SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
                           _____________________

                                FORM 10-KSB

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

      For the fiscal year ended December 31, 2003.

                     OR

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

      For the transition period from ____________ to ___________

                        Commission File No. 0-33145

                        RASCALS INTERNATIONAL, INC.
            ----------------------------------------------------
           (Exact name of the Registrant as specified in Charter)

          Delaware                                    84-1195628
  --------------------------------------------------------------------------
 (State or other jurisdiction                 (I.R.S. Employer ID Number)
  of incorporation or organization)

                 501 Bloomfield Avenue, Montclair, NJ 07042
                 ------------------------------------------
                  (Address of principal executive offices)

      Registrant's Telephone Number, including Area Code: 973-233-1233

      Securities Registered Pursuant to Section 12(b) of the Act: None

        Securities Registered Pursuant to Section 12(g) of the Act:

                   Common Stock, $.001 par value per share

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


  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

   State the issuer's revenues for its most recent fiscal year:  $2,352,800.

   State the aggregate market value of the voting stock held by non-
affiliates of the Registrant.  The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
ask prices of such stock, as of a specified date within 60 days prior to the
date of filing.

   The aggregate market value of the Registrant's common stock,
$.001 par value, held by non-affiliates as of April 12, 2004 was $1,228,610.

   As of April 12, 2001, the number of shares outstanding of the Registrant's
common stock was 18,686,380 shares, $.001 par value.


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

                  DOCUMENTS INCORPORATED BY REFERENCE: None


             FORWARD-LOOKING STATEMENTS: NO ASSURANCES INTENDED

     This Report contains certain forward-looking statements regarding
Rascals International, its business and financial prospects.  These
statements represent Management's present intentions and its present belief
regarding the company's future. Nevertheless, there are numerous risks and
uncertainties that could cause our actual results to differ from the results
sug gested in this Report.  Among the more significant factors are:

     *  Rascals lacks the capital necessary to expand its operations.
     *  Our debts exceed the book value of our assets.
     *  We have committed to issue shares of common stock that one of our
        creditors will resell to the market until we eliminate $850,000 in
        debt, which is likely to dilute the value of our common stock.

     Because these and other risks may cause Rascals' actual results to differ
from those anticipated by Management, the reader should not place undue
reliance on any forward-looking statements that appear in this Report.
Readers should also take note that Rascals will not necessarily make any
public announce ment of changes affecting these forward-looking statements,
which should be considered accurate on this date only.

                                   PART 1

Item 1.  BUSINESS

     The Business Plan

     Rascals International, Inc. is the successor to a business
operation commenced in 1983.  Rascals began with a comedy club
and restaurant in West Orange, New Jersey.  Until 2003 the West
Orange "Rascals" and a sister club/restaurant of the same name in
the New Jersey resort area of Ocean Township were the source of
substantially all of Rascals' revenue.  Nevertheless the success
of those clubs in booking and promoting both headliners and
rising stars in the field of stand-up comedy made Rascals a name
known throughout the comedy industry.  Most of today's stars of
stand-up comedy made their way to fame appearing at a Rascals
Comedy Club.

     In recent years Rascals has acquired new management, a new
business plan, and a new determination to exploit the value of
the "Rascals" name as leverage for the growth of our company.
Our first effort involved the establishment of a "Rascals Comedy
Club" in the Miami area, which copied in essence the operations
of our two New Jersey clubs.  The expense, however, involved in
outfitting a new facility and pushing traffic to a new site
exceeded the capacity of our financial resources, and the Miami
club was closed in 2000.  Spurred on by that experience, however,
we have formulated a business plan designed to give Rascals a
nationwide presence with a minimum of capital investment.  The
plan contemplates that we will develop a network of "partners"
who recognize the value of the "Rascals" name and our entertain
ment offerings in attracting consumers of comedy.  In exchange
for the opportunity to market to these consumers, our "partners"
will provide the other resources necessary to business success.

     The plan to "go national" with the "Rascals" name can be
understood in four discernable, albeit interrelated, aspects:

     Hotel-Based Clubs.  We are underway with a program of
     establishing "Rascals Comedy Clubs" in premier hotels
     throughout the U.S.  During 2001 we opened a Rascals in the
     Crowne Plaza Hotel in Phoenix, and another in the Sheraton
     Springfield at Monarch Place in Springfield, MA.  Both of
     those clubs have since closed.  However, since December 2002
     we have operated a Rascals Comedy Club in the Hilton Hotel
     in Cherry Hill, NJ. We are currently in negotiation with
     hotels in Tucson, Asbury Park, Atlantic City and Easton, PA.
     In each of these arrangements the hotel will provide the
     facility (rent-free) and operate the food and beverage
     service.  We provide the show and the promotion only, keep
     all admission proceeds, and receive a share of the food and
     beverage gross revenue.

     Embedded Clubs.  Recently we expanded our focus to
     explore the advantages of locating a Rascals Comedy Club in
     a destination location where there is a pre-established
     clientele.  We are under contract to open a Rascals Comedy
     Club next summer in the newly-developed Louisiana Riverwalk
     in Shreveport/Bossier City.  Recently we have also con
     tracted to open a club in the Palisades Center in West
     Nyack, New York, which is the second largest shopping mall
     in the U.S.  The relationship described below that we are
     developing with Banana Joe's Dance Clubs is another example
     of "embedded clubs."

     Licensed Clubs.  At the present time we have granted
     licenses to two groups which will develop and operate Ras
     cals Comedy Clubs.  One licensee is an investment group who
     plan to open a club in Jersey City, New Jersey in the second
     quarter of 2004.  The other licensee is owned by members of
     our management, who are financing the development of a club
     and restaurant in Montclair, New Jersey to replace our West
     Orange facility which was closed in the summer of 2003. The
     Jersey City licensee will pay us a licensing fee and a
     percentage of gross revenue, and may also pay us fees if we
     book entertainment for their club. The Montclair licensee
     will lease back to us the comedy club on a revenue-sharing
     arrangement similar to our hotel-based clubs.

     The Library.  Rascals owns a library of  over 200 hours
     of recorded performances by major comedic entertainers, such
     as Tim Allen, Rosie O'Donnell and Drew Carey, made before
     the comedians became famous.  In exchange for the opportu
     nity to appear at Rascals Comedy Club, these entertainers
     yielded to Rascals the right to market video recordings of
     their performances at Rascals.  This library of videotapes
     provides Rascals the raw materials from which we can manu
     facture a limitless supply of comedy products in every
     audio-visual medium.  For example, "The Rascals Comedy Hour"
     was offered in 35 million homes on pay-per-view television
     during 2002, and we expect pay-per-view distribution to
     recommence in the future.  In the Summer of 2003 a major
     distributor to the home video market commenced marketing the
     first three VHS titles containing comedy performances re
     corded at Rascals.  In addition, Rascals comedy has also
     been broadcast on the Internet, and on the in-house television
     channels in 140,000 Hilton hotel rooms.

     In each of these aspects, our goal is to leverage the
"brand-equity" of our Rascals tradename by joining forces with
another entity which will underwrite the capital-intensive
aspects of marketing comedy, such as site construction, publicity
or distribution.  We believe that in this way we can achieve a
national presence for the Rascals name with a modest capital
investment.

     Rascals Comedy Clubs

     During 2003 we closed our flagship club and restaurant in
West Orange, New Jersey.  This year we are closing our other club
and restaurant, which was located in Ocean, New Jersey.  At the
present time, therefore, there is only one Rascals Comedy Club in
operation: the Rascals Comedy Club at the Hilton Hotel in Cherry
Hill, New Jersey.  This facility opened in December 2002.  It
consists of a comedy room with a seating capacity of 308 in which
we produce six shows per week. Our plan is to develop more hotel-
based clubs, as resources become available.

     Our agreements with the hotels which host our clubs allocate
to Rascals the responsibility for booking, marketing and producing
the comedy shows, and allocate to the hotel the responsibility for
food and beverage service.  Rascals promotes the shows through local
media, sells the tickets, and retains 100% of the revenue from ticket
sales, from which it pays fees to the enter tainers and to the Rascals
personnel involved in producing the show.  The hotel collects payment
for food and beverage service, and is responsible for supervising the
kitchen and wait staff, who are hotel employees.  The hotel is also
responsible for compliance with liquor laws.  Our agreements provide
for a percentage of food and beverage revenue to be paid by the hotel
to Rascals.

     The primary advantage of a hotel-based club for Rascals is
the efficiency of initiating the club's operations.  Since we are
moving into an established facility, we are required to make only
the minimal capital investment necessary to outfit the comedy
room in Rascals' trademark decor.  In addition, since the hotels
in which we locate are already known as entertainment locations
in their communities (even if only as a restaurant location), the
expense incurred in "attracting traffic" to the site is generally
not much greater than the expense we incur in promoting shows at
our established sites.  Our estimate is that our capital commit
ment to a new hotel-based facility, including the working capital
required until the club achieves positive cash flow, will generally
not exceed $130,000.  Occasionally, however, a particular site will
be appropriate for a "premier" build-out, which will require a
larger investment.  This was the case with our club in Cherry Hill,
where we installed cherrywood paneling and a state-of-the-art sound
system.

     Comedy shows at our clubs generally consist of three performers:
one nationally-known headliner, a featured act and a comic master of
ceremonies.  Our ticket prices range from $8.00 to $35.00, and are
determined by the fees we commit to pay the entertainers.  Those fees
may on occasion include a percentage of our ticket revenues.

     Entertainers are booked for our clubs by independent booking
agents.  Most of our bookings at present are made by Top Draw
Entertainment.  Our relationship with Top Draw is at will.  Our
fees to Top Draw are based on services provided.  As the number
of our clubs increases, Rascals should become even more attractive
to entertainers due to our ability to offer "block booking."
In a block booking arrangement, we commit to multiple dates at multiple
locations in exchange for a reduced fee per show.

     We market our shows through traditional local media: newspaper
and radio advertisements, local cable TV commercials, and radio
promotions, often involving the performers that will be appearing.
In addition, tickets to all of our club locations can be purchased
at our Website: www.rascalscomedyclub.com.

     Clubs in Development

     We currently have two new clubs under development, and
several in the planning stage.  Our club that is being constructed
in Montclair, New Jersey includes an attached restaurant and bar.
The club we have designed for the Palisades Center will be located
amidst a complex of restaurants, so we will provide beverage service only.

     At the beginning of 2004 we initiated a relationship with
two individuals who own a chain of dance clubs.  Their best known
clubs operate under the names "Banana Joe's" and "Cactus Lounge."
We are currently negotiating an arrangement under which we and
they will jointly develop projects that will locate a Banana
Joe's or a Cactus Lounge next to a Rascals Comedy Club.  We
expect these combined clubs will be able to attract customers for
a full evening's entertainment: a show followed by dancing.
Although we have not completed negotiation of the terms of this
relationship, we have begun to work with the owners of Banana
Joe's in developing these new project.  To date we have advanced
$825,000 toward the projects.  The first of these joint projects
opened in March in Jackson, Mississippi.  Future joint projects
are intended for Omaha, Pittsburgh and Hampton, Virginia.

