###  

### **U.S. SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON,DC 20549**

 

**FORM 10-Q**

 
| **ý** | **Quarterly report under Section 13 or 15(d)  of the Securities Exchange Act of 1934.**                                                                                                                                                                                                                                                                                                                                                                                                                  |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|       | **For  the quarterly period ended January 26, 2003.**                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **o**      | **Transition report under Section 13 or 15(d)  of the Securities Exchange Act of 1934.**                                                                                                                                                                                                                                                                                                                                                                                                                 |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|       | **For  the transition period from                                         to                                       .** |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|       | **Commission  File Number 0-18369**                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

 

**BOSTON RESTAURANT ASSOCIATES, INC.**

(The exact name ofregistrant as specified in its charter)

 

| **Delaware**                                                      |   | **61-1162263**                              |
|-------------------------------------------------------------------|--------|---------------------------------------------|
| (state or other  jurisdiction of  incorporation or  organization) |   | (I.R.S.  Employer  Identification No.) |
|                                                              |   |                                        |
| **999  Broadway  Saugus, Massachusetts 01906**                    |
| (Address of  principal executive offices                          |
|                                                              |   |                                        |
| **(781)  231-7575**                                               |
| (Registrant’s  telephone number,  Including area code)       |

 

Indicate by check whetherthe registrant: (1) filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor 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  ý  -  No o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12B-2 of theExchange Act).  Yes o  -  No  ý

 

As of February 27, 2003,there were 7,035,170 shares of the issuer’s Common Stock, par value $.01 pershare, outstanding.

 

 

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BOSTON RESTAURANT ASSOCIATES, INC.

 

INDEX

 
| PART I - FINANCIAL  INFORMATION |
|---------------------------------|
|                            |   |
| Item 1.                         | Financial Statements |
|                            |   |
|                            | Condensed  Consolidated Balance Sheets as of January 26, 2003 (unaudited) and April 28,  2002 |
|                            |   |
|                            | Condensed  Consolidated Statements of Income for the thirteen weeks and thirty-nine  weeks ended January 26, 2003 and January 27, 2002 (unaudited) |
|                            |   |
|                            | Condensed  Consolidated Statements of Cash Flows for the thirty-nine weeks ended January  26, 2003 and January 27, 2002 (unaudited) |
|                            |   |
|                            | Notes  to Condensed Consolidated Financial Statements |
|                            |   |
| Item  2.                        | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|                            |   |
| Item 3.                         | Quantitative and  Qualitative Disclosure about Market Risk |
|                            |   |
| Item  4.                        | Controls  and Procedures |
|                            |   |
| PART II - OTHER INFORMATION     |
|                            |   |
| Item 1.                         | Legal  Proceedings |
|                            |   |
| Item  2.                        | Changes  in Securities and Use of Proceeds |
|                            |   |
| Item 3.                         | Defaults  Upon Senior Securities |
|                            |   |
| Item  4.                        | Submission  of Matters to a Vote of Security Holders |
|                            |   |
| Item 5.                         | Other  Information |
|                            |   |
| Item 6.                         | Exhibits  and Reports on Form 8-K |
|                            |   |
|                            | SIGNATURES |
|                            |   |
|                            | CERTIFICATIONS |

 

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PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOSTON RESTAURANT ASSOCIATES, INC. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 
|                                                                                 |   | **January 26,  2003** |      | **April 28,  2002** |   |
|--------------------------------------------------------------------------------------|--------|-----------------------|-----------|---------------------|--------|
|                                                                                 |   | **(unaudited)**       |      |                |   |
| ASSETS                                                                               |   |                  |      |                |   |
| Current:                                                                             |   |                  |      |                |   |
| Cash and cash equivalents                                                            |   | $                     | 1,206,063 |                | $      | 932,806 |   |
| Accounts receivable                                                                  |   | 109,188               |      | 123,840             |   |
| Inventories                                                                          |   | 562,781               |      | 546,688             |   |
| Prepaid expenses and other                                                           |   | 171,804               |      | 118,189             |   |
|                                                                                 |   |                  |      |                |   |
| Total current assets                                                                 |   | 2,049,836             |      | 1,721,523           |   |
|                                                                                 |   |                  |      |                |   |
| Property and equipment:                                                              |   |                  |      |                |   |
| Building                                                                             |   | 512,500               |      | 512,500             |   |
| Leasehold improvements                                                               |   | 6,622,541             |      | 6,517,055           |   |
| Equipment, furniture and fixtures                                                    |   | 4,440,302             |      | 4,329,675           |   |
|                                                                                 |   |                  |      |                |   |
|                                                                                 |   | 11,575,343            |      | 11,359,230          |   |
|                                                                                 |   |                  |      |                |   |
| Less accumulated depreciation and amortization                                       |   | 6,219,331             |      | 5,508,234           |   |
|                                                                                 |   |                  |      |                |   |
| Net property and equipment                                                           |   | 5,356,012             |      | 5,850,996           |   |
|                                                                                 |   |                  |      |                |   |
| Goodwill                                                                             |   | 453,643               |      | 453,643             |   |
|                                                                                 |   |                  |      |                |   |
| Other assets                                                                         |   | 574,061               |      | 614,572             |   |
|                                                                                 |   |                  |      |                |   |
| Total assets                                                                         |   | $                     | 8,433,552 |                | $      | 8,640,734 |   |
|                                                                                 |   |                  |      |                |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                            |   |                  |      |                |   |
| Current liabilities:                                                                 |   |                  |      |                |   |
| Accounts payable                                                                     |   | $                     | 453,156   |                | $      | 805,719 |   |
| Accrued expenses                                                                     |   | 1,397,339             |      | 1,440,237           |   |
| Current maturities:                                                                  |   |                  |      |                |   |
| Notes payable-stockholder                                                            |   | 5,766                 |      | 5,533               |   |
| Long-term debt                                                                       |   | 217,252               |      | 528,623             |   |
| Obligations under capital leases                                                     |   | 251,312               |      | 364,077             |   |
|                                                                                 |   |                  |      |                |   |
| Total current liabilities                                                            |   | 2,324,825             |      | 3,144,189           |   |
|                                                                                 |   |                  |      |                |   |
| Long-term obligations:                                                               |   |                  |      |                |   |
| Notes payable-stockholder, less current maturities                                   |   | 96,427                |      | 100,784             |   |
| Long-term debt, less current maturities                                              |   | 568,357               |      | 346,087             |   |
| Obligations under capital leases, less current  maturities                           |   | 297,720               |      | 449,154             |   |
| Subordinated debentures                                                              |   | 1,450,000             |      | 1,500,000           |   |
| Deferred rent                                                                        |   | 386,930               |      | 376,825             |   |
| Other long-term liabilities                                                          |   | 910,526               |      | 978,026             |   |
|                                                                                 |   |                  |      |                |   |
| Total liabilities                                                                    |   | 6,034,785             |      | 6,895,065           |   |
|                                                                                 |   |                  |      |                |   |
| Commitments and contingencies                                                        |   |                  |      |                |   |
|                                                                                 |   |                  |      |                |   |
| Stockholders’ equity :                                                          |   |                  |      |                |   |
| Preferred stock, $.01 par value, 10,000,000 shares  authorized;  none issued    |   | 0                     |      | 0                   |   |
| Common stock, $.01 par value, 25,000,000 shares  authorized, 7,060,170 shares issued |   | 70,602                |      | 70,602              |   |
| Additional paid in capital                                                           |   | 10,922,636            |      | 10,922,636          |   |
| Accumulated deficit                                                                  |   | (8,569,779            | )         | (9,222,877          | )      |
|                                                                                 |   |                  |      |                |   |
| Total                                                                                |   | 2,423,459             |      | 1,770,361           |   |
| Less:                                                                                |   |                  |      |                |   |
| Treasury stock, 25,000 shares at cost                                                |   | (24,692               | )         | (24,692             | )      |
| Total stockholders’ equity                                                      |   | 2,398,767             |      | 1,745,669           |   |
|                                                                                 |   |                  |      |                |   |
| Total liabilities and stockholders’ equity                                      |   | $                     | 8,433,552 |                | $      | 8,640,734 |   |

