U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

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

                  For the quarterly period ended April 1, 2001

                                       OR

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

                         Commission File Number 0-27148

                        NEW WORLD RESTAURANT GROUP, INC.
              (formerly, New World Coffee - Manhattan Bagel, Inc.)

             (Exact name of registrant as specified in its charter)

           Delaware                               13-3690261
(State or Other Jurisdiction                    (I.R.S. Employer
of Incorporation or Organization)              Identification No.)

                  246 INDUSTRIAL WAY WEST, EATONTOWN, NJ 07724
               (Address of Principal Executive Offices) (Zip Code)

                                 (732) 544-0155
              (Registrant `s telephone number, including area code)


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

     Number of shares of common stock,  $.001 par value per share,  outstanding:
As of May 8, 2001: 16,443,447


<PAGE>

                     NEW WORLD COFFEE - MANHATAN BAGEL, INC.

              INDEX TO FINANCIAL STATEMENTS AND FINANCIAL SCHEDULES

                                  April 1, 2001

                                                                            Page
PART I.   FINANCIAL INFORMATION

     Item 1. Financial Statements

     Condensed Consolidated Balanced Sheets as of April 1, 2001 and
          December 31, 2000....................................................3

     Condensed Consolidated  Statements of Operations for the three months
          ended April 1, 2001 and March 26, 2000...............................4

     Condensed Consolidated  Statements of Cash Flows for the three months
          ended April 1, 2001 and March 26, 2000...............................5

     Notes to Consolidated Financial Statements................................6

     Item 2.  Management's  Discussion  and Analysis of Financial  Condition
          and Results of Operations for the Three Months ended April 1, 2001...9

PART II:   OTHER INFORMATION..................................................12

           SIGNATURES.........................................................12


                                       2

<PAGE>

                    NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                     April 1, 2001  December 31,
                                                      (Unaudited)      2000
                                                     -------------  ------------
                                                       (Revised)
ASSETS
Current Assets:
  Cash and cash equivalents........................  $ 4,227,062    $ 2,271,107
  Franchise and other receivables, net.............    3,465,456      3,067,765
  Current maturities of notes receivables..........      676,768        676,768
  Inventories......................................    1,608,166      1,436,124
  Prepaid expenses and other current assets........      653,417        621,030
    Deferred income taxes - current portion........      500,000        500,000
    Investment in debt securities..................   39,961,233     13,888,784
    Assets held for resale.........................    4,911,243      5,141,491
                                                     ------------   ------------
      Total current assets.........................   56,003,345     27,603,069

Property, plant and equipment, net.................    6,600,048      6,969,731
Notes and other receivables, net...................      971,640      1,221,861
Trademarks, net....................................   15,594,013     15,724,086
Goodwill, net......................................    2,300,561      2,325,959
Deferred income taxes..............................    8,933,740      9,100,178
Deposits and other assets..........................    3,131,813      2,753,470
                                                     ------------   ------------
      Total Assets.................................  $93,535,160    $65,698,354
                                                     ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable.................................  $ 1,717,058    $ 2,708,398
  Accrued expenses.................................    1,972,830      3,730,501
  Current portion of long-term debt................    4,885,155      4,422,522
  Current portion of obligations under
     capital leases................................      218,858        199,887
  Other current liabilities........................       23,275         14,190
                                                     ------------   ------------
     Total current liabilities.....................    8,817,176     11,075,498

Long-term debt.....................................   10,177,288     13,689,957
Obligations under capital leases...................      224,618        362,896
Other liabilities..................................    1,535,565      1,828,641
                                                     ------------   ------------
     Total Liabilities.............................   20,754,647     26,956,992

Series D Preferred Stock, $.001 par value;
     25,000 shares                                          --       12,008,314
Series F Preferred Stock, $.001 par value;
     65,000 shares authorized; 42,564 and
     0 shares issued and outstanding...............   29,294,267            --
Minority interest..................................    6,645,844            --

Stockholders' equity:
  Preferred stock, $.001 par value; 2,000,000
     shares authorized; 0 issued and outstanding
     Series A convertible preferred stock, $.001
     par value; 400 shares authorized; 0 shares
     issued and outstanding.......................
  Series B convertible preferred stock, $.001
     par value; 225 shares authorized, 0 shares
     outstanding..................................
  Series C convertible preferred stock, $.001
     par value; 500,000 shares authorized,
     0 shares outstanding.........................
  Common stock, $.001 par value; 50,000,000 shares        16,123         15,405
     Authorized; 16,122,691 and 15,404,828
     shares issued and outstanding................
  Additional paid-in capital......................    59,571,483     45,180,828
  Accumulated deficit.............................   (22,747,204)   (18,463,185)
                                                     ------------   ------------
     Total stockholders' equity...................    36,840,402     26,733,048
                                                     ------------   ------------
     Total liabilities and stockholders' equity...   $93,535,160    $65,698,354
                                                     =============  ============


