<PAGE>   1



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                          Commission file Number 0-1590
December 31, 1998

                            THE WESTWOOD GROUP, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                    <C>                                               <C>
            DELAWARE                              190 V.F.W. PARKWAY                            04-1983910
 (state or other jurisdiction)                     REVERE, MA 02151                      (IRS Employer Identifi-
of incorporation or organization       (address of principal executive offices                fication No.)
                                                  including zip code)
</TABLE>

                                  781-284-2600
              (Registrant's telephone number, including area code)

                                 ---------------

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

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

                           Common Stock-$.01 par value

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

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

The aggregate market value of the voting stock held by nonaffiliates of the
registrant, computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within 60
days prior to the date of filing, was:

                               TOTAL NO. OF SHARES
        PRICING OF             COMMON STOCK HELD BY              AGGREGATE
       VOTING STOCK               NONAFFILIATES                 MARKET VALUE
       ------------            --------------------             ------------
        $ 3.00(1)                   313,875(2)                   $ 941,625

(1) The registrant's Common Stock was removed from quotation through the NASDAQ
    system on July 29, 1988. There is no established trading market for either
    the Company's Common Stock or Class B Common Stock.

(2) Excludes shares held by Executive Officers and Directors of the registrant,
    without admitting that any such Executive Officer or Director is an
    affiliate of the registrant.

The number of shares outstanding of each of the registrant's classes of common
stock, as of April 15, 1999, was as follows:

         Common Stock, $.01 par value:  351,210
         Class B Common stock, $.01 par value: 912,015

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


                                       1
<PAGE>   2



PART I

ITEM I.         BUSINESS

          (A)  GENERAL

                  The Westwood Group, Inc. (the "Company" or "Westwood", which
          term as used herein includes its wholly-owned subsidiaries) was
          incorporated in Delaware in 1984 as the successor to racing and
          restaurant operations which commenced in 1935 and 1968, respectively.
          The Company operates Wonderland Greyhound Park, Inc. ("Wonderland"), a
          pari-mutuel greyhound racing facility located in Revere,
          Massachusetts. The Company also operated a pari-mutuel harness racing
          facility located in Foxboro, Massachusetts through July, 1997 (see
          Item 3).

          (B)  BUSINESS SEGMENTS

                  In 1998, the Company's business was principally conducted in
          the pari-mutuel greyhound racing industry, while in 1997 the Company
          was in the pari-mutuel greyhound racing industry for the entire year
          and harness racing industry through July. The Company was in both
          industries during 1996.

          (C)  DESCRIPTION OF BUSINESS

                  The Company's wholly-owned subsidiary, Wonderland, owns and
          operates a greyhound racetrack, located in the City of Revere,
          Massachusetts. Revere adjoins the City of Boston. Wonderland Park is
          approximately five miles north of downtown Boston and is served
          directly by major transportation routes and the Massachusetts Bay
          Transportation Authority rail line. The racetrack is approximately two
          miles from Boston's Logan International Airport.

                  The racetrack facilities include a one-quarter mile oval sand
          track, a physical plant consisting of a climate controlled grandstand
          and clubhouse and a two-story administrative center. The Company
          maintains and operates two full service restaurants, a sports bar and
          other concession facilities at the racetrack to serve Wonderland's
          patrons. The racetrack facility can accommodate 10,000 patrons. The
          average attendance per day in 1998 was approximately 1,021 persons.
          The total attendance for the year was approximately 407,000 persons.
          The complex encompasses a total of approximately 35 acres, including
          paved and lighted parking providing capacity for approximately 2,300
          cars.

                  Wonderland was originally opened in 1935 and has operated
          continuously from the same location since that time. Wonderland
          operates a year-round racing schedule of up to 520 live matinee and
          evening performances. In addition to conducting live racing during
          1998, Wonderland provided its patrons with simulcast wagering from
          over 26 various greyhound and thoroughbred tracks throughout the
          country and was one of the first sites, and the only greyhound race
          track in North America, to introduce international simulcasting from
          the Hong Kong Jockey Club. In addition, Wonderland has broadcast its
          simulcast signal to over 60 locations throughout the country. The
          Company is continuing to research new markets to broadcast its signal
          and new ways to provide quality racing entertainment to its on-track
          patron.

                  The Company's annual revenues are mainly derived from the
          commissions that it receives from wagers made by the public during its
          racing performances and from admission and concession charges at such
          performances. Wagers at Wonderland are placed under the pari-mutuel
          wagering system, pursuant to which the winning bettors in each race
          divide the total amount bet on the race (the "pool") in proportion to
          the sums they wagered individually, after deducting certain
          percentages governed by state law including amounts which are reserved
          for the Commonwealth of Massachusetts, the owners of the winning
          greyhounds, and the racetrack.

                  The pari-mutuel commission is regulated by the local and state
          regulatory commission in the jurisdiction of the individual race
          track. In addition, the net pari-mutuel commission varies based upon
          the type of wager. Also, the Company generates commission revenue from
          other tracks for all amounts wagered on its product at their facility.
          These commissions vary based upon contractual arrangements.

                                       2
<PAGE>   3




                  During 1995, the Commonwealth of Massachusetts enacted new
          legislation allowing Wonderland to increase the amount withheld from
          the bettors up to a maximum of 26% of each $1.00 wagered on certain
          live wagers beginning in 1996. As such, the average net pari-mutuel
          commission at Wonderland was approximately 21.8%, 22.8% and 22.5% of
          each $1.00 wagered on track during 1998, 1997 and 1996, respectively.
          Out of this amount approximately 6% is distributed to kennel operators
          as purses paid, 5% is paid to the Commonwealth of Massachusetts in the
          form of pari-mutuel tax and .5% is deposited into both the Capital
          Improvements Trust Fund and Promotional Trust Fund.

                  The Commonwealth of Massachusetts State Racing Commission, as
          individuals, are the trustees and Wonderland is the beneficiary of the
          Greyhound Capital Improvements and Promotional Trust Funds which have
          been established in accordance with Massachusetts law and are
          dedicated to reimbursement of capital improvements and promotional
          expenses.

                  During July 1997, the Company's harness racing subsidiary,
          Foxboro Park, Inc. (including wholly owned subsidiaries), was evicted
          from the Foxboro Raceway (see Litigation at Note 5 of Notes to
          Consolidated Financial Statements). As such, its operating results are
          reflected as discontinued operations.

                  In February 1998 the Company executed an Assignment for the
          Benefit of Creditors ("AFBC") for Foxboro Park, Inc., Foxboro Harness,
          Inc. and Foxboro Thoroughbred, Inc. (collectively, the "Foxboro
          Entities"). The AFBC was executed to provide a mechanism for the
          liquidation of its assets and the distribution of proceeds to its
          creditors. Provided that 70% in amount and 50% in number of the
          Foxboro Entities creditors become Assenting Creditors, the Company
          will subordinate its claims except for those claims relating to
          certain contingent litigation matters. Creditors must file a written
          assent with the Assignee in order to become an Assenting Creditor.
          Assenting Creditors agree that the submission of an assent to this
          AFBC will operate as a release of any claims which could be asserted
          by an Assenting Creditor seeking to avoid the corporate separateness
          of the Company or any affiliate of the Company and the Foxboro
          Entities.

                  Additionally Assenting Creditors agree not to institute or
          continue a suit against the Foxboro Entities or any other proceeding
          at law or in equity or otherwise on account of any debt due and owing
          to the Assenting Creditor from the Foxboro Entities, nor will the
          Assenting Creditor transfer its claim without the written approval of
          the Assignee. Each Assenting Creditor accepts in lieu of its claim
          against the Foxboro Entities the rights acquired in the AFBC.

          (D)  COMPETITION AND MARKETING

                  The Company is trying to adapt and survive in a dramatically
          changing environment, one in which the Company and the racing industry
          nationally have experienced significant declines in on-site attendance
          and dollars wagered.

                  The Company continues to be negatively impacted by a strong
          Massachusetts Lottery, two Indian Casinos in Connecticut and slot
          machines at the Lincoln, Rhode Island, greyhound track. The casinos
          and track are in close proximity to the Massachusetts border and
          therefore rely upon their ability to attract Massachusetts patrons.
          Wonderland is at a competitive disadvantage when compared with other
          New England greyhound racetracks in that it can offer only a very
          limited amount of simulcasting from thoroughbred racetracks.
          Additionally, this past year a casino boat began operation
          approximately twenty miles north of Wonderland in the City of
          Gloucester. The boat takes its patrons into international waters where
          state prohibitions on casino forms of wagering do not apply.

                  Management believes that the long-term strategy to best
          maximize shareholder value is to position Westwood for growth, not in
          the narrow confines of the greyhound pari-mutuel industry, but rather,
          in the gaming and entertainment industry. To that end, management has
          worked diligently attempting to convince the Governor and the
          Legislature of the Commonwealth of Massachusetts of the need to allow
          the State's commercial racetracks to offer their patrons expanded
          gaming opportunities. No assurance can be given that such legislation
          will be enacted or enacted on favorable terms.

          (E)  GOVERNMENT REGULATION

                  Wonderland operates under an annual license granted after
          application to, and public hearings by, the Massachusetts State Racing
          Commission (the "Racing Commission"). Wonderland received its first
          license in 1935 and has had its license renewed annually since that
          date. The Racing Commission has certain regulatory powers with respect
          to the dates and the number of performances granted to its licensees
          and various other aspects of racetrack operations. In addition, the
          Racing Commission licenses certain key officials employed by
          Wonderland.

                                       3
<PAGE>   4



                  Alcoholic beverage control regulations require each of the
          restaurant and bar facilities at Wonderland to apply to a state and
          local authority for a license or permit to sell alcoholic beverages on
          the premises. The licenses must be renewed annually and may be revoked
          or suspended for cause at any time. Alcoholic beverage control
          regulations relate to numerous aspects of the daily operations of the
          restaurants and bars, including minimum age of patrons and employees,
          hours of operation, advertising, wholesale purchasing, inventory
          control and handling, and storage and dispensing of alcoholic
          beverages. The failure to receive or retain, or a delay in obtaining,
          a liquor license could adversely affect the Company's ability to
          operate the restaurant facilities. The Company has not encountered any
          material problems relating to alcoholic beverage licenses to date.

                  Various federal and state labor laws govern the Company's
          relationship with its employees, including such matters as minimum
          wage requirements, overtime and other working conditions.

                  Significant additional government-imposed increases in minimum
          wages, paid leaves of absence, mandated health benefits or increased
          tax payment requirements in respect to employees who receive
          gratuities could, however, have a material adverse effect on the
          Company's results of operations.

          (F)  EMPLOYEES


                  At December 31, 1998, the Company employed approximately 350
          persons.

ITEM 2.  DESCRIPTION OF PROPERTY


          The Company's Wonderland Park racing facility is mortgaged to secure
the indebtedness owed under a term loan to the Century Bank and Trust Company.
(See Item 1(C), "Description of Business", Item 7, Liquidity and Capital
Resources and Note 2 of Notes to Consolidated Financial Statements).

          The executive offices are owned by the Company and are located at
Wonderland Greyhound Park in Revere, Massachusetts.

ITEM 3.  LEGAL PROCEEDINGS

          The Company is subject to various claims and legal actions that arise
in the ordinary course of its business.

          In 1996 litigation ensued between Foxboro Realty Associates, LLC, ET
AL. ("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET AL., in
Norfolk Superior Court in Massachusetts, over Foxboro's right to occupy Foxboro
Raceway. The Court issued an execution pursuant to which Foxboro was evicted
from the racetrack on July 31, 1997. The parties appealed to the Appeals Court
on January 27, 1998. The Company expects the appeals to be decided sometime
during calendar year 1999.

          On July 8, 1998, Foxboro Route 1 Limited Partnership, ET AL., filed a
civil action in Suffolk Superior Court in Massachusetts against The Westwood
Group, Inc., Wonderland Greyhound Park, Inc., ET AL., seeking payment for use
and occupancy of Foxboro Raceway, and other damages, from 1992 through July
1997.

               The ultimate outcome of such pending litigation cannot be
determined at this time, however it is the opinion of the Company's management,
any liability under such pending litigation would not materially affect its
financial condition or operations.


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

          The Company held its Annual Meeting of Stockholders on November 19,
1998. At this Meeting, Paul J. DiMare and Charles F. Sarkis were elected by the
holders of Common Stock to serve for a term of three (3) years on the Board. The
following votes were cast in connection therewith:

                                                 For             Withheld
                                               -------           --------

                     Charles F. Sarkis         193,361             3,435
                     Paul J. DiMare            193,566             3,230


                                       4
<PAGE>   5



PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
         MATTERS

          (a)  MARKET PRICE

                  There is no established trading market for the Company's
                  Common Stock or the Company's Class B Common Stock.

          (b)  APPROXIMATE NUMBER OF RECORD HOLDERS OF COMMON STOCK AND CLASS B
               COMMON STOCK

                                                                     NUMBER
                                                                   OF RECORD
                                                                 HOLDERS AS OF
          TITLE OR CLASS                                         APRIL 15, 1999
          --------------                                         --------------

          Common Stock -- par value $.01                              463
          Class B Common Stock -- par value $.01                       11

          (c)  DIVIDEND HISTORY

                  No dividends have been declared by the Company on its Common
          Stock during 1998, 1997 or 1996. The Company has not paid a cash
          dividend on its Class B Common Stock to date. The Company does not
          intend to pay cash dividends on either class of Common Stock in the
          immediate future.


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA.

          The following table summarizes certain financial information derived
from the Consolidated Financial Statements of the Company. The Selected
Consolidated Financial Information as of and for the fiscal year ended December
31, 1998, 1997 and 1996 is derived from the Consolidated Financial Statements,
as audited by BDO Seidman, LLP, independent accountants. The Selected
Consolidated Financial Information as of and for the fiscal years ended December
31, 1995 and 1994 is derived from the Consolidated Financial Statements, as
audited by Coopers & Lybrand L.L.P., independent accountants as adjusted for the
discontinued Foxboro business during 1997. This information should be read in
conjunction with and is qualified by reference to the Consolidated Financial
Statements of the Company and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in the
Company's prior years' Form 10-K and included herein.