 

Seeaccompanying notes.

 

3

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BOSTONRESTAURANTS ASSOCIATES, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATEDSTATEMENTS OF INCOME

(unaudited)

 
|                                                           |   | **Thirteen  Weeks Ended** |      | **Thirty-nine  Weeks Ended** |   |
|----------------------------------------------------------------|--------|---------------------------|-----------|------------------------------|--------|
|                                                           |   | **January 26,  2003**     |      | **January 27,  2002**        |   | **January 26,  2003** |   | **January 27,  2002** |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Revenues:                                                      |   |                      |      |                         |   |   |   |   |   |
| Restaurant  sales                                              |   | $                         | 5,828,978 |                         | $      | 6,231,727 |   | $ | 17,205,521 |   | $ | 18,195,578 |   |
| Royalties                                                      |   | 3,416                     |      | 10,931                       |   | 10,576 |   | 23,032 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Total  revenues                                                |   | 5,832,394                 |      | 6,242,658                    |   | 17,216,097 |   | 18,218,610 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Costs and expenses:                                            |   |                      |      |                         |   |   |   |   |   |
| Cost of food, beverages and liquor                             |   | 1,096,759                 |      | 1,222,275                    |   | 3,297,104 |   | 3,815,110 |   |
| Payroll                                                        |   | 1,731,350                 |      | 1,850,874                    |   | 5,147,054 |   | 5,641,513 |   |
| Other  operating expenses                                      |   | 1,769,601                 |      | 1,793,515                    |   | 5,131,818 |   | 5,268,185 |   |
| General  and administrative                                    |   | 668,324                   |      | 556,831                      |   | 1,903,634 |   | 1,512,361 |   |
| Depreciation and amortization                                  |   | 260,040                   |      | 265,983                      |   | 779,389 |   | 793,138 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Total costs and expenses                                       |   | 5,526,074                 |      | 5,689,478                    |   | 16,258,999 |   | 17,030,307 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Operating  income                                              |   | 306,320                   |      | 553,180                      |   | 957,098 |   | 1,188,303 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Other  income                                                  |   | 1,660                     |      | 1,119                        |   | 7,967 |   | 5,642 |   |
| Interest income                                                |   | 788                       |      | 397                          |   | 2,183 |   | 2,655 |   |
| Interest expense                                               |   | (99,088                   | )         | (124,060                     | )      | (314,150 | ) | (386,988 | ) |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Net Income                                                     |   | $                         | 209,680   |                         | $      | 430,636 |   | $ | 653,098 |   | $ | 809,612 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Income  per share-basic                                        |   | $                         | 0.03      |                         | $      | 0.06 |   | $ | 0.09 |   | $ | 0.12 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Income  per share-diluted                                      |   | $                         | 0.03      |                         | $      | 0.06 |   | $ | 0.09 |   | $ | 0.12 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Weighted average number of common shares  outstanding-basic    |   | 7,035,170                 |      | 7,035,170                    |   | 7,035,170 |   | 7,035,170 |   |
|                                                           |   |                      |      |                         |   |   |   |   |   |
| Weighted average number of dilutive common shares  outstanding |   | 7,035,170                 |      | 7,035,170                    |   | 7,045,208 |   | 7,036,735 |   |

 

See accompanying notes

 

4

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BOSTON RESTAURANT ASSOCIATES, INC. ANDSUBSIDIARIES

 

CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS

 