                                       3

<PAGE>

                    NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE FIRST QUARTER ENDED APRIL 1, 2001 AND MARCH 26, 2000

                                   (UNAUDITED)

                                                 April 1, 2001    March 26, 2000
                                                 -------------    --------------
                                                  (Revised)
Revenues:

  Manufacturing revenues.......................  $  5,149,755      $  6,150,638
  Franchise related revenues...................     1,653,352         1,774,944
  Retail sales.................................     3,672,075         1,220,500
                                                 -------------     -------------
    Total revenues.............................    10,475,182         9,146,082

  Cost of sales................................     7,366,535         5,860,051
  General and administrative expenses..........     2,209,167         1,585,173
  Depreciation and amortization................       786,695           571,915
                                                  ------------     -------------
    Income from operations.....................       112,785         1,128,943

Interest expense, net..........................       444,053           478,178
Gain from sale of investments..................       240,601                --
                                                  ------------     -------------
Income (loss) before income taxes and
     minority interest.........................       (90,667)          650,765

Provision for income taxes.....................       166,438

Minority interest..............................       723,385
                                                  ------------     -------------
Net (loss) income..............................      (980,490)          650,765

Dividends and accretion on preferred stock.....     3,316,559                --
                                                  ------------     -------------
Net (loss) income available to common
     stockholders..............................   ($4,297,049)         $650,765
                                                  =============    =============
Net (loss) income per common share - Basic.....   ($      .27)             $.06
                                                  =============    =============
Net (loss) income per common share - Diluted...   ($      .27)             $.06
                                                  =============    =============
Weighted average number of common shares
     outstanding:

  Basic........................................     15,896,836       11,386,777
                                                  =============    =============
  Diluted......................................     15,896,836       11,684,286
                                                  =============    =============


                                       4

<PAGE>


                    NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE FIRST QUARTER ENDED APRIL 1, 2001 AND MARCH 26, 2000

                                   (UNAUDITED)

                                                 April 1, 2001    March 26, 2000
                                                 -------------    --------------
                                                  (Revised)

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income...................................  ($   980,490)     $    650,765
  Adjustments to reconcile net income to
     net cash used in operating activities:
     Depreciation and amortization.............       786,695           571,915
     Minority interest.........................       723,385                --
     Gain on sale of debt securities...........      (240,601)               --
     Stock issued as compensation..............       506,763                --
     Deferred income tax asset.................       166,438                --
  Increase/(decrease) in cash as a result
     of changes in operating assets and
     liabilities:
     Receivables...............................      (397,691)         (271,807)
     Inventories...............................      (172,042)         (198,435)
     Prepaid expenses..........................       (32,387)            3,580
     Deposits and other assets.................       246,039             2,785
     Receipts of notes receivable..............       260,036            84,745
     Additions to notes receivable.............        (9,815)
     Accounts payable..........................      (991,340)           44,415
     Accrued expenses..........................      (832,569)         (424,302)
     Other liabilities.........................      (159,629)         (110,302)
                                                 --------------    -------------
       Net cash provided by/(used in)
          operating activities.................    (1,127,208)          353,359
                                                 --------------    -------------
 SH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures.........................       (31,293)         (101,975)
  Addition to assets held for resale...........            --           (15,437)
  Deferred acquisition costs...................      (624,382)               --
  Investment in debt securities................   (28,911,364)               --
  Proceeds from the sale of debt
     securities................................     3,884,994                --
                                                 --------------    -------------
       Net cash provided by/(used in)
          investing activities.................   (25,682,045)         (117,412)
                                                 --------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of stock, net.........    23,755,148           161,999
  Minority owners' capital contributions
     to affiliated entity......................     9,165,989
  Payment of liabilities in connection
     with acquired assets......................      (986,586)         (787,833)
  Repayments of capital leases.................      (119,307)         (120,842)
  Repayment of notes payable...................    (3,050,036)          (18,235)
                                                 --------------    -------------
       Net cash provided by/(used in)
          financing activities.................    28,765,208          (764,911)
                                                 --------------    -------------
       Net increase /(decrease) in cash........     1,955,955          (528,964)

CASH, beginning of period......................     2,271,107         2,880,342
                                                 --------------    -------------
CASH, end of period............................  $  4,227,062      $  2,351,378
                                                 ==============    =============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
  Cash paid during the period for:
       Interest................................       683,789           857,921
                                                 ==============    =============

Non-cash Investing and Financing Activities:
  Non-cash Dividends and accretion on
     preferred stock...........................     3,316,559
                                                 ==============    =============
  Stock issued to extinguish liabilities.......        62,878
                                                 ==============    =============
 Stock issued in exchange for debt securities..       805,478
                                                 ==============    =============


                                       5

<PAGE>

                    NEW WORLD COFFEE - MANHATTAN BAGEL, INC.