     We have also entered into a letter of intent that contem
plates an agreement under which Rascals would acquire ownership
of nine existing Banana Joe's clubs in exchange for cash and
Rascals common stock.  Negotiations toward that end have paused,
however, as we have not been able to secure the funds that we
will need to make the acquisition.

     Rascals Comedy Library

     Between 1985 and 1992 Rascals developed a library of video
tapes of the comedy performances at its West Orange club.  The
performers on the videotapes include many who achieved stardom:
Denis Leary, Drew Carey, Jeff Foxworthy, Rosie O'Donnell, Tim
Allen, Ray Romano and others.  In exchange for the opportunity to
appear at Rascals Comedy Club, each of these performers signed a
release giving Rascals the right to reproduce and market the
videotapes.  Until 2002 the videotapes were co-owned by Rascals
and Rob Perna d/b/a Stand and Deliver.  In 2002 we divided the
library, with Rascals retaining over 200 hours of performances.

     Our library provides an inventory of raw material which
Rascals intends to use to develop products and content in a
variety of media.  At the same time, although Rascals is not
currently adding to its library of videotapes, the ongoing
operations of our comedy clubs is a potential source of addi
tional valuable media content.  A considerable portion of our
energies during 2002, therefore, were devoted to developing
outlets for marketing Rascals' comedy outside of our clubs.  To
date, we have relationships established with powerful marketing
partners in two media:

     VHS Recordings.  In March 2002 we entered into a Memorandum
of Understanding with Razor & Tie Direct L.L.C.  Razor & Tie is a
music producer with a considerable market presence which has had
noteworthy success marketing VHS videos.  Razor & Tie advanced to
Rascals $50,000 in exchange for our agreement to produce two home
videos of performances in the Rascals library, which Razor & Tie
agreed to market through direct response channels. The agreement
provides that, to the extent that direct response marketing was
successful, Razor & Tie would then introduce the videos into
retail stores.  The agreement provides that Razor & Tie would pay
to Rascals and Stand and Deliver 50% of the net profits from
sales of the videos.  Rascals has given Razor & Tie a one year
exclusive license to market the Rascals library in home video
format.  Razor & Tie can extend the license to five years by
paying Rascals a $200,000 advance, provided that it has intro
duced at least one Rascals video into retail distribution.  In
July 2003 Razor & Tie introduced three of our videos into retail
distribution.

     Television Pay-Per-View and Video-On-Demand.  In the Fall of
2001 we entered into a marketing agreement with iN-DEMAND L.L.C.
to market up to 12 programs produced by Rascals.  IN-DEMAND is
the nation's leading provider of pay-per-view and video-on-demand
programming, serving over 1,800 affiliated systems with approxi
mately 28 million addressable households subscribing.  In each of
five months in early 2002, IN-DEMAND broadcast on seven or eight
occasions a 55 minute program taken from Rascals' library - one
new program each month.  The agreement provided that approxi
mately 40% of the gross receipts from the broadcasts would be
paid to Rascals.  The broadcasts were suspended later in 2002, as
we negotiated with Stand and Deliver a division of the library.
We expect iN-DEMAND to commence broadcasts again in the next few
months.

     Employees

     The Company currently employs 25 individuals, of whom 8
are full-time employees.  The other 17 employees are primarily
hosting staff, wait staff, bartenders, and kitchen employees who
work during the performances at our club in Cherry Hill.  None of
our  employees is represented by a union.  We believe that our
relations with our employees are good.

     Insurance

     As a dispenser of alcoholic beverages, Rascals is subject to
state liquor liability ("dram shop") laws.  These laws vary from
state to state.  In general, dram shop laws  impose liability on
the proprietor of an establishment for damage caused by a customer
of the establishment, if the service of alcoholic beverages
by the establishment to that customer was a cause of the damage
and the establishment service was negligent or otherwise culpable.
Since alcoholic beverages are served in all of our clubs, it is
particularly important that we maintain insurance against liability.

     At the present time, Rascals is insured by a policy which
provides $2,000,000 general aggregate liability coverage. as well
as a $10,000,000 commercial umbrella policy.  The annual premium
for our insurance, which includes this liability insurance, is
$102,700.

Item 2.  PROPERTIES

  Since February 2004 the executive offices of Rascals
International, Inc. have been  located in the building in
Montclair, New Jersey where our new Rascals Comedy Club is being
built.  Our lease for the offices terminates in 2014.  We pay a
monthly rental of $4,500 for the offices.

  Our Cherry Hill comedy club is located in the Hilton Hotel,
which provides the comedy room to us free of charge.   We will
have a similar arrangement with the owners of the club and
restaurant facility being developed in Montclair.

Item 3.  LEGAL PROCEEDINGS

  Rascals International, Inc. v. iCapital Finance Inc.,
Randall Letcavage and Rosemary Nguyen  (Court of Common Pleas,
Philadelphia County, Pennsyvalia).  This action commenced in
August 2003.  Rascals alleged that the defendants signed invest
ment banking and consulting agreements with Rascals, in which
they undertook to perform certain services for Rascals.  Rascals
further alleges that the defendants failed to perform the services,
as a result of which Rascals suffered damages in excess of $1,000,000.
The defendants failed to answer the complaint, and a default judgment
was entered against them in October 2003. Rascals does not know to
what extent, if any, it will be able to enforce the judgment.

  Rascals International, Inc. v. P.A. Whalen and Company,
Inc..  (Superior Court, State of New Jersey).  This action
commenced in February 2002.  The action alleges that Whelan
breached a consulting and marketing contract with Rascals.
Rascals is demanding that the contract be rescinded.  Whelan has
counterclaimed alleging breach of the same contract by Rascals,
and demanding damages of $99,260.

  William Hannah v. Rascals International, Inc., Eduardo
Rodriguez, Michael Margolies and Gary Marks.  (Court of Chancery,
State of Delaware).  This action commenced in February 2003.  The
plaintiff is a shareholder claiming to represent the shareholders
of Rascals as a class.  He is also proceeding derivatively on
behalf of Rascals against the members of the Board of Directors.
The complaint alleges (a) that the directors breached their
fiduciary duties in connection with the reverse split of common
stock effected in March 2003, (b) that the reverse split as
originally structured violated the procedural requirements of
Delaware corporation law, and (c) that the directors have engaged
in various acts of self-dealing in violation of their fiduciary
duties.  The complaint demands that the reverse split be en
joined, that the alleged acts of self-dealing be voided, that
there be an accounting and constructive trust imposed on the
fruits of the self-dealing, and damages in an unspecified amount.
Rascals and its directors have not yet answered the complaint,
but believe that the allegations are without merit.  After the
complaint was filed, Rascals restructured the reverse split to
comply with Delaware corporation law.

  Andrew Freundlich v. Eduardo Rodriguez, Rascals International,
Inc., Robert Jaffe, John Doe and Richard Roe.  (Superior Court, Union
County, State of New Jersey).  The plaintiff claims that moneys are
owed to him under the terms of a debenture that Rascals sold to him
several years ago.  We estimate that the unpaid amount of the debenture
is approximately $79,000.

  Stanley Chason v. Eduardo Rodriguez, Michael Margolies,
Rascals Cherry Hill, Inc., D.E.M., Inc., Rascals Comedy Club
Stage Door Grill, Inc., Rascals International, Inc., Marod
Holdings, LLC and Rodmar Holdings, LLC.  (Superior Court, Essex
County, State of New Jersey).  The plaintiff commenced the action
to enforce a promissory note in the principal amount of $200,000
that had been issued by Rascals Cherry Hill, Inc. and guaranteed
by the other defendants.  Judgment in favor of the plaintiff was
entered in July 2003 and a judgment lien against all of Rascals'
assets was filed in August 2003.  In November 2003 a settlement
agreement was executed in which Mr. Chason released his lien on
certain assets in exchange for the defendants' promise to pay a
total of $265,000.  The payments will be made from the proceeds
of the sale of Rodmar's real property in Ocean, New Jersey, from
the sale of the liquor license used at that property, and by
monthly payments of $5,000.  Rascals has also issued 1,000,000
shares of its common stock to Mr. Chason, and the proceeds of his
sale of those shares will be an offset to the judgment debt.

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

  None

                               PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK
         HOLDER MATTERS, AND SMALL BUSINESS ISSUER PURCHASES OF
         EQUITY SECURITIES

  (a) Market Information

  Since mid-December, 2001 our common stock has been listed
for quotation on the OTC Bulletin Board.  It is currently listed
under the trading symbol "RSCA.OB."  Prior to the reverse split
of common stock in March 2003 it was listed under the trading
symbol "RASC.OB."  The following table sets forth the bid prices
quoted for our common stock on the OTC Bulletin Board during the
two years ended December 31, 2003  All prices have been adjusted
to reflect the 1-for-500 reverse split of common stock effected
on March 28, 2003.


                                      Bid
Period:                         High        Low
---------------------------------------------------------
Jan. 1, 2002 - Mar. 31, 2002    $ 65.00    $  35.00
Apr. 1, 2002 - June 30, 2002    $ 40.00    $  20.00
July 1, 2002 - Sep. 30, 2002    $ 25.00    $   5.00
Oct. 1, 2002 - Dec. 31, 2002    $ 35.00    $   2.50

Jan. 1, 2003 - Mar. 31, 2003    $  7.50    $   2.00
Mpr. 1, 2003 - June 30, 2003    $  3.00    $   1.05
July 1, 2003 - Sep. 30, 2003    $  1.55    $    .26
Oct. 1, 2003 - Dec. 31, 2003    $   .60    $    .14






  (b) Shareholders

  Our shareholders list contains the names of 116 registered
shareholders of record.  Based on recent requests for materials
that we mailed to shareholders, we believe that the number of
beneficial shareholders exceeds 800.

  (c)  Dividends

  The Company has never paid or declared any cash dividends on
its Common Stock and does not anticipate doing so in the foresee
able future.  The Company intends to retain any future earnings
for the operation and expansion of the business.  Any decision as
to future payment of dividends will depend on the available
earnings, the capital requirements of the Company, its general
financial condition and other factors deemed pertinent by the
Board of Directors.

  (d) Sale of Unregistered Securities

    In October 2003 Rascals issued 120,000 shares of common
stock to Live Oak Capital LLC. The securities were issued in
consideration for services valued at the market value of the
shares on the date they were issued.  The sale was exempt pursuant
to Section 4(2) of the Act since the sale was not made in a
public offering and was made to an entity whose executives had
access to detailed information about Rascals and which was
acquiring the shares for its own account.  There were no underwriters.

    In October 2003 Rascals issued a total of 321,231 shares
of common stock to Cornell Capital Partners, LP, Butler Gonzalez
LP and Newbridge Securities Corp.  The securities were issued in
consideration for services valued at the market value of the
shares on the date they were issued.  The sales were exempt
pursuant to Section 4(2) of the Act since the sales were not made
in a public offering and were made to entities whose executives
had access to detailed information about Rascals and which were
acquiring the shares for their own accounts.  There were no underwriters.

  In December 2003 Rascals issued 1,000,000 shares of common
stock to Stanley Chason. The securities were issued in partial
satisfaction of a $265,000 obligation.  The sale was exempt
pursuant to Section 4(2) of the Act since the sale was not made
in a public offering and was made to an individual who had access
to detailed information about Rascals and was acquiring the shares
for his own account.  There were no underwriters.