                                       5
<PAGE>   6



ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA.(continued)

<TABLE>
<CAPTION>
                                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                          ------------------------------------------------------------------
                                                             1998          1997          1996          1995          1994
                                                          ----------    ----------    ----------    ----------    ----------
                                                               (DOLLARS IN THOUSANDS EXCEPT PER SHARE AND SHARE AMOUNTS)
  <S>                                                     <C>           <C>           <C>           <C>           <C>       
  CONSOLIDATED STATEMENT OF OPERATIONS DATA:
  Operating revenue                                       $   18,971    $   21,046    $   20,582    $   22,079    $   21,069
                                                          ----------    ----------    ----------    ----------    ----------
  Expenses:
     Operating expenses                                       17,506        18,509        18,161        21,147        21,071
     Depreciation and amortization                               700           529           828           883           942
                                                          ----------    ----------    ----------    ----------    ----------
       Total expenses                                         18,206        19,038        18,989        22,030        22,013
                                                          ----------    ----------    ----------    ----------    ----------

  Income (loss) from operations                                  765         2,008         1,593            49          (944)

  Interest expense, net                                         (398)         (387)         (755)         (709)       (2,248)
  Other income (expense), net (2)                                525         1,169         1,867          (159)        6,643
                                                          ----------    ----------    ----------    ----------    ----------
  Income (loss) before income taxes
    and extraordinary item                                       892         2,790         2,705          (819)        3,451
  Provision for income taxes                                      83            --            13            --           145
                                                          ----------    ----------    ----------    ----------    ----------
  Income (loss) from continuing operations, before
    operations of discontinued harness racing
    subsidiary and extraordinary item                            809         2,790         2,692          (819)        3,306
  Loss from operations of discontinued harness
    racing subsidiary                                             --        (2,412)       (2,180)       (1,235)       (2,374)
  Gain from discontinued harness racing subsidiary
    (net of income taxes of $20,400 in 1998)                    1001         2,581            --            --            --
  Extraordinary item, net                                         --            --            --            --        11,160
                                                          ----------    ----------    ----------    ----------    ----------

  Net income (loss)                                       $    1,810    $    2,959    $      512    $   (2,054)   $   12,092
                                                          ==========    ==========    ==========    ==========    ==========

  Basic per share data:
     Income from continuing operations                    $      .63    $     2.22    $     2.15    $     (.65)   $     2.63

     Income (loss) from discontinued operations                  .81           .14         (1.74)         (.98)        (1.89)

     Extraordinary item                                           --            --            --            --          8.89
                                                          ----------    ----------    ----------    ----------    ----------

     Net income (loss)                                    $     1.44    $     2.36    $      .41    $    (1.63)   $     9.63
                                                          ==========    ==========    ==========    ==========    ==========

    Basic weighted average common shares outstanding       1,261,252     1,255,225     1,255,225     1,255,225     1,255,225
                                                          ==========    ==========    ==========    ==========    ==========

  Diluted per share data:
    Income from continuing operations                     $      .62    $     2.19    $     2.15    $     (.65)   $     2.63

    Income (loss) from discontinued operations                   .80           .13         (1.74)         (.98)        (1.89)

    Extraordinary item                                            --            --            --            --          8.89
                                                          ----------    ----------    ----------    ----------    ----------

    Net income (loss)                                     $     1.42    $     2.32    $      .41    $    (1.63)   $     9.63
                                                          ==========    ==========    ==========    ==========    ==========

  Diluted weighted average common shares
    outstanding                                            1,281,243     1,275,225     1,255,225     1,255,225     1,255,225
                                                          ==========    ==========    ==========    ==========    ==========
</TABLE>



<TABLE>
<CAPTION>
                                                                                   AS OF DECEMBER 31,
                                                             ---------------------------------------------------------------
                                                              1998          1997          1996          1995          1994
                                                             -------       -------      --------      --------      -------- 
  <S>                                                        <C>           <C>           <C>           <C>           <C>
  CONSOLIDATED BALANCE SHEET DATA:                                                                                    
     Working capital (deficit)                               $(4,439)      $(9,309)     $(17,105)     $(20,480)     $(15,264)
     Total assets                                             13,369        13,581        20,830        25,608        27,823
     Long-term debt (1)                                        5,551           997         3,435         5,774         9,550
     Stockholders' equity (deficit)                              466        (1,551)       (4,464)       (4,913)       (2,952)
</TABLE>


(1) Long-term debt at December 31, 1998, 1997, 1996, 1995 and 1994 excludes $10,
$4,373, $3,412, $1,751 and $2,504, respectively, of long term debt reclassified
as current obligations (see Note 2 of Consolidated Financial Statements).

(2) The table above reflects the Company's accounting for its investment in Back
Bay Restaurant Group, Inc. ("BBRG") under the equity method. Other income
(expense), net contains income (loss) of approximately $525, $337, $86 and
$(552), from the Company's investment in BBRG for 1998, 1997, 1996, and 1995,
respectively.

     In 1994, other income (expense), net contained income of approximately $4 
million from the sale of certain real estate.

                                       6
<PAGE>   7


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

           Wonderland conducts live racing seven nights and two afternoons per
week, and offers simulcast wagering afternoons and evenings. The table below
illustrates certain key statistics for Wonderland, for each of the past three
years:

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                                    -----------------------
                                                                    1998     1997      1996
                                                                    ----     ----      ----

<S>                                                                 <C>      <C>       <C> 
  Performances                                                       399      458       449
  Simulcast Days                                                     363      362       358

  Pari-mutuel handle (millions)
     Live-on track                                                  $ 31     $ 40      $ 45
     Live-simulcast (wagering on live racing at Wonderland)           39       35        27
     Guest-simulcast (wagering on live racing at other tracks)        51       52        52
                                                                    ----     ----      ----
  Total handle                                                      $121     $127      $124
                                                                    ====     ====      ====

  Total attendance (thousands)                                       407      490       524
                                                                    ====     ====      ====

  Average per capita on site wagering                               $201     $188      $185
                                                                    ====     ====      ====
  </TABLE>


           Wonderland has been granted a license to conduct 360 racing
performances during 1999.


           OPERATING REVENUE

           The Company is still experiencing a decline in total attendance and
live-on track handle, caused by a variety of factors including a general decline
in the pari-mutuel racing industry and strong competition for the wagered
dollar, from the Massachusetts State Lottery and from the introduction of casino
gambling and slot machines in neighboring states.


           1998 VERSUS 1997

               Total operating revenue decreased to $19.0 million in 1998 as
compared to $21.0 million in 1997. Pari-mutuel commissions decreased by
approximately $1,684,000 or 9.9% to $15.4 million in 1998 from $17.1 million in
1997. Total handle in 1998 was $121 million as compared to $127 million in 1997.
Guest-simulcast handle decreased by approximately $1 million or 2% in 1998 as
compared to 1997. Live-on track handle decreased by $9 million or 22% in 1998 as
compared to 1997, while Live-simulcast handle increased by $4 million or 13%.

               The decrease in pari-mutuel commission revenue is attributable to
the increase in Live-simulcast handle and an increase in the commission rate
earned on Guest-simulcast handle offset by the decrease from live on track
handle. Commission revenue was negatively impacted by a decline in Live-on track
handle which was partially offset by an increase in the commission rate. Per
capita wagering at Wonderland did not change significantly in 1998 as compared
to 1997. Wonderland had 59 less live racing performances in 1998 as compared to
1997, with a minimal decrease in attendance between 1998 and 1997.

               Concessions revenue decreased to $1.8 million as compared to $2.0
million in 1997. Such declines are largely attributable to the decline in total
attendance. Other operating revenue consists of program sales, admissions,
parking and gift shop sales.

               Revenue for 1998 includes $282,000 deposited into the Greyhound
Promotional Trust Fund and $279,000 deposited into the Greyhound Capital
Improvements Trust Fund. These funds are dedicated to reimbursement of
promotional expenses and capital improvements, respectively, incurred by
Wonderland. These funds are funded by a percentage of the handle and 
reimbursement is approved by the Commonwealth.


           1997 VERSUS 1996

               Total operating revenue increased to $21.0 million in 1997 as
compared to $20.6 million in 1996. Pari-mutuel commissions increased by
approximately $303,000 or 1.8% to $17.1 million in 1997 from $16.8 million in
1996. Total handle in 1997 was $127 million as compared to $124 million in 1996.
Guest-simulcast handle remained consistent at $52 million. Live-on track handle
decreased by $5 million or 11% in 1997 as compared to 1996, while Live-simulcast
handle increased by $8 million or 30%.


                                       7
<PAGE>   8



               The increase in pari-mutuel commission revenue is attributable to
the increase in Live-simulcast handle and an increase in the commission rate
earned on Guest-simulcast handle. Commission revenue was negatively impacted by
a decline in Live-on track handle which was partially offset by an increase in
the commission rate. Per capita wagering at Wonderland did not change
significantly in 1997 as compared to 1996. Wonderland had nine more live racing
performances in 1997 as compared to 1996, with an average attendance of
approximately 1,070 persons, while average attendance was approximately 1,167
persons in 1996.

               Concessions revenue was essentially unchanged in 1997 as compared
to 1996 at $1.9 million. Other operating revenue consists of program sales,
admissions, parking and gift shop sales. These revenues increased by
approximately $136,000 or 7% in 1997 as compared to 1996 to $2.04 million from
$1.90 million.

               Revenue for 1997 includes $334,000 deposited into the Greyhound
Promotional Trust Fund and $332,000 deposited into the Greyhound Capital
Improvements Trust Fund.


           OPERATING EXPENSES


           1998 VERSUS 1997

           Operating expenses were $18.2 million and $19.0 million in 1998 and
1997, respectively. The Company realized cost savings on purse expense of
approximately $622,000 in 1998 as compared to 1997. Purse expense is determined
by contractual agreement with the dog owners and statutory requirements of the
Commonwealth of Massachusetts based upon on-track handle. The decrease in purse
expense in 1998 is attributable to a decline in on-track handle.

           The Company also realized savings in operating wages, taxes and
benefits, general operating costs and cost of food and beverage expenses in 1998
as compared to 1997. These cost savings realized by the Company were offset by
increases in administrative costs in 1998 as compared to 1997.

           1997 VERSUS 1996

           Operating expenses were $19 million in both 1997 and 1996. The
Company realized cost savings on purse expense of approximately $151,000 in 1997
as compared to 1996. Purse expense is determined by contractual agreement with
the dog owners and statutory requirements of the Commonwealth of Massachusetts
based upon on-track handle. The decrease in purse expense in 1997 is
attributable to a decline in on-track handle.

           The Company also realized savings in general operating costs and cost
of food and beverage expenses of approximately $50,000 and $18,000, respectively
in 1997 as compared to 1996. The cost savings realized by the Company were
offset by increases in operating wages, taxes and benefits of approximately
$406,000 and administrative costs of $159,000, respectively in 1997 as compared
to 1996.

           DEPRECIATION AND AMORTIZATION

           Depreciation and amortization increased in 1998 as compared to 1997
by approximately $171,000 and decreased by approximately $299,000 in 1997 from
1996. Certain assets reached the end of their depreciable lives during 1997 thus
the reduction in depreciation in 1997 from 1996. The Company has invested
approximately $1.5 million in capital assets over the past two years explaining
the increase in depreciation in 1998 from 1997. The Company continues to replace
capital items as they become obsolete.

           INTEREST EXPENSE

           During 1998, interest expense increased by approximately $11,000 as
compared to 1997. The increase was attributed to the new long-term financing
entered into during 1998. During 1997, interest expense decreased by
approximately $368,000 as compared to 1996. The decrease was attributed to the
Company reducing its outstanding debt by approximately $2 million in December
1996 in connection with the foreclosure on the property located at 284 Newbury
Street in the Back Bay section of Boston. As discussed further below, the
Company significantly reduced its long-term debt during 1996 and 1997. However,
the Company's 1996 interest expense was not significantly impacted due to the
late timing of such events in December of 1996.


                                       8
<PAGE>   9



           EQUITY INCOME IN INVESTMENTS

           At December 31, 1998, the Company owned approximately 673,000 or 19%
of the outstanding shares of the Back Bay Restaurant Group, Inc. ("BBRG").
During 1994, the Company and BBRG jointly pursued a series of transactions, the
effect of which resulted in the control of BBRG no longer resting with the
Company. Accordingly, the Company's investment in BBRG has been accounted for
under the equity method. The equity income in investments represents the
Company's proportionate share of BBRG's net earnings (see Notes 10 and 14 of
Notes to Consolidated Financial Statements).

           NET GAIN ON SALE/FORECLOSURE OF REAL PROPERTY

           In 1997, the Company sold its interest in a limited partnership which
owned land and an office and retail building for a cash payment of $500,000.

           In December 1996 the first and second mortgage holders completed
foreclosure proceedings on the Company's property located at 284 Newbury Street
in the Back Bay Section of Boston. These transactions resulted in a gain of
approximately $1.1 million.

           PROVISION FOR INCOME TAXES

           The Company's provision for income taxes is less than the statutory
federal tax rate of 34% during 1998, 1997 and 1996 primarily due to the
utilization of available net operating loss carryforwards for which the 
related deferred tax asset has been fully reserved. The provision for
taxes of $102,800 in 1998 and $13,000 in 1996 represents the Federal alternative
minimum tax and state income taxes.

           DISCONTINUED OPERATIONS

           Foxboro Park, Inc. ("Foxboro", which term as used herein includes its
wholly-owned subsidiaries) conducted seasonal live harness racing generally two
evenings and two matinees per week, while simulcasting afternoons and evenings
through July 1997 (see Item 3 and Note 3 in Notes to Consolidated Financial
Statements.) The table below presents certain key statistics for Foxboro for the
periods indicated:

                                                 Period Ended      Year Ended
                                                   July 31,       December 31,
                                                     1997             1996
                                                 ------------     ------------

Performances                                           99              150
Simulcast Days                                        204              352

Pari-mutuel handle (millions)
   Live-on track                                     $  3             $  6
   Live-simulcast                                      27               32
   Guest-simulcast                                     28               48
                                                     ----             ----
                                                     $ 58             $ 86
                                                     ====             ====

Total attendance (thousands)                          148              257
                                                     ====             ====

Average per capita on site wagering                  $209             $211
                                                     ====             ====

           Foxboro operated the premises through July 1997 (see Item 3 Legal
Proceedings and Note 3 of Notes to Consolidated Financial Statements).