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

1. Basis of Presentation.  The  accompanying  unaudited  consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principals for interim  financial  information and the instructions to Form 10-Q
and Article 10 of Regulation  S-X.  Accordingly,  they do not include all of the
information and notes required by generally accepted  accounting  principles for
complete  financial  statements.  In the opinion of  management,  the  unaudited
interim   consolidated   financial   statements  furnished  herein  include  all
adjustments  necessary  for a  fair  presentation  of  the  Company's  financial
position at April 1, 2001 and March 26,  2000 and the results of its  operations
and its cash flows for the three-month  periods then ended. All such adjustments
are of a normal recurring nature. Interim financial statements are prepared on a
basis  consistent with the Company's  annual  financial  statements.  Results of
operations for the  three-month  period ended April 1, 2001 are not  necessarily
indicative of the operating results that may be expected for future periods. The
consolidated  balance  sheet as of December  31, 2000 has been  derived from the
audited consolidated  financial statements at that date but does not include all
of  the  information  and  notes  required  by  generally  accepted   accounting
principles for complete financial statements. For further information,  refer to
the  consolidated  financial  statements  and  notes  thereto  included  in  the
Company's  Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
2000 on file with the Securities and Exchange Commission.

2. Revised Financial Statements (Original  Amendment).  As of April 1, 2001, the
Company  accounted  for the  accretion  of the warrant  issued based on the Bond
Purchase Agreement (the Bond Purchase Agreement) with Green Light Capital, L.P.,
Green Light Capital  Qualified,  L.P and Green Light Capital  Offshore Ltd. (see
Footnote 4) as a charge to retained earnings instead of operations. In addition,
accretion of issuance  costs, as well as other  provisions  provided by the Bond
Purchase  Agreement,  were not initially  reflected in the  Company's  financial
statements. The amended financial statements reflect these charges.

The result of these  changes has been that net income for the three months ended
April 1, 2001 has been decreased to ($473,727)  from $249,658;  Basic Income Per
Share has been  decreased to ($0.25) from ($0.22);  and Diluted Income Per Share
has been decreased to ($0.25) from ($0.22).

3. Revised Financial Statements (Second Amendment).  In previously filed Revised
Financial  Statements  (See  Note 2),  the  Company  failed to  account  for the
issuance  of 717,863  shares of its common  stock  that were  issued  during the
quarter  ended  April 1, 2001.  The  amended  financial  statements  reflect the
issuance of these shares.

The result of these  changes has been that net income for the three months ended
April 1, 2001 has been decreased to ($980,490)  from  ($473,727),  as previously
reported;  Basic Income Per Share has been decreased to ($0.27) from ($0.25), as
previously reported;  and Diluted Income Per Share has been decreased to ($0.27)
from ($0.25), as previously reported.

4. Income  (loss) Per Share.  Basic  income  (loss) per share is  calculated  by
dividing net income (loss)  attributable to common  shareholders by the weighted
average number of shares of common stock outstanding during the period.  Diluted
income (loss) per share is calculated by dividing net income (loss) attributable
to  common  shareholders  by  the  weighted  average  number  of  common  shares
outstanding,  adjusted for potentially dilutive securities.  The following table
summarizes  the  equivalent   number  of  common  shares  assuming  the  related
securities that were outstanding as of April 1, 2001 had been exercised, but not
included  in the  calculation  of  diluted  loss per  share as such  shares  are
antidilutive:

                    Warrants.................... 17,837,843
                    Options.....................  1,959,729
                    Total....................... 19,797,572


                                       6

<PAGE>

5. Investment in Debt Securities. Investments in debt securities are reported at
fair  value.  Unrealized  gains and  losses  from  those  securities,  which are
classified as  available-for-sale  are reported as unrealized  holding gains and
losses as a separate  component of stockholders'  equity.  At April 1, 2000, the
cost of debt  securities  approximate  their  fair value  and,  accordingly,  no
unrealized gain or loss has been recorded.