  In December 2003 Rascals issued a total of 1,500,000 shares
of common stock to Mark Magnusson and Drew Magnusson. The securi
ties were issued in satisfaction of an obligation of approximately
$155,000.  The sale was exempt pursuant to Section 4(2) of the
Act since the sale was not made in a public offering and was made
to individuals who had access to detailed information about Rascals
and were acquiring the shares for their own accounts. There were
no underwriters.

  In December 2003 Rascals issued a total of 1,250,000 shares
of common stock to Rodmar Holdings LLC and Marod Holdings LLC.
The securities were issued in satisfaction of an obligation of
approximately $300,000.  The sale was exempt pursuant to Section
4(2) of the Act since the sale was not made in a public offering
and was made to entities whose executives had access to detailed
information about Rascals and which were acquiring the shares for
their own accounts.  There were no underwriters.

  (e) Repurchase of Equity Securities

  The Company did not repurchase any of its equity securities
that were registered under Section 12 of the Securities Exchange
Act during the 4th quarter of 2003.


Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
          AND FINANCIAL CONDITION

Results of Operations

     At the beginning of 2002 Rascals embarked on a new business
plan.  While our business through 2001 consisted entirely of the
operation of stand-alone restaurant/comedy club facilities, in
2002 we began to develop alternative locations for Rascals'
comedy by organizing hotel-based clubs and by granting licenses
to utilize the name "Rascals."  We also began to develop multiple
channels of distribution for the comedic entertainment produced
in our clubs, such as home video sales and pay-per-view sales.
As the year progressed, however, it became apparent that our
efforts in developing and managing these multiple channels of
distribution, though profitable, were not cost-effective.  These
distribution channels that we developed early in 2002 remain in
place, and we expect them to be a source of revenue in the future.
However, in the third quarter of 2002 we refocused our attention
on the development of new Rascals clubs, both hotel-based and
licensed.  Our focus today is on developing a sufficient number
of clubs to achieve an efficient level of operations.

     The results of our hotel-based operations, which commenced
in the Fall of 2001, have been mixed to date.   Our first two
clubs, one in Springfield, MA and one in Phoenix, AZ, have
closed.  The Springfield club closed after less than 8 months of
operations; the Phoenix club closed after 18 months of operations.
Each made a modest contribution to our revenue and incurred
relatively insignificant losses, as start-up expenses such as
marketing, offset the initial revenues. We closed the clubs when
we determined that their growth rate was falling short of our
expectations.  However, because we had only a very modest capital
investment in either club, we were able to quickly cut our losses
without damage to the Company's balance sheet.  Our experiences
in Springfield and Phoenix, though disappointing, lent support to
our rationale for entering into hotel-based relationships.  The
operations require only a modest capital investment, and the
measure of their success can be determined relatively quickly.

     The most recent tangible result of our new focus on hotel-
based clubs was the opening in December 2002 of a  Rascals club
in the prestigious Hilton Hotel in Cherry Hill, NJ.  During 2003
the Cherry Hill club contributed $261,677 to our revenue and
recorded net income of $8,205.  We expect that as the community
becomes familiar with the club, we will realize increased attendance
as well as sales in the special event market (parties, meetings,
etc.) which will make Cherry Hill a more profitable operation.

     Recently we have expanded our new direction from hotel-based
clubs to clubs in entertainment venues, where a large, pre-existing
clientele can be converted into customers of our club. Our first
two efforts in this new type of environment are now under contract:

     *  During the Summer of 2003 we reached agreement to lease a
        7,000 square foot facility in the newly-developed Louisiana
        Riverwalk Project, a $150 Million entertainment, dining
        shopping complex in Shreveport/Bossier City, Louisiana.
        If we can obtain the funds necessary to develop the facility,
        we expect to open a comedy club with beverage and snack service
        there in the summer of 2004.

     *  In December 2003 we signed a ten year lease for 7,000 square
        feet in the Palisades Center, the second largest retail mall
        in the United States.  Again, if the necessary funds become
        available, we plan to open a 350-seat comedy club in the Palisades
        Mall later in 2004.

     The most dramatic example of our new focus on entertainment
venues is our ongoing joint venture with JHF Properties, the
owners of a chain of dance clubs called either "Banana Joe's" or
"Cactus Lounge."  In January 2004 we entered into an informal
arrangement under which Rascals is contributing funds to JHF
Properties, which is using the funds to develop "mega-entertainment
complexes, each consisting of a Rascals Comedy Club and a dance club,
either a Banana Joe's or a Cactus Lounge.  To date Rascals has
contributed $825,000 to the project.  The first such mega-entertainment
complex opened in Jackson, Mississippi at the end of March.  Our
understanding with JHF Properties is that an additional three complexes
will be built.  Rascals will own one-third of the equity in these
complexes if it contributes no less than $2.9 million to the project.
Moreover, it is understood that if Rascals purchases the nine existing
Banana Joe's clubs owned by JHF Properties, Rascals will also acquire
100% ownership of the new mega-entertainment complexes.  However,
there is no contract in effect that formalizes either the arrangement
for development of the mega-entertainment complexes or the acquisition
of the nine Banana Joe's.

     Our efforts to increase the number of our clubs with a minimal
capital commitment have also led us into a number of licensing
arrangements.  For example, we have given a license to a group
which is planning to open a 300-seat "Rascals Comedy Club" in
Jersey City, New Jersey during the first quarter of 2004.  Rascals
provides the group with its plans and designs for the club, consults
with the group during the development stage, and will provide bookings
for a fee.  In return, the licensee pays an initial fee to Rascals
and a monthly royalty throughout the ten-year term of the license.

     The transitions in our business plan during 2002 resulted in
a marked disparity between revenues and expenses.  Since our new
operations are only in their early stages, we continued to
realize 0ver 86% our net sales from our two New Jersey restaurant/
comedy club facilities.  Revenue from these club operations fell
significantly in 2003, primarily due to the fact that we closed our
club in West Orange in June.  Nevertheless, our clubs generated a
gross profit in 2003 of $286,470.  However, that gross profit was
not sufficient to support the corporate activities involved in
developing our new business plan.  These wide spread efforts to
implement new revenue sources  resulted in general and administrative
expenses during 2003 of $4,516,276.  The portion of general and
administrative expenses that are payable in cash was significantly
reduced from 2002 ($1,779,663) to 2003 ($997,816).  However, the
non-cash expense increased by $3,312,176, as we incurred $3,519,043
in expenses for "stock based compensation" during 2003.

     In 2003 86% of our revenue came from the two New Jersey
restaurant-clubs that we have operated since the 1980s.  In 2004
we expect most of our revenue to arise from new operations.  This
will occur because:

        (1)     We closed our West Orange club and restaurant at
                the end of June.  In recent years that club had
                produced over 60% of our annual revenue.  We
                have also scheduled the closing of our club and
                restaurant in Ocean, New Jersey for the summer
                of 2004.  That club produced most of the remaining
                40% of our revenues in recent years.   Each of these
                clubs will be replaced in a nearby location - the
                West Orange club is being replaced by a new club and
                restaurant in Montclair, New Jersey.  But the Montclair
                club will be owned by a licensee from Rascals and the
                replacement for the Ocean club is likely to likewise be
                built by someone other than Rascals itself.

        (2)     We are now realizing revenue from our Cherry
                Hill hotel-based operation which, albeit far
                less in amount than revenue from West Orange,
                will, after its start-up phase is completed,
                produce far greater gross profit margins.

        (3)     Our interest in the mega-entertainment complexes
                being constructed by JHF Properties will begin
                to contribute to our revenues in the second
                quarter of this year.

        (4)     The first three videos licensed from the Rascals
                Library were introduced to the market for home
                videos in July 2003.  They are on sale at Best
                Buy and other national retail chains.  Depending
                on the success of this marketing effort, succes
                sive offerings may be made, which could contribte
                substantially to our operating results.

     These new directions in our operations bode well for the
future.  Initial results from these ventures, however, are not
likely to be profitable due to start-up costs; so 2004 will be a
year of transition.  Our goal is to return to profitability in
2005.

Liquidity and Capital Resources

     The magnitude of our losses in recent years has not been
matched by reductions in cash, as we have used stock grants to
pay expenses whenever possible.  Nevertheless, our operations
during 2002 consumed $755,199 in cash, and our operations in 2003
used $136,418 in cash.  Since we began 2002 with virtually no
cash, our continued operations for the past two years required
that we borrow the funds needed by our operations.  For this
reason in November 2002 we borrowed $659,361 from Marod Holdings
LLC and Rodmar Holdings LLC, two entities which are controlled by
our executive officers.  To secure the debt Rascals gave the two
entities a secured interest in Rascals' restaurant/clubs in Ocean
and West Orange, New Jersey.

     In May 2003 Rodmar Holdings and Marod Holdings agreed to
accept 1,000,000 shares of Rascals common stock in satisfaction
of $500,000 that Rascals owed to them.  In December 2003 the
remainder of that debt, accrued interest, and certain unpaid rent
obligations were satisfied when Rascals issued 1,250,000 shares
of its common stock to Rodmar Holdings and Marod Holdings.  Both
of those transactions served to reduce our working capital deficit
and increase our shareholders equity.

     In December 2002 our subsidiary which operates the Rascals
Comedy Club in Cherry Hill borrowed $200,000 for its operations
from Stanley Chason.  The loan to Rascals Cherry Hill was guaranteed
by Rascals International as well as by Marod Holdings, Rodmar Holdings
and our two executive officers.  When that loan went into default, Mr.
Chason obtained a judgment lien on our assets.  We have reached an
agreement with Mr. Chason releasing the lien, which permits us to close
the Ocean operation and sell its liquor license to pay some of our
debts.  In the agreement Mr. Chason agreed to accept 1,000,000 shares
of our common stock in partial satisfaction of the debt.  That transaction
likewise will increase our shareholders equity.

     The several consulting agreements that we entered into in
2002 and 2003 resulted in a current asset of $1,078,715 on our
balance sheet at December 31, 2003.  This represents the amount
prepaid (by issuance of stock) for services that will be rendered
during 2004.  That asset will be amortized over that period, and
the recorded amount will be an addition to our expenses for that
period.  In the meantime, however, that current asset helped to
reduce our working capital deficit  from ($2,130,649) at December
31, 2002 to ($1,333,184) at December 31, 2003.

     On October 8, 2003 Rascals signed an Equity Line of Credit
Agreement with Cornell Capital Partners, LP.   The Equity Line of
Credit Agreement provides that during the two years commencing
January 8, 2004 Rascals may demand that Cornell Capital Partners
purchase shares of common stock from Rascals.  Rascals may make a
demand no more than once every seven trading days.  The maximum
purchase price on each demand is $150,000.  The aggregate maximum
that Rascals may demand from Cornell Capital Partners is
$10,000,000.  The number of shares that Cornell Capital Partners
will purchase after a demand will be determined by dividing the
dollar amount demanded by a per share price.  The per share price
used will be 98% of the lowest daily volume-weighted average
price during the five trading days that follow the date a demand
is made by Rascals.  Cornell Capital Partners is required by the
Agreement to pay each amount demanded by Rascals, unless (a)
there is no prospectus available for Cornell Capital Partners to
use in reselling the shares, (b) the purchase would result in
Cornell Capital Partners owning over 9.9% of Rascals outstanding
shares, or (c) the representations made by Rascals in the
Agreement prove to be untrue.