           The Company recognized a gain on the discontinuance of the Company's
harness racing business of $1.0 million and $2.6 million for years ended
December 31, 1998 and 1997, respectively. Such gain is primarily comprised of
the excess of occupancy and other liabilities over non recoverable net leasehold
improvements and other assets. The Company had a loss from operations of its
discontinued harness racing operations of $2.4 million and $2.2 million for the
period ended December 31, 1997 and the year ended December 31, 1996,
respectively.

                                       9
<PAGE>   10



           LIQUIDITY AND CAPITAL RESOURCES

           Historically, the Company's primary sources of capital to finance its
businesses have been its cash flow from operations and credit facilities. The
Company's capital needs are primarily for maintenance and enhancement of the
racing facility at Wonderland, and for debt service requirements


           The Company's unrestricted cash and cash equivalents totaled $188,462
at December 31, 1998, compared with $374,292 at December 31, 1997. The Company
generated cash flows from operations of approximately $480,000 in 1998 as
compared to $441,000 in 1997. The increase in 1998 is principally attributable
to the continued reduction of operating expenses. Non cash items included in the
Company's net income in 1998 consist of gain on discontinuance of harness racing
subsidiary of approximately $1.0 million, depreciation and amortization expense
of approximately $700,000 and equity in income from investments of approximately
$525,000. Changes in working capital accounts including restricted cash,
accounts payable and other accrued liabilities provided approximately $407,000
of cash in 1998. Net cash used in investing activities in 1998 is comprised of
investments and additions to the property, plant and equipment of approximately
$694,000 which was offset by proceeds from sales and redemption of investments
aggregating approximately $100,000. Financing activities in 1998 include
approximately $4,814,000 of funds used to reduce outstanding balances on long
term debt. Short-term borrowings arrangements used net cash of approximately
$182,000. The source of the funds was from a new $5,000,000 long-term debt
financing, which has a seven year term (see Note 2 of Notes to Consolidated
Financial Statements).


           The Company expects to fund any capital expenditures for 1999 from
internally generated cash. The Company expects cash flow from operations to be
sufficient to cover the operating obligations of the Company.

           INVESTMENT IN BBRG

           On March 26, 1999, a majority of BBRG's shareholders approved a 
merger agreement (the "Merger Agreement"), by and between BBRG and SRC 
Holdings, Inc. (the "Acquiror"), a Delaware corporation formed by Charles F. 
Sarkis, BBRG's Chairman and Chief Executive Officer, pursuant to which the 
Acquiror would be merged (the "Merger") with and into BBRG, with BBRG being the 
surviving company. The Merger was consummated April 5, 1999. Pursuant to the 
Merger, the holders of BBRG's common stock, other than the Company, Mark L. 
Hartzfeld, Francis P. Bissaillon, Ann Marie Lagrotteria and Richard P. Dalton 
(collectively, the "Affiliated Shareholders"), received $10.25 in cash in 
exchange for each share of common stock of BBRG held by them. The Affiliated 
Shareholders continued to own stock of the surviving corporation. As of the 
date of the Merger, the Company holds 48.64% of the common stock of BBRG on a 
fully diluted basis. Following the Merger, BBRG no longer meets the 
requirements of a public company and its shares will no longer be listed or  
traded in the public market.  

           RACING SUBSIDIARY

           In order to meet the requirements for renewal of racing licenses in
2000, the Company's racing subsidiary must demonstrate, amongst other criteria,
it is a financially stable entity, capable of disposing of its obligations on a
timely basis. Although management is optimistic that it will be able to
demonstrate financial stability in their applications for 2000 racing license,
there can be no assurance that the Racing Commission will continue to grant a
licenses to conduct racing on the schedule presently maintained at Wonderland.

           In the event that the Company is not successful in obtaining a year
2000 racing license, the adverse impact on the Company's financial results and
position would be material.

           IMPACT OF INFLATION AND CHANGING PRICES

           Certain of the Company's operating expenses, such as wages and
benefits, equipment repair and replacement, and inventory and marketing costs,
increase with general inflation. In order for the Company to cope with
inflation, it must, to the extent permitted by competition and patron
acceptance, pass increased cost on by periodically increasing prices. The
Company is limited in its ability to offset the effects of inflation by
increasing its percentage of handle because this percentage is governed by
statute.

           NEW ACCOUNTING STANDARDS

           In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"). SFAS No. 133 requires companies to recognize all derivative contracts
as either assets or liabilities in the balance sheet and to measure them at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged assets or liability or (ii) the earnings
effect of the hedged forecasted transaction. For a derivative not designated as
a hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.

                                       10
<PAGE>   11



           Historically, the Company has not entered into derivative contracts
either to hedge existing risks or for speculative purposes. Accordingly, the
Company does not expect adoption of the new standard to affect its financial
statements.


           YEAR 2000 DISCLOSURE

           The Company is aware of the potential for industry wide business
disruption which could occur due to problems related to the "Year 2000 issue."
It is the belief of the Company that the Company has a prudent plan in place to
address these issues. The components of our plan include: an assessment of
internal systems for modification and/or replacement; communication with
external vendors to determine their state of readiness to maintain an
uninterrupted supply of goods and services to the Company; an evaluation of our
equipment as to its ability to function properly after the turn of the century;
an evaluation of facility related issues; and the development of a contingency
plan.

           STATE OF READINESS

           The Company has developed a comprehensive plan to reduce the
probability of operational difficulties due to Year 2000 related failures. While
there is still a significant amount of work to do the Company believes that it
is on track towards a timely completion. Overall, the Company estimates the
organization to be approximately 85% complete in regard to the identification
and remediation of Year 2000 issues.

           INTERNAL SYSTEMS

           The process the Company is following to achieve Year 2000 compliance
for internal systems is as follows: The Company expects to have all of its
financial accounting software to be Year 2000 compliant by the end of the second
quarter of 1999. The Company expects to have the hardware components of its
financial accounting system to be Year 2000 compliant by the end of the first
quarter of 1999.

           SUPPLIER

           The Company is in the process of communicating with its external
vendors to gain an understanding of their state of readiness to maintain an
uninterrupted supply of goods and services to the Company. The Company has
contacted many of its suppliers regarding the Year 2000 issue. The Company has
been assured by its major suppliers that there will be no interruption of the
delivery of goods and services.

           EQUIPMENT

           The Company is in the process of completing an inventory of currently
used equipment at the Company. The Company will determine the Year 2000
readiness through communication with the equipment manufacturers and testing
where appropriate. At this time the company is not aware of any equipment which
is affected by the Year 2000 issue and will not be repaired or replaced prior to
operating problems. The Company, as in most companies, remains aware of the
potential for imbedded logic within microchips to cause equipment to failure.
The Company believes that our action plan provides a prudent approach towards
evaluating equipment, however, some equipment may prove not feasible or
impossible to test.

           FACILITY RELATED ISSUES

           The Company is in the process of completing an inventory and
evaluating facilities related equipment with the potential for Year 2000 related
failures. The Company will determine the Year 2000 readiness through
communication with the equipment manufactures and testing where appropriate. At
this time the Company is not aware of any facilities related equipment which is
affected by the Year 2000 issue and will not be repaired or replaced prior to
operating problems. The Company, as in most companies, remains aware of the
potential of imbedded logic within microchips to cause equipment failure. The
companies believes that our action plan provides a prudent approach towards
evaluating production equipment, however, some equipment may prove not feasible
or impossible to test.

           COSTS

           The Company is evaluating the total cost of Year 2000 compliance. At
this time the Company is unable to estimate the total cost of Year 2000 related
activities.

                                       11
<PAGE>   12



           CONTINGENCY PLAN

           At this time the Company is not aware of any internal systems or
external vendors issues related to the Year 2000 which would prevent, or
seriously impact the Company from continuing operations before, during, or after
the turn of the century.

           Although the Company believes that we are taking prudent action
related to the identification and resolution of issues related to the Year 2000
our assessment is still in progress. The Company may never be able to know with
certainty whether certain key vendors are compliant, especially those outside
the United States. There are also technical vagaries to logic imbedded within
microchips which may prove not feasible or impossible to test.

           The Company continues to evaluate the risks associated with potential
Year 2000 related failures. As the Company betters understands the risks within
our unique set of business partners, production processes, and internal systems,
the Company will develop a formal contingency plan to alleviate the impact of
high potential or serious failures. The Company anticipates having this
contingency plan outline by the end of the first quarter of 1999.

           RISKS

           The failure to correct a material Year 2000 problem could result in
an interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have material impact on the Company's results of operations, liquidity or
financial condition. The Year 2000 Project is expected to significantly reduce
the Company's level of uncertainty about the Year 2000 problem and, in
particular, about the Year 2000 compliance and readiness of its material
external agents. The Company believes that, with the implementation f new
business systems and completion of the Project as scheduled, the possibility of
significant interruptions of normal operations should be reduced. Readers are
cautioned that forward-looking statements contained in the Year 2000 Update
should be read in conjunction with the Company's disclosures under the heading:
"CAUTIONARY STATEMENT".

           SUBSEQUENT EVENT

           On March 26, 1999, a majority of BBRG's shareholders approved a
merger agreement (the "Merger Agreement"), by and between BBRG and SRC Holdings,
Inc. (the "Acquiror"), a Delaware corporation formed by Charles F. Sarkis,
BBRG's Chairman and Chief Executive Officer, pursuant to which the Acquiror
would be merged (the "Merger") with and into BBRG, with BBRG being the surviving
company. The Merger was consummated April 5, 1999. Pursuant to the Merger, the
holders of BBRG's common stock, other than the Company, Mark L. Hartzfeld,
Francis P. Bissaillon, Ann Marie Lagrotteria and Richard P. Dalton
(collectively, the "Affiliated Shareholders"), received $10.25 in cash in
exchange for each share of common stock of BBRG held by them. The Affiliated
Shareholders continued to own stock of the surviving corporation. As of the date
of the Merger, the Company holds 48.64% of the common stock of BBRG on a fully
diluted basis. Following the Merger, BBRG no longer meets the requirements of a
public company and its shares will no longer be listed or traded in the public
market.

           FORWARD-LOOKING STATEMENTS

           Certain statements contained in this report constitute
"forward-looking statements" as that term is defined under the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from those contemplated or projected,
forecasted, estimated or budgeted in or expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; industry trends, changes in business
strategy or development plans; availability and quality of management; and
availability, terms and deployment of capital, SPECIAL ATTENTION SHOULD BE PAID
TO SUCH FORWARD-LOOKING STATEMENTS INCLUDING, BUT NOT LIMITED TO, STATEMENTS
RELATING TO (I) THE COMPANY'S ABILITY TO EXECUTE ITS BUSINESS STRATEGY, AND (II)
THE COMPANY'S ABILITY TO OBTAIN SUFFICIENT RESOURCES TO FINANCE ITS WORKING
CAPITAL AND CAPITAL EXPENDITURE NEEDS AND PROVIDE FOR ITS OBLIGATIONS.


                                       12
<PAGE>   13



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

                                                                          PAGE


REPORT OF INDEPENDENT ACCOUNTANTS                                           14

CONSOLIDATED BALANCE SHEETS                                              15-16

CONSOLIDATED STATEMENTS OF INCOME                                           17

CONSOLIDATED STATEMENTS OF CHANGES IN
  STOCKHOLDERS' EQUITY (DEFICIT)                                            18

CONSOLIDATED STATEMENTS OF CASH FLOWS                                       19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               20-30


                                       13
<PAGE>   14


REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
The Westwood Group, Inc. and Subsidiaries
Revere, Massachusetts

We have audited the accompanying consolidated balance sheets of The Westwood
Group, Inc. and Subsidiaries as of December 31, 1998 and 1997 and the related
consolidated statements of income, stockholders' equity (deficit) and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statement of the investee which was 
the basis for recording the Company's investment in and equity in earnings of 
the investment. The investment in the investee and equity in the income for the 
investor represents 43.8%, 39.2%, and 24.0% of total assets and 29.0%, 11.4% 
and 16.9% of net income for the years ended December 31, 1998, 1997 and 1996, 
respectively. Those statements were audited by other auditors whose reports 
have been furnished to us, and our opinion, insofar as it relates to the 
amounts included for such investments, is based solely on the reports of the 
other auditors.

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

In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects
the consolidated financial position of The Westwood Group, Inc. and Subsidiaries
as of December 31, 1998 and 1997 and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.