6. Recent  developments.  On January 22, 2001, the Company consummated a sale of
20,000 shares of its authorized but unissued Series F Preferred Stock to Halpern
Denny III, L.P. (Halpern Denny) in exchange for the sum of $20 million.  At such
time the Company  entered into a Series F Preferred  Stock and Warrant  Purchase
Agreement with Halpern  Denny.  The Series F Preferred  Stock accrues  dividends
payable in shares of Series F  Preferred  Stock at the rate of 16% per annum for
the first year, which rate increases semi-annually  thereafter at the rate of 2%
per  annum.  The Series F  Preferred  Stock,  including  accrued  dividends,  is
redeemable  at such  time as there is a  combination  between  the  Company  and
Einstein  or three  years  from the date of issue,  whichever  is  sooner.  If a
redemption takes place prior to the end of such three-year  period,  the Company
is  entitled  to redeem the  Series F  Preferred  Stock by issuing  subordinated
senior  notes (the  Notes) to the holder of the Series F  Preferred  Stock.  The
Notes would bear  interest at a rate  comparable  to the dividend rate under the
Series F Preferred  Stock and are due and  payable  three years from the date of
the initial  issuance of the Series F Preferred  Stock  (January 22,  2004).  In
connection  with the Series F Purchase  Agreement,  the Company  issued  Halpern
Denny a warrant to purchase 8,484,112 shares of the Company's common stock at an
exercise price of $0.01 per share. The fair value of the warrants at the date of
grant was  recorded  as a  reduction  in the  carrying  amount  of the  Series F
Preferred Stock and is being accreted over the three year period to the earliest
fixed redemption date. The Series F Purchase Agreement provides that for so long
as the  Series F  Preferred  Stock  has not been  redeemed  for cash  (including
payment of the Notes,  if any),  or until  there is a  combination  between  the
Company and Einstein and a redemption of the Series F Preferred Stock, including
delivery of the Notes (but not payment of the same), Halpern Denny shall receive
additional  warrants  equal to 1.5% of the  fully  diluted  common  stock of the
Company (excepting certain options and warrants) on January 22, 2002 and on each
succeeding  June 30 and December 31. This warrant has a term of five years.  The
warrant  further  provides that it would be exercisable  for  additional  shares
under  certain  events,  as  set  forth  in  the  warrant.  The  Certificate  of
Designation of the Series F Preferred Stock requires the vote or written consent
by the  holders of at least 67% of the then  outstanding  shares of the Series F
Preferred  Stock,  voting  together  as a single  class for  certain  events and
transactions.  Under the  Certificate  of  Designation,  the holders of Series F
Preferred Stock,  except as otherwise  required under the laws of Delaware or as
set forth in the  Certificate of  Designation,  are not entitled or permitted to
vote on any matter required or permitted to be voted upon by the stockholders of
the Company.

BET and Brookwood had invested the sum of $15 million for substantially the same
purpose  as  that  contemplated  by  the  Series  F  Purchase  Agreement,  which
investment  was made in August  2000,  and BET and  Brookwood  were then holding
Series D  Preferred  Stock,  which had a right to approve  the  creation  of the
Series F Preferred Stock.  Therefore,  the Company  considered it appropriate to
restructure the investment  documents  relating to the August 2000 investment by
BET and Brookwood.  Accordingly,  the Company, BET and Brookwood entered into an
Exchange  Agreement,  whereby they exchanged all of their  outstanding  Series D
Preferred  Stock,  including  accrued  but unpaid  dividends  (all of which were
retired)  for a total of  16,398.33  shares of  Series F  Preferred  Stock.  The
closing of the  exchange of Series F Preferred  Stock for the Series D Preferred
Stock took place on or about January 22, 2001.  BET and Brookwood also exchanged
the  warrants  received  by them in August  2000 for  warrants  to  purchase  an
aggregate  of  6,526,356  shares of common  stock of the  Company at an exercise
price of $0.01 per share. The form of these warrants is substantially  identical
to the form of the warrant  issued to Halpern  Denny  including  the  provisions
thereof  relating  to the  increase  of the  warrant  shares,  except  that  the
semi-annual  increases  are an aggregate of 1.154% of the fully  diluted  common
stock of the Company (excepting certain options and warrants). The fair value of
the  warrants at the date of grant was  recorded as a reduction  in the carrying
amount of the Series F Preferred Stock and is being accreted over the three year
period to the earliest fixed  redemption  date. The difference in the fair value
of securities  exchanged was charge to accumulated  deficit.  In connection with
the Series F Purchase Agreement and the Exchange Agreement,  the parties entered
into an Amended and Restated  Registration  Rights Agreement.  In addition,  the
parties entered into a Stockholders Agreement,  which relates principally to the
composition of the Board of Directors of the Company. The Stockholders Agreement
also contains  provisions giving Halpern Denny, BET and Brookwood certain rights
of first refusal to provide  financing and certain co-sale rights for the common
stock they may purchase upon exercise of their warrants. Also in connection with
the Series F Purchase Agreement and the Exchange Agreement,  the Company amended
its bylaws to provide (a) for a Board of Directors  composed of nine members and
(b) to provide that any filing by the Company under the United States Bankruptcy
Code shall require the approval of 75% of the full Board of Directors.