     During 2004 Rascals has sold a total of 7,955,121 shares to
Cornell Capital Partners pursuant to the terms of the Equity Line
of Credit Agreement, and received $650,000 for those shares.  In
addition, Cornell Capital Partners has made loans to Rascals, the
remaining balance of which totals $850,000.  The loans will be
satisfied at a rate of $50,000 per week by Rascals issuing shares
to Cornell Capital Partners under the terms of the Equity Line of
Credit Agreement.  The number of shares that will be issued in
this way will depend on the market price of our common stock from
time to time.

     From the funds provided by Cornell Capital Partners, Rascals
has advanced $825,000 to JHF Properties to fund the development
of the four mega-entertainment complexes that we are developing
jointly with JHF Properties.  Our understanding with JHF Proper
ties calls for Rascals to contribute a minimum of $2,165,000 to
the project, in exchange for a 33 % interest in the four complexes.
Our interest will increase to 100% if Rascals purchases nine existing
clubs owned by JHF Properties.  Although we do not have a contract
for the purchase of the clubs, it is likely that purchase of the nine
clubs would require payment of at least $1,250,000 plus issuance of
Rascals common stock.  We are currently investigating sources for
the funds required for this purpose.

     At the present time, our liquid assets are negligible, while
we had over $2.3 million in accounts and notes payable on Decem
ber 31, 2003.  We also have plans to fund the build-out of three
new clubs during 2003 (Palisades, Montclair, and Shreveport) in
addition to funding the joint venture with JHF Properties.  Our
plan is to use the proceeds from our equity line of credit with
Cornell Capital Partners to reduce our payables and to fund our
building plans.  We are also actively seeking alternative sources
of capital investment, as the Cornell Capital Partners equity
line is not likely to be sufficient for all of our purposes.

Off-Balance Sheet Arrangements

     We do not have any "off-balance sheet arrangements," as
defined in the Regulations of the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

     In preparing our financial statements we are required to
formulate working policies regarding valuation of our assets and
liabilities and to develop estimates of those values.  In our
preparation of the financial statements for 2003, there was only
one estimate made which was (a) subject to a high degree of
uncertainty and (b) material to our results.  That was our
determination, detailed in Note 8 to the Consolidated Financial
Statements, that we should record a valuation allowance for the
full value of the deferred tax asset created by our net operating
loss carryforward.  The primary reason for the determination was
our lack of certainty as to if and when Rascals would commence
profitable operations.

     We have made no material changes to our critical accounting
policies in connection with the preparation of financial statements
for 2003.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on
our financial condition or results of operations.

Item 7.   FINANCIAL STATEMENTS

     The Company's financial statements, together with notes and
the Report of Independent Certified Public Accountants, are set
forth immediately following Item 14 of this Form 10-KSB.


Item 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AC
          COUNTING AND FINANCIAL DISCLOSURE

     None.

Item 8A.  CONTROLS AND PROCEDURES

     Eduardo Rodriguez, our Chief Executive Officer and Chief Financial
Officer, performed an evaluation of the Company's disclosure controls and
procedures as of December 31, 2003.  Based on his evaluation, he concluded
that the controls and procedures in place are sufficient to assure that
material information concerning the Company which could affect the
disclosures in the Company's quarterly and annual reports is made known to
him by the other officers and employees of the Company, and that the
communications occur with promptness sufficient to assure the inclusion of
the information in the then-current report.

     There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect those controls subsequent
to the date on which Mr. Rodriguez performed his evaluation.


                             PART III

Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

     This table identifies our management team.  Directors serve
until the next annual meeting of shareholders and until their
successors are elected and qualify.  Officers serve at the pleasure
of the Board of Directors.


Name                  Age             Position with            Director
                                      the Company              Since
-----------------------------------------------------------------------
Eduardo Rodriguez     42              Chairman, Chief
                                       Executive Officer         1998
                                       Officer, Chief Financial
                                       Officer
Michael Margolies     76              Vice Chairman,
                                       Secretary,2001
                                       Director
Gary Marks            45               Director2000

     Eduardo Rodriguez has served as Chief Executive Officer of
Rascals since 1998.  Immediately prior to joining Rascals, Mr.
Rodriguez served as President of Lancaster Consultants, Inc., a
company involved in financial management and consulting.

     Michael Margolies became Vice Chairman and Secretary of Rascals
in January 2002, after having served on our Board of Directors for the
prior year.  Since 1998 Mr. Margolies has been employed as Chief
Executive Officer of Transportation Logistics Int'l, Inc. (OTC Bulletin
Board: TRPL.OB), which provides logistics and logistic-related services.

     Gary Marks is currently a partner at Roxiticus Ventures in
Bedminster, New Jersey. Prior to joining Roxiticus Ventures, Mr.
Marks held senior technology sales and marketing positions at
Cybertel, Intel, Conner Peripherals, SyQuest and Western Digital.


Audit Committee

     The Board of Directors does not have an audit committee
financial expert.  The Board of Directors has not been able to
recruit an audit committee financial expert to join the Board of
Directors because of the Company's poor financial condition.

Code of Ethics

     The Company does not have a written code of ethics applicable
to its executive officers.  The Board of Directors has not adopted a
written code of ethics because there are so few members of management.

Compliance with Section 16(a) of the Exchange Act

     None of the directors, officers or beneficial owners of more
than 10% of Rascals's common stock failed to file on a timely basis
reports required during 2003 by Section 16(a) of the Exchange Act,
except as follows: Messrs. Rodriguez and Margolies each failed to file
three reports on Form 4 when due, and Mr. Marks failed to file one
report on Form 4 when due.

Item 10.  EXECUTIVE COMPENSATION

     This table itemizes the compensation we paid to Eduardo
Rodriguez, who served as our Chief Executive Officer during 2003,
and to Michael Margolies, our Vice Chairman.  There was no
officer whose salary and bonus for services rendered during the
year ended December 31, 2003 exceeded $100,000.

                                                       Other
                                 Year     Salary       Compensation
     --------------------------------------------------------------
     Eduardo Rodriguez.......    2003     $145,288 (1)  $ 10,800 (2)
                                 2002       40,000        10,800 (2)
                                 2001       74,400        22,000 (2)

     Michael Margolies.......    2003     $145,288 (1)
                                 2002            0
                                 2001            0
                            ______________________


(1)  Represents shares acquired in lieu of salary under the Employee
     Stock Purchase Plan.
(2)  Represents premiums paid for health insurance and payments made to
     supply Mr. Rodriguez with an automobile.



          Employment Agreements; Affiliation Agreement

          In connection with the refinancing of the mortgages on
Rascals' two New Jersey restaurant/clubs on December 31, 2001,
Rascals entered into employment agreements with Eduardo Rodriguez,
its Chief Executive Officer, and Michael Margolies, its Vice Chairman
and Secretary.  The refinancing is described in "Certain Relationships
and Related Transactions" below.

          Rascals' employment agreement with Eduardo Rodriguez provides
that Mr. Rodriguez will serve as President of Rascals during the term
of the agreement, which ends on December 31, 2006.  Mr. Rodriguez
covenants in the agreement that he will not compete with Rascals
for one year after termination of his employment.  The agreement
further provides that Rascals will pay Mr. Rodriguez an annual
salary of $250,000, and will spend up to $12,000 per year to provide
him an automobile.  In the event of Mr. Rodriguez' death or disability,
Rascals commits to pay him or his estate an amount equal to one year's
salary.

          Rascals' employment agreement with Michael Margolies provides
that Mr. Margolies will serve as Vice Chairman and Secretary during the
term of the agreement, which ends on December 31, 2006.  Mr. Margolies
covenants in the agreement that he will not compete with Rascals for
one year after termination of his employment.  The agreement further
provides that Rascals will pay Mr. Margolies an annual salary of $150,000.
In the event of Mr. Margolies' death or disability, Rascals commits to
pay him or his estate an amount equal to one year's salary.  In order
to induce Mr. Margolies to enter into the agreement, Rascals issued 2,000
shares of common stock to the Margolies Family Trust and 1,000
shares to Mr. Margolies.  In September 2002 the Margolies Family
Trust and Mr. Margolies surrendered those shares to Rascals.

          At the same time as the employment agreements, an "Affiliation
Agreement" was made among Rascals, Mr. Rodriguez and Mr. Margolies.  The
stated consideration for Rascals' covenants in the Affiliation Agreement
was Mr. Margolies' agreement to partic ipate in the refinancing of the
New Jersey mortgages.  The Affiliation Agreement provides, with respect
to both Mr. Rodri guez and Mr. Margolies, that as long as he or his family
own one percent of Rascals, he will be nominated at any election of Board
members.  The Affiliation Agreement further provides that until December
31, 2006 the salary and benefits paid to Mr. Margolies will equal
no less than 60% of the salary and benefits paid to Mr. Rodriguez;
that Rascals will not issue stock to Mr. Rodriguez or Mr. Margolies
or their families without the consent of the other; and that neither
Mr. Rodriguez nor Mr. Margolies will sell any Rascals shares without
affording the sale opportunity to the other of them.


          Restricted Stock Grant Program and Surrender of Shares

          On August 5, 2003, Rascals' Board of Directors adopted a
Restricted Stock Grant Program (the "Program") pursuant to which
2,000,000 shares of Common Stock were reserved.  On the same day,
the restricted shares were issued as follows:

         Eduardo Rodriguez       - 1,000,000 shares
         Michael Margolies       - 1,000,000 shares

     The shares issued under the Program are subject to the
following restrictions:

     1.  After 2003 and each of the following four fiscal years
(2004 through 2007) one-fifth of the shares granted (the "At-Risk
Shares") will be forfeited if Rascals' revenue during the year
does not exceed the following thresholds:

         2003  - $ 1,000,000
         2004  - $ 1,500,000
         2005  - $ 2,000,000
         2006  - $ 2,500,000
         2007  - $ 3,000,000

     2.  All shares held by a Grantee shall be forfeited if his
employment by Rascals terminates prior to the date the restrictions lapse.

     3.  The shares granted under the Program cannot be sold,
assigned, pledged, transferred or hypothecated in any manner, by
operation of law or otherwise, other than by writ or the laws of
descent and distribution, and shall not be subject to execution,
attachment or similar process.  These restrictions will lapse with
respect to any At-Risk Shares that are not forfeited as described above.

     4.  The restrictions shall also lapse as to all shares granted
to a Grantee on the first to occur of (i) the termination of that
Grantee's employment with the Company by reason of his disability,
(ii) the Grantee's death, (iii) termination of the Grantee's
employment by the Company without good reason, or (iv) a change
of control of the Company.  The Program defines "Change of Control"
as an acquisition by a person or group of more than 50% of the
Company's outstanding shares, a transfer of the Company's property
to an entity of which the Company does not own at least 50%, or the
election of directors constituting a major ity of the Board who have
not been approved by the existing Board.