(unaudited)

 
|                                               |   | **Thirty-nine  Weeks Ended** |      |
|----------------------------------------------------|--------|------------------------------|-----------|
|                                               |   | **January 26,  2003**        |      | **January 27,  2002** |   |
|                                               |   |                         |      |   |   |
| Cash  flows provided by operating activities       |   | $                            | 896,793   |   | $ | 1,126,635 |   |
|                                               |   |                         |      |   |   |
| Cash flows from   investing activities:       |   |                         |      |   |   |
| Capital  expenditures                              |   | (216,112                     | )         | (76,448 | ) |
|                                               |   |                         |      |   |   |
| Cash  flows used for investing activities          |   | (216,112                     | )         | (76,448 | ) |
|                                               |   |                         |      |   |   |
| Cash flows from   financing activities:       |   |                         |      |   |   |
| Repayments  of long-term debt                      |   | (1,011,406                   | )         | (402,755 | ) |
| Repayments  of capital lease obligations           |   | (264,199                     | )         | (265,187 | ) |
| Repayments  of stockholder loans                   |   | (4,124                       | )         | (3,477 | ) |
| Repayments  of subordinated convertible debentures |   | (50,000                      | )         | 0 |   |
| Proceeds  from long-term debt                      |   | 922,305                      |      | 0 |   |
|                                               |   |                         |      |   |   |
| Cash  flows used for financing activities          |   | (407,424                     | )         | (671,419 | ) |
|                                               |   |                         |      |   |   |
| Increase  in cash and cash equivalents             |   | 273,257                      |      | 378,768 |   |
|                                               |   |                         |      |   |   |
| Cash  and cash equivalents at beginning of period  |   | 932,806                      |      | 333,048 |   |
|                                               |   |                         |      |   |   |
| Cash  and cash equivalents at end of period        |   | $                            | 1,206,063 |   | $ | 711,816 |   |

 

Seeaccompanying notes.

 

5

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BOSTON RESTAURANTASSOCIATES, INC.  AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTSJANUARY 26, 2003(unaudited)

 

1.  NATURE OF BUSINESS AND BASIS OF PRESENTATION

 

The accompanyingunaudited condensed consolidated financial statements of Boston RestaurantAssociates, Inc. and its subsidiaries (the “Company”) have been prepared inaccordance with generally accepted accounting principles for interim financialinformation and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information andfootnotes required by generally accepted accounting principles for completefinancial statements.  In the opinion ofmanagement, all adjustments (consisting of normal recurring accruals)considered necessary for a fair presentation have been included.  Operating results for the thirteen-weekperiod, and thirty-nine week period, ended January 26, 2003 are not necessarilyindicative of the results that may be expected for the year ending April 27,2003.  The accompanying financial informationshould be read in conjunction with the consolidated financial statements andfootnotes thereto included in the Company’s annual report on Form 10-K for theyear ended April 28, 2002.  The balancesheet at April 28, 2002 has been derived from the audited financial statementsat that date.

 

The accompanyingstatements of income and cash flows for the fiscal 2003 and fiscal 2002 periodsreflect the consolidated operations and cash flow of four casual dining Italianrestaurants and twelve Pizzeria Regina restaurants for the entire period.

 

2. NET INCOME PER SHARE

 

The Company followsStatement of Financial Accounting Standards No. 128, “Earnings per Share”(“SFAS 128”).

 

The following is areconciliation of the denominator (number of shares) used in the computation ofearnings per share.  The numerator (netincome) is the same for the basic and diluted computations.

 

6

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|                            |   | **Thirteen  weeks ended** |   | **Thirty-nine  weeks ended** |   |
|---------------------------------|--------|---------------------------|--------|------------------------------|--------|
|                            |   | **January 26,  2003**     |   | **January  27,  2002**       |   | **January  26,  2003** |   | **January  27,  2002** |   |
|                            |   |                      |   |                         |   |   |   |   |   |
| Basic Shares                    |   | 7,035,170                 |   | 7,035,170                    |   | 7,035,170 |   | 7,035,170 |   |
|                            |   |                      |   |                         |   |   |   |   |   |
| Effect  of Dilutive Securities: |   |                      |   |                         |   |   |   |   |   |
|                            |   |                      |   |                         |   |   |   |   |   |
| Options                         |   | Ø                    |   | Ø                       |   | 10,038 |   | 1,565 |   |
|                            |   |                      |   |                         |   |   |   |   |   |
| Diluted Shares                  |   | 7,035,170                 |   | 7,035,170                    |   | 7,045,208 |   | 7,036,735 |   |

 

The following tablesummarizes securities that were outstanding as of January 26, 2003 and January27, 2002, but not included in the calculation of net income per share becausesuch securities are anti-dilutive:

 
|                    |   | **Thirteen  weeks ended** |   | **Thirty-nine  weeks ended** |   |
|-------------------------|--------|---------------------------|--------|------------------------------|--------|
|                    |   | **January 26,  2003**     |   | **January  27,  2002**       |   | **January  26,  2003** |   | **January  27,  2002** |   |
|                    |   |                      |   |                         |   |   |   |   |   |
| Options                 |   | 910,146                   |   | 809,646                      |   | 790,146 |   | 749,646 |   |
|                    |   |                      |   |                         |   |   |   |   |   |
| Warrants                |   | 500,000                   |   | 500,000                      |   | 500,000 |   | 500,000 |   |
|                    |   |                      |   |                         |   |   |   |   |   |
| Convertible  Debentures |   | 1,160,000                 |   | 1,200,000                    |   | 1,160,000 |   | 1,200,000 |   |

 

7

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3. NEW ACCOUNTINGPRONOUNCEMENTS

 

In April 2002, the FASBissued SFAS No. 145, “Rescission of FASB Statements SFAS Nos. 4, 44 and 64,Amendment of FASB Statement No. 13 and Technical Corrections”. SFAS No. 145rescinds Statement No. 4, “Reporting Gains and Losses from Extinguishments ofDebt”. and an amendment of that Statement, FASB Statement No. 64,“Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”.  SFAS No. 145 also rescinds FASB StatementNo. 44, “Accounting for Intangible Assets of Motor Carriers”. SFAS No. 145amends FASB Statement No. 13, “Accounting for Leases”. to eliminate an inconsistencybetween the required accounting for sale-leaseback transactions and therequired accounting for certain lease modifications that have economic effectsthat are similar to sale-leaseback transactions. SFAS No. 145 also amends otherexisting authoritative pronouncements to make various technical corrections,clarify meanings, or describe their applicability under changed conditions. Theprovision of SFAS No.145 related to the rescission of Statement No. 4 shall beapplied in fiscal years beginning after May 15, 2002. The provisions of SFASNo. 145 related to Statement No. 13 should be for transactions occurring afterMay 15, 2002. Early application of the provisions of this Statement isencouraged. The Company does not expect that the adoption of SFAS No. 145 willhave a significant impact on its consolidated results of operations, financialposition or cash flows.