                                       7

<PAGE>

On or about  January  17,  2001,  the  Company  entered  into the Bond  Purchase
Agreement  (the  Bond  Purchase  Agreement)  with  Greenlight   Capital,   L.P.,
Greenlight  Capital Qualified,  L.P. and Greenlight Capital Offshore,  Ltd. (the
Greenlight  Entities).  Pursuant to the Bond Purchase Agreement,  the Greenlight
Entities formed a limited  liability  company  (Bondco) and funded the same with
$10 million for the purchase of Bonds.  The Company is the exclusive  manager of
Bondco. Accordingly, the Company has consolidated Bondco since its inception. At
such time as there is a  combination  of the Company with  Einstein,  Bondco may
sell its Bonds and the Company will share in the profits or exclusively bear the
losses in relation thereto,  based upon an agreed to accretion in the Greenlight
Entities' investment.  Alternatively,  Bondco may retain its Bonds or securities
issued in lieu  thereof or may sell the same to the  Company in  exchange  for a
newly created Class of Series E Preferred  Stock.  The Series E Preferred  Stock
provides for the payment of dividends at the rate of 15% per annum increasing by
2% each 6 months after the first year  following  the initial  investment by the
Greenlight  Entities.  These dividends are payable in Series E Preferred  Stock.
The Series E Preferred Stock, if issued,  shall be redeemed three years from the
date of the investment in Bondco by the Greenlight Entities.  In connection with
the Bond Purchase Agreement, the Company issued the Greenlight Entities warrants
to purchase an aggregate of 4,242,056  shares of the  Company's  common stock at
$0.01  per  share.  The fair  value  of the  warrants  at the date of grant  was
recorded as a reduction of minority  interest and is being accreted over the two
year period to the earliest fixed redemption  date. The Bond Purchase  Agreement
provides  that  for so long as  there  has not been a  combination  between  the
Company and Einstein, or there has been a combination but the Series E Preferred
Stock was not issued to the Greenlight Entities, or the Series E Preferred Stock
was issued but has not been  redeemed,  the  Greenlight  Entities  shall receive
additional warrants equal to 0.9375% of at the fully diluted common stock of the
Company  (excepting certain options and warrants) on January 17, 2002 and at the
beginning of each succeeding three month period. This warrant has a term of five
years. In addition,  warrants for an additional 1.5% of the fully diluted common
stock shall be issued at such time as the Series F Preferred  Stock is redeemed.
The Company and the  Greenlight  Entities  entered  into a  registration  rights
agreement relating to the shares purchasable under the warrants.

On March 29, 2001, the Company  consummated a sale of 5,000 additional shares of
its  authorized,  but  unissued,  Series F Preferred  Stock to Halpern  Denny in
exchange for the sum of $5,000,000. Pursuant to the terms of the Second Series F
Preferred Stock and Warrant Purchase  Agreement (the Second Purchase  Agreement)
with Halpern  Denny,  the Company also sold Halpern  Denny  warrants to purchase
2,121,028  shares  of the  Company's  common  stock at a price per share of $.01
(subject to  adjustment  as provided in the form of warrant).  The fair value of
the  warrants at the date of grant was  recorded as a reduction  in the carrying
amount of the Series F Preferred Stock and is being accreted over the three year
period to the  earliest  fixed  redemption  date.  The rights,  preferences  and
designations  of the  Series F  Preferred  Stock  are set  forth  in an  Amended
Certificate of  Designation,  Rights and Preferences of Series F preferred Stock
(the Amended  Certificate  of  Designation)  which are identical to the Series F
Preferred  Stock created in January  2001. In connection  with the execution and
delivery  of the Second  Purchase  Agreement,  BET  Associates,  L.P.  (BET) and
Brookwood  New World  Investors,  LLC  (Brookwood),  each waived any  preemptive
rights  they may have had to the  issuance  of  additional  shares  of Series of
Preferred Stock as provided for in the Second  Purchase  Agreement and consented
to the filing of the Amended  Certificate  of Designation to increase the number
of shares of Series F  Preferred  Stock the  Company is  authorized  to issue to
73,000.

The Company used the proceeds from the initial  financing by BET and  Brookwood,
and the financings  with Halpern Denny and the  Greenlight  entities to purchase
certain 7.25% subordinated  convertible  debentures due in June 2004 (the Bonds)
of Einstein/Noah Bagel Corporation (Einstein).