     During any tax year in which a Grantee realizes taxable
income by reason of the lapse of the restrictions on the shares
granted under the Program, the Company shall pay to such Grantee
a "Gross-Up Bonus" in cash equal to the aggregate of (i) the
additional federal, state and local income taxes incurred by
Grantee as a result of realization of such taxable income, and
(ii) the federal, state and local income tax incurred by the
Grantee as a result of the Gross-Up Bonus.  In no event shall the
Gross-Up Bonus exceed the aggregate of (i) the amount of the tax
deduction for which the Company receives a benefit for the tax
year of the Company beginning during the tax year of the Grantee
in which he realizes taxable income by virtue of the lapse of the
restrictions referred to above, and (ii) the amount of the tax
deduction for which the Company receives a benefit for such tax
year of the Company by virtue of the Gross-Up Bonus.

     Employee Stock Purchase Plan

     In July 2003 Rascals Board of Directors adopted the 2003
Employee Stock Purchase Plan.  Each employee of Rascals who is
either an executive officer or a manager was eligible to participate
in the Plan.  The Plan permitted participants to purchase Rascals
common stock through payroll deductions.  The purchase price was
85% of market value.  500,000 shares were included in the Plan,
and all have been purchased as follows: 245,750 shares by Eduardo
Rodriguez, 245,750 shares by Michael Margolies, and 8,500
share by Rascals' Director of Operations.

     Stock Options

     None of our officers or directors holds any options to purchase
Rascals securities.

     Compensation of Directors

     Our directors are reimbursed for out-of-pocket expenses
incurred on our behalf, but receive no additional compensation
for service as directors.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

     The following table sets forth information known to us with
respect to the beneficial ownership of our common stock as of the
date of this prospectus by the following:

     *  each shareholder known by us to own beneficially more
        than 5% of our common stock;

     *  each officer named in the Executive Compensation table
        above.

     *  each of our directors; and

     *  all directors and executive officers as a group.

     There are 18,686,380 shares of our common stock outstanding
on the date of this Report.  Except as otherwise indicated, we
believe that the beneficial owners of the common stock listed
below have sole voting power and investment power with respect to
their shares,  subject to community property laws where applicable.
Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission.

     In computing the number of shares beneficially owned by a
person and the percent ownership of that person, we include
shares of common stock subject to options or warrants held by
that person that are currently exercisable or will become exercisable
within 60 days. We do not, however, include these "issuable" shares
in the outstanding shares when we compute the percent ownership of
any other person.

                                    Amount and
                                    Nature of
Name and Address                    Beneficial             Percentage
of Beneficial Owner(1)              Ownership(2)           of Class
--------------------------------------------------------------------------
Eduardo Rodriguez                 3,533,404(3)(4)            18.9%
Michael Margolies                 3,528,963(3)(4)            18.9%
Gary Marks                           25,750                   0.1%

All Officers and Directors
As a Group (3 persons)            4,810,905(3)(4)            25.7%
     ____________________________________

     (1)  Except as noted, the address of all shareholders is c/o Rascals
          International, Inc.,  501 Bloomfield Avenue, Montclair, NJ 07042
     (2)  All shares are owned of record unless otherwise indicated.
     (3)  The shares beneficially owned by Messrs. Rodriguez and Margolies
          each include 1,000,000 shares subject to the terms of the Restricted
          Stock Grant Program.
     (4)  The shares beneficially owned by Messrs. Rodriguez and Margolies
          each include 1,638,606 shares owned of record by Rodmar Holdings,
          LLC and 638,606 shares owned of record by Marod Holdings, LLC.  Mr.
          Rodriguez and Mr. Margolies are the two Managers of Rodmar and of
          Marod.  Mr. Rodriguez' wife owns a 50% interest in Rodmar and a 50%
          interest in Marod in trust for their minor children.  The remaining
          50% interest in each LLC is owned by The Margolies Family Trust.
          The Trustee of the Margolies Family Trust is Mr. Margolies' spouse,
          and the beneficiaries of the Trust are Mr. Margolies' spouse and
          children.


Equity Compensation Plan Information

     The information set forth in the table below regarding equity
compensation plans (which include individual compensation arrangements)
was determined as of December 31, 2003.

                                               Weighted       Number of
                             Number of         average        securities
                             securities        exercise       remaining
                             to be issued      price of       available for
                             upon exercise of  outstanding    future issuance
                             outstanding       options,       under equity
                             options, warrants warrants       compensation
                             and rights        and rights     plans
                             ------------------------------------------------

Equity compensation plans
 approved by security
 holders..........                   0            --              0

Equity compensation plans not
 approved by security
 holders*.........                   0            --          6,380
                              -----------------------------------------------
 Total..............                 0            --          6,380
                              ===============================================


     Our Board of Directors has adopted three equity compensation plans
without shareholder approval under which shares remain available for
issuance.  The three plans are identical in their material terms.  They
permit the Board to award to employees, directors or consultants
(other than consultants whose services to Rascals are related to
capital-raising transactions) stock, restricted stock, stock options
or performance shares.

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Refinance

     On December 31, 2001, the management and affiliates of
Rascals completed a refinancing of the mortgages on the proper
ties in West Orange, New Jersey and Ocean Township, New Jersey on
which Rascals Comedy Clubs were located (the "Realty").  The
refinanced mortgage loan was a two-year loan in the principal
amount of $2,250,000.  As a condition to its willingness to
complete the refinancing, the mortgagee received personal guarantees
of the loan from Michael Margolies and his wife and Eduardo
Rodriguez and his wife.

     In order to induce Mr. Margolies and his wife to assist in
the refinancing, including giving a personal guarantee of the
mortgage loan, Rascals and Mr. Rodriguez entered into the Affiliation
Agreement with Mr. Margolies.  In addition, Mr. Margolies acquired
the greater part of the interest that Mark Magnusson had held in Rascals
and all of his interest in the Realty.  Specifically:

     *  Mr. Magnusson agreed to the assignment of the Realty by
        Comrest and W.H.R. Realty, two general partnerships
        comprised of Mr. Magnusson and Eduardo Rodriguez, Ras
        cals President, to Marod Holdings, L.L.C. ("Marod") and
        Rodmar Holdings, L.L.C. ("Rodmar").  The members of
        Marod and Rodmar are Mr. Rodriguez' spouse (in trust for
        their minor children) and the Margolies Family Trust.
        The Managers of Marod and Rodmar are Messrs. Eduardo
        Rodriguez and Michael Margolies, who are members of
        Rascal's Board).  In consideration of his agreement to
        the transfer, the Margolies Family Trust paid Mr.
        Magnusson $24,000 and promissory notes for $56,000.

     *  Rascals, Marod and Rodmar agreed that the leases of the
        Realty to Rascal's subsidiaries would continue in effect
        and unchanged.

     *  The Margolies Family Trust purchased four thousand
        shares of Rascals common stock from Mark Magnusson for
        $96,000.

     *  Comrest and W.H.R. Realty, the previous landlords of the
        Realty, released Rascals from past debts, primarily
        unpaid rental, totaling approximately $570,000.

     *  Rascals reaffirmed the agreement it had made with Mr.
        Magnusson dated January 24, 2001, and agreed to commence
        paying Mr. Magnusson $1,500 per week without interest
        until the debt of $114,000 was satisfied.

     Sale and Lending

     On September 26, 2002 Marod Holdings, LLC sold to Commerce
Bank the land and buildings at 425 Pleasant Valley Way in West
Orange, New Jersey.  D.E.M., Amusements, Inc., a subsidiary of
Rascals, by lease from Marod Holdings, carried on the operation
of a restaurant and comedy club on those premises.  By
arrangement with Commerce Bank, D.E.M. Amusements, Inc. continued
to carry on that business until June 2003, at which time D.E.M.
Amusement's lease for the premises expired.

     Marod utilized a portion of the proceeds of the sale of the
West Orange property to reduce the principal amount of the
mortgage held by Hudson United Bank on the West Orange premises
as well as on the premises in Ocean.   The mortgage loan encumbering
the properties was reduced from a principal amount of approximately
$2,250,000 to a principal amount of approximately $1,250,000.
That amount was retired in December 2003 when Rodmar sold the
property in Ocean Township, New Jersey where Rascals other club
and restaurant complex was located.

     Upon completion of the sale of the West Orange property,
Marod Holdings assigned to Rodmar Holdings a beneficial interest
in a portion of the proceeds from the sale.  Marod Holdings and
Rodmar Holdings subsequently loaned to Rascals a total of $659,361.
Rascals used the proceeds of the loan primarily to reduce its
outstanding payables.  The Loan Agreement  provided for the sale
to each of Rodmar Holdings and Marod Holdings of fifteen thousand
shares of Rascals's common stock for a price of $7,500.

     In consideration of the loan, Rascals entered into a Loan
Agreement and a Pledge Agreement with Rodmar Holdings and Marod
Holdings, and Rascals executed a Promissory Note in favor of
Rodmar Holdings and Marod Holdings.  The Promissory Note was in
the principal amount of $641,204 and bore interest at twelve
percent per annum.  The Promissory Note called for payment of
$25,000 per month, commencing on January 2, 2003, with payment of
the unpaid balance of the Note on December 31, 2003.  In May 2003
Rascals reduced its obligation under the Promissory Note by
$500,000 by issuing 1,000,000 shares of common stock to Rodmar
Holdings, LLC.  In December 2003 Rascals satisfied the remainder
of the obligation on the Promissory Note and other debts to
Rodmar Holdings and Marod Holdings by issuing them 1,250,000
shares of common stock.

     The members of Marod Holdings and Rodmar Holdings are the
spouse of Eduardo Rodriguez (in trust for their minor children)
and the Margolies Family Trust.  The Managers of Marod Holdings
and Rodmar Holdings are Messrs. Eduardo Rodriguez and Michael
Margolies, who are members of Rascals's  Board of Directors.

     Rascals Montclair, Inc.

     In June 2003 Rascals' lease for the property in West Orange,
New Jersey on which Rascals operated a club and restaurant
terminated.  For several months, Rascals' management looked for a
location where the club and restaurant could be reopened.
However, because of Rascals lack of capital, landlords were
unwilling to rent space to Rascals on favorable terms and contractors
were unwilling to extend credit to Rascals for construction of the
new facility.  Therefore Eduardo Rodriguez and Michael Margolies,
Rascals' officers, organized Rascals Montclair, Inc., which is owned
by The Margolies Family Trust, the Rodriguez Family Trust and
Jerry Pontones, Rascals' General Manager.  Rascals Montclair, Inc. has
entered into a lease for space in Montclair, New Jersey where a
replacement for the West Orange club and restaurant will be opened.

     Rascals has entered into a licensing agreement with Rascals
Montclair, Inc., similar to the licensing agreement it has made
in connection with the owners of the Rascals Comedy Club being
built in Jersey City.   The agreement permits Rascals Montclair
to use the Rascals name and its club style.  After the facility
is constructed, however, Rascals Montclair will lease the comedy
club alone to Rascals International.  That arrangement will be
similar to our arrangement with the hotels which have housed our
comedy clubs, as we will receive the revenue from the club and a
share of the revenue from the restaurant and bar.

     The lease arrangement between Rascals and Rascals Montclair
requires Rascals to advance the funds needed to develop the
comedy room.  During 2003 Rascals advanced $44,000 to Rascals
Montclair, Inc. for this purpose.  In 2004 Rascals has advanced
an additional $318,000 to Rascals Montclair for this purpose.