                                                  /s/ BDO SEIDMAN, LLP
                                        ----------------------------------------
                                                    BDO SEIDMAN, LLP

Boston, Massachusetts
March 26, 1999



                                       14
<PAGE>   15

                    THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                 ---------------

<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                                --------------------------------
                                                                                    1998                 1997
                                                                                -----------          -----------
<S>                                                                             <C>                  <C>        
                 ASSETS

Current assets:
   Cash and cash equivalents                                                    $   188,462          $   374,292
   Restricted cash                                                                  170,052              612,037
   Accounts receivable                                                               23,496              629,204
   Prepaid expenses and other current assets                                        168,964              161,502
   Notes receivable from officers                                                   151,377                   --
                                                                                -----------          -----------

   Total current assets                                                             702,351            1,777,035
                                                                                -----------          -----------

Property, plant & equipment:
   Land                                                                             348,066              348,066
   Buildings and building improvements                                           18,466,838           17,830,342
   Machinery and equipment                                                        4,498,547            4,441,026
                                                                                -----------          -----------

                                                                                 23,313,451           22,619,434

   Less accumulated depreciation and amortization                                17,458,993           16,913,769
                                                                                -----------          -----------

    Net property, plant and equipment                                             5,854,458            5,705,665
                                                                                -----------          -----------

Other assets:
   Deferred financing costs, less accumulated amortization of $10,833               171,265                   --
   Investments                                                                    5,849,814            5,324,522
   Notes receivable from officers                                                   742,016              369,375
   Other assets, net                                                                 49,559              404,875
                                                                                -----------          -----------

   Total other assets                                                             6,812,654            6,098,772
                                                                                -----------          -----------

   Total assets                                                                 $13,369,463          $13,581,472
                                                                                ===========          ===========
</TABLE>


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


                                       15
<PAGE>   16



                    THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                   (CONTINUED)

                                 ---------------


<TABLE>
<CAPTION>
                                                                                          December 31,
                                                                                --------------------------------
                                                                                    1998                 1997
                                                                                -----------          -----------

<S>                                                                             <C>                  <C>        
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Accounts payable and other accrued liabilities                               $ 2,395,518          $ 4,765,747
   Outstanding pari-mutuel tickets                                                  622,447              310,763
   Net liabilities of discontinued operations                                       704,420            1,280,620
   Current maturities of long-term debt                                             350,663              494,561
   Debt obligations in default                                                       10,000            4,234,286
                                                                                -----------          -----------

   Total current liabilities                                                      4,083,048           11,085,977

Long-term debt, less current maturities                                           5,550,847              996,671
Other long-term liabilities                                                       3,270,114            3,049,452
                                                                                -----------          -----------

   Total liabilities                                                             12,904,009           15,132,100
                                                                                -----------          -----------

Commitments and contingencies

Stockholders' equity (deficit):
   Common stock, $.01 par value authorized 3,000,000 shares,
   1,936,409 shares issued                                                           19,444               19,364
   Class B common stock, $.01 par  value; authorized 1,000,000
    shares; 912,615 shares issues                                                     9,126                9,126
   Additional paid-in capital                                                    13,379,275           13,355,355
   Accumulated deficit                                                           (4,728,205)          (6,538,493)
   Note receivable from stockholder                                                      --             (345,119)
   Other comprehensive loss                                                        (249,404)             (86,079)
   Cost of 1,593,199 common and 600 Class B common shares in treasury            (7,964,782)          (7,964,782)
                                                                                -----------          -----------

   Total stockholders' equity (deficit)                                             465,454           (1,550,628)
                                                                                -----------          -----------

   Total liabilities and stockholders' equity (deficit)                         $13,369,463          $13,581,472
                                                                                ===========          ===========
</TABLE>

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


                                       16
<PAGE>   17



                    THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

                                 ---------------



<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                ---------------------------------------------------
                                                                    1998                1997                1996
                                                                -----------         -----------         -----------
<S>                                                             <C>                 <C>                 <C>        
Operating revenue:
     Pari-mutuel commissions                                    $15,373,562         $17,057,287         $16,754,300
     Concessions                                                  1,758,670           1,952,759           1,928,152
     Other                                                        1,839,100           2,035,732           1,899,295
                                                                -----------         -----------         -----------


         Total operating revenue                                 18,971,332          21,045,778          20,581,747
                                                                -----------         -----------         -----------

Operating expenses:
     Wages, taxes and benefits                                    7,248,903           7,311,681           6,905,439
     Purses                                                       4,470,893           5,092,615           5,243,461
     Cost of food and beverage                                      524,296             562,403             580,151
     Administrative                                               1,541,658           1,460,084           1,300,739
     General operating                                            3,720,757           4,081,578           4,131,154
     Depreciation and amortization                                  700,106             529,288             828,191
                                                                -----------         -----------         -----------

         Total operating expenses                                18,206,613          19,037,649          18,989,135
                                                                -----------         -----------         -----------

         Income from operations                                     764,719           2,008,129           1,592,612
                                                                -----------         -----------         -----------

Other income (expense):
     Interest expense, net                                         (398,284)           (386,803)           (754,796)
     Equity income in investment                                    525,292             336,726              86,395
     Other income, net                                                   --             331,915             353,334
     Net gain on sale/foreclosure of real property                       --             500,000           1,427,697
                                                                -----------         -----------         -----------

         Total other income                                         127,008             781,838           1,112,630
                                                                -----------         -----------         -----------

Income from continuing operations before provision
  for income taxes                                                  891,727           2,789,967           2,705,242
Provision for income taxes                                           82,400                  --              13,000
                                                                -----------         -----------         -----------

Income from continuing operations                                   809,327           2,789,967           2,692,242

Loss from operations of discontinued harness racing
  operations                                                             --          (2,411,787)         (2,180,436)
Gain from discontinued harness racing operations
  (net of income taxes of $20,400 in 1998)                        1,000,961           2,580,676                  --
                                                                -----------         -----------         -----------

Net income                                                      $ 1,810,288         $ 2,958,856         $   511,806
                                                                ===========         ===========         ===========

Basic per share data:
  Income from continuing operations                             $       .63         $      2.22         $      2.15

  Income (loss) from discontinued operations                            .81                 .14               (1.74)
                                                                -----------         -----------         -----------

  Net income per share                                          $      1.44         $      2.36         $       .41
                                                                ===========         ===========         ===========

Basic weighted average common shares outstanding                  1,261,252           1,255,225           1,255,225
                                                                ===========         ===========         ===========

Diluted per share data:
  Income from continuing operations                             $       .62         $      2.19         $      2.15

  Income (loss) from discontinued operations per share                  .80                 .13               (1.74)
                                                                -----------         -----------         -----------

  Net income per share                                          $      1.42                2.32                 .41
                                                                ===========         ===========         ===========

Diluted weighted average common shares outstanding                1,281,243           1,275,225           1,255,225
                                                                ===========         ===========         ===========
</TABLE>



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

                                       17
<PAGE>   18



                    THE WESTWOOD GROUP INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


                                 ---------------


<TABLE>
<CAPTION>
                                                                                                             NOTE
                                                              CLASS B     ADDITIONAL                      RECEIVABLE
                                                  COMMON      COMMON       PAID-IN       ACCUMULATED         FROM
                                                   STOCK       STOCK       CAPITAL         DEFICIT        STOCKHOLDER
                                                  -------     -------    -----------     ------------     -----------


<S>                                               <C>         <C>        <C>             <C>               <C>       
Balance, December 31, 1995                        $19,364     $9,126     $13,355,355     $(10,009,155)     $(316,073)
    Interest receivable                                --         --              --               --        (14,521)
    Comprehensive income (loss):
      Net income                                       --         --              --          511,806             --
      Pension Liability Adjustment                     --         --              --               --             --
                                                  -------     ------     -----------     ------------      ---------
Balance, December 31, 1996                         19,364      9,126      13,355,355       (9,497,349)      (330,594)
    Interest receivable                                --         --              --               --        (14,525)
    Comprehensive income (loss):
      Net income                                       --         --              --        2,958,856             --
      Pension Liability Adjustment                     --         --              --               --             --
                                                  -------     ------     -----------     ------------      ---------
Balance, December 31, 1997                         19,364      9,126      13,355,355       (6,538,493)      (345,119)
    Issuance of common stock                           80         --          23,920               --             --
    Note reclassification                              --         --              --               --        345,119
    Comprehensive income (loss):
      Net income                                       --         --              --        1,810,288             --
      Pension Liability Adjustment                     --         --              --               --             --
                                                  -------     ------     -----------     ------------      ---------
Balance, December 31, 1998                        $19,444     $9,126     $13,379,275     $ (4,728,205)     $      --
                                                  =======     ======     ===========     ============      =========
</TABLE>


<TABLE>
<CAPTION>
                                                                                     TOTAL
                                                     OTHER                       STOCKHOLDERS'
                                                 COMPREHENSIVE     TREASURY         EQUITY
                                                    (LOSS)           STOCK         (DEFICIT)
                                                 -------------    -----------    -------------

<S>                                                <C>            <C>             <C>         
Balance, December 31, 1995                         $  (6,561)     $(7,964,782)    $(4,912,726)
    Interest receivable                                   --               --         (14,521)
    Comprehensive income (loss)
        Net income                                        --               --         511,806
        Pension Liability Adjustment                 (48,798)              --         (48,798)
                                                   ---------      -----------     -----------
Balance, December 31, 1996                           (55,359)      (7,964,782)     (4,464,239)
    Interest receivable                                   --               --         (14,525)
    Comprehensive income (loss)
       Net income                                         --               --       2,958,856
       Pension Liability Adjustment                  (30,720)              --         (30,720)
                                                   ---------      -----------     -----------
Balance, December 31, 1997                           (86,079)      (7,964,782)     (1,550,628)
    Issuance of common stock                              --               --          24,000
    Note reclassification                                 --               --         345,119
    Comprehensive income (loss)

       Net income                                         --               --       1,810,288
       Pension Liability Adjustment                 (163,325)              --        (163,325)
                                                   ---------      -----------     -----------
Balance, December 31, 1998                         $(249,404)     $(7,964,782)    $   465,454
                                                   =========      ===========     ===========
</TABLE>


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

                                       18
<PAGE>   19


                    THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 ---------------


<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                             -----------------------------------------------------
                                                                 1998                 1997                 1996
                                                             -----------          -----------          -----------

<S>                                                          <C>                  <C>                  <C>        
Cash flows from operating activities:
Net income                                                   $ 1,810,288          $ 2,958,856          $   511,806
                                                             -----------          -----------          -----------
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Gain on discontinuance of harness racing operations       (1,021,361)          (2,580,676)                  --
    Recovery of bad debts                                        (77,548)                  --                   --
    Depreciation and amortization                                700,106              529,288            1,539,918
    Gain on sale/foreclosure of real property                         --             (500,000)          (1,427,697)
    Change in liability estimate                                (445,161)                  --                   --
    Gain on bond sales and redemptions                                --             (199,415)                  --
    Equity in income from investments                           (525,292)            (336,726)             (86,395)
    Deferred revenue                                                  --             (132,500)            (353,334)
    Minimum pension liability adjustment                        (163,325)             (30,720)             (48,798)
    Other                                                             --                   --              142,698
    Changes in operating assets and liabilities:
         Decrease in restricted cash                             441,985              409,184              380,578
         Decrease in accounts receivable                         587,049              112,141              154,740
         Decrease (increase) in prepaid expenses
          and other current assets                                (7,462)              36,793               72,390
         Decrease (increase) in other assets, net                211,316               (5,134)              26,601
         Increase in notes receivable from officers              (82,692)                  --                   --
         Increase (decrease) in accounts payable and
           other accrued liabilities                          (2,058,545)          (1,200,511)             557,355
         Increase in other long-term liabilities               1,110,984            1,380,295              865,287
                                                             -----------          -----------          -----------

             Total adjustments                                (1,329,946)          (2,517,981)           1,823,343
                                                             -----------          -----------          -----------
             Net cash provided by operating activities           480,342              440,875            2,335,149
                                                             -----------          -----------          -----------

Cash flows from investing activities:
     Additions to property, plant and equipment                 (694,066)            (756,444)            (676,457)
     Proceeds from bond sales and redemptions                         --               99,415                   --
     Proceeds from sale of real property                              --              500,000                   --
                                                             -----------          -----------          -----------
         Net cash used in investing activities                  (694,066)            (157,029)            (676,457)
                                                             -----------          -----------          -----------

Cash flows from financing activities:
     Payments for debt issue costs                              (182,098)                  --                   --
     Proceeds from short-term debt                                    --              407,466              900,000
     Proceeds from notes payable                               5,000,000                   --                   --
     Principal payments of debt                               (4,814,008)          (1,350,931)          (1,975,768)
     Issuance of common stock                                     24,000                   --                   --
                                                             -----------          -----------          -----------
         Net cash provided (used) in financing activities         27,894             (943,465)          (1,075,768)
                                                             -----------          -----------          -----------

Net increase (decrease) in cash and cash equivalents            (185,830)            (659,619)             582,924

Cash and cash equivalents at beginning of year                   374,292            1,033,911              450,987
                                                             -----------          -----------          -----------

Cash and cash equivalents at end of year                     $   188,462          $   374,292          $ 1,033,911
                                                             ===========          ===========          ===========

Supplemental disclosure of cash flow information:
   Cash paid during the year for:
         Interest                                            $   625,589          $   439,165          $   958,960
                                                             ===========          ===========          ===========

         Income taxes                                        $    84,970          $        --          $    91,704
                                                             ===========          ===========          ===========
</TABLE>

Non-cash financing activities:
         During 1997, the Company wrote-off property and other assets of
         $6,372,682 and relieved liabilities of $8,953,358 in connection with
         the Company's discontinuance of its Foxboro harness racing business
         (see Note 12).

         During 1996, the Company wrote-off property of $4,103,702 in exchange
         for the discharge of $5,231,399 in debt related to a foreclosure
         transaction (see Note 12).

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

                                       19
<PAGE>   20


                    THE WESTWOOD GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 ---------------

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         DESCRIPTION OF BUSINESS

         The Company operates primarily in one business segment through its
    pari-mutuel racing subsidiary. Wonderland Greyhound Park, Inc.
    ("Wonderland") is a pari-mutuel greyhound racing facility located in Revere,
    Massachusetts. The Company also operated Foxboro Park, a pari-mutual harness
    racing facility located in Foxboro, Massachusetts through the date of
    eviction in July, 1997 (see Litigation at Note 6). The Company's Foxboro
    harness racing operations were discontinued during 1997 and is reported as a
    discontinued operation in the accompanying consolidated financial statements
    (see Note 3 of Notes to Consolidated Financial Statements).


         The Wonderland facility includes a one-quarter mile sand track, a
    physical plant consisting of a climate controlled grandstand and clubhouse
    and a two-story administrative center. The Company maintains and operates
    two full service restaurants, a sports bar and other concession facilities
    at the racetrack. The racetrack facility can accommodate 10,000 patrons. The
    average attendance per performance in 1998 was approximately 1,020 persons.
    The complex encompasses a total of approximately 35 acres, including paved
    and lighted parking providing capacity for approximately 2,300 cars.


         Wonderland provides its patrons with a variety of entertainment options
    including live racing and full card simulcast wagering.

         PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of the
    Company and its wholly-owned subsidiaries. All material intercompany
    transactions have been eliminated in consolidation.

         CASH AND CASH EQUIVALENTS

         Cash investments with maturities of three months or less at the time of
    their purchase are classified as cash equivalents.

         RESTRICTED CASH

         Restricted cash is related to the operations of Wonderland and consists
    of amounts held by The Commonwealth of Massachusetts (the "Commonwealth") in
    trust funds (for capital improvements and advertising/promotion), and
    unclaimed winnings from pari-mutuel wagering. Removal of restrictions on the
    use of the trust funds is dependent upon approval by the Commonwealth.

         PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost and are depreciated
    using the straight-line method over the following estimated useful lives:

       ASSET CLASSIFICATION                          ESTIMATED USEFUL LIFE
       --------------------                          ---------------------

       Buildings and improvements                           30 Years
       Machinery and equipment                             5-10 Years


         Gains or losses are recognized upon the disposal of property, plant and
    equipment, and the related accumulated depreciation and amortization are
    adjusted accordingly. Losses are also recognized on buildings and
    improvements in the event of a permanent impairment to their value, as
    determined by SFAS No. 121 "Accounting for the Impairment of Long-Lived
    Assets and for Long-Lived Assets to be Disposed of". Maintenance, repairs
    and betterments that do not enhance the value of or increase the life of the
    assets are charged to operations as incurred.

                                       20
<PAGE>   21


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         PROPERTY, PLANT AND EQUIPMENT (continued)


         Depreciation and amortization expense of approximately $700,000,
    $529,000 and $1,540,000, was recorded for the years ended December 31, 1998,
    1997 and 1996, respectively.


         INVESTMENTS


         The Company's investment in Back Bay Restaurant Group, Inc. ("BBRG") at
    December 31, 1998 represented approximately 19% of BBRG common stock. The
    Company is deemed to have the ability to exercise influence over BBRG since
    the Chairman of the Board of the Company is also the Chief Executive Officer
    of BBRG. Accordingly, the investment in BBRG has been accounted for under
    the equity method (see Note 14 of Notes to Consolidated Financial
    Statements).


         FAIR VALUE OF FINANCIAL INSTRUMENTS


         As of December 31, 1998 and 1997, the following methods and assumptions
    were used to estimate the fair value of each class of financial instruments
    for which it is practical to estimate. The carrying amount of cash
    equivalents approximates the fair value due to short term maturity of the
    cash equivalents. The fair value of the Company's long-term debt is
    estimated based on the quoted market prices for the same or similar issues
    or on the current rates offered to the Company for debt of the same
    remaining maturities.


         CONCENTRATION OF CREDIT RISK

         Financial instruments which potentially subject the Company to credit
    risk consist of cash equivalents and accounts receivable. The Company's
    policy is to limit the amount of credit exposure to any one financial
    institution and place investments with financial institutions evaluated as
    being creditworthy. Concentration of credit risk, with respect to accounts
    receivable, is limited due to the Company's credit evaluation process. The
    Company does not require collateral from its customers. The Company's
    customer base consists principally of other race tracks. Historically, the
    Company has not incurred any significant credit related losses.

         INCOME TAXES

         The Company uses the liability method of accounting for income taxes.
    Under this method, deferred income taxes are provided based on the estimated
    future tax effects of differences between financial statement carrying
    amounts and the tax basis of existing assets and liabilities. The Company's
    policy is to record a valuation allowance against deferred tax assets unless
    it is more likely than not that such assets will be realized in future
    periods. The Company considers estimated future taxable income or loss and
    other available evidence when assessing the need for its deferred tax asset
    valuation allowance.

         INCOME (LOSS) PER COMMON SHARE

         The Company follows Statement of Financial Accounting Standards (SFAS)
    No. 128, Earnings per Share, issued by the Financial Accounting Standards
    Board. Under SFAS No. 128, the basic and diluted net income (loss) per share
    of common stock are computed by dividing the net income (loss) by the
    weighted average number of common shares outstanding during the period,
    including potentially dilutive stock options. The Company's stock options
    did not have a dilutive effect in 1997 and 1996 since the option prices per
    share were deemed to be higher than the estimated average per share market
    price of the Company's common stock.

         USE OF ESTIMATES

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

                                       21
<PAGE>   22


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


         ADVERTISING


         The Company expenses advertising costs as incurred. Advertising expense
    was approximately $219,000, $319,000 and $350,000 for the years ended
    December 31, 1998, 1997 and 1996, respectively.


         NEW ACCOUNT PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
    133, "Accounting for Derivatives Instruments and Hedging Activities" ("SFAS
    No. 133"). SFAS No. 133 requires companies to recognize all derivatives
    contracts as either assets or liabilities in the balance sheet and to
    measure them at fair value. If certain conditions are met, a derivative may
    be specifically designated as a hedge, the objective of which is to match
    the timing of gain or loss recognition on the hedging derivative with the
    recognition of (i) the changes in the fair value of the hedged assets or
    liability or (ii) the earnings effect of the hedged forecasted transaction.
    For a derivative not designated as a hedging instrument, the gain or loss is
    recognized in income in the period of change. SFAS No. 133 is effective for
    all fiscal quarters of fiscal years beginning after June 15, 1999.

         Historically, the Company has not entered into derivative contracts.
    either to hedge existing risks or for speculative purposes. Accordingly, the
    Company does not expect adoption of the new standard to affect its financial
    statements.

         RECLASSIFICATIONS

         Certain amounts in the 1997 consolidated financial statements have been
    reclassified to conform with the 1998 presentation.


                                       22
<PAGE>   23



2.       LONG-TERM DEBT

         At December 31, 1998 and 1997, long-term debt consisted of the
following:

<TABLE>
<CAPTION>
                                                                               1998            1997
                                                                            ----------      ----------
       
       <S>                                                                  <C>             <C>       
       9.5% Century Bank and Trust Company ("Century Bank") term
         loan, requiring 84 monthly payments of principal and
         interest of $58,319 beginning August 1, 1998,
         collateralized by a mortgage and security interest in all
         real estate and personal property located at Wonderland
         Greyhound Park and by 125,000  shares of BBRG common
         stock held by the Company                                          $4,904,828      $       --
       
       6% BBRG Term Note, payable in equal quarterly payments of
          principal and interest beginning in 1999, collateralized
          by certain tangible personal property and licenses                   970,000         970,000
       
       7.5% Promissory Note, payable in 60 monthly payments
         of principal and interest of $2,003, commencing
         April, 1995                                                            26,682          47,838
       
       14-1/4% Subordinated Notes, due August 1997                              10,000         285,000
       
       8-3/4% MSCGAF Realty Trust term loan, paid in full
         during 1998                                                                --      $2,381,286
       
       Line of credit note, paid in full during 1998                                --       1,568,000
       
       Margin agreement, paid in full during 1998                                   --         117,855
       
       12% short-term note payable, paid in full during 1998                        --         355,539
                                                                            ----------      ----------

                                                                             5,911,510       5,725,518
       Less:
            Current maturities                                                 350,663         494,561
            Debt obligations in default                                         10,000       4,234,286
                                                                            ----------      ----------
       
       Long-term portion                                                    $5,550,847      $  996,671
                                                                            ==========      ==========
</TABLE>


         The aggregate principal payments required to be made on long term debt,
    for the years subsequent to December 31, 1998 are as follows:

       1999                                                  $  360,663
       2000                                                     407,000
       2001                                                     438,000
       2002                                                     476,000
       2003                                                     518,000
       2004 and thereafter                                    3,711,847
                                                             ----------
                                                             $5,911,510
                                                             ==========

         In May 1994, the Company entered into an agreement with BBRG to
    transfer the operations under the Concessions Agreement and the Management
    Agreement to the Company in return for a six year term note in the amount of
    $970,000. In 1997 the Note was amended requiring equal quarterly payments of
    principal and interest beginning April 1, 1999 of approximately $36,000 with
    interest at 6%.

         In May 1994, holders of approximately $19,300,000 of the Company's
    14.25% Subordinated Notes (the "Notes") exchanged them for approximately
    887,000 shares of BBRG common stock. The shares were exchanged in full
    settlement of principal, accumulated interest and default premiums due in
    respect of such Notes. Holders of approximately $285,000 of the Notes
    elected not to participate in the exchange. As of December 31, 1998, a
    balance of $10,000 remains unpaid and in default.

         In July 1998, the Company obtained long-term debt financing for
    $5,000,000 with Century Bank. The proceeds were used to repay previously
    outstanding indebtedness, including approximately $275,000 of subordinated
    debt, $2,381,000 of a realty trust term loan, $1,568,000 of a line of credit
    note, $118,000 on a margin agreement, and $356,000 of a short-term note
    payable. The remaining proceeds were used to pay other liabilities. The note
    agreement contains certain restrictive covenants including the maintenance
    of certain financial ratios and debt coverage requirements. The note is
    collateralized by a mortgage and security interest in all real estate and
    personal property at Wonderland Greyhound Park and by 125,000 shares of BBRG
    common stock held by the Company.


                                       23
<PAGE>   24



3.       DISCONTINUED OPERATIONS

         In 1996 litigation ensued between Foxboro Realty Associates, LLC, ET
    AL. ("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET AL., over
    Foxboro's right to occupy Foxboro Raceway. The Court issued an execution
    pursuant to which Foxboro was evicted from the racetrack on July 31, 1997
    (see Litigation at Note 5 of Notes to Consolidated Financial Statements). As
    a result the Company discontinued its harness racing operations.

         The gain on the discontinuance of approximately $1.0 million and $2.6
    million for year ended December 31, 1998 and 1997, respectively, is
    primarily comprised of the excess of occupancy and other liabilities over
    non-recoverable net leasehold improvements and other assets. The 1998 gain
    also includes approximately $445,000 for a change in a liability estimate
    (see Note 13 of Notes to Consolidated Financial Statements).

         The remaining liabilities of the Company's discontinued operations at
    December 31, 1998 are comprised of the following:

                                                                         1998
                                                                       --------

         Creditors Trust Agreement Promissory obligation and
           other liabilities                                           $174,451
         Trade payable                                                   53,598
         Outstanding pari-mutuel tickets                                476,371
                                                                       --------

                                                                       $704,420
                                                                       ========

         The loss of the Company's discontinued operations is summarized as
follows:

                                                 Period Ended       Year Ended
                                                   July 31,        December 31,
                                                     1997              1996
                                                 ------------      ------------

         Operating revenues                      $ 6,476,083       $ 11,214,689
         Operating expenses                       (8,976,203)       (13,395,125)
         Other income                                 88,333                 --
                                                 -----------       ------------

                                                 $(2,411,787)      $ (2,180,436)
                                                 ===========       ============

         In February 1998 the Company executed an Assignment for the Benefit of
    Creditors ("AFBC") for Foxboro Park, Inc., Foxboro Harness, Inc. and Foxboro
    Thoroughbred, Inc. (collectively, the "Foxboro Entities"). The AFBC was
    executed to provide a mechanism for the liquidation of its assets and the
    distribution of proceeds to its creditors. Provided that 70% in amount and
    50% in number of the Foxboro Entities creditors become Assenting Creditors,
    the Company will subordinate its claims except for those claims relating to
    certain contingent litigation matters. Creditors must file a written assent
    with the Assignee in order to become an Assenting Creditor. Assenting
    Creditors agree that the submission of an assent to this AFBC will operate
    as a release of any claims which could be asserted by an Assenting Creditor
    seeking to avoid the corporate separateness of the Company or any affiliate
    of the Company and the Foxboro Entities.

         Additionally Assenting Creditors agree not to institute or continue a
    suit against the Foxboro Entities or any other proceeding at law or in
    equity or otherwise on account of any debt due and owing to the Assenting
    Creditor from the Foxboro Entities, nor will the Assenting Creditor transfer
    its claim without the written approval of the Assignee. Each Assenting
    Creditor accepts in lieu of its claim against the Foxboro Entities the
    rights acquired in the AFBC.


4.       OTHER LONG-TERM LIABILITIES


         Other long-term liabilities includes approximately $1,032,000 and
    $1,346,000 at December 31, 1998 and 1997, respectively, of fees owed to a
    law firm primarily related to the Foxboro litigation (see Litigation at Note
    5 of Notes to Consolidated Financial Statements). Such amount is currently
    payable at $5,000 per week.



                                       24
<PAGE>   25


5.       COMMITMENTS AND CONTINGENCIES

         PLEDGES OF BBRG STOCK

         Approximately 40,000 shares of BBRG common stock have been pledged to
    collateralize a performance bond for Wonderland Park, which is required
    annually by the Mass State Racing Commission for all race tracks. The bond
    is for $125,000.

         Approximately 125,000 shares of BBRG common stock have been pledged as
    additional collateral for the note agreement with Century Bank.

         RACING LICENSE

        In order to meet the requirements for renewal of racing licenses,
    Wonderland must demonstrate, on an annual basis, that it is a financially
    viable entity, capable of disposing of their obligations on a timely basis.
    The racing license has been granted for the 1999 calendar year. Although
    management is optimistic that it will be able to demonstrate financial
    stability in their applications for a year 2000 racing license, there can
    be no assurance that the Racing Commission will continue to grant licenses
    to conduct racing on the schedules presently maintained at Wonderland.


         In the event that the Company is not successful in obtaining a year
    2000 racing license, the adverse impact on the Company's assets would be
    material.

         LEASE COMMITMENT

         Totalisator equipment rent (which is primarily based on the handle per
    performance) was approximately $320,000, $386,000, and $471,000, in 1998,
    1997 and 1996, respectively. Future minimum payments are due at amounts
    contingent on the Company's total handle amounts.


         The Company is also liable for numerous operating leases for
    automobiles and other equipment which expire through 2001. The future
    minimum lease commitments relating to noncancelable operating leases as of
    December 31, 1998 are immaterial.

         LITIGATION

         The Company is subject to various claims and legal actions that arise
    in the ordinary course of its business.

         In 1996 litigation ensued between Foxboro Realty Associates, LLC, ET
    AL. ("FRA") and the Company, its subsidiary Foxboro Park, Inc., ET AL., in
    Norfolk Superior Court in Massachusetts over Foxboro's right to occupy
    Foxboro Raceway. The Court issued an execution pursuant to which Foxboro was
    evicted from the racetrack on July 31, 1997. The parties appealed to the
    Appeals Court on January 27, 1998. The Company expects the appeals to be
    decided sometime during calendar year 1999.

         On July 8, 1998, Foxboro Route 1 Limited Partnership, ET AL., filed a
    civil action in Suffolk Superior Court in Massachusetts, against The
    Westwood Group, Inc., Wonderland Greyhound Park, Inc., ET AL., seeking
    payment for use and occupancy of Foxboro Raceway, and other damages, from
    1992 through July 1997.

         The ultimate outcome of such pending litigation cannot be determined at
    this time, however it is the opinion of the Company's management, any
    liability under such pending litigation would not materially affect its
    financial condition or operations.