In April 2001 the  Company  entered  into an  agreement  with the Trustee of the
Boston  Chicken Plan Trust,  the majority  stockholder  of Einstein,  to support
confirmation  of the Plan of  Reorganization  (the Plan) filed by the Trustee in
the Chapter 11 cases of ENBC and Einstein/Noah Bagel Partners,  L.P. (ENBP), now
pending in the United States  Bankruptcy  Court for the District of Arizona (the
Court).  Under the Plan,  holders of ENBC's 7.25% Debentures due June 2004 shall
be given the option of  converting to equity in the  reorganized  ENBC or having
their  bonds  reinstated  through  payment of all  accrued  interest  and future
compliance  with the terms of the  Indenture.  In April 2001,  the Company  also
entered into an agreement  with one of the  Trustee's  proposed exit lenders for
the Plan,  to confirm  New World's  support for the Plan,  pursuant to which New
World would  agreed to convert its  Debentures  to equity in  reorganized  ENBC.
Under the  conversion  price and formula in the Plan,  New World  would  receive
approximately 3.9 million shares of reorganized  ENBC's new common stock,  which
the  Company  anticipates  would


                                       8

<PAGE>

result in the Company  becoming the largest  stockholder  in  reorganized  ENBC.
There is no assurance that the Plan will be confirmed.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q under Management's  Discussion and Analysis
of Financial  Condition  and Results of  Operations  constitute  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1996 with respect to the financial  condition  and business of the Company.  The
words estimate,  plan,  intend,  believe,  expect,  and similar  expressions are
intended to identify forward-looking statements. Such forward-looking statements
involve  and are subject to known and unknown  risks,  uncertainties,  and other
factors which could cause the actual results,  performance,  and achievements of
the Company to be  materially  different  from any future  results,  performance
(financial  or  operating),   or  achievements  expressed  or  implied  by  such
forward-looking  statements.  Such factors include, among others, the following:
competition;  success of  operating  and  franchising  initiatives;  development
schedules; advertising and promotional efforts; adverse publicity; acceptance of
new product  offerings;  availability  of new locations,  and terms of sites for
store   development;   changes  in  business  strategy  or  development   plans;
availability  and terms of capital;  food,  labor,  and employee  benefit costs;
changes  in  government  regulations;  regional  weather  conditions;  and other
factors  referenced  in this Form 10-Q or in the  Company's  Form 10-KSB for its
2000 fiscal year.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

New World Coffee - Manhattan  Bagel,  Inc. is one of the largest  franchisors of
bagel bakeries and coffee bars in the United States.  It operates and franchises
bagel bakeries and coffee bars in 26 states throughout the United States and the
District of Columbia.  The first  Company-owned New World Coffee store opened in
1993 and the first franchised New World Coffee store opened in 1997. On November
24,  1998,  the Company  acquired the stock of Manhattan  Bagel,  Company,  Inc.
(MBC). On August 31, 1999, the Company  acquired the assets of Chesapeake  Bagel
Bakery  (CBB).  At April 1, 2001,  the  Company's  retail  system  consisted  of
approximately  337 stores,  including 42  Company-owned  and 295  franchised and
licensed stores.

The  Company  is  vertically  integrated  and has bagel  dough and cream  cheese
manufacturing plants in Eatontown, NJ and Los Angeles, CA, and a coffee roasting
plant in Branford,  CT. The Company's products are sold to franchised,  licensed
and   Company-owned   stores   as  well  as  to   wholesale,   supermarket   and
non-traditional outlets.

The Company is a Delaware corporation and was organized in November 1992.

Commencing  in  August  2000,  the  Company  acquired   certain   debentures  of
Einstein/Noah  Bagel Corp.  (ENBC), a company engaged in the retail bagel bakery
business.  ENBC has been operating under Chapter 11 of the Bankruptcy Code since
April 2000.  The  Company and its  affiliate  New World -  Greenlight,  LLC have
acquired  in excess of  $61,000,000  of face  value of  debentures,  making  the
Company ENBC's largest  creditor.  As ENBC's largest  creditor,  the Company has
been an active participant in ENBC's ongoing Bankruptcy proceedings.

On April 2, 2001,  the Trustee (the  Trustee) of the Boston  Chicken  Bankruptcy
Plan Trust,  as holder of a majority of the  outstanding  common  stock of ENBC,
filed a plan of  reorganization  (the Trustee  Plan) with the  Bankruptcy  Court
providing for  reinstatement of all the obligations of ENBC and providing for an
allocation  of new common stock of ENBC to the holders of its old common  stock,
including  the Trustee.  The Company  agreed to support the  Trustee's  Plan and
committed,  to the Trustee,  and to the lead  institution  that had committed to
provide exit financing to ENBC pursuant to the Trustee's  Plan, that the Company
would  convert  the  debentures  owned  by it and  its  affiliate  New  World  -
Greenlight LLC into new common stock of reorganized  ENBC in accordance with the
Trustee's Plan.