 

In June 2002, the FASBissued SFAS No. 146 “Accounting for Costs Associated with Exit or DisposalActivities.” This statement superseded EITF No. 94-3, “Liability Recognition forCertain Employee Termination Benefits and Other Costs to Exit an Activity”.Under this statement, a liability or a cost associated with a disposal or exitactivity is recognized at fair value when the liability is incurred rather thanat the date of an entity’s commitment to an exit plan as required under EITF94-3. The provision of this statement is effective for exit or disposalactivities that are initiated after December 31, 2002, with early adoptionpermitted. The Company does not expect the adoption of SFAS No. 146 to impactits consolidated financial position and results of operations.

 

The Company’s previousbusiness combinations were accounted for using the purchase methods.  All future business combinations will beaccounted for under the purchase method, which may result in the recognition ofgoodwill and other intangible assets, some of which may subsequently be chargedto operations, either by amortization or impairment charges.  As of January 26, 2003, the net carryingamount of goodwill for purchase business combinations completed prior toJune 30, 2001 was approximately $454,000 and there were no otherintangible assets.

 

In October 2001, the FASBissued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-LivedAssets,” which addresses financial accounting and reporting for the impairmentor disposal of long-lived assets.  Thisstatement supersedes SFAS No. 121, “Accounting for the Impairment of Long-LivedAssets and for Long-Lived Assets To Be Disposed Of,” and APB Opinion No. 30,  “Reporting the Results of Operations -Reporting the Effects of Disposal of a Segment of a Business, andExtraordinary, Unusual and Infrequently Occurring Events and Transactions forthe Disposal of a Segment of a Business.” SFAS No. 144 becomes effective for the fiscal years beginning afterDecember 15, 2001. The Company has adopted SFAS No. 144 for itsfiscal year beginning April 29, 2002.

 

8

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ITEM 2.                                                     Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

 

Results of Operations

 

Overview

 

The Company’s net income for the third quarter offiscal 2003 was $210,000 as compared to $431,000 for the same quarter of fiscal2002.  The economic conditions andinclement weather in the Northeast led to a decline in revenues to $5,829,000in the third quarter of 2003 as compared to $6,232,000 in the same quarter of2002. During the third quarter the Company entered into a lease for a new fullservice restaurant location in Cambridge, Massachusetts, but it has not yetcommenced operation.

 

ThirteenWeeks Ended January 26, 2003 as Compared to Thirteen Weeks ended January 27,2002 Restaurant Sales.

 

Restaurant sales in themost recent quarter were $5,829,000, compared to restaurant sales in the prioryear’s period of $6,232,000. Sales for the restaurants open throughout bothfiscal 2003 and 2002 periods decreased by approximately 6.5%.  The company believes that the decrease inrestaurant sales in the fiscal 2003 period compared to the fiscal 2002 periodwas attributable to a continuing economic slowdown in the Northeast coupledwith inclement weather during the third quarter.

 

Net sales at theCompany’s Pizzeria Regina restaurants decreased by 4.7% to $3,118,000 in thecurrent period from $3,272,000 in the prior year’s period. Net sales at theCompany’s full service casual dining restaurants decreased by 8.5% to$2,702,000 in the current period from $2,953,000 in the prior year’speriod.  The Company believes thesedecreases were primarily attributable to a continuing economic slow down in theNortheast and the harsh winter weather, which had a greater effect on the fullservice restaurants than on the fast food operations.

 

Net sales at theCompany’s commissary were $9,000 in the current period compared to $7,000 inthe prior year’s period.

 

Royalties

 

During the current yearperiod, the Company recognized $3,000 in royalties from a domestic PizzeriaRegina franchise opened at the Palms Casino Resort in Las Vegas, Nevada,compared to $3,000 in royalties for franchise operations in the prior year’speriod.  The Company also recognized$8,000 in franchise fees from franchise operations in the prior year’s period.

 

9

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Costs and Expenses

 

Costof Food, Beverages and Liquor.

 

Cost of food, beveragesand liquor as a percentage of total revenues was 19% in the current period, ascompared to 20% in the prior year’s period. The decrease as a percentage of total revenues was primarily attributableto improved cost control systems and lower cheese costs.

 

The cost of food,beverage and liquor was $1,097,000 in the current period compared to $1,222,000in the prior year’s period.  The dollardecrease was due in part to the reduction in the amount of product sold for thethird quarter of fiscal 2003 and in part to improved cost control systems.

 

The cost of food,beverages and liquor as a percentage of restaurant sales at the Pizzeria Reginarestaurants was 15% for both fiscal 2003 and 2002 periods.

 

The cost of food,beverage and liquor at Pizzeria Regina restaurants was $469,000 in the currentperiod compared to $505,000 in the prior year’s period.

 

The cost of food,beverages and liquor as a percentage of restaurant sales at the Company’s fullservice casual dining restaurants was 23% in the current period and 24% in theprior year’s period.  This decrease as apercentage of restaurant sales was primarily due to improved cost controls atthe restaurants.

 

The cost of food,beverage and liquor at the Company’s full service casual dining restaurants,was $628,000 in the current period compared to $717,000 in the prior year’speriod.  The dollar decrease wasprimarily due to diminished sales and improved cost control systems.

 

Other Operating Expenses

 

PayrollExpenses.

 

Payroll expenses were 30%of total revenues for both fiscal 2003 and 2002 periods.

 

Payroll expenses were$1,731,000 in the current period compared to $1,851,000 in the prior year’speriod.  The dollar decrease in payrollexpenses was primarily due to a reduction in hours worked as a result ofdiminished sales, improved labor efficiency and the reclassification ofoperational supervisors to general and administrative overhead.  If the operation supervisors had not beenreallocated, the current payroll expenses would have been $1,804,000 in thecurrent period compared to $1,851,000 in the prior year’s period.

 

Payroll expenses at thePizzeria Regina restaurants were 24% of restaurant sales in both fiscalperiods.