         CONSULTING ARRANGEMENTS

         Prior to 1995, the Company engaged a firm to assist management in the
    planning and execution of a financial and operational reorganization of the
    Company. As compensation for its services, the Company agreed to a success
    fee, in addition to the basic fee, to grant options to acquire common stock
    totalling 6% of the total of the Company's capital stock at $3 per share
    (the "success fee" option). The success fee also stipulated that the
    principle of such firm, who was a director of the Company, would be required
    to return options to purchase 25,000 shares of the Company's common stock if
    the success fee options are exercised. Upon completion of the contract, the
    total costs were deemed to be materially less than the value of the success
    fee and thus the success fee options were not granted. The Company intends
    to renegotiate the amount of shares, price per share and other terms. The
    Company has previously recorded an estimated reserve of $100,000 for this
    consulting arrangement which is included with accounts payable and other
    accrued liabilities in the accompanying consolidated balance sheet.


                                       25


<PAGE>   26

6.       COMMON STOCK, STOCK OPTION AND GRANT PLANS

         The Company follows SFAS No. 123, "Accounting for Stock-Based
    Compensation". SFAS No. 123 allows the Company to account for its
    stock-based compensation plans based upon either a fair value method or the
    intrinsic value method. The Company has elected to follow the intrinsic
    value method of accounting for stock-based compensations plans prescribed
    under Accounting Principles Board Opinion No. 25, "Accounting for Stock
    Issued to Employees". Under SFAS No. 123, the Company is required to
    disclose the effects of applying the fair value method on the net income or
    loss.

         In October 1995, the Board of Directors approved and ratified the
    granting of non-qualified stock options. These options were granted to the
    Directors of the Company to purchase shares of common stock at an option
    price equal to the fair market value of the Company's common stock at the
    date the options were granted.

         The Company's stock options activity is summarized as follows:

                                                       Number        Exercise
                                                     of Shares         Price 
                                                     ---------       -------- 

         Balance, December 31, 1996 and 1995          241,334          $3.00
          Granted                                      52,500           3.00
          Terminated                                   (5,000)          3.00
                                                      -------

         Balance, December 31, 1997 and 1998          288,834           3.00
                                                      =======

         Exercisable, December 31, 1998               283,834           3.00
                                                      =======

         The Company's total stock options outstanding of 288,834 at December
    31, 1998 and 1997 expire as follows: 190,000 in 2002; 51,334 in 2005; and
    47,500 in 2007.

         The Company has computed the pro forma disclosures required under SFAS
    No. 123 for stock options using the Black-Scholes option pricing model
    prescribed by SFAS No. 123.

         The assumptions used and the weighted average information for year
    ended December 31, 1998 and 1997 are as follows:

                                                        1998            1997  
                                                      --------        -------

       Risk-free interest rates                           7.5%           6.5%
       Expected dividend yield                            2.5%           None
       Expected lives                                 10 YEARS        8 years
       Expected volatility                                 45%          46.5%
       Weighted average fair value of
         options on date of grant                        $3.01          $3.81
       Weighted-average exercise price                   $3.00          $3.00
       Weighed-average remaining
         contractual life of options
         outstanding                                   9 YEARS        9 years

                                       26
<PAGE>   27



6.       COMMON STOCK, STOCK OPTION AND GRANT PLANS (continued)

         The effect of applying SFAS No. 123 for year ended December 31, 1998
and 1997 would be as follows:

                                                            1998        1997
                                                        ----------   ----------

         Net income                      As reported    $1,810,288   $2,958,856
                                         Pro forma      $1,667,133   $2,796,931

         Net income per basic share      As reported    $     1.44   $     2.36
                                         Pro forma      $     1.32   $     2.23

         Net income per diluted share    As reported    $     1.42   $     2.32
                                         Pro forma      $     1.30   $     2.19


7.       INCOME TAXES

         The Company's provision for income taxes for the years ended December
    31, 1998 and 1996 represents alternative minimum Federal taxes and state
    income taxes. There was no provision for income taxes for the year ended
    December 31, 1997 due to the Company's taxable net operating loss.

         The Company's effective tax rates differ from amounts computed by
    applying the statutory federal income tax rate to income (loss) before
    income taxes, as follows:


                                                     1998      1997      1996
                                                    -----     -----     -----


       Statutory federal income tax rate             34.0%     34.0%     34.0%
       (Increase) Decrease in deferred tax
          valuation allowance                        (5.1)    (34.0)     11.6
       Alternative minimum tax                        2.0        --       2.0
       Utilization of carryforward  losses          (21.7)       --     (45.1)
                                                    -----     -----     -----
       Income tax rate                                9.2%       --%      2.5%
                                                    =====     =====     =====

         The tax effects of the significant temporary differences which comprise
    the deferred tax assets and liabilities are as follows:


                                                 1998        1997        1996
                                               --------    --------    --------
                                                       (IN THOUSANDS)
               DEFERRED TAX ASSETS

         Net operating loss carryforwards      $ 13,663    $ 14,105    $ 10,559
         Capital loss carryforwards                 670         670         670
         Fixed assets                               931       1,168       1,164
         Deferred compensation                      136         258         292
         Miscellaneous operating reserves           717         341         748
         Alternative minimum tax credit             580         580         580
         Capitalized expense                        150         150         150
         Rent expense                                --          --       2,212
                                               --------    --------    --------
         Gross deferred assets                   16,847      17,272      16,375
         Less valuation allowance               (14,449)    (14,813)    (14,303)
                                               --------    --------    --------
         Net deferred assets                      2,398       2,459       2,072

            DEFERRED TAX LIABILITIES                                    

         Miscellaneous liabilities                   --         244          64
         Investment in BBRG                       2,398       2,215       2,008
                                               --------    --------    --------
         Net deferred tax liabilities          $     --    $     --    $     --
                                               ========    ========    ========

         The Company's net operating loss carryforwards begin expiring as of
    December 31, 2007. The net operating loss carryforwards, amounting to $13.7
    million, expire as follows (in thousands) $2,046 in 2007, $7,591 in 2008,
    $43 in 2010, $437 in 2011, and $3,546 in 2012. The Company has fully
    reserved for all net deferred tax assets as future realization of these
    assets is not presently determinable.


                                       27
<PAGE>   28



8.       PENSION PLANS AND RETIREMENT BENEFITS


         The Company contributed $81,399, $84,049 and $86,338 in 1998, 1997 and
    1996, respectively, to three multi-employer pension plans for employees
    covered by collective bargaining agreements. These plans are not
    administered by the Company and contributions are determined in accordance
    with the provisions of negotiated labor contracts. The Company maintains a
    defined benefit retirement plan for certain other union employees and one
    for non-union employees. The plan provides a benefit of a flat dollar
    amount, determined by the collective bargaining agreement with the union.
    Company contributions to this plan totaled $142,073, $100,650 and $78,740 in
    1998, 1997 and 1996, respectively. Benefits under the plan are provided by a
    group annuity contract purchased from an insurance carrier. The expense for
    this plan includes amortization of the cost of providing plan benefits for
    past service over a period of approximately 14 years. The Company's funding
    policy is to contribute amounts annually to the Plan, subject to the
    Internal Revenue Service and ERISA minimum required and maximum allowable
    funding limitations. The following table sets forth the plan's funded status
    at December 31, 1998 and 1997:


<TABLE>
<CAPTION>
                                                            1998              1997
                                                        -----------       -----------

<S>                                                     <C>               <C>        
Actuarial present value of benefit obligation:
 Accumulated benefit obligation, including vested
 benefits of $1,283,304 and $1,709,769 for 1998 and
 1997, respectively                                     $(1,348,030)      $(1,763,919)
                                                        ===========       ===========

Projected benefit obligation                            $(1,348,030)      $(1,763,919)
Plan assets at fair value                                   760,967         1,319,124
Unrecognized transition obligation                               --          (170,299)
Unrecognized net losses                                    (253,060)          (89,735)
Adjustment for minimum liability                            253,060           260,034
                                                        -----------       -----------
Adjusted accrued pension cost (included in other
long-term liabilities)                                  $   587,063       $   444,795
                                                        ===========       ===========
</TABLE>

               Net periodic pension cost included the following components:

<TABLE>
<CAPTION>
                                                       For the Year Ended December 31,
                                                     ----------------------------------
                                                         1998         1997         1996
                                                     --------    ---------     --------

<S>                                                  <C>         <C>           <C>     
Service cost-benefits earned during the period       $     --    $  24,344     $ 26,820
Interest cost on projected benefit obligation         102,406      133,086      136,508
Actual return on plan assets                          (47,307)    (113,811)     (77,609)
Net gain (loss) during the year, deferred for
  later recognition                                   (20,088)      (7,120)     (31,944)
Amortization of unrecognized net obligation           170,299       42,576       42,576
                                                     --------    ---------     --------
     Net periodic pension cost                       $205,310    $  79,075     $ 96,351
                                                     ========    =========     ========
</TABLE>

         Assumptions used in accounting for the above pension information
    included a discount rate of 7% and an expected long-term rate of return of
    8.5% for all years presented.

<TABLE>
<CAPTION>
         The following tables set forth pension obligations and plan assets as 
         of December 31, 1998:

                                                1998
         ----------------------------------------------
         <S>                                 <C>
         Change in benefit
          obligation:
         Benefit obligation
          as of January 1, 1998              $1,763,919
         Interest cost                          102,406
         Actuarial loss (gain)                  220,215
         Benefits paid                         (738,510)
                                             ----------
         Benefit obligation
          as of December 31, 1998            $1,348,030
         ------------------------            ==========

         Change in plan
          assets:
         Fair value as
          of January 1, 1998                 $1,319,124
         Actual return on plan
          assets                                 47,307
         Company contribution                   142,073
         Benefits paid                         (738,510)
         Plan expenses paid                      (9,027)
                                             ----------
         Fair value as
          of December 31, 1998               $  760,967
                                             ========== 
</TABLE>

         The Company amended the defined benefit plan in connection with the
    renewal of a collective bargaining agreement. The amendment provides that as
    of January 31, 1998, benefit accruals under the plan will be frozen for
    those active employees who accrued benefits under the plan before January
    31, 1998. The amendment further provides that on and after January 31, 1998,
    employees hired by Wonderland will no longer be eligible to join the plan.
    The Company will make contributions on behalf of these employees at a fixed
    rate to the union 401(k) plan based upon hours worked. These contributions
    commenced in 1998 and amounted to approximately $4,300.


         During 1997 the Company established separate 401(k) plans for union and
    nonunion employees, respectively. The plans are administered by an insurance
    company. The Company made contributions on behalf of certain union employees
    based upon a fixed rate and performances worked. The total of these
    contributions was approximately $56,000 and $41,000 for the years ended
    December 31, 1998 and 1997, respectively.



                                       28
<PAGE>   29



8.       PENSION PLANS AND RETIREMENT BENEFITS (continued)

         The Company also has employment contracts with certain retired
    employees which provide for the payment of retirement benefits, the cost of
    which has been accrued during their active employment.


         Expense for all retirement plans of the Company for the years ended
    December 31, 1998, 1997, and 1996, was approximately $436,000, $358,000 and
    $329,000, respectively.


9.       INVESTMENTS

         During 1994, the Company and BBRG jointly pursued a series of
    transactions, the effect of which resulted in the control of BBRG no longer
    resting with the Company. Accordingly, the Company's investment in BBRG for
    the years ended December 31, 1998, 1997 and 1996 has been accounted for
    under the equity method (see Note 14 of Notes to Consolidated Financial
    Statements).

         The following summarized financial information was derived from BBRG's
    financial statements which have been audited by other independent certified
    public accountants, and included in their Form 10-K for the year ended
    December 27, 1998:


    BALANCE SHEET INFORMATION           DECEMBER 27, December 28,
        (IN THOUSANDS)                     1998          1997
                                        -----------  ------------
        Current assets                    $ 4,848       $ 4,050
        Property and equipment             33,043        30,405
        Noncurrent assets                   8,754         8,617
        Current liabilities                12,531        11,786
        Noncurrent liabilities              4,298         4,274
        Stockholders' equity               29,816        27,012



                                                     Years Ended
                                       -----------------------------------------
    OPERATIONS INFORMATION             DECEMBER 27,  December 28,   December 29,
        (IN THOUSANDS)                     1998          1997           1996
                                       ------------  ------------   ------------

        Net sales                         $99,396       $94,904        $87,753
        Gross profit                       71,887        68,503         62,968
        Net income                          2,684         1,731            467
        Company's equity in net 
          earnings of BBRG                    525           337             86

    The quoted market value of BBRG stock during 1998 reflected a high and low
    price of $9.88 and $4.63, respectively. The quoted market value of BBRG
    stock at December 31, 1998, reflected a price $9.50.



10.      ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


         Accounts payable and accrued liabilities as of December 31, 1998 and
1997 consisted of the following:

                                            1998           1997
                                         ----------     ----------


        Accounts payable, trade          $  853,220     $2,399,542
        Other accrued liabilities           882,598      1,666,913
        Accrued bonus                       322,777        481,000
        Accrued interest                    336,923        218,292
                                         ----------     ----------
                                         $2,395,518     $4,765,747
                                         ==========     ==========


                                       29
<PAGE>   30



11.      TRANSACTIONS WITH OFFICERS, EMPLOYEES AND RELATED PARTIES

         In May 1994, the Company purchased all restaurant and concession
    operations at Wonderland from BBRG for a sales price of $770,000. Included
    in the term note of $970,000 was additional amounts owed to BBRG for costs
    incurred under a Cross Indemnification agreement amounting to $200,000, and
    interest expense of approximately $58,000 each of the last three years.

         The Company received payments of $80,000 in January 1995, as repayments
    on a note receivable from Charles Sarkis, the Company's Chairman and
    majority stockholder. At December 31, 1998 and 1997, the aggregate amounts
    of loans outstanding to officers/stockholders including interest, was
    $893,393 and $820,949, respectively. The loans have been restructured and
    are payable over five years and bear interest at 8.0% per annum. Notes
    receivable and related interest, in the amount of $384,434 is due from
    Charles Sarkis and $508,959 is due from Richard P. Dalton, the Company's
    President, Chief Executive Officer, and stockholder. Charles Sarkis' loan,
    including interest, has previously been recorded as a component of
    stockholders' equity. The $384,434 is now recorded as a note receivable at
    December 31, 1998. The accrued bonus due to Charles F. Sarkis and Richard P.
    Dalton of $419,500 and $200,100 at December 31, 1998, respectively, will be
    used to repay the outstanding notes receivable balances as they become due.
    See Note 14 for additional transactions with related parties. These bonuses
    amounts are classified in Accounts payable and other accrued liabilities and
    Other long-term liabilities at December 31, 1998.