In  addition,  on May  14,  2001 a  deadline  set by the  Bankruptcy  Court  for
competing  bids in order to preserve a right to bid on the assets of ENBC in the
event that the Trustee's Plan is not confirmed,  Einstein  Acquisition  Corp., a


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<PAGE>

Delaware corporation which is an affiliate of the Company made a bid to purchase
the  assets  of  ENBC.  Such  bid  consisted  of  $151,000,000  in cash  and the
assumption of Einstein trade indebtedness up to a total of $30,000,000.

The Company and Einstein  Acquisition  Corp.  have  received a highly  confident
letter from a  nationally  recognized  investment  banking  firm with respect to
financing  necessary to consummate a  transaction  with ENBC.  Bankruptcy  Court
proceedings  are ongoing both with respect to the issue of  confirmation  of the
Trustee's Plan and the bid for the assets of ENBC.  There can be no assurance as
to the outcome of such Bankruptcy Court proceedings.

Fiscal  Quarter Ended April 1, 2001  Compared to Fiscal  Quarter Ended March 26,
2000

Revenues.  Total revenues  increased 14.5% to $10,475,182 for the fiscal quarter
ended April 1, 2001 from $9,146,082 for the comparable 2000 period. The increase
in revenues was  attributable  to  additional  retail  sales from Company  owned
stores  acquired  during  2000.   Manufacturing   revenues  decreased  16.3%  to
$5,149,755 or 49.2% of total revenues for the fiscal quarter ended April 1, 2001
from $6,150,638 or 67.2% of total revenues for the comparable  2000 period.  The
decrease in  manufacturing  revenues was  primarliy  the result of the Company's
decision to  outsource  its  low-margin  distribution  business  (which had been
included in manufacturing revenues in the 2000 period.) In addition, the Company
experienced  extreme  weather in its core markets during the 2001 quarter,  also
having a negative impact on manufacturing  revenues.  Franchise related revenues
decreased  6.9% to $1,653,352 or 15.8% of total  revenues for the fiscal quarter
ended  April  1,  2001  from  $1,774,944  or 19.4%  of  total  revenues  for the
comparable 2000 period. The decrease in franchise related revenues was partially
attributable to extreme weather conditions experienced during the fiscal quarter
ended April 1, 2001 in the  Company's  core  markets.  In addition,  the decline
reflects a lower store base in the fiscal  quarter ended April 1, 2001, in part,
resulting from  Management's  decision to terminate  certain  franchisees  who's
operations did not comply with the Company's  policies.  Retail sales  increased
200.9% to  $3,672,075  or 35.0% of total  revenues for the fiscal  quarter ended
April 1, 2001 from $1,220,500 or 13.3% of total revenues for the comparable 2000
period.  The increase was attributable to additional  company-owned  stores that
were acquired during 2000.

Costs and Expenses.

Cost of  Sales  as a  percentage  of  related  manufacturing  and  retail  sales
increased to 83.5% for the fiscal quarter ended April 1, 2001 from 79.5% for the
comparable 2000 period.  The increase  primarily  resulted from a shift in sales
mix towards  retail  store  revenues  which  generally  have lower  margins than
manufacturing revenues.

General and  administrative  expenses  increased  to  $2,209,167  for the fiscal
quarter ended April 1, 2001 from $1,585,173 for the comparable 2000 period.  The
increase was primarily  attributable to operational staff additions  required in
order to service the Company's additional company-owned stores. In addition, the
fiscal  quarter ended April 1, 2001 reflects a  compensation  charge of $506,763
representing  stock issued on behalf of an officer of the  Company.  General and
administrative expenses expressed as a percentage of total revenues increased to
21.1% of total revenues for the fiscal quarter ended April 1, 2001 from 17.3% of
total revenues for the comparable 2000 period. The increase primarily relates to
the above-noted compensation charge.

Depreciation and amortization expenses increased by 37.6% to $786,695 or 7.5% of
total  revenues for the fiscal quarter ended April 1, 2001 from $571,915 or 6.3%
of total  revenues for the  comparable  2000 period.  The increase was primarily
attributable to depreciation on company-owned stores acquired during 2000.