Item 13.  EXHIBIT LIST AND REPORTS ON FORM 8-K

     (a) Financial Statements

Report of Independent Auditors                         F-1

Consolidated Balance Sheets                            F-2

Consolidated Statements of Operations                  F-3

Consolidated Statements of Shareholders' Equity        F-4

Consolidated Statements of Cash Flows                  F-5

Notes to Consolidated Financial Statements             F-7

     (b) Exhibit List

3-a Articles of Incorporation, as amended through December 11, 2001. (1)

3-a(1)    Certificate of Amendment to Articles of Incorporation
          dated March 17, 2003 - filed as an exhibit to the
          Quarterly Report on Form 10-QSB for the period ended
          March 31, 2003 and incorporated herein by reference.

3-b       By-laws. (1)

10-a      Affiliation Agreement dated December 31, 2001 among Ras
          cals International, Inc., Edward Rodriguez and Michael
          Margolies. (2)

10-b      Employment Agreement - Michael Margolies dated January 1,
          2002. (2)

10-c      Employment Agreement - Eduardo Rodriguez dated January 1,
          2002. (2)

10-d      Restricted Stock Grant Program - filed as an exhibit to
          the Current Report on Form    8-K dated August 5, 2003 and
          incorporated herein by reference.

10-e      Equity Line of Credit Agreement with Cornell Capital
          Partners dated October 8, 2003 - filed as an exhibit to
          the Company's Registration Statement on Form SB-2 (Reg.
          No. 333-111296) and incorporated herein by reference.

21  Subsidiaries -  Rascals Comedy Club Stage Door Grill, Inc.
                    D.E.M. Amusements, Inc.
                    Rascals Cherry Hill, Inc.

31  Rule 13a-14(a) Certification

32  Rule 13a-14(b) Certification
_____________________________

(1)       Filed as an exhibit to the Company's Registration
          Statement on Form 10-SB and incorporated herein by
          reference.
(2)       Filed as an exhibit to the Company's Current Report on
          Form 8-K dated December 31, 2001 and incorporated
          herein by reference.

    (c) Reports on Form 8-K

    None

Item 14       PRINCIPAL ACCOUNTANT FEES AND SERVICES

  Audit Fees

  Rosenberg Rich Baker Berman & Company billed $26,865 to the Company for
professional services rendered for the audit of our 2003 financial
statements and review of the financial statements included in our
reports on Form 10-QSB for the first three quarters of 2003.

  Audit-Related Fees

  Rosenberg Rich Baker Berman & Company billed $0 to the Company in
2003 for assurance and related services that are reasonably related
to the performance of the 2003 audit or review of the quarterly
financial statements.

  Tax Fees

  Rosenberg Rich Baker Berman & Company billed $0 to the Company
in 2003 for professional services rendered for tax compliance, tax
advice and tax planning.

  All Other Fees

  Rosenberg Rich Baker Berman & Company billed $0 to the Company in
2003 for services not described above.

   It is the policy of the Company's Board of Directors that all
services other than audit, review or attest services, must be
pre-approved by the Board of Directors.  All of the services described
above were approved by the Board of Directors.






<PAGE>
                       Independent Auditors' Report

                To the Stockholders and Board of Directors of
                Rascals International, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet
of Rascals International, Inc. and Subsidiaries as of
December 31, 2003, and the related consolidated statements
of operations, stockholders' equity (deficit), and cash flows
for the years ended December 31, 2003 and 2002.  These
consolidated financial statements are the responsibility of
the Company's management.  Our responsibility is to express
an opinion on these consolidated financial statements based
on our audits.

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

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the consolidated financial position of Rascals International,
Inc. and Subsidiaries as of December 31, 2003, and the
consolidated results of their operations, stockholders'
equity (deficit) and their cash flows for the years ended
December 31, 2003 and 2002, in conformity with accounting
principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been
prepared assuming Rascals International, Inc. and
Subsidiaries will continue as a going concern.  As discussed
in Note 1, the Company has suffered recurring losses from
operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going
concern.  Management's plans in regard to these matters are
also described in Note 1.  The consolidated financial
statements do not include any adjustments that might result
from the outcome of this uncertainty.


Rosenberg Rich Baker Berman & Company


Bridgewater, New Jersey
April 10, 2003



                 Rascals International, Inc. and Subsidiaries
                         Consolidated Balance Sheet
                             December 31, 2003




Assets

Current Assets
 Cash (Note 1)                        $        70
 Inventory (Notes 1)                        8,938
 Prepaid consulting (Note 3)            1,078,715
                                        ---------
 Total Current Assets                   1,087,723
                                        ---------

Property and equipment, net
 (Notes 1 and 4)                           47,237

Other Assets
 Liquor licenses, net of accumulated
  amortization of $99,273 (Note 1)        151,827
 Security deposits                          2,500
 Prepaid consulting, net of current
  portion (Note 3)                        651,134
                                        ---------
 Total Other Assets                       805,461
                                        ---------
 Total Assets                           1,940,421
                                        =========

Liabilities and Stockholders' Deficit

Current Liabilities
 Accounts payable and accrued expenses  2,056,982
 Due to officer (Note 8)                   15,143
 Notes payable (Note 5)                   317,000
 Deferred income (Notes 1 and 11)          31,782
                                        ---------
 Total Current Liabilities              2,420,908
                                        ---------
Commitments and Contingencies (Note 10)

Stockholders' Deficit
 Common stock, authorized 100,000,000
  shares, $.001 par value, 10,731,731
  shares issued and outstanding
  (Notes 1, 3 and 6)                       10,732
 Additional paid-in capital             9,248,360
 Accumulated deficit                   (9,739,578)
                                        ---------
 Total Stockholders' Deficit             (480,486)
                                        ---------
 Total Liabilities and Stockholders'
  Deficit                             $ 1,940,421
                                        =========



See notes to the consolidated financial statements.



               Rascals International, Inc. and Subsidiaries
                  Consolidated Statements of Operations



                                              Year Ended December 31,
                                                 2003         2002
                                              -----------------------


Net Sales                                    $ 2,352,800   $ 4,375,194

Costs and Expenses
 Cost of sales                                   981,096     1,535,084
 Restaurant operating expenses                   958,569     1,886,013
 Rent expense - related party (Note 8)           114,477       312,000
 Depreciation and amortization (Notes 1 and 4)    12,188        54,931
                                               ---------     ---------
 Total Costs and Expenses                      2,066,330     3,788,028
                                               ---------     ---------

Gross Profit                                     286,470       587,166
                                               ---------     ---------

General and Administrative expenses
 General and administrative expenses             997,233     1,779,663
 Stock based compensation (Note 3)             3,519,043       206,867
                                               ---------     ---------
 Total General and Administrative Expenses     4,516,276     1,986,530
                                               ---------     ---------

(Loss) From Operations                        (4,229,806)   (1,399,364)
                                               ---------     ---------
Other Income (Expense)
 Interest expense                               (167,057)      (30,372)
 Other income                                      8,043        12,887
 Loss on disposal of fixed assets                (82,361)            -
                                               ---------     ---------
 Total Other (Expense)                          (241,375)      (17,485)
                                               ---------     ---------

(Loss) Before Income Tax Provision            (4,471,181)   (1,416,849)
Provision for Income Taxes (Note 1 and 9)            436           240
                                               ---------     ---------
Net Loss                                     $(4,471,617)  $(1,417,089)
                                               =========     =========

Earnings (Loss) Per Share (Note 1)
Earnings (Loss) Per Common Share             $     (1.51)  $    (27.07)
                                                ========     =========

Earnings  Per Share - Assuming Dilution      $     (1.51)  $    (27.07)
                                                ========     =========
Weighted Average Number of Common Shares
 Outstanding                                   2,953,237        52,359
                                               =========     =========


See notes to the consolidated financial statements.



                 Rascals International, Inc. and Subsidiaries
          Consolidated Statements of Stockholders' Equity (Deficit)



                                                                   Total
                         Common Stock      Additional              Stockholders'
                      -------------------  Paid-in    Accumulated  Equity
                       Shares     Amount   Capital    (Deficit)    (Deficit)
                      ----------------------------------------------------------
Balance-
 December 31, 2001   15,827,422  $ 15,827  $2,439,293 $(3,850,872)  $(1,395,752)

Issuance of Common
 Stock                1,416,700     1,417     110,033           -       111,450

Stock Issued for Loan
 Extension              186,000       186      22,134           -        22,320

Stock Issued for
 Services            11,730,000    11,730     906,342           -       918,072

Stock issued for
 conversion of debt
 and accrued interest   833,334       833     166,667           -       167,500

Stock issued for
 officer compensation   400,000       400       5,200           -         5,600

Retroactive effect of
 500:1 reverse common
 stock split        (30,332,669)  (30,332)     30,332           -             -

Net Loss                      -         -           -  (1,417,089)   (1,417,089)
                     ----------------------------------------------------------
Balance -
 December 31, 2002       60,787  $     61  $3,680,001 $(5,267,961)  $(1,587,899)

Issuance of Common
 Stock                  120,000  $    120  $   59,880 $         -   $    60,000

Stock Issued for
 Services             3,279,444     3,279   2,964,501           -     2,967,780

Stock issued for
 conversion of debt
 and accrued interest 4,780,000     4,780     901,732           -       906,512

Stock issued for
 officer compensation 2,491,500     2,492   1,642,246           -     1,644,738

Net Loss                      -         -           -  (4,471,617)   (4,471,617)
                      ---------------------------------------------------------
Balance -
 December 31, 2003   10,731,731   $10,732  $9,248,360 $(9,739,578)  $  (480,486)
                      =========================================================


See notes to consolidated financial statements.



                 Rascals International, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows



                                                Year Ended December 31,
                                                 2003            2002
                                               -------------------------
Cash Flows From Operating Activities
 Net Loss                                      $(4,471,617)  $(1,417,089)
 Adjustments to Reconcile Net Loss to
  Net Cash Used by Operating Activities
  Depreciation and amortization                     18,466        62,109
  Stock issued for services                      2,539,939       278,292
  Amortization of deferred compensation            979,104       206,867
  Loss on sale of assets                            82,361             -
  Decreases (Increases) in Assets
   Deferred charges                                221,327      (221,327)
   Prepaid expenses                                 10,021        42,289
   Inventory                                        35,321         9,557
   Security deposits                                 7,843           743
  Increases (Decreases) in Liabilities
   Accounts payable and accrued expenses           445,659       317,021
   Deferred income and credits                      (4,842)      (33,661)
                                                 ---------     ---------
  Net Cash Used by Operating Activities           (136,418)     (755,199)
                                                 ---------     ---------

Cash Flows From Investing Activities
 Purchase of property and equipment                 (4,526)      (40,845)
                                                 ---------     ---------
  Net Cash Used by Investing Activities             (4,526)      (40,845)
                                                 ---------     ---------
Cash Flows From Financing Activities
 Repayment of notes payable                         (2,000)      (51,310)
 Repayment on officer loans                        (38,700)            -
 Proceeds from common stock issued                  60 000       111,450
 Proceeds from related party                        90,639       659,361
 Proceeds from officer                                   -        53,843
                                                 ---------     ---------
  Net Cash Provided by Financing Activities        109,939       773,344
                                                 ---------     ---------

Net (Decrease) in Cash and Equivalents             (31,005)      (22,700)

Cash and Equivalents at Beginning of Period         31,075        53,775
                                                 ---------     ---------
Cash and Equivalents at End of Period          $        70   $    31,075
                                                 =========     =========



See notes to consolidated financial statements.