12.      NET GAIN ON SALE/FORECLOSURE OF REAL PROPERTY

         In 1997, the Company sold its interest in a limited partnership which
    owned land and an office and retail building for a cash payment of $500,000.
    During 1992, the Company reduced the carrying value of this investment to
    zero, therefore the entire amount of the proceeds resulted in a gain in
    1997.

         In December 1996 the first and second mortgage holders completed
    foreclosure proceedings on the Company's property located at 284 Newbury
    Street in the Back Bay Section of Boston. These transactions resulted in a
    gain of approximately $1.1 million and the reduction of liabilities of
    approximately $5.2 million including accrued interest and property taxes of
    approximately $471,000. These mortgage obligations were non-recourse to the
    company and also resulted in the release of 45,000 shares of BBRG stock
    previously held by the first mortgagee as additional collateral.


13.      CHANGE IN LIABILITY

         In prior years, Westwood recorded a liability of approximately $890,000
    to a supplier. During 1998, Westwood eliminated the recorded liability by
    recording approximately half as discontinued operations on Foxboro and
    recording approximately half against general operating expenses of
    Wonderland.


14.      SUBSEQUENT EVENT

         On March 26, 1999, a majority of BBRG's shareholders approved a merger
    agreement (the "Merger Agreement"), by and between BBRG and SRC Holdings,
    Inc. (the "Acquiror"), a Delaware corporation formed by Charles F. Sarkis,
    BBRG's Chairman and Chief Executive Officer, pursuant to which the Acquiror
    would be merged (the "Merger") with and into BBRG, with BBRG being the
    surviving company. The Merger was consummated April 15, 1999. Pursuant to
    the Merger, the holders of BBRG's common stock, other than the Company, Mark
    L. Hartzfeld, Francis P. Bissaillon, Ann Marie Lagrotteria and Richard P.
    Dalton (collectively, the "Affiliated Shareholders"), received $10.25 in
    cash in exchange for each share of common stock of BBRG held by them. The
    Affiliated Shareholders continued to own stock of the surviving corporation.
    As of the date of the Merger, the Company holds 48.64% of the common stock
    of BBRG on a fully diluted basis. Following the Merger, BBRG no longer meets
    the requirements of a public company and its shares will no longer be listed
    or traded in the public market.



                                       30
<PAGE>   31



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

    None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        DIRECTORS

        NAME                      AGE      SINCE      POSITION
        ----                      ---      -----      --------


        Charles F. Sarkis         59        1978      Chairman of the Board

        Richard P. Dalton         51        1978      President, Chief Executive
                                                        Officer, Director

        A. Paul Sarkis            31        1995      Executive Vice President,
                                                        Director

        Paul J. DiMare            56        1987      Director


               CHARLES F. SARKIS has served as Chairman of the Board since 1978.
He was Chief Executive Officer of the Company from 1978 to 1992 and President
from 1984 to 1992. He has been Chairman of the Board, President and Chief
Executive Officer of Back Bay Restaurant Group, Inc. (restaurant holding
company), formerly a wholly-owned subsidiary of the Company, for more than six
years. He also has been Chief Executive Officer of Sarkis Management Corporation
(restaurant management).

               RICHARD P. DALTON has served as President and Chief Executive
Officer of the Company since 1993. He served as Executive Vice President of the
Company from 1988 to 1992 and Chief Operating Officer from 1989 until 1992. He
was Vice President from 1984 until 1987; Chief Financial Officer from 1988 to
1989; Treasurer from 1974 to 1989; Assistant Secretary since 1984; and General
Manager from 1981 to 1983. Mr. Dalton is also a director of Back Bay Restaurant
Group, Inc.

               A. PAUL SARKIS was elected Executive Vice President and Director
in August, 1995. Mr. Sarkis was Corporate Director of Development from 1993 to
1995 and Financial Analyst from 1990 to 1993.

               PAUL J. DIMARE has been President of DiMare Homestead, Inc.
(agricultural processing and packaging) and DiMare Management Corp.
(agricultural management and marketing) for over six years. He also is a
director of First National Bank of Homestead, Florida.

               Mr. A. Paul Sarkis, currently an Executive Vice President of the
Company and director of the Company, is the son of Charles F. Sarkis, the
Chairman of the Board of Directors. All of the directors and executive officers
are citizens of the United States. There are no arrangements or understandings
between any of the directors or executive officers of the Company and any other
person pursuant to which such director or executive officer was or will be
selected as a director or officer of the Company. Each of the executive officers
of the Company holds office at the pleasure of the Board of Directors.


                                       31
<PAGE>   32


ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE - The following table shows the cash and other
remuneration paid or accrued, in respect of services rendered to the Company and
its wholly-owned subsidiaries for the three years ended December 31, 1998, to
each of the Company's executive officers whose aggregate remuneration exceeded
$100,000.


<TABLE>
<CAPTION>
                                            COMPENSATION                           --AWARDS-- PAYOUTS
-----------------------------------------------------------------------------------------------------------------------
                                             
       NAME AND                                 OTHER     RESTRICTED                                       
       PRINCIPAL                                ANNUAL      STOCK      OPTIONS/       LTIP     ALL OTHER   
       POSITION           YEAR      SALARY      BONUS    COMPENSATION   AWARDS(S)     SARS      PAYOUTS    COMPENSATION
-----------------------   ----    --------    --------   ------------  ----------     ----     ---------   ------------
                                             
<S>                       <C>     <C>         <C>               <C>     <C>              <C>        <C>          <C>
Charles F. Sarkis         1998    $250,000    $159,500
  Chairman of the Board   1997    $200,000    $269,000          -          20,000        -          -            - 
                          1996    $200,000    $      -          -               -        -          -            - 
                                             
Richard P. Dalton         1998    $205,000    $ 95,700
  President and  Chief    1997    $186,250    $161,400          -          15,000        -          -            -
  Executive Officer       1996    $180,000           -          -               -        -          -            - 
                                             
A. Paul Sarkis            1998    $125,000    $ 63,800
  Executive Vice          1997    $ 93,750    $107,600          -           7,500        -          -            -
  President                                  
                                             
Richard G. Egan, Jr.      1998    $110,000    $      -          -               -        -          -            -
  Former Vice             1997    $100,817    $  9,840          -           5,000        -          -            -
  President and CFO                        
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

               During the year ended December 31, 1998, Messrs. Charles F.
Sarkis, Richard P. Dalton and A. Paul Sarkis served as executive officers of the
Company and as members of the Board of Directors of the Company which performs
the functions of a compensation committee. In addition, Mr. Charles F. Sarkis
served as a director and executive officer of BBRG and Mr. Dalton served as a
member of the Compensation Committee of the Board of Directors of BBRG.


               REMUNERATION OF DIRECTORS - The Company pays to each nonemployee
Director $2,000 per Board meeting attended with an additional fee of $1,000 for
each Committee meeting attended.


               COMPENSATION PLAN - The Company has adopted a executive
compensation plan. The compensation plan is designed to provide an environment
and opportunity for key executives to be rewarded for individual achievement as
well as for attaining overall corporate goals. The compensation plan includes
provisions for a base salary, annual incentive and long term incentives. Base
salary is determined annually and is based upon the level and amount of
responsibility in the context of comparable companies. Additional annual
incentives are to be distributed to key executives from a bonus pool. A
performance bonus equal to 10% of income before tax will be allocated to the key
executives at the discretion of the Compensation Committee and Board of
Directors. Additionally, a discretionary bonus up to 5% of income before income
taxes will be available to reward an employee's individual performance. Finally,
long term incentives will consist of stock options granted to key executives at
the discretion of the Compensation Committee and Board of Directors.

               In addition, a special transaction bonus is available in the
event the Chairman initiates and/or negotiates an extraordinary transaction to
enhance shareholder value, including a merger, sale, acquisition or joint
venture. The transaction bonus is equal to 2% of the value of any such
transaction.

               STOCK OPTION AGREEMENTS - During 1997, the Company issued to
certain executives 47,500 options to purchase the Company's common stock at an
exercise price of $3.00 per share. During 1995, the Company awarded to Directors
and Former Directors of the Company, non-qualified stock options to purchase
241,334 shares of the Company's common stock at an exercise price of $3.00 per
share. All such options expire 10 years from the date of grant.


                                       32

<PAGE>   33

                             Year-End Option Values

               The table below shows the total number of unexercised options
held at December 31, 1998. There are no unexercised in-the-money options(1) a
the fiscal year-end. No options were exercised in the year-ended December 31,
1998.

<TABLE>
<CAPTION>
                                     Number of Securities                        Value of Unexercised
                                    Underlying Unexercised                      In-The-Money Options at
                                Options at Fiscal Year-End(#)                        Year-End($)(1)
                                -----------------------------                   -----------------------
       Name                  Exercisable            Unexercisable           Exercisable            Unexercisable
------------------           -----------            -------------           -----------            -------------
<S>                             <C>                     <C>                      <C>                     <C>
Charles F. Sarkis               95,000                      -                    0                       -

Richard P. Dalton               40,000                      -                    0                       -

A. Paul Sarkis                  32,500                      -                    0                       -

Richard G. Egan Jr.                  0                  5,000                    0                       0
</TABLE>

(1)  In-the-Money Options are those where the fair market value of the
     underlying Securities exceeds the exercise price of the option.



                                       33

<PAGE>   34



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF COMMON STOCK

    The following table sets forth certain information, as of April 15, 1999,
with respect to the beneficial ownership of the Company's Common Stock by each
Director, by all Directors and officers of the Company as a group and by persons
known by the Company to own beneficially more than 5% of the outstanding Common
Stock. Unless otherwise noted, such stockholders have full voting and investment
power with respect to the shares listed as beneficially owned by them.

                                                AMOUNT AND NATURE   
                      NAME AND ADDRESS            OF BENEFICIAL     PERCENT
                     OF BENEFICIAL OWNER          OWNERSHIP (1)    OF CLASS

               Directors and Officers:                               


               Richard P. Dalton                     52,350(2)       13.7%
               The Westwood Group, Inc.                              
               190 VFW Parkway                                       
               Revere, MA 02151                                      

               Paul J. DiMare*                      143,300(3)       37.4%
               P.O. Box 900460                                       
               Homestead, FL  33090                                  

               A. Paul Sarkis                        48,609(4)       12.4%
               Back Bay Restaurant Group, Inc.                       
               284 Newbury Street                                    
               Boston, MA 02115                                      

               Charles F. Sarkis*                   899,616(5)       72.4
                                                  ---------          ----
               Back Bay Restaurant Group, Inc.
               284 Newbury Street                                    
               Boston, MA 02115                                      

               All Directors and Officers as a                       
                  group (five persons)            1,143,875(6)       83.4
                                                                     ====

Holders of more than 5%, not included above
-------------------------------------------

               Dimare Homestead, Inc.                92,500(7)       27.0%
               Jori M. Baker                         37,749(8)       10.2%
               Michael S. Fawcett                    25,600(9)        7.0%
               Joseph J. O'Donnell                   47,669(10)      12.9%
               Pauline F. Evans                      26,122(11)       7.6%
               Patricia F. Harris                    19,850(12)       5.8%


* Messrs. Sarkis and DiMare each beneficially owns over five percent of the 
  outstanding Common Stock.

(1)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote, or to direct the voting of, a security, or the sole or
     shared investment power with respect to a security (i.e., the power to
     dispose of or to direct the disposition of, a security). For purposes of
     this table a person is deemed to have "beneficial ownership" of any
     security that such person has the right to acquire within 60 days,
     including by conversion of such stockholder's shares of Class B Common
     Stock into shares of Common Stock or by exercise of options. For purposes
     of this table, any shares of Common Stock not outstanding which are subject
     to such a right, or conversion privileges, are deemed to be outstanding for
     the purposes of computing the percentage of outstanding shares owned by
     such person or group, but are not deemed to be outstanding for the purposes
     of computing such percentage owned by any other person or group.

(2) Includes presently exercisable options to purchase 40,000 shares.


(3) Includes 92,500 shares held of record by DiMare Homestead Inc. over which
    Mr. DiMare has voting and investment power, and presently exercisable
    options and grants to purchase 40,000 shares.

(4) Includes presently exercisable options to purchase 32,500 shares and 16,109
    shares issuable upon conversion of the shares of Class B Common Stock
    beneficially owned by Mr. Sarkis.


                                       34
<PAGE>   35



(5)  Consists of 804,616 shares issuable upon conversion of the shares of 
     Class B Common Stock beneficially owned by Mr. Sarkis as well as presently
     exercisable options to purchase 95,000 shares. Does not include 6,750
     shares of Common Stock or 2,900 shares of Class B Common Stock held by Mr.
     Sarkis' former wife; Mr. Sarkis disclaims beneficial ownership of such
     shares. See footnote (2) to the table below showing beneficial ownership of
     Class B Common Stock.

(6)  Includes presently exercisable options to purchase 207,500 shares and
     820,725 shares issuable upon conversion of shares of Class B Common Stock,
     held by all directors and officers as a group.

(7)  See Footnote (3)

(8)  Includes 7,665 shares held of record by International Planning Group 401(K)
     Profit Sharing Plan over which Mr. Baker has voting and investment power,
     and presently exercisable options to purchase 26,334 shares. Mr. Baker's
     address is c/o The Baker Companies, 62 Walnut Street, Wellesley,
     Massachusetts 02181.

(9)  Includes presently exercisable options to purchase 25,000 shares. Mr.
     Fawcett's address is c/o Dorman & Fawcett, P.O. Box 214, Hamilton,
     Massachusetts 01936.

(10) Includes presently exercisable options to purchase 25,000 shares. Mr.
     O'Donnell's address is c/o Boston Concessions Group, Inc., 111 6th Street,
     Cambridge, Massachusetts 02141.

(11) Ms. Evans' address is 3600 Galt Ocean Drive, Fort Lauderdale, Florida
     33308.