Interest  expense,  net for the fiscal  quarter ended April 1, 2001 decreased to
$444,053,  or 4.2% of total revenues from $478,178 or 5.2% of total revenues for
the  comparable  2000 period.  This  decrease is  primarily  the result of lower
average debt balances during the quarter ended April 1, 2000 as well as interest
earned invested cash balances.

Gain from sale of debt securities was $240,601 or 2.3% of total revenues for the
fiscal  quarter  ended April 1, 2001.  There was no such gain in the  comparable
2000 period.

Provision for income taxes  increased to $166,438 or 1.6% of total  revenues for
the fiscal quarter ended April 1, 2001 from $0 for the  comparable  2000 period.
The increase was attributable to certain deferred tax benefits recognized in the
2000 period relating to the recognition of deferred tax assets.


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<PAGE>

Minority  interest was $723,385 or 6.9% or total revenues for the fiscal quarter
ended  April 1, 2001.  This charge is  attributable  to  accretion  of the value
assigned  to warrants  and the  guaranteed  investment  return to  investors  in
Greenlight New World, L.L.C.

Net Loss.

Net Loss for the fiscal quarter ended April 1, 2001 was  ($980,490)  compared to
net income of $650,765  for the  comparable  2000  period.  The  decrease in net
income is primarily a result of the decrease in margins  resulting from a change
in sales mix to lower margin retail sales, the compensation  charge related to a
restricted  stock award on behalf of an officer of the Company,  the increase in
income tax expense recognized for the 2001 period and the allocation of earnings
to the minority interest.

Liquidity and Capital Resources

The Company  plans to satisfy any of its capital  requirements  in 2001  through
cash flow from  operations and the sale of  Company-owned  stores to franchisees
which should  generate  additional  cash. The Company  continually  assesses its
ongoing capital needs and may consider the issuance of additional equity or debt
securities in order to raise capital  should  business  conditions  dictate that
such is necessary.

In January and March 2001, the Company issued 25,000 shares of newly  authorized
Series  F  Preferred  Stock  as well as  equity  in a  newly  formed  affiliate,
Greenlight New World,  L.L.C. The proceeds,  net of related  offering  expenses,
were $ 32,921,137. The proceeds from these stock sales were utilized to purchase
ENBC debt securities and pay certain related costs.

At April 1,  2001 the  Company  had a working  capital  surplus  of  $47,186,169
compared to a working  capital  surplus of  $2,547,029  at March 26, 2000.  This
increase  is  primarily  a  result  of the  Company's  investment  in ENBC  debt
securities in exchange for the issuance of certain preferred stock.

The Company had net cash used in  operating  activities  of  $1,127,208  for the
first quarter of 2001 compared with net cash provided by operating activities of
$353,359  for the first  quarter  of 2000.  The  decrease  in cash  provided  by
operating  activities  was  attributable  to  the  decrease  in net  income  and
liquidation of certain current liabilities in the 2001 period.

The Company had net cash used in investing  activities  of  $25,682,045  for the
first  quarter of 2001  compared  with net cash used in investing  activities of
$117,412 for the first  quarter of 2000.  The increase in cash used in investing
activities was attributable to the Company's investment in debt securities.

The Company had net cash provided by financing activities of $28,765,208 for the
first  quarter of 2001  compared  with net cash used in financing  activities of
$764,911  for the first  quarter  of 2000.  The  increase  in cash  provided  by
financing  activities  relates to the issuance of  preferred  stock and proceeds
from sale of an interest in an affiliated entity during 2001.

Seasonality and General Economic Trends

The Company  anticipates  that its business will be affected by general economic
trends that affect  retailers  in  general.  While the Company has not  operated
during a period of high inflation, it believes based on industry experience that
it would  generally be able to pass on increased  costs resulting from inflation
to its  customers.  The  Company's  business  may be affected by other  factors,
including  increases  in the  commodity  prices of green  coffee  and/or  flour,
acquisitions  by  the  Company  of  existing  stores,  existing  and  additional
competition,  marketing programs, weather, and variations in the number of store
openings.  The Company has few, if any,  employees at the minimum wage level and
therefore  believes  that an  increase in the  minimum  wage would have  minimal
impact on its operations and financial condition.


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<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 2. Changes in Securities

Not applicable

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

None

(b) Reports on Form 8-K

On February 1, 2001,  the Company  filed a Form 8-K  relating to the issuance of
Series F Preferred Stock and related matters.


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<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                            New World Restaurant Group, Inc.
                            (formerly, New World Coffee - Manhattan Bagel, Inc.)


Date:  May 31, 2002        By: /s/ Anthony Wedo
                                ------------------------------
                                Anthony Wedo
                                Chief Executive Officer
                                (Principal Executive Officer and
                                Principal Accounting Officer)


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