB filed October 23, 1997
     and filed in electronic format as exhibits to Amendment No. 1 to Form 10-SB
     filed June 25, 1998 and incorporated herein by reference.

***  Previously  filed as an exhibit to the  Company's  annual  proxy  statement
     (File No. 001-13559) filed with the Securities and Exchange Commission.



<PAGE>


                                   SIGNATURES

         The undersigned registrant hereby amends and restates its Annual Report
on Form 10-KSB for the fiscal year ended December 31, 2000.

         In accordance with Section 13 or 15(d) of the Securities  Exchange Act,
the  registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, this 17th day of September 2001.


                                         Registrant


                                  By: /s/ Stanley L. Swanson
                                      Stanley L. Swanson
                                      Chairman of the Board of Directors
                                        and Chief Executive Officer


         In accordance  with the Exchange  Act,  this  amendment has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.  In accordance with the Exchange Act, this amendment
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates  indicated.  In accordance  with the Exchange
Act, this amendment has been signed below by the following  persons on behalf of
the registrant and in the  capacities and on the dates  indicated.In  accordance
with the Exchange  Act,  this  amendment  has been signed below by the following
persons  on  behalf of the  registrant  and in the  capacities  and on the dates
indicated.In  accordance  with the Exchange Act, this  amendment has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

September 17, 2001


                                  By:  /s/ Curtis A. Swanson
                                      Curtis A. Swanson, Director
                                      Vice President and Chief Financial Officer