 

Payroll expenses of thePizzeria Regina restaurants were $737,000 in the current period compared to$788,000 in the prior year’s period. This dollar decrease was primarily due to a reduction in man-hours as aresult of diminished sales.

 

10

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Payroll expenses at theCompany’s full service casual dining restaurants were 33% of restaurant salesfor both fiscal 2003 and fiscal 2002 periods.

 

Payroll expenses at theCompany’s full service casual dining restaurants were $902,000 in the current periodcompared to $964,000 in the prior year’s period.  This dollar decrease was primarily due to a reduction inman-hours due to diminished sales and to improved labor efficiency.

 

Payroll expenses at theCompany’s Commissary were $92,000 for the fiscal 2003 period as compared to$99,000 in the fiscal 2002 period.

 

OtherOperating Expenses, Exclusive of Payroll.

 

Other operating expenses,exclusive of payroll, were 30% of total revenues in the current period comparedto 29% in the prior year’s period.  Theincrease in operating expenses, exclusive of payroll, as a percentage ofrestaurant sales is a reflection of the reduced revenue base.

 

Other operating expenses,exclusive of payroll, were $1,770,000 in the current period compared to$1,794,000 in the prior year’s period. This decrease is primarily due to a reduction in costs as a result ofdiminished sales.

 

Other operating expenses,exclusive of payroll, from the Pizzeria Regina restaurants were 31% ofrestaurant sales in the current period, compared to 30% of restaurant sales inthe prior year’s period.  The increasein operating expenses, exclusive of payroll, as a percentage of restaurantsales is a reflection of the reduced revenue base.

 

Other operating expenses,exclusive of payroll, from the Pizzeria Regina restaurants decreased to$979,000 in the current period from $993,000 in the prior year’s period.  The dollar decrease was primarily the resultof diminished sales.

 

Other operating expenses,exclusive of payroll, from the Company’s full service casual dining restaurantsincreased to 28% of restaurant sales in the current period from 26% ofrestaurant sales in the prior year’s period. The increase in operating expenses, exclusive of payroll, as a percentageof restaurant sales is a reflection of the reduced revenue base.

 

Other operating expenses,exclusive of payroll, from the Company’s full service casual dining restaurantsdecreased to $762,000 in the current period from $775,000 in the prior year’speriod. The dollar decrease was primarily attributable to diminishedsales.  Other operating expenses includecommissary expenses, which were $29,000 in the current period, as compared to$21,000 in the prior year’s period. Other operating expenses also included franchise costs of $5,000 in theprior year’s period.

 

Generaland Administrative Expenses.

 

General andadministrative expenses were 11% of total revenues in the current period,compared to 9% of total revenues in the prior year’s period.

 

11

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General andadministrative expenses were $668,000 in the current period, compared to$557,000 in the prior year’s period. Both the percentage and dollar increase was attributable to thereallocation of operational supervisors to general and administrative andemployee incentives.  If the operationalsupervisors had not been reallocated, the general and administrative expenseswould have been $595,000 in the current period compared to $557,000 in theprior year’s period.

 

Depreciationand Amortization Expenses.

 

Depreciation andamortization expense was 4% of total revenues in both the fiscal 2003 andfiscal 2002 periods.

 

Depreciation andamortization expense was $260,000 in the current period, compared to $266,000in the prior year’s period.

 

InterestExpense and Interest Income.

 

Interest expense was$99,000 in the current period as compared to $124,000 in the prior year’speriod.  This decrease was primarily dueto a decrease in interest expense under the Company’s credit facility.

 

Interest income was $800in the current period, as compared to $400 in the prior year’s period.

 

Income Taxes.

 

There is no provision forFederal income taxes due to the availability of net operating loss carryforwards.

 

Thirty-nineweeks Ended January 26, 2003 as Compared to Thirty-nine weeks ended January 27,2002

 

RestaurantSales.

 

Restaurant sales in thecurrent period were $17,206,000, compared to restaurant sales in the prioryear’s period of $18,196,000. Sales for the restaurants open throughout bothfiscal 2003 and 2002 periods decreased by approximately 5.5%.  The Company believes the decrease inrestaurant sales in the fiscal 2003 period compared to the fiscal 2002 periodwas attributable to a continuing economic slowdown in the Northeast coupledwith inclement weather during the third quarter. Net sales at the Company’sPizzeria Regina restaurants decreased 2.5% to $8,889,000 in the current periodfrom $9,115,000 in the prior year’s period. Net sales at the Company’s full service casual dining restaurantsdecreased by 8.5% to $8,298,000 in the current period from $9,064,000 in theprior year’s period.  The decreases wereprimarily attributable to a continuing economic slowdown in the Northeast andinclement weather during the third quarter, which has a greater effect on fullservice restaurants than on fast food operation.

 

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Net sales at theCompany’s commissary were $19,000 in the current period, compared to $17,000 inthe prior year’s period.

 

Royalties

 

During the current yearperiod, the Company recognized $11,000 in royalties from a domestic PizzeriaRegina franchise opened at the Palms Casino Resort in Las Vegas, Nevada,compared to $15,000 in royalties in the prior year’s period.  The Company also recognized $8,000 infranchise fees from franchise operations in the prior year’s period.

 

Costs and Expenses

 

Costof Food, Beverages and Liquor.

 

Cost of food, beveragesand liquor as a percentage of total revenues was 19% in the current period, ascompared to 21% in the prior year’s period. The decrease as a percentage of total revenues was primarilyattributable to improved cost control systems and lower cheese costs.

 

The cost of food,beverage and liquor was $3,297,000 in the current period compared to $3,815,000in the prior year’s period.  The dollardecrease was due in part to the diminished sales and in part to improved costcontrol systems.

 

The cost of food,beverages and liquor as a percentage of restaurant sales at the Pizzeria Reginarestaurants was 15% and 16% in the fiscal 2003 and 2002 periods,respectively.  The decrease in the costof food, beverage and liquor as a percentage of restaurant sales wasprincipally due to lower cheese costs and improved cost control systems.

 

The cost of food, beverageand liquor at Pizzeria Regina restaurants was $1,350,000 in the current periodcompared to $1,477,000 in the prior year’s period.