                Rascals International, Inc. and Subsidiaries
                   Consolidated Statements of Cash Flows



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the year for:
 Interest                                      $   15,357    $         -
 Income taxes                                  $      430    $       480



SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

During the year ended December 31, 2003, the Company converted a related
party debt of $890,459 into common stock.

During the year ended December 31, 2003, the Company converted $16,053 of
accrued expenses into common stock.

During the year ended December 31, 2003, the Company issued $2,434,705 for
prepaid consulting services.

During the year ended December 31, 2002, the Company converted notes payable
of $150,000 as well as accrued interest of $17,500 into common stock.




See notes to consolidated financial statements.


                  Rascals International, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (NOTE 1)

     Basis of Presentation and Business

     Rascals International, Inc. was organized as a Delaware corporation in
1992.  It is currently engaged in the business of operating comedy clubs in
the State of New Jersey.  Each club is owned and operated by one of three
subsidiaries of Rascals International, Inc.: Rascals Stage Door Grill, Inc.,
D.E.M., Inc. and Rascals Cherry Hill, Inc.  The club operating under
D.E.M., Inc. was closed in 2003.

     These financial statements are presented on a consolidated basis and
include the results of operations of the parent corporation, Rascals
International, Inc., the three subsidiaries aforementioned, and Rascals
Kendall, Inc., a 75%-owned subsidiary which owned and operated a now-closed
club in Kendall, Florida.

     The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of
business.  As reflected in the consolidated financial statements, the Company
has incurred recurring net losses from operations, an accumulated deficit,
and recurring negative cash flows from operations.  These factors all raise
substantial doubt about the ability of the Company to continue as a going
concern.

     Principles of Consolidation

     The accompanying consolidated financial statements include the accounts
of the Company and its majority owned subsidiaries.  All intercompany
transactions and balances have been eliminated in consolidation.

     Cash and Cash Equivalents

     Cash equivalents are comprised of certain highly liquid investments with
a maturity of three months or less when purchased.  At December 31, 2003, the
Company had no cash equivalents.

     Inventories

     Inventories consist of food, beverages and supplies.  Inventories are
stated at the lower of cost, determined by the first-in, first-out method,
or market.

     Property and Equipment, Depreciation and Amortization

     Property and equipment is presented at cost.  Depreciation is computed
utilizing the straight-line method over the estimated useful lives of the
assets: 5-15 years for Machinery and Equipment and Furniture and Fixtures.
Amortization of leasehold improvements is computed utilizing the straight-
line method over the lesser of the remaining lease term or the useful life of
the leasehold.

     Liquor Licenses

     The liquor licenses are amortized over their useful lives of 40 years
utilizing the straight-line method.  Amortization expense was $6,278 for the
years ended December 31, 2003 and 2002, respectively.

     Advertising

     The Company expenses advertising costs as incurred.  Advertising costs
for the years ended December 31, 2003 and 2002 were $53,739 and $82,277,
respectively.

     Concentrations

     The Company maintains cash balances at financial institutions in New
Jersey.  The balances are insured by the Federal Deposit Insurance Corporation
up to $100,000.

     All cash balances were fully insured at December 31, 2003.


               Rascals International, Inc. and Subsidiaries
              Notes to the Consolidated Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued

     Use of Estimates

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

     Earnings (Loss) Per Share

     Earnings (Loss) per common share represents the amount of earnings
(loss) for the period available to each share of common stock outstanding
during the reporting period.  Diluted earnings (loss) per share reflects the
amount of earnings (loss) for the period available to each share of common
stock outstanding during the reporting period, while giving effect to all
dilutive potential common shares that were outstanding during the period,
such as common shares that could result from the potential exercise or
conversion of securities into common stock.  The computation of diluted
earnings (loss) per share does not assume conversion, exercise, or contingent
issuance of securities that would have an antidilutive effect on earnings
(loss) per share.

     Potential future dilutive securities include 2,200 shares issuable under
outstanding warrants as of December 31, 2003.

     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 financial reporting and tax bases of assets and liabilities
and are measured using tax rates and laws expected to be in effect when the
differences are expected to reverse.  Valuation allowances are provided
against deferred tax assets for which it is "more likely than not" the assets
will not be realized.

     Revenue Recognition

     Revenue from restaurants are recognized when services are provided.
Revenues from the comedy clubs are recognized when the show is performed.
The Company is paid by cash or credit card when services are provided,
therefore, there are no accounts receivable or allowance for doubtful
accounts at the date of these financial statements.

DEFERRED CHARGE (NOTE 2)

     In August 2002, the Company entered into an agreement for their location
in Cherry Hill, New Jersey.  As part of the agreement the Company was
responsible for renovating the existing club.  The agreement calls for the
owners of the club to reimburse the Company, for their "investment cost" at
10% of monthly beverage revenues generated in the showroom during scheduled
shows.  The agreement is for five years.  This deferred charge is being
amortized over the five year period and will be decreased by reimbursement.
The collections are being held by the hotel, as Company never fully paid the
contractors for the renovation.  In 2003, the entire deferred charge was
reserved to $0.

PREPAID CONSULTING (NOTE 3)

     Prepaid consulting expenses are recorded in connection with common stock
issued to consultants for services that extend into the future and are
amortized over the period of the agreement, ranging from one to four years.



                Rascals International, Inc. and Subsidiaries
               Notes to the Consolidated Financial Statements


PROPERTY AND EQUIPMENT (NOTE 4)

     A summary of property and equipment is as follows:


             Machinery and Equipment        $   98,539
             Leasehold Improvements             60,278
             Furniture and Fixtures             78,662
                                               -------
             Total                             237,479

             Less:  Accumulated Depreciation   190,242
                                               -------
                                            $   47,237
                                               =======

     Depreciation expense was $12,188 and $54,931 for the years ended
December 31, 2003 and 2002, respectively.

NOTES PAYABLE (NOTE 5)

 Note payable, at 16% interest per annum, secured by
 liquor licence on the West Orange, NJ club.  The
 Note is in litigation. Subsequent to December 31,
 2003, the liquor license on the West Orange, NJ Club
 was sold for $68,000.  These proceeds were used to
 reduce this note.                                          $ 119,000

 Note payable, at 18% interest.  This note is currently
 in default. In December of 2003, the Company and the
 creditor reached an agreement, whereby, the Company
 issued 1,000,000 common shares to  the creditor.  Any
 proceeds the creditor receives from the sale of the
 shares will be applied against the debt.  As of December
 31, 2003 the creditor did not sell any of these shares.      198,000
                                                             --------
                 Total                                        317,000

                 Less: current maturities                     317,000
                                                             --------
                 Notes Payable, net of Current Maturities    $      -
                                                             ========
EQUITY LINE OF CREDIT (NOTE 6)

     On October 8, 2003 the Company signed an Equity Line of Credit
Agreement with Cornell Capital Partners, LP.  The Equity Line of
Credit Agreement provides that during the two years commencing
January 8, 2004 the Company may demand that Cornell Capital Partners
purchase shares of common stock from the Company.  The Company may
make a demand no more than once every seven trading days.  The
maximum purchase price on each demand is $150,000.  The aggregate
maximum that the Company may demand from Cornell Capital Partners is
$10,000,000.  The number of shares that Cornell Capital Partners will
purchase after a demand will be determined by dividing the dollar
amount demanded by a per share price.  The per share price used will
be 98% of the lowest daily volume-weighted average price during the
five trading days that follow the date a demand is made by the
Company.  Cornell Capital Partners is required by the Agreement to
pay each amount demanded by the Company, unless (a) there is no
prospectus available for Cornell Capital Partners to use in reselling
the shares, (b) the purchase would result in Cornell Capital Partners
owning over 9.9% of Rascals outstanding shares, or (c) the
representations made by the Company in the Agreement prove to be
untrue.


             Rascals International, Inc. and Subsidiaries
              Notes to the Consolidated Financial Statements


CONVERSION OF DUE TO RELATED PARTIES (NOTE 7)

     During the year ended December 31, 2003, payable due to related parties
in the amount of $890,459 were converted into 2,280,000 shares of the Company's
common stock.

TRANSACTIONS WITH RELATED PARTIES (NOTE 8)

     Facilities Rental

     The companies lease their facilities from two entities owned by the
families of the Company's executive officers.  Total rent expense to the
entities during the years ended December 31, 2003 and 2002 was $114,477
and $312,000, respectively.

     Due to Officer

     The Company has an amount due to officer for $15,643.  The note is non-
interest bearing and has no repayment terms.

INCOME TAXES (NOTE 9)

     Provision for income taxes consist of the following:

                                             December 31,
                                           2003       2002
                                         -------------------

     Currently Payable
      Federal                            $     -      $     -
      State                                  436          240
                                            ----         ----
      Total                              $   436      $   240
                                            ====         ====

     The components of the Company's deferred tax asset is as follows:


      Federal and State Net Operating Losses   $ 5,072,000
      Deferred Items                                34,000
                                                 ---------
      Totals                                     5,106,000

      Less:  Valuation Allowance                (5,106,000)
                                                 ---------
      Net Deferred Tax Asset                   $         -
                                                 =========

     The Company has net operating loss carryforwards for federal income tax
purposes of approximately $12,664,000 of which approximately $2,100,000 expires
in 2009, $300,000 in 2010, $700,000 in 2011, $300,000 in 2012, $1,000,000 in
2018, $1,200,000 in 2019, $1,580,000 in 2020 $354,000 in 2021 $1,224,000 in
2022 and $3,906,000 in 2023.  Certain of the net operating losses arose prior
to various subsidiaries joining the consolidated group and are therefore
limited in there usage only against profits of that particular subsidiary.
In addition, a change in ownership has occurred with respect to approximately
$4,000,000 of the net operating losses and their usage will be severely
restricted under the net operating loss limitations provided in section 383 of
the Internal Revenue Code.



                Rascals International, Inc. and Subsidiaries
                Notes to the Consolidated Financial Statements

INCOME TAXES (NOTE 9), Continued

     Due to the uncertainty of profitable operations, and the restrictions and
limitations on the usage of the Company's net operating losses, a valuation
allowance for the full amount of the deferred tax asset has been recorded.
At December 31, 2003, the valuation allowance increased $1,500,000 over the
preceding period.

     A reconciliation of the federal statutory tax amount to the Company's
actual tax amount for the year ended December 31, 2003 and 2002 is as follows:


                                                  December 31,
                                                2003        2002
                                              --------------------

     Statutory (Benefit)                     $ 1,500,000  $ 457,000
     Loss for Which No Benefit was Received   (1,470,000)  (433,000)
     Non Deductible Expenses                     (30,000)   (24,000)
     Effective Rate                          $         -  $       -


COMMITMENTS (NOTE 10)

     Leases

     The Company entered into a lease in October 2002 for office space in New
Jersey under an operating lease through December 31, 2005.  This lease was
terminated in 2003, and the Company is currently in negotiations with the
former landlord.

     Total non-related party rent expense was $32,867 and $3,941 for the
years ended December 31, 2003 and 2002, respectively.