(12) Ms. Harris' address is 11 Royal Road, Brookline, Massachusetts 02146.


(b) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF CLASS B COMMON STOCK


    The following table sets forth certain information, as of April 15, 1999
with respect to the beneficial ownership of the Company's Class B Common Stock
by each Director, and named Executive Officer and by all Directors and officers
of the Company as a group and by persons known by the Company to own
beneficially more than 5% of the outstanding Class B Common Stock. Unless
otherwise noted, such stockholders have full voting power and investment power
with respect to the shares listed as beneficially owned by the.


                                                SHARES OF CLASS B   
                   NAME AND ADDRESS               COMMON STOCK       PERCENT
                  OF BENEFICIAL OWNER        BENEFICIALLY OWNED(1)  OF CLASS
                  -------------------        ---------------------  --------

            Charles F. Sarkis                       804,616(2)        88.2%
            Back Bay Restaurant Group, Inc.
            284 Newbury St.
            Boston, MA 02116

            A. Paul Sarkis                           16,109            1.8%
            Back Bay Restaurant Group, Inc. 
            284 Newbury St.
            Boston, MA 02116
                                                    -------           ---

            All Directors and                       820,725(2)         90%
             Officers as a                          =======           ===
             Group (five persons)

(1)  As used in this table, "beneficial ownership" means the sole or shared
     power to vote, or to direct the voting of, a security, or the sole or
     shared investment power with respect to a security (i.e., the power to
     dispose of, or to direct the disposition of, a security). In addition, for
     purposes of this table a person is deemed to have "beneficial ownership" of
     any security that such person has the right to acquire within 60 days.


(2)  Includes shares held by Sarkis Management Corporation which is wholly-owned
     by Mr. Sarkis. Does not include 93,754 shares held by Mr. Sarkis' six adult
     children (including A. Paul Sarkis) or 2,900 shares held by Mr. Sarkis'
     former wife; Mr. Sarkis disclaims beneficial ownership of such shares.


                                       35
<PAGE>   36




COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Based solely on the review of Forms 3, 4 and 5 and all amendments thereto
furnished to the Company with respect to its most recent fiscal year, it appears
that each Director, officer and 10% beneficial owner of Common Stock of the
Company complied with Section 16(a) of the Securities Exchange Act of 1934,
except that Messrs. Charles F. Sarkis, A. Paul Sarkis, Richard P. Dalton and
Richard G. Egan, Jr. failed to timely file a Form 5 with respect to option
grants made in fiscal year 1997.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (a) The Company made loans of $28,000, $52,000 and $32,400 to Richard P.
   Dalton, a director and executive officer of the Company, in 1986, 1987 and
   1988 respectively, in connection with certain purchases by Mr. Dalton of
   shares of the Company's Common Stock. Personal loans in the amounts of
   $107,905, $55,104 and $10,000 were also made to Mr. Dalton during 1989, 1990
   and 1991, respectively. During 1990, Mr. Dalton repaid $25,000 in principal
   amount of these loans. The Company also made personal loans to Mr. Sarkis in
   the amounts of $201,086 and $209,237 during 1989 and 1990, respectively. In
   January, 1995, Mr. Sarkis repaid $80,000 to the Company. The restructuring of
   these loans have been agreed upon by the principals and formal agreements are
   to be prepared and executed. These loans are to be payable over five years of
   monthly principal and interest payments maturing on December 31, 2003, and
   bear interest at 8.0% per annum. As of December 31, 1998, the outstanding
   balance on these loans, including accrued interest, is $893,393:

     (b) Mr. Charles F. Sarkis is the majority shareholder of the Company. At
   December 31, 1998, the Company owned 19% of the common stock of Back Bay
   Restaurant Group, Inc. ("BBRG). Certain arrangements between the Company and
   BBRG and/or their respective affiliates were made while BBRG was a
   wholly-owned subsidiary of the Company and accordingly, were established by
   related parties and were not subject to arms length negotiations. Prior to
   1994, the Company and BBRG were parties to agreements pursuant to which BBRG
   operated the concession business and received certain other revenues in
   connection with the operation of Wonderland Greyhound Park and Foxboro Park,
   two pari-mutuel race tracks owned by the Company. In May 1994, BBRG
   transferred its concession and related operations to the Company in return
   for $770,000 term note to which $200,000 owed by the Company to BBRG was
   added, to bring the total principal amount of the note to $970,000. In 1997,
   this note was amended requiring equal quarterly payments of principal and
   interest beginning April 1, 1999 of approximately $36,000 with interest at
   6%.

     (c) On March 26, 1999, a majority of BBRG's shareholders approved a merger
   agreement (the "Merger Agreement"), by and between BBRG and SRC Holdings,
   Inc. (the "Acquiror"), a Delaware corporation formed by Charles F. Sarkis,
   BBRG's Chairman and Chief Executive Officer, pursuant to which the Acquiror
   would be merged (the "Merger") with and into BBRG, with BBRG being the
   surviving company. The Merger was consummated April 5, 1999. Pursuant to the
   Merger, the holders of BBRG's common stock, other than the Company, Mark L.
   Hartzfeld, Francis P. Bissaillon, Ann Marie Lagrotteria and Richard P. Dalton
   (collectively, the "Affiliated Shareholders"), received $10.25 in cash in
   exchange for each share of common stock of BBRG held by them. The Affiliated
   Shareholders continued to own stock of the surviving corporation. As of the
   date of the Merger, the Company holds 48.64% of the common stock of BBRG on a
   fully diluted basis. Following the Merger, BBRG no longer meets the
   requirements of a public company and its shares will no longer be listed or
   traded in the public market.  

     (d) Prior to 1995, the Company engaged a firm to assist management in the
   planning and execution of a financial and operational reorganization of the
   Company. As compensation for its services, the Company agreed to a success
   fee, in addition to the basic fee, to grant options to acquire common stock
   totalling 6% of the total of the Company's capital stock at $3 per share (the
   "success fee" option). The success fee also stipulated that the principle of
   such firm, who was a director of the Company, would be required to return
   options to purchase 25,000 shares of the Company's common stock if the
   success fee options are exercised. Upon completion of the contract, the total
   costs were deemed to be materially less than the value of the success fee and
   thus the success fee options were not granted. The Company intends to
   renegotiate the amount of shares, price per share and other terms. The
   Company has previously recorded an estimated reserve of $100,000 for this
   consulting arrangement which is included with accounts payable and other
   accrued liabilities in the accompanying consolidated balance sheet.


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<PAGE>   37

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

    (a) (1) Financial Statements

            Included under Item 8 in Part II of this report:
            Reports of Independent Accountants
            Consolidated Balance Sheets
            Consolidated Statements of Income
            Consolidated Statements of Changes in Stockholders' Equity (Deficit)
            Consolidated Statements of Cash Flows
            Notes to Consolidated Financial Statements

        (2) Financial Statement Schedules

            All financial statement schedules are omitted because they are not
            applicable or the required information is shown in the consolidated
            financial statements or notes thereto.

(3) Exhibits

    3.1     Certificate of Incorporation of the Company.(1)

    3.2     Amendment, dated May 15, 1987, to the Certificate of Incorporation
            of the Company.(4)

    3.21    Amendment, dated November 2, 1995, to the Certificate of
            Incorporation of the Company.(9)

    3.3     Bylaws of the Company.(1)

    4.1     Indenture, dated as of August 15, 1987, between the Company and
            State Street Bank and Trust Company, as trustee, relating to the
            Company's Subordinated Notes.(2).

    4.2     Supplemental Indenture, dated as of March 16, 1988, between the
            Company and State Street Bank and Trust company, as trustee.(4)

    10.7    Collective Bargaining Agreement between Wonderland Greyhound Park,
            Inc. and Local 103 - Electrical Workers, dated November 12, 1986.(2)

    10.8    Retirement arrangement with James F Kelley.(5)

    10.9    Loan Agreement dated May 15, 1992, in connection with a loan from
            the MSCGAF Realty Trust, together with a promissory note and a
            mortgage and security agreement.(6)

    10.10   Term Loan Agreement, dated August 24, 1992 in connection with a loan
            from First Trade Union Savings Bank, FSB, together with a term
            promissory note, a pledge and security agreement and with a
            Modification Agreement, dated August 27, 1992.(6)

    10.11   Creditor Trust and Settlement Agreement dated September 29, 1992, in
            connection with a settlement with certain trade creditors, together
            with a promissory note and a creditors trust security agreement.(6)

    10.12   Totalisator Service Agreement, dated August 30, 1991, in connection
            with an exclusive service contract, together with an amendment and
            extension agreement dated April 2, 1992.(6)

    10.13   Contract dated November 20, 1992, in connection with services to be
            provided to the Company by an entity of which a former Director of
            the Company is a principal, together with an amendment by letter
            agreement, dated February 2, 1993.(6)


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<PAGE>   38



    10.14   Collective Bargaining Agreement between the Company and United Food
            and Commercial Workers' Union, Local 1445 AFL-CIO, CLC, dated June
            1, 1993.(7)

    10.15   Collective Bargaining Agreement between the Company and Local
            25-Teamsters, effective January 1, 1993.(7)

    10.16   Purchase and Sale Agreement dated December 14, 1993 between Back Bay
            Restaurant Group, Inc. and The Westwood Group, Inc.(7)

    10.17   Termination Agreement dated December 14, 1993 between Back Bay
            Restaurant Group, Inc. and The Westwood Group, Inc. together with
            termination of employee and administrative services agreement, a
            termination of amended and restated tax sharing and indemnification
            agreement, an amended and restated cross-indemnification agreement
            and a mutual release.(7)

    10.18   Loan Restructuring Agreement, dated as of July 1, 1993, between
            certain subsidiaries of the Company and the MSCGAF Realty Trust, in
            connection with the restructuring of $4,500,000 Term Loan, together
            with Exhibits A through F of such agreement.(7)

    10.19   Amendment, dated December 16, 1994, to Loan Restructuring Agreement
            between certain subsidiaries of the Company and the MSCGAF Realty
            Trust, in connection with the restructuring of $4,500,000 Term
            Loan.(8)

    10.20   Settlement of Litigation Agreement, dated October 12, 1994, between
            Foxboro Park, Inc. and the trustee of the Creditor Trust and
            Settlement Agreement, in connection with the restructuring of the
            Creditor Trust and Settlement Agreement with related promissory
            notes, dated July 7, 1994.(8)

    10.21   Collective Bargaining Agreement between Wonderland Greyhound Park,
            Inc. and Local 22 - Laborers' International Union, dated July 1,
            1993.(8)

    10.22   Collective Bargaining Agreement Extension between RFSC, Inc. and
            Local 26 - Hotel and Restaurant Workers, effective January 1,
            1994.(8)

    10.23   Settlement Agreement between Wonderland Greyhound Park, Inc. and
            Local 254 Service Employees International Union, dated September 19,
            1994, in connection with a successor collective bargaining
            agreement.(8)

    10.24   Amendment to Term Note between certain subsidiaries of the Company
            and BBRG, dated March 17, 1995.(8)

    10.25   Margin Account Client Agreement between Westwood Financial Group,
            Inc. and Tucker Anthony Inc., dated May 19, 1994, together with a
            side agreement detailing additional terms.(8)

    10.26   Assignment for the Benefit of Creditors and Sharing Agreement
            (Foxboro Hamess).(10)

    10.27   Assignment for the Benefit of Creditors and Sharing Agreement
            (Foxboro Thoroughbred).(10)

    10.28   Assignment for the Benefit of Creditors and Sharing Agreement
            (Foxboro Park).(10)

    10.29   Form of Executive Non-Qualified Stock Option Agreement.(10)

    10.30   Form of Employee Non-Qualified Stock Option Agreement.(10)

    10.31   Third Amendment to Term Note between certain subsidiaries of the
            Company and BBRG, dated January 5, 1998.(10)

    10.32   Voting and Shares Exchange Agreement, dated as of March 31, 1999.
            (filed herewith).

                                       38
<PAGE>   39



    21      Subsidiaries of the Company (filed herewith).

    27      Financial Data Schedule (filed herewith).

    (1)     Filed with the Company's Annual Report on Form 10-K for 1984 and
            incorporated herein by reference.

    (2)     Filed with the Company's Registration Statement on Form S-2 No.
            33-15344 filed on June 25, 1987 and incorporated herein by
            reference. (3)

    (3)     Filed with the Company's Annual Report on Form 10-K for 1980 and
            incorporated herein by reference.

    (4)     Filed with the Company's Annual Report on Form 10-K for 1987 and
            incorporated herein by reference.

    (5)     Filed with the Company's Annual Report on Form 10-K for 1988 and
            incorporated herein by reference.

    (6)     Filed with the Company's Annual Report on Form 10-K for 1992 and
            incorporated herein by reference.

    (7)     Filed with the Company's Annual Report on Form 10-K for 1993 and
            incorporated herein by reference.

    (8)     Filed with the Company's Annual Report on Form 10-K for 1994 and
            incorporated herein by reference.

    (9)     Filed with the Company's Annual Report on Form 10-K for 1995 and
            incorporated herein by reference.

    (10)    Filed with the Company's Annual Report on Form 10-K for 1997 and
            incorporated herein by reference.

            (b) REPORTS ON 8-K.

            No reports on Form 8-K were filed during the quarter ended 
            December 31, 1998.



                                       39
<PAGE>   40



    SIGNATURES 

    Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                 THE WESTWOOD GROUP, INC.

                                                 By /s/ Charles F. Sarkis
                                                    ----------------------------
                                                 Charles F. Sarkis
                                                 Chairman of the Board
Date: April 15, 1999

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

    Date: April 15, 1999      By /s/ Charles F. Sarkis
                                 -------------------------------------------
                                 Charles F. Sarkis
                                 Chairman of the Board

    Date: April 15, 1999      By /s/ Richard P. Dalton
                                 -------------------------------------------
                                 Richard P. Dalton
                                 President, Chief Executive
                                 Officer and Director
                                 (Principal financial and accounting officer)

    Date: April 15, 1999      By /s/ A. Paul Sarkis
                                 -------------------------------------------
                                 A. Paul Sarkis
                                 Executive Vice President Director

    Date: April 15, 1999      By /s/ Paul J. DiMare
                                 -------------------------------------------
                                 Paul J. DiMare
                                 Director


                                       40