 

The cost of food,beverages and liquor as a percentage of restaurant sales at the Company’s fullservice casual dining restaurants was 23% in the current period and 26% in theprior year’s period.  This decrease as apercentage of restaurant sales was primarily due to improved cost controls atthe restaurants.

 

The cost of food,beverage and liquor at the Company’s full service casual dining restaurants was$1,947,000 in the current period compared to $2,338,000 in the prior year’speriod.  The dollar decrease wasprimarily due to the diminished sales and improved cost control systems.

 

Other Operating Expenses

 

PayrollExpenses.

 

Payroll expenses were 30%of total revenues in the current period compared to 31% of total revenues inthe prior year’s period.  The decreasein payroll expenses as a percentage of total revenues was

 

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attributable to improvedlabor efficiency and to the reallocation of operational supervisors to generaland administration overhead.

 

Payroll expenses were$5,147,000 in the current period compared to $5,642,000 in the prior year’speriod.  The dollar decrease in payrollexpenses was primarily due to a reduction in man-hours worked as a result ofdiminished sales, improved labor efficiency and to the reclassification ofoperational supervisors to general and administrative overhead.  If the operation supervisors had not beenreallocated, the current payroll expenses would have been $5,342,000 in thecurrent period compared to $5,642,000 in the prior year’s period.

 

Payroll expenses at thePizzeria Regina restaurants were 25% of restaurant sales in both fiscal 2002and 2001 periods.

 

Payroll expenses of thePizzeria Regina restaurants were $2,185,000 in the current period compared to$2,293,000 in the prior year’s period. This dollar decrease was primarily due to a reduction in man-hoursworked as a result of diminished sales.

 

Payroll expenses at theCompany’s full service casual dining restaurants decreased to 32% of restaurantsales in the current period from 34% of restaurant sales in the prior year’speriod.  The decrease was primarilyattributable to improved labor efficiency.

 

Payroll expenses at theCompany’s full service casual dining restaurants were $2,683,000 in the currentperiod compared to $3,060,000 in the prior year’s period.  This dollar decrease was primarily due to areduction in man-hours worked a result of diminished sales and to improvedlabor efficiency.

 

Payroll expenses at theCompany’s Commissary were $279,000 for the fiscal 2003 period as compared to$289,000 in the fiscal 2002 period.

 

OtherOperating Expenses, Exclusive of Payroll.

 

Other operating expenses,exclusive of payroll were 30% of total revenues in the current period, comparedto 29% of total revenues in the prior year’s period.  The increase in operating expenses, exclusive of payroll, as apercentage of total revenues is a reflection of the reduced revenue base.

 

Other operating expenses,exclusive of payroll, were $5,132,000 in the current period compared to$5,268,000 in the prior year’s period. This dollar decrease was primarily due to a reduction in costs as a resultof diminished sales.

 

Other operating expenses,exclusive of payroll, from the Pizzeria Regina restaurants were 32% ofrestaurant sales in both the fiscal 2003 and fiscal 2002 periods.

 

Other operating expenses,exclusive of payroll, from the Pizzeria Regina restaurants decreased to$2,884,000 in the current period from $2,911,000 in the prior year’speriod.  This dollar decrease wasprimarily the result of diminished sales.

 

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Other operating expenses,exclusive of payroll, from the Company’s full service casual dining restaurantswere 26% of restaurant sales in the current period, compared to 25% in theprior year’s period.  The increase inoperating expenses, exclusive of payroll, as a percentage of restaurant salesis a reflection of the reduced revenue base.

 

Other operating expenses,exclusive of payroll, from the Company’s full service casual dining restaurantsdecreased to $2,167,000 in the current period from $2,282,000 in the prioryear’s period. The decrease was primarily attributable to diminishingsales.  Other operating expenses includecommissary expenses, which were $81,000 in the current period, as compared to$70,000 in the prior year’s period. Other operating expenses also included franchise costs of $5,000 in theprior year’s period.

 

Generaland Administrative Expenses.

 

General andadministrative expenses were 11% of total revenues in the current period,compared to 8% of total revenues in the prior year’s period.

 

General and administrativeexpenses were $1,904,000 in the current period, as compared to $1,512,000 inthe prior year’s period.  Both thepercentage and dollar increase was primarily attributable to the reallocationof operational supervisors to general and administrative and employeeincentives.  If the operationalsupervisors had not been reallocated, the general and administrative expenseswould have been $1,709,000 in the current period compared to $1,512,000 in theprior year’s period.

 

Depreciationand Amortization Expenses.

 

Depreciation andamortization expense was 5% of total revenues in the current period, comparedto 4% of total revenues in the prior year’s period.  The increase in depreciation and amortization expense as apercentage of total revenues was primarily the result of diminished sales.

 

Depreciation andamortization expense was $779,000 in the current period, compared to $793,000in the prior year’s period.

 

InterestExpense and Interest Income.

 

Interest expense was$314,000 in the current period as compared to $387,000 in the prior year’speriod.  This decrease was primarily dueto a decrease in the interest rate under the Company’s new credit facilityeffective on April 30, 2002.

 

Interest income was$2,000 in the current period, as compared to $3,000 in the prior year’s period.

 

Income Taxes.

 

There is no provision forFederal Income taxes due to the availability of net operating loss carryforwards.

 

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Liquidityand Capital Resources.

 

AtJanuary 26, 2003, the Company had negative net working capital of $275,000, and cash and cash equivalents ofapproximately $1,206,000, compared to negative net working capital of$1,423,000 on April 28, 2002. The $1,148,000 reduction in the working capitoldeficit from the fiscal year-end was principally attributable to new income of$645,000 for thirty-nine weeks ended February 26, 2003 plus non-cash charges of$779,000 for depreciation and amortization reduced by capitol expenditures of$216,000.

 

During the thirty-nineweeks ended January 26, 2003, the Company had a net increase in cash and cashequivalents of  $273,000, reflecting netcash provided by operating activities of $896,000, net cash used for investingactivities of $216,000 and net cash used for financing activities of $407,000.