     Financial Consulting Agreements

     In 1999, the Company entered into a five year agreement with a consultant
to act as a finder for equity and/or debt financing on the Company's behalf.
Terms of the agreement provide the consultant with the following fee schedule:

        5% of the first $1,000,000
        4% of the consideration between $1,000,001 and $2,000,000
        3% of the consideration between $2,000,001 and $3,000,000
        2% of the consideration between $3,000,001 and $4,000,000
        1% of such consideration in excess of $4,000,000

     In addition, the Company issued 100 warrants to purchase the Company's
common stock at $1,000 per share and 100 warrants to purchase the Company's
common stock at $750 per share for a total fair value of $77,954.  The warrants
are issued for a 5 year period and vest immediately.  The Company recorded
amortization of $19,491 and $15,590 in the statement of operations for the
years ended December 31, 2003 and 2002, respectively.



               Rascals International, Inc. and Subsidiaries
               Notes to the Consolidated Financial Statements


DEFERRED INCOME AND CREDITS (NOTE 11)

     The Company sells comedy tickets in advance for certain performances as
well as gift certificates.  The deferred income recorded by the Company for
prepaid tickets and gift certificates was $31,782 at December 31, 2003.

FAIR VALUE OF FINANCIAL INSTRUMENTS (NOTE 12)

     The carrying amount of cash,  inventory, prepaid expenses, accounts
payable and deferred income and credits approximates fair value because of
the short maturity of these instruments.  The fair value of the Company's
capital lease obligations approximates its carrying value and is based on the
current rates offered to the Company for debt of the same remaining maturities
with similar collateral requirements.

LIMITATIONS (NOTE 13)

     Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial statement.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgement and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.

OPTIONS AND WARRANTS (NOTE 14)

     Effective December 21, 2001, the Company adopted the 2001 Stock and
Stock Option Plan.  During 2002  the Company adopted the 2002 Stock and Stock
Option Plan and the 2002 Equity Incentive Plan. The terms of the Plans are
substantially identical.  Under the Plans the Board of Directors is authorized
to  grant up to 28,000 shares of common stock to employees, directors or
consultants.  The grants could be made in the form of outright grants of
stock, grants of restricted stock, grants of qualified or non-qualified
options or grants of performance shares.  Through December 31, 2002 a total
of 21,620 shares had been granted under the Plans, all in the form of stock
grants.  No options have been granted under the Plans.

     A summary of the status of the Company's warrants as of December 31,
2003 and changes during the year then ended is presented below:

                                                         Weighted
                                                         Average
                                                         Exercise
                                             Shares      Price
                                           ------------------------

Outstanding at beginning of year              2,200     $     193
Granted                                           -             -
Exercised                                         -             -
Expired                                           -             -
                                             ------        ------
Outstanding at end of year                    2,200     $     193
                                             ======        ======



               Rascals International, Inc. and Subsidiaries
              Notes to the Consolidated Financial Statements

RESTRICTED STOCK GRANT (NOTE 15)

      On August 5, 2003, Rascals' Board of Directors adopted a Restricted
Stock Grant Program (the "Program") pursuant to which 2,000,000
shares of Common Stock were reserved, in August 2003 the restricted
shares were issued.

      The shares issued under the Program are subject to the following
restrictions:

      1.   After 2003 and each of the following four fiscal years (2004
through 2007) one-fifth of the shares granted (the "At-Risk Shares") will
be forfeited if Rascals' revenue during the year does not exceed the
following thresholds:

                2003 - $ 1,000,000
                2004 - $ 1,500,000
                2005 - $ 2,000,000
                2006 - $ 2,500,000
                2007 - $ 3,000,000

      2.   All shares held by a Grantee shall be forfeited if his
employment by Rascals and his membership on the Board terminates prior to
the date the restrictions lapse.

     On March 18, 2002, Rascals' Board of Directors adopted a Restricted Stock
Grant Program (the "Program") pursuant to which 17,500 shares of Common Stock
were reserved. In April 2002 the restricted shares were issued.  In September
2002 17,000 of the restricted shares granted in April 2002 were surrendered
and returned to Rascals.

     The shares issued under the Program are subject to the following
restrictions:

     1.   After 2002 and each of the following four fiscal years (2003 through
2006) one-fifth of the shares granted (the "At-Risk Shares") will be forfeited
if Rascals' revenue during the year does not exceed the following thresholds:

        2002 - $ 3,500,000
        2003 - $ 4,500,000
        2004 - $ 5,500,000
        2005 - $ 6,500,000
        2006 - $ 7,500,000

     2.   All shares held by a Grantee shall be forfeited if his employment by
Rascals and his membership on the Board terminates prior to the date the
restrictions lapse.


NEW ACCOUNTING PRONOUNCEMENTS (NOTE 16)

     Standards Implemented

     In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections.

     This statement rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that statement, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.  This
statement amends SFAS No. 13, Accounting for Leases, to eliminate
inconsistencies between the required accounting for sales-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sales-leaseback transactions.  Also,
this statement amends other existing authoritative pronouncements to make
various technical corrections, clarify meanings, or describe their
applicability under changed conditions. Provisions of SFAS No. 145 related to
the rescissions of SFAS No. 4 were effective for the Company on November 1,
2002 and provisions affecting SFAS No. 13 were effective for transactions
occurring after May 15, 2002.  The adoption of SFAS No. 145 did not have a
significant impact on the Company's results of operations or financial
position.

     In June 2003, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities.  This statement covers
restructuring type activities beginning with plans initiated after December
31, 2002.  Activities covered by this standard that are entered into after
that date will be recorded in accordance with provisions of SFAS No. 146.
The adoption of SFAS No. 146 did not have a significant impact on the Company's
results of operations or financial position.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which provides alternative methods of
transition for a voluntary change to fair value based method of accounting for
stock-based employee compensation as prescribed in SFAS 123, Accounting for
Stock-Based Compensation.  Additionally, SFAS No. 148 required more prominent
and more frequent disclosures in financial statements about the effects of
stock-based compensation.  The provisions of this Statement are effective for
fiscal years ending after December 15, 2002.  The adoption of this statement
did not have a significant impact on the Company's results of operations of
financial position.


                 Rascals International, Inc. and Subsidiaries
                Notes to the Consolidated Financial Statements


NEW ACCOUNTING PRONOUNCEMENTS (NOTE 16), Continued

     In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities", which amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under
FASB Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities.  This Statement is effective for contracts entered into or
modified after June 30, 2003, except for certain hedging relationships
designated after June 30, 2003.  Most provisions of this Statement should be
applied prospectively.  The adoption of this statement did not have a
significant impact on the Company's results of operations or financial
position.

     In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity". This Statement establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity.  It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances).  This statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at
the beginning of the first interim period beginning after June 15, 2003,
except for mandatorily redeemable financial instruments of nonpublic entities,
if applicable.  It is to be implemented by reporting the cumulative effect of
a change in an accounting principle for financial instruments created before
the issuance date of the Statement and still existing at the beginning of the
interim period of adoption.  The adoption of this statement is did not have a
significant impact on the Company's results of operations or financial
position.

     In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others.  FIN 45 requires a company, at
the time it issues a guarantee, to recognize an initial liability for the
fair value of obligations assumed under the guarantees and elaborates on
existing disclosure requirements related to guarantees and warranties.  The
recognition requirements are effective for guarantees issued or modified
after December 31, 2002 for initial recognition and initial measurement
provisions.  The adoption of FIN 45 did not have a significant impact on the
Company's results of operations or financial position.

     In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do
not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties.  FIN 46
is effective for all new variable interest entities created or acquired after
January 31, 2003.  For variable interest entities created or acquired prior
to February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003.  The adoption of FIN
46 did not have a significant impact on the Company' results of operations
or financial position.

SUBSEQUENT EVENTS (NOTE 17)

     In January 2004, the Company entered into an informal arrangement with the
owners of a chain of dance clubs ("the owners"), whereby the Company is
contributing funds to a joint venture, which is using the funds to develop
"mega-entertainment complexes", each consisting of a Rascals Comedy Club
and a dance club.  Subsequent to December 31, 2003, the Company has
contributed $850,000 to the project.  The informal agreement with the
owners calls for our "mega-entertainment complexes" to be built.  The
Company will own one-third of the equity in these complexes if it
contributes at least $2.9 million to the project.

      Subsequent to December 31, 2003, the Company has sold a total of
7,955,121 shares to Cornell Capital Partners pursuant to the terms of the
Equity Line of Credit Agreement, and received $650,000 for those shares.
In addition, Cornell Capital Partners has made loans to the Company, the
remaining balance of which totals $825,000.  The loans will be satisfied
at a rate of  $50,000 per week by the Company issuing shares to Cornell
Capital Partners under the terms of the Equity Line of Credit Agreement.
The number of shares that will be issued in this way will depend on the
market price of the Company's common stock from time to time.

     From the funds provided by Cornell Capital Partners, Rascals has advanced
$825,000 to JHF Properties to fund the development of the four "mega-
entertainment complexes" that the Company is developing jointly with JHF
Properties.




                                SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                              Rascals International, Inc.

                              By: /s/ Eduardo Rodriguez
                              ------------------------------------------
                              Eduardo Rodriguez, Chief Executive Officer



     In accordance with the Exchange Act, this Report has been
signed below on April 14, 2004 by the following persons, on behalf
of the Registrant and in the capacities and on the dates indicated.


/s/ Eduardo Rodriguez         Chief Executive Officer, Chief Financial
---------------------          Officer, Chief Accounting Officer
    Eduardo Rodriguez


/s/ Michael Margolies          Director
---------------------
    Michael Margolies


---------------------          Director
    Gary Marks



                    *       *       *       *       *

                                  Exhibit 31

                         RULE 13a-14(a) Certification

I, Eduardo Rodriguez, certify that:

         1.  I have reviewed this annual report on Form 10-KSB of Rascals
International, Inc.;

         2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;

         3.   Based on my knowledge, the financial statements and other
financial information included in this report fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;

         4.  The small business issuer's other certifying officers and I
are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

         a)  Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those enti
ties, particularly during the period in which this report is being prepared;

         b)  Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our conclu
sions about the effectiveness of ths disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and

         c)  Disclosed in this report any changes in the small business
issuer's internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting.

         5.  The small business issuer's other certifying officers and I
have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):

         a)  All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and

         b)  Any fraud, whether or not material, that involves management
or other employees who have a significant role in the small business issuer's
internal control over financial reporting.


Date: April 14, 2004        /s/ Eduardo Rodriguez
                            -------------------------------------------
                            Eduardo Rodriguez, Chief Executive Officer
                            and Chief Financial Officer


                     *       *       *       *       *

                                  EXHIBIT 32

                         Rule 13a-14(b) Certification

The undersigned officer certifies that this report fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934, and that
the information contained in the report fairly presents, in all material
respects, the financial condition and results of operations of Rascals
International, Inc.

A signed original of this written statement required by Section 906 has been
provided to Rascals International, Inc. and will be retained by Rascals
International, Inc. and furnished to the Securities and Exchange Commission or
its staff upon request.

April 14, 2004                    /s/ Eduardo Rodriguez
                                  -----------------------------------
                                  Eduardo Rodriguez (Chief executive
                                  officer and chief financial officer)