 

Net cash provided byoperating activities included net income of $653,000, an increase in deferredrent of $10,000, a decrease in accounts receivable of $15,000, and depreciationand amortization expense of $779,000, partially offset by a reduction inaccrued expenses of $43,000, an increase in inventories of $16,000, an increasein prepaid expenses of $54,000, an increase in other assets of $28,000, areduction in other long-term liabilities of $68,000, and a reduction in accountspayable of $352,000.  Net cash used forinvesting activities reflects costs associated with the purchase of equipmentfor the restaurants.  Net cash used forfinancing activities of $407,000 consisted of net repayments of long-term debt,lease obligations and stockholder loans offset by proceeds from Commerce Bankand Trust as discussed below.

 

On April 30, 2002, theCompany entered into a new $3,500,000 revolving credit facility with CommerceBank and Trust to replace its prior facility. Borrowings under the new credit facility bear interest at the bank’sbase rate plus 2%.  The new creditfacility expires in April 2004.  Theterm notes under the Company’s prior credit facility were converted into asingle term note under the new credit facility.  The new term note bears interest at 6.75%, which rate is subjectto adjustment after each year at the bank’s base rate plus 2%, and is payableover four years.  At January 26, 2003,the Company has accessed approximately $786,000 of the credit facility.

 

AtJanuary 26, 2003, the Company had current liabilities of $2,325,000, including$453,000 of

accountspayable, $1,397,000 of accrued expenses and current maturities of long termobligations in the amount of $475,000. At January 26, 2003, the Company had long-term obligations, less currentmaturities, in the amount of $3,710,000, including $568,000 due under itscredit facility with Commerce Bank & Trust Company, $97,000 of notespayable to a stockholder, $298,000 due under the capital lease obligations, $1,450,000of convertible subordinated debentures, $387,000 of deferred rent, and $910,000of other long-term liabilities primarily related to the litigation settlementagreement with Italian Ventures, LLC.

 

TheCompany believes that its existing resources, including the current line ofcredit and cash flow from operations, will be sufficient to allow it to meetits existing obligations over the next twelve months, notwithstanding that itmay have a net working capital deficit.

 

TheCompany may pursue additional debt or equity financing if the Board ofDirectors determines this to be necessary or appropriate in view of changingconditions, either to finance existing

 

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operationsor to finance new store openings. However, there is no guarantee that the Company will be able to obtainadditional financing on reasonable terms, or that it will be able to obtainadditional financing at all.

 

New AccountingPronouncements

 

In April 2002, the FASBissued SFAS No. 145, “Rescission of FASB Statements SFAS Nos. 4, 44 and 64,Amendment of FASB Statement No. 13 and Technical Corrections”. SFAS No. 145rescinds Statement No. 4, “Reporting Gains and Losses from Extinguishments ofDebt”. and an amendment of that Statement, FASB Statement No. 64,“Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”.  SFAS No. 145 also rescinds FASB StatementNo. 44, “Accounting for Intangible Assets of Motor Carriers”. SFAS No. 145 amendsFASB Statement No. 13, “Accounting for Leases”. to eliminate an inconsistencybetween the required accounting for sale-leaseback transactions and therequired accounting for certain lease modifications that have economic effectsthat are similar to sale-leaseback transactions. SFAS No. 145 also amends otherexisting authoritative pronouncements to make various technical corrections,clarify meanings, or describe their applicability under changed conditions. Theprovision of SFAS No.145 related to the rescission of Statement No. 4 shall beapplied in fiscal years beginning after May 15, 2002. The provisions of SFASNo. 145 related to Statement No. 13 should be for transactions occurring afterMay 15, 2002. Early application of the provisions of this Statement isencouraged. The Company does not expect that the adoption of SFAS No. 145 willhave a significant impact on its consolidated results of operations, financialposition or cash flows.

 

In June 2002, the FASBissued SFAS No. 146 “Accounting for Costs Associated with Exit or DisposalActivities.” This statement superseded EITF No. 94-3, “Liability Recognitionfor Certain Employee Termination Benefits and Other Costs to Exit an Activity”.Under this statement, a liability or a cost associated with a disposal or exitactivity is recognized at fair value when the liability is incurred rather thanat the date of an entity’s commitment to an exit plan as required under EITF94-3. The provision of this statement is effective for exit or disposalactivities that are initiated after December 31, 2002, with early adoptionpermitted. The Company does not expect the adoption of SFAS No. 146 to impactits consolidated financial position and results of operations.

 

The Company’s previousbusiness combinations were accounted for using the purchase methods.  All future business combinations will beaccounted for under the purchase method, which may result in the recognition ofgoodwill and other intangible assets, some of which may subsequently be chargedto operations, either by amortization or impairment charges.  As of January 26, 2003, the net carryingamount of goodwill for purchase business combinations completed prior toJune 30, 2001 was approximately $454,000 and there were no otherintangible assets.

 

In October 2001, the FASBissued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-LivedAssets,” which addresses financial accounting and reporting for the impairmentor disposal of long-lived assets.  Thisstatement supersedes SFAS No. 121, “Accounting for the Impairment of Long-LivedAssets and for Long-Lived Assets To Be Disposed Of,” and APB OpinionNo. 30,  “Reporting the Results ofOperations - Reporting the Effects of Disposal of a Segment of a

 

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Business, andExtraordinary, Unusual and Infrequently Occurring Events and Transactions forthe Disposal of a Segment of a Business.” SFAS No. 144 becomes effective for the fiscal years beginning afterDecember 15, 2001. The Company has adopted SFAS No. 144.

 

“Safe Harbor” Statement Under the Private SecuritiesLitigation Reform Act of 1995

 

Forward-lookingstatements in this report, including without limitation statements relating tothe adequacy of the Company’s working capital and other resources,  its ability to obtain additional financing,and the timing of any future expansion, are made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.  Investors are cautioned that suchforward-looking statements involve risks and uncertainties, including withoutlimitation:  potential quarterlyfluctuations in the Company’s operating results; seasonality of sales;competition; risks associated with expansion; the Company’s reliance on keyemployees; risks generally associated with the restaurant industry; risksassociated with geographic concentration of the Company’s restaurants; risksassociated with serving alcoholic beverages; and other risks and uncertaintiesindicated from time to time in the Company’s filings with the Securities andExchange Commission.

 

Item 3.  Quantitative and QualitativeDisclosure about Market Risk

 

TheCompany believes that quantitative and qualitative market risk have notsignificantly changed since the last periodic report.

 

Interest Rate Exposure

 

Managementbelieves, based on the Company’s overall interest exposure at January 26, 2003,including all interest rate-sensitive instruments, and historical interest ratemovements, that a near-term change in interest rates would not materiallyaffect the consolidated results of operations or the financial position of theCompany.

 

Food Commodity Price Exposure

 

TheCompany has potential exposure to changes in food commodity prices,particularly block cheese prices, which could effect results of operation.  Management believes that projected near termchanges in food commodity prices will not have a material impact on theCompany’s consolidated financial condition and results of operations.

 

Item 4.  Controls and Procedures

 

Withinthe 90-day period prior to the date of this report, the Company’s management,including the Company’s Chief Executive Officer and Chief Financial Officer,performed an evaluation of the effectiveness of the Company’s disclosurecontrols and procedures (as defined in SEC Rule 13a-14), which have been designedto ensure that material information related to the Company is timelydisclosed.  Based upon that evaluation,they concluded that the disclosure controls and procedures were effective.

 

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Sincethe last evaluation of the Company’s internal controls and procedures forfinancial reporting, the Company has made no significant changes in thoseinternal controls and procedures or in other factors that could significantlyaffect the Company’s internal controls and procedures for financial reporting.

 

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PARTII

 

OTHER INFORMATION

 
| ITEM 1. | Legal Proceedings. |
|---------|--------------------|

 

The Company is involvedin various legal matters in the ordinary course of its business.  Each of these matters is subject to variousuncertainties and some of these matters may be resolved unfavorably to theCompany.  Management believes that anyliability that may ultimately result from these matters will not have a materialadverse effect on the Company’s financial position.

 
| ITEM 2. |   | Changes in Securities and Use of  Proceeds.                                                                          |
|---------|--------|----------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                 |
| None.   |   |                                                                                                                 |
|    |   |                                                                                                                 |
| ITEM 3. |   | Defaults Upon Senior Securities.                                                                                     |
|    |   |                                                                                                                 |
| None.   |   |                                                                                                                 |
|    |   |                                                                                                                 |
| ITEM 4. |   | Submission of Matters to a Vote of  Security Holders.                                                                |
|    |   |                                                                                                                 |
| None.   |   |                                                                                                                 |
|    |   |                                                                                                                 |
| ITEM 5. |   | Other Information.                                                                                                   |
|    |   |                                                                                                                 |
| None.   |   |                                                                                                                 |
|    |   |                                                                                                                 |
| ITEM 6. |   | Exhibits and Reports On Form 8-K.                                                                                    |
|    |   |                                                                                                                 |
| (a)     |   | Exhibits.                                                                                                            |
|    |   |                                                                                                                 |
|    |   | Exhibit 99.1:           Sarbanes-Oxley  Section 906 Certification  |
|    |   |                                                                                                                 |
|    |   | Exhibit  99.2:           Sarbanes-Oxley Section  906 Certification |
|    |   |                                                                                                                 |
| (b)     |   | Reports  On Form 8-K.                                                                                                |
|    |   |                                                                                                                 |
|    |   | None.                                                                                                                |

 

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SIGNATURES

 

In accordance with therequirements of the Securities Exchange Act of 1934, the registrant has causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                | BOSTON RESTAURANT  ASSOCIATES, INC.                            |
|---------------------|----------------------------------------------------------------|
|                |                                                           |
|                |                                                           |
| Date: March 4, 2003 | By:                                                            | /s/ George R.  Chapdelaine |   |
|                | George R. Chapdelaine,  President and  Chief Executive Officer |

 

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I, George R. Chapdelaine, certify that:

 

1.               I have reviewed this report on Form 10-Qof Boston Restaurant Associates, Inc.;

 

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

 

3.               Based on my knowledge, the financialstatements and other financial information included in this quarterly reportfairly present in all material respects the financial condition, results ofoperations,  and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

 

4.               The registrant’s other certifyingofficers and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for the registrant and we have:

 

(a)           designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

 

(b)          evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

 

(c)           presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifyingofficers and I have disclosed, based on our most recent evaluation, to theregistrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):

 

(a)           all significant deficiencies in thedesign or operation of internal controls which could adversely affect theregistrant’s ability to record, process, summarize, and report financial dataand have identified for the registrant’s auditors any material weaknesses ininternal controls; and

 

(b)          any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifyingofficers and I have indicated in this quarterly report whether or not therewere significant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 
| Date:  March 4, 2003 | /s/  George R. Chapdelaine                                     |   |
|---------------------------|----------------------------------------------------------------|--------|
|                      | George  R. Chapdelaine, President and  Chief Executive Officer |

 

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I, Fran Ross, certifythat:

 

1.                I have reviewed this report on Form 10-Qof Boston Restaurant Associates, Inc.;

 

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

 

3.               Based on my knowledge, the financialstatements and other financial information included in this quarterly reportfairly present in all material respects the financial condition, results ofoperations,  and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;

 

4.               The registrant’s other certifyingofficers and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for the registrant and we have:

 

(a)          designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

 

(b)         evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

 

(c)          presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifyingofficers and I have disclosed, based on our most recent evaluation, to theregistrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent functions):

 

(a)          all significant deficiencies in thedesign or operation of internal controls which could adversely affect theregistrant’s ability to record, process, summarize, and report financial dataand have identified for the registrant’s auditors any material weaknesses ininternal controls; and

 

(b)         any fraud, whether or not material, thatinvolves management or other employees who have a significant role in the registrant’sinternal controls; and

 

6.               The registrant’s other certifyingofficers and I have indicated in this quarterly report whether or not therewere significant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 
| Date:  March 4, 2003 | /s/  Fran Ross                      |   |
|---------------------------|-------------------------------------|--------|
|                      | Fran  Ross, Chief Financial Officer |

